Medicaid beneficiaries who challenged benefit reductions required by state legislation were denied a preliminary injunction, and their action against state officials was dismissed. The beneficiaries contended that the state legislation, which eliminated Medicaid coverage for nine specified optional services, violated the American Recovery and Reinvestment Act (ARRA) (PubLNo 111-5), which prohibits a state's receipt of a temporary increase in the federal medical assistance percentage (FMAP) if it: (1) sets any new requirements that would impose greater restrictions on Medicaid eligibility than the plan in effect on July 1, 2008, or (2) deposits its FMAP increase in a rainy day or reserve fund.
Section 5000(a) of ARRA states the purposes of the law are to protect Medicaid by helping to avert reductions in payments to providers for covered services and to prevent new constrictions on Medicaid eligibility, but it contains no mandatory language. Section 5001(f)(1) imposes the requirement not to restrict eligibility, but nothing in ARRA prohibits reductions or elimination of optional services, and the legislative history reflects an intention to prohibit eligibility restrictions but permit benefit reductions. CMS guidance on the legislation states that only changes that would cause someone to lose eligibility for Medicaid are prohibited.
The state legislation neither conflicts with ARRA nor hinders the achievement of its purpose. Because the beneficiaries may be able to state a claim regarding their allegation that the state has deposited the FMAP increase into a rainy day fund, that count of the complaint was dismissed with permission to amend. The beneficiaries did not alleged facts to establish that they are likely to succeed on the merits; therefore, the preliminary injunction was denied.
Gray Panthers v. Schwarzenegger, N.D. Calif., Sept. 1, 2009.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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