News & Perspectives

5th Circuit Court of Appeals Upholds Provider Fee That States Pay Under the Affordable Care Act (ACA) to Receive Federal Reimbursement for Managed Care Organization (MCO) Payments

31. July 2020 Sam Fish Health

On Friday, July 31, 2020, the U.S. Court of Appeals for the Fifth Circuit overturned a lower court decision and upheld the provider fee that states are required to pay under Section 9010 of the ACA, on behalf of MCOs, in order for the states to receive federal reimbursement for payments to the MCOs.

The Circuit Court stated that the fee is a valid federal tax that does not violate the U.S. Constitution spending clause.

The ruling by the Circuit Court prevented the federal government from having to repay at least $479 in total to Texas, Kansas, Louisiana, Indiana, Wisconsin, and Nebraska.