Supreme Court appears divided on whether providers can sue for higher Medicaid rates

The Supreme Court appears to be split over the question of whether healthcare providers have a right to sue states over low Medicaid rates, court watchers noted after oral arguments on Tuesday.

The case, Armstrong vs. Exceptional Child Center, originated in Idaho. Providers serving developmentally disabled patients sued the state, saying that it was breaking federal law by holding Medicaid rates flat for years due to budget concerns. The low rates made it impossible for providers to care for Medicaid patients, unlawfully restricting their access to care, the plaintiffs claimed. If they succeed in their case, long-term care providers and others that rely heavily on Medicaid would have a potentially valuable legal tool for safeguarding their reimbursements.

Major medical associations and patient advocates support the providers, but the White House and many states are opposed. They say that only the federal government — not healthcare providers — can sue states for setting improperly low rates.

Chief Justice John Roberts appeared to back the government's position, posing sharp questions about a potential slippery slope. If federal judges can determine appropriate state funding for healthcare, he posed, what other types of state services might ask for similar intervention?

“What would happen if you have five cases going, each one claiming rights to higher rates under the roads program, under the parks program?” Roberts asked attorneys, according to Bloomberg BNA.

Other conservative justices seemed to share Roberts' viewpoint that the providers do not have standing to bring this lawsuit, news sources reported. However, the more liberal wing of the court appeared to be of a different mind. For example, Justice Sonia Sotomayor countered that the slippery slope argument goes too far afield, and that this case is “just about stopping the State from doing something that's wrong,” according to BNA.  

The high court likely will reach its decision by June.