Important Medicaid Decision Issued By U.S. Supreme Court

The United States Supreme Court has decided that Medicaid providers do not have the right to sue state Medicaid programs when a state allegedly has failed to comply with federal Medicaid law regarding the setting of payment rates. In the case, Armstrong v. Exceptional Child Center, Inc., the Supreme Court “decided that there is not private right of action under the Supremacy Clause of the U.S. Constitution for a provider of services to sue a state Medicaid program to enforce the federal Medicaid law that requires rates to be set at a level sufficient to secure access to care for Medicaid beneficiaries to the same extent available to individuals with private health insurance.”

Medicaid providers have long challenged Medicaid payment rates under the Supremacy Clause of the Constitution. The constitutional provision established that federal law preempts any conflicting state law. The Court of Appeals had previously ruled that healthcare providers had a “private right of action” under the Supremacy Clause to enforce the “equal access” provision of federal Medicaid law as it related to payment rates. However, in the Exceptional Child Center case, the Supreme Court reversed the Court of Appeals, establishing that the Supremacy Clause does not grant any right of action itself. Instead, the provision just tells a federal court how it must decide when there is a conflict between a state and federal law. The Exceptional Child Center case is a home care related case as it is concerns payment rates for habilitation services for developmentally disabled children.

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