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Medi-Cal and Provider Payments: Litigation Update

Medi-Cal and Provider Payments: Litigation Update. California Association of Health Plans 2010 Seminar Series Health Plans & Our Legal Obligations Michael J. Daponde March 23, 2010. Litigation involving the Department of Health Care Services.

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Medi-Cal and Provider Payments: Litigation Update

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  1. Medi-Cal and Provider Payments: Litigation Update California Association of Health Plans 2010 Seminar Series Health Plans & Our Legal Obligations Michael J. Daponde March 23, 2010

  2. Litigation involving the Department of Health Care Services During the two year period from January 2008 through January 2010 – state court litigation • “Maxwell-Jolly” named in 44 lawsuits in Los Angeles Superior Court • “Shewry” named in 44 lawsuits in Los Angeles Superior Court • “Maxwell-Jolly” named in 14 lawsuits in Sacramento Superior Court • “Shewry” named in 25 lawsuits in Sacramento Superior Court • Does not include cases where Director is not named • Does not include counties other than these two • Does not include federal court

  3. Medi-Cal Litigation 1. Statutory Rate Reduction cases 2. Hospital Rate cases 3. Rate Freeze cases 4. Other Budget Cut cases

  4. Medi-Cal Litigation State Budget Cuts

  5. Statutory Rate Reduction cases Common theme: State Legislature imposed provider rate reductions in violation of federal law – i.e., provisions of Medicaid Act

  6. Statutory Rate Reduction cases Basic argument: • The Supremacy Clause allows federal law to trump state law. • Article VI, section 2 of the United States Constitution makes “the Laws of the United States ... the supreme Law of the Land ...” • Federal Medicaid law requires states to set provider payments in a manner that takes into account “quality of care” and “equal access.” • 42 U.S.C. section 1396a(a)(30)(A) requires DHCS “to 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 care and services are available to the general population in the geographic area ...”

  7. Statutory Rate Reduction cases Basic argument (cont.): • Ninth Circuit Court of Appeals has interpreted section 30(A) to mean that the state must rely on a reasoned analysis or study before cutting provider rates. • Orthopaedic Hospital v. Belshe, 103 F.3d 1491 (9th Cir. 1997) requires “responsible cost studies ... that provide reliable data as a basis for [DHCS’s] rate setting ...” • “Rate Reduction” statute at issue did not rely on any analyses or studies and imposed across-the-board rate reductions solely in an attempt to balance the state budget. • E.g., AB 5 (2008), AB 1183 (2008), AB X4 5 (2009)

  8. Statutory Rate Reduction cases • Independent Living Center v. Shewry • Central District of California, Case No. 2:08-cv-03315-CAS-MAN (Filed 5/19/08) • Related cases: 2:08-cv-07045-CAS-MAN, 2:08-cv-07046-CAS-MAN, 2:08-cv-03363-CAS-MAN, 2:08-cv-00382-CAS-MAN, 2:08-cv-08642-CAS-MAN, 2:08-cv-00722-CAS-MAN, 2:08-cv-03694-CAS-MAN, 2:08-cv-07097-CAS-MAN • Ninth Circuit Court of Appeals, Case Nos. 08-56061, 08-56422, 08-56551, 08-56554, 08-56751, 08-57016

  9. Statutory Rate Reduction cases California Medical Ass’n v. Shewry (5/5/08), BC390126 (L.A.), 2:08-cv-03363 (Central) California Ass’n for Health Svcs. At Home v. Shewry (10/24/08), 2:08-cv-07045 (Central) California Medical Transportation Ass’n v. Shewry (10/24/08), 2:08-cv-07046 (Central) Santa Rosa Memorial Hospital v. Maxwell Jolly (11/14/08), 3:08-cv-05173 (Northern) California Pharmacists Association, et al. v. Maxwell-Jolly (1/29/09), 2:09-cv-00722 (Central) Managed Pharmacy Care, et al. v. Maxwell-Jolly (1/16/09), 2:09-cv-00382 (Central) Dominguez, et al. v. Schwarzenegger (5/26/09), 4:09-cv-02306 (Northern) Nat’l Ass’n of Chain Drug Stores v. Schwarzenegger (9/30/09), 2:09-cv-07097 (Central) AIDS Healthcare Foundation v. Maxwell-Jolly (11/9/09), 2:09-cv-08199 (Central) California Hospital Ass’n v. Maxwell-Jolly (11/24/09), 2:09-cv-08642 (Central)

  10. Hospital Rate cases • Antelope Valley Healthcare District v. DHCS, Los Angeles Superior Court, Case No. BS110801 • Non-contract hospital rate • Molina Healthcare of California Partner Plan v. Shewry, Sacramento Superior Court, Case No. 34-2008-80000111 • Non-contract hospital rate/Rogers Amendment • California Hospital Ass’n v. DHCS, Central District Case No. 2:09-cv-03694-CAS-MAN • Non-contract hospital rate/Rogers Amendment • CAHP intervened in case

  11. Rate Freeze cases • Mission Hospital Regional Medical Center v. Shewry • 2004-05 hospital rate freeze • Health Net of California, Inc. v. Department of Health Services • 2001-02 managed care rate freeze • Budget Adjustment Factor cases • 2003-04, 2004-05, 2005-06, 2006-07

  12. Other Budget Cut cases • Brantley/Cota v. Maxwell-Jolly (8/18/09),Northern District Case No. 4:09-cv-03798-SBA • V.L., et al. v. Wagner (10/5/09),Northern District Case No. 4:09-cv-04668-CW

  13. What does this mean for Medi-Cal Managed Care Plans?

  14. Contact information: Michael J. DapondeWilke, Fleury, Hoffelt, Gould, & Birney, LLP400 Capitol Mall, 22nd FloorSacramento, CA 95814 (916) 329-1705mdaponde@wilkefleury.com

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