U.S. Supreme Court Considers Whether Providers May Sue State Medicaid Officials for Failing to Raise Reimbursement Rates

Written By Joanne Ceballos  

On Tuesday, January 20, 2015, the United States Supreme Court heard oral argument in a case brought by providers of residential rehabilitation services to Medicaid eligible individuals against the Director and Deputy Director of Idaho's Department of Health and Welfare (IDHW) challenging IDHW's failure to raise Medicaid reimbursement rates that had been in effect since July 1, 2006.  The question the Supreme Court is considering is whether Medicaid providers may sue state officials under Section 30(A) of the Medicaid Act, 42 U.S.C. §1396a(a)(30)(A), which requires states accepting federal Medicaid funding to establish a “state plan,” which, among other things, provides “methods and procedures relating to the utilization of, and the payment for, care and services available under the plan … as may be necessary to assure that payments are consistent with efficiency, economy, and quality of care.”  

The case, Armstrong v. Exceptional Child Center, Inc., was instituted by the residential rehabilitation service providers in 2009 after the IDHW failed to raise reimbursement rates consistent with studies commissioned by IDHW because Idaho's Legislature did not appropriate $4 million in funding necessary to cover the increased rates.  The providers sued the IDHW for maintaining the July 2006 reimbursement rates on the ground they did not take into account providers’ actual costs, and, accordingly, violated Section 30(A)’s requirement that “payments [to providers] are consistent with efficiency, economy, and quality of care.”  The United States District Court for the District of Idaho granted summary judgment to the providers, citing precedent from the Ninth Circuit Court of Appeals, which had previously held that Section 30(A) requires a state Medicaid agency to consider actual provider costs when setting rates. 

The Ninth Circuit upheld the district court’s judgment, and the IDHW petitioned the U.S. Supreme Court, which granted the petition solely on the question of whether the providers could even bring an action against the state Medicaid agency to enforce Section 30(A) when Congress had not expressly authorized such an action in the federal Medicaid statute.  The providers take the position that the Supremacy Clause of the United States Constitution affords them a private right of action to enjoin a state law or regulation that is inconsistent with federal law, in this case Section 30(A) of the Medicaid Act.  The Attorneys General of 27 states, including Delaware, filed an amicus brief with the Supreme Court urging it to reject the providers’ position, arguing principally that private rights of action to enforce federal law must be created by Congress.

 

The Supreme Court’s decision is expected to have an impact, one way or the other, on providers’ ability to bring legal challenges against state Medicaid agencies regarding reimbursement rates.  DE Health Law Blog will report on the Supreme Court’s opinion when it is issued.

CMS Issues Proposed Revisions to Medicare Regulations and State Survey Agency Guidance with Respect to Same-Sex Spouses

Written By Joanne Ceballos

On December 12^th the Centers for Medicare and Medicaid Services issued a proposed rule to revise Medicare regulations to afford same-sex spouses equal rights in Medicare and Medicaid participating facilities.  The proposed changes to Medicare conditions of participation (CoPs) for providers, conditions for coverage (CfCs) for suppliers, and requirements for long-term care facilities, follow the U.S. Supreme Court’s decision in United States v. Windsor, 570 U.S.12, 133 S.Ct. 2675 (2013), finding unconstitutional a section of the federal Defense of Marriage Act that prohibited recognition, in federal statutes and regulations, of same-sex marriages lawfully entered into or recognized under state law.  The proposed revisions to certain regulatory definitions and patient rights’ provisions are intended to clarify that where state law or facility policy provides or allows certain rights or privileges to a patient’s opposite-sex spouse, a patient’s same-sex spouse must be afforded equal treatment if the marriage is valid in the jurisdiction in which it was celebrated.  With a majority of states recognizing same-sex marriage, the proposed rule places same-sex spouses on equal footing with opposite-sex spouses when dealing with Medicare and Medicaid providers in most circumstances.  The text of the proposed regulations can be viewed by clicking here. 

  

On the same date CMS’s proposed rule was published in the Federal Register, CMS issued guidance to state survey agency directors clarifying references in certain sections of the State Operations Manual as follows:

“spouse” means an individual who is married to another individual as a result of marriage lawful where it was entered into including a lawful same-sex marriage, regardless of whether the jurisdiction where the provider or supplier providing health care services to the individual is located, or in which the spouse lives, permits such marriages to occur or recognizes such marriages;

“marriage” means a marriage lawful where it was entered into, including a lawful same-sex marriage, regardless of whether the jurisdiction where the provider or supplier providing health care services to the individual is located, or in which the spouse lives, permits such marriages to occur or recognizes such marriages;

“family” includes, but is not limited to, an individual’s “spouse” (see above); and

“relative,” when used as a noun, includes, but is not limited to an individual’s “spouse” (see above).

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[W]here CMS regulations explicitly require an interpretation in accordance with State law, wherever the text of a regulation or associated guidance uses the above terms or includes a reference to a patient’s or resident’s “representative,” “surrogate,” “support person,” “next-of-kin,” or similar term in such a manner as would normally implicitly or explicitly include a spouse, the terms are to be interpreted consistent with the guidance above.

The text of CMS’s guidance to state survey agency directors can be viewed by clicking here.

While CMS is accepting comments on the proposed rule through February 10, 2015, the guidance to surveyors states that is effective immediately, so the affected providers, namely, hospitals, psychiatric hospitals, critical access hospitals, long term care facilities, hospices, and organ procurement organizations, must promptly revise their policies and procedures to conform to CMS guidance.