The First Appellate District reversed a judgment and remanded. The court held that federal law barred the Department of Health Services from modifying MediCal reimbursement rates without considering efficiency, economy, quality, and access to care.
In September 1995, the Department of Health Care Services submitted a state plan amendment to the Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for California’s Medi-Cal program. The amendment set forth a revised reimbursement methodology. The plan amendment reduced the reimbursement rate for hospitals operating distinct part nursing facilities (DP/NF’s) by excluding, from the median calculation, those participating providers whose Medi-Cal patient days accounted for less than 20 percent of their total patient days. Although CMS notified the department that it would not approve the amendment, the department allegedly nonetheless issued an emergency regulation which incorporated the unapproved methodology.
