Supreme Court rules providers can't sue states over Medicaid payments

A landmark Supreme Court ruling Tuesday made it clear that private medical providers cannot sue individual states in an attempt to raise Medicaid reimbursement rates.

In the case, Armstrong v. Exceptional Child Center, justices ruled 5-4 in favor of the state of Idaho, which a group of residential care service providers alleged had unfairly kept Medicaid reimbursement rates at 2006 levels despite studies showing that the cost of care had gone up. Lower courts had sided with the plaintiffs and required Idaho to increase reimbursements by $12 million in 2013.

But the highest court disagreed with the plaintiffs' argument that the Constitution's Supremacy Clause allows federal law to supersede contradictory state laws. The clause "instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court, and in what circumstances they may do so," Justice Antonin Scalia wrote in the majority opinion.

In a dissenting opinion, Justice Sonia Sotomayor argued that Medicaid laws were not intended to prevent private lawsuits.

The majority opinion states that providers must ask the federal government to intervene on their behalf if they feel Medicaid reimbursement rates are too low, a ruling that the Associated Press wrote strikes "a blow to many doctors and healthcare companies that complain Medicaid reimbursement rates are so low, they often lose money seeing patients participating in the program." 

Indeed, in a court brief filed in support of the plaintiffs, the American Hospital Association and the Federation of American Hospitals noted that the cost of providing care to Medicaid beneficiaries in 2012 exceeded reimbursements by $13.7 billion. Furthermore, Medicaid payments to primary care physicians were expected to drop more than 40 percent in 2015, FiercePracticeManagement reported, and providers in states that have refused to expand Medicaid are likely to fare the worst.

To learn more:
- here's the ruling (.pdf)
- read the AP piece