The administration of California Gov. Arnold Schwarzenegger (R) plans to appeal an appeals court ruling from earlier this week that temporarily halted a 10% reduction in Medi-Cal reimbursement rates to health care providers, the San Francisco Chronicle reports (Fernandez, San Francisco Chronicle, 8/21).

The ruling restores fee rates for providers who serve Medi-Cal beneficiaries (Kaiser Daily Health Policy Report, 8/20). The reduced rates took effect on July 1 for a large network of doctors, dentists, pharmacists, adult day health centers and other providers.

Next week, the Schwarzenegger administration also will seek a stay to U.S. District Judge Christina Snyder's ruling, arguing that higher reimbursement rates would cost California $575 million annually (San Francisco Chronicle, 8/21).

California lawmakers and Schwarzenegger approved the rate reductions in February as part of an effort to address the state's estimated $15.2 billion budget deficit.

Under federal law, state lawmakers are required to consider the effect of Medicaid reimbursement rate cuts on quality and access to care, Snyder ruled, adding that state officials did not show that they had taken into account any factors other than the state budget deficit (Kaiser Daily Health Policy Report, 8/20).

Department of Finance spokesperson H.D. Palmer said, "We believe this ruling can be overturned," adding, "When we first proposed (the cut) in January, we knew it was difficult but necessary. We need to achieve these savings."

However, health care providers argue that the cuts would discourage providers from participating in Medi-Cal, impeding beneficiaries' access to care. Medi-Cal is California's Medicaid program (San Francisco Chronicle, 8/21).