The California Medical Association (CMA) has filed an amicus brief in a Medicaid reimbursement case (Armstrong v. Exceptional Child Center) that will go before the U.S. Supreme Court this year to determine whether Medicaid providers have a cause of action under the Supremacy Clause of the U.S. Constitution to challenge a state’s compliance with Medicaid laws in setting reimbursement rates. CMA established good precedent in the Ninth Circuit appellate district on this specific question in our Medi-Cal rate cut litigation, but the Supreme Court’s ruling in the Armstrong case could overturn that precedent.

The Medicaid Act's equal access provision requires that states must reimburse providers at a level high enough to attract enough providers to participate so that enrollees have the same access to care that private pay enrollees have in the same geographic area.

The ability of providers to sue under the “supremacy clause” has been tested in many states that have tried to reduce Medicaid reimbursements in response to budget constraints. There is no federal guidance on how reimbursement rates should be determined.

The Supreme Court in this case will examine a decision made by the U.S. Court of Appeals for the Ninth Circuit that allowed Idaho Medicaid providers to sue state Medicaid administrators even though the federal statute does not contain the private right to sue.

In the Idaho case, five nursing homes sued the state Department of Health and Welfare for failure to provide the reimbursement levels required under the federal Medicaid Equal Access Requirement.

Although Idaho in 2005 created, and the Centers for Medicare and Medicaid Services (CMS) approved, a funding formula that would have increased reimbursement for care provided to developmentally disabled adults, the state never implemented it and continued to pay at the old rate. The state stipulated that it was, in fact, unable to meet the federally mandated standards, as the Idaho Legislature had failed to allocate the necessary funding.

After reviewing the facts of the case, the trial court granted summary judgment for the nursing homes and against the state. It found that the inaction of the Idaho Legislature had violated the Supremacy Clause and ordered Idaho Medicaid administrators it to increase reimbursement for providers.

The State of Idaho, however, contends that the U.S. Constitution does not allow private parties to enforce federal Medicaid funding laws against states. Idaho officials say it's up to the federal agencies that oversee Medicaid to decide whether a state is in compliance with reimbursement rules. Twenty-seven states, including Idaho, have filed briefs arguing that CMS is the ultimate determiner of rate adequacy.

CMA involvement in support of the respondents in Armstrong is critical to uphold and to protect the precedential decisions of the Ninth Circuit and to extend the good law recognized in those cases to the entire country.

CMA, along with American Medical Association, the American Dental Association, American Academy of Pediatrics, the American Congress of Obstetricians and Gynecologists, the American Academy of Family Physicians and the College of Emergency Physicians have all filed briefs in this case.

Click here to read the brief.

Contact: CMA legal information line, (800) 786-4262 or legalinfo@cmadocs.org.