Policy & Regulation News

Idaho Medicaid Reimbursement Case Goes to Supreme Court

By Elizabeth Snell

- Last week the Supreme Court announced that it would make a decision on the case concerning whether private medical providers can sue a state to raise Medicaid reimbursement rates to deal with rising medical costs.

In December 2013, the 9th U.S. Circuit Court of Appeals said the providers could sue and ruled in their favor on the merits. However, Idaho appealed the ruling and the justices agreed to hear the case, called Armstrong v. Exceptional Child Center.

Idaho’s lawyers claim that to receive Medicaid funding, they are required only to comply with the Medicaid Act and related regulations, reported Reuters. The December ruling noted though that state officials recommended increases in reimbursement rates in the late 2000s. However, they were never implemented because the Idaho legislature declined to appropriate funds.

The petition filed by the state of Idaho explains that the Idaho Department of Health and Welfare – the state’s Medicaid agency – does not typically include the reimbursement rates for residential rehabilitation services in its state plan or waiver documents and is not required to. It simply needs to maintain documentation of those rates and make them available to CMS on request.

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  • “In 2009, the Department proposed rate increases for the services at issue in this case,” the petition read. “However, the Department did not receive an appropriation for the increases from the Idaho Legislature, so the Department did not finalize the methodology change or increase the rates. At no time relevant to this case has CMS ever initiated any compliance action or otherwise complained about the State’s rates or its compliance with the DD Waiver.”

    The DD Waiver – the Developmentally Disabled Home and Community Based Services Waiver – was authorized by Congress to help states fund numerous noninstitutional care options for individuals eligible for Medicaid benefits in an institution, but who would rather live at home or in the community. The case involves Idaho’s reimbursement rates for residential rehabilitation services under the DD Waiver.

    The second issue raised in Idaho’s petition to the Supreme Court is about the role of provider costs in setting and maintaining reimbursement rates.

    “The rulemaking status is unclear,” the petition said. “In the three plus years since the proposed rule was published in the Federal Register, no final rule has been adopted, and Petitioners have no information that HHS has taken any further steps toward implementing the rule or even that HHS intends to proceed with this rulemaking.”

    According to Idaho representatives, the HHS Secretary has not adopted any regulation addressing how states may demonstrate compliance with the statute that says payments need to be “consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available…at least to the extent that such care and services are available to the general population.”

    Additionally, the 9th US Circuit Court gave that statute a reading “that imposes substantive requirements on states that do not appear in the text of the statute.”

    A decision on the case is expected by the end of June 2015.