Q & A: Preemption and the Medicaid Act – State Court

This Q & A describes significant state court cases finding that the Medicaid Act preempts state law. 
Jensen v. Missouri Dept. of Health and Senior Services, 186 S.W.3d 857 (Mo. Ct. App. 2006) 
In this case, an adult plaintiff argued that Missouri?s restrictions on personal assistance services violated the Medicaid Act. Pursuant to an administrative hearing, the plaintiff?s personal care services had been reduced because she lived with her parents and, under Missouri regulations, their potential contributions had to be taken into account. This decision was upheld by a state trial court. 
The state appeals court reversed. It held that the state program requirements were preempted because they conflict with a federal law provision that says the state may only consider the resources of a spouse or parents when determining eligibility if the beneficiary is under 21 years of age.2
The court stated that 
 
[w]hat the Department is essentially requiring of Ms. Jensen is that she show that her parents will lose income (undue hardship) if they provide PCA services to her as volunteers two days each week. This is required for Ms. Jensen to demonstrate that she has unmet needs and thus qualifies for PCA services seven days a week. Federal Medicaid law, however, states quite plainly that state plans may not, when determining the extent of medical assistance to be provided, 'take into account the financial responsibility of any individual for any applicant or recipient of assistance … unless such applicant or recipient is such individual's spouse or such individual's child under age 21.3
Poindexter v. State, No. 4-05-0709, 2006 Ill. App. LEXIS 1146 (Dec. 12, 2003) 
At issue in this case was an Illinois state statute governing collection of support from individuals who have spouses living in long-term care facilities and receiving Medicaid. Pursuant to the state statute, the state sought spousal support from these community spouses in the amount that their incomes exceeded the monthly needs allowance established by federal Medicaid law. The plaintiffs alleged that the state statute was preempted by federal law stating that no income of the community spouse shall be ?deemed available? to the institutionalized spouse. 42 U.S.C. § 1396r-5 (b)(1). 
To determine the intent of Congress, the court examined the Medicaid statute as well as ?congressional statements, prior decisions, and agency interpretations for guidance.? Among other sources, the court looked to CMS? State Medicaid Manual and legislative history. The court also emphasized that there is a presumption that Congress did not intend to preempt state law. Ultimately, the court held that the Medicaid provision applied only to determinations of eligibility and not related to issues involving ongoing spousal support. Accordingly, the court held that the state law was not preempted because it did not frustrate the purpose of the Medicaid provision at issue. 
Olszewski v. Scripps Health, 30 Cal.4th 798 (2003) 
At issue in Olszewski were federal regulations limiting the amount of payment that providers could receive for providing Medicaid services. Federal law requires Medicaidparticipating providers to accept the Medicaid payment and any recipient co-payments as payment in full, even if the Medicaid reimbursement amount is less than their normal charges for the service.4 A California statute, however, allowed health care providers to file liens against judgments or settlements obtained by a Medi-Cal beneficiary, and thus collect payment beyond the Medicaid full payment amount.5
The Court held that the California law was preempted by the federal regulations.6 The Court found it clear that the intent of the federal Medicaid regulations was to bar health care providers from recovering any amount from recipients that exceeded the co-payment. Thus, because the state requirements allowed providers to obtain much more from the recipients than the co-payment, ?they cannot co-exist with federal law and stand as an obstacle to the accomplishment of Congress? intent.?7
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1 Produced by the National Health Law Program with a grant from the Nathan Cummings Foundation and the Training Advocacy Support Center (TASC), which is sponsored by the Administration on Developmental Disabilities, the Center for Mental Health Services, the Rehabilitation Services Administration, the Social Security Administration, and the Health Resources Services Administration. TASC is a division of the National Disabilities Rights Network (NDRN). 
2 Jensen, at 863; see also 42 U.S.C. § 1396a(a)(17)(D). 
3 Id. at 862, citing 42 U.S.C. § 1396a(a)(17)(D).

4 42 U.S.C. § 1396a(a)(25)(C); 42 C.F.R. § 447.15. 
5 Welf. & Inst. Code §§ 14124.74, 14124.791 (2002). 
6 Olszewski, 30 Cal.4th at 814, 823. 
7 Id.

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