Supreme Court rules against Medicaid providers

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The Supremacy Clause bars private citizens from suing states over Medicaid reimbursement rates, the Supreme Court ruled in a 5-4 decision handed down March 31.

As a result, Medicaid providers seeking to force states to raise reimbursement rates must rely almost entirely on the federal government.

Medicaid, the nation’s primary health care program for people with disabilities, is jointly funded by the federal and state government. States are tasked with setting rates to reimburse health care providers for services provided to Medicaid patients.

In doing so, states must comply with the Medicaid Act’s Equal Access provision, which requires states to provide rates comparable to what health care providers would make on the private market. The purpose of this provision is to incentivize health care professionals to provide services for Medicaid recipients, thus making treatment accessible to low-income patients.

The plaintiffs in the lawsuit, Armstrong v. Exceptional Child Center, were a group of health care providers that sued the state of Idaho in 2009, on the grounds that the state’s rates violated the Equal Access provision. The state argued that only the federal government could bring such a lawsuit, an argument that was unsuccessful at both the district court and in the U.S. Court of Appeals for the 9th Circuit.

Generally under the Constitution’s Supremacy Clause, only the federal government has authority to sue states for failure to comply with a federal regulatory scheme. However, in numerous laws, Congress has expressly granted private citizens the right to sue states to enforce the law’s provisions.

The Medicaid Act neither expressly grants private citizens a right to enforce the equal access provision, nor expressly prohibits it.

Justice Scalia, writing for the five-member majority, found that there was no evidence Congress meant to confer such a right.

“Our precedence establishes that a private right of action under federal law is not created by mere implication, but must be unambiguously conferred,” the majority opinion stated. “Nothing in the Medicaid Act suggests that Congress meant to change that for the commitments made under (the Equal Access provision).”

In the opinion, Justice Scalia pushed back against the argument raised in amicus briefs by a variety of disability rights groups, that barring private lawsuits would leave citizens without a remedy under the Equal Access provision. As discussed in the majority opinion, the federal government can enforce the equal access provision by withholding state Medicaid funds, or by directly suing the state itself.

The opinions of the court’s four more conservative members – Justices Scalia, Roberts, Alito and Thomas – were not surprising. In 2012, the Supreme Court heard arguments in a similar case involving California’s reimbursement rates, but remanded the case back to the lower courts for further proceedings. These four justices dissented from the decision, on the basis that they did not believe the providers in the case had a right to bring the lawsuit.

In the present case, however, Justice Kennedy, the court’s swing justice on the nine-member court for the past decade, joined the four-person dissent.

Instead, Justice Breyer proved to be the pivotal vote. He wrote a separate concurring opinion, which emphasized his finding that the lack of Congressional intent to confer a private right of action could be derived from the complexity of the statutory scheme and the traditional role of administrative agencies in rate-setting.

Justice Sotomayor wrote a dissent, joined by three other justices. She emphasized the lack of language in the Medicaid Act expressly prohibiting private actions, highlighting the similarities between the equal access provision and other aspects of the Medicaid Act, which provided for a cause of action, and the lack of a detailed remedial scheme.

“The Court’s error today has very real consequences,” Sotomayor wrote. “Previously, a State that set reimbursement rates so low that providers were unwilling to furnish a covered service for those who need it could be compelled by those affected to respect the obligation imposed by (the equal access provision).

“Now, it must suffice that a federal agency, with many programs to oversee, has authority to address such violations through the drastic and often counterproductive measure of withholding the funds that pay for such services.”