Supreme Court: Hospitals can't sue states over Medicaid reimbursement

In a 5-4 decision, the U.S. Supreme Court has ruled that hospitals and other healthcare providers can't sue to challenge Medicaid reimbursement rates set by states.

The lawsuit that landed in the high court was brought by healthcare providers who claimed the rates set by the state of Idaho for people with developmental disabilities were too low to comply with the federal Medicaid law. A lower court agreed with the providers and ruled the rates didn't consider provider costs and were unlawful, according to Bloomberg.

In the Supreme Court case, the state of Idaho asserted the providers had no legal recourse to sue. The providers argued they had the right to bring the lawsuit under the supremacy clause of the Constitution.

A majority of the justices sided with the state, and Justice Antonin Scalia wrote on behalf of the majority. The supremacy clause "instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court," he wrote.

Moving forward, providers must request the federal government intervene on their behalf if they feel Medicaid reimbursement rates are too low, according to the majority opinion in the case.

The decision is a disappointment to hospitals that claim Medicaid isn't covering their costs. The American Hospital Association submitted a brief in the case saying the cost of providing care to Medicaid beneficiaries exceeded reimbursements by $13.7 billion in 2012, according to Bloomberg.

More articles on healthcare industry lawsuits:

Supreme Court rejects PPACA 'death panel' challenge
Premera faces multiple class-action lawsuits over data breach
4 major trends in healthcare litigation

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