Acting Solicitor General Neal Katyal filed an amicus brief May 26 opposing providers and supporting California's appeal of a lower court ruling, which had blocked a 10% Medicaid payment cut for hospitals and other providers. The court will decide only if providers and beneficiaries can sue in federal court to enforce federal Medicaid law, and then it will send the case back to a lower court to decide.
The administration's action caused “surprise and disappointment” among many Medicaid advocates and providers, said Timothy Jost, a healthcare policy expert and professor at the Washington and Lee University School of Law. “States receive an awful lot of money from the federal government with the expectation that they are going to provide adequate reimbursement,” Jost said.
In his filing, Katyal wrote that such provider lawsuits were not the enforcement mechanism Congress intended to ensure Medicaid beneficiaries' access. Instead, it is the HHS secretary's duty to ensure state compliance.
“States felt that it was really tough to have to defend their provider rates before a federal judge,” Matt Salo, National Governors Association HHS committee director, said about the expense of myriad cases stemming from state decisions on access and any of their other “obligations” to beneficiaries, as defined by federal law. Such provider suits were more common under a federal law replaced in 1989 with a statute directing the HHS secretary to provide more oversight, according to health policy experts.
The lawsuits are consistent with the longstanding practice of private parties suing states to assert the primacy of federal laws, according to a March 21 letter to Katyal from advocates for hospitals and other providers. They pointed out that provider suits have come in lieu of the federal government's enforcement of its own laws. So far, no HHS secretary has told any state that their provider rates violated their Medicaid obligation to maintain beneficiary access to care, according to Sara Rosenbaum, chairwoman of the health policy department at George Washington University.
HHS did not respond to questions for this article.
“CMS doesn't have the resources to do that level of oversight,” said Jana DuBois, attorney for the California Hospital Association. “Without being able to go to court, all providers across the nation are at the mercy of CMS.”
For example, she said, California is implementing its latest round of Medicaid provider cuts this summer without CMS approval of a state plan amendment.
Federal enforcement may come in the future through the first regulations—proposed in April—to implement the 1989 law giving the HHS secretary authority to reject state provider rates. Those regulations would require states to “periodically monitor” the availability of care and providers—among other steps—to determine if beneficiaries have sufficient access to care.
But the gesture inspired little confidence from Medicaid advocates.
“Basically, if a state declares itself in compliance with the regulation, then there's nothing for CMS to do,” Jost said.
Also, the regulations would not apply to the two-thirds—and growing—portion of the Medicaid population covered by managed-care programs. The Obama administration will eventually issue separate regulations for those beneficiaries, according to language in the proposed regulation.
Despite possibly moving to tighter oversight of state Medicaid provider rates, the administration's recent legal stand against providers struck some provider advocates as inconsistent with its other Medicaid initiatives. For instance, it has stridently opposed state efforts to cut Medicaid rolls to save money following the program's largest expansion in history. A provision in the Patient Protection and Affordable Care Act is expected to expand its enrollment by at least 16 million by 2014.