Hooper, Lundy & Bookman (HLB; Los Angeles) said it has filed a complaint against the State of California on behalf of a coalition of major healthcare provider organizations seeking to halt implementation of Medi-Cal reimbursement cuts enacted as part of the 2008-2009 budget and slated to go into effect March 1.

"Once again, the state has attempted to move forward with dangerous cuts to providers who serve our most vulnerable population," said Plaintiff Attorney Craig Cannizzo of HLB. "And once again the state has attempted to implement these cuts in violation of federal and state laws that demand that the state ensure first and foremost that Medi-Cal patients will not be harmed and that providers will be able to afford to continue to treat these patients."

The members of the plaintiff coalition include the California Pharmacist's Association, the California Medical Association, the California Dental Association, the California Hospital Association, the California Association for Adult Day Services, Ross Valley Pharmacy, Zweber Apothecary, South Sacramento Pharmacy, Farmacia Remedios, Acacia Adult Day Services, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center and Sharp Coronado Hospital and Healthcare Center.

Filed in U.S. Federal District Court – Central District, the suit seeks to block the scheduled reduction in Medi-Cal payments enacted on Sept. 18 as part of budget trailer bill, AB 1183. If this legislation is permitted to go into effect, the following services will be affected, HLB noted: a 5% rate reduction for Medi-Cal fee-for services benefits paid to certain hospitals, intermediate care facilities, skilled nursing facilities, rural swing-bed facilities, subacute care units, pediatric subacute care units, and adult day health care centers; a 5% rate reduction in payments to pharmacies; a 1% rate reduction for all other Medi-Cal fee-for-service benefits, including physician and dental care.

"These cuts were clearly enacted illegally," said Plaintiff Attorney Byron Gross of HLB. "As we pointed out in earlier litigation involving previous cuts, lawmakers failed to consider the likely impact of such cuts on Medi-Cal beneficiaries. "If these cuts are allowed to go into effect, the Medi-Cal program will be devastated as care to our most vulnerable population will be jeopardized."

Federal and state law (42 C.F.R. Sect. 447.204) requires that Medi-Cal payments to providers "must be sufficient to enlist enough providers so that services under the [Medi-Cal] plan are available to recipients at least to the extent that those services are available to the general public," HLB said.

"If the new Medi-Cal cuts are implemented, providers will have no choice but to further limit participation in the program," Cannizzo said. "This is true since current payment rates are shamefully low already, among the lowest in the nation, and provider participation in the program has been reduced to a point that jeopardizes the ability of many Medi-Cal patients to receive timely access to care. Furthermore, patients unable to receive timely care will be forced to seek care at already overburdened emergency departments.

The complaint filed this week follows previous attempted rate reductions under earlier legislation. Specifically, AB 5, enacted Feb. 16, 2008, attempted to reduce payments to providers by 10%, effective July 1. A preliminary injunction remains in effect with a hearing set before the Ninth Circuit Court of Appeal for Feb. 18, 2009, HLB noted.

In other legalities, Smith & Nephew's Advanced Wound Management (St. Petersburg, Florida) division issued a statement commenting on a recent decision by the U.S. Court of Appeals for the Federal Circuit to uphold a trial court judgment that the gauze-based Versatile 1 negative pressure wound therapy system marketed by Blue Sky Medical Group (Carlsbad, California) does not infringe Kinetic Concepts' (KCI; San Antonio) patents (Medical Device Daily, Feb. 3, 2009). Smith & Nephew acquired Blue Sky in May 2007.

"Smith & Nephew welcomes the appeals court decision today that our Versatile 1 negative pressure wound therapy system does not infringe KCI's patents," said Robin Carlstein, senior VP of advanced wound devices at Smith & Nephew.

The court also upheld the jury finding that the two patents involved in the litigation against BlueSky and Medela (Baar, Switzerland) are valid. The patents are related to KCI's Vacuum Assisted Closure technology used for the treatment of patients with serious, complex wounds.

A trial court previously found the patents to be valid and enforceable, but not infringed. KCI appealed the part of the decision that found the patents were not infringed, while Medela appealed the part that found the KCI patents valid and enforceable (MDD, May 3, 2007).

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