California hospitals could get back millions in Medicaid payments

An appeals court has sided with hospitals in California by ruling the federal government wrongly approved a 10 percent payment cut for outpatient services in Medi-Cal, the state’s Medicaid program, for an eight-month period beginning in July 2008.

According to the San Francisco Chronicle, the eight-month reduction was approved retroactively by the Obama administration at CMS in 2011, after California lowered all Medi-Cal payments by 10 percent that year to balance its budget. Judges on the Ninth U.S. Circuit Court of Appeals in San Francisco rejected that approval, saying CMS had reached an “arbitrary conclusion” about the adequacy of the rates and “failed to include any consideration regarding Medi-Cal beneficiaries’ access to care relative to the general population.”

Unless the state can come up with a new justification for the cuts, then California will have to pay back hundreds of millions of dollars to hospitals that saw their payments reduced in 2008-09.

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