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From Health Law Daily, January 6, 2015

High Court has more to read; associations weigh in on Medicaid rate setting battle

By Danielle H. Capilla, J.D.

The American Hospital Association (AHA) and the Federation of American Hospitals filed an amici brief asking the Supreme Court to uphold the Ninth Circuit’s ruling in favor of health care providers, allowing them to take states to court when they don’t live up to payment obligations under Medicaid. The case, Armstrong v. Exception Child Center Inc., is set for oral arguments in front of the justices on January 20, 2015.

Ninth Circuit. The Ninth Circuit ruled per curiam in favor of a group of providers that brought suit against the directors of state agencies in Idaho, finding that the providers could bring a private action to enforce the Medicaid Act. The Supreme Court is limiting its grant to a single question: whether the Supremacy Clause gives Medicaid providers a private right of action to enforce Social Security Act Sec. 1396a(a)(30)(A) when Congress chose not to create enforceable rights under the statute (see Idaho’s ‘hot potato’ Medicaid challenge set for 2015October 3, 2014). The providers specifically challenged the failure of the agency directors to adopt rates that had a reasonable relationship to the cost of service based on cost studies. The Ninth Circuit rules that the Medicaid Act required “some justification other than purely budgetary reasons” when the reimbursement rates failed to substantially cover providers’ costs (see Providers’ successful challenge to living services rates that do not substantially reimburse costs affirmedApril 7. 2014).

Brief. The AHA and the Federation of American Hospitals argue that Section 30(A) promises equal access to care, but that states have repeatedly cut reimbursement rates to levels far below actual costs, with 2012 rates showing care to Medicaid beneficiaries exceeded reimbursement by $13.7 billion. The gap, they argue, threatens the availability of care. The brief argues that without judicial recourse to enforce Congressional conditions, losses will become unsustainable for hospitals. Furthermore, the brief argues that as a conflict between state regulation and federal law, reimbursement rates are subject to preemption under the Supremacy Clause. The groups argue that Section 30(A) imposes limitations on the states’ authority to set reimbursement rates and that the Supremacy Clause provides a cause of action for providers to enjoin state violations of the Act.

The brief will be considered by the court, along with those filed by many other organizations and states, including the American Civil Liberties Union, the American Medical Association, members of Congress, and the National Governor’s Association. Twenty-seven states have offered support to Idaho in the matter.

Companies: American Hospital Association; Federation of American Hospitals

MainStory: TopStory SupremeCourtNews HouseNews SenateNews ReimbursementNews MedicaidPaymentNews

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