The New York Times by Robert Pear –
February 25, 2013:
The Obama administration said Monday that states could cut Medicaid payments to many doctors and other health care providers to hold down costs in the program, which insures 60 million low-income people and will soon cover many more under the new health care law.
The administration’s position, set forth in a federal appeals court in California, has broad national implications as it comes as the White House is trying to persuade states to expand Medicaid as part of the new law.
The statement of federal policy infuriated health care providers and advocates for low-income people. But it may encourage wavering Republican governors to go along with the expansion because it gives them a tool to help control costs.
Byron J. Gross, a lawyer at the National Health Law Program, an advocacy group for low-income people, said: “The federal government is trying to bend over backward to show flexibility and accommodate states as much as it can. California is an example of that.”
In a brief filed with the United States Court of Appeals for the Ninth Circuit, in San Francisco, federal officials defended a decision by California to cut Medicaid payments to many providers by 10 percent.
Kathleen Sebelius, the secretary of health and human services, approved the cuts in October 2011 after finding that beneficiaries would still have“adequate access” to the wide range of services covered by Medicaid.
The Obama administration urged judges to uphold those cuts, which are being challenged by patients, doctors, dentists, hospitals, pharmacists and other health care providers in California.
AARP, the lobby for older Americans, joined the health law advocacy group and more than a dozen consumer groups in opposing the cuts, which they said would reduce access to care for millions of current and future beneficiaries.
In an interview, Gov. Jerry Brown of California, a Democrat, said the Medicaid cuts were essential to his efforts to dig the state out of a budget hole.
“California has a great record of providing more benefits, expanding to more people, doing more of everything,” said Mr. Brown, who was here for the winter meeting of the National Governors Association. “But I believe in balancing our budget, living within our means.”
“We like the president’s commitment to extend health care to as many Americans as possible, and we can be powerful partners,” Mr. Brown said.“But we need more authority than we now have. I want to emphasize that —more authority than we have now to manage the Affordable Care Act and the expansion of Medicaid.”
Medicaid is one of the fastest-growing items in state budgets. Cutting payment rates saves money for states and for the federal government, which will pay most of the costs for people who become eligible for Medicaid under the new law.
Health care providers said California’s payment rates were inadequate even before the cuts. They pointed to a federal study that said,“California stands out because of its very low Medicaid payment levels.”
In an interview, Dr. Paul R. Phinney, president of the California Medical Association, a plaintiff in one of the court cases, said: “Two-thirds of doctors in California cannot afford to participate in Medicaid because the rates are so low. The problem will only get worse if rates are cut as we move more and more people into Medicaid.”
The cuts were supposed to take effect in 2011 but have been held up, pending the outcome of litigation.
Health care providers said California was cutting Medicaid payment rates for“purely budgetary reasons.”
In court papers, the Obama administration said, “It is entirely appropriate for a state to review its Medicaid plan to determine whether it can continue to satisfy its statutory obligations at lower payment rates.”Indeed, the administration said, states should conduct such reviews “to avoid the perpetuation of payment rates that are unnecessarily high.”
Federal law says Medicaid rates must be “sufficient to enlist enough providers” so that Medicaid beneficiaries have access to care at least to the same extent as the general population in the same geographic area.
The Obama administration said California officials had agreed to monitor beneficiaries’ access to care and to “take prompt action if any problems are indicated.”
Moreover, the administration said, Congress gave states “wide discretion”to set Medicaid rates, and courts should not second-guess decisions by Secretary Sebelius on the adequacy of rates.
“There is no general mandate under Medicaid to reimburse providers for all or substantially all of their costs,” the administration said.