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Medicaid’s looming Supreme Court battle

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The Supreme Court will open its 2011-2012 term on Monday Photo by Bill Jonscher PHOTO BY BILL JONSCHER with a crucial case on Medicaid, the federal health insurance program for low-income Americans. The case, Toby Douglas vs. The Independent Living Center of the United States, will likely determine whether private Medicaid providers, like hospitals and doctors, have a right to challenge payment rate cuts in court. It centers on a 10 percent rate cut that the state of California attempted to enact in 2008. California already has the lowest Medicaid reimbursement rates in the country; Medicaid advocates pushed back in the courts, contending that such a cut would push providers out of the program.

Earlier this week, I spoke with Lloyd Bookman, an attorney who has carried the case with his firm, Hooper Lundy and Bookman, for the past three years. We discussed the key questions of the case, what he’ll be watching for Monday and the possible implications of the Court’s final decision. What follows is a transcript of our interview, lightly edited for length and clarity.

Sarah Kliff: Explain what’s at stake in this case. What is the Supreme Court going to be deciding on?

Lloyd Bookman: The main conflict before the Supreme Court is whether there’s a private right of action, by a beneficiary of a state Medicaid program, or a health care provider, to challenge state Medicaid rates being set so low that they violate the federal mandate [which requires Medicaid to provide payments “sufficient to enlist enough providers”]. That’s the basic issue that’s going to be decided here.

SK: When you’re in the courtroom on Monday, what kind of questions are you hoping the Supreme Court justices will ask? What should we look for to get a sense of their thinking?

LB: What I would hope to hear are questions directed at the notion this case is a constitutional case and not reliant on Congressional statute. If the Court focuses on whether we have a private right of action, directly under the Supremacy Clause [which says federal laws preempt state ones], we should come out well. It would be unprecedented to say private litigants can’t rely on the provisions of the United States constitution to pursue their litigation.

If we start hearing questions about what did Congress intend, did Congres intend a right of action [in the legislation creating Medicaid], that indicates they’re thinking that Congress can narrow the scope of remedy and narrow the ability of private litigants to get into court. We could hear those questions, but I’d prefer not to.

SK: One interesting thing about this case is that it’s split Democrats. Some Congressional Democrats have written an amicus brief in support of your case, while the Obama administration has supported California’s right to make the rate cut without challenge. Are you worried to go into the courtroom with the White House supporting the other side?

LB: We found that decision by the White House, besides very disheartening, also very curious. Health and Human Services hasn’t signed onto the solicitor general’s brief, which is unusual. It indicates to us that there’s some disagreement within the administration about what the outcome should be. We did do some research though, looking at previous cases that have been supported our opposed by the solicitor general, and it frankly it doesn’t seem to matter. Although we’d obviously prefer to have them on our side, we’re not thinking it will affect the material outcome.

SK: What’s at stake here? What changes if the Supreme Court says that Medicaid providers don’t have a right to challenge rate cuts?

LB: If this case is decided adversely to our clients, it could have very significant implications for the Medicaid program and health reform. Medicaid is one of the largest budget items and, since it’s hard to cut benefits, it’s easier, politically, to cut provider rates. Fear of litigation is one of the only things holding states back from making rate cuts right now. Absent that, we think we’d see a lot more. Medicaid beneficiaries won’t be able to get access to services, hospitals could go out of business. I’m really fearful an adverse decision can cause a domino effect that could lead to a really compromised Medicaid program.

SK: In the larger context of all the things that could impact Medicaid, how much does this case matter?

LB: At our firm, our clients are primarily health care-focused. And for them, I can’t imagine a more important case.

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