The State of Idaho took on the federal government in a court case over Medicaid reimbursement rates, and lost. Five Idaho corporations which provide basic life skills - routine functions such as bathing, eating and laundry - sued the Idaho Department of Health and Welfare three years ago in federal court. The Medicaid providers argued that they were losing money under Idaho's budget restrictions because their reimbursements had been frozen since July 2006.
In 2009, the Idaho Division of Medicaid paid for an outside study of Medicaid rates which found that normal daily rates for providers were about 23 dollars a day short, and that rates for intensive support for clients was more than 220 dollars a day below where they should be. But when the providers asked for the higher amount, Department of Health and Welfare officials told them state legislators had not appropriated the additional money, roughly 4-million dollars.
In their suit, the five Medicaid providers cited a state law passed in 2005 which required the health department to set up a method for Medicaid payments which incorporated the actual costs of providing services. And a federal judge in Boise agreed with them. He wrote that budget constraints are not a valid excuse to deny appropriate reimbursements - that the state cannot reasonably set rates based on valid cost studies and then disregard undisputed evidence of increasing costs in subsequent years.
On Friday, a federal appeals court panel upheld the trial court ruling. The Idaho Attorney General has not indicated whether he'll ask the US Supreme Court to overturn the decisions.