In Health Affairs, Huberfeld Analyzes Supreme Court Ruling that Undercut Medicaid

Following the Affordable Care Act's (ACA) expansion of Medicaid eligibility, an estimated 14 to 18 million new beneficiaries will enroll in Medicaid over the next 10 years, according to the Congressional Budget Office. At the same time, a U.S. Supreme Court ruling from March threatens the success of Medicaid and could undercut the entire program.

In this month's issue of Health Affairs, the leading journal of health policy thought and research, Nicole Huberfeld, Ashland-Spears Distinguished Research Professor at the University of Kentucky College of Law and bioethics associate at the UK College of Medicine, analyzes the Armstrong v. Exceptional Child Center, Inc. ruling and its implications on Medicaid and health care reform.

In Armstrong, the Court terminated Medicaid providers’ ability to seek relief in federal courts when states fail to pay sufficient Medicaid rates. Huberfeld writes that sufficient payment for providers' services are vital to Medicaid delivery because payment rates are notoriously low.

"If providers are not being paid sufficiently to treat all of these new patients, Medicaid’s promise of medical assistance will not be very meaningful," Huberfeld said.

The court held that the Supremacy Clause of the U.S. Constitution does not grant Medicaid providers the right to ask federal courts to force states to pay fair rates for their services, even when states violate the Medicaid Act of 1965.

In her analysis, Huberfeld writes that the ruling is a triumph for states in the cooperative federalism scheme of Medicaid.

"States have been seeking to limit private actions in federal courts to enforce the Medicaid Act for many years," Huberfeld said. "The Supreme Court has finally agreed with them that such actions are not available under the Supremacy Clause."

Given the opportunity, Huberfeld writes, states are likely to lower payment rates in the wake of Armstrong, and sufficient payment is key in equal access to care for Medicaid beneficiaries.    

Several studies have found that primary care physicians are more likely to accept new private insurance and Medicare patients than Medicaid patients, largely because of the reimbursement differential.

"Hospitals in Kentucky have complained recently that the ACA is costing them money because of the increase in Medicaid enrollment combined with the low rates Kentucky pays in the Medicaid program," Huberfeld said. "As of 2012, Kentucky paid approximately 77 perfect of what Medicare would pay for the same services."

Congress increased Medicaid fees for primary care services to Medicare levels Jan. 1, 2013, but the increase expired Dec. 31, 2014. Huberfeld writes in Health Affairs that recent studies show that this two-year increase in payment rates positively influenced physicians’ decisions to treat Medicaid patients, indicating that Medicaid enrollees’ access to primary care delivery is directly influenced by payment sufficiency.

So, how can payment sufficiency be secured now?

"HHS (U.S. Department of Health and Human Services) must provide greater oversight of states’ payment decisions," Huberfeld said. "The regulations that HHS published in draft form in 2011 must be completed so that states at least start to report and analyze the payment decisions they make in Medicaid."

To view the abstract of Huberfeld's analysis, "The Supreme Court Ruling That Blocked Providers From Seeking Higher Medicaid Payments Also Undercut The Entire Program," visit http://content.healthaffairs.org/content/34/7/1156.abstract.