California doctors sue to block Medicaid cuts

Physicians say the reductions violate laws requiring reimbursement to be sufficient to maintain a big enough pool of doctors to treat program patients.

By Amy Lynn Sorrel, AMNews staff. June 9, 2008.

California doctors have sued the state to stop an across-the-board Medicaid payment cut of 10% that they say further would damage patients' access to care.

The California Medical Assn. led a coalition of physicians, hospitals and other health care groups in a class-action lawsuit filed May 5 to block the payment reductions, which total $600 million. The decreases, authorized by Gov. Arnold Schwarzenegger and the Legislature in February, are scheduled to take effect July 1.

Doctors worry that the problem will be compounded if the state adopts the governor's revised fiscal 2008-09 budget proposal, which would cut $3.4 billion from California Health & Human Services Agency programs. This figure includes the already approved physician cuts. The new plan would reduce eligibility for Medi-Cal, the state's Medicaid program, to 61% of the federal poverty level for two-parent households and would pare services.

State officials say the move is part of an across-the-board effort to plug a projected $17 billion budget shortfall, avoid tax hikes and establish a rainy-day fund to avoid future crises.

But in their lawsuit, doctors say the planned rate decreases violate state and federal laws requiring that Medicaid payments be adequate to enlist enough doctors and other health care professionals to ensure the availability of basic services promised under the program.

In addition, the Dept. of Health Care Services has failed for the last 15 years to audit Medi-Cal annually to make sure it meets the mandated access-to-care criteria, states the complaint, filed in Los Angeles County Superior Court. During that time, doctors saw payments increase just once, in 2001.