The U.S. Supreme Court heard arguments today in Douglas v. The Independent Living Center of Southern California as to whether Medicaid recipients and healthcare providers may sue to block states from cutting Medicaid rates.  The original action—filed by a group of pharmacies, health care providers, senior citizens’ groups and Medi-Cal beneficiaries—sought to enjoin the Director of the California Department of Health Care Services from implementing state legislation reducing payments by ten percent to certain medical service providers under Medi-Cal. The Ninth Circuit ruled that the Supremacy Clause of the U.S. Constitution allows Medicaid recipients and healthcare providers to sue state officials to enjoin reimbursement cuts that allegedly violate federal Medicaid law, which does not include an express right to sue over Medicaid payment levels but does require states to keep payment rates high enough for providers to participate in the Medicaid program.  See 42 U.S.C. § 1396a(a)(30)(A) (a state that accepts federal Medicaid funds must adopt a state plan containing methods and procedures “to safeguard against unnecessary utilization of [Medicaid] services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population”). 

The Supreme Court limited argument to the question of whether Medicaid recipients and providers may maintain a cause of action under the Supremacy Clause to enforce § 1396a(a)(30)(A) and declined to hear argument on whether a state law reducing Medicaid reimbursement rates may be held preempted by § 1396a(a)(30)(A) based on requirements that do not appear in the text of the statute.