March 11, 2008

Complaint in Alameda County Medical Center, et al., v. Leavitt, et al.

On March 11, 2008, the American Hospital Association, the Association of American Medical Colleges, and the National Association of Public Hospitals and Health Systems filed a lawsuit in Federal District Court challenging a Medicaid final rule published May 29, 2007. The rule, referred to as "the cost limits rule," changed the definition of a unit of government for the purposes of intergovernmental transfers (IGT), changed how states conducted IGTs, and limited reimbursements for Medicaid services provided by units of government to the cost of services. The plaintiffs argued that the rule was invalid because it violated a May 25, 2007, congressionally imposed moratorium on changing Medicaid rules, which prevented the Centers for Medicare and Medicaid Services (CMS) from implementing the rule and also prohibited CMS from changing any Medicaid provisions. On May 23, 2008, the judge agreed that the rule violated the moratorium and invalidated the rule.