Alexander v. Choate
Headline: Court allows Tennessee to cut annual Medicaid inpatient coverage from twenty to fourteen days, rejecting a disability-discrimination challenge and making it easier for states to set yearly hospital-day limits.
Holding: The Court held that Tennessee’s reduction of annual Medicaid inpatient coverage from twenty to fourteen days, though it disproportionately affects handicapped recipients, does not violate the Rehabilitation Act because it does not deny meaningful access to the defined benefit.
- Allows states to set yearly inpatient day limits for Medicaid recipients.
- Makes it harder to challenge neutral coverage limits as disability discrimination.
- Preserves state discretion over amount, scope, and duration of Medicaid benefits.
Summary
Background
In 1980 Tennessee faced a large Medicaid budget shortfall and proposed cutting the number of inpatient hospital days it would pay for from 20 to 14 per year. A group of Medicaid recipients who are handicapped sued, pointing to statistics showing handicapped users need more than 14 days much more often than nonhandicapped users. A federal appeals panel found a prima facie disability-discrimination claim and sent the case back to the State to justify the rule.
Reasoning
The Court examined whether the Rehabilitation Act’s ban on disability discrimination reaches neutral rules that have a disparate effect on the handicapped. Relying on earlier decisions and regulations, the Court rejected a sweeping rule that all disparate effects are automatically unlawful. It said the key is whether a rule denies handicapped people meaningful access to the particular benefit the State offers. The 14-day limit is facially neutral, treats handicapped and nonhandicapped alike as to the defined package of benefits, and does not bar handicapped people from obtaining the benefit Tennessee chose to provide.
Real world impact
The Court reversed the appeals court and allowed Tennessee’s 14-day limit to stand under the Rehabilitation Act. States retain discretion to set the amount, scope, and duration of Medicaid benefits, and neutral annual limits will not automatically be struck down as disability discrimination. The decision narrows when neutral, budget-driven coverage rules can be challenged as discriminatory.
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