91 N.Y.2d 618 (1998)

A state regulation cannot limit Medicaid reimbursement for eligible individuals during the three months prior to application to only services rendered by Medicaid-enrolled providers because it is inconsistent with federal law.

Summary

Estelle Seittelman, representing Ida Zichlinsky’s estate, challenged the Department of Social Services’ (DSS) refusal to reimburse Zichlinsky for home care services received during the three months before her Medicaid application because the provider wasn’t Medicaid-enrolled. Other individuals intervened, seeking reimbursement for similar services. The Supreme Court granted class-wide relief, deeming the regulation irrational and inconsistent with federal law. The Appellate Division concurred but limited relief after the Medicaid application date. The New York Court of Appeals held that the regulation limiting retroactive reimbursement to enrolled providers was invalid, as it contradicted federal Medicaid law. However, reimbursement is limited to the Medicaid rate at the time services were rendered, not the full out-of-pocket cost.

Facts

Ida Zichlinsky received home care services before applying for Medicaid. After applying, the Department of Social Services (DSS) denied reimbursement for the services provided in the three months prior to the application, citing a regulation that only allowed reimbursement for services from Medicaid-enrolled providers. Other plaintiffs had similar denials for home care and nursing services from non-Medicaid providers during their pre-application period.

Procedural History

Plaintiffs sued DSS, challenging the denial of retroactive Medicaid benefits based on the provider enrollment requirement. The Supreme Court ruled in favor of the plaintiffs, declaring the regulation invalid. The Appellate Division affirmed the Supreme Court’s ruling regarding the pre-application period but allowed the limitation for the period after the Medicaid application date. DSS appealed to the New York Court of Appeals.

Issue(s)

1. Whether a New York regulation can limit Medicaid reimbursement for the three-month period preceding a Medicaid application to only those services rendered by Medicaid-enrolled providers.

2. Whether Medicaid recipients are entitled to reimbursement for out-of-pocket expenses or only at the Medicaid rate for the three-month pre-application period.

Holding

1. No, because the state regulation is inconsistent with the federal Medicaid statute, which mandates reimbursement for eligible services during the three-month pre-application period regardless of the provider’s enrollment status.

2. No, because recipients may only be reimbursed at the Medicaid rate in effect at the time the service was rendered to ensure parity among Medicaid recipients.

Court’s Reasoning

The Court reasoned that the regulation imposing the Medicaid-enrolled provider requirement for retroactive reimbursement was inconsistent with the federal statute (42 U.S.C. § 1396a(a)(34)). The Court stated, “Had Congress intended to limit reimbursement only to Medicaid-enrolled providers, it could have done so.” The Court also noted that the state regulation added a restriction not found in federal statutes or regulations, narrowing the scope of the remedial federal statute. The Court rejected DSS’s argument that the regulation was necessary to prevent fraud, stating DSS failed to adequately demonstrate how denying reimbursement to eligible individuals would prevent fraud by the provider. Regarding the reimbursement rate, the court emphasized the parity provision (42 U.S.C. § 1396a(a)(10)(B)(i)), which requires that medical assistance not be less in amount, duration, or scope than assistance made available to other individuals. Reimbursing out-of-pocket expenses could result in some recipients receiving more than others, violating the parity provision. The court modified the judgment, remitting the case to Supreme Court for further proceedings consistent with the opinion.