Over the years, we’ve written about the difficulties of challenging Medicaid entitlement in federal court. In light of a series of Supreme Court decisions dating back to 1990, the journey from an aggrieved Medicaid beneficiary or service provider to a Medicaid beneficiary to challenge a Medicaid plan’s alleged violation of a State of a Medicaid program requirement has become increasingly narrow. A 2015 Supreme Court ruling barred virtually all avenues for federal court enforcement of most Medicaid program requirements.

So what are the remaining options for an aggrieved beneficiary or supplier? Well, the aggrieved party can always complain to CMS. In November 2015, the Obama administration issued a final rule establishing a process to ensure covered access to Medicaid services and a recent RFI issued by the Biden administration seeks comment on access to Medicaid care. But this process, to say the least, is not particularly accessible to a Medicaid recipient (who is almost certainly unaware that the process even exists), and it is not particularly useful for a supplier who may need timelyaccess to services for their patient. And, it’s not entirely clear that this rule will stay in place; the Trump administration proposed repealing it in 2019 and a future administration may do so.

So we were interested to read a recent decision from the Arkansas Court of Appeals that attempted to address the challenge of a state Medicaid agency’s decision to deny access to an FDA-approved drug. to a patient with a rare medical condition. But before we get into the facts of this case — which, for now, appears to create an alternative way to apply the guarantee to a Medicaid benefit — we thought it would be helpful to briefly explain the background and why. challenging a state’s alleged violation of a Medicaid requirement is so difficult.

After all, one would think that since Congress imposed a series of requirements on state Medicaid plans (a state medical assistance plan must guarantee prompt access to services; must provide services in the amount , of equal duration and scope to all Medicaid recipients; must ensure open access to providers; must provide sufficient payments to attract enough providers; etc. – there are over 80 requirements), and if a state has violated any of these requirements, the person harmed by that violation should be able to sue the state in federal court, since the alleged violation is a violation of federal law. If I am a physician treating a Medicaid beneficiary and the state Medicaid plan reduces payments for medical services to such a low level that no physician in my state is willing to treat a Medicaid beneficiary, shouldn’t I be able to enter federal court and have my complaint about these payment levels heard?

In fact, in all likelihood, I probably can’t. And the reason stems from one of the oldest amendments to the United States Constitution, the First Amendment ratified after the adoption of the Bill of Rights in 1791. In particular, the Eleventh Amendment to the United States Constitution states deprives federal courts of jurisdiction to hear a claim against a state by a citizen of another state, or – as the Eleventh Amendment was later interpreted in the years following the Civil War – to hear a claim under which a state has violated federal law.

While there are tools for challenging a state’s violation of an unambiguous constitutionally guaranteed right of an individual – the right to vote, for example, or the right to due process under the laws – these tools are considerably lower when the federal government simply provided a vague and amorphous benefit (“sufficient payment” to enroll “enough” Medicaid providers) in a federal spending program like Medicaid. This bar presented by the Eleventh Amendment, coupled with an unrealistic enforcement mechanism (complete termination of a state’s Medicaid funds), can leave a Medicaid recipient or provider out in the cold.

But…even if the Eleventh Amendment acts as an obstacle to
federal enforcement of a violation of a Medicaid entitlement, nothing in the Constitution or Medicaid statute prohibits a
state court to hear a challenge to a state’s violation of a requirement of the Medicaid program. And that’s what happened in Arkansas when the state Medicaid program sought to block approval of coverage for an FDA-approved prescription biologic agent.

As my colleagues Alex and Ross have explained very well in the past, if a pharmaceutical manufacturer wants their drug covered by a state’s Medicaid program, they must agree to pay the state a generally equal rebate at 23.1% of the average manufacturer price of the drug and must agree to participate in the 340B program; in return, the state must agree to cover the drug in almost all cases. A state may require prior authorization before allowing a beneficiary access to a drug, but generally once the manufacturer has agreed to pay a rebate, the state must cover the drug.

As Alex pointed out in his recent article, there has been a lot of controversy over drugs that are not approved through the normal FDA approval pathway, but rather through the FDA’s fast-track mechanism. This accelerated approval pathway allows a manufacturer to seek FDA approval for a drug based on a surrogate endpoint considered a predictor of a clinical outcome, even if the company has not completed all its clinical trials testing the actual endpoint defined in the trial. design. A manufacturer can apply for expedited approval, especially in the case of a treatment for a rare medical condition with no treatment options.

That’s what happened with a drug called Exondys, a treatment for Duchenne muscular dystrophy – a rare and almost always fatal disease affecting young boys due to a defect on the X chromosome. Exondys is prescribed for treat the genetic defect and the FDA approved it using its fast-track mechanism. After the drug was approved, an Arkansas doctor prescribed Exondys to his patient, an Arkansas Medicaid recipient, but Arkansas Medicaid denied coverage, saying the drug was experimental. In doing so, the state relied on its assertion that Exondys had been approved under the fast-track approval pathway and had not undergone the traditional review and approval of the FDA. And because state Medicaid plans are required to ensure they don’t pay for services that aren’t medically necessary, the state argued it was justified in denying Exondys coverage. because, in the opinion of the State, the drug was experimental.

Here is a perfect example of why a Medicaid beneficiary or provider might want to challenge a possible state violation of a Medicaid requirement. A state plan for medical assistance must “comply with applicable requirements” of the Medicaid drug reimbursement program. Arguably, Arkansas was not “compliant[ing]with” these requirements because the maker of Exondys had agreed to pay rebates on its FDA-approved drug, but Arkansas did not cover the drug under its Medicaid program.

The manufacturer could have challenged Arkansas’ decision not to cover by suing in federal court. But if he did, he risked a federal court ruling finding that the disputed Medicaid benefit was too vague or amorphous to challenge in the federal court system. (The manufacturer had good reason to think so; as we’ve described here, the federal courts in Arkansas frown on the enforcement of Arkansas Medicaid benefit entitlement through the system. federal judiciary). The manufacturer could also have approached the CMS under the enforcement mechanism developed by the agency in 2015, but that could have delayed patient access to the drug while the agency deliberated. Instead, the manufacturer took what they believed to be the fastest action available to them.

It was a strategic decision that worked. According to the Arkansas Court of Appeals in Arkansas Department of Health v Sarepta Therapeutics, 2021 Ark. App. 330 (Ark. Ct. App. 2021), the state “impermissibly substituted its judgment of the drug’s efficacy for that of the FDA and the patient’s prescribing physician.” Accordingly, the state could not deny Exondys coverage based on its argument that the drug was not medically necessary.

It will be interesting to see if this route to enforcing benefits under Medicaid law — that is, challenging the operation of a state Medicaid plan in the state court system rather than in the federal court system – is becoming a growing trend. Given the paucity of alternatives available for a Medicaid recipient or provider to assert that a state has violated federal Medicaid law, this may become more common. We look forward to seeing if Arkansas appeals to its Supreme Court.

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