Federal Court Upholds 10% Medi-Cal Provider Cut

The United States Ninth Circuit Court of Appeals upheld the right of California to impose a 10% rate reduction on providers of Medi-Cal services. The long-awaited ruling is the last judicial step, short of the U.S. Supreme Court, for the controversial cut to hospitals, physicians, emergency transport and dentists. Provider groups have said they would likely appeal the rate reduction to the Supreme Court. The federal ruling lifted the injunctions on implementing the reductions. That 10% cut represents about $600 million a year to the California budget. The Legislature, prompted by the governor and a huge budget shortfall, passed the 10% across-the-board reductions in 2011. That move was put on hold until the court case could be resolved. Now, two years later, providers are not only looking at that 10% cut, but also at needing to pay back two years’ worth of retroactive service fees. State officials have said that “clawback” can be paid over four years instead of two, which would mean a 15% rate reduction for Medi-Cal providers for the next four years, and a 10% reduction after that.