Home   Uninsured   Racism    Medicare    Medicaid/Medi-Cal    Mental Health    Healthcare Reform    War    Economics    All Articles   Search

2003-12-24 -- Cuts in Medi-Cal Payments to Providers Blocked

Cuts in Medi-Cal Payments to Providers Blocked by Judges Preliminary
Injunction of Chief US District Judge, pending a full decision on the
merits of the case.

Service cuts worth hundreds of millions of dollars averted.

Davis' 5% cut and Schwarz's proposed 10% cut set aside.

Case won on basis that cuts would cause provders to drop out.

California reimbursement already among lowest in natin.

Judge says state never considered equal access in setting rates.

Only fee-for-service covered, not managed care plans covering about
half of state's 6.4 million Medi-Cal recipients.  AIDS Healthcare
Foundation to appeal managed care part of decision.

Coalition to Save Public Health - SF lawyer Lynn Carmen argued case.
Next target is Workers Comp drug cuts.

State Assembly bill introduced demanding cities and counties get full
value of vehicle license fee increase which Schwarz. Overturned.


 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

San Francisco Chronicle, December 24, 2003 article:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003
/12/24/BUG6L3TEKE1.DTL

A federal judge issued a preliminary injunction Tuesday preventing
proposed cuts affecting about half the state's poor and disabled on
Medi-Cal from going into effect Jan. 1.

A coalition of groups led by the California Medical Association and an
organization of independent pharmacists had filed suit against the
state. The coalition had accused the head of the Department of Health
Services of violating federal law by failing to consider how a 5
percent cut in reimbursements would affect patient access to care.

Judge David Levi, chief judge of the Eastern Division of U.S. District
Court in Sacramento, agreed with the doctors and pharmacists in his
decision.

However, the order does not cover Medi-Cal recipients in managed-care
plans, because the judge indicated it is the responsibility of the
health plans, not the providers, to challenge the cuts affecting those
patients.

The physicians had filed suit Nov. 7, claiming that the reduction in
reimbursement rates for doctors would make it even more financially
difficult for them to treat those patients. A month earlier, the
independent pharmacists filed suit over the same issue.

Walgreen Co. has threatened to stop filling prescriptions for Medi-Cal
patients, but many of the smaller pharmacies can't afford to do so.

Even though managed-care plans were excluded from the decision, Craig
Cannizzo, a San Francisco attorney who represents the doctors, said he
does not view the ruling as a partial victory.

"I view it as a complete victory, because it's going to be a very
serious obstacle to the administration's proposal to consider further
rate reductions, " he said.

Former Gov. Gray Davis had initiated the 5 percent reductions, and
Gov. Arnold Schwarzenegger has proposed cutting Medi-Cal reimbursement
rates by an additional 10 percent.

Robert Miller, spokesman for the Department of Health Services, said
late Tuesday that the department's attorneys were busy reviewing the
judge's 42- page order. "In terms of what its implications are and
what we may or may not do, it's much too early to say," he said.

The physicians and pharmacists had hoped any injunction would cover
all of the state's 6.4 million poor and disabled on Medi-Cal, the
nation's largest Medicaid program.

"It's a mixed bag, and we certainly disagree with the judge that it's
limited to fee-for-service,'' said San Francisco attorney Lynn Carman,
who represents the pharmacists. He said they are considering whether
to file an appeal or a new lawsuit.

As of June, 51.6 percent of Medi-Cal beneficiaries are on managed-care
plans, compared with 48.4 percent on fee for service, according to the
state Health Department. Medi-Cal managed-care plans are not available
in all counties.

According to the California Medical Association's Cannizzo, the health
plans can make a variety of decisions in response to the cuts. He
said, for example, that they can pass on all or some of the rate cuts
to the medical providers or opt to challenge the cuts in court.

"Even though we weren't included in the judge's ruling, we think any
ruling on the side to improve or continue funding for the state's
Medi-Cal program is a positive step," said Bobby Peña, spokesman for
the California Association of Health Plans.

= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

Tuesday, December 23, 2003
Guest Editorial: Disabled deserve state's support

Last week, as he stood smiling next to a developmentally disabled
toddler at the annual lighting of the official state Christmas tree --
dangling ornaments made by people with disabilities -- Gov. Arnold
Schwarzenegger was forging ahead with a plan to cut services for the
disabled.

To the nearly 200 disabled people and their families standing in the
cold dark rain, it was a confounding moment. There was Schwarzenegger,
admiring the decorations, praising the people who made them and even
noting -- without mentioning his desire to cut them -- the many
services available to the child at his flank.

Schwarzenegger, to help remedy the state's fiscal woes, is proposing a
sweeping reduction in funds for the poor, in particular hundreds of
thousands of sick and severely disabled children, seniors and their
families. Under his plan, services for the developmentally disabled
would either be terminated, reduced or capped, creating an imposing
waiting list of people who couldn't get services unless another
recipient died or otherwise dropped out of a state- funded program.

His idea is to eliminate about $1.6 billion from health and human-
service programs. But doing so means cutting nonmedical services for
children and adults with cerebral palsy, autism, mental retardation,
spina bifida, muscular dystrophy, spinal cord injuries other
disabilities.

Also, the Healthy Families Program, which provides health insurance
for children who don't have any, would be frozen at Dec. 31, 2003,
levels, barring new clients. Medi-Cal would cut fees to doctors by 10
percent above the 5 percent this year, making it more difficult for
the disabled to find doctors who take Medi-Cal patients. The Respite
Program, offering care for a disabled child while parents run errands
or just take a break, would be eliminated along with In Home Support
Services, which allows the disabled to pay for help with bathing,
house cleaning and such.

The governor's plan also would suspend the Lanterman Act, the
disability- rights law that has been a national model for 34 years. It
requires the state to provide support services that allow people with
disabilities to live independently.

The cuts may turn out to be a false economy. Many disabled people
could be forced into institutions at an annual cost of about $200,000
each.

Schwarzenegger has boxed himself into a corner by slashing the car
tax, ruling out other tax increases and putting a large portion of
state spending off-limits to reduction. Surely the state can find more
humane and judicious ways to balance its budget than cutting basic
services to the disabled.

San Francisco Chronicle

 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

from Lynn S. Carman, attorney,
415-927-4023, fax 415-499-1687.

December 23, 2003

FOR IMMEDIATE MEDIA RELEASE

Federal Judge David F. Levi, today issued a preliminary injunction, in
the U.S.  District Court in Sacramento, enjoining Diana M. Bonte,
Director of the  California Department of Health Services, from
implementing the Legislature's 5  percent cut in payments to doctors,
dentists, and pharmacies which was to go  into effect on January 1,
2004

Judge Levi held that neither the Legislature nor the Director had
considered  whether the cut would impact quality of services, which is
a required element  for health services in the Medicaid Act, which
funds 50 percent of the state's  Medi-Cal expenses on condition that
the state comply with the quality  requirements of the Medicaid Act.

Lynn S. Carman, attorney for two Medi-Cal recipients and James
Clayworth, R.Ph.,  owner of a Castro Valley pharmacy, who were among
the plaintiffs in the case,  said that the decision terminates
Governor Schwartznegger's cruel proposal to  cut Medi-Cal fees another
10 percent across the board, in next year's Budget  Act.

 "No longer can the Governor and the  Legislature just cut, cut, and
cut the  Medi-Cal budget, just to balance the budget.  From now on,
the only rates  payable to Medi-Cal providers will have to be based on
evidence that the new  rate will be sufficient to enable Medi-Cal
recipients to receive quality care.   Nothing less is acceptable,
under Judge Levi's decision."

The decision did exempt the portion of the 5 percent rate cut insofar
as it  affects those managed care plans who provide, Medi-Cal
services.

Carman said that on balance, that most of Medi-Cal services are
provided by  independent doctors, dentists, and pharmacies, -- not, by
managed care entities.   He said that Judge Levi's decision protects,
in general, the right of Medi-Cal  patients, under the Medicaid Act,
to quality medical, dental, and pharmacy  services.

He said that the managed care entities are big enough to take care of
themselves, and that it is up to them, -- not the Medi-Cal recipients
and the  independent community pharmacies whom he represents, -- to
challenge Judge  Levi's carve-out of managed care entities, from the
order enjoining the  arbitrary 5 percent cut in provider rates.

Carman's suit was supported by the Pharmacy Defense Fund and by
contributions  from community pharmacies throughout the United States.

Next on Carman's target list is the Legislature's cut in rates to
pharmacies who  dispense medicine to industrially injured workers in
the workers' compensation  system, which goes into effect on January
1, 2004.

He filed suit today in the state Court of Appeal in San Francisco,
charging that  the Legislature's cut in rates to pharmacies who
dispense to injured workers  under the state's workers' compensation
system, violates the provision in the  state Constitution, (article
14, section 4) which he says requires that reasonable fees be paid to
assure that injured  workers have access to quality medical and
prescription services.

The plaintiff in the new suit is the same pharmacist, James Clayworth,
who was  the lead plaintiff in the Sacramento federal suit in which
Judge Levi issued his  injunction, today.

The new Court of Appeal suit cites opinions of Paul W. Lofholm,
professor of  pharmacy at U.C.S.F., that the Legislature's reduction
in fees to pharmacies who  dispense to injured workers, are so low
that they do not even cover the costs to  dispense most brand-name
drugs, and, do not cover the costs to dispense a large  group of
generic drugs.

Professor Lofholm says that, starting in January, most pharmacies will
refuse to  dispense to industrially-injured workers, under the reduced
workers'  compensation rates, because pharmacies cannot afford to
dispense drugs at a loss  to anybody.

The suit, accordingly, asks for an order staying the new rate law for
pharmacies  who dispense to injured workers in San Francisco.

(A copy of the new suit can be obtained emailing attorney Carman at
www.a7827@comcast.net. Do not fax him,. because he will be out of town
until Monday, December 29th.)

Both the federal Medi-Cal suit and the new workers' compensation rate
suit are  funded and supported by the Pharmacy Defense Fund, a
nonprofit organization, located in San  Rafael, whose president in
Frederick S. Mayer, R.Ph., M.P.H., telephone (4125)  479-8628.

A COPY OF THE SIGNIFICANT PORTION OF TODAY'S FEDERAL COURT INJUNCTION
ORDER, AND  OF THE NEW SUIT IN THE STATE COURT OF APPEAL TO ENJOIN THE
CUT IN PHARMACY RATES  IN THE WORKERS' COMPENSATION SYSTEM, IS
ATTACHED, IN PDF FORMAT FOR EASE IN  DOWNLOADING.

NOTE: I will be out of town from Wednesday, December 24th, to Sunday,
December  28th. but, can be reached at (541) 484-9955, or may above
email address  www.a7827@comcast.net.

                             -end of media release-


 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =


Los Angeles Times, December 24, 2003

http://www.latimes.com/news/local/la-me-doctors24dec24,1,3473454.story
?coll=la-headlines-california

In a decision that makes balancing California's troubled state budget
more difficult, a federal judge in Sacramento on Tuesday blocked the
state from cutting payments to doctors and other Medi-Cal providers
who treat poor, aged, blind and disabled patients.

Chief U.S. District Judge David F. Levi ruled that the 5% cut in
provider payments due to take effect Jan. 1 would violate federal law,
because it would make it harder for Medi-Cal patients to get quality
medical care. The pending rate reduction, Levi wrote, "is arbitrary
and cannot stand."

The preliminary injunction issued by Levi bars the state from imposing
the across-the-board cut, thus preventing the state Department of
Health Services from saving hundreds of millions of dollars.

The decision was a victory for professional organizations that
represent doctors, dentists and pharmacists, and for patient advocates
who argued in a court hearing last week that doctors would drop out of
the Medi-Cal program if the cut were to take effect.

"The court's decision . will prevent further erosion of access to care
for our most vulnerable patients," said Dr. Jack Lewin, a Sacramento
physician and chief executive of the California Medical Assn.

In his ruling, Levi agreed with the plaintiffs that "at least some
Medi-Cal providers will cease participating in the Medi-Cal program
altogether or will refuse to take on new Medi-Cal patients if rates
are reduced by 5%.. This reduction in the number of providers in the
program will adversely affect beneficiaries' equal access to medical
care and, quite possibly, its quality."

Spokesmen for Gov. Arnold Schwarzenegger's administration had no
immediate comment on the 42-page ruling.

"We're still digesting it," said Robert Miller, a spokesman for Health
Services. "Medi-Cal is a very complex program and this is a complex
ruling."

The decision is a setback for the administration's efforts to cut
state spending and comes just as the new governor is putting the
finishing touches on his first budget, to be released next month.

"We will want to take time to carefully review the ruling and consult
with our counsel and the attorney general's office before making any
specific comment," said H.D. Palmer, deputy director of the state
Department of Finance.

The reduction that is the centerpiece of the court case was passed by
the Legislature and signed into law in August by then-Gov. Gray Davis.
It was expected to save $115 million in the last half of the current
fiscal year, which ends next June 30.

After taking office, Schwarzenegger asked lawmakers to approve an
additional 10% cut in payments to Medi-Cal providers to help close a
multibillion-dollar gap in the state budget. The administration
estimated that the further 10% cut would save $623 million over the
next year and a half.

But the judge ruled the across-the-board 5% cut "violates the quality
and equal access requirements" of the federal Medicaid Act.

He said that a previous case in the 9th Circuit, which includes
California, established that federal law grants Medi-Cal patients
certain rights. Among them: a rate-setting process that is not
arbitrary and takes into account provider costs, quality of services
and equal access to medical services. In that case, Levi said, "there
is no record of considered decision making."

Levi cited in his ruling a statement from Legislative Analyst
Elizabeth Hill that the Department of Health Services has "no rational
basis" for its provider rate system.

The injunction does not apply to a reduction in payments to managed
care plans. Medi-Cal operates both as a traditional fee-for-service
program, in which patients deal directly with doctors, and as a
managed care program, in which patients see designated providers.

At the end of June, there were 6.4 million Medi-Cal recipients in the
state. Los Angeles County, with just under 2.5 million recipients, had
about 40% of all those patients.

Statewide, slightly more than half of the Medi-Cal patients are in
managed care plans. The percentage in Los Angeles County approaches
55%.

Levi said "there are undoubtedly many ways" in which the state may
reduce overall Medi-Cal costs, including the elimination of so-called
optional services - such as dental care, eyeglasses, acupuncture and
hearing aids - that are not required by federal law. Davis tried that
approach early this year, but lawmakers balked at the cuts.


 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

PRNewswire, December 23, 2003


AIDS Healthcare Foundation Will Appeal Decision on Decision Allowing
Cuts to Medi-Cal Managed Care to Stand.

# LOS ANGELES, Dec. 23 /PRNewswire/ -- AIDS Healthcare Foundation
(AHF), the largest AIDS organization in the US and operator of free
AIDS treatment clinics in the US, Uganda, South Africa, and Honduras,
announced that a federal judge has issued a preliminary injunction
preventing the California Department of Health Services from
instituting a 5% reduction in reimbursement rates to medical
providers -- physicians, pharmacists, health clinics, managed care
plans -- for care and services they provide to patients under the
state's Medi-Cal (Medicaid) program. The five percent cut, scheduled
to go into effect January 1, 2004, would wreak havoc with the health
and welfare of millions of Californians covered under Medi-Cal. The
DHS' failure to take this impact into account when making this
reduction rendered it illegal, and was one of the bases for the
injunction.

"Christmas has come early for millions of Californians," said Michael
Weinstein, President of AHF. "Come the new year, they will find that
they still will have some access to quality medical care for
themselves and their families."

AHF, a nonprofit corporation that provides medical and pharmacy
services to some 5,500 people in California with HIV/AIDS regardless
of ability to pay, became involved in this issue because the Medi-Cal
program is one of the largest insurers of people with HIV/AIDS in
California. AHF brought this suit along with the California Medical
Association (CMA), and more than a dozen other California physicians,
pharmacists and health care providers.

The DHS has been enjoined from making this cut pending a full decision
on the merits of the case. However, "the Court's action today sends a
strong signal that it believes that the DHS' action will not withstand
scrutiny. Hopefully, this also will be the death knell for an
additional 10% cut that has been proposed. The new administration in
Sacramento must know that it cannot solve the State's financial crisis
on the backs of its neediest people."

The injunction does not cover proposed cuts for managed care plans.
AHF, which operates a Medi-Cal managed care for people with HIV/AIDS
that has saved the DHS millions of dollars over the past eight years,
intends to appeal this part of the ruling. "The logic in both settings
is the same," said Weinstein. "The damage to Medi-Cal recipients from
DHS' arbitrary rate reduction in fee for service also extends to those
receiving care from managed care plans."


= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =


San Jose Mercury News,  Wed, Dec. 24, 2003

Judge orders state to drop budget measure to cut medical payments
Associated Press

SACRAMENTO - A federal judge here on Wednesday ordered the state to
drop a budget measure that would reduce reimbursements to health care
providers that serve the poor.

U.S. District Judge David F. Levi ruled that a bill imposing a 5
percent cut in reimbursements violated the federal Medicaid Act,
particularly its quality of care and equal access guarantees.

The cut was expected to save the state $245 million in the first six
months of 2004. The Legislature passed the measure earlier this year
to help address California's unprecedented budget deficit. It was
scheduled to take effect Jan. 1.

In his 42-page order, Levi said the federal statute guarantees
beneficiaries "a rate-setting decision by the state that is not
arbitrary and that takes into account provider costs, quality service,
and equal access to medical services."

The judge also said there was "no record of considered
decision-making" in adopting the measure, saying there was no evidence
that the Legislature sought a recommendation from the state Department
of Health Services.

Assemblyman Darrell Steinberg, D-Sacramento, said the ruling will
place more strain on legislators, who face tough budget decisions in
January. The blow is especially severe after Gov. Arnold
Schwarzenegger ordered the state to pay local governments for lost
revenues from his recent rollback of vehicle license fees, Steinberg
said.

Last week, the governor declared a fiscal emergency and mandated a
so-called backfill to cities and counties, leaving a $2.6 billion hole
in an already-strapped state treasury. Schwarzenegger also called for
another 10 percent cut to the reimbursement rate to save $443 million
in the next fiscal year starting July 1.

Levi's ruling may jeopardize the additional cut and the savings.

The planned medical provider cuts would have been an across-the-board
reduction, but Levi's order only applies to fee-for-services patients,
not to members of managed care plans.

Levi issued a preliminary injunction barring the rate cut, which will
be in force until the legal challenge by Medi-Cal providers and
beneficiaries, led by the California Medical Association, has been
settled.

The order preserves the status quo for as many as 6 million California
residents who faced the prospect of being dropped by their providers.



 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

In other news, a state assembly legislator introduced a bill demanding
cities and counties be paid the full amount of what they would have
gotten from the vehicle license fee increase.


Tri-Valley Herald, Wednesday, December 24, 2003

Dutra bill seeks funding for cities

Legislation also aims to plug loophole that could reduce flow of money
to local coffers

By Rob Kuznia, STAFF WRITER

Fremont Assemblyman John Dutra introduced a bill Tuesday asking the
state to pay cities and counties up to $1 billion more than Gov.
Arnold Schwarzenegger unilaterally gave them last week to replace lost
car taxes.

The $2.6 billion Schwarzenegger gave cities and counties in return for
his revocation of a car-tax increase falls short of the full amount
lost, said Dutra, D-Fremont.

Dutra said he thinks cities and counties would have collected $3.6
billion had the car tax been at its full 2 percent level, but added
that others predict the number to be $3.2 billion.

"It won't be known until the end of the fiscal year, on June 30," said
Dutra, who is running for the Senate seat Liz Figueroa must relinquish
due to term limits in 2006. "It will definitely be more than $2.6
billion. Our measure requires full payment for 2003-04."

Assembly Bill X5 12 also aims to ensure that cities and counties are
reimbursed by the state in future years for the money they lost as a
result of Schwarzenegger's revocation of the car-tax increase.

There is debate among pundits about whether local jurisdictions will
be guaranteed the money in years to come, Dutra said.

"I'm not sure who's right, and it's really not important," so long as
this bill is passed," Dutra said.

The bill also intends to eliminate a loophole that could stop the flow
of money to local coffers. Dutra says an "ambiguous trigger" in
current law allows the Department of Motor Vehicles automatically to
reduce local government "backfill funds when insufficient general-fund
money is available."

"This confusing section of current law could threaten funding for our
cities and counties, our police and fire protection, year after year,"
Dutra said in a statement. "We need to get rid of this uncertainty."

Tri-City area leaders praised the plan.

"The reason Dutra is doing that is he knows firsthand what it's like
to rely on these revenue sources, having been a (Fremont)
councilmember himself," Newark City Manager Al Huezo said.

Newark would lose $1.6 million annually from its $30 million budget
without replacement funds, he said. That would translate into 17 or 18
of the city's roughly 100 public safety employees, he said.

Fremont has lost $3 million since the fiscal year began in July. Had
Schwarzenegger not intervened, the city could have lost $6 million
more, officials say.

Fremont Chief Financial Officer Dave Millican said the bill "signifies
the intent of the Legislature to support the governor in his
commitment to local government."

But the bill had others wondering -- on condition of anonymity --
where the money would come from.

"If funding for localities hadn't gone out, the added revenues would
have been used to offset other areas -- education, Medi-Cal, social
services," said one legislative analyst. "The money is going to come
from somewhere."

But few people want to create the perception that they are against
funding local public-safety departments, pundits say.

Though Schwarzenegger dropped $274 million in controversial proposed
service cuts for the developmentally disabled, advocates for the
disabled have said they are worried the state will trim other programs
serving California's neediest residents as it grapples with deep
budget woes.

Politically, Dutra's bill, which may have to be approved in two
Assembly committees before hitting the floor, would allow legislators
to participate in the "It joins the Legislature in the process," Dutra
said. "It's not just the governor taking unilateral action."

Dutra said the bill, which contains an urgency clause, could be law by
the end of January.

The bill also would resolve the ambiguity surrounding the legality of
Schwarzenegger's backfill plan.