As Goes California, So Goes the Nation for Rulings on Medicaid Cuts?

The Supreme Court decided last Wednesday to forego a ruling on a years-long legal battle between California and healthcare providers protesting cuts in reimbursement rates to the state’s Medicaid program.

Like many states, California is seeking to make major budget cuts, and the state government began implementing cuts to its Medi-Cal program before they were approved by the Centers for Medicare & Medicaid Services (CMS). Healthcare providers began suing the state to block the cuts under the Constitution’s Supremacy Clause, and the case ended up being heard before the Supreme Court Justices in Douglas, et al., v. Independent Living Center.

Then, CMS retroactively approved the cuts, causing the Justices to decide that because the case had changed so drastically since it originally came before them, they would not rule on it and instead send the case back to the Ninth Circuit.


In the meantime, can providers keep suing to block cuts to Medicaid reimbursements? Maybe, but maybe not, says Dianne De La Mare, the vice president of Legal Affairs at the American Healthcare Association (AHCA).

“Basically, the Supreme Court just punted this case,” she told SHN.

Providers argued the Supremacy Clause gave them the right to sue in order to ensure that California lives up to its obligations under the federal Medicaid program to provide adequate reimbursements so providers are willing to give care to the needy, according to Lyle Denniston’s SCOTUS Blog.


The five Justices concluded that “while the Supremacy Clause was at best a doubtful source for a lawsuit, the patients and providers may yet have a right to proceed now that final federal agency approval had been completed, by suing under the Administrative Procedure Act. The majority did not decide finally, however, whether the change in circumstances meant that there could be no Supremacy Clause challenge; that was the issue left to the Ninth Circuit to decide in the first instance,” says Denniston.

The eventual ruling on the case could potentially be huge, as it will set a precedent for the nation, De La Mare says.

With many states facing budget problems of epic proportions, often leading to cuts across multiple programs, people throughout the country are keeping an eye on the proceedings to see how it could impact budget decisions in their own state.

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Written by Alyssa Gerace