Medicaid Payment Rate Lawsuits: Evolving Court Views Mean Uncertain Future for Medi-Cal

Sara Rosenbaum, JD, The George Washington University

This issue brief explores the evolution of Medicaid provider payment-rate lawsuits and the lessons they provide for the future of Medi-Cal rate setting, as well as their implications for the direction of equal access litigation.

October 2009

Between April 2008 and April 2009, five lawsuits were filed against the state of California to stop scheduled reductions in Medi-Cal provider payment rates (to rehabilitation providers, nonemergency medical transportation providers, pharmacies, physicians, and emergency physicians). All the lawsuits shared a common legal theory: that the Medi-Cal rate cuts violated the federal Medicaid "equal access" statute, which requires that Medicaid provider payments "be sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area."

This issue brief explores the evolution of Medicaid lawsuits, both in California and nationally. Its primary focus is on the Medi-Cal equal access cases, which have proved to be important not only in California but also in their influence on decisions in other jurisdictions.

This brief discusses these cases and developments, and their implications, in four sections:

  • An overview of federal Medicaid law as it relates to provider payments, with a special focus on the equal access statute and the role of state law in Medicaid payment cases
  • An examination of mechanisms for enforcing state agency obligations under federal Medicaid law, including enforcement by the US Department of Health and Human Services (HHS) and court actions by private litigants, including providers and beneficiaries
  • A summary of the principal Medi-Cal provider payment equal access cases that have resulted in federal judicial decisions since 1990
  • A discussion of the implications of these cases for health care access, quality, and efficiency

The complete issue brief is available under Document Downloads.