- Associated Press - Friday, April 22, 2016

DES MOINES, Iowa (AP) - The Iowa Department of Human Services correctly cut payments to some Medicaid service providers in 2011, even though it didn’t include language that specified those lower rates in its administrative rules, the Iowa Supreme Court ruled Friday.

The legal dispute over the rates traces back to 2009, when then-Gov. Chet Culver ordered 10 percent across-the-board budget cuts for state agencies as state tax revenue plunged following the Great Recession. The Legislature passed a law in 2010 continuing those cuts into the 2011 state fiscal year, which ran from July 1, 2010, through June 30, 2011.

The department neglected to carry over a portion of those cuts - a 2.5 percent inflation adjustment - to its administrative rules that set service provider payments but continued to reimburse service providers at the reduced rates.

Exceptional Persons Inc., which provides home and community-based services to individuals with developmental disabilities, brain injuries and mental illness sued, along with several other Medicaid providers. They contended that even if the missing rule was an oversight, DHS cannot reimburse them at the reduced rate without a rule authorizing it to do so.

A Polk County judge and the Iowa Court of Appeals agreed with the groups and ordered Human Services to recalculate the rates to include the 2.5 percent inflation adjustment. The department appealed to the Supreme Court.

Justices concluded that the Legislature’s intent in the 2010 bill was to continue the cuts that Culver had ordered through fiscal 2011. The court said it could not look beyond legislative intent just because the department neglected to include the correct language in its administrative rules.

The court declined to read the 2010 law “in a manner allowing IDHS’s rulemaking mistake to contravene legislative intent.”

The justices said statutes enacted by the Legislature prevail over administrative rules when there are conflicts. They threw out the court of appeals decision and reversed the Polk County judge.

A spokeswoman for Iowa Department of Human Services said the agency has not determined how much money was at stake and has not yet calculated new rates.

An attorney for the service providers did not immediately respond to messages.

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