Fall­out from Calif. Med­i­caid case

... but court rul­ing doesn’t ad­dress es­sen­tial fac­tor

Modern Healthcare - - FRONT PAGE - Me­lanie Evans

“We need to re­con­sider the groups who are el­i­gi­ble for Med­i­caid,” Illi­nois Gov. Pat Quinn said in his bud­get ad­dress.

Pa­tients and providers can con­tinue to sue states over Med­i­caid spend­ing, for now, af­ter the U.S. Supreme Court re­turned a Cal­i­for­nia law­suit to a lower court. The court, in a 5-4 decision, de­clined to set­tle the spe­cific ques­tion be­fore it be­cause cir­cum­stances in the case had changed. Le­gal ex­perts said that ques­tion was a po­ten­tially far­reach­ing one over whether pa­tients and providers can sue states over Med­i­caid spend­ing un­der the Con­sti­tu­tion’s supremacy clause, which says states must fol­low fed­eral law.

The decision comes af­ter years of state fis­cal dis­tress has led to wide­spread cuts to Med­i­caid bud­gets and ahead of a ma­jor ex­pan­sion of Med­i­caid sched­uled for 2014. States have chal­lenged the ex­pan­sion in a law­suit the Supreme Court is sched­uled to hear in March.

The case de­cided last week con­sol­i­dated sev­eral law­suits in which Cal­i­for­nia providers and Med­i­caid en­rollees had sued the state over Med­i­caid rate cuts. Cal­i­for­nia’s law­mak­ers ap­proved the lower re­im­burse­ment but failed to en­sure rates were

high enough to guar­an­tee providers would ac­cept Med­i­caid pa­tients, as re­quired by fed­eral law, the law­suits al­leged.

Mark Gal­lant, a mem­ber of the law firm Cozen O’con­nor and for­mer deputy gen­eral coun­sel for the CMS, called the Supreme Court decision good news for providers be­cause it al­lowed for fur­ther le­gal ac­tion by those di­rectly af­fected by Med­i­caid spend­ing.

Jus­tice Stephen Breyer, writ­ing for the ma­jor­ity, sug­gested an­other le­gal av­enue might be more ap­pro­pri­ate for the providers be­cause the CMS ap­proved Cal­i­for­nia’s lower rates af­ter the court heard oral ar­gu­ments.

Fed­eral health of­fi­cials have ex­per­tise to eval­u­ate whether state law ad­heres to fed­eral law, Breyer said. Nonethe­less, that fed­eral ap­proval could be chal­lenged, but it could be more ap­pro­pri­ately ar­gued un­der the Ad­min­is­tra­tive Pro­ce­dure Act, Breyer wrote. The court re­manded the case to the 9th U.S. Cir­cuit Court of Ap­peals to con­sider that ques­tion.

The ma­jor­ity opin­ion “didn’t slam the door” on le­gal chal­lenges un­der the supremacy clause brought by hos­pi­tals, doc­tors or pa­tients against state Med­i­caid pol­icy, said Steve Vladeck, a law pro­fes­sor at the Amer­i­can Univer­sity Washington Col­lege of Law. Vladeck was coun­cil for for­mer HHS of­fi­cials who filed an am­i­cus brief in the case.

Stressed state bud­gets could bring the ques­tion be­fore the court again soon. “The tighter state bud­gets be­come … the more they’re go­ing to look at Med­i­caid as one of the ap­peal­ing places to cut cor­ners,” Vladeck said.

State Med­i­caid bud­gets have shown signs of im­prove­ment af­ter re­cent years, with some ex­cep­tions, said Joan Alker, co-ex­ec­u­tive di­rec­tor of the Ge­orge­town Cen­ter for Chil­dren and Fam­i­lies. Among those ex­cep­tions are Cal­i­for­nia and Illi­nois, where the gov­er­nor last week called for $2.7 bil­lion in Med­i­caid cuts.

“In or­der to re­duce cost pres­sures, we need to re­con­sider the groups who are el­i­gi­ble for Med­i­caid, the ser­vices we cover un­der the pro­gram, the uti­liza­tion of these ser­vices and the way and amount we pay for them,” Illi­nois Gov. Pat Quinn said in his bud­get ad­dress Feb. 22.

Maryjane Wurth, pres­i­dent of the Illi­nois Hospi­tal As­so­ci­a­tion, said she has kept an eye on the pro­ceed­ings in Cal­i­for­nia. Asked whether her or­ga­ni­za­tion could take sim­i­lar ac­tion, she re­sponded: “Ev­ery op­tion needs to be con­sid­ered.”

Quinn did not pro­vide any de­tails about how the state would achieve its sav­ings num­ber, which the hospi­tal as­so­ci­a­tion said rep­re­sents 18% of the state’s Med­i­caid bud­get.

—with Ashok Sel­vam

AP PHOTO

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