CMS Settlement May Have Ripple Effect

CMS officials this week approved a settlement officially halting a 10% Medi-Cal payment reduction from 2011 at California independent living centers. Federal approval came three years after the issue was settled in court.

The state of California settled a series of lawsuits around the independent living centers’ Medi-Cal reductions in 2012, but CMS waited till this week to officially approve the settlements.

“The state’s payments to providers for particular services during the specified period in early 2011 would be at the unreduced Medi-Cal rates rather than the reduced rates as previously approved under the state plan by CMS,” a Mar. 24 email from CMS officials said.

That seemingly innocuous approval has consequences in another high-profile case, according to Lynn Carman, attorney for the independent living centers.

The U.S. Supreme Court is hearing Armstrong v. Exceptional Child Center, Inc., and at the heart of that case is the so-called supremacy clause, Carman said — the right of ordinary people to sue over state violations of the Medicaid Act.

“The Obama Administration and the California Attorney General contended that CMS administers the Medicaid program, so any lawsuit filed by a person injured [under the Medicaid Act] interferes with CMS administration,” Carman said. “This settlement shows actions by individual providers to enforce the Medicaid Act actually assists the CMS. It’s entirely contrary to the official CMS position in the Armstrong case.”

In 2011, the U.S. Supreme Court rejected the argument that ordinary citizens cannot sue state officials to prevent being injured by state violation of the federal Medicaid Act, Carman said. It was sent back to the U.S. Ninth Circuit Court of Appeals, where a court-approved settlement halted the reduction for independent living centers — pending approval of the settlement by CMS.

“Private enforcement of the Medicaid Act by providers, under the supremacy clause of the U.S. Constitution, is not obstructive to CMS but, indeed, aids CMS to better enforce the Medicaid Act, for the benefit of beneficiaries,” Carman wrote in an email.

A decision in the Armstrong case is expected by June, Carman said.

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Capitol Desk Medi-Cal