California Healthline, Wednesday, April 1, 2015

The U.S. Supreme Court’s ruling on Tuesday that private health care providers cannot file lawsuits against state Medicaid agencies over low reimbursement rates could limit future Medi-Cal lawsuits, the Los Angeles Times‘ “PolitiCal” reports.

Medi-Cal is California’s Medicaid program (Megerian, “PolitiCal,” Los Angeles Times, 3/31).

Background on SCOTUS Ruling

The high court’s ruling in the case, Armstrong v. Exceptional Child Center, reversed a lower court ruling that ordered Idaho to increase its Medicaid reimbursement rates. Providers in Idaho originally sued the state in 2009, alleging that it was illegally keeping Medicaid reimbursement rates at levels set in 2006 despite data showing that the cost of providing medical services had increased. A federal judge sided with the providers, and the decision was affirmed by the 9th U.S. Circuit Court of Appeals. Idaho’s Medicaid officials appealed the ruling to the Supreme Court.

The providers in the case argued that the courts are an important venue for challenging low reimbursement rates, which they claim can lead to less access to care for Medicaid beneficiaries because many providers are not willing to participate in the program. However, some states argued that Congress has not authorized such legal challenges.

On Tuesday, the U.S. Supreme Court in a 5-4 decision ruled that such legal challenges are not permitted under the U.S. Constitution’s supremacy clause, which states that federal laws supersede conflicting state statutes.

Justice Antonin Scalia wrote for the majority that the supremacy clause “instructs courts what to do when state and federal law clash but is silent regarding who may enforce federal laws in court.” He added that providers have the option of asking the federal government to intervene in their stead (California Healthline, 3/31).

Lynn Carman, chief counsel for the Medicaid Defense Fund, said the decision “will make it extremely hard for any beneficiary or provider to be able to force the state” to raise reimbursement rates (Siders, “Capitol Alert,” Sacramento Bee, 3/31).

Effect on California

According to “PolitiCal,” federal officials in the past have approved California’s health care spending cuts. However, those reductions often were blocked by court injunctions, even if eventually allowed to take effect.

According to state Attorney General Kamala Harris (D), such injunctions have cost California more than $1.5 billion since 2008 (“PolitiCal,” Los Angeles Times, 3/31).

However, the high court’s decision stands to limit such legal fights in the future, the Sacramento Bee‘s “Capitol Alert” reports.


The Brown administration applauded the ruling, “Capitol Alert” reports.

California Department of Health Care Services spokesperson Norman Williams in an email said the agency was “pleased that the U.S. Supreme Court has reaffirmed the contractual relationship between states and the federal government for the operation and administration of Medicaid programs.”

However, some health care advocates say it is unclear how large of an effect the decision will have in California.

California Medical Association spokesperson Molly Weedn said providers might still be able to file lawsuits under a different provision of the law.

She said, “Preliminary evaluation of the court’s decision shows that as we continue to pursue action around Medicaid rates in California, viable options remain available” (“Capitol Alert,” Sacramento Bee, 3/31).

Source: California Healthline, Wednesday, April 1, 2015