U.S. Supreme Court weighs in on California budget fight

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A sharply divided decision from the U.S. Supreme Court on Wednesday highlighted the legal minefield that California must navigate while trimming its budget.

When considering whether the state should be allowed to lower reimbursement rates for doctors who treat the poor as part of California’s Medi-Cal program, the court decided to punt the case back to the U.S. 9th Circuit Court of Appeals.

The 5-4 decision provided little clarity for state officials, who are still assessing its consequences for Medi-Cal. At stake is tens of millions of dollars in state taxpayer money, according to Gov. Jerry Brown’s Department of Finance.

The 9th Circuit Court had previously stopped the state from lowering its rates, but the Obama administration said the cuts could go forward, leading to contradictory signals from two different branches of the federal government.

A similar situation is playing out in Los Angeles, where a federal judge is blocking another rate cut that the Obama administration has already approved. State officials said they would appeal that case to the 9th Circuit. Because Medi-Cal is part of the federal Medicaid program, some cuts need approval from the federal government. Lawsuits have accused the state of violating the promise that poor patients would have access to quality care, further complicating the situation.

-- Chris Megerian in Sacramento

Twitter: @chrismegerian

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