California Healthline Daily Edition

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SCOTUS: Providers Cannot Sue Over Low Medicaid Reimbursements

The Supreme Court in a 5-4 decision ruled that private health care providers are not able to sue state Medicaid agencies over low reimbursement rates, Modern Healthcare reports (Schencker, Modern Healthcare, 3/31).


The high court's ruling in the case, Armstrong v. Exceptional Child Center, reversed a lower court ruling that ordered Idaho to increase its Medicaid reimbursement rates. Providers in Idaho originally sued the state in 2009, alleging that it was illegally keeping Medicaid reimbursement rates at levels set in 2006 despite data showing that the cost of providing medical services had increased. A federal judge sided with the providers, and the decision was affirmed by the 9th U.S. Circuit Court of Appeals. Idaho paid an additional $12 million in 2013 reimbursements as a result of the ruling. Idaho's Medicaid officials appealed the ruling to the Supreme Court.

The providers in the case argued that the courts are an important venue for challenging low reimbursement rates, which they claim can lead to less access to care for Medicaid beneficiaries because many providers are not willing to participate in the program. However, some states argued that Congress has not authorized such legal challenges (California Healthline, 1/21).

Ruling, Dissent Details

The high court ruled that such legal challenges are not permitted under the U.S. Constitution's supremacy clause, which states that federal laws supersede conflicting state statutes.

Justice Antonin Scalia wrote for the majority that the supremacy clause "instructs courts what to do when state and federal law clash but is silent regarding who may enforce federal laws in court."

Scalia added that providers have the option of asking the federal government to intervene in their stead (Hurley, Reuters, 3/31).

He wrote, "The dissent's complaint that the sanction available to the [HHS] Secretary (the cut-off of funding) is too massive to be a realistic source of relief seems to us mistaken. [The majority] doubt[s] that the [HHS] Secretary's notice to a State that its compensation scheme is inadequate will be ignored" (Supreme Court decision, 3/31).

Meanwhile, Justice Sonia Sotomayor wrote in a dissenting opinion that the language of the Medicaid law did not suggest that lawmakers intended to not allow private lawsuits challenging reimbursement rates (Reuters, 3/31).

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