Medicaid providers in Idaho had their day in court in January when the Supreme Court heard oral arguments in Armstrong v. Exceptional Child Center. The issue before the court centers on federal law requiring states to ensure adequate access for Medicaid beneficiaries, and whether low reimbursement rates for providers violate that law.
The plaintiffs, facilities serving people who have intellectual and developmental disabilities, are challenging the rates the states paid them and are asking the Court to force the state government to increase reimbursement rates. The state in turn argues the plaintiffs don’t have standing to bring the lawsuit, meaning the relevant law does not allow them to sue over the matter.
The federal government has sided with the state of Idaho, arguing the relevant federal law does not preempt state law or policy in this area.
Low reimbursement rates are a way for elected officials to appear to offer more benefits without really doing so, explained Thomas Miller, a resident fellow at the American Enterprise Institute who studies heath care policy.
“State and federal officials can use lower reimbursement rates as a budgetary discount factor to appear to stretch a given amount of Medicaid dollars further, at least in terms of promising more covered services or expanding eligibility to cover more beneficiaries, at the cost of reduced access to physicians and better quality care in practice,” Miller told Health Care News.
Arguing Federal Law’s Implications
The plaintiffs acknowledge federal Medicaid law establishes a methodology mandating provider reimbursement rates by each state operating a Medicaid program, citing 42 U.S.C. Section 1396(a)(30)(A). The state of Idaho argues only the federal government can bring a lawsuit to enforce this law.
In order for the plaintiffs to have standing, the Medicaid statutes would have to include a “private right of action” expressly authorizing any private individual or institution claiming harm to file a lawsuit against the state, the Idaho government argues.
The plaintiffs argue they do not need statutory authorization to bring this lawsuit because they are permitted to make this claim directly under the “Supremacy Clause” of the U.S. Constitution. In other words, plaintiffs claim the fact Congress enacted this provision in the Medicaid law means it is the “supreme law of the land” and a state is bound to follow the will of Congress under the preemption doctrine, under which federal law takes precedence over conflicting state laws.
Serious Consequences to Follow
The Court will likely issue a decision in this case by the end of the current term in June 2015.
A ruling in favor of the plaintiffs could lead to further lawsuits charging low Medicaid fees violate federal law by denying adequate access to beneficiaries, wheras a ruling for the state likely means Medicaid will continue to provide reimbursements so low many providers are unable to treat more than a handful of patients in the program.
If the plaintiffs win, courts will “be prone to finding that current levels are too low,” said Miller. “When they have to match Medicaid’s nominal promises against the resources dedicated to delivering them, the mismatch in a case asking for higher reimbursement—rather than less generous benefits—is stacked toward finding that those rates should be higher.”
“This will lead to rates being raised and some states having to make choices about drastic cuts to other vital services or increased taxes and fees to offset the raised rates,” said Gary Alexander, former secretary of Health and Human Services in Rhode Island. “State budgets are already strained, and a small increase in rates could be turn a one-year deficit into a multiyear deficit with little or no recourse for the state.”
Michael Bond, a professor of finance at Cleveland State University and an expert in Medicaid policy, said it’s unlikely higher reimbursement rates would solve the program’s access problems.
“Courts could order more spending [like] they have done with prisons and education,” Bond said. “But to really do good efficiently, the money needs to go to beneficiaries to buy from competing plans and to get rid of the price controls and one-size benefit packages.”
William Todd ([email protected]) is an attorney practicing law in Columbus, Ohio.
