How Medicaid Could Become Obsolete

The equal access mandate is one of the major requirements of Medicaid. This mandate requires states to set rates at which they reimburse Medicaid providers at levels sufficient to ensure an adequate supply of providers. Congress and the executive branch understand that there is not much incentive for providers to participate in Medicaid if their payments are substantially below market levels.

In 2008, the California Legislature cut reimbursement levels by 10% across the board for the state Medicaid program. Groups of Medicaid beneficiaries and providers brought suit against California claiming that the enactment was pre-empted by the equal access mandate. Three federal appellate panels agreed on the merits and put a stop to the rate reduction.

A 2011 Supreme Court case, Douglas v. Independent Living Center of Southern California was about resolving whether private parties can bring suits attempting to enforce the equal access provision. Most lower courts have held that private parties cannot bring such suits. The question then becomes, who can?

California and the Obama administration say that the United States Department of Health and Human services can bring suit. The New York Times points out, however, that this department does not have the financial or legal resources to enforce the provision. They do not have the staff to oversee compliance with the equal access provision, the enforcement budget to hire more staff, or sufficient authority to enforce the provision.

If the federal enforcement ends up being ineffective as New York Times speculates, then other states may follow California’s example and make similar cuts in Medicaid reimbursement rates. Eventually then, providers would abandon Medicaid beneficiaries for private consumers which would eliminate the purpose of the Medicaid program.

Bruce C. Vladeck and Stephen I. Vladeck, Killing Medicaid the California Way, New York Times, Oct. 13, 2011.

Special thanks to Jim Hillhouse (Professional Legal Marketing  (PLM, Inc.)) for bringing this article to my attention.