This court ruling has significant implications for Virgina as the House of Delegates and Senate consider cuts to Virginia's Medicaid program. Following the attached article concerning the California ruling is an analysis of Virginia's proposed cuts to Medicaid written by VOCAL.
Paula Price
MHAV
Executive Director
Federal Appeals Court Rules Against California's Reduction in Medicaid Rates
By Tom Gilroy BNA March 5, 2010
LOS ANGELES—The U.S. Court of Appeals for the Ninth Circuit reiterated March 3 its oft-stated opinion that California may not cut its Medi-Cal reimbursement rates purely for budgetary reasons, but instead must rely on responsible cost studies, prior to any cuts, to show that the planned reductions do not reduce access to care for Medicaid recipients (California Pharmacists Assn. v. Maxwell-Jolly, 9th Cir., No. 09-55532, 3/3/10).
The ruling, affirming a preliminary injunction granted by a federal district court judge in February 2009 against a planned 5 percent rate cut voted by the Legislature in September 2008 (A.B. 1183), again relied heavily on the Ninth Circuit's 1997 decision in Orthopaedic Hospital v. Belshe, , 103 F.3d 1491. In Orthopaedic, the court held that Section 30(A) of the Medicaid Act requires that payments for Medi-Cal services “must be sufficient to enlist enough providers to provide access to Medicaid recipients.”
That, in turn, required that the Department of Health Services, the predecessor agency to the current Department of Health Care Services (DHCS), “must rely on responsible cost studies, its own or others,’ that provide reliable data as a basis for its rate setting.”
Judge Christina A. Snyder of the U.S. District Court for the Central District of California had granted a preliminary injunction against the A.B. 1183 reimbursement cuts. Snyder cited the Ninth Circuit's decision in Orthopaedic, and said a DHCS analysis supporting the rate reductions was completed well after enactment of the law, and thus did not meet the requirements set out in Orthopaedic.
The challenge to the rate cuts was brought by a group of adult day health care centers (ADHCs), hospitals, pharmacies, and other beneficiaries of the state's Medicaid program, known as Medi-Cal. It was similar to a lawsuit filed in 2008 by other providers protesting a 10 percent Medi-Cal rate cut, which Snyder also blocked, and the Ninth Circuit upheld (Independent Living Center of Southern California v. Shewry, C.D. Cal., No. CV 08-3315 CAS (MANx), preliminary injunction grated 8/18/08) (162 HCDR, 8/21/08).
More recently, Snyder on Feb. 24 granted, on virtually identical grounds as the other cases, a preliminary injunction sought by the California Hospital Association, against state legislation (A.B. 5) that effectively freezes certain designated hospital services at 2008-2009 levels (California Hospital Association v. Maxwell-Jolly, C.D. Cal., No. CV 09-8642 CAS (MANx), preliminary injunction granted 2/24/10).
Rejecting State's Argument
In its appeal of the adult day care centers' preliminary injunction, the state argued that Orthopaedic did not hold that rate-setting had to be based upon pre-enactment legislative studies undertaken and completed by the Legislature itself prior to the action authorizing implementation of the cuts. That case focused solely on the department's actions, and thus only the department was required to consider Section 30(A) requirements, the state maintained.
But the Ninth Circuit three-judge panel disagreed. The court in Orthopaedic did, in fact, focus on the department, since it was setting the rates in that instance. Nevertheless, the state is “misguided” in thinking that focus “absolves the legislature of the same requirements when it sets rates,” Judge Milan D. Smith Jr., who wrote the opinion, stated. In Orthopaedic, the Legislature was “one step removed from the regulations promulgated by the Department,” and thus the Ninth Circuit had no reason to focus on what that body considered before rates were set, Smith noted. “Yet if the legislature elects to bypass the Department, and set rates itself, it must engage in the same principled analysis we required of the Director in Orthopaedic II,” he added
“In sum, we find nothing remarkable in holding that the final body responsible for setting Medicaid reimbursement rates must study the impact of the contemplated rate reduction on the statutory factors of efficiency, economy, quality of care, and access to care prior to setting or adjusting payment rates,” the court wrote. The appellate court also agreed with Snyder that the DHCS's post hoc analysis of the rate cuts did not satisfy the requirements of Orthopaedic. “To satisfy Section 30(A), any analysis of reimbursement rates on the statutory factors of efficiency, economy, quality, and access to care must have the potential to influence the rate-setting process,” the court ruled.
Yet the DHCS analysis of A.B. 1183 with regard to adult day care centers was issued more than five months after enactment of the law, it noted. While that was still before the cuts were actually implemented, the Ninth Circuit was not persuaded by the DHCS's argument that the director could have vetoed the cuts if he determined they did not comply with Section 30(A).
Finally, the appellate court rejected the state's claim that the lower court erred when it found that plaintiffs demonstrated a likelihood of irreparable harm if the preliminary injunction was not granted. In fact, showing a procedural violation of the statute, namely the state's failure to consider the impact of the rate cuts on the statutory factors set forth in Section 30(A), may demonstrate a likelihood of success on the merits that the setting of provider reimbursement rates conflict with Section 30(A), the court stated.
If at least some providers stop treating Medi-Cal beneficiaries as a result of the rate cuts, and evidence indicates that at least some adult day care center providers would stop treating beneficiaries due to A.B. 1183, that might be sufficient for a finding of irreparable harm, Smith wrote.
“We have now handed down multiple decisions instructing the State on Section 30(A)’s procedural requirements,” Smith noted in the court's conclusion. “We trust that the State now understands that in order for it to comply with Section 30(A)’s ‘requirement that payments for services must be consistent with efficiency, economy, and quality of care, and sufficient to ensure access,’ …it must: 1) ‘rely on responsible cost studies, its own or others,’ that provide reliable data as a basis for its rate setting,’ … and 2) study the impact of contemplated rate change(s) on the statutory factors prior to setting rates, or in a manner that allows those studies to have a meaningful impact on rates before they are finalized,” he added. Because the state did neither with regard to A.B. 1183, the district court's order granting plaintiffs a preliminary injunction was affirmed, Smith added.
Reaction to Decision
The DHCS did not return a call seeking comment on the decision.
Lloyd Bookman, of Hooper, Lundy & Bookman in Los Angeles, who along with colleagues Byron J. Gross and Jordan B. Keville, represented the plaintiffs, told BNA March 3 his clients “obviously are very delighted with the Ninth Circuit's decision.”
Bookman also said he hoped the state Legislature, and the DHCS, would heed what the court has said when seeking to adjust Medi-Cal rates.
Text of the Ninth Circuit opinion is at http://www.ca9.uscourts.gov/datastore/opinions/2010/03/03/09-55532.pdf. A not-for-publication memorandum in the case is at http://www.ca9.uscourts.gov/datastore/general/2010/03/03/0955365mem.pdf
The following is from VOCAL
*********************************************
The House and Senate Budget Bills currently do not match each other. The Legislature must reconcile them and are actively working on that task now. If the information below about Medicaid eligibility is of concern to you, you can use the information at the end of this message for the contact information for the Budget Conferees.
If you choose to contact the Conferees do so by close of business today, Friday, March 5th.
Senate Bill 30 contains a provision that would reduce the Medicaid eligibility from the current 80% of Federal Poverty Level to 75% of Federal Poverty Level.
-This change will affect approximately 9,950 individuals receiving public mental health services.
-The critical services that the need to remain in the community will be severely impacted: psychiatry, medications, case management, day treatment, and psychosocial rehabilitation
-The reduction will not provide real savings for Virginia because the needs of the individuals must be met with General Fund dollars, especially if the individuals fall back on higher-cost crisis-driven care such as inpatient acute care at state hospitals.
-The eligibility was raised from 75% to 80% in 2001 after a 4 year Hall-Gartlan study of the system, and the drive to maximize Medicaid reimbursement and limit General Fund obligations.
Budget Conferees:
Senator Colgan -(804) 698-7529 email: district29@senate.virginia.gov
Senator Houck - (804) 698-7517 email: district17@senate.virginia.gov
Senator Howell - (804) 698-7532 email: district32@senate.virginia.gov
Senator Saslaw - (804) 698-7535 email: district35@senate.virginia.gov
Senator Stosch - (804) 698-7512 email: district12@senate.virginia.gov
Senator Wampler - (804) 698-7540 email: district40@senate.virginia.gov
Delegate M. Kirkland Cox -- (804) 698-1066 email: delkcox@house.virginia.gov
Delegate Johnny S. Joannou -- (804) 698-1079 **no email**
Delegate S. Chris Jones-- (804) 698-1076 email: delcjones@house.virginia.gov
Delegate R. Steven Landes --(804) 698-1025 email: delslandes@house.virginia.gov
Delegate Lacey E. Putney-- (804) 698-1019 email: dellputney@house.virginia.gov
Delegate Beverly J. Sherwood -- (804) 698-1029 email: delbsherwood@house.virginia.gov
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment