The Weekly Articles

Medi-Cal providers and other proponents of last year’s Proposition 35 (“Prop 35”) ballot measure were met with disappointing news on April 1, 2025, as CalMatters reported the State had missed a critical deadline.[1] While the long-term implications remain unclear, the short-term consequences likely include delayed rate increases that many in the provider community have argued are long overdue.

CSHA is pleased to provide information on the following recent actions by the Trump Administration that potentially impact health care in California.  Given how rapidly events are changing at the federal level, readers are cautioned to double check the current status of any article in this feature.

Fierce competitor, Karen Weinstein, collected 2,725 points to become the winner of CSHA's second annual app game at the Annual Meeting and Spring Conference.  Cathy Kay was second, 65 points behind Karen, and Alyssa Ehrlich as in close contention.  The contest, which requires physical stamina and a vast knowledge of CSHA lore, is rapidly becoming a crowd favorite.  Congratulations to Karen!

At the Spring Seminar and Annual Meeting, CSHA was proud to honor longtime member Cathy Kay with the Life Membership Award!  The CSHA Board may bestow this award on an individual who has retired from the full-time practice of law or reached senior status in the healthcare legal profession, has made extraordinary contributions to CSHA over an extended period of years, and has provided outstanding leadership in the healthcare legal procession.  Cathy Kay fits all of these attributes after retiring from CommonSpirit Health in July of last year.  Cathy served as CSHA President in 1996 and has been a member since 1981.  Cathy has served on every CSHA committee possible and currently serves on the Diversity Task Force.  She has taken the last-speaker-on-Sunday slot more than once at Annual Meetings, and happily recalls her time as a member of the Larry Kessenick Players.

Cathy began her practice as a hospital lawyer for the Lutheran Hospital Society of Southern California, which then owned California Hospital Medical Center.  She ended her career working for CommonSpirit Health, which now owns California Hospital Medical Center.  In the interim, Cathy has practiced in every possible setting, focusing her expertise primarily on hospital operations and physician relationships.  She also created one of the first PPOs in California and was the first Chief Counsel for LA Care Health Plan, obtaining its first license for an initial enrollment of 600,000 enrollees.

Cathy has long been recognized for her efforts as a mentor and teacher; as a past Adjunct Professor at the USC School of Policy, Planning and Development, as a partner at Manatt, Phelps and Phillips, and through to her current role at CommonSpirit Health where she was awarded the 2022 CommonSpirit Health Acts of Humankindness Award.  Even in retirement, Cathy has continued her commitment to healthcare access by joining the Board of Directors of the Center for Health Care Rights, which provides free Medicare health insurance counseling to residences of LA County.  In honor of Cathy Kay, the attendees of the annual dinner raised a gin martini to celebrate Cathy with CSHA’s Life Membership Award!

CSHA is pleased to provide information on the following recent actions by the Trump administration that potentially impact health care in California.  Given how rapidly events are changing at the federal level, readers are cautioned to double check the current status of any information in this feature.

CSHA is committed to creating a culture that recognizes the value of individuals with diverse backgrounds, talents, experiences, and perspectives at all levels of the organization. For the first time, CSHA is conducting a voluntary and anonymous member demographic survey to understand the composition of CSHA membership and leadership. CSHA will aggregate the data and share a compilation of overall percentage by category with the entire CSHA membership (e.g., years in practice, practice area, sexuality, gender, race/ethnicity/ancestry, disability, and veteran status).  CSHA leadership will review the data to understand the diversity within the organization and measure progress on creating an inclusive environment for all members.  CSHA will not receive any identifying information along with the survey responses and therefore will not be able to tie any particular response to a specific member.  Participation is purely voluntary, but sharing this information will provide important and meaningful data regarding the diversity of CSHA’s membership. Members can indicate that they prefer not to answer any or all of the questions.  Members can also simply ignore the survey.

To complete the survey, click here. Please only complete the survey once.

The data collected through this survey will be stored securely using Google Forms, which is part of Google Workspace. Google Workspace leverages Google Cloud Platform (GCP) infrastructure, ensuring high levels of data protection and privacy.  Key security features include:

• Encryption: All data is encrypted both in transit and at rest, providing a robust layer of security against unauthorized access.
• Regular Security Audits: Google conducts regular security audits and adheres to stringent compliance standards.
• Redundancy and Reliability: Data is stored across multiple secure data centers, ensuring redundancy and reliability.

For more information about Google’s privacy policy, click here.  CSHA is committed to safeguarding your information and ensuring that your data is handled with the utmost care and confidentiality.  CSHA will never sell or share member information to any third-party. 

On April 4, 2025, the Court of Appeal for the District of Columbia held that California was not obligated to share Medi-Cal Quality Assurance Fees with out of state hospitals that treated California residents.  The action was brought by a group of hospitals in Arizona, Nevada and Oregon that treated California residents covered by Medi-Cal (“Border Hospitals) against the Department of Health Services and CMS.  California’s Medi-Cal plan includes a Quality Assurance Fee (“QAF”) program that operates by assessing fees on certain in-state hospitals, using those fees to generate matching federal funds, and then distributing those funds as supplemental payments to qualifying private in-state hospitals.  Out-of-state hospitals did not pay the QAF fees.  The QAF payments were in addition to base payments made on a per claim basis.  California paid base payments to out-of-state hospitals for treatment provided to California Medi-Cal patients. 

In 2010, when the QAF program was established, the Border Hospitals sued to participate in the payments and California entered into settlements agreeing to include them.  In 2019, the Border Hospitals were notified that the settlement agreements would not be renewed.  The Border Hospitals filed suit challenging CMS’s approval of their exclusion from the QAF program.  The Border Hospitals argued that the exclusion violated the Commerce Clause, Equal Protection Clause, and federal Medicare regulations.  The district court granted summary judgment in favor of the defendants and the Border Hospitals appealed.

The court rejected the Commerce Clause argument on grounds that both the tax for and provision of QAF payments were calculated solely based on the in-state provision of medical care to in-state patients.  The court applied the rational basis test to the Equal Protection argument and concluded that it was not irrational for California to structure the QAF program based on the assumption that most of the services provided to Medi-Cal patients would be provided by in-state hospitals and therefore give extra payments to and collect for those payments exclusively from in-state providers.

The Border Hospitals also challenged the program based on HHS regulation, 42 CFR § 431.52 which provides in part:  “(b) A State plan must provide that the State will pay for services furnished in another State to the same extent it would pay for services furnished within its boundaries if the services are furnished to a beneficiary who is a resident of the State, and any of the following conditions is met:  (1) Medical services are needed because of a medical emergency; (2) Medical services are needed and the beneficiary’s health would be endangered if he were required to travel to his State of residence; (3) It is general practice for beneficiaries in a particular locality to use medical resources in another state.

The court rejected the Border Hospitals’ argument that this provision required a payment-parity to in-state and out-of-state providers that applied to the PAF payments.  According to the court, the “same extent” language in subsection (b) was limited by the language of subsection (a), “furnishing Medicaid to State residents who are absent from the State,” indicated section 431.52 only applied when the State was acting as an insurer and providing payment for the provision of services to a beneficiary.  Because QAF monies were not payments for services rendered, they were not covered by section 431.52.  One justice dissented on the applicability of section 431.52.  

The case is Asante v. Robert F. Kennedy, Jr., et al., 23-5055, U.S. Court of Appeal, District of Columbia Circuit (2025 WL 1006395).

This week, CSHA would like to acknowledge platinum sponsor, King & Spalding. Celebrating more than 130 years of service, King & Spalding helps leading companies advance complex business interests in more than 160 countries. Working across a highly integrated platform of more than 1,300 lawyers in 24 offices globally, we deliver tailored commercial solutions through world-class offerings and an uncompromising approach to quality and service. Our premier healthcare practice includes more than 400 professionals who collaborate to serve the entire spectrum of healthcare providers, practitioners, manufacturers, suppliers, vendors, educators, researchers and investors. Our growth as a professional firm to the healthcare industry is attributable to our track record in achieving outcomes our clients value. We partner with our clients in developing and executing complex transactions, litigation strategies, regulatory compliance initiatives, government reimbursement solutions, managed care contracting strategies and efficiency/cost-reduction measures among other areas.

CSHA extends its gratitude to King & Spalding for its generous partnership and support of the Annual Meeting and Spring Seminar.

On March 25, 2025, the previously introduced Senate Bill No. 679 (“SB 679”) was amended to require annual reporting of physician employment and privileging activity by health care facilities and peer review bodies. If enacted, SB 679 would substantially increase reporting obligations for health care facilities and peer review bodies.