California Landmark Cases Addressing Medicaid

Federal Medicaid Program: Medicaid is a cooperative federal-state program through which the federal government provides financial assistance to states so that they may furnish medical care to needy individuals. (42 U.S.C. 1396; Wilder v. Virginia Hospital Assn. (1990) 496 U.S. 498, 502; Mission Hospital Regional Medical Center v. Shewry (2008) 168 Cal.App.4th 460, 469 (Mission Hospital).) Although state participation is voluntary, if a state chooses to participate, it must prepare and submit a plan for approval to the federal government, describing its Medicaid program. (Wilder v. Virginia Hospital Assn., supra, at p. 502; Mission Hospital, supra, at p. 469; 42 C.F.R. 430.10 (2009).) "The Centers for Medicare and Medicaid Services (CMS), formerly known as the Health Care Financing Administration, is the federal agency responsible for Medicaid." (Mission Hospital, supra, 168 Cal.App.4th at p. 470, fn. 1.) Participating states are required to include in their plans reimbursement methods and standards for the medical services provided. (42 C.F.R. 447.252(b) (2009); Mission Hospital, supra, 168 Cal.App.4th at p. 470.) The Medicaid Act provides detailed requirements for state plans. (See 42 U.S.C. 1396a(a)(1)-(71).) Subsection (a)(30)(A) of section 1396a of title 42 of the United States Code (section 30(A)), "imposes both procedural and substantive requirements on states when they set reimbursement rates for hospital services provided to Medicaid beneficiaries. Designed to guarantee beneficiaries both high quality of care and equal access to care, section (30)(A) requires the state plan to provide 'such methods and procedures' relating to payment for services under the state plan as may be necessary 'to assure that payments are consistent with efficiency, economy, and quality of care and are 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 ... .' ( (30)(A).)" (Mission Hospital, supra, at p. 473.) Consequently, "any analysis of reimbursement rates on the statutory factors of efficiency, economy, quality, and access to care, must have the potential to influence the rate-setting process." (California Pharmacists Assn. v. Maxwell-Jolly (9th Cir. 2010) 596 F.3d 1098, 1109 (California Pharmacists), citing Independent Living Center of Southern California v. Maxwell-Jolly (9th Cir. 2009) 572 F.3d 644, 652, fn. 9 (Independent Living); see also Orthopaedic Hospital v. Belshe (9th Cir. 1997) 103 F.3d 1491, 1499 (Orthopaedic Hospital); Mission Hospital, supra, 168 Cal.App.4th at pp. 473-474.) Additionally, "it is not justifiable ... to reimburse providers substantially less than their costs for purely budgetary reasons. " (Orthopaedic Hospital, supra, 103 F.3d at p. 1499, fn. 3.)