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Averett v. United States Department of Health And Human Services

United States District Court, M.D. Tennessee, Nashville Division

January 24, 2018

ANDREW AVERETT, et al., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.

         OPINION AND ORDER (1) GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT (ECF #22); (2) DENYING DEFENDANTS' CROSS-MOTION FOR SUMMARY JUDGMENT (ECF #29); AND (3) REMANDING TO THE CENTERS FOR MEDICARE AND MEDICAID SERVICES FOR FURTHER PROCEEDINGS

          MATTHEW F. LEITMAN UNITED STATES DISTRICT JUDGE.

         In this action, a group of Tennessee physicians who provide primary care services to Medicaid recipients seek to invalidate an administrative rule adopted by the Centers for Medicare and Medicaid Services (“CMS”). The rule relates to a physician's eligibility for enhanced payments for primary care services under Medicaid. The parties have filed cross-motions for summary judgment. (See Pls.' Mot. for Summ. J., ECF #22; Defs.' Cross-Mot. for Summ. J., ECF #29.) For the reasons explained below, the Court GRANTS Plaintiffs' motion and DENIES Defendants' motion.

         I

         A

         In March 2010, Congress passed, and President Barack Obama signed, comprehensive healthcare reform legislation known as the Affordable Care Act (the “ACA”). The ACA was designed to “increase the number of Americans covered by health insurance and decrease the cost of health care.” Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519, 538 (2012). The ACA “was not one single health care bill that became law, but two - the initial health care legislation, the Patient Protection and Affordable Care Act (PPACA), and the Health Care and Education Reconciliation Act of 2010 (HCERA), passed almost immediately after the PPACA to amend that legislation.” John Cannan, A Legislative History of the Affordable Care Act: How Legislative Procedure Shapes Legislative History, 105 Law Libr. J. 131, 133-34 (2013). Congress passed the PPACA on March 21, 2010, and President Obama signed it into law on March 23, 2010. Congress passed the HCERA on March 25, 2010, and President Obama signed that bill into law on March 30, 2010.[1]

         Among other things, the ACA incentives physicians to provide primary care services to vulnerable populations. It does so by authorizing enhanced payments to certain doctors who provide primary care to participants in Medicare and Medicaid. These increased payments are set out in two separate ACA provisions, one for Medicare and another for Medicaid.

         The provision that authorizes increased payments for primary care services under Medicare appears in Section 5501 of the PPACA, 42 U.S.C. § 1395l(x) (the “Medicare Payment Statute”). The Medicare Payment Statute authorizes enhanced payments to “primary care practitioners” for “primary care services furnished on or after January 1, 2011, and before January 1, 2016 . . . .” It defines the term “primary care practitioner” as a physician (1) “who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine” and (2) “for whom primary care services accounted for at least 60 percent of the allowed charges” under Medicare during a prior period of time determined by the Secretary of Health and Human Services.[2]

         The provision that authorizes increased payments for primary care services under Medicaid appears in Section 1202 of the HCERA, 42 U.S.C. § 1396a(a)(13)(C) (the “Medicaid Payment Statute”). Like the Medicare Payment Statute, the Medicaid Payment Statute authorizes enhanced payments to physicians with certain specified “primary specialty designation[s]” - essentially the same designations listed in the Medicare Payment Statute.[3] But unlike the Medicare Payment Statute, the Medicaid Payment Statute does not require physicians to meet any billing metric in order to qualify for the enhanced payments. In its entirety, the Medicaid Payment Statute provides:

A State plan for medical assistance must-

         . . .

(13) provide --

         . . .

(C) payment for primary care services (as defined in subsection (jj)) furnished in 2013 and 2014 by a physician with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine at a rate not less than 100 percent of the payment rate that applies to such services and physician under part B of subchapter XVIII of this chapter (or, if greater, the payment rate that would be applicable under such part if the conversion factor under section 1395w-4(d) of this title for the year involved were the conversion factor under such section for 2009);

42 U.S.C. § 1396a(a).

         B

         After Congress passed the ACA, CMS, an agency within the United States Department of Health and Human Services, adopted rules to implement the Medicare Payment Statute and the Medicaid Payment Statute.

         CMS promulgated the final rule implementing the Medicare Payment Statute, 42 C.F.R. § 414.80(a), on November 29, 2010 (the “Final Medicare Payment Rule”). As relevant here, the Final Medicare Payment Rule confirms that a “primary care practitioner” is eligible to receive enhanced Medicare payments for primary care services. 42 C.F.R. § 414.80(b). It further defines “eligible primary care practitioner” as a physician who satisfies two criteria:

(A) Enrolled in Medicare with a primary specialty designation of 08-family practice, 11-internal medicine, 37-pediatrics, or 38-geriatrics.
(B) At least 60 percent of the physician's allowed charges under the physician fee schedule (excluding hospital inpatient care and emergency department visits) during a reference period specified by the Secretary are for primary care services.

42 C.F.R. § 414.80(a)(i). Notably, the Final Medicare Payment Rule does not define the term “primary specialty designation” nor does it establish any criteria for determining whether a physician has one of the specified “primary specialty designations.” CMS promulgated the final rule implementing the Medicaid Payment Statute, 42 C.F.R. § 447.400(a), on November 6, 2012 (the “Final Medicaid Payment Rule”).

         The Final Medicaid Payment Rule authorizes enhanced Medicaid payments to a physician with one of the specified “primary specialty designation[s]” listed in the Final Medicaid Payment Statute. But, unlike the Final Medicare Payment Rule, the Final Medicaid Payment Rule narrowly defines the term “primary specialty designation.” Under the Final Medicaid Payment Rule, a physician is deemed to have one of the specified “primary specialty designation[s]” only if she attests that she:

(1) Is Board certified with such a specialty or subspecialty [of family medicine, general internal medicine or pediatric medicine or a recognized subspecialty] and/or
(2) Has furnished evaluation and management services and vaccine administration services under codes described in paragraph (b) of this section that equal at least 60 percent of the Medicaid codes he or she has billed during the most recently completed CY or, for newly eligible physicians, the prior month.

42 C.F.R. § 447.400(a). (For ease of reference, the Court will refer to the billing metric in subsection (2) of the Final Medicaid Payment Rule as the “60% Billing Code Threshold.”)

         CMS explained that it included the 60% Billing Code Threshold in the definition of “primary specialty designation” in part because Congress included a 60 percent allowed-charge threshold requirement in the Medicare Payment Statute:

We developed this [60% Billing Code Threshold] proposal for the use of a supporting history of codes billed to qualify physicians for increased payment after review of the statutory requirements for the Medicare Incentive Payments for Primary Care Services payments authorized by section 5501(a) of the Affordable Care Act [i.e., the Medicare Payment Statute] . . . . That provision specifically requires that primary care services account for at least 60 percent of the allowed charges billed by a practitioner for services to be eligible for increased payment. We propose that the same standard be applied to the Medicaid payments under section 1902(a)(13)(C) of the Act [i.e., the Medicaid Payment Statute] although we propose that verification would be based on the number of codes billed for the specified primary care services, rather than charges.

(Admin. R., ECF #21-2 at Pg. ID 305.)

         During the notice and comment period for the Final Medicaid Payment Rule, a number of commentators objected that the 60% Billing Code Threshold was contrary to Congress' intent. These commentators highlighted that Congress included a billing metric in the Medicare Payment Statute but did not include such a provision in the Medicaid Payment Statute. The commentators argued that Congress' omission of a billing metric from the Medicaid Payment Statute under these circumstances demonstrated that Congress intended that the enhanced payments under Medicaid would be available regardless of whether physicians met any billing metric.[4]

         CMS was unmoved by these objections. It responded that “we often use Medicare program standards in developing policy for the Medicaid program, and we believe that it is appropriate to apply the 60 percent threshold applicable to the Medicare primary care incentive payment to the Medicaid payment as well.” (Admin. R., ECF #21-10 at Pg. ID 1077-78.)

         C

         The Plaintiffs in this action are physicians who practice primary care medicine in Tennessee. Many of the Plaintiffs serve disadvantaged citizens in rural areas, and all of them participate in the Tennessee Medicaid program. The Tennessee Bureau of TennCare (“TennCare”) administers the Tennessee Medicaid program.

         In mid-2013, each Plaintiff attested to TennCare that he or she was eligible for the enhanced payments under the Medicaid Payment Statute and the Final Medicaid Payment Rule. Because none of the Plaintiffs are board certified, they attested that they had the required “primary specialty designation” based upon their billing histories. More specifically, they reported that 60 percent of their Medicaid claims for the prior year were for billing codes specified in the Final Medicaid Payment Rule. (See, e.g., Ex. A to Decl. of Britain Sexton (the “Sexton Decl.”), ECF #25-1 at Pg. ID 1176-77; Ex. B to Sexton Decl., ECF #25-2 at Pg. ID 1186-87.) In reliance upon Plaintiffs' attestations, TennCare paid Plaintiffs enhanced Medicaid payments for primary care services during 2013 and 2014.

         In 2015, TennCare conducted an audit and determined that the Plaintiffs did not qualify for the increased Medicaid payments. (See id.) The audit found that Plaintiffs had not satisfied the 60% Billing Code Threshold. Therefore, TennCare concluded that Plaintiffs lacked the “primary specialty designation” necessary to make them eligible for the enhanced payments.[5] (See id.) TennCare then sought to recoup the payments made to the Plaintiffs.[6]

         On October 31, 2016, the Plaintiffs filed this action against the United States Department of Health and Human Services, the Secretary of the United States Department of Health and Human Services, the Centers for Medicare and Medicaid Services, and the Administrator of the Centers for Medicare and Medicaid Services. (See Compl., ECF #1; Am. Compl., ECF #19.) The Plaintiffs allege that the Final Medicaid Payment Rule is invalid and that they were entitled to the enhanced payments for primary care services that they received. (See id.)

         Plaintiffs' claims focus on the provision of the Final Medicaid Payment Rule that defines “primary specialty designation” by reference to whether the physician satisfied the 60% Billing Code Threshold. They contend that this aspect of the rule is “contrary to the text, purpose, and legislative history of the Medicaid [Payment Statute], harm[ful] [to] the very physicians whom Congress intended to benefit, and [] arbitrary and capricious.” (Pls.' Memo in Support of Mot. for Summ. J., ECF #23 at Pg. ID 1123.) Plaintiffs insist that Congress did not intend that a physician would have to satisfy any billing threshold in order to qualify for enhanced payments for primary care services under the Medicaid Payment Statute. Plaintiffs ask the Court to “hold unlawful and set aside” the Final Medicaid Payment Rule on the ground that “it is contrary to [the Medicaid Payment Statute].” (Am. Compl. at ¶13, ECF #19 at Pg. ID 183.)

         Plaintiffs filed a motion for summary judgment and supporting memorandum on May 19, 2017. (See ECF ## 22, 23.) Defendants filed a cross-motion for summary judgment and supporting memorandum on July 7, 2017. (See ECF ## 29, 29-1.) The Court held a hearing on the motions on October 30, 2017, and subsequently ordered supplemental briefing. (See ECF #39.) Both parties filed supplemental briefs. (See Defs.' Supp. Br., ECF #40; Pls.' Supp. Br., ECF #41.)

         II

         “An agency's interpretation of a statute that is reflected in a regulation adopted through notice-and-comment rulemaking is reviewed using the two-step framework outlined in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).” Metro. Hosp. v. U.S. Dep't of Health & Human Servs., 712 F.3d 248, 254 (6th Cir. 2013). At step one of a Chevron analysis, a court asks whether “Congress has directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842. If Congress has spoken to the precise question at issue, then “the reviewing court must give effect to the will of Congress irrespective of any contrary agency interpretation.” Mid-Am. Care Found. v. N.L.R.B., 148 F.3d 638, 642 (6th Cir. 1998).

         “[I]f the intent of Congress on a matter of statutory meaning is ambiguous, however, the court is to proceed to ‘step two' of the Chevron inquiry: whether the agency's interpretation is a permissible construction of the statute.” Sierra Club v. U.S. E.P.A., 793 F.3d 656, 665 (6th Cir. 2015). At step two, “[t]he court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.” Id. (quotations omitted). Nevertheless, a reviewing court will not defer to an agency's construction if it is ...


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