By Erica Teichert | August
8, 2017
HHS should not have approved California's request to reduce
hospitals' Medicaid reimbursement rates for outpatient services by 10% during
the Great Recession, a federal appeals court ruled Monday.
The 9th U.S. Circuit Court of Appeals determined the federal agency didn't consider whether the rate cuts would affect Medi-Cal beneficiaries' access to care in comparison with the general public's access. Without that analysis, HHS cannot approve a reimbursement rate reduction because federal law requires that Medicaid beneficiaries receive equal access to care, the three-judge panel said.
"Congress did not require the (HHS) secretary to ensure a 'reasonable' level of access, or a level of access 'comparable' or 'similar' to that of the general public, which ambiguous standards would benefit from the secretary's judgment and expertise," the 9th Circuit said. "Instead, Congress required equal access."
California asked HHS in September 2008 to approve a 10% retroactive rate reduction for hospital outpatient services from July 2008 through February 2009. Although HHS initially denied the state's request because it didn't include information on whether the cuts would affect access to care, it approved the plan in September 2011 with additional data showing that outpatient care demands and provider participation in Medi-Cal had stayed stable for three years.
But 57 hospitals sued HHS in December 2011, alleging California's submission didn't include evidence comparing Medi-Cal beneficiaries' and the general public's access to care. Monday's ruling overturns a lower court decision in favor of HHS.
More than 13 million people receive care via Medi-Cal.
HHS declined to comment on the 9th Circuit's decision.
Medi-Cal's payment rates are some of the lowest Medicaid rates in the country, according to Robert Leventhal, an attorney at Foley & Lardner who represented the hospitals.
"The Medi-Cal rates are well below providers' costs and cause access problems for Medi-Cal patients," he said. "There are potentially hundreds of millions of dollars at issue, money that is badly needed to treat indigent patients in California."
The appeals court remanded the case to a lower court for further proceedings. California will be required to repay the hospitals for the cuts.
HHS can appeal the decision or ask the 9th Circuit to reconsider the ruling.
The 9th U.S. Circuit Court of Appeals determined the federal agency didn't consider whether the rate cuts would affect Medi-Cal beneficiaries' access to care in comparison with the general public's access. Without that analysis, HHS cannot approve a reimbursement rate reduction because federal law requires that Medicaid beneficiaries receive equal access to care, the three-judge panel said.
"Congress did not require the (HHS) secretary to ensure a 'reasonable' level of access, or a level of access 'comparable' or 'similar' to that of the general public, which ambiguous standards would benefit from the secretary's judgment and expertise," the 9th Circuit said. "Instead, Congress required equal access."
California asked HHS in September 2008 to approve a 10% retroactive rate reduction for hospital outpatient services from July 2008 through February 2009. Although HHS initially denied the state's request because it didn't include information on whether the cuts would affect access to care, it approved the plan in September 2011 with additional data showing that outpatient care demands and provider participation in Medi-Cal had stayed stable for three years.
But 57 hospitals sued HHS in December 2011, alleging California's submission didn't include evidence comparing Medi-Cal beneficiaries' and the general public's access to care. Monday's ruling overturns a lower court decision in favor of HHS.
More than 13 million people receive care via Medi-Cal.
HHS declined to comment on the 9th Circuit's decision.
Medi-Cal's payment rates are some of the lowest Medicaid rates in the country, according to Robert Leventhal, an attorney at Foley & Lardner who represented the hospitals.
"The Medi-Cal rates are well below providers' costs and cause access problems for Medi-Cal patients," he said. "There are potentially hundreds of millions of dollars at issue, money that is badly needed to treat indigent patients in California."
The appeals court remanded the case to a lower court for further proceedings. California will be required to repay the hospitals for the cuts.
HHS can appeal the decision or ask the 9th Circuit to reconsider the ruling.
Erica Teichert assigns, edits and directs news
coverage for Modern Healthcare’s website and magazine. She previously served as
the publication’s New York bureau chief and legal reporter. Before joining
Modern Healthcare in 2016, she worked at Law360 as legal newswire’s first D.C.
bureau chief after three years as a court reporter covering the U.S. Supreme
Court, D.C. Circuit and other federal courts and agencies. Prior to that, she
worked as an associate editor for FierceMarkets. She has a bachelor's degree in
communications with a print journalism emphasis from Brigham Young University.
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