A consortium of California’s health care providers is suing the state over its decision to cut 10 per cent of health care payments from July because they say the move will reduce access to care. The news was released to the press yesterday, 5th May.
In a move to take control of the state’s budget crisis, in February this year California’s governor signed a law to cut 1.3 billion dollars from the state’s Medi-Cal program (the name given to state-supported healthcare, Medicaid in California).
The cuts come into effect on 1st July, and part of the move includes delaying payments, due on 19th June, to Medi-Cal hospitals, pharmacists, and adult day health care centres. For some of the smaller providers, said the consortium in a press statement, this could mean delayed pay checks to employees and payments to small suppliers.
Thus the consortium filed a “class action” lawsuit in the Los Angeles County Superior Court against the state to stop the law from coming into force.
Class action means the lawsuit is filed jointly by all the parties, which in this case comprise the California Medical Association (CMA); the California Hospital Association (CHA); the California Dental Association (CDA); the California Association for Adult Day Services (CAADS); the American College of Emergency Physicians, State Chapter of California (Cal/ACEP); the California Pharmacists Association (CPhA); and the California Association of Public Hospitals and Health Systems (CAPH).
The consortium’s legal stand is that by cutting the payments, the state is violating state and federal laws that say Medicaid payments “must be sufficient to enlist enough providers so that services under the (state’s Medicaid) plan are available to recipients at least to the extent that those services are available to the general public.”
“President of the California Medical Association (CMA), Dr Richard Frankenstein, said:
“Medi-Cal already doesn’t cover the cost of providing care.”
“This chronic underfunding is forcing many doctors to leave the Medi-Cal program, which in turn deprives these vulnerable patients access to primary and preventative medical care,” he added.
If these cuts come into force, patients on Medi-Cal will be forced to seek care in “already overcrowded hospital emergency rooms, which undermines access to care for all Californians,” said Frankenstein.
The consortium said the cuts are intended purely to solve the budget crisis, without regard to their effect on the availability of Medi-Cal services.
They say the cuts are illegal, and in the lawsuit they argue they are “being imposed on a system already in crisis, wherein inadequate payment levels have resulted in a scarcity of willing providers, creating serious access hurdles for Medi-Cal beneficiaries.”
They argue that if the cuts take effect, more health care providers will exit the Medi-Cal program, and this will result in “additional crowding of hospital emergency departments.”
Dr Michael Salomon, president of the American College of Emergency Physicians, State Chapter of California, said:
“California’s emergency rooms are overburdened and chronically overcrowded.”
“Ambulance diversions and patient wait times are on the rise: with many patients having to wait hours, or even days, for a hospital bed. Slashing Medi-Cal payments will make things even worse,” he added.
The Consortium criticized California’s rate of Medicaid contribution. The state ranks last in the US, nearly 2,000 dollars below the 4,662 dollars national average spend per beneficiary, they said.
Patients in rural parts of the state are likely to be the worst affected by the cuts because in many cases they may only have one pharmacy and the local hospital also doubles as a skilled nursing centre.
Charles R Guenther, CEO of Eastern Plumas Health Care District, which runs two small hospitals in Portola and Loyalton in Plumas County, in northeastern California, explained how difficult it is to grasp the effect these cuts will have on small rural health care providers:
“Our organization has already been through bankruptcy once: we can’t go through it again,” said Guenther.
“We have no operating cash on hand and we owe 1.5 million dollars in accounts payable,” he explained, adding that, “We are the only health care provider for about 1,500 square miles.”
He said they were experiencing enormous problems getting “essential supplies and keeping qualified staff even at the current level of Medi-Cal reimbursement”.
“If the state pulls the rug out from us by implementing these cuts, we will have no choice but to reduce services and close facilities,” said Guenther.
The consortium argues that the legislation violates a number of Medicaid regulations, including the fact that California has not submitted a State Amendment Plan to the federal government for approval, the state has not published the proposed reduced rates and the rationale behind them, and it has not followed a review process for payments to doctors and other providers that takes into account requirements such as changes in consumer price indices and other factors required by state law.
The consortium is seeking an injunction to stop the cuts from going ahead before the 1st July, and are expecting a court hearing to take place within the next month and a half.
Sources: California Hospital Association.
Written by: Catharine Paddock, PhD