AHF Sues California Over Forced Closure of AIDS Care Plan; Retaliation by Health Officials.

Nation's Largest AIDS Organization Files Suit Against State's Department of Health Care Services (DHCS); Asserts Punitive Action by State is Forcing AHF's Respected, Money Saving 'Positive Healthcare' AIDS Primary Care Case Management Plan to Cease Operating After 15 Years

LOS ANGELES -- AIDS Healthcare Foundation:

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AIDS Healthcare Foundation (AHF), the nation's largest non-profit HIV/AIDS healthcare provider, which has operated Positive Healthcare, a successful and cost-effective AIDS primary care case management program (PCCM) serving California Medi-Cal (Medicaid) recipients, will host a press teleconference in Los Angeles, Thursday February 19th at 11:30am Pacific, to announce its filing of a lawsuit against California's Department of Health Care Services (DHCS) and officials from the Department asserting that the Department has not followed federal and state law in its contracting process for the provision of health care services for Medi-Cal recipients living with AIDS. AHF's suit also asserts that DHCS officials infringed on AHF's freedom of speech and expression when it acted in a punitive and retaliatory manner toward AIDS Healthcare Foundation during the recent contract renewal process for Positive Healthcare, actions AHF asserts that were taken in retribution for AHF's previous outspoken public advocacy and successful legal action forcing the DHCS to comply with a 2002 law (AB 2197) requiring the department to enroll HIV-infected Californians in Medi-Cal. Prior to passage of the 2002 law, which AHF sponsored, HIV-positive, but otherwise Medi-Cal eligible individuals needed to progress to a diagnosis of an AIDS defining illness in order to enroll in Medi-Cal.

AHF's current legal action was prompted by the DHCS' recent failure to abide by federal and state law in setting the capitation rate to cover the per patient monthly costs for Medi-Cal recipients enrolled in AHF's Positive Healthcare primary care case management program which AHF has operated under contract with the state for the past 15 years. AHF's lawsuit asserts that because the state has been unwilling or unable to set a contract capitation price that is consistent with state and federal law, its actions constitute a breach of law which is now forcing AHF to cease operating the lifesaving and cost-effective Positive Healthcare managed care plan. AHF's lawsuit, filed in Superior Court of the State of California, County of Los Angeles (BS 119149) states that, "In a time of rising health care costs, and for a disease that is one of the most costly to treat, DHCS has proposed paying 18% less than the previous contract price, for the same services." The lawsuit also states that, "ODHCS has breached its duties under both federal and state law, and that DHCS must contract at a per patient rate that is actuarially sound."

"This legal action is being brought on behalf of the AIDS patients and clients we care for and serve through AHF's Positive Healthcare primary care case management program who will be directly and adversely affected by the closure of Positive Healthcare due to the state's failure to comply with the law in setting the capitation rate for the delivery of such lifesaving care and services," said Tom Myers, General Counsel for AIDS Healthcare Foundation. "We are also suing the department and DHCS officials to remedy violations of our right to freedom of speech and expression."

AHF's lawsuit also asserts that, "OPlaintiffs/Petitioners, including its president Michael Weinstein, have been vocally critical of DHCS' inaction and failure to implement AB 2197," and that "ODHCS has refused to propose capitation rates in compliance with the law in retaliation for Plaintiffs'/Petitioners' criticism of DHCS and maintenance of the AB 2197 lawsuit, in violation of the right to free expression guaranteed by the California Constitution and the Constitution of the United States."

"While AHF was fighting for a court order forcing the Department of Health Care Services to comply with a 2002 California law requiring the department to start enrolling HIV positive individuals in Medi-Cal, DHCS proposed a 2009 per patient monthly capitation rate for Positive Healthcare of just $1367.91--an 18% decline from the 2007 rate of $1,666.97--and a rate that is not even legal," said Michael Weinstein, AIDS Healthcare Foundation President. "We believe that DHCS officials refused to negotiate in good faith as they had in prior years and continued to insist on a low rate at that time in retaliation for our filing a Petition for a Writ of Mandate to compel compliance with the 2002 law. The Court soon granted AHF's Petition, which AHF believes led to further retaliation and intransigence from DHCS. In addition, by proposing such a low capitation rate, department officials have forced AHF to cease operating the Positive Healthcare PCCM as of March 31st. The state's move is clearly retaliation through punitive--and illegal--actions by DHCS officials that appear to be intended to silence and punish us by forcing the closure of Positive Healthcare."

"For 15 years, AIDS Healthcare Foundation has operated the only AIDS specific Medi-Cal care program in California. The program has cared for the sickest of the sick among AIDS patients. In the process, Positive Healthcare has consistently yielded better health outcomes for its patients than many of the state's Medi-Cal recipients receive via more traditional and more expensive fee for service programs," said Donna Stidham, Chief of Managed Care for AIDS Healthcare Foundation. "At the same time, the amount that AHF has been paid for providing such lifesaving care and services through Positive Healthcare has always been less than what the state pays for traditional fee for service care. In short, we have improved health outcomes for a very vulnerable population of Medi-Cal recipients while the state has saved millions of dollars in costs of such care over the years."

AHF's lawsuit also states, "In addition, the Positive Healthcare program has reduced the need for medical services that are not covered by the contractOthe PHC contract covers some, but not all, potential medical services required by patients. Such services include hospitalization and certain newer anti-viral medications. For those services not covered by the contract, patients access this care by means of the fee for service program. Because PHC patients are healthier than similarly situated fee for services patients with AIDS, they use far fewer of these other services. These savings, generated by the quality of care patients receive under the PHC program, are shared between AHF and the StateOIn the last five years alone, this one item of savings to the State has been at least $3,445,356.00."

"By forcing the closure of Positive Healthcare, DHCS officials will also now continue to try and bolster their specious and disingenuous claims that the department simply lacks sufficient revenue to comply with the 2002 HIV Medi-Cal enrollment law as required by the recent court ruling in December," added AHF's Weinstein.

On December 5, 2008, the Los Angeles Times published an article titled, "State Ignores HIV Law, Judge Says," (Jordan Rau, Reporter) on a ruling by Los Angeles County Superior Court Judge James Chalfant granting AHF's petition for Writ of Mandate to require California's Department of Health Care Services to comply with AB 2197, the 2002 HIV Medi-Cal enrollment law. In response to the Times' article, Sandra Shewry, Director of California's Department of Health Care Services wrote a Letter-to-the-Editor to the Times published on December 12, 2008. Shewry wrote:

* "The waiver authorized by AB 2197 would have allowed people who now receive their care from the AIDS Drug Assistance Program to supplement their care by obtaining coverage from Medi-Cal. This cost would be offset by savings from enrolling Medi-Cal eligible people with AIDS into HMOsOThe law was clear that its costs must be offset by savings. Unfortunately, because of the costs of some managed-care plans, we could not demonstrate that. We will continue to work to implement the law in a cost-neutral manner, as the Legislature intended."

AHF's Weinstein continued, "Remember: "For the past 15 years and until March 31st, AHF has operated the only AIDS-specific managed care plan in California, which has yielded nearly $3.5 million in savings to the state--savings which could and should by law be used to comply with AB 2197 by enrolling HIV-positive Californians in Medi-Cal."

"The State has an obligation to set rates according to law, and they simply have not done this," added Tom Myers, AHF's General Counsel. "They are using the current budget crisis as a pretext for not doing their jobs and complying with the law. If they did their jobs properly and followed the law in setting the capitation rate, they could not justify the cut. They are breaking the law in order to gut a program that has produced healthier people, and spent less money."

History of AB 2197

Following is a link to more news information on AHF's earlier lawsuit concerning the state's failure to comply with AB 2197: http://www.aidshealth.org/news/in-the-media/california-health-agency.html

History of Positive Healthcare

AHF first established its Positive Healthcare program in California on April 1, 1995, when it introduced a groundbreaking Medicare Managed Care Plan--a 'Special Needs Plan' health care program--specifically designed for people living with an AIDS-defining illness who also lived in the Medi-Cal-designated service area of Los Angeles County, the only region AHF offered medical care and services at that time. The initial Positive Healthcare program, which operates under contract with California's Department of Health Services, was created with a prestigious Special Projects of National Significance (SPNS) Grant. Since its inception, Positive Healthcare has both increased patient health outcomes while significantly reducing the costs for such patients' care to the state of California.

About AHF: AIDS Healthcare Foundation (AHF) is the nation's largest non-profit HIV/AIDS organization. AHF currently provides medical care and/or services to more than 95,000 individuals in 21 countries worldwide in the US, Africa, Latin America/Caribbean and Asia. Additional information is available at www.aidshealth.org