Supreme Court rules on California Medicaid [updated]

Or rather, refuses to rule, sending the case back to the 9th Circuit for briefing on the Supremacy Clause.  Breyer writes for the 5-4 majority, with Kennedy the swing vote. A preview of the outcome for the ACA?

The Douglas cases argued that California violated federal law when it cut Medicaid provider rates, specifically, the laws that require adequate provider networks in Medicaid.  42 USC 1396a(a)(30)(A).  The health care providers and advocates bringing the case looked to the Supremacy Clause – when state and federal laws conflict, federal law is supreme.

When the cases were before the 9th Circuit, CMS had still not decided whether they agreed with the California provider payment cuts.  After the Supreme Court took the cases, CMS blessed the California cuts, in a move that disappointed many health care providers and advocates.

The Supreme Court is now sending the cases back to the 9th Circuit, to re-argue the Supremacy Clause issue in light of CMS approval.  It won’t be a close decision – the 9th Circuit will defer to CMS in this issue and find no violation of the Supremacy Clause. The next lawsuit will be against CMS, claiming their action was “arbitrary and capricious” under the Administrative Procedure Act.

The more important issue in this case is what wasn’t decided. Four conservative Justices were ready to decide the case on a different ground, saying that private individuals don’t have the legal standing to even raise these questions (a so-called “private right of action” in Medicaid, limiting Ex parte Young).  The majority (Breyer, Kennedy, Ginsburg, Sotomayor and Kagan) leaves this issue for another day.

Of course, Congress could fix this with a simple statutory amendment either granting or denying a private right of action.  But with gridlock in Congress, the courts get to write the rules for at least a little while longer.

I’ll have more analysis later today.


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