U.S. Supreme Court Rules That Providers Cannot Sue to Enforce Payment Levels

On March 31, in Armstrong v. Exceptional Child Center, Inc., the U.S. Supreme Court decided that the Constitution’s Supremacy Clause cannot be used by private providers of Medicaid-funded community services for people with developmental disabilities to sue the state of Idaho for setting payment rates too low. The providers of habilitation services had sued Idaho for violating a provision of the Medicaid program that requires states to set rates that ensure adequate access to services.  The United States Court of Appeals for the Ninth Circuit upheld the providers’ right to sue Idaho under the Supremacy Clause.

The issue of provision of adequate rate-setting is a major one for Medicaid beneficiaries, including people with I/DD. Unfortunately, the Supreme Court decided that the Supremacy Clause does not confer a private right of action, and that Medicaid providers cannot sue to enforce the Medicaid provisions requiring states to “assure that payments are consistent with efficiency, economy, and quality of care” while “safeguard[ing] against unnecessary utilization of … care and services”. Some court observers believe that this decision could further narrow the rights of beneficiaries to use other means to protect individual rights. It remains to be seen how this decision will be interpreted in the lower courts and in future Supreme Court decisions.

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