Upcoming Medicaid decision likely to have sweeping impact

California has appealed a 9th U.S. Circuit Court of Appeals decision stopping a 10% provider rate reduction from going forward, with an anticipated decision by the Supreme Court by spring 2012, notes Stan Rosenstein, MPA, principal advisor at Health Management Associates in Sacramento, CA, and former California Medicaid director.

The decision will address one issue—whether providers and beneficiaries have standing under federal laws to enforce the requirements that Medicaid rates be adequate to ensure access, says Mr. Rosenstein.

"If the Supreme Court says that providers can't litigate, then obviously the provider litigation in federal court is thrown out," says Mr. Rosenstein. The state's legislature replaced the original 10% reduction with a 1% or 5% rate reduction in February 2009, adds Mr. Rosenstein, and parts of those rate reductions were enjoined, and parts actually went forward.

Then in March 2011, the legislature adopted a new 10% provider rate reduction, dependent on approval from the Centers for Medicare & Medicaid Services (CMS). "Those rate reductions, both the new 10% as well as the old 1% that is in effect, are under CMS review right now," says Mr. Rosenstein. "Providers in the state are waiting to see whether CMS will approve the 1% that was done first, and also whether they will approve the 10% reduction."

If the Supreme Court invalidates the 9th Circuit ruling, and CMS approves the rate reductions, says Mr. Rosenstein, providers' only remedy will be in state court.

With the 9th Circuit decision, only the states of the 9th Circuit were affected, says Mr. Rosenstein, but the Supreme Court ruling will affect the entire nation. Over 20 states have filed amicus briefs with the Supreme Court in California, he adds, and the National Governor's Association has come out in support of California. "States and providers are watching this very carefully. It really will be a landmark decision for Medicaid," says Mr. Rosenstein.

Case is "monumental"

Steve Hitov, general counsel for the Coalition of Immokalee Workers, says that when he argued a case before the Supreme Court years ago in which now-Supreme Court Justice Samuel Alito was his adversary, Alito argued on behalf of the government that the only remedy for a citizen confronted with government wrongdoing is to petition his or her elected representatives.

"So, we pretty much know how he will rule on this," he says. "If this comes out the wrong way, then citizens confronted with blatant disregard of the law by the government will have no other recourse than to write their Congressman."

That the Obama administration has decided to come down on the side of Justice Alito's argument is, in Mr. Hitov's opinion, "totally indefensible. The President taught Constitutional law, so there is no chance he doesn't understand what is at stake here."

Mr. Hitov, a former National Health Law Program attorney, says that the case "is a monumental one, but not only because of its implications for Medicaid. It is nothing short of a case about the rule of law in this country."

The outcome will determine whether citizens can challenge government noncompliance with the law or not, says Mr. Hitov. "It just happens to be a Medicaid case that raises this fundamental rule of law issue," he says.

Contact Mr. Hitov at (301) 422-6942 or stevehitov@ciw-online.org and Mr. Rosenstein at (916) 792-3740 or srosenstein@healthmanagement.com.