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On March 31, the U. S. Supreme Court handed down its ruling in Armstrong v. Exceptional Child Center, holding that providers cannot sue under the Supremacy Clause to invalidate Medicaid rates that conflict with the Medicaid Act's requirements that rates be sufficient to support quality care and enlist enough providers to ensure equal service access to Medicaid recipients. Armstrong thus removed one major avenue for providers to challenge the reasonableness of Medicaid rates. At a time when state budgetary concerns are driving the reimbursement rates for medical services provided to the neediest Americans, Armstrong is a blow to both Medicaid providers and patients. Despite the ruling, however, some avenues remain for challenging inadequate reimbursement rates.

Medicaid is a federal-state partnership. State participation is voluntary. But if a state chooses to participate and receive federal funds, it must follow federal Medicaid rules. Each state develops and administers its own state plan under the oversight of the federal Centers for Medicare and Medicaid Services (CMS). In Connecticut, the Department of Social Services (DSS) administers the Medicaid program and sets the reimbursement rates paid to providers.

Providers in Connecticut and around the country have complained that the Medicaid rates established by the states are woefully inadequate, failing to cover providers' costs. Many health care providers lose money on each Medicaid patient they serve: the more Medicaid patients served, the greater the loss. Low rates lead to poor provider participation, which in turn harms Medicaid recipients, who may have trouble finding a doctor to treat them.

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