McCants v. Betlach

In order to be protected by cost-sharing restrictions of the Medicaid Act, plaintiffs must be both eligible for Medicaid coverage and part of the State’s plan.

Arizona folded in a state funded medical benefit program for the medically needy with their existing, federally recognized, Medicaid program for the categorically needy. The appellants in this case are a certified class of Arizonans from this medically needy group who argue that their mandatory copayment increase violated the Medicaid Act. Federal law sets limits on cost sharing, like the increase of copayments, for groups covered by a state’s Medicaid Plan. This medically needy group was found to be a demonstration group, which promotes the objectives of the Medicaid Act. As per the Act, the Secretary allowed a waiver of the cost-sharing restrictions. Utilizing Chevron, the Court defers to the Secretary’s argument that in order to be protected by cost-sharing restrictions the plaintiffs must be both eligible for Medicaid coverage and part of the State’s plan. HHS regulations allow for a state to define who is eligible as medically needy. Arizona had not done so, meaning that an individual may indeed be eligible for Medicaid, but is not part of the state’s plan. Such a group is instead treated as a member of an expansion population and outside the cost-sharing protections. On other issues, the Court found that the Secretary’s waiver approval was inappropriate as she failed to establish a sufficient record for her decision. Also, the Secretary’s increased copayment approval did not violate the human participant provision of the Medicaid Act even though regulations promulgated a heightened copayment, as it did not constitute the type of danger that the Act was directed toward. Lastly, plaintiffs due process argument about the notice they received is remanded to decide whether the issue is moot as there have since been superseding unchallenged notices. AFFIRMED in part; REVERSED in part; REMANDED.