American Healthcare Association et al amicus brief

INTEREST OF AMICI
Amici are the American Health Care Association, the American Hospital Association, the Association of American Medical Colleges, the Catholic Health Association of the United States, the Federation of American Hospitals, the National Association of Children?s Hospitals, the National Association of Community Health Centers, the National Association of Public Hospitals and Health Systems, the National Council for Community Behavioral Healthcare, and Safety Net Hospitals for Pharmaceutical Access. Amici include associations and networks of hospitals, health systems, and other healthcare providers and collectively represent over 20,000 facilities, in addition to more than one hundred thousand individual practitioners, who supply critically needed medical services to millions of Americans throughout the nation. Amici share a strong interest in the proper administration and enforcement of the statutory requirements of the Medicaid Act.

As Medicaid providers, members of our organizations are acutely aware of the difficulties Medicaid recipients face when seeking primary, secondary, and tertiary care. Despite a continued commitment to treating the Medicaid population, increased Medicaid volume at reduced rates threatens our organizations? members? long-term financial viability and ability to adequately serve Medicaid recipients. 
 

The Supremacy Clause of the Constitution plays a critical part in the system of structural federalism adopted by the Founders. Provider suits such as those brought by respondents vindicate the primacy of federal law by ensuring that the Medicaid Act is not undermined or subverted by conflicting state law, and that the Medicaid program serves Congress?s purpose of providing meaningful benefits to Medicaid recipients. Accordingly, amici curiae and their members have a substantial interest in the important issues raised in these cases. 
 
INTRODUCTION AND SUMMARY 
Petitioners ask the Court to hold that Medicaid providers are powerless to stop California from enforcing against them drastic cuts in Medicaid payment rates that violate the mandates of federal law. As these cases come to the Court, it is taken as a given that California?s indiscriminate, across-the-board 10% cut in rates, without any consideration of the impact of those cuts on beneficiaries? access to care, violates the Medicaid Act. It is also established that respondents, Medicaid providers, are directly and substantially injured by these cuts, which further reduce payment rates that are, for many providers, already significantly below the cost of providing care. Finally, it is established that the administrative review process is singularly ineffective at vindicating the supremacy of federal law. In fact, petitioners have essentially disregarded the administrative process for more than two years, and simply ignored the federal oversight agency when it rejected California?s plan amendment as unsupported by any evidence. Petitioners nonetheless contend that, even assuming all of this, Medicaid providers have no cause of action under the Supremacy Clause to seek a declaration that the cuts are invalid and an injunction preventing their enforcement against providers. Petitioners are wrong. 
 
1. The Medicaid program is responsible for providing access to medical care for more than a quarter of the population of the United States and one third of all children, a percentage that is likely to grow even higher. One of the central requirements of any state Medicaid program is that the program must ensure access for beneficiaries to medical services equal to the access enjoyed by the general population.

Dramatic, indiscriminate cuts of the type at issue in these cases pose a serious threat to an already overtaxed safety net for our most vulnerable citizens, including millions of seniors, children, pregnant women and people with disabilities. Hospitals and nursing homes already are paid by Medicaid programs at rates far below their costs. Hospitals, on average, are compensated at rates 15% less than their costs, and nursing home facilities, on average, are paid at rates almost 10% below provider costs. As a result, providers have been forced to forgo new initiatives and in some cases cease providing certain services. Low reimbursement rates have caused large numbers of doctors to withdraw from the program, with adverse consequences for the entire safety net. It has, for example, become increasingly difficult for Medicaid beneficiaries to find a physician, especially a specialist. Medicaid beneficiaries have difficulty obtaining specialty consultations at an alarming rate, roughly three times more often than insured patients. And, as access to physicians becomes 

more difficult, patients turn to hospital emergency departments, an inefficient use of resources that only adds additional pressure to an already over-taxed system. 
 
Multiple courts of appeals have held that acrossthe-board rate cuts, adopted for purely budgetary reasons and without considering their effect on quality, efficiency, or the availability of care for beneficiaries, are precluded by the Medicaid Act. Lawsuits brought under the Supremacy Clause are the only effective way to prevent states from implementing illegal rate cuts.

The system of administrative oversight by the Department of Health and Human Services (?HHS?) is, by constrast, structurally incapable of preventing states from acting in derogation of Medicaid?s equal access requirement. Limited to what information the state provides it, HHS is ill-equipped to serve as an independent check against violations of the federal mandate. Nor, when a violation is identified, does HHS have an effective way to bring the state into compliance. The present case, in which petitioners simply ignored the federal administrative proceeding, and continued to implement California?s rate cuts even after the proposed state plan amendment was rejected, demonstrates the inadequacy of the administrative scheme. 

Without the ability to bring a suit for declaratory and injunctive relief under the Supremacy Clause, respondents would have no avenue for relief, but would instead simply have to endure California?s illegal rate cuts. 
 
2. This Court has repeatedly recognized that ?the availability of prospective relief of the sort awarded in Ex parte Young gives life to the Supremacy Clause. Remedies designed to end a continuing violation of federal law are necessary to vindicate the federal interest in assuring the supremacy of that law.? Green v. Mansour, 474 U.S. 64, 68 (1985). Petitioners acknowledge the numerous cases in which this Court has entertained a Supremacy Clause challenge and do not genuinely dispute that there are many circumstances in which such a cause of action exists. See Pet. Br. 42-44. Petitioners spend most of their brief arguing instead that such a cause of action should not be recognized in the specific context of a suit to set aside a state law that is invalid because it conflicts with 42 U.S.C. 1396a(a)(30)(A) (?Section 30(A)?). Those arguments are mistaken. 
 
 
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