On November 30, 2010, the Department of Health and Human Services (HHS) announced that it was removing provisions of a final rule published on May 29, 2007 (Final Rule), pursuant to a decision of the United States District Court for the District of Columbia in Alameda County Med. Ctr. v. Leavitt, 559 F. Supp. 2d 1 (2008). The Final Rule had modified the regulatory requirements pertaining to federal and state funding of the Medicaid and State Children’s Health Insurance Program (SCHIP) programs. Included within the Final Rule were provisions that, among other things, clarified that only units of government could finance the non-federal share of Medicaid expenditures and limited Medicaid reimbursement to government-operated health care providers to the provider’s cost in providing services to Medicaid beneficiaries.

In Alameda County Medical Center, the D.C. District Court vacated the Final Rule after finding that HHS had improperly promulgated the Final Rule by ignoring a Congressional moratorium on the regulation enacted as part of the U.S. Troop Readiness, Veterans Care, Katrina Recovery and Iraq Accountability Appropriations Act of 2007 (later extended by the Supplemental Appropriations Act of 2008). As part of the American Recovery and Reinvestment Act of 2009, Congress subsequently expressed its sense that the Final Rule should not be adopted. Through the regulation issued on November 30, 2010, HHS removed all provisions of the Final Rule from the Code of Federal Regulations and reinstated the regulatory language that existed prior to the issuance of the Final Rule. These changes affect rules in Parts 433, 447, and 457 of Title 42 of the Code of Federal Regulations.

The Final Rule is available by clicking here.