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From Health Law Daily, October 3, 2014

Idaho’s ‘hot potato’ Medicaid challenge set for 2015

By Anthony H. Nguyen, JD

The U.S. Supreme Court will decide whether private sector health care providers can force a state to raise its Medicaid reimbursement rates to keep up with the rising cost of services after granting a petition for writ of certiorari in Armstrong v Exceptional Child Center, Inc. (No. 14-15). The high court agreed to hear an appeal from the state of Idaho, which requested a lower court’s decision ordering Idaho to increase Medicaid payments be overturned. The Court limited its grant to one question – whether the Supremacy Clause gave Medicaid providers a private right of action to enforce Social Security Act sec. 1396a(a)(30)(A) against a state where Congress chose not to create enforceable rights under that statute.

Ninth Circuit ruling. In a per curiam decision, Exceptional Child Center, Inc. v Armstrong, the U.S. Court of Appeals for the Ninth Circuit affirmed a lower court’s summary judgment ruling 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 pursuant to the Supremacy Clause. The Ninth Circuit specifically found that the providers of certain living services for Medicaid-eligible individuals could challenge the failure of the state agencies’ directors to adopt rates that bore a reasonable relationship to their costs of service based on cost studies. The state agencies’ directors had admitted that the current rates did not substantially reimburse the providers for costs and that the new rates were not adopted based on pure budgetary reasons (see Providers’ successful challenge to living services rates that do not substantially reimburse costs affirmed, April 7, 2014).

Idaho’s petition. In its petition, Idaho contended that federal agencies determine whether a state is in compliance with reimbursement rules, not private parties. Conversely, the private companies that sued Idaho in federal court argued that the judiciary was the only means available to force federal officials to pursue states not in compliance with Medicaid law.

Idaho has stated that the private suit interfered with its ability to provide services within budget, in addition to circumventing congressional intent that states should have flexibility in administering Medicaid. According to Idaho officials, the increased reimbursements as ordered by the lower courts cost Idaho an additional $12 million in payments for 2013.

Twenty-seven states have offered support of Idaho’s appeal citing ambiguity on whether private parties have a right of action. In a 5-4 decision in 2012 the Court declined to address the Supremacy Clause in Douglas v Independent Living Center, leaving questions as to the right to bring such a claim, although Chief Justice Roberts indicated in the dissent that he would have held that the Supremacy Clause did not offer a right of action on its own if Congress had not explicitly created one (see also Providers gain partial injunction against Medicaid cuts, March 19, 2012).

MainStory: TopStory SupremeCourtNews ReimbursementNews MedicaidNews MedicaidPaymentNews HomeNews

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