(Story updated at 2:30 p.m. ET.)
Private healthcare providers cannot sue state Medicaid agencies over low reimbursement rates, the U.S. Supreme Court decided Tuesday in a 5-4 decision (PDF), reversing a lower court's ruling.
Justice Antonin Scalia wrote in the majority opinion that the supremacy clause of the U.S. Constitution, which says federal laws reign supreme over state ones, does not allow providers to sue state Medicaid agencies over rates. Scalia also wrote that the Medicaid Act implicitly does not allow private parties to enforce a part of the law that requires state plans to “assure that payments are consistent with efficiency, economy, and quality of care” while “safeguard(ing) against unnecessary utilization of ... care and services.” Congress, he concluded, did not mean for the court to be able to get around that part of the law.
Idaho providers had argued in the case, Armstrong v. Exceptional Child Center Inc., that suing over low rates is sometimes the only way to enforce federal payment requirements. Otherwise, low rates could lead to fewer providers agreeing to participate in Medicaid and thus less access to care for Medicaid patients, some had argued.
State Medicaid officials countered that Congress had not authorized such suits in the Medicaid Act and that allowing them could mean endless litigation that would slow the system.
Justice Sonia Sotomayor wrote in a dissenting opinion that the court's decision Tuesday “has very real consequences.” The outcome, she said, means only HHS—an already busy federal agency—may go after state Medicaid agencies that underpay providers, and then only “through the drastic and often counterproductive measure of withholding the funds that pay for such services.”
Scalia answered that argument in the majority opinion. “The dissent speaks as though we leave these plaintiffs with no resort. That is not the case," he wrote. "The dissent's complaint that the sanction available to the Secretary (the cut-off of funding) is too massive to be a realistic source of relief seems to us mistaken. We doubt that the Secretary's notice to a State that its compensation scheme is inadequate will be ignored.”