Supreme Court rules Medicaid providers can't sue states for higher rates, disputes should be resolved by HHS

March 30, 2015

The Supreme Court said Medicaid providers can't sue states claiming they were underpaid for medical services to the poor, ruling such disputes should be resolved instead by HHS. Federal law gives states discretion in setting Medicaid rates, as long as they follow a broad set of factors intended to ensure health services remain available to the poor without encouraging the "unnecessary utilization of such care." In Idaho, several companies that provide home care for intellectually disabled people sued state officials claiming reimbursement rates set by the state were too low. The Supreme Court threw the suit out on a 5-4 vote. Writing for the majority, Justice Antonin Scalia said that under the Medicaid Act, the only way to pressure states to increase providers' pay would be for the secretary of HHS to withhold federal contributions to the joint state-federal health insurance program for the poor. Chief Justice John Roberts and Justices Clarence Thomas, Stephen Breyer and Samuel Alito joined all or most of the opinion. Justice Sonia Sotomayor, joined by Justices Anthony Kennedy, Ruth Bader Ginsburg and Elena Kagan, dissented. "Now it must suffice that a federal agency, with many programs to oversee, has authority to address such violations through the drastic and often counterproductive measure of withholding the funds that pay for such services," Justice Sotomayor wrote.