Wilder v. Virginia Hospital Assn.

1990-06-14

Headline: Medicaid payment rules expanded: Court allows hospitals and other health-care providers to sue states, holding federal Boren Amendment enforceable and enabling courts to require reasonable, adequate reimbursement rates.

Holding: The Court held that the Boren Amendment creates enforceable rights under §1983, allowing health-care providers to sue state officials to challenge and obtain reasonable, adequate Medicaid reimbursement rates.

Real World Impact:

Allows hospitals to sue states over Medicaid payment methods.
Courts can order states to adopt reasonable, adequate Medicaid rates.
State administrative appeal limits won't always block federal lawsuits.

Topics: Medicaid reimbursement, hospital funding, provider lawsuits, state payment rules

Summary

Background

The case was brought by the Virginia Hospital Association (a group of public and private hospitals) against Virginia state officials. The hospitals challenged Virginia’s prospective Medicaid payment plan, which groups providers by "peer groups" and bases rates on a 1982 median cost adjusted annually (first by CPI, then by a medical-cost index). The hospitals asked for a court declaration and an order requiring new rates and interim payments comparable to Medicare.

Reasoning

The Court considered whether the Boren Amendment — which requires States to set rates they find "reasonable and adequate" for efficiently and economically operated facilities and to give assurances to the federal Secretary — creates rights enforceable under 42 U.S.C. §1983. The majority held that the amendment is mandatory, intended to benefit providers, and not merely a procedural promise to the Secretary. Because Congress did not clearly foreclose private enforcement, the Court found providers may sue state officials under §1983 to challenge rates.

Real world impact

Practically, the decision opens federal courts to suits by providers seeking to invalidate state reimbursement plans and order new plans or interim payments. The opinion leaves questions about the exact standard of judicial review and does not itself decide whether Virginia’s rates are unlawful — it decides that providers may bring the suit. State administrative appeals do not necessarily bar federal §1983 actions.

Dissents or concurrances

The dissent argued the statute’s text and structure address States and the Secretary, not courts, and warned that judicially substituting court-ordered rates would displace the rate-setting role Congress gave States.