On Thursday, the 9th Circuit Court of Appeals ruled that California can  reduce Medi-Cal payments for health care providers by 10%, overturning a lower  court decision that blocked the cut, the Sacramento Bee's "Capitol Alert" reports.

Medi-Cal is California's Medicaid program (Yamamura, "Capitol Alert," Sacramento Bee, 12/13).

Background

In October 2011, CMS approved the state's plan to reduce certain Medi-Cal  payments by 10%. State officials have projected that the cuts will save $623  million.

According to the Department of Health Care Services, CMS allowed the state to  make a 10% reimbursement cut to:

• A number of providers and outpatient services, including clinics, dentists,  laboratories, optometrists and pharmacists; and
• Freestanding nursing and adult subacute care facilities, as well  as other nursing facilities.

The cuts would be retroactive to June 1, 2011.

In January, U.S. District Court Judge Christina Snyder tentatively blocked the cut, saying it could cause  irreparable harm to patients.

In her ruling, Snyder wrote that California's "fiscal crisis does not  outweigh the serious irreparable injury plaintiffs would suffer absent the  issuance of an injunction" (California  Healthline, 1/31).

Details of New Ruling

A three-judge appeals court panel ruled that HHS Secretary Kathleen Sebelius  has authority to decide whether California and other states can reduce Medicaid  rates while still adhering to program regulations.

The judges wrote, "Congress explicitly granted the Secretary authority to  determine whether a state's Medicaid plan complies with federal law" ("Capitol  Alert," Sacramento Bee, 12/13).

Reaction to Ruling

Critics of the ruling say that California already provides one of the  lowest Medicaid reimbursement rates in the U.S. They argue that the ruling could  make it harder for patients to find physicians willing to accept Medi-Cal  beneficiares after the program expands enrollment under the Affordable Care  Act.