Providers' lawsuit over delayed Medicaid rates can continue, court rules

Share this content:
Price increases, not a larger senior population, are responsible for exploding healthcare costs: ana
Price increases, not a larger senior population, are responsible for exploding healthcare costs: ana

A group of 10 Illinois skilled nursing providers may press forward with claims that the state failed to adjust their Medicaid reimbursement rates following a change of ownership, an appeals court ruled on Tuesday.

The operators filed a lawsuit against the Illinois Department of Healthcare and Family Services in 2016, arguing that the department and its director violated federal law by not recalculating their Medicaid reimbursement rates following a 2012 change in ownership. The adjustment process never began, the providers said, leaving them without a chance to comment or any notice that the rates would change, as required by the Medicaid Act.

In total, the “state's laxness” left the facilities with $12 million in unpaid costs, the providers allege.

The director of IDHFS filed a motion to dismiss the suit, arguing that the facilities' claims were not supported by the Medicaid Act. The providers would also be blocked by the Eleventh Amendment from receiving retroactive payments from the state at their recalculated rates, the director said.

“In response to the Director's first point, the Operators said that they were seeking only to enforce their procedural rights under the current statute,” court documents read. “They urged that there is an independent value in the public process the statute affords, because without it they cannot know why the Director is refusing to treat them as new owners and failing to recalculate their rates.”

The U.S. Court of Appeals for the Seventh Circuit issued an opinion on Tuesday ultimately siding with the providers, finding that they have an enforceable procedural right to the Medicaid rate readjustment process outlined in the Medicaid Act.

Some of the providers' requests for relief still pending at the district court level may “wander into forbidden territory,” the court said. It added it “will not hesitate to call ‘out of bounds' any effort to obtain retrospective payment from the state.”

“Many questions remain for the district court to resolve, including whether this particular complaint states a claim upon which relief can be granted,” the court wrote.