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MELISSA BLOCK, host: This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

GUY RAZ, host: And I'm Guy Raz. I'll be filling in here for the next few weeks while Michele Norris and Robert Siegel both get some much-deserved time away.

We begin this hour with the Supreme Court. It opened a new term today with a raft of hot-button issues headed its way. The biggest, of course, is the legal challenge to the Obama administration's health-care law. The case is almost certain to be heard this term.

BLOCK: Today, though, the court heard arguments in another important case involving the provision of medical care.

As NPR legal affairs correspondent Nina Totenberg reports, the issue is whether doctors, hospitals and patients can go to court to challenge state cuts in Medicaid.

NINA TOTENBERG: The federal Medicaid law establishes a cooperative federal-state program to provide medical care for the poor. Depending on the state, the Feds pay 50 to 75 percent of the costs. But the condition for getting the federal money is that the state pays health providers sufficiently to ensure that poor patients have access to doctors and hospitals.

In 2008 and '09, California cut these fees by up to 10 percent, and the cuts went into effect without being submitted to the federal Medicaid agency for approval as required by law. Health-care providers went to court, contending that the cuts were solely for budgetary purposes, and did not meet the federal requirements for balancing money issues and access to health care.

On the steps of the Supreme Court today, doctors from the California Medical Association said they simply can't afford to take care of substantial numbers of Medicaid patients when the fees are so low. Dr. Ted Maser said, for instance, he's paid $168 to perform a tonsillectomy on a child, including pre- and post-operative care - not enough to cover expenses.

Seeking to stop this downward spiral, doctors, hospitals and patients went to court and won a temporary injunction to freeze the status quo pending a trial. The state, backed by the Obama administration, appealed. Today, California's deputy attorney general, Karin Schwartz, told the justices that doctors and patients have no right to bring a court challenge because the Medicaid law does not explicitly authorize such suits. Justice Ginsburg observed that the government doesn't have injunctive power to stop the rate cuts, even if it thinks the state is violating the Medicaid law.

Schwartz replied: But the government can cut off all funds to the state. Justice Ginsburg, dryly: But that's a rather drastic remedy that's going to hurt the people that Medicaid was meant to benefit. Answer: Well, that's the only remedy provided by law. Most states resolve these issues in consultation with the federal Medicaid agency.

Justice Kagan suggested that didn't happen here because California, quote, end-ran the administrative process, putting rate changes into effect before submitting them to the Department of Health and Human Services. Justice Alito: Congress never explicitly creates a right to sue in a case like this involving federal spending. Are you asking us to adopt a rule that's good for this case only? Justice Kennedy: The courts have the prerogative, perhaps even the obligation, to freeze the status quo and simply withhold adjudication until the agency acts.

The legal worm turned, however, when attorney Carter Phillips got up to argue on behalf of the Medicaid providers and patients. Chief Justice Roberts repeatedly asked why Phillips' clients can sue when Congress did not authorize lawsuits. Phillips repeatedly answered that his clients are not asking for damages. They're just suing to prevent irreparable harm under a state law that violates a federal law.

Justice Breyer asked what limits there could be under that theory. Wouldn't there be lawsuits galore? Answer from lawyer Phillips: The agency always has the ultimate authority to step in and take action. But here, the state tried to put into effect unlawful rate cuts without even notifying the agency, and then made no response when the agency asked for information. Without court action, these illegal cuts would have gone into effect for years and indeed, would still be in place.

Justice Breyer: If anyone can challenge a state law on the grounds it violates a federal law, that would just be a mess.

Nina Totenberg, NPR News, Washington.

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