Opinion ID: 3009724
Heading Depth: 2
Heading Rank: 2

Heading: Medicaid and the Boren Amendment

Text: The Medicaid program `establishes a joint federal and state cost-sharing system to provide necessary medical services to indigent persons who otherwise would be unable to afford such care.' Temple Univ. v. White, 941 F.2d 201, 205 (3d Cir. 1991) (quoting Pinnacle Nursing Home v. Axelrod, 928 F.2d 1306, 1309 (2d Cir. 1991)). State participants receive federal Medicaid funds in return for administering a Medicaid program. They are obligated to comply with certain federal statutory and regulatory requirements in developing their programs. See West Va. Univ. Hosps., Inc. v. Casey, 885 F.2d 11, 15 (3d Cir. 1989). Historically, states paid hospitals the reasonable costs of services actually provided. See Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 507 n.7 (1990). This amounted to payment for the actual costs incurred by hospitals in providing care to Medicaid recipients, regardless of disparities in costs or efficiencies among hospitals. However, in 1981 Congress 4 enacted the Boren Amendment to the Social Security Act, which gave state participants the ability to alter the Medicaid repayment methodology. States were given more flexibility to formulate their rates. Programs could include statewide or classwide rates, rates based on a prospective cost, or incentive provisions to encourage efficiency. Flexibility was ensured by limiting federal oversight. See id. at 507. The Amendment replaced the `reasonable cost' standard with the current standard of `reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities.' West Va. Univ. Hosps., 885 F.2d at 15. In order to qualify for federal financial support, a participating state must submit a State Plan or a change in payment methods and standards to the Heath Care Financing Administration of the Department of Health and Human Services (HCFA). See 42 U.S.C. § 1396a(a). The state must make findings and give assurances to the HCFA that its program comports with federal requirements. Id. Such findings and assurances also must be made whenever a state changes its payment methods and standards. See 42 C.F.R. § 447.253(a) & (b).