Obama Administration Files Brief in Support of Medi-Cal Provider Cuts

In a move that is expected to have repercussions across the country, the Obama Administration on Monday filed a brief in the Ninth Circuit Court in support of Gov. Jerry Brown’s proposed 10 percent payment cuts to Medi-Cal providers.

Some background: The provider cuts were approved by CMS back in 2011, but then immediately challenged by the California Medical Association (and others) in federal court. A federal judge blocked the cuts. The state of California appealed to the Ninth Circuit. A three-judge panel approved the cuts. The CMA asked for an en banc review by all of the judges.

And that’s where we are today, with the Obama Administration’s brief.

The timing is interesting, as it comes when the National Governors Association is meeting in Washington, and the Obama Administration is trying to convince states to implement the Medicaid expansion portion of the health care overhaul. As the New York Times reports, the Administration seems to be in support of giving states flexibility:

In court papers, the Obama administration said, “It is entirely appropriate for a state to review its Medicaid plan to determine whether it can continue to satisfy its statutory obligations at lower payment rates.” Indeed, the administration said, states should conduct such reviews “to avoid the perpetuation of payment rates that are unnecessarily high.” …

Moreover, the administration said, Congress gave states “wide discretion” to set Medicaid rates, and courts should not second-guess decisions by Secretary Sebelius on the adequacy of rates.

Meanwhile, advocates for the poor — as well as health care providers — were “infuriated,” says the Times:

But it may encourage wavering Republican governors to go along with the [Medicaid] expansion because it gives them a tool to help control costs.

Byron J. Gross, a lawyer at the National Health Law Program, an advocacy group for low-income people, said: “The federal government is trying to bend over backward to show flexibility and accommodate states as much as it can. California is an example of that.”

Gov. Brown insists that the provider cuts are a necessary part of restoring California’s budgetary health. He has also expressed concern about the unknown costs associated with the health bill’s expansion of Medicaid and declared the state must move “cautiously.”

“We like the president’s commitment to extend health care to as many Americans as possible, and we can be powerful partners,” Gov. Brown told the Times. “But we need more authority than we now have. I want to emphasize that — more authority than we have now to manage the Affordable Care Act and the expansion of Medicaid.”

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