Key Medicaid case moves to Supreme Court

In the quest for sound Medicaid reimbursement, healthcare provider advocates may soon have another tool to compel state governments.

The U.S. Supreme Court has agreed to hear a case brought by Idaho providers over an issue that has split many lower courts: whether Medicaid providers have a Constitutional right to sue states to enforce Medicaid funding regulations.

The case stems from a 2009 lawsuit brought by Idaho rehabilitation service providers, who eventually convinced an appeals court that the state Department of Health and Welfare was obligated to increases its rates with inflation as outlined by department methodology — even though the legislature had not allocated the extra funding.

The Idaho state government, under order from the appeals court, increased reimbursements by another $12 million in 2013.

But Idaho is also appealing the case, arguing to the Supreme Court that private Medicaid providers cannot sue for increased reimbursement in the first place — a position that 27 other states are supporting in friend of the court briefs.

[See also: Medicaid care expansion: Two test cases.]

The Idaho providers, including Exceptional Child Center, Tomorrow’s Hope Satellite Services and Living Independently For Everyone, argue that they had no recourse other than a lawsuit to compel the state to keep Medicaid reimbursement at sustainable levels.

Idaho, along with other states, maintains that such litigation is not granted under the Constitution’s supremacy clause, and that it would interfere with efficient Medicaid administration and budgeting, and make the complex program less flexible.

Indeed, the ability for providers to sue over rates could set a new precedent for reimbursement in Medicaid and many other areas of government, a prospect that has some state government leaders worried.

“The notion that the Supremacy Clause empowers private litigants to bring ‘preemption’ claims against state officials who violate ‘supreme’ federal law has radical and far-reaching implications,” wrote Texas attorney general Greg Abbott and his peers in 26 states, in a brief supporting Idaho.

This will actually be the second time the Supreme Court hears a case concerning Medicaid reimbursement. In 2012, after California providers won various court orders against the state for Medicaid cuts, the Supreme Court overturned a lower court ruling and decided that subsequent federal approval of the rate reductions left the lawsuit no longer relevant. 

The Supreme Court declined to rule on whether private parties could sue over the Medicaid rates — although Chief Justice John Roberts did hint of his opinion that the supremacy clause on its own isn’t enough to empower providers with litigation rights.