Supreme Court to Hear Challenge to Medicaid Rate Cuts

The case involving California’s legislative cuts to Medicaid payments  mentioned recently will be first on the Supreme Court’s agenda this fall.  Providers and beneficiaries contend that the legislation requiring 10 percent cuts to all Medicaid payments violates two provisions in  the federal Medicaid statute  that require: (1) a public process and opportunity for hearing on changes to inpatient care rates, and (2) that all Medicaid payment rates rates be high enough to assure that Medicaid beneficiaries  have access to services equal to the general public in the geographic area.

The main issue before the Court is whether providers and beneficiaries have the right under the Supremacy Clause of the United States Constitution to challenge the rates in federal court. The answer will depend partly on whether the current laws and regulations are a comprehensive scheme to enforce the law.

If the court remains focused on these technical legal issues, the consequences of the rate cuts may not even be considered.  Health care providers who filed a brief supporting the lawsuit describe the likely results of across-the-board cuts to Medicaid funding. Lower payment rates mean reduced access to care, as physicians and other private providers stop taking new Medicaid patients or even drop out of the program entirely.  The publicly funded clinics will have to see more patients without payment, and and arguably people will delay going to the doctor until they wind up  in the emergency room.

States have very real concerns. In times of high unemployment, when they receive less tax revenue, there are more people who need and are eligible for Medicaid and the Children’s Health Insurance Program (CHIP). Thus, Medicaid takes an ever increasing share of the shrinking pie. Currently states must cover low-income children and their caretaker relatives, individuals with disabilities, and the elderly.  In 2014,  under the Affordable Care Act, Medicaid will expand to cover adults  under 65, who are not disabled, with incomes up to 133 percent of the federal poverty level (FPL). The Chicago  Tribune  reports that state officials have expressed concern that the expansion of eligibility in 2014 will make it even harder for states to pay for Medicaid.

States will not have to provide all necessary medical care for the newly eligible group.  At the beginning, the federal government must pay for 100 percent of the costs. The new group will only be entitled to premium assistance to help them buy private insurance. However, state officials worry that many people who would be eligible now but aren’t receiving assistance will apply and the states will get only the usual percentage of matching funds for them.

The “super committee” will consider more Medicaid cuts.  In fact, they are more likely to consider cutting Medicaid and CHIP funding than to eliminate  even the most egregious tax loopholes.  What do you think the super committee will do?