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The U.S. Ninth Circuit Court of Appeals issued four decisions Wednesday against Gov. Arnold Schwarzenegger that continue to block past budget cuts to Medi-Cal reimbursement rates for hospitals and pharmacists and In-Home Supportive Services wages.

The Ninth Circuit agreed with lower court decisions that granted preliminary injunctions against the cuts because California did not comply with the federal Medicaid Act. The cuts were contained in budget agreements over the past two years.

The court decisions not only have blocked past budget cuts, but they could also preclude the state from pursuing similar ways of solving its current $19.9 billion budget deficit. Schwarzenegger, for instance, proposed cuts to IHSS to save roughly $950 million in his January budget plan, but court rulings for now suggest that those solutions will be legally difficult to impose.

The court previously determined that under the Medicaid Act the state Department of Health Care Services must set rates "that bear a reasonable relationship to efficient and economical hospitals' costs of providing quality services, unless the Department shows some justification for rates that substantially deviate from such costs."

The Ninth Circuit on Wednesday determined that the state did not conduct the analysis required under the Medicaid Act to consider the impacts of cuts to IHSS wages or reimbursement rates. In the case California Pharmacists v. Maxwell-Jolly, Judge Milan D. Smith wrote that the court now has handed down "multiple decisions" on how to comply with the Medicaid Act.

But Schwarzenegger officials still disagree with the court's interpretation. Administration lawyers last month asked the U.S. Supreme Court to review one of the cases related to the Medicaid requirement in hopes of getting lower court decisions overturned. Schwarzenegger also has asked the state's congressional delegation to change federal law so that the federal Centers for Medicare and Medicaid Services can give states flexibility to cut payments.

"We strongly disagree with the court's decisions, which interfere with the state's ability to manage its finances and reduce its spending to match its revenue," said Schwarzenegger spokeswoman Rachel Arrezola. "We are confident the U.S. Supreme Court will overrule the Ninth Circuit's rulings and reaffirm the state's ability to make tough decisions to balance its budget."



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