Health care providers file suit to block Medi-Cal cut

A broad coalition of health care providers filed a lawsuit Monday to prevent a planned 10 percent cut in Medi-Cal payments from taking effect July 1.

In February, the state legislature approved and Gov. Arnold Schwarzenegger signed into law a total of $1.3 billion in cuts to the Medi-Cal program as they began to grapple with the rising state budget deficit. The provider cut is scheduled to take effect July 1 and save more than $500 million a year.

The lawsuit, filed in Los Angeles County Superior Court, alleges the cut violates state and federal laws that require Medi-Cal payments be sufficient to attract enough providers to make services as accessible to the poor as the general public.

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The suit also alleges the violations will have ramifications for all Californians -- the state will lose more than $500 million in federal matching funds, employers and privately insured residents will pay more for health insurance, counties will lose revenue and there will be longer lines in emergency rooms.

The lawsuit seeks an injunction to stop cut in funding.

"(The cut) would threaten the already fragile Medi-Cal system," said Craig Cannizzo, an attorney in the San Francisco office of Hooper, Lundy & Bookman, the law firm that filed the lawsuit.

Coalition members include the California Medical Association, California Hospital Association, California Dental Association, California Association for Adult Day Services, the California chapter of the American College of Emergency Physicians, California Pharmacists Association and the California Association of Public Hospitals and Health Systems.

California already pays Medi-Cal providers the lowest of any state, coalition members said in an audio press conference Monday. If the cut goes through, many will simply drop participation in the government health care program for the poor -- and access to services is already bad, they say.

"I get patients coming 100 miles with broken bones," said Dev GnanaDev, president-elect of the California Medical Association. Doctors now get $49.95 per office visit; hospitals get paid $400 for emergency room visits -- half the amount the hospitals charge, he said.

"If the state cuts any further, more providers will be gone," GnanaDev said.

This isn't the first time providers have sued over proposed Medi-Cal provider cuts. A suit was filed 3 1/2 years ago to block a proposed 5 percent cut. The court granted an injunction, saying that the program could not survive a cut in service, Cannizzo said.

The governor bemoaned the lack of a broader fix.

"The governor fully understands the devastating impact of these cuts," his press office said. "That's why he continues to push for comprehensive health care reform and structural budget reform. Together, these reforms will bring stability to the Medi-Cal budget and make sure the state never has to make this kind of drastic cuts again."