Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

Lawsuits Over Medicaid Fees Could Impact Reimbursement

By Ryan Mcaskill

A series of lawsuits show how healthcare providers use the legal system to get improved Medicaid fee reimbursement.

- Over the last month, Medicaid fee reimbursement has been a major topic of conversation. With the federally mandated “fee bump” ending on January 1, 2015 after two years, the reimbursement level for practitioners accepting Medicaid patients could drop as much as 50 percent in some states. This could add to the fear that was prevalent before the bump was instituted and is the main reason it was created, which is that doctors will turn away Medicaid patients because of the low rate of reimbursement.

Any kind of extension has yet to be agreed upon from a federal level, meaning the only way that these fee rates could be increased is from rulings in individual states. While they may not want to do that willingly, a series of lawsuits may start forcing their hand.

A recent article from Kaiser Health News examined two lawsuits over Medicaid fees that could just be the tip of the iceberg. The first case comes from Florida and was settled in December, 2014. It revolved around a young boy in the state that needed to wait nearly a week to find a doctor to treat a painful sinus infections. Despite calling multiple area doctors, the boy’s mother was denied an appointment because he was covered by Medicaid.

In the ruling, federal district judge Adalberto Jordan deemed the wait for treatment to be “unreasonable” and went as far saying the Florida Medicaid system is failing.

“l conclude that Florida’s Medicaid program has not compensated primary physicians or specialists at a competitive rate as compared with either that of Medicare or private insurance payers,” Jordan wrote. “I further conclude that Florida’s structure for setting physician reimbursement fails to account for statutorily mandated factors in the Medicaid Act, including the level of compensation needed to assure an adequate supply of physicians.”

The second case, could have a bigger impact. It started in Idaho and on January 20, 2015 it will be heard by the U.S. Supreme Court. The goal of the case, will be to overturn a 2011 lower court ruling to increase payments to providers that take Medicaid enrollees with development  disabilities. It was brought by several centers that handled these patients but dealt with unfair reimbursement rates that were at 2006 levels when there is evidence that the cost of care has increased.

State officials countered with the argument that it should be able to set providers fees and they should not be dictated by providers using the court system to get higher pay rates. These cases will also be a drain on already limited state resources. However, legal recourse is something hospital and provider supports are adamant about.

“Without recourse to the courts… hospitals and other providers will continue to bear losses that, for some, are unsustainable,” the American Hospital Association said in a brief filed in the Supreme Court case.

The outcome of this case could have major ramifications for providers that are considering legal action to get Medicaid fees increased to an acceptable level. With the federal fee bump over, a ruling against providers in Idaho could make matters worse.



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