United States: Enforcing The Entitlement To Medicaid: The Ongoing Saga

Last Updated: December 1 2017
Article by Thomas Barker

We have written in the past about enforcing the entitlement to Medicaid through the federal court system. In light of a recent opinion by the United States Court of Appeals for the 8th Circuit, it seems that this judicial saga continues.

The federal Medicaid statute imposes roughly 80 requirements on a state Medicaid plan. For example, a state Medicaid plan must make medical assistance available "with reasonable promptness." Social Security Act § 1902(a)(8). It must provide the same "amount, duration or scope" of Medicaid to all enrollees. Social Security Act § 1902(a)(10)(B). It must "assure that payments ... are sufficient to enlist enough providers." Social Security Act § 1902(a)(30)(A).

But what happens if a state Medicaid plan fails to comply with any of those requirements? What if benefits aren't made available "with reasonable promptness"? What if benefits are not provided in the same "amount, duration or scope"? What if payments are not "sufficient to enlist enough providers"? What recourse does an aggrieved Medicaid beneficiary or provider have if a state fails to comply with any of the 80 requirements?

It turns out that this is one of the most complicated and long-unsettled questions in the Medicaid program. For over 25 years, the federal courts have grappled with this issue. Increasingly, the answer is that providers and beneficiaries have limited recourse through the federal courts. Rather, the sole remedy for an aggrieved beneficiary or provider is to lodge a complaint with CMS in the hopes that the agency will withhold funding from the state. A recent decision involving the Arkansas Medicaid program reinforces our view on this point. But before we turn to that, a bit of background.

The central problem is that the Medicaid law lacks an enforcement mechanism. As a result, someone who wants to challenge the failure of a state Medicaid plan to comply with the program's requirements has to look to some other statute to enforce Medicaid requirements. In a case called Virginia Hospital Association v. Wilder, 496 U.S. 498 (1990), the Supreme Court held, in a 5 – 4 decision, that the Federal Civil Rights statute (a Civil War-era law designed to protect individuals when a state violated their federally-guaranteed rights) could be used to enforce Medicaid.

It didn't take long for the Supreme Court to begin walking away from that decision, however. In Gonzaga v. Doe, 536 U.S. 273 (2002), the Supreme Court explained that the Federal Civil Rights statute could only be used to enforce federal rights guaranteed by programs such as Medicaid against encroachment by a state when those federal rights were "clear" and "unambiguously" granted. Many Medicaid requirements do not meet this standard.

In 2012, the Supreme Court had its clearest opportunity to overrule the Wilder case, but it declined to do so in Douglas v. Independent Living Centers of Southern California, 132 S. Ct. 1204. Three years later, in Armstrong v. Exceptional Child Center, 135 S. Ct. 1378 (2015), the Court came one step closer when it ruled that a challenger could not rely on the Supremacy Clause of the Constitution, and the doctrine of pre-emption, to enforce the requirements of the Medicaid statute. But still, the Court has never expressly overruled Wilder.

The Douglas and Armstrong cases teed up the most recent example of this ongoing legal drama. In Doe v. Gillespie, No. 15-3271, (8th Cir. 2017), a three-judge panel of the U.S. Court of Appeals for the 8th Circuit examined the ability of a Medicaid patient to enforce the "free choice of provider" requirements of section 1902(a)(23)(A) of the Social Security Act. This section guarantees to a Medicaid beneficiary the ability to choose to receive care from any health care professional "who undertakes to provide [her] such [medical] services."

The case arose when the state of Arkansas elected to terminate Planned Parenthood's contract to provide health care services to Arkansas residents. The lack of a Planned Parenthood provider in the state meant that some women in the state were unable to receive health care services from the provider of their choice. The plaintiffs were women who had lost access to those services as a result of the termination of the contract.

In their lawsuit against the state Medicaid agency, they argued that the state had violated § 1902(a)(23)(A) by eliminating their free choice of provider. Moreover, they sought to enforce their purported right to a free choice of provider by arguing that § 1902(a)(23)(A) was enforceable via the Federal Civil Rights statute as interpreted by the Supreme Court in the Wilder case. Remember, although the Wilder case has been curtailed, it has never been expressly overruled. The plaintiffs in the Gillespie case took the position that Medicaid's free choice of provider requirement was precisely the kind of "clear and unambiguous" right that was enforceable, even in light of the cases that came after Wilder.

The appellate court disagreed, however. The court concluded that § 1902(a)(23)(A) was not "clear and unambiguous" because, among other reasons, the statute is a directive targeted at the state; it is not a conferral of a right to a beneficiary. In other words, the federal Medicaid statute does not say: "A beneficiary under this title has a right to receive services from any health care professional who undertakes to provide her such services"; rather, it says that "a state plan must provide that a [Medicaid beneficiary] may obtain [medical services]" from a provider of their choice.

The statute, according to the court, is "two steps removed" from the interests of Medicaid beneficiaries. It is not directed at the individual Medicaid recipient, and it is not directed at the funding recipients (i.e., the health care provider – here, Planned Parenthood) being regulated. Rather, it is directed at the state official managing the Medicaid program. This, in the court's view, is too far removed to stand as a "clear and unambiguous" right – especially in light of the rulings that came after Wilder.

If the 8th Circuit is correct – and there is some question whether they are, in light of contrary interpretations in other circuits – it is likely that there is no provision in Medicaid that can be enforced through the federal courts. After all, given the way that section 1902 is drafted, every requirement of Medicaid is "two steps removed" from the ultimate Medicaid beneficiary. Providers and beneficiaries must wait to see whether the Supreme Court agrees to take up the split in the Circuit Courts of Appeal on this question.

To view Foley Hoag's Medicaid and the Law blog please click here

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