Theresa Eagleson, Director, Illinois Department of Healthcare and Family Services v. St. Anthony Hospital, et al.

In traditional Medicaid fee-for-service programs, States pay healthcare providers directly and must adopt claims payment procedures to ensure that they pay defined percentages of providers’ claims within specified time periods. 42 U.S.C. § 1396a(a)(37)(A). Alternatively, States may establish managed care programs, in which they contract with managed care organizations (“MCOs”) that in turn enter into contracts with healthcare providers and pay them according to the terms of those contracts. For such programs under a State’s Medicaid plan, Section u-2(f) of the Medicaid Act provides that a State must include in its contracts with MCOs a provision—the “Timely Payment Clause”—pursuant to which each MCO agrees to pay providers “on a timely basis consistent with the claims payment procedures described in section 1396a(a)(37)(A) . . . , unless the health care provider and [MCO] agree to an alternate payment schedule.” 42 U.S.C. § 1396u-2(f). The questions presented are:

1. Whether Spending Clause legislation, including Section u-2(f), can impliedly create private rights enforceable under 42 U.S.C. § 1983.

2. Whether, if so, Section u-2(f)’s requirement that States include the Timely Payment Clause in their contracts with MCOs unambiguously gives States a statutory duty, not just a contractual right, to ensure that MCOs pay providers in accordance with that contract provision, and also unambiguously gives providers a private right to enforce that duty.