Q & A: Case on Provider Enforcement of Medicaid Freedom of Choice

Executive Summary

This Q&A discusses the potential issues around litigation by providers to enforce the Medicaid freedom of choice requirement.

Update on Federal Court Access? Provider Enforcement of Medicaid through Section 1983
Question:  An organization of health care providers has contacted our office, asking for advice about suing the Medicaid agency for failing to follow Medicaid requirements allowing free choice of providers.  They have asked whether there are any recent cases they should consider before filing suit.  Are there any they should know about?
Answer:  A recent case from Pennsylvania, Queer v. Westmoreland County, held that providers cannot enforce this provision.   This is the latest in a series of setbacks for providers.
Detailed Answer:
In Queer v Westmoreland County,  Integrated Care Corporation (ICC), a provider of early intervention services for children aged birth to 3, sued Westmoreland County, alleging that the county has violated the freedom of participants to select providers of their choice.  Pursuant to 42 U.S.C. § 1396a(a)(23) state plans for medical assistance must provide that "any individual eligible for medical assistance (including drugs) may obtain such assistance from any institution, agency, community pharmacy, or person, qualified to perform the service or services required.  ICC filed suit because the County had terminated ICC?s service contract.  
The Court held that this Medicaid requirement could not be enforced by providers, noting that ?section 1983 can, in theory, be used to remedy statutory violations.?  However, the Court noted that the cases addressing whether providers could enforce the provision had all been decided against the providers.  In general, the Court reasoned, the Medicaid Act and program were created to benefit individual beneficiaries, not providers.  

Thus, while Medicaid providers have been permitted to bring actions challenging the Social Security Act, all such cases, most notably Wilder, have involved "reimbursement rates or payment procedures." Unlike the reimbursement provision at issue in Wilder, the freedom of choice provisions at issue here "do not in any way affect a provider's right to reimbursement or payment under Medicaid."  (citation omitted)
In contrast to the reimbursement provision, however, the Court noted that the freedom of choice provision gives no indication that health care practitioners are given any rights. The legislative history of the freedom of choice provision clearly focuses on the Medicaid recipient's right to choose the provider of his or her choice.  ?It thus follows that ?the purpose of the freedom of choice provision was not intended to benefit Plaintiffs.? (citation omitted). If  § 1396a(a)(23) was not intended to benefit Plaintiffs, it certainly does not give Plaintiffs an unambiguously conferred right to support a cause of action brought under 1983." 
Thus, providers should steer clear of making claims to enforce this (and most other) Medicaid provisions.  It is particularly important that they be discouraged from such cases, because courts may take them as an opportunity to chip away at the enforcement rights of Medicaid beneficiaries.  

1  No. 2:06-cv-325, 2007 Westlaw 2407283, 2007 U.S. Dist. LEXIS 60827 (W.D. Penn. Aug. 20, 2007)

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