States have 'wide discretion' to cut Medicaid payments to providers, White House says

The White House said states can reduce Medicaid payments to long-term care operators and other healthcare providers in a court brief filed Monday.

In its court paper, the Obama administration supported California’s right to cut Medicaid payments to many providers by 10%. The proposed cuts to Medi-Cal included 10% reimbursement reductions for some freestanding nursing facilities.The proposed reductions were approved by the Centers for Medicare & Medicaid Services in Oct. 2011.

CMS said California “submitted extensive data” showing the cuts would not compromise access to care. However, providers protested this assertion and the courts upheld their ability to sue over the cuts.

In advocating for the ability of states to cut Medicaid, the White House said states can and should evaluate Medicaid payment levels “to avoid the perpetuation of payment rates that are unnecessarily high.” Furthermore, states have “wide discretion” in setting payment rates, according to the administration’s brief.

This strong confirmation of states’ authority in setting rates may encourage some hesitant governors to move forward with Medicaid expansion under the Affordable Care Act, suggests The New York Times.