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Toal v. DeKalb Med. Ctr. Inc.

Georgia's 1996 Medicaid reimbursement plan was invalid because the Georgia Department of Medical Assistance adopted the plan without make the findings necessary to insure that the plan provided for the reimbursement of health care providers at rates which are reasonable and adequate to meet the costs incurred by efficiently and economically operated facilities.

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The DeKalb Medical Center and various other hospitals sued the Georgia Department of Medical Assistance DMA, claiming, among other things, that DMA’s Medicaid reimbursements to the hospitals breached the terms of their respective provider agreements.1 The trial court granted summary judgment to the hospitals on certain issues and to DMA on others. Both sides appeal aspects of the trial court’s ruling.

Medicaid is a federal-state program under which the federal government provides financial assistance to states to enable them to provide medical care to needy individuals.2 To qualify for federal assistance, a state must formulate a plan and submit it for approval to the federal Health Care Financing Agency HCFA, an agency of the Department of Health and Human Services HHS.3 Among other things, the plan must contain a scheme for reimbursing health care providers who provide services to Medicaid patients.4 During the time period relevant in this case, a provision of the Medicaid Act known as the Boren Amendment required that state plans must provide for hospitals to be reimbursed at rates “which the State finds, and makes assurances satisfactory to the Secretary of HHS are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities.”5 The Boren Amendment has both a procedural and a substantive component—i.e., the State must make the requisite findings and assurances, and must also adopt rates that are in fact reasonable and adequate.6

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