US appeals court finds federal government wrongly allowed California to cut Medicaid reimbursement

A three-judge panel of the U.S. 9th Circuit Court of Appeals on Monday reversed a district court's decision and ruled the federal government illegally approved a state request to temporarily implement a 10 percent reimbursement cut for outpatient services provided to California Medicaid beneficiaries, according to a Los Angeles Times report.

The panel said the federal government's approval violated federal law "and was arbitrary and capricious."

The federal government "erred in approving the state plan amendment [retroactively implementing the reimbursement cut] ... without requiring any evidence regarding 'the extent that such care and services are available to the general population in the geographic area,'" the court opinion states.

California initially implemented the Medicaid cut to hospitals during the recession, from July 2008 through February 2009, according to the report.

The panel said it remanded the case for further consideration. But California and the federal government will have to reimburse hospitals in the state hundreds of millions of dollars if the appeals court decision stands, Robert Leventhal, who represented more than 50 California hospitals in the challenge, told the Los Angeles Times.

When contacted by the Los Angeles Times, Jeffrey Eric Sandberg, who represented the U.S. Department of Justice, pointed questions to the department's public information office. A representative from the department did not immediately respond to the publication's request for comment.

Moving forward, the federal government has multiple options. These include calling on the appeals court to reconsider the decision, requesting a larger panel of the U.S. 9th Circuit Court of Appeals to review the case or appealing to the the nation's highest federal court, according to the report.


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