2016 annual conference july 11, 2016 update … · providers to sue state officials for alleged...

ACCSES2016 ANNUAL CONFERENCE

July 11, 2016

_______________________________UPDATE ON MEDICAID AND STRATEGIES FOR OBTAINING

ADEQUATE RATES FOR SERVICES_______________________________________________

Joel M. Hamme, Esq.Senior Counsel

Powers, Pyles, Sutter & Verville, P.C.

1501 M Street, NW, Seventh Floor Washington, DC 20005

Telephone: (202) 466-6550 Fax: (202) 785-1756 www.ppsv.com

SYNOPSIS OF REMARKS

• Historical Background On Federal Medicaid Rate Standards

• Armstrong v. Exceptional Child Center, Inc., 135 S.Ct. 1378 (2015)

• Interim Final Equal Access Regulations (80 Fed. Reg. 67,576 [Nov. 2, 2015]) And Request For Information (RFI) As To Access Data Metrics And Alternative Processes (80 Fed. Reg. 67,377 [Nov. 2, 2015])

• Medicaid Managed Care Final Rule (81 Fed. Reg. 27,498 [May 6, 2016])

• Alternative Litigation Theories, Other Strategic Approaches, And Case Law Update

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Background

• A History Of Federal Medicaid Rate Standards:– Originally, No Payment Standards When Medicaid

Enacted

– Section 237, P.L. 90-248 (Jan. 2, 1968) (Established A Ceiling, Not A Floor, By Requiring That Medicaid Rates Not Exceed “Reasonable Charges” Consistent With Efficiency, Economy, And Quality Of Care)

– Section 249 (Reasonable Cost-Related Basis Medicaid Rates), P.L. 92-603, § 249 (Oct. 30, 1972) (Formerly, 42 U.S.C. § 1396a(a)(13)(E)) (Effective July 1, 1976). Replaced in 1980

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Background (Cont’d)

– Boren Amendment (Reasonable And Adequate Medicaid Rates To Meet Costs Incurred By Efficiently And Economically Operated Facilities To Provide Care And Services Complying With Applicable Laws, Regulations, And Quality And Safety Standards), P.L. 96-499, § 962 (Dec. 5, 1980) (Formerly, 42 U.S.C. §1396a(a)(13)(A))• Supreme Court Ruled In Wilder v. Va. Hosp. Ass’n, 496 U.S.

498 (1990) That The Boren Amendment Was Privately Enforceable By Medicaid Providers

• Repealed In 1997. Section 4711(A), P.L. 105-33 (Aug. 5, 1997)

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Background (Cont’d)

– Equal Access Provision (Medicaid Rates Consistent With Efficiency, Economy, And Quality Of Care And Adequate To Enlist Sufficient Providers To Assure Equal Access to Services, P.L. 90-248, § 237 (Jan. 2, 1968) And P.L. 101-239, § 6402(a) (Dec. 19, 1989) (42 U.S.C. § 1396a(a)(30)(A)). Still In Effect

• Some Lessons Learned– Review Of Provider Finances, Analyses Of Allowable Costs

Versus Rates, And Examination Of Geographic Cost Coverage Disparities Are Necessary

– But, More Importantly, It Is Essential To Demonstrate The Adverse Impact Of Inadequate Medicaid Rates On The Quality Of Patient Care And Access To Care

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Armstrong v. Exceptional Child Center, Inc.

• In Douglas v. Indep. Living Ctr. Of S. Cal., Inc., 132 S.Ct. 1204 (2012), The Supreme Court Had Granted Review To Decide Whether The Equal Access Provision Could Be Privately Enforced Through The Supremacy Clause. The Ninth Circuit Had Held That It Could Be

• The Court Narrowly Avoided Deciding That Issue Because Of Changed Circumstances In The Case But, Ominously, Four Justices Indicated In Dissent That They Would Find No Such Right Of Action (Chief Justice Roberts And Justices Scalia, Thomas, And Alito)

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Armstrong v. Exceptional Child Center, Inc. (Cont’d)

• The Court Later Granted Certiorari To Decide The Same Questions In Armstrong -- A Case Where The Ninth Circuit Had Again Found Such A Right Of Action And Determined That Idaho’s Medicaid Rates For Habilitation Services Violated The Equal Access Provision

• In Armstrong, The Court Held That There Was No Right Of Action Through The Supremacy Clause For Medicaid Providers To Sue State Officials For Alleged Equal Access Violations And That Congress Had Entrusted Enforcement Of This Requirement To The United States Department of Health And Human Services (HHS)

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• Majority Opinion (Written By Justice Scalia And Joined By Chief Justice Roberts And Justices Thomas, Breyer [In Part], And Alito)

• Crucial Concurring Opinion By Justice Breyer• Dissenting Opinion (Authored By Justice

Sotomayor Joined By Justices Kennedy, Ginsburg, And Kagan)

• The Essential Unresolved Factual Issue In Armstrong

• The Many Fallacies In And Problems With The Majority’s Reasoning

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• Implications Of Armstrong

– Potential Actions Against HHS Under The Administrative Procedure Act, 5 U.S.C. § 706, After It Has Approved Challenged Medicaid State Plan Amendments. Standard Of Review Is Highly Deferential To Agency, Though

– Fee-For-Service Compared To Medicaid Managed Care. 42 U.S.C. §1396u-2; 42 C.F.R. Part 438; 67 Fed. Reg. At 48,036 (Jun. 14, 2002); 80 Fed. Reg. At 67,582-83 (Nov. 2, 2015). See 81 Fed. Reg. 27,498 (May 6, 2016) (Final Medicaid Managed Care Regulations)

– Other Federal Potential Causes Of Action Under Medicaid (Public Notice; Reasonable Promptness; Amount, Duration, And Scope) Or Other Federal Statutes (Rehabilitation Act; Americans With Disabilities Act) Or Case Law (Olmstead v. L.C., 527 U.S. 581 [1999])

– State Law Claims And State Law Courts9

Interim Final Equal Access Regulations

• Proposed Regulations. 76 Fed. Reg. 26,342 (May 6, 2011)

• Interim Final Regulations With Comment Period Through Jan. 4, 2016. 80 Fed. Reg. 67,567 (Nov. 2, 2015) (Effective Jan. 4, 2016)

• Highlights/Lowlights Of Interim Final Rule

– Does Not Apply To Medicaid Managed Care Or Certain Waiver Programs, Including Ones Providing For Home And Community-Based Services

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Interim Final Equal Access Regulations (Cont’d)

• Highlights/Lowlights Of Interim Final Rule (Cont’d)– Establishes Five Core Services (Primary Care, Physician

Specialist, Behavioral Health, Prenatal And Postnatal Obstetric, And Home Health) Where Medicaid Rates/Access Must Be Reviewed By States At Least Once Every Three Years

– Other Services Would Only Have Their Medicaid Rates/Access Reviewed More Intensively By HHS Where Rates Are Reduced Or Restructured Or There Is An Abnormal Volume Of Access Complaints

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Interim Final Equal Access Regulations (Cont’d)

• Highlights/Lowlights Of Interim Final Rule (Cont’d)– No Separate Analysis Of Olmstead Compliance Or

Issues– Possible Exemptions From Triennial Reviews For States

With Certain Medicaid Program Characteristics, Such As High Managed Care Enrollment

– Lack Of An Established Formal Federal Process For HHS Review Of Beneficiary And Provider Input, Complaints, Or Concerns

– Process For Addressing Access Deficiencies And State Submissions Of Corrective Action Plans

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HHS RFI As To Access DataMetrics And Alternative Processes

• RFI With Comment Period Through January 4, 2016. 80 Fed. Reg. 67,377 (Nov. 2, 2015)

• Sought Feedback On Measures And Metrics To Gauge Access To Care

• Encompassed Both Medicaid Fee-For-Service And Managed Care Delivery Systems

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HHS RFI As To Access Data MetricsAnd Alternative Processes (Cont’d)

• Divided Into:– Access To Care Data Collection And Methodology– Access To Care Thresholds/Goals– Alternative Processes For Access Concerns– Access To Care Measures/Availability Of Care And

Providers, Beneficiary Reported Access, Service Utilization, And Comparison Of Payments

• Outstanding Issues As To Consumer Choice, Beneficiary Directed Care, And Distinctions Between And Among Network Adequacy, Physical Accessibility, And Programmatic Accessibility

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Medicaid Managed Care Final Rule

• Issued In Proposed Form On June 1, 2015. 80 Fed. Reg. 31,098

• The Final Rule Was Published On May 6, 2016, 81 Fed. Reg. 27,498, And Adopts Much Of What Was In The Proposed Rule. Except For Several Provisions Relating To Federal Financial Participation (Which Were Effective Immediately), The Remainder Of The Rule Was Effective July 5, 2016

• The Final Rule Covers Multiple Topics, Including, For Example:– The Medical Loss Ratio (42 C.F.R. § 438.8);– Actuarial Soundness Standards For The Rates Paid By Medicaid To

Their Managed Care Organizations (MCOs) (42 C.F.R. § 438.4); And– Long Term Services And Supports (LTSS) (42 C.F.R. §§ 438.2 et seq.)

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Medicaid Managed Care Final Rule (Cont’d)

• But, The Provision That Pertains Most Directly To Whether The Rates Paid By MCOs To Providers Are Sufficient Involves Network Adequacy (42 C.F.R. § 438.68)

– The Key Underlying Assumption Is That, Unless Those Rates Are Adequate To Attract Enlistment, Providers Will Not Join Networks In Numbers Sufficient To Sustain Them

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– Time And Distance Standards For the Following Types Of Providers If Covered By Contract (42 C.F.R. § 438.68(b)(1)):• Primary Care, Adult And Pediatric;

• OB/GYN;

• Behavioral Health (Mental Health And Substance Abuse Disorder), Adult And Pediatric;

• Specialist, Adult And Pediatric;

• Hospital;

• Pharmacy;

• Pediatric Dental; And

• Other Provider Types As Determined By HHS

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– States Covering LTSS Must Have Time And Distance Standards For Enrollee Travel To The Provider. They Must Also Have Network Adequacy Standards Other Than Time And Distance For Providers That Travel To The Enrollee To Furnish Services (42 C.F.R. § 438.68(b)(2))

– Nine Elements Must Be Considered By States When Developing Network Adequacy Standards, Including Factors Such As Anticipated Medicaid Enrollment, Expected Medicaid Utilization, Characteristics Of Served Populations, Numbers And Types Of Network Providers Needed To Furnish Contracted Services, And Network Providers Not Accepting New Medicaid Patients (42 C.F.R. § 438.68(c))

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– Stakeholder Engagement Must Occur When LTSS Are Provided Via Managed Care (42 C.F.R. §438.70)

– There Must Also Be A Beneficiary Support System With Particular Functions Specific To LTSS (42 C.F.R. § 438.71(d))

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Contemporary And Future Developments

• Alternative Litigation Theories

– Other Provisions Of The Medicaid Act That Could Be A Basis For Litigation -- E.g.,:

• Public Notice (42 U.S.C. § 1396a(a)(13)(A); 42 C.F.R. § 447.205)

• Furnishing Covered Services With Reasonable Promptness (42 U.S.C. § 1396a(a)(8))

• Services Sufficient In Amount, Duration, And Scope (42 U.S.C. § 1396a(a)(10)(B))

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Contemporary And Future Developments(Cont’d)

– Corollary Federal Enactments Or Mandates• Rehabilitation Act Of 1973, 29 U.S.C. § 794• Americans With Disabilities Act, 42 U.S.C. § 12101(b)(1); 28

C.F.R. § 35.130(d)• Olmstead

– Possible State Law Claims That Would Have To Be Litigated In State Courts

• Legislative Initiatives?– Dependent Upon The Political Environment– Unrealistic At National Level Currently Given Political

Divisions And Dysfunction– State Legislation?

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• Case Law Update – Highlights The Alternative Litigation Approaches. Examples:– Idaho Developments In The Wake Of Exceptional Child

Center• Inclusion Inc. v. Idaho Department of Health And Welfare, CV

OC 1521761 (4th Jud. Dist. Id.) (Complaint Based On State APA Claim). Corollary Case In Federal Court Alleges Notice And Appeal Opportunities Denied Despite Service Cuts

• K. W. v. Armstrong, Case No. 1:12-cv-00022-BLW (D. Id. Mar. 28, 2016) (Idaho Medicaid Required To Develop Additional Procedural Protections For Developmentally Disabled Beneficiaries Threatened With Coverage Cuts)

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– Discriminatory Rates For Out-Of-State Providers

• Asante v. Cal. Dep’t Of Health Care Srvs., No. 3:14-cv-3226 (N.D. Cal. Dec. 21, 2015) (California’s Failure To Provide Arizona, Nevada, And Oregon Hospitals Certain Adjustments And Payments Accorded California Hospitals When Serving Medicaid Patients Violates Dormant Commerce Clause)

• Mary Hitchcock Memorial Hosp. v. Cohen, Civil No. 15-cv-453-LM (D. N.H. May 2, 2016) (Denying Motion To Dismiss Various Claims, Including Dormant Commerce Clause And Equal Protection Theories, Alleging Illegality Of Vermont Medicaid’s Lower Rates For An Out-Of-State [New Hampshire] Hospital)

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– Low Medicaid Rates And Access Issues

• Settlement In Fla. Pediatric Soc’y v. Dudek, No. 1:05-cv-23037 (S.D. Fla.) In April 2016. Designed To Increase Medicaid Managed Care Rates For Pediatric Medical And Dental Care. Court Had Previously Held That Low Rates Impaired Access

– Supplemental (Wraparound) Payments

• Legacy Community Health Services, Inc. v. Janek, No. 4:15-cv-25 (S.D. Tex. May 3, 2016) (Texas Could Not Avoid Its Legal Obligation To Make Supplemental Payments To Federally Qualified Health Centers By, Instead, Requiring Medicaid MCOs To Pay Rates Higher Than Those Negotiated)

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– ADA Claims

• Steimel v. Wernert, Nos. 15-2377 and 15-2389 (7th Cir. May 10, 2016) (Cases Remanded To District Court To Determine Whether Indiana Medicaid’s Handling Of Three Waiver Programs Involving The Developmentally Disabled -- Two Of Them Uncapped As To Services And The Other Capped -- Violated The Integration Mandate Of The ADA And Olmstead By Isolating Recipients Unduly In Their Homes)

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QUESTIONS AND ANSWERS

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2016 annual conference july 11, 2016 update … · providers to sue state officials for alleged...

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