States win Medicaid rate ruling
Supreme Court decides healthcare providers can’t go to court to challenge cutbacks in payments.
WASHINGTON — The Supreme Court dealt a defeat Tuesday to doctors, dentists and pharmacists who treat low-income patients, ruling they may not go to court to challenge cutbacks in Medicaid payments in California and other states.
In a 5-4 decision, the justices ruled these reimbursement rates are to be set by state lawmakers and federal health officials, not by judges.
Though the case stemmed from an Idaho lawsuit, the issue has weighed heavily in California.
The Legislature, facing a budget crisis, adopted a series of Medicaid spending cuts from 2008 to 2012. But repeatedly, federal judges in San Francisco intervened to delay or block the cuts to Medi-Cal, the state’s name for the joint federal-state program. Doctors and other medical providers had sued, saying the cutbacks would deprive poor people of their right to decent healthcare.
On Tuesday, Justice Antonin Scalia said judges lacked the authority to intervene in these budget battles.
“We hold that Medicaid providers have no right to seek injunctive relief ” in court, he said, speaking in the courtroom. “The sole remedy Congress provided for a state’s failure to comply with Medicaid’s requirements is the withholding of Medicaid funds by the secretary of Health and Human Services” in Washington.
Advocates for a strong Medicaid program were dismayed. “This is a momentous decision,” said Timothy Jost, a law professor at Washington & Lee University. He said it suggests providers and patients effectively have no legal remedy if funding is slashed.
“It’s a disaster,” said Lynn Carman, a San Francisco lawyer who represented California pharmacists and succeeded in blocking several planned cutbacks in reimbursement rates. This “permits state officials to violate federal law with impunity.”
Lawyers for the American Medical Assn. said the federal agency was a “paper tiger” and would not cut off funds to states that slashed their spending.
“Today’s ruling shuts off a practical path of relief when states break trust with Medicaid’s promise to provide the poorest Americans with equal access to medical care,” said Dr. Robert M. Wah, AMA’s president.
The ruling is a victory for California officials and budget planners. State Atty. Gen. Kamala D. Harris had urged the court to block private lawsuits over Medicaid. They “have improperly disrupted California’s ability to manage its $90-billion Medicaid program,” she said in a friend-of the-court brief. And they “have cost the state more than $1.5 billion” when spending cuts were delayed or blocked, she said.
Tuesday’s ruling reflects a shift in the law that was decades in the making. When Congress passed major spending laws in the 1960s to fund education, healthcare and services for the poor and disabled, the money was to flow through the states. It was “a bargain,” Scalia explained Tuesday. States received the money as long as they abided by the federal rules.
Within a few years, when problems arose, advocates went to court, contending states, schools or other facilities had failed to provide the promised services. Sometimes, they accused the state of violating the rights of the students or patients. Judges then played the major role in deciding the scope of these federal laws.
But a more conservative Supreme Court has slowly retreated from the view that federal judges could set the terms of these spending laws.
The liberal-leaning 9th Circuit Court of Appeals in San Francisco had held fast to the earlier view. It cited a provision in the Medicaid Act that said states must ensure its payments are “consistent with efficiency, economy and a quality of care” and are “sufficient to enlist enough providers” to serve the local population.
Its judges relied on this provision to delay California’s proposed cutbacks. In an Idaho case, they said the state was not providing enough money to pay for inhome nursing care for lowincome people. This failure was said to violate the Constitution’s provision that makes federal law supreme.
In reversing the 9th Circuit, Scalia said neither the Constitution nor the Medicaid Act authorized judges to veto Idaho’s payment rates. If the providers or their patients are unhappy with these rates, “their relief must be sought initially through the [Health and Human Services] secretary rather than through the courts,” he said.
Chief Justice John G. Roberts and Justices Clarence Thomas and Samuel Alito agreed with his opinion in Armstrong vs. Exceptional Child Center.
Justice Stephen G. Breyer, who usually votes with the liberal bloc, cast the key fifth vote to form the majority.
He said Congress had “decided to vest broad discretion” in the federal health agency to manage the Medicaid program, and it “intended to foreclose” private lawsuits.
In dissent, Justice Sonia Sotomayor said that “since the earliest days of the Republic,” it has been understood that federal judges can enforce federal law.
“The court’s error today has very real consequences,” she wrote. It will allow states to “set reimbursement rates so low that providers [are] unwilling to furnish a covered service for those who need it.”
Justices Anthony Kennedy, Ruth Bader Ginsburg and Elena Kagan joined in her dissent.