With the passage of the Affordable Care Act, President Obama took a huge step forward to ensure greater health care access. But now he is taking political and legal action that threatens to undermine his promise of expanded access through Medicaid.
Politically, Obama has been criticized for his willingness to accept Medicaid cuts as part of a deal with Republicans to raise the debt ceiling. In order to see how such cuts threaten access, one need only look at recent headlines about the number of states already struggling to balance their budgets, in part through deep cuts to Medicaid programs and provider reimbursement. Cuts that result in the elimination of an entire service category are clearly problematic, but access is also threatened when Medicaid reimbursement becomes so low that providers refuse to accept Medicaid beneficiaries, or to work in emergency rooms in underserved communities that have disproportionate numbers of Medicaid patients. A common complaint by Medicaid beneficiaries is their inability to find a provider willing to accept them.
These cuts have legal implications as well. (Previously I have blogged about the legal implications of this problem in California). States have a lot of discretion in how they run Medicaid, especially with respect to setting provider reimbursement, but this discretion is not absolute. States must comply with a number of conditions of federal funding, and one of the most important mandates, found at 42 U.S.C. Section 1396a(a)(30)(A), is commonly referred to as the "Equal Access Provision" or "30A" requirement. This provision requires states to "assure that provider payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to the general population in the geographic area.” States cannot honestly and reasonably make such assurances without doing some kind of analysis to assess the impact that rates have on access; yet many states do nothing before implementing rate cuts. They cut provider rates solely in response to fiscal concerns, and without any consideration of access.
Since the 1970s, Medicaid beneficiaries and providers have brought suits in federal court challenging these kinds of illegal cuts. While these suits have yielded mixed success for plaintiffs, federal courts have halted or delayed cuts in many cases, especially where the violation was egregious. These suits have been an important legal check on state violations that implicate Medicaid access, but beneficiaries and providers may soon lose this tool. As I described in an earlier blog post, the Supreme Court has granted cert in Independent Living Center v. David Maxwell-Jolly , a case that calls this right into question.
Despite Obama's promise to expand Medicaid access, his administration has taken a step that would make it much more difficult to prevent illegal cuts that threaten access: the U.S. Department of Health and Human Services (HHS) has filed an amicus brief in the Independent Living Center case urging the Supreme Court to hold that Medicaid providers and beneficiaries do not have a legal right to sue in federal court to prevent illegal state cuts. Why would a President who fought so hard for health care reform undermine one of the most important legal tools that exist for protecting Medicaid access?
In asserting its position, the Obama administration does not seem to rely on any firm legal precedent. Plaintiffs are challenging California's payment cuts based on the Supremacy Clause, in Article VI of the U.S. Constitution, which is an important and uncontroversial basis for challenging state laws that conflict with federal law. In Independent Living Center, California enacted payment cuts without regard to access, quality, economy or efficiency - factors required to be considered under federal law - clearly undermining and conflicting with the Medicaid Act.
Rather, the crux of HHS's position is that state violations of Medicaid program requirements, like the Equal Access Provision, are different: even if a state law violates this provision, it should be up to the federal government (through HHS), and not individual beneficiaries or providers, to enforce the law. Most of HHS's brief is devoted to justifying this different treatment.
First, the brief highlights the fact that Medicaid is a cooperative program, and argues that program requirements like the Equal Access Provision look more like contract conditions between the federal government and states, as opposed to specific rights created for Medicaid beneficiaries or providers. Based on this model, the Obama administration believes it should be up to HHS (as the other party to the contract) to enforce these funding conditions. Indeed, the Medicaid statute grants authority to HHS to do just that: States must submit state plans and state plan amendments proposing significant changes (like payment cuts) to HHS, and HHS has authority to review and then approve or reject the state plan. Implicitly, Obama is asking us to trust HHS to police the states.
Second, it argues that HHS enforcement, rather than private enforcement through the federal courts, will be a better and fairer approach for states. Specifically, HHS highlights the fact that it, and not federal courts, has the expertise to make health policy decisions and review state rate methodology, given the complexity of the Medicaid statute and the multiple and potentially conflicting goals (access, quality, economy, efficiency) that states must balance in rate setting. HHS also expressed concern about the inconsistency in approaches taken by different federal courts with respect to 30A challenges, and the uncertainty this can create for states trying to deal with difficult and pressing budgetary needs. HHS and states are concerned that such uncertainty can be used by individuals to challenge state decisions that they simply do not like.
Although these arguments reflect important concerns, they do not justify eliminating such an important legal check on illegal state action. First, the concern about inconsistent approaches being applied by federal courts is most significant when there is evidence that courts (and thus individuals) are allowed to second-guess the expertise and value judgments of state and federal health officials with respect to decisions that are purposely left to agency discretion. But the reality is that this is not typically what is happening in these cases. I am currently in the process of reviewing Medicaid payment suits from the 1970s to the present, and so far the overwhelming number of challenges I have reviewed are based on some egregious lack of action or utter failure to use any process to determine access before making 30A assurances. Moreover, I would say there is more consistency than inconsistency in federal courts' approaches: they have consistently held that the Medicaid Act prohibits cuts made for exclusively budgetary reasons, and they tend to step in only in these kind of egregious cases. On the other hand, courts tend to be very deferential to state decisions that are based on some kind of analysis.
I don't mean to suggest that there is no inconsistency - there is. I have described the different approaches federal courts have taken elsewhere. But to the extent inconsistency does exist, there is a much easier and less radical fix: HHS can simply promulgate regulations that provide greater guidance for states and the federal courts that hear such challenges. States have asked for such guidance; federal courts are typically very deferential to federal regulations; and HHS has just recently issued a proposed rule to give states better guidance for compliance. This approach would answer the legitimate concerns that HHS and states have about consistency and certainty, while preserving beneficiaries' and providers' rights to sue to prevent blatantly illegal action that threatens health care access.
This brings me to the third and final reason why the Obama administration's concerns do not justify eliminating access to the courts. To the extent that there is inconsistency and uncertainty with respect to 30A requirements, HHS is to blame. The primary reason for state violations and inconsistent approaches by federal courts, is the lack of regulatory guidance by HHS. It is hard to trust HHS to police states given its long history of passivity and its own deliberate disregard of Equal Access protections. A review of challenges to Medicaid payment cuts nationwide and as far back as the 1970s reveals that HHS has been largely absent in these disputes. Private enforcement is important precisely because of a lack of meaningful federal oversight.
To be fair, under President Obama HHS has been more vigilant and active than it has in a long time. Since 2008 HHS has done more searching inquiries before approving requests for rate cuts. Moreover, as noted above, for the first time HHS proposed a regulatory framework for states to help ensure their compliance with the Equal Access Provision. But the enforcement power of an agency depends on the political will and agenda of the Executive, and Obama will not be in office forever. Even under Obama, it is not clear how meaningful this new regulatory guidance for states will be in its final form or in practice. For example, HHS repeatedly emphasizes state discretion and flexibility in its proposed rule on 30A compliance, and it expressly resists establishing a uniform standard for measuring access. Moreover, HHS says it has only rejected two state requests for rate cuts based on access concerns despite finding pervasive examples of state noncompliance. For example, it notes that despite state assurances that cuts would have no impact on access, "only a few States indicated that they relied upon actual data to make the determination," and of those using data "most did not ask the right questions" to determine impact on access. The jury is definitely still out on whether we will be able to trust HHS to effectively police the states in the future.
Federal courts have no desire to become Medicaid administrators or second-guess health officials' judgment. But when government agencies abdicate their clear statutory mandates and oversight duties in ways that harm polticially and economically vulnerable people, this is when access to federal courts is critical. Illegal payment cuts that threaten access to vulnerable populations is due to precisely the kind of regulatory void and pubic law failure that demands federal court intervention. It is perverse for the HHS to use the inconsistency that has resulted from its own regulatory failures to justify barring Medicaid beneficiaries' and providers' from seeking relief in federal court.
The Obama administration wants to eliminate this judicial last resort, even as it entertains significant federal funding cuts to Medicaid that will surely exacerbate states’ existing budget crises by shifting more of the cost of Medicaid to states. Together, the loss of federal funding and enforcement rights will almost certainly result in more illegal Medicaid cuts that undermine health care access. The Affordable Care Act may have been an important step forward, but in the latest political and legal battle surrounding Medicaid cuts, Obama has taken two unfortunate steps backwards.
For more about ILC v. Maxwell-Jolly, the case that will be heard by the Supreme Court next term, click here. To get copies of the lower court opinions and amicus briefs filed in the case, click here.
