• 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.


    • Kevin, thanks for the nice summary of the state of affairs. I think the majority probably captured Kennedy’s vote for this very narrow holding because he seemed to take very seriously (during oral arguments) the amicus by former HHS officials, which stated how heavily they rely on private rights of action in Medicaid enforcement. This is probably the best we could have hoped for in Douglas. That Breyer wrote the majority is not surprising, as he was clearly seeking a narrow, simple solution in his questions during oral arguments. I found notable that the majority and dissent began their opinions quite differently – the majority with the nature of Medicaid, the dissent with the nature of the federal spending power and a reiteration of the importance of clear statement rules. I’m not sure these tea leaves tell us much about Florida v. HHS, but I can’t say that I feel reassured.

    • Interesting (although not surprising) that both sides claim victory: The State by taking the Court’s (non)decision and CMS approval as allowing states wide discretion to address Medicaid cost concerns. The Petitioners for dodging the dissent’s categorical bar and, for now, continuing to receive the higher reimbursement rate, despite CMS approval of the cuts.

    • Kevin
      Again, need translation.

      –OK, rates now revert back to pre-California decrease until this is resolved?

      –Now can gets kicked to CMS. They say no dice, CA has say in rates. Right back to SCOTUS, no? Or, is the translation of this, “we are done, you figure this out, dont bother us any more.”

      How does this actually play out?


    • [Posted for Brietta Clark by KO]

      Thank you for your posting, though I have a different take on what the Ninth Circuit is likely to do on remand. I actually think there are good reasons not to defer to CMS approval, even under the deferential APA standard, and it looks like a California district court agrees. Three recent decisions were issued (last December and January) preliminarily enjoining Medi-Cal cuts, despite CMS approval, because of defects in the process that made it look arbitrary, capricious, and inconsistent with federal law. I think this is a probably better predictor for what we can expect from the Ninth Circuit than the Douglas language about deference. I’ve blogged about this in greater detail at .


      Brietta Clark
      Professor of Law
      Loyola Law School
      919 Albany Street
      Los Angeles, CA 90015

      Blog: http://www.healthcarejusticeblog.org
      Homepage: http://www.lls.edu/academics/faculty/clark.html

    • I think everyone with common sense knows that we are overpaying for medicaid provider rates. But.. so are we overpaying for regular medical rates also. Go to any South American country and get our medical products for pennies on the dollar. I think we need to stop the fraud first which will really take a bite out of the medicaid dollar.