The Federal Ninth Circuit Court of Appeals rejected the provider coalition petition to hear an appeal of the January 2013 panel decision that overturned the injunction on the 2011 10% Medi-Cal provider rate reductions. This means that DHCS could implement those reductions and previously indicated their intent to recoup those over-payments retroactive to June 1, 2011.

This week the provider coalition, led by the CMA, filed a request for a stay of the order lifting the injunction and if denied would then also file a request with the U.S. Supreme Court to hear an appeal. DHCS has not announced a timetable for their actions but we would expect that any decision to begin to recoup payments and implement the 10% reduction would take several months to implement. They have told the provider community that they would announce a schedule and plan with notice as to how it would be accomplished.

Meanwhile two bills in the California Legislature that would have attempted to prohibit the retroactive application of the 10% cut have run into problems. SB 640 (Lara) was held in the Senate Appropriations Committee and will not move. AB 900 (Alejo) passed out of the Assembly Appropriations Committee but only after amendments that limited the relief to cuts to hospital distinct part SNFs and no relief to other providers. The Budget Conference Committee is also meeting now to resolve differences in the Assembly and Senate versions of the 2013-14 state budget. To date there has been no inclusion of language to stop the 10% reductions. The Governor has included savings in his version of the budget by the continued application of the 10% reduction and is generally reluctant to embrace any restoration of prior benefit cuts or augmentation to programs. The budget deadline is 6/15 and we would expect decisions by that approximate time. The budget the Legislature sends the Governor might face veto or "blue pencil" actions if the Governor continues to not want to spend any of the current budget surplus.

Yesterday there was a rally by thousands of health care providers, patients and patient advocates urging the Governor and Legislature to eliminate the provider rate reductions.  We will keep you informed on any developments on the legal and legislative front.

DHCS has announced that the pilot program to transition Medi-Cal/Medicare dual eligibles to managed care in 8 counties has been delayed until at least January 1, 2014 and no later than March 1, 2014. The demonstration program now approved by CMS  and called the Coordinated Care Initiative includes the following counties;

Los Angeles

Orange

Riverside

San Bernardino

San Diego

Santa Clara

Alameda

The specific start-up dates were varied by county in the earlier planning and we assume they will be staggered again, e.g. LA county would have transitioned patients into managed care over an 18 month period. We will provide more detail on the new plan when it is announced.