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Supreme Court Ruling Prohibits Medicaid Providers from Suing States for Higher Pay

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Michael Petruzzelli

, National Council for Behavioral Health

Supreme Court Ruling Prohibits Medicaid Providers from Suing States for Higher Pay

April 2, 2015 | Justice | Medicaid | Comments
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The Supreme Court of the United States handed down a decision on Tuesday that prohibits private health care providers from suing state Medicaid agencies for higher reimbursement rates. Instead, the Court ruled that such disputes over payment should be resolved by the US Department of Health and Human Services (HHS) – dashing advocates’ hopes that litigation could yield pay increases for struggling providers.

The case, Armstrong v. Exceptional Child Center, Inc., originated with a group of private health care providers serving the Medicaid population in Idaho. The providers took legal action against the state’s Health and Welfare Department for freezing Medicaid reimbursement rates at 2006 levels, despite evidence that medical costs had risen.  Under federal law, states are given discretion in setting Medicaid rates so long as they meet a broad set of requirements intended to ensure necessary access to care without encouraging unnecessary utilization of Medicaid services.

Patient protection and advocacy organizations voiced their concerns that the Court’s decision could make it difficult for Medicaid beneficiaries to find or retain doctors, as providers may be forced to stop serving the Medicaid population if the rates are too low to remain financially viable.  “What’s going to happen is you’ll have all these people with the benefits [of Medicaid] who can’t get care,” warned Linda Rosenberg, president & CEO of the National Council for Behavioral Health. Dr. Robert Wergin, president of the American Academy of Family Physicians, said, “Physicians will have a hard decision in terms of whether or not to take a Medicaid patient. If the reimbursement is too low, they will not take them.”

With litigation no longer an option, providers and patients alike may turn to Congress to increase the reimbursement rate for Medicaid providers.