Healthcare providers have long been unhappy with often meager Medicaid payments, but whether they can actually sue states to raise those rates is a question the Supreme Court will consider Tuesday.
The case Armstrong v. Exceptional Child Center is brought by five private companies providing Medicaid patients with in-home healthcare and other services. The firms say Idaho unfairly kept reimbursement rates at 2006 levels, even though care continued to grow more expensive.
In response, Idaho, backed by 27 other states and the Obama administration, says it’s up to the federal government and not courts to decide whether states are obeying the Medicaid rules. And being forced to pay higher rates is a burden on its budget, Idaho argues. The state spent an additional $12 million on Medicaid in 2013 under order by a lower court.
If the Supreme Court rules that healthcare providers may seek higher Medicaid payments via the court system, policymakers worry it will open up the floodgates to more such lawsuits across the country.
“The rush to jurisprudence would be swift and overwhelming,” said Matt Salo, executive director of the National Association of Medicaid Directors. “That will really kind of gunk up the gears of how government works.”
But providers contend that courts offer the only realistic hope for higher payments.
Doctors, hospitals and clinics caring for the nation’s poorest are paid at different rates depending on where they live, as states have lots of flexibility in how they run their Medicaid programs. But the reimbursements are generally lower than for private insurance or Medicare, prompting many providers to turn away Medicaid patients and making it hard for them to find a doctor.
And the problem could soon become more acute, with millions of Americans being added to the Medicaid rolls through the Affordable Care Act and the Jan. 1 end of the law’s two-year Medicaid payment bump to primary care doctors.
Appealing to state policymakers to bump up payment rates they’ve already set isn’t typically very fruitful, said Jeff Micklos, general counsel for the Federation of American Hospitals. Nor is appealing to the Centers for Medicare and Medicaid Services, he said.
“You could go to CMS, but they really haven’t done a lot in this area,” Micklos said. “Medicaid rates are considerably below the cost of care.”
Federal law says state Medicaid programs should ensure payments are “sufficient to enlist enough providers” to make sure patients have access to care. But states, with the approval of CMS, are able to decide for themselves what that means. And many have chosen to keep rates low.
The American Medical Association pointed to a 2012 report by the Government Accountability Office finding that more than two-thirds of the states were unable to draw enough providers to participate in their Medicaid programs to ensure access for patients.
In the report, many of the states cited low Medicaid payments as a major contributor to the problem. The average Medicaid payment was just 66 percent of Medicare rates, according to data compiled by the Kaiser Family Foundation.
“The sad fact is that Medicaid’s guarantee of equal access has become an illusion in many states that have cut Medicaid funding and driven physicians and other health professionals from the program,” AMA President Robert Wah said in a statement this week.
States say they’ve been forced to make those decisions because of budgetary constraints — and they could balk at being forced to pony up more money for their Medicaid programs. In total, 16 percent of state dollars went to Medicaid programs in 2012, according to the Pew Research Center.
“At the most basic level, Medicaid is just a huge expense for states,” said Lisa Soronen, executive director of the State and Local Legal Center. “The idea that it would be more expensive would be shocking and hard to stomach for a state.”
