Supreme Court to decide if hospitals can sue states over Medicaid cuts

The U.S. Supreme Court has agreed to hear a case that could have a huge bearing on how hospitals are paid for treating Medicaid patients, reports Kaiser Health News.

The case originates in California, where hospitals sued the state in 2008 after then-Gov. Arnold Schwarzenegger tried to cut the rates paid to care for Medicaid patients by 10 percent.

California has one of the lowest rates for Medicaid inpatient reimbursement in the nation, and its hospitals have long resisted any cuts in payments from Medi-Cal, its Medicaid program. The providers claim that the reductions would make it fiscally unrealistic for hospitals to continue to participate in Medi-Cal and deliver necessary healthcare services .

"The Medicaid statute was created to assure payments were sufficient to enlist enough providers to participate in the program," said Charles Luband, an attorney with the law firm Repoes & Gray in New York. "That's why it's important providers be able to bring such lawsuits to assure that statute has meaning and relevance."

The Supreme Court will focus on whether organizations such as hospitals have the right to sue when they believe a state is violating federal law. It is expected to hear arguments in the case this fall and render a decision in the spring of 2012.

For more:
- read the Kaiser Health News story
- check out the Politico article