One way to raise Medicaid reimbursement rates would be to bring litigation against the State Medicaid agency in charge of managing Medicaid under §30(A) of the Social Security Act (“SSA”).

That’s what the pharmacy associations in the State of Washington did in April 2021. The associations alleged that, per a 2016 CMS Rule, State Medicaid agencies must consider two types of costs when it comes to reimbursement rates; i.e., (1) the ingredient costs; and (2) the professional dispensing fee, when creating a Medicaid reimbursement rate. They argued that Washington’s Medicaid reimbursement rates were less than half of the surrounding States.

The case never went to trial. In July 2021, the parties filed a Joint Motion for Voluntary Remand and Dismissal Without Prejudice. It was so ordered that this matter was remanded back to the Centers for Medicare & Medicaid Services (“CMS”). It was further ordered that this matter was dismissed without prejudice with the parties to bear their own costs and fees. The Order was signed by Judge Ricardo S. Martinez. National Association of Chain Drug Stores et al v. Becerra et al, 2:21CV00576. I have no idea what has happened since leaving the court system. If anyone knows, I would love to know. Has Washington’s Medicaid reimbursement rates increased for pharmacies?

Section 30(A) of the Social Security Act (“SSA”) describes reimbursement rates as being high enough “to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” Yet, statistics show that only 70% of health care providers accept Medicaid or Medicare. In mental health, in particular, there is a shortage of providers, especially minority providers. In other words, government health is failing its providers and consumers. See blog.

Exactly what Section 30(A) requires of States in terms of payments to Medicaid providers has been the subject of considerable litigation. There is little consistency in the Courts’ interpretation of §30(A). While some Courts have held that provider costs should be considered, other Courts disagree.

Providers have reasonable complaints about the Medicare and Medicaid reimbursement rates. The reimbursement rates are wholly inadequate; in fact, the reimbursement rates, in some cases, do not even cover the cost of rendering the services. Yet “quality of care” and “equality of access” are promised in Section 1902(a)(30)(A) of the SSA. For example, in 2020 hospitals received only 88 cents for every dollar spent caring for Medicaid patients. This amounted to a $24.8 billion underpayment. Low reimbursement rates limit access to quality care and contribute to poor health outcomes for Medicaid beneficiaries, who are disproportionately minority. Research suggests that increasing Medicaid primary care rates by $45 per service would reduce access-to-care inequities by at least 70%.

Medicaid reimbursement rates suck. Medicare reimbursement rates suck. Plus, providers must succumb to tedious audits. There is little upside to accepting Medicare and Medicaid, except charity.

I do not believe that the reason “why” matters when it comes to reimbursement rates. If the government chooses to regulate health care, the health care the government regulates should be adequate.

Other service types should choose to litigate over the low reimbursement rates.

The State of Florida recently looked into its Medicaid reimbursement rates. “According to the latest Physician Workforce Annual Report published by the Florida Department of Health, the most common reason that physicians do not accept Medicaid is low reimbursement.” In total, the report found that 44% of physicians who do not accept Medicaid patients do so due to the unacceptably low reimbursement offered by the program.

Other associations have likewise filed litigation in hopes of increasing Medicaid reimbursement rates. I highly encourage providers to discuss bringing litigation to increase Medicaid and Medicare reimbursement rates to their respective associations Litigation, unlike lobbying, is swifter to change. Public opinion has weight.