Court Blocks California Medicaid Reimbursement Reductions

Sacramento, Calif.

Citing potential beneficiary access problems, a federal judge granted a preliminary injunction in December blocking provider cuts to Medi-Cal, the California Medicaid program, that were slated to go into effect Jan. 1. The cuts were part of a compromise budget proposal passed last summer by the state legislature and signed by then-governor Gray Davis.

For California HME providers, the ruling affects those who sell disposable medical supplies such as incontinence supplies, said Bob Achermann, executive director of the California Association of Medical Product Suppliers (CAMPS). A 5 percent reduction of DME was “discretionary for the [California Department of Health],” he said. The department has not said it would enact the reductions yet, and they probably will not do so, he explained, “because of the other reductions they have done.” Currently, Medi-Cal pays no more than 80 percent of the Medicare allowable for listed DME and 80 percent of the manufacturers’ suggested retail price for unlisted items.

Achermann added that the injunction is “important for the industry” because it could set a foundation for future actions against the state for “changes in reimbursement for listed and unlisted DME.”

But the fight still isn’t over. In mid-January, Gov. Arnold Schwarzenegger proposed a 10-percent cut in Medi-Cal provider reimbursement rates, to take effect retroactively as of Dec. 1, 2003, industry sources said.

“This is a vestige of the previous administration, and we already know that these cuts are not a viable option,” said Jack Lewin, M.D., CEO of the California Medical Association.

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