Capitol Alert: Judge blocks California budget cut to hospitals for Medi-Cal

A federal judge has blocked a California state budget cut that would have affected rural patients, the latest indication that courts will have the last word on Medi-Cal reductions.

Gov. Jerry Brown and lawmakers cut reimbursement rates to a variety of Medi-Cal providers by 10 percent to save $623 million in their June budget. Physicians, pharmacists and hospitals, among others, have argued that the cut to California's already low payment rates would discourage providers from accepting Medi-Cal patients and reduce access.

U.S. District Court Judge Christina Snyder issued a preliminary injunction Wednesday blocking the specific rate cut to nursing units within hospitals, many of which are located in rural California. Snyder determined that the California Hospital Association and other plaintiffs had a reasonable argument that the state had failed to appropriately review whether Medi-Cal patients would lose sufficient access to care.

The state Department of Health Care Services will ask the court to reverse the injunction and file an appeal with the U.S. Ninth Circuit Court of Appeals, a spokeswoman said Friday in an e-mail.

Physicians and pharmacists have filed a separate suit asking the court to block the rate cut to their services. The court filings come after the Obama administration approved most of California's Medi-Cal cuts in October.

In a separate case before the U.S. Supreme Court this fall, White House and California officials argued that groups such as the California Hospital Association should not be able to challenge cuts to Medi-Cal, the state's Medicaid program serving low-income children and people with disabilities. If the high court rules in favor of California, the state will have more leverage to cut Medi-Cal in the future, while health care advocates will have fewer ways to challenge budget reductions.

Updated at 2:20 p.m. to note the state will appeal the decision.