The United States Supreme Court overturned an Idaho District Court decision in late March, finding that private healthcare providers cannot sue states to increase Medicaid reimbursement to match the increasing rate of medical costs.

In Armstrong v. Exceptional Child Center, Inc., five home healthcare providers joined together to sue the Idaho Department of Health and Welfare, which was supported by legal papers from twenty-seven additional states, in 2009, alleging a violation of § (30)(a) of the Medicaid Act.  This section of the Medicaid Act states that, among other things, a “State plan for medical assistance must…assure that payments are consistent with efficiency, economy, and quality of care.”  This means that the state must take medical care costs into account when determining rates of reimbursement, so as not to insufficiently pay healthcare providers for their services to Medicaid subscribers.

The District Court of Idaho and the Ninth Circuit Court of Appeals both ruled in favor of the providers, holding that IDHW’s rates of reimbursement were too low to satisfy the requirements of § (30)(a).  Furthermore, the Ninth Circuit ruled that the healthcare providers had an “implied private right of action” to challenge the reimbursement rates under the Supremacy Clause of the Constitution (which establishes federal law as governing when there is a conflict between federal law and state law).

However, the Supreme Court overturned the decision with a 5-4 vote, with Justice Antonin Scalia writing the majority opinion and Chief Justice John G. Roberts, Justices Clarence Thomas, Stephen G. Breyer, and Samuel A. Alito Jr. agreeing. Justice Sonia Sotomayor wrote the dissenting opinion and was joined by Justices Ruth Bader Ginsburg, Elena Kagen, and Anthony M. Kennedy.  Supporting his decision, Scalia said healthcare providers should turn to the secretary of the Department of Health and Human Services rather than the courts for support when they feel reimbursement is unfairly low, as the department could withhold funds from states who do not comply with the Medicaid Act.  Supporters of the healthcare providers in this action say it could leave low-income individuals without the ability to ”directly challenge state laws that infringe on individual rights,” a consequence that could have effects far beyond just healthcare, reaching to immigration and fair housing violations as well.

Medicaid is the federal government’s health insurance program for low-income Americans and serves more than 60 million people across the nation.  States use federal funds to reimburse healthcare providers for expenses incurred while serving Medicaid subscribers, and the Supreme Court’s recent decision could potentially give state governments more flexibility when adhering to § (30)(a) of the Medicaid Act, especially if the federal government does not consistently follow through with its ability to withhold funds from states who do not comply.