Authority To Reduce Medicaid Payments to Certain States

A former Secretary of the Department of Health, Education, and Welfare (HEW) asked for an opinion on the Secretary's authority with respect to the reduction of Medicaid payments made to certain States. The Secretary had determined that the payments must be reduced as a result of the failure of the States to satisfy the utilization control provisions of the Medicaid program. HEW wanted to know for future reference, should similar instances occur, if it is authorized to find the State in compliance with the provisions if it has met the requirements in all but one or two cases of recipient eligibility determinations. It was held that HEW is required to reduce payments to a State unless the State makes a satisfactory and valid showing that it has a program of control over utilization of long-term institutional services. In order to make the valid showing, a State must comply with the criteria of the pertinent statute, which includes physician certification of the need for institutional care and of a plan for care in each case of a long-term patient. The fact that a State may have satisfied most of the requirements of the statute does not permit HEW to find a valid showing when any long-term patients are found not to have such certification.