From Medscape Medical News

Judge Blocks 10% Medicaid Cut for Physicians in California

Robert Lowes

January 31, 2012 — A federal judge in Los Angeles yesterday temporarily blocked a 10% cut in Medicaid reimbursement rates in California for physicians, dentists, and other providers, saying that the reduction could cause too many of them to close their doors to beneficiaries.

In her ruling, US District Judge Christina Snyder wrote that the Obama administration approved the rate reduction for Medi-Cal — the name of California's Medicaid program — without adequately evaluating its effect on either providers or patients as required by law.

Quoting a previous court decision, Synder wrote that when there is a conflict between government fiscal concerns and preventable human suffering, "the balance of hardships tips decidedly in favor of the latter."

Last spring, the California state legislature enacted the pay cut, which would have occurred in fiscal year 2012 beginning on July 1, 2011. The Centers for Medicare and Medicaid Services (CMS) signed off on the measure last October. The California Medical Association (CMA), other state healthcare organizations, and individual Medicaid recipients immediately sued the Obama administration in response.

Yesterday's preliminary injunction is a replay of one handed down by Synder in 2008 to block a 10% pay cut set to take effect that year. The case is now before the US Supreme Court, which is determining whether the CMA and other plaintiffs have any legal standing to bring a lawsuit to enforce federal Medicaid regulations. In the current court battle over Medicaid rates, Snyder said that the CMA, the California Dental Association, and other plaintiff associations have a right to sue the federal government on behalf of their members as well as their members' patients.

Like other states, California is attempting to reduce Medicaid provider rates to help balance its beleaguered budget. Those rates, among the lowest in the nation, already deter roughly 50% of California physicians from participating in Medicaid, according to the CMA. It has warned that this percentage would grow if the latest 10% cut is enacted.

"The court's tentative ruling is encouraging to those of us who practice medicine," CMA President James Hay, MD, said in a press release. "The state's repeated attempt to slash Medi-Cal reimbursement rates is a short-sighted solution that balances the budget on the backs of the poorest and most vulnerable Californians."