CDCAN REPORT #187-2011: Brown Administration will hold off implementing 10% Medi-Cal provider cuts until after federal court hearing

BROWN ADMINISTRATION WILL HOLD OFF IMPLEMENTING 10% MEDI-CAL PROVIDER RATE CUT UNTIL AFTER DECEMBER 19th FEDERAL COURT HEARING ON LAWSUIT SEEKING TO STOP THE REDUCTIONS

Lawsuit Filed by Medicaid Defense Fund On Behalf of Several Medi-Cal Recipients, Disability and Senior Advocacy Organizations and Medi-Cal Providers  - Obama Administration Gave Approval to California's Request for 10% Cuts On October 27th - Reductions Were Part Of 2011-2012 State Budget Passed in March and June - Lawsuit Says Federal Government Violated Federal Law In Approving California's Cuts

SACRAMENTO, CA (CDCAN) [Last updated 11/15/2011 11:00 AM] - The Brown Administration disclosed yesterday that it Photo of Attorney Lynn Carman (by Marty Omoto)will not implement the 10% across-the-board Medi-Cal provider rate reductions as authorized in the 2011-2012 State Budget, until after December 19th federal court hearing in Los Angeles on a lawsuit that is seeking to stop the reductions. That federal district court however could issue an order that could further delay implementation beyond that date - or it could take other action that would allow the cuts to be implemented.

The lawsuit - Managed Care Pharmacy, Independent Living Center of Southern California, et al v. Kathleen Sebelius and Toby Douglas - was filed on November 4, 2011 in the US District Court in Los Angeles by the Medicaid Defense Fund, a small legal advocacy organization headed by 82 year old attorney Lynn Carman [photo left taken in front of the US Supreme Court building on October 3rd by Marty Omoto], to stop the 10% Medi-Cal rate cut,seeking a preliminary injunction [a court order to stop - at least temporarily - the cut from being implemented].  Carman called the delay in implementation a "key win" for people with disabilities and seniors and providers but cautioned that "a long battle" loomed ahead in the courts to permanently stop the reductions.

The lawsuit is asking the court to issue an order that temporarily - and then permanently - stops the State from going forward with the 10% reduction.   The lawsuit covers those providers targeted with a 10% reduction in the 2011-2012 State Budget in the budget related ("trailer bil") legislation AB 97.  That bill was passed by the Legislature and signed into law by Governor Brown on March 24, 2011 - 3 months ahead of the main budget bill which was passed and signed into law in late June.  For a pdf (document) copy of AB 97 (61 pages) as signed into law go to this link: http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0051-0100/ab_97_bill_201...

[CDCAN Note: A copy of the 13 page request (motion) by those filing the lawsuit that the federal district court issues an order to stop - temporarily and then permanently - the 10% Medi-Cal provider rate cut from being implemented, is attached to this report titled: "20111107 - Medi-Cal Provider Rate Reduction (CV11 9211) Motion for Injunction and Temporary Restraining Order.pdf"  Also attached is the 13 page actual lawsuit or complaint, titled "20111103 - Medi-Cal Provider Rate Reduction Lawsuit (CV11 9211 Filed Complaint).pdf"

Both documents were saved as a pdf image - like a picture, which means that people who are blind or sight impaired cannot use a screen reading device to "read" or "view" the document. CDCAN has urged and urges that all government agencies and advocates save their pdf files as pdf documents instead of a pdf image to allow everyone the opportunity to view it- Marty Omoto]

A hearing on the motion is scheduled for December 19, 2011.  Sebelius is the Secretary of the US Health and Human Services Department and Douglas heads the California Department of Health Care Services (See below for the list of all the plaintiffs who filed the suit).

Jennifer Kim, Supervising Deputy Attorney General, in an email sent Monday (November 14) to attorney Lynn Carman of the Medicaid Defense Fund, representing people with disabilities and seniors in the Medi-Cal program and Medi-Cal providers wrote:

Mr. Carman,

This is to confirm our telephone conversation this morning wherein I informed you that the Department [of Health Care Services] will not implement the AB 97 Medi-Cal reimbursement rate reductions until the hearing on December 19, 2011. Therefore there is no need of a TRO [Temporary Restraining Order] at this time, as (your) preliminary injunction hearing is already set for December 19.

Thank you.

/s/

Jennifer M. Kim, Supervising Deputy Attorney General, Los Angeles.

The Department of Health Care Services, the state agency that oversees California's Medicaid (called "Medi-Cal") program has not yet posted the delay in implementation of the 10% reduction.  The Department of Health Care Services recently held a public stakeholder meeting and webinar on November announcing and answering questions

Carman, a longtime and respected disability and senior rights advocate, said in reaction that the decision by the Department of Health Care Services to delay the implementation of the 10% Medi-Cal provider rate cut was a "...key win in the first round of this long [court] battle. We must keep focused on winning the preliminary injunction hearing on December 19, 2011. The State never quits, neither should we...We have to fight back to save health care for the poor as well as the middle class in this country."

He called the reductions to the Medi-Cal program - and also other cuts this past year to many of the other health and human services programs that also required the approval of the Obama Administration, as a "...war declared by the Governor and Obama against poor people's health care..." including people with disabilities, mental health needs, seniors and the blind, and also a "war" against tens of thousands of "...middle class Americans like the thousands of dedicated pharmacists, doctors, and other providers throughout the state, who participate in the Medi-Cal program..."

Carman's Medicaid Defense Fund filed several other lawsuits to block other cuts in previous budget years going back to the 1980's and 1990's - and most recently a 2008 lawsuit (Independent Living Center of Southern California, et al v. Toby Douglas, et al) that went all the way to the US Supreme Court.  That case, combined with two other California Medi-Cal provider lawsuit cases, was heard on October 3, 2011.  A decision by the high court is expected as early as December - or no later than June. That decision, depending on how broad or narrow the ruling is - could have major impact to health and human services for people with disabilities, mental health needs, the blind, low income seniors and low income families across the nation.

What the Lawsuit Says

• The lawsuit claims that the Secretary of the US Department of Health and Human Services under President Obama exceeded her authority when the Centers on Medicare and Medicaid Services (CMS) - an agency under her department - granted approval of California's request for the 10% Medi-Cal rate reduction.
• The suit further claims that the Obama Administration violated Section 1902(a)(30)A of the federal Social Security Act and the federal Administrative Procedures Act by failing to consider whether the California Legislature and the California Department of Health Care Services considered the factors of "...efficiency, economy, quality of services, and equal access..". That section requires that the states must "...assure that payments are consistent with efficiency, economy and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such are and services are available to the general population in the geographic area." [federal regulations - 42 CFR 430 and 447 also deal with providing federal regulatory guidance to the states regarding implementing Section 1902(a)(30)(A).
• The suit also claims that the State failed to consider "...any costs data or determine whether the reduced rates were reasonably related to costs of providers to furnish quality services.  The suit also claims that the Secretary of the US Department of Health and Human Services also failed to consider whether the 10% rate reduction "...was consistent with quality of services and equal access" and that the federal government did not properly analyze whether the reduction were sufficient for providers - especially pharmacies - to provide quality services as required under federal law.
• The lawsuit contends that the 10% Medi-Cal rate reduction would really amount to a 20% rate cut (at least for several months), because 10% is to be taken out of prospective payments to Medi-Cal providers, plus, another 10% from the same reimbursement checks, for the State to also collect - retroactively 10% of all Medi-Cal payments made to the provider since June 1, 2011 (the effective date of the reduction as authorized in the 2011-2012 State Budget and as approved by the Obama Administration in late October).
• The Medicaid Defense Fund and those filing the lawsuit say the impact of the rate reduction - and the retroactive effective date will "...destroy the Medi-Cal program within a couple of weeks, if it is ever implemented, because no business, – let alone providers such as pharmacies who already operate on much less than a 10% net profit margin, – cannot withstand even a 10% cut, let alone a 20%.." reduction.
• The Department of Health Care Services, posted a 5 page "frequently asked questions" document on their website, dated November 10th, that included questions and answers raised at the public stakeholder meeting on the Medi-Cal rate reduction.  On the question of implementation of the reduction, the department responded (prior to the November 14th email to the Medicaid Defense Fund) that "...payment reductions will be applied at the end of the claims adjudication cycle.  The payment reduction will be applied based on the following criteria: billing provider type [and] age of beneficiary."  [CDCAN Note: the age of the Medi-Cal recipient is mentioned by the department because for Medi-Cal doctors and clinics, the 10% rate cut does not apply to children]

Who and What This Impacts

• All "Fee for Service" Medi-Cal providers who were targeted in AB 97 that authorized the 10% reductions to be effective retroactively to June 1, 2011 - after approval by the federal government (AB 97 is the budget related bill passed by the Legislature and approved by Governor Brown in March as part of the 2011-2012 State Budget). Some "fee for service" Medi-Cal providers were exempted by the reductions in AB 97 - and a few others - including Medi-Cal doctor and clinic services for children and Home Health agencies were later exempted by the Department of Health Care Services after an analysis was done regarding how a reduction would impact access to health services.
• Over 2.5 million people in the Medi-Cal "fee for service" program of the over 7.4 million persons in the Medi-Cal program could be impacted by the delay in implementing the 10% reduction.  The Department of Health Care Services reported earlier this month that about 18% of that total in the "fee for service" program are people with disabilities or blind and just under 4% are persons 65 years or older.
• ADULT DAY HEALTH CARE CENTERS:  While the lawsuit DOES impact the 10% provider rate reductions to Adult Day Health Centers, it does not impact the elimination of Adult Day Health Care as a Medi-Cal "optional" benefit - slated to be eliminated effective December 1, 2011.  That issue is the subect of a separate lawsuit (Darling, et al v. Toby Douglas) filed by Disability Rights California and other advocacy groups on behalf of Medi-Cal recipients in the program.  A settlement on that lawsuit is expected to be announced when the case is heard on November 17.
• MEDI-CAL MANAGED CARE: The delay in implementing the 10% Medi-Cal provider rate cuts does not specifically impact Medi-Cal managed health care plans - a separate decision on implementation of rate reductions to Medi-Cal managed health plans by the Department of Health Care Services is expected soon.  The department could however decide to hold implementation of those reductions until after the December 19th court hearing, even though the lawsuit does not include managed care providers.
• REGIONAL CENTERS: The delay in implementing the 10% Medi-Cal provider rate reduction does not effect reductions underway for other providers - such as those funded through the 21 non-profit regional centers under the Department of Developmental Services - where much of the funding is matched by federal funds under a Medicaid home and community-based waiver.  A separate federal lawsuit filed federal district court in Sacramento in early October by the Arc of California and UCP of San Diego, is seeking to stop some of those reductions.
• IHSS: The delay in implementing the 10% Medi-Cal provider cuts does not impact any reductions currently underway now in the In-Home Supportive Services (IHSS) program, nor does it impact the state budget "trigger cut" that if pulled would implemented, effective January 1, 2012, a 20% across the board cut in service hours to all persons in the IHSS program, with certain exemptions and exceptions. The across the board cut would also impact hundreds of thousands of IHSS workers whose hours would be similarly reduced, that could also threaten health care benefits. A separate lawsuit is expected to be filed by several advocacy groups on behalf of the IHSS recipients in December if the state budget "trigger cut" is pulled.

Who Filed the Medi-Cal 10% Reduction Lawsuit

• Mark Beckwith, person with disabilities and Medi-Cal recipient living in Berkeley
• Independent Living Center of Southern California
• California Foundation for Independent Living Centers
• Managed Pharmacy Care
• Uptown Pharmacy (Los Angeles)
• Tran Pharmacy (Garden Grove)
• Kovacs-Frey Pharmacy (Redondo Beach)
• Market Pharmacy

The California Korean American Pharmacists Assn., and the Vietnamese American Pharmacy Assn., are also strongly supporting this important lawsuit. [Note: CDCAN also strongly supports this and the other lawsuits filed by the Medicaid Defense Fund over the years]

Lynn Carman, the attorney for the Medicaid Defense Fund said that the lawsuit is not being supported by the California Pharmacists Association - a provider organization of pharmacies.  He indicated that the California Pharmacists Association is not part of the Medicaid Defense Fund.

Attorney Contact Information
Lynn S. Carman, Chief Counsel
Medicaid Defense Fund
November 14, 2011
415-927-4023
Email: lynnscarman@hotmail.com

Federal Government Approved State's Request for Medi-Cal Provider Rate Cuts Retroactive to June 1st

• On October 27th, the Department of Health Care Services announced that the Obama Administration gave approval to the State's request for Medi-Cal provider rate reductions that will total  over $623 million in State general funds by June 30, 2012.  Some providers were previously exempted in the 2011-2012 State Budget as passed in March and late June.
• Some providers who were originally authorized for reductions in the 2011-2012 State Budget such as Home Health agencies, and Physicians and Clinics that serve children - will not see an additional reduction because the Department of Health Care Services has determined - from its own analysis, that such a cut would impact access to their services.
• The Department of Health Care Services held a brief public conference call October 27th at 4:30 PM to announce the approval of the State's requested Medi-Cal provider reductions, but could not take any questions due to the size of the audience that reportedly numbered over 500 people across the State. A public stakeholder meeting to answer questions and to also provide an overview of the reductions was held November 2nd  by the Department of Health Care Services in Sacramento (and also via the internet through a webinar."

CDCAN LINKS TO MEDI-CAL BUDGET RELATED DOCUMENTS

The following are latest links (as of November 15th) on the Department of Health Care Services website to the documents that the department released earlier this month (and also last week) dealing with the Medi-Cal provider rate reductions - and also other reductions that the federal government still has not yet given approval with some comments by CDCAN.

MEDI-CAL PROVIDER RATE REDUCTIONS FREQUENTLY ASKED QUESTIONS

CDCAN Note: The Department of Health Care Services issued on November 10th, a 5 page document of "frequently asked questions" from questions asked at the November 2nd public stakeholder meeting (and also questions submitted before, during and after that meeting to the department via email).  This document was posted on the department website before the State notified the Medicaid Defense Fund that it would be delaying implementation of the 10% reduction under AB 97 until after the December 19th court hearing.
* Medi-Cal Rate Reduction - Frequently Asked Questions - 5 pages:  http://www.dhcs.ca.gov/Documents/Rate%20Reductions/RateReductionFAQs.pdf
POTENTIAL IMPORTANCE OF THIS DOCUMENT: VERY HIGH

MEDI-CAL MANAGED CARE CAPITATION RATES

CDCAN Note: The following is webpage that provides update by the department on the rates for Medi-Cal managed care plans.  The proposed rate is not final since the federal government has not yet given approval. rate reductions to managed care plans.  The rate reductions to managed care plans are being implemented differently than the Medi-Cal "fee-for-service" providers because of the differences on how the two programs operate.    .      
* Medi-Cal Managed Care Capitation Rates:  http://www.dhcs.ca.gov/Pages/2011-12ManagedCareCapitationRates.aspx
POTENTIAL IMPORTANCE OF THIS DOCUMENT: VERY HIGH

AUDIO RECORDING (WITH PRESENTATION SLIDES) OF NOVEMBER 2ND PUBLIC STAKEHOLDER MEETING AND WEBINAR

CDCAN Note: this is a audio recording (includes presentation slides used by Director Toby Douglas during the meeting) of the November 2nd public stakeholder meeting held at the Department of Health Care Services auditorium - and also streamed live on the internet via the "webinar" .You will be prompted to type in an email address in order to listen and view the recording.
* Audio Recording/Presentation Slides of November 2nd Meeting on Rate Reductions: https://www1.gotomeeting.com/register/893997072
POTENTIAL IMPORTANCE OF THIS DOCUMENT: VERY HIGH

PRESENTATION BY TOBY DOUGLAS, DIRECTOR OF DEPARTMENT OF HEALTH CARE SERVICES

CDCAN Note:  This is the 28 page presentation of slides by Toby Douglas, director of the Department of Health Care Services that he gave during the November 2nd public stakeholder meeting (and "webinar").  It is a very good overview of the process used by the department and summary of the reductions.
* Presentation by Director Toby Douglas (November  2,2011):  http://www.dhcs.ca.gov/Documents/Rate%20Reductions/Rate%20Reduction%20St...
POTENTIAL IMPORTANCE OF THIS DOCUMENT: VERY HIGH

RATE REDUCTION ANALYSIS

CDCAN Note: The following are several documents with the department's analysis on the impact of a rate reduction to access for that service. These documents can be very useful in helping to understand how the Department of Health Care Services determined the impact of a certain reduction - and the impact to access to that service - and whether or not the data and analysis is accurate.
This is the first time that the Department of Health Care Services has conducted such a formal - and public - analysis (they officials have previously claimed they had done so before internally), driven in large part by previous federal court rulings that blocked previous Medi-Cal reductions because this step was not done.

• Medi-Cal Access Analysis (6 services) - 12 pages :  http://ww2.dhcs.ca.gov/Documents/Rate%20Reductions/Medi-Cal%20Access%20A...
• Long Term Care Access Analysis - Skilled Nursing and Subacute Services (16 pages): http://ww2.dhcs.ca.gov/Documents/Rate%20Reductions/LTC%20Access%20Analys...
• Physician Clinic Medi-Cal Access Analysis (84 page report): http://ww2.dhcs.ca.gov/Documents/Rate%20Reductions/Physician%20Clinic%20...
• Hospital Inpatient and Outpatient Medi-Cal Access Analysis (7 pages): http://ww2.dhcs.ca.gov/Documents/Rate%20Reductions/Hospital%20Inpatient%...
• Pharmacy Medi-Cal Access Analysis (2 pages): http://ww2.dhcs.ca.gov/Documents/Rate%20Reductions/Pharmacy%20Medi-Cal%2...
• Adult Day Health Care Medi-Cal Access Analysis (7 pages): http://ww2.dhcs.ca.gov/Documents/Rate%20Reductions/ADHC%20Medi-Cal%20Acc...

POTENTIAL IMPORTANCE OF THESE DOCUMENTS:  VERY HIGH

MONITORING PLAN

CDCAN Note: The following document deals with the department's plan to monitor the outcomes resulting from implementation of the various rate reductions and its impact to access to those services by the people who need them.  Presumably other policy changes in Medi-Cal, such as elimination of Adult Day Health Care, imposing caps on certain services, implementation of co-payments (some of these changes are still waiting for federal approval) will also be part of the monitoring plan.

This plan - which the Department of Health Care Services says is "groundbreaking" could be a useful tool - depending on how it is applied and depending on how it is received and used in actual policymaking and advocacy.

Never before has there been a formal process or plan by state government to actually review the impact of a major policy change or a major budget reduction. California Health and Human Services Secretary Diana Dooley earlier this year expressed a strong concern and interest in monitoring outcomes - especially those impacted by budget cuts and policy changes.

* CA - Developing A Healthcare Access Monitoring System (82 page report): http://ww2.dhcs.ca.gov/Documents/Rate%20Reductions/Developing%20a%20Heal...
POTENTIAL IMPORTANCE OF THIS DOCUMENT:  VERY HIGH

APPROVAL LETTERS FROM FEDERAL GOVERNMENT & ACTUAL STATE PLAN AMENDMENTS (TO CALIFORNIA'S MEDICAID STATE PLAN)

CDCAN Note: these are formal - usually 1 page - letters to the Department of Health Care Services from the Centers on Medicare and Medicaid Services - the federal agency under the Obama Administration that oversees nationally those two programs, notifying the State of approval (or rejection or delay) of a change in the State's Medicaid State Plan (called a "State Plan Amendment" or SPA).  Similar letters are also used to notify the State when a proposed waiver or program is submitted for approval. The letters don't provide much information other than the approval notice (or rejection or other concern) and if approved, the effective dates.  Attachments to the letters are not provided on the department's website.

• Approval  Letter (Non-institutional providers rate reduction) - CA SPA 11-009 (2 pages): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/SPA%...
• Companion Letter from Federal Government to CA SPA 11-009 (4 pages): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/SPA%... [CDCAN Note: this letter contains among other things certain issues that the State is not in compliance with certain federal regulations]
• Approval Letter for Nursing Facilities Level A and Distinct Part Nursing Facilities Level B rate reduction - CA SPA 11-010) (2 pages): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/SPA%...
• Approval Letter for freestanding skilled nursing facilities level-B and freestanding subacute skilled nursing facilities level-B rate reductions - CA SPA 11-011 (2 pages): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/SPA%...
• Approval Letter for freestanding skilled nursing facilities level-B and freestanding subacute skilled nursing facilities level-B regarding freezing rates (2 pages): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/Fede...
• Approval Letter for freestanding skilled nursing facilities level-B and freestanding subacute skilled nursing facilities level-B changes to rate methodology, lifting of rate freeze and approval of rate increases (1 page): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/Fede...
• Approval Letter for rate reduction for prescription drugs (1 page): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/Fede...

POTENTIAL IMPORTANCE OF THESE DOCUMENTS:  HIGH

TRANSMITTAL NOTICES

CDCAN Note: The following are transmittal notices (forms) that are used by the states as a cover sheet for proposed changes to a state plan.  The attachments referred to in the transmittal notices by the Department of Health Care Services are not currently available on the department's website - only the 1 page notice (cover sheet) and by itself, is not very useful.  .
* Transmittal Notice - CA SPA 11-009 (1 page): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/Fede...
POTENTIAL IMPORTANCE OF THESE DOCUMENTS:  LOW - UNLESS ATTACHMENTS ARE ALSO AVAILABLE

MEDI-CAL PROVIDER RATE REDUCTION CHART

CDCAN Note: This is a four page spread sheet type document that summarizes the various rate cuts to Medi-Cal providers and the current status of those reductions.  The information from his chart is used in the CDCAN summary above.
* Medi-Cal Provider Rate Reduction Chart (as of October 27, 2011) (4 pages): http://ww2.dhcs.ca.gov/Documents/DHCS%20Budget%20Actions/SPA%20docs/Prov...
POTENTIAL IMPORTANCE OF THIS DOCUMENT:  HIGH

DEPARTMENT OF HEALTH CARE SERVICES NEWS RELEASE ON MEDI-CAL PROVIDER CUTS

CDCAN Note: This is a 2 page news release from the Department of Health Care Services that was released late Thursday afternoon (October 27, 2011).  The information in the release was the same as the information provided during the public conference call hosted by the Department of Health Care Services at 4:30 PM that same day.
* News Release by Department of Health Care Services on Medi-Cal Provider Cuts (2 pages): http://ww2.dhcs.ca.gov/formsandpubs/publications/opa/Documents/11-06%20S...
 POTENTIAL IMPORTANCE OF THIS DOCUMENT:  HIGH

File Attachments: 

2011-11-03 - US DC CACD - Managed Pharmacy Care and ILC of Southern CA v. Sebellius and Douglas - Medi-Cal Provider Rate Reduction Lawsuit.pdf

2011-11-07 - US DC CACD - Managed Pharmacy Care and ILC of Southern CA v. Sebellius and Douglas - Motion for Injunction and Temporary Restraining Order.pdf