SCOTUS to Hear Case Involving Governor’s Proposal to Cut Payments for Providers to California’s Medicaid Patients

The U.S. Supreme Court will decide if doctors, hospitals, pharmacies and others who provide services to California Medi-Cal recipients can have their payments cut by the state. Medi-Cal, the state’s Medicaid program, is being targeted by Gov. Jerry Brown for 10 percent cuts in reimbursements. Previous attempts to close the $25B state deficit from health welfare and education programs have hit roadblocks with lower federal courts denying the action. About 7M Californians receive their health care through Medi-Cal and about 57 percent of the state’s doctors participate in the program. Make no doubt about it, this case has implications in the wake of a symbolic rejection of President Obama’s signature domestic initiative by the GOP-led House today; since Medicaid funding is generated, in part, by federal dollars — a high profile decision on this case will only add fuel to fire to either side on just how far federal spending should go for states facing similar budget deficit emergencies.

The nation’s highest court must determine if the Medicaid Act gives the federal government unfettered freedom in setting payment rates for providers. Previously, the Ninth Circuit said California’s proposed changes were were trumped by federal law. California says that it has a role in deciding the breadth of cuts in spending on its Medicaid program. Patient advocacy groups and providers, unsurprisingly, are on the sides of the lower courts, concerned that healthcare access for California’s uninsured and working poor will plummet in the wake of the alternative ruling by the U.S. Supreme Court. Can private entities and citizens — unhappy with the level of spending on partially state-funded programs — sue the state to hold on to a current reimbursement structure against the backdrop of state-mandated cuts?