According to a lawsuit filed in 2009, Idaho illegally underpaid home health care providers that enable Medicaid patients to live at home rather than being confined to a hospital or nursing facility. These providers, however, will not even be able to pursue their lawsuit, thanks to a 5-4 decision handed down by the Supreme Court on Tuesday. The decision largely broke down on familiar partisan lines, although conservative Justice Anthony Kennedy crossed over to vote with three members of the Court’s liberal bloc and Clinton-appointee Justice Stephen Breyer joined most of Justice Antonin Scalia’s opinion announcing the Court’s judgment.
Scalia’s opinion in Armstrong v. Exceptional Child Center rests on a distinction that even many lawyers are likely to find confusing. Just because something is illegal, Scalia explains on behalf of the Court, does not mean that individuals or businesses that are hurt by the illegal action can enforce the law in court.
The federal Medicaid law requires states to set payment rates for services “to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” Thus, because health providers may choose not to accept Medicaid patients if they are not paid enough for doing so, state Medicaid programs must pay providers sufficiently high rates to ensure that the program’s beneficiaries have the same access to medical care as non-Medicaid patients.
Armstrong was originally filed in 2009, when Idaho hadn’t raised its Medicaid reimbursement rates since 2006. The plaintiffs claimed that these low rates did not keep up with the cost of caring for Medicaid patients, and thus violated Medicaid law.
The crux of Scalia’s opinion, however, is that this provision of the Medicaid law cannot be enforced through lawsuits. “The sole remedy Congress provided for a State’s failure to comply with Medicaid’s requirements” according to Scalia, “is the withholding of Medicaid funds by the Secretary of Health and Human Services.”
Though this holding does permit the federal government to pressure Idaho to raise its rates by threatening to cut off Medicaid funds to that state, it also places federal health officials in a bind. Under Scalia’s decision, the sole consequence for a state that fails to meet its obligations to Medicaid patients is to lose funding that it would otherwise use to provide medical care to Medicaid patients. Federal officials, for good reason, should be reluctant to invoke a power that could make conditions even worse for poor people in Idaho.