Top court to decide if states can cut Medicaid payments

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Gov. Jerry Brown (D-CA)
Gov. Jerry Brown (D-CA)
The U.S. Supreme Court has agreed to hear arguments in a controversial case that could allow states to significantly reduce Medicaid payments to long-term care operators—and leave providers all but powerless to stop them.

A 2008 California state budget proposal sparked outrage in the Medicaid provider community when state legislators attempted to slash reimbursements by roughly $1 billion. That proposal was shot down in federal court. Judges for the U.S. Court of Appeals for the Ninth Circuit decided that the cuts violated the federal Medicaid Act by effectively denying poor patients access to acceptable medical care.

In its appeal, Maxwell-Jolly vs. Independent Living Center of Southern California, the state had argued that private providers are not authorized under the Medicaid Act to challenge the state's cuts to a public benefit. In June of 2009, the U.S. Supreme Court formally declined to hear California's appeal, letting the Ninth Circuit ruling stand.

Recently elected California Gov. Jerry Brown (D), in his new budget proposal, is attempting to revive the cuts. Brown's proposed 10% reimbursement reductions would save $709 million in the fiscal year starting July 1, according to reports.

At least 22 other states have indicated their desire to make similar cuts and have sided with California in its repeated appeals.

On Jan. 18, the Supreme Court relented and said it would hear arguments in the case. States are eagerly anticipating the Supreme Court's ruling, since it could indicate what kind of private lawsuits could be filed over public benefits. The high court will review three separate appeals this fall with a verdict expected early in 2012.
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