Appeals court rules against former Medi-Cal payment cuts
A U.S. appeals court on Monday found the federal government shouldn't have approved California’s 2008 request to temporarily reduce the state's Medicaid hospital outpatient care reimbursements, reported the Los Angeles Times.
California requested the eight-month cut while the state was in the middle of a budget crisis and the country faced a recession. The U.S. 9th Circuit Court of Appeals said the federal government shouldn't have approved the 10% cut without evidence that it wouldn't affect access to care for members of the state Medicaid program, called Medi-Cal.
With Monday’s ruling, California and the federal government will need to pay back hundreds of millions of dollars to California hospitals. The federal government may still request that the three-judge panel reconsider, ask for the larger 9th Circuit to review or appeal to the U.S. Supreme Court.
Medi-Cal is a major payer in California. More than 12 million people have coverage through the program. The California Hospital Association estimates nearly $30 billion annually — more than half of hospitals' revenue in the state — comes from federal programs like Medicare and Medi-Cal.
California spends 27% of its public health funding on Medi-Cal, which is more than Medicare (20%) and employer-based insurance subsidies (12%). So, any decision involving Medi-Cal payments will have a huge impact on California hospitals.
California imposed the payment cuts nearly 10 years ago as a way to help the state get out of a major fiscal downturn. However, opponents of physician reimbursement cuts say reducing Medicare or Medicaid payments forces doctors to stop taking those patients, which can lead to patient access problems. Healthcare access for Medi-Cal members has been a concern before. A 2015 report by the state auditor found that Medi-Cal patients didn't have guaranteed access to doctors.
One possible avenue the state is considering to resolve access issues is going to a single-payer system. California legislators are currently debating whether a single-payer system would make more sense for the state, especially since it already provides so much healthcare coverage already. Employer-sponsored health insurance makes up about 45% of the California population. The rest is Medi-Cal (26%), Medicare (10%), individual market (9%) and other federal government programs, such as VA (2%). About 8% of the population is uninsured, according to the California Senate Committee on Appropriations.
A bill called The Healthy California Act would create a single-payer system, which a recent California Senate Committee on Appropriations report said would cost $400 billion.
That price tag means a single-payer system likely won't happen in California now. However, the Medi-Cal payment issue may become fodder for supporters of the idea, who will see the hospital payment case as another reason to blow up the current system and create a new one.
- Los Angeles Times U.S. appeals court says Medi-Cal cut to hospitals was illegal