The U.S. Court of Appeals for the 9th Circuit ruled today that California can cut rates to doctors, pharmacists and other providers for serving Medi-Cal patients, overturning a lower court decision that blocked a state budget cut from last year.
A three-judge appeals court panel determined that U.S. Health and Human Services Secretary Kathleen Sebelius has authority to determine whether California and other states can cut Medicaid rates -- the federal program of which Medi-Cal is part -- and still comply with the program's rules.
"The Medicaid program is a colossal undertaking, jointly funded by the federal government and the States," the 9th Circuit panel wrote. "Congress explicitly granted the Secretary authority to determine whether a State's Medicaid plan complies with federal law."
Sebelius approved California's cuts in October 2011, but U.S. District Court Judge Christina A. Snyder blocked them in December of last year. At the time, the cuts were expected to save $623 million annually.
California appealed the decision, and the 9th Circuit ruled in the state's favor today. It remains to be seen whether California will follow through with a 10 percent reduction to provider rates, and when that might occur.
Lynn S. Carman, who represents pharmacists as chief counsel for the Medicaid Defense Fund, said plaintiffs plan to ask the court for en banc review, meaning the full 9th Circuit bench would reconsider today's decision. If that is denied or the review does not block the rate cuts, Carman said his side would ask the U.S. Supreme Court to consider the case.