Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state. Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states. The Health and Human Services (HHS) is now our 51st state.
Today the Supreme Court decided the King v. Burwell case.
If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld. According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).
“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”
“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”
In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”
However, the majority disagrees.
Apparently, HHS is now our 51st state.
The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails. Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”
Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.” Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.
In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd. In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”
Tomorrow is a big day. Not only will most of us return to work after a long weekend, but the Supreme Court will hear oral arguments on a very important issue.
On January 20, 2015, (tomorrow) the Supreme Court of the United States will hear oral arguments on a very important issue that will affect every health care provider in America who accepts Medicaid, and, yet, there has been very little media coverage over this lawsuit.
Legal Issue: Does a Medicaid provider have a private right of action under the Medicaid Act to bring a lawsuit against states under the Supremacy clause.
The Issue Translated from Legalese to English: Can a Medicaid provider sue the state in which the provider does business if the provider believes that the Medicaid reimbursement rate for a particular service or product is too low? For example, can a dentist sue NC for a higher Medicaid reimbursement rate for tooth extractions? Can a long-term care facility and/or a home care agency sue due to low Medicaid personal care services (PCS) rates?
It is my opinion that Medicaid providers across the country have not brought enough lawsuits demanding higher Medicaid reimbursement rates. It is without question that Medicaid reimbursement rates across the country are too low. Low reimbursement rates cause health care providers to refuse to accept Medicaid recipients. See my blog NC Health Care Providers Who Accept Medicaid: Thank you!.
If you hold a Medicaid card, you do not automatically have access to good quality health care. You are segregated from the privately insured and the care you receive is not equal. You are limited in your choice of doctors. If you are an adult, you can forget any dental procedures. Even if you aren’t an adult, you require prior approval for almost all services (regardless of whether you are suffering from pain), which will often be denied (or reduced…or require a significant waiting period). You want mental health care? You better get the very least amount of help possible until you prove you need more help. See my blog NC Medicaid Expansion: Bad for the Poor.
And why won’t more health care providers accept Medicaid? The Medicaid reimbursement rates are too low!! The Medicaid reimbursement rates are too low for health care providers to yield a profit…or, in many instances, even cover the overhead. In fact, providers tell me that when they do accept Medicaid, they are forced to accept more privately insured patients to offset the losses from accepting the finite number of Medicaid patients. In many states, the states refuse to cover psychology costs for Medicaid recipients, and other states refuse to cover the costs for PCS.
So, I say, bring on the lawsuits!!! Force states to increase Medicaid reimbursement rates!!
For example, in obstetrics, if the national Medicaid reimbursement rate for ob/gyn visits is $1.00, here, in NC, we reimburse ob/gyns 88¢. Which is why only 34% of North Carolina ob/gyns accept Medicaid. See Kaiser.
So far, across the country, federal courts have held that Medicaid providers do have a private right of action to sue states for low reimbursement rates. In fact, in most cases, the providers have PREVAILED and the states have been forced to pay higher rates!!!
Providers of all types have filed lawsuits across the country disputing the states’ Medicaid reimbursement rates as being too low. For example, in California, between April 2008 and April 2009, five lawsuits were filed against the state of California to stop scheduled reductions in reimbursement rates (on behalf of rehabilitation providers, nonemergency medical transportation providers, pharmacies, physicians, and emergency physicians).
A Florida lawsuit that was settled in December 2014 revolved around a young boy on Medicaid who was suffering from a painful sinus infection. His mother contacted multiple physicians and was denied appointments because the mother and her son were on Medicaid. He was forced to wait almost a week for an appointment. The judge in the case wrote, “I conclude that Florida’s Medicaid program has not compensated primary physicians or specialists at a competitive rate as compared with either that of Medicare or private insurance payers….I further conclude that Florida’s structure for setting physician reimbursement fails to account for statutorily mandated factors in the Medicaid Act, including the level of compensation needed to assure an adequate supply of physicians.”
Over the years, the Supreme Court has vacillated over even determining whether a Medicaid provider has a private right of action under the Medicaid Act to bring a lawsuit against states under the Supremacy clause.
In 2002, the Supreme Court denied certiorari (refused to hear the argument) on this very issue. Coming out of the 9th Circuit (which includes California), a Circuit which has been especially busy with lawsuits arguing Medicaid reimbursement rates are too low, the case of Independent Living Center of California v. Shewry would have squarely addressed this issue. But the Supreme Court denied certiorari and did not hear arguments.
In 2012, the Supreme Court decided to hear arguments on this issue. In Douglas v. Independent Living Center, Medicaid beneficiaries and providers sued the California state Medicaid agency, seeking to enjoin a number of proposed provider payment rate cuts. After the Supreme Court heard oral argument, but before it had issued its decision, the Centers of Medicare and Medicaid Services (CMS) approved California’s state plan amendment containing the rate cuts. Consequently, the Douglas majority held that the case should be sent back to the lower courts to consider the effect of CMS’s approval of the state plan amendment, without deciding whether the beneficiaries and providers had a right to sue.
Now the case Armstrong v. Exceptional Child Center will be heard by the Supreme Court on January 20, 2015.
How did this case come about?
In 2005, the Idaho state legislature passed a law requiring the state Medicaid agency to implement a new methodology to determine provider reimbursement rates, and in 2009, the state Medicaid agency published new, higher rates based, in part, on a study of provider costs. CMS approved the state’s new methodology. However, the new rates never were implemented because the state legislature failed to appropriate sufficient funding, making the refusal to increase the reimbursment rate a budgetary issue. A group of Idaho residential habilitation providers that accept Medicaid sued the Idaho state Medicaid agency and alleged that the state’s failure to implement the new rates conflicted with federal law (the Supremacy Clause).
Section (30)(A) of the Medicaid Act requires state Medicaid agencies to take provider costs into account when setting reimbursement rates. Under case law precedent, the rate must “bear a reasonable relationship to efficient and economical . . . costs of providing quality services.” To deviate from this standard of reasonableness, a state must justify its decisions with more than budgetary reasons.
The argument is that the state’s low reimbursement rate for X service, is too low to provide good quality services and that the low rates were set for purely budgetary reasons.
Once you prove that the reimbursement rates are too low to expect good quality care (which would be fairly easy for almost all Medicaid services in NC), then you argue that the state’s reimbursement rates violate the Supremacy Clause because the federal law requires good quality care.
What is the Supremacy Clause?
The Supremacy Clause can be found in Article VI, Paragraph 2 of the U. S. Constitution. Basically, it establishes that federal law trumps conflicting state laws , even state constitutional provisions, on matters within the Constitution’s grant of powers to the federal government – such as Medicaid..
In this case, we are talking about a state’s Medicaid reimbursement rate violating the federal law requiring that the rate must bear a reasonable relationship to quality of care.
This is not a small matter.
After all is said and done, the Armstrong case, which will be heard by the Supreme Court tomorrow, will be extraordinarily important for Medicaid health care providers. I believe it is obvious which way I hope the Supreme Court decides…in favor of providers!! In favor of a ruling that states are not allowed to underpay health care providers only because the patient holds a Medicaid card.
My wish is that Medicaid providers across the country bring lawsuits against their state to increase Medicaid reimbursement rates…that the providers prevail…that more health care providers accept Medicaid…and that more Medicaid recipients receive quality health care.
Is that too much to ask?
The Supreme Court will most likely publish its opinion this summer.
Its decision could have an extreme impact on both Medicaid providers and recipients. Higher Medicaid reimbursement rates would increase the number of physicians willing to accept Mediaid, which, in turn, would provide more access to care for Medicaid recipients.
Keep in mind, however, the issue before the Supreme Court in Armstrong is narrow. If, for whatever reason, the Supreme Court decides that Medicaid providers do not have a private right to sue under the Supremacy Clause…all is not lost!!! There is more than one way to skin a cat.
What is the “law” of North Carolina Medicaid? I mean, as a health care provider in North Carolina accepting Medicaid, you are expected to know EVERYTHING. You must follow ALL laws/regulations/policies to a tee. Yet you have:
1. The State; i.e., the Division of Medical Assistance (DMA);
2. The Managed Care Organizations (MCOs); i.e.; Alliance Behavioral Health (Alliance), Cardinal Innovations (Cardinal), East Carolina Behavioral Health (East Carolina), or whatever MCO is in charge of your county; not to mention,
3. The Recovery Audit Contractors (RACs); i.e., Carolinas Center of Medical Excellence (CCME), Public Consulting Group (PCG), and HP Enterprises (HP);
all telling you that you are NOT following the (fill in the blank) (a) the law; (b) NC Medicaid rules and regulations; (c) the DMA Clinical Policies; (d) the Implementation Updates; (d) the Basic Medicaid Billing Guide; or (e) all of the above.
Let’s break it down.
First, in the world of Medicaid, because federal dollars are used, the federal law is supreme.
Therefore, if any state, whether North Carolina or Alaska, states that you must abide by “_____” and “_____” is specifically not allowed by federal law, “_____” violates federal law and is not “law.” So many people just assume that if North Carolina states “____”…”____” must be “law.” Forgive me for being the naysayer, but the U.S. federal government is supreme. As in, if North Carolina and the U.S. government got in a fight, NC would be the underdog. Yet, despite the fact, most people read a NC general statute and act as a Stepford Wife….”Yes, sir, it must be true.”
So let’s put the Medicaid laws in a hierarchy, most important to least important:
1. Federal law. Most of the federal Medicaid regulations are found in the Code of Federal Regulations (CFR). (Please understand that this blog is NOT comprehensive; I am merely trying to simplify a system that is not easily simplified. Please contact an attorney if you have any questions (not necessarily me:) ). There is also the Social Security Act.
2. Centers for Medicare and Medicaid Services (CMS). I know, CMS is a federal agency. Why would I denote CMS as the second most important in the genre of Medicaid law? CMS does not make law. CMS must follow federal law. But, in reality, let me assure you, if CMS says its ok, it is ok. So it is important to note CMS.
CMS issues guidance in the form of letters to State Medicaid Directors and letters to State Health Officials. CMS also issues federal regulations. Issue. Not draft. Regardless, CMS is important.
3. North Carolina laws. Here’s where it gets sticky…
People make good money on arguing as to which NC laws/policies/manuals are most important.
In my humble opinion, only promulgated policies are mandatory.
What does promulgated mean?
Definition of PROMULGATE
Remember my post on March 14, 2013, stating that NCGS 108C-7 violates federal law? Well, obviously I wrote that blog without pursuing a legal case and without having a judge decide whether NCGS 108C-7 actually violates federal law.
But there may be some validity to my claim that 108C-7 violates federal law.
Yesterday the Supreme Court of the United States wrote an opinion regarding another North Carolina Medicaid statute: NCGS 108A-57. Wos v. E.M.A. In Wos v. E.M.A., the Supreme Court held that the NC Medicaid statute 108A-57 is pre-empted by the Supremacy Clause in the Constitution.
By way of background, the case originated from a mom and dad bringing a medical malpractice claim against the doctor and hospital that delivered their child, E.M.A. E.M.A. suffered multiple serious injuries during birth, leaving her deaf, blind, and unable to sit, walk, crawl, or talk. She also suffers mental retardation and seizures. Due to these birth injuries, Medicaid paid $1.9 in hospital costs, surgeries and health care on behave of E.M.A. In November 2006, the NC Court approved a settlement for $2.8 million. If you think that the settlement seems low, it is low. Apparently the settlement was based on the amount of malpractice insurance the defendants possessed.
A representative from Medicaid (DMA) informed the parents that Medicaid would seek reimbursement for the $1.9 million expended.
“E. M. A. and her parents then filed this action under Rev. Stat. §1979, 42 U. S. C. §1983, in the United States District Court for the Western District of North Carolina. They sought declaratory and injunctive relief, arguing that the State’s reimbursement scheme violated the Medicaid anti-lien provision, §1396p(a)(1) .”
After appeal after appeal and all the way up to the U.S. Supreme Court, North Carolina fought E.M.A. and her parents, saying that the State was entitled to Medicaid reimbursement as required under NCGS 108A-57.
The U.S. Supreme Court disagreed .
In the words of the Supreme Court (as to why the NC Statute was pre-empted):
“Instead, North Carolina has picked an arbitrary number—one-third—and by statutory command labeled that portion of a beneficiary’s tort recovery as representing payment for medical care. Pre-emption is not a matter of semantics. A State may not evade the pre-emptive force of federal law by resorting to creative statutory interpretation or description at odds with the statute’s intended operation and effect. ”
Interesting that the Supreme Court picked the word “arbitrary.”
In light of the Wos v. E.M.A. decision, I think it would be prudent to question other Medicaid statutes. Most likely other Medicaid statutes, similarly, violate federal law. Maybe…..108C-7.
See my March 14, 2013, blog for my legal reasons that 108C-7 violates federal law.
The U.S. Supreme Court heard oral arguments January 8, 2013, as to whether the federal Medicaid Act trumps North Carolina‘s Medicaid seizure law. As of now, when a plaintiff wins a medical malpractice lawsuit, the State is authorized to recoup up to 1/3 of any jury award or settlement or the actual amount of Medicaid payments (whichever is less), regardless of how much of the award was designated for medical expenses.
The underlying case is Delia v. E.M.A.
The Facts: Emily M. Armstrong was born on February 25, 2000. She was seriously injured during her delivery resulting in mental retardation, cerebral palsy and several other medical conditions. Two months after Emily was born, Emily’s parents, Sandra and William Earl Armstrong applied for Medicaid. From Emily’s birth until her untimely death, Medicaid paid over $1.9 million in medical expenses on Emily’s behalf. Emily’s parents and guardian sued the physicians who delivered her and settled for $2.8 million. DHHS immediately placed a lien on the settlement money.
The Legal Issue: Whether N.C. Gen. Stat. § 108A-57 is preempted by the Medicaid Act’s anti-lien provision, 42 U.S.C. §§ 1396a(a)(25), 1396k(a),
The Legal Issue in English: The Federal law prohibits recovery from any payments not made for past medical expenses. In other words, if the jury or settlement does not specify which portion of the settlement or award was reimbursement of medical expenses, then Medicaid cannot recoup any money. In North Carolina a minor child is not allowed to recover for past medical expenses. Therefore, in Emily’s case, none of the monies was designated as past medical expenses. Thus….Medicaid (under the federal law) cannot be reimbursed for the expenses paid out for Emily. Which law wins? Federal or State?
Once the case was settled, the NC Court ordered that $933,333 of the settlement must be paid to the state.
Emily’s parents sued NC DHHS in the U.S. District Court for the Western District of North Carolina, saying that federal law prevents the State from any reimbursement.
The North Carolina U.S. District Court for the Western District of North Carolina granted summary judgment in favor of the State, saying the State law trumps federal law. Emily’s parents appealed.
The United States Court of Appeals for the Fourth Circuit vacated the lower court’s decision. However, the appellate court held that DHHS had the right to recoup a portion of Emily’s settlement, but it remanded the case because the State failed to provide an itemization of how much of the settlement was designated as past medical expenses.
Now we wait….Does the North Carolina law allowing the State to take 1/3 of a settlement, if the money was not designated as past medical expenses, violate federal Medicaid law disallowing the states from taking money from a settlement unless the settlement money was designated as past medical expenses.
The question that has to be answered, not saying that it can be answered, is: When the insurance company for the physicians settled with Emily’s parents, were they paying for past medical expenses? Or were they paying for Emily’s parents’ loss of child, mental anguish and pain and suffering?
Guess we need another trial to determine that issue.