Tuesday, April 7, 2015

US Supreme Court Holds Providers Cannot Sue Over Medicaid Rates

Dianne De La Mare

In a 5-4 decision, the US Supreme Court released an opinion , holding private health care providers cannot sue the state over low reimbursement rates (Armstrong v Exceptional Child Center Inc.).  In 2009, private health care providers delivering residential care to disabled patients in Idaho, sued the state alleging that it was illegally keeping Medicaid reimbursement rates at 2006 levels despite data showing that the cost of providing services had significantly increased. A Federal District Court judge sided with the providers, holding that the Idaho Medicaid rates weren’t in line with the federal law’s requirements that states “assure that payments are consistent with efficiency, economy and quality of care and are sufficient to enlist enough providers” to ensure adequate access to care. The District Court decision was upheld by the US Court of Appeals for the Ninth Circuit. As a result of that ruling, Idaho was forced to pay an additional $12 million in 2013 reimbursements. Idaho appealed the ruling to the US Supreme Court.  

On appeal to the US Supreme Court, health care providers argued that the courts are an important venue for challenging low reimbursement rates, which often are the only way to enforce federal payment requirements. Furthermore, providers argued when reimbursement rates are too low, there is lower provider participation in the Medicaid program, which can lead to less access to care for Medicaid beneficiaries. The Idaho Medicaid officials countered those arguments asserting that Congress had not authorized lawsuits under the Medicaid Act, codified under Title XIX of the Social Security Act, and that allowing such a course of action would result in endless litigation. The majority of the US Supreme Court Justices agreed with the state of Idaho, and concluded that a private cause of action is not permitted under the U.S. Constitution’s Supremacy Clause. Further, Title XIX does not allow private parties to enforce the provision in the Medicaid Act that requires state plans to “assure that payments are consistent with efficiency, economy, and quality of care” while “safeguard[ing] against unnecessary utilization of . . .care and services.” Rather, only CMS may scrutinize rate adequacy following its process for reviewing state plan amendments (SPA) pertaining to reimbursement. CMS guidance on SPA review is located here in a State Medicaid Directors’ Letter.  

AHCA/NCAL submitted an amicus brief in support of the Idaho providers in Armstrong v Exceptional Child Center Inc., and the Association is greatly disappointed in the US Supreme Court decision. As you know, AHCA has ample data demonstrating nursing facility Medicaid rates do not cover allowable costs. As a result of this decision, providers with insufficient Medicaid rates may only address rate complaints to the Single State Medicaid Agency (SSMA) as under current state practice but now have little hope of judicial relief.

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