Commentators also point to growing support for important "social" issues like marriage equality and abortion as further evidence of a cultural shift toward a more liberal electorate that is more likely to vote Democratic. For example, while abortion continues to be a divisive issue, exit polling by Fox news showed that 59% percent of those polled believe abortion should be legal in all or most cases, and a Pew Research Center poll showed that Democrats hold a significant advantage when voters are asked who would do a better job representing their interests in this area. The same polls also show more people support same sex marriage than are against it (support ranges from 51% - 49% depending on the poll), and this growing support was reflected in the wins for marriage equality in Maryland, Maine and Washington.
It should go without saying that no group (whether defined by race, gender, or orientation) is monolithic in its values or voting preferences, and individual voters care about a range of issues, and to different degrees, in ways that may not always be easily predictive of one's votes. Nonetheless, politicians, campaign advisers, and political pundits are paying a lot of attention to these trends and asking why these diverse groups' interests have converged to support Democrats this year. One of the best explanations of this convergence that I have read so far was an op-ed titled The Culture War and the Jobs Crisis in the New York Times, by Thomas Edsall:
"More recently, there has been a steady diminution of conflict and a growing consensus on the left culminating in the 2008 and 2012 election victories. Issues now linked – clustered — in the minds of many Democratic voters include not only traditional socio-cultural, moral and racial issues like women’s, minority and gay rights, abortion and contraception, non-marital child-bearing, and the obligation of government to provide a safety net, but also to matters pertaining to the overarching role of government in generating greater social justice. "
I agree that concern about social justice and an appreciation for the government's role in ensuring a more just system is a common thread for these otherwise diverse groups. And I think that the most salient issue this election season that highlights this shared interest is health reform. Health care is an area where "socio-cultural" issues, like discrimination against women, racial and ethnic minorities, gay men and lesbians, and people with disabilities, can have the most tangible, immediate, and devastating effects on one's life. These groups have historically been, and are currently still at high risk of discrimination in a variety of ways. As a result, they are also at greater risk of exclusion from, or discrimination in, a private health care market that is linked to employment, and thus more likely to need government protection or to rely on the public safety net.
]]> Inequity in the Health Care Market: Before Health ReformHistorically, health care access has been determined primarily by powerful private industry players like insurance companies and large employers; predictably, certain groups are at greater risk of experiencing barriers to access. For instance, insurers selling plans in the individual insurance market would charge women higher rates than men or deny them coverage altogether if they were deemed "high risk" - a label assigned to women who were victims of domestic violence or with a prior history of Caesarean sections, according to a recent Institute of Medicine (IOM) report. The IOM has also reported that women and racial and ethnic minorities tend to suffer from chronic disease and disability at greater rates, making them "high risk" and thus more likely to be excluded from the individual insurance market.
People who receive insurance through their employer, rather than on the individual market, have been protected from this kind of inequity for the most part. But access to employment-based insurance is limited. Employees in low-wage and part-time jobs often do not have this option, and according to the IOM, racial and ethnic minorities are disproportionately represented in jobs that do not provide insurance. A study by the Williams Institute reveals that gay men, lesbians, and transgender individuals suffer high levels of employment discrimination, which can impact access. And many workers use employment-based policies to provide health care for their families as dependents, which is not an option for most same-sex couples denied the right to marry.
Even those lucky enough to be insured may be treated inequitably because of coverage exclusions that are not justified actuarially, and which reflect broader patterns of societal discrimination. One example that has received the most attention in health reform is the exclusion of women's reproductive health care, including prescription contraception used to treat medical problems as well as facilitate pregnancy planning. The inability to control the timing of pregnancy has implications for women's and fetal health, but can have particularly serious consequences for women suffering from chronic conditions. Another troubling example includes a history of exclusion of people with HIV from the private market, as well as insurance caps on, or exclusions of AIDS and AIDS-related treatment, that make coverage inadequate. Finally, coverage for mental health care is still not comparable to coverage "physical" health conditions, despite federal and state mental health parity laws. Denials of certain kind of mental health care, especially residential care and long-term habilitative care for people with developmental disabilities, persist despite litigation and regulatory oversight.
Although health care and civil rights advocates have tried using anti-discrimination law to fight inequity, this has yielded mixed results, at best. Public insurance has provided an imperfect, but crucial safety net for some groups excluded from the private market. Federal funding, in particular, has played a critical role in facilitating access to HIV medication, women's preventive and reproductive health care, prenatal care, and habilitative services.
Convergence Around Health Care Justice & the Affordable Care Act
Health care justice cuts across many issues and deeply impacts the diverse groups that are becoming more prominent in national elections. I have already described how various forms of discrimination in society (in employment, marriage, and the health insurance market) create barriers to health care access. Gaps in health care, in turn, have serious consequences for health and life, as well as economic security: access to care helps prevent disabling illness, enables people to manage their chronic conditions, and prevents significant medical debt, a common cause of personal bankruptcy. "Socio-cultural issues", "health" and the "economy" are often treated by pollsters as alternative issues to be ranked during election time, but these things are inextricably linked in pronounced ways for the historically disadvantaged groups which make up a growing percentage of voters.
Moreover, treating women, racial and ethnic minorities, and members of the LGBT community as discrete groups also ignores intersections among these populations that further highlights overlapping concerns around health care justice. For example, 2010 data published by the U.S. Census Bureau shows that same-sex couples are as likely as different-sex married couples to include a racial or ethnic minority, and same-sex couples with a householder who is a racial or ethnic minority are more likely to have children than those without a racial or ethnic minority. A 2008 snapshot of California's Black LGB population provides an even more detailed picture of what this intersection looks like: women comprise a majority of Black people in same-sex couples (55%), almost 55% of Black women and 11% of Black men in same-sex couples are raising children, and Black same-sex parents have fewer financial resources to support their children than those in married couples. Consider the numerous barriers that a Black woman raising children with her same-sex partner must face as a result of the intersection of her race, gender, orientation, and economic status. The harms resulting from those barriers are often compounded as well, either because she has fewer resources to help compensate for these barriers, or because some barriers, like discrimination based on race or orientation, can actually create new health problems, like depression, that exacerbate existing ones.
Health care did play a prominent role in this election. Obama's signature accomplishment from his first term, the Affordable Care Act (ACA), is designed to help remedy much of this inequity. It builds upon the existing public-private patchwork, but tries to plug many of its holes. It strengthens the public safety net by extending Medicaid coverage to the very poor who do not fit the traditional narrow eligibility categories. It also uses regulation to try to level the playing field for people in the individual market to give them similar protections enjoyed by those covered by employment-based insurance, such as guaranteeing coverage, eliminating risk rating, and providing subsidies to ensure access to affordable, meaningful coverage.
Other consumer protections in the ACA either directly or indirectly eliminate some of the inequities mentioned above, especially provisions that eliminate gender rating and caps on lifetime benefits, and require qualified health plans to provide some minimum level of benefits (referred to as "essential health benefits") to ensure that coverage will be meaningful. Federal regulators have already made clear that preventive services must include the kind of screenings and reproductive health care for women that have been excluded in the past, and that people with chronic conditions, like HIV, should be able to get meaningful coverage in the private health care market. Additionally, the ACA requires an external review mechanism to help counter wrongful denials of care, like those frequently seen in mental health coverage determinations. Although the federal government has delegated the responsibility for defining many of these requirements to the states, it has published guidance that acknowledges existing inequities and emphasizes the importance of ensuring equity in coverage.
This is not to say that the Affordable Care Act is perfect or will succeed. In fact, this post is the start of a series of blog posts looking at how the states and federal government handle reform implementation, with a focus on whether the ACA delivers the equity and affordability it promises. But the ACA provides a stark contrast to the alternatives presented by Republican candidates. Promises of repeal by Republican challenger Mitt Romney and other republican lawmakers relied on abstract attacks on "big government" and ignored the critical role that government has played in removing some of the barriers that cause inequity in the private health insurance market. Romney's choice of Ryan as a running mate triggered fears that he would support Ryan's plan to gut the public safety net by transforming Medicare into a voucher program and Medicaid into a block grant program, predicted to result in greater numbers of people becoming uninsured. Finally, political rhetoric that treated abortion and marriage equality as purely "social" or "cultural" issues that conservatives should fight was divorced from any consideration of the economic, personal and health-related hardships that result from marriage discrimination and denial of reproductive health care.
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It should not be surprising then that the interests of this more diverse electorate converged to deliver wins for President Obama and other Democrats, especially in light of polls like those by the Washington Post, which show that 81% of the people voting for Obama listed as a "top quality" they want in the President "cares about people like me", and that 75% of Obama voters listed "health care" as a "top issue." Health care is a civil rights issue - not one distinct from other civil rights concerns like discrimination based on racial, ethnic, gender, or LGBT status, but one that is shaped by, and inextricably linked to, the many other kinds of inequity experienced by an increasingly diverse electorate that will continue to shape future elections.
]]>This year marks the 30th anniversary of the first diagnosis of HIV/AIDS, and this week is the first time the United States is opening its doors to host the International AIDS Conference in over two decades, as President Obama finally lifted the 22-year ban that prohibited travel visas for HIV-positive visitors to the United States. While HIV is a global issue, the United States itself has over one million people living with HIV/AIDS, with another 50,000 new infections every year. But on the eve of this multinational conference that is expected to draw over 20,000 participants, there was a much smaller and highly specialized conference held in Washington D.C. this past weekend. The participants were attorneys, and the topic of the day was the legal rights of people living with HIV/AIDS.
This HIV Law and Practice conference, sponsored by the American Bar Association (ABA), is a national gathering of attorneys who all strive to combat the illegal discrimination against people living with HIV/AIDS. In fact, the Centers for Disease Control and Prevention (CDC) recommend consultation with an attorney as part of a general medical treatment program for patients who are newly diagnosed with HIV (known by advocates as the HIV Legal Checkup). Never in its history has the CDC recommended legal services for any particular disease or illness. Accordingly, legal services centers, law firms and pro bono attorneys around the country are working to assist people who face employment discrimination, housing discrimination, and breaches of confidentiality all due to a person's HIV positive status.
One of the primary topics discussed at the ABA Conference was how the Affordable Care Act (ACA) will improve access to healthcare for people living with HIV/AIDS. By prohibiting preexisting condition restrictions for health insurance coverage, the ACA will ensure a person's HIV-positive status can no longer be used by health insurance companies to restrict coverage. The ACA also abolishes lifetime or annual caps on healthcare coverage, which will benefit patients who often require complicated treatment regimens to treat advanced AIDS diagnoses. Speakers such as Julie Scofield, the Executive Director of the National Alliance of State and Territorial AIDS Directors, explained the importance of the Medicaid expansion provision of the ACA and its ability to extend medical treatment to thousands of people living with HIV/AIDS.
The Mississippi Center for Justice is addressing this civil rights crisis by providing free legal services for people living with HIV/AIDS. The primary legal challenges we have identified in Mississippi are HIV-related employment and housing discrimination, and we are working with local community advocates and national law firm pro bono attorneys to fight for justice for Mississippians living with HIV/AIDS.
For additional information, you can check out the following resources:
- Susan Blumenthal Making AIDS History: Achieving an HIV-Free Generation, Huffington Post Healthy Living (July 23, 2012)
- Centers for Disease Control and Prevention, HIV in the United States: At a Glance (March 2012)
- Southern HIV/AIDS Strategy Initiative, HIV/AIDS Epidemic in the South Reaches Crisis Proportions in Last Decade 2-3 (2011)
- Megan McLemore, Human Rights Watch: Rights at Risk - State Response to HIV in Mississippi 15 (2011)
- And for more on how partnerships between lawyers and doctors can help improve health care access and outcomes in general, check out an earlier blog post by Brie Clark titled, Law is Good Medicine.
About the author:
Marni von Wilpert serves as the Skadden Legal Fellow for the Mississippi Center for Justice, providing legal representation for people living with HIV/AIDS primarily in the Delta. Prior to joining the Center, Marni served as a United States Peace Corps Volunteer in Botswana working as a community advocate for HIV/AIDS prevention. Marni's prior legal experience includes serving as a law clerk at the Texas Civil Rights Project, in which she focused on accessibility rights for people living with disabilities, and as an intern at the San Diego Legal Aid Society where she worked to help domestic violence survivors. Marni graduated from the University of California at Berkeley with a B.A. in Peace and Conflict Studies, and obtained a J.D. at the Fordham University School of Law. You can reach Marni at mvonwilpert@mscenterforjustice.org.
]]>For commentary on the arguments regarding the constitutionality of the individual mandate, see David G. Savage and Noam N. Levey's article, Supreme Court Greets Healthcare Mandate with Skepticism .
For different views on how the Court received arguments concerning the constitutionality of the Medicaid expansion, see
- NHeLP Press Release, Supreme Court Concludes Oral Arguments on Health Reform, Justices Cast Doubt on Claims that Medicaid Expansion is Coercive.
- David G. Savage and Noam N. Levey's article, Justices Suggest Medicaid Expansion is Unconstitutional.
(1) Whether the individual mandate is constitutional;
(2) If it is found unconstitutional, whether the entire Act must be struck down with the mandate, or only the provisions that seem linked to the mandate (such as the guarantee issue and ban on preexisting condition limits);
(3) Whether the Court should even hear this challenge now, or must wait until after the mandate actually goes into effect in 2014 and leads to some concrete financial harm (like someone being forced to purchase insurance or paying a fine); and
(4) Whether the Medicaid expansion to all adults who meet the income eligibiity limits is valid.
For a nice overview of the issues and timeline of the arguments this week, you should read A Guide to the Supreme Court Challenges to Obama's Health Care Law in the New York Times. For a more in-depth discussion of the legal issues presented, you can also check out my previous blog posts:
]]> - the constitutionality of the individual mandate, click here.- the severability of the mandate (What happens to the rest of the law if the mandate is struck down?), click here.
- do plaintiffs even have standing to challenge the mandate at this time, click here.
- the constitutionality of the Medicaid expansion, click here.
]]>The Court only granted cert to decide whether patients and providers had a right to challenge such cuts in federal court using the Supremacy Clause, a Constitutional provision that essentially says federal law preempts conflicting state law. The problem is that the Court never answers this question. In a five-to-four decision, the Court reframed the question and remanded it back to the Ninth Circuit for briefing by the parties because during litigation the rates were approved by CMS (Centers for Medicare and Medicaid Services), the agency charged with administering Medicaid. The revised question is whether private citizens can use the Supremacy Clause to challenge state cuts after CMS has approved them.
As Professor Tim Jost has already commented, the practical effect of delaying the decision is a win for plaintiffs because it preserves their right to sue, for now. The majority declined to follow the dissent's approach, which would have held that the Supremacy Clause cannot be used regardless of CMS approval. Despite this apparent win for plaintiffs, some view the majority's opinion as foreshadowing a more favorable rule for states. According to KPCC news, for example, Governor Brown characterized the decision as giving states leeway in rate setting and said the court gave the Ninth Circuit "clear instructions that are very favorable to the state's position." And in Professor Kevin Outterson's recent blog, he predicts that on remand the Ninth Circuit will defer to CMS and find no violation of the Supremacy Clause - he says "it won't even be a close decision."
While I agree that language in the majority's opinion provides some evidence of a more favorable approach for states, I disagree that the Douglas decision clearly favors the states or demands unqualified deference to CMS in the future. Rather than clarifying questions about future payment challenges, Douglas raises a new and more challenging question about the level of review required and how courts decide when deference to federal approval is warranted. In fact, three recent decisions from a California district court highlight this question, and are probably a better predictor of what the Ninth Circuit will do on remand. In each case, the court temporarily enjoined Medi-Cal cuts despite CMS approval. Far from resulting in a slam dunk win for states, the court refused to defer to CMS's approval because of serious defects in the state's rate-setting process that made it look arbitrary and capricious, and because CMS's own inconsistency and approval of such a defective process did not warrant the kind of deference typically required for agency action.
]]> The Importance of Deference and the APAIn their predictions about what Douglas means for future payment suits, Governor Brown and Professor Outterson are probably relying on language in the opinion that speculates about two effects of CMS approval - both of which are favorable to states. First, the Court suggests that CMS approval "may change the answer" to the "underlying substantive question" about whether the rates violate federal law. Second, the Court notes that CMS approval changes the procedural posture and, thus, may change the level of scrutiny applied by the courts because it may require the plaintiffs to seek review of the agency determination under the Administrative Procedure Act (APA) rather than in an action against California under the Supremacy Clause. This is relevant, says the Court, because the APA generally provides for judicial review that is deferential to agency action, making the "Supremacy Clause challenge at best redundant." At worst, the Court worried, allowing both claims might "threaten[] potential inconsistency or confusion," if the Supremacy Clause action allows courts to avoid the kind of deference typically demanded under the APA.
In short, the Court is suggesting that federal courts, in fact, may be less likely to invalidate cuts that have been approved by CMS, and that legally courts may have less discretion to do so under this more deferential APA standard. While this certainly sounds good for the states, people should not rush to assume that this will mean a slam dunk for states. For now, the Court can only speculate about the effect of CMS approval because the parties have not briefed these issues; this is why it is remanding the issue back to the Ninth Circuit. Through this process, I expect the Court to learn much more about the level of review that federal courts have been applying to states' rate-setting processes and CMS's decisions. What it will discover is that Supremacy Clause claims have not been used to avoid the typical deference applied to agency action under the APA; federal courts do consider the APA's basic principles of deference in these cases, but deference is not absolute. A look at Medicaid payment suits shows that courts often have good reasons for finding that deference to agency decisions is not warranted, even under the APA.
Limits on Deference: Why States Can Still Lose
The APA does create a deferential standard for reviewing agency action, but the Supreme Court has made clear that a reviewing court can set aside agency action if it is found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The Court has gone further to explain that a decision is arbitrary and capricious "if the agency relies on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." When federal courts have invalidated state Medicaid rates, even in the face of CMS approval, it is because they found that the agency action did not meet these minimal standards.
The most common and compelling example of this is where states cut rates in clear violation of federal law, and the federal regulator does nothing about it. California has one of the worst histories of repeatedly disregarding federal rate-setting requirements. It has tried several times to cut rates solely in response to its budgetary needs, and without any consideration for how it would impact access for Medicaid patients -- an act that federal courts have long held to be a violation of federal law. CMS (and its predecessors) have an equally troubling history. Historically, federal regulators have not done much, if anything, to enforce the Equal Access Requirement. They are more likely to actively review and reject state plans when proposed rates look too high, but not when concerns are raised that rates are too low to ensure equal access. Reviews of state plans have been cursory, at best, and are often approved by default. It is in this context that courts have consistently refused to defer to agency action, holding that even traditional APA deference does not require courts to "rubber stamp" federal approval of state plans that are clearly arbitrary and a violation of federal law.
Admittedly, the question about whether deference is warranted is much harder to answer where the state undertakes some process to comply with federal law, and where CMS actively reviews and approves that process. This is the scenario presented by recent developments in California, which is likely why the Supreme Court remanded the case. In the latest round of cuts, California conducted an access review and concluded that the rates complied with federal law. CMS was also engaged in the process; before approving California's rate cuts, CMS requested additional information from state officials concerning the impact on access, and was confident in the state's findings. In fact, under the Obama Administration, CMS generally has been more active in reviewing state plans to determine compliance with the federal Equal Access Requirement, and it has recently proposed regulations that give states guidance about the kind of process they should undertake in order to satisfy this requirement. This certainly does not look like the kind of clearly arbitrary or capricious behavior described above.
Nonetheless, the APA's deferential standard permits courts to take a "hard look" at the agency decision-making process to determine whether an agency has engaged in reasoned decision making or is acting in an arbitrary and capricious manner. Not all courts look closely agency actions, and some defer to agency action despite evidence of serious flaws in the process. But other federal courts have rejected state rates despite federal approval where they find that the state failed to undertake a "bona fide process" that would ensure compliance with federal law. And the Ninth Circuit, in Orthopaedic v. Belshe, has gone the furthest in interpreting 30A as specifically requiring states to consider provider cost as part of the rate-setting process. According to the Ninth Circuit, ignoring provider cost is inconsistent with the federal law, which is one of the grounds for setting aside agency action under the APA.
Recent Injunctions Illustrate the Next Challenge for the Court
Perhaps the best predictor of what the Ninth Circuit will do on remand, and the legal questions likely to reach the Supreme Court in the next round, is the result of three recent California district court opinions enjoining Medi-Cal cuts despite CMS approval. Applying Ninth Circuit precedent, the court found a strong likelihood that the state's rate-setting process, and specifically its access review, was so defective as to be arbitrary and capricious, and it found that deference to CMS approval was not warranted. I have described these cases in greater detail in an earlier blog, but I'd like to give just two examples of the kind of defects that led the court to its conclusion.
First, the court held that state officials' failure to consider provider cost in its rate-setting process violated 30A based on the Orthopaedic case described above. CMS argued for a different interpretation of 30A - one that would not require states to consider provider cost - and it insisted that its interpretation should receive deference. But the court rejected CMS's interpretation and argument for deference, in part, because of CMS's own inconsistency. It was particularly troubled by the fact that CMS was treating provider cost as irrelevant for determining whether the rates are too low to ensure equal access, but that in 2004 CMS argued the opposite position when it denied a state plan amendment by Alaska that would increase Medicaid rates. In that case, CMS denied the plan, in part, because of Alaska's failure to consider provider cost, and, ironically, CMS quoted language from the Ninth Circuit's Orthopaedic decision stating that "the requirements of 30A are ... not so flexible as to allow the [State] to ignore the costs of providing services." To take such apparently inconsistent positions without a rational explanation looks like precisely the kind of arbitrary action that does not warrant APA deference.
The court was also troubled by the state's failure to consider the kind of data necessary to accurately measure access. State officials measured access by counting the numbers of Medicaid providers that accepted at least one claim per year, but did not inquire into how many Medicaid patients these providers were able or willing to see, what kinds of services they could provide, or how this compared to the need of beneficiaries in a specific geographic area. Even CMS (through informal guidance and recent proposed rules) has made clear that this kind of analysis is inadequate, and that states should measure access based on patients' needs and a realistic picture of whether they can access services in a timely manner. Yet CMS approved the rate cuts, without acknowledging this failure or demanding further information.
These recent cases illustrate that some courts continue to be troubled by what they view as arbitrary, capricious and inconsistent decision making by states and CMS, and that they will continue to take a hard look at agency decisions in order to determine whether deference is warranted. If I had to make a prediction, my guess would be that on remand the Ninth Circuit will be equally troubled by the actions of state officials and CMS, and that they will be just as vigilant as the district court in reviewing the agency's process before deciding whether deference is really warranted under the APA. This is why I think Douglas raises more questions than it answers: Douglas' suggestion that CMS approval will trigger deference by courts is not a new concept nor does it mandate a particular outcome because deference is not absolute.
]]>Previously I have blogged about this problem and about the lawsuits brought by Medi-Cal providers and beneficiaries to prevent these kinds of cuts from going into effect. States must comply with procedural and substantive guarantees found at 42 U.S.C. Section 1396a(a)(30)(A), commonly referred to as the "Equal Access Provision" or "30A" requirement. Under this provision, states must "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 under the plan a least to the extent that such care and services are available to the general population in the geographic area." State officials cannot honestly and reasonably make such assurances without undertaking some kind of analysis to assess the impact that rates will likely have on access, and federal courts have consistently held that states cannot cut provider rates solely in response to fiscal concerns. Yet this is precisely what California lawmakers have tried to do a number of times before, until federal courts were asked to intervene and prevented the cuts.
Federal regulators are supposed to oversee the state rate-setting process to ensure 30A compliance. CMS (the Centers for Medicare and Medicaid Services), is the division of the U.S. Department of Health and Human Services that administers Medicaid, and the Medicaid Act requires states to submit proposals to change rates to CMS for approval. Until recently, however, federal regulators have been largely absent in this arena: HHS has failed to promulgate regulations providing guidance to states about how to comply with 30A, though the Obama administration has recently proposed such rules; and HHS has failed to use its enforcement power to reject rate cuts, even where state violations of federal law have been clear and egregious. It is because of this regulatory void that federal courts historically have played such a critical role in Medicaid payment suits.
Significance of the AB 97 Rate Cut Cases
The most recent decisions by a California district court enjoining the AB 97 rate cuts are noteworthy for a couple of reasons. First, both federal regulators and state officials seemed to take their 30A obligations seriously. When California submitted its rate cuts for approval, CMS did not simply rubber stamp them, it requested additional information concerning the implications of the cuts on health care access. California performed an access review, ultimately concluding that the cuts would not adversely impact quality or access. Based on this, CMS approved the cuts.
These cases are also important because of the current threat to providers' and beneficiaries' right to challenge illegal rate cuts in federal court. As I describe in greater detail in a prior blog, the Supreme Court will be deciding this issue soon, and HHS has sided with the states in advocating for the elimination of this judicial last resort. HHS's argument against allowing suits to challenge payment cuts is based, in part, on the fact that HHS has been explicitly charged with Medicaid oversight in rate setting. Implicitly, HHS seems to be claiming that it can be trusted to exercise its oversight effectively. Certainly, the Obama administration has done more than past administrations to try to earn this trust by stepping up its oversight activity with respect to access and proposing rules to give states guidance for complying with 30A.
There are still many unanswered questions about HHS's stated commitment to enforcing 30A obligations, and these recent cases provide a troubling glimpse of this "commitment" in practice. In all three cases, the court's opinion reveals fundamental flaws in the state's rate-setting process -- flaws that reflect a continuing disregard of federal law, and specifically access and quality protections. In approving these latest cuts, CMS seems to ignore these flaws, California's history of violating federal law, and even California's disregard of CMS's own suggested criteria for determining 30A compliance. Far from instilling trust in CMS's regulatory promises, these most recent cases reinforce the critical role that federal courts will need to continue to play in protecting Medicaid access in the future.
]]> A Closer Look at California's Process: Determining 30A ComplianceTypically, courts are very deferential to action by administrative agencies: they affirm an agency's action unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Federal courts have held that a decision is arbitrary and capricious if the agency relies on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. In this case, however, the California district court did not defer to the state's findings or CMS's approval. It found that the state's process did not comply with 30A, and thus CMS's approval was also inconsistent with federal law. Links to the full opinions are provided above, but I want to briefly highlight three important defects in the state's process that led the court to invalidate the cuts.
The Role of Provider Cost
One of the flaws in the state's process was its failure to consider provider cost as a factor in setting rates. Since 1997, the Ninth Circuit has interpreted 30A to require states to do cost studies and consider these costs in rate setting. In fact, Medi-Cal cuts have been invalidated in the past on this basis, so lawmakers are aware of this requirement. Their failure to comply is simply the latest in a pattern of disregarding federal rate-setting requirements. The important link between the sufficiency of payment rates, provider cost, and provider participation has been recognized either explicitly or implicitly since Medicaid's enactment in 1965. Whether rates are sufficient to cover the "reasonable cost" of providing care is relevant for determining if rates encourage economical and efficient care (in other words, not too high), as well as for determining if they are consistent with access and quality (in other words, not too low).
CMS's position about the role of provider cost in determining 30A compliance has been, at best, inconsistent. In 1990, Medi-Cal beneficiaries challenged the extremely low payment rates and access for dental care in the case Clark v. Kizer. In the course of litigation, HHS filed an amicus brief explaining the informal criteria it used for measuring 30A compliance, affirming the relevance of provider cost in the process. As recently as 2005, in Alaska Department of Health and Social Services v. CMS, CMS denied Alaska's proposed rate changes out of concern that the rates were too high, citing as one reason for its denial Alaska's failure to consider provider cost. Currently, however, CMS is taking the opposite position: In its recent proposed regulations and in the AB 97 cases, it insists that 30A does not require cost studies, and it seems to devalue the importance of the link between rates, provider cost, and access. The court was disturbed by this inconsistency. CMS cannot assert that cost is relevant in one circumstance (when concerned that rates are too high), but claim that it is irrelevant in another (when the concern is that rates are too low or after a change in administration) without some rational explanation. This is precisely the kind of arbitrary and irrational agency action which is not entitled to judicial deference.
Measuring Beneficiary Access
State officials and CMS seemed to focus their review on access concerns, and, specifically, whether rates would continue to guarantee access for Medi-Cal beneficiaries equal to those in the general population. However, the state failed to consider the kind of data necessary to effectively measure access. A lack of clear statutory or regulatory requirements for 30A compliance means that states have had a great deal of discretion to establish their own process for access review. However, HHS has offered a framework and suggested criteria for measuring access, through informal guidance, and, more recently, in its proposed rules. This framework includes obvious criteria, such as the level of physician participation, beneficiary need, and patient utilization. But HHS and the California district court in the Clark case have also made clear that these criteria must be assessed meaningfully and accurately; that is, states must try to assess the reality of access on the ground and from the perspective of Medi-Cal beneficiaries.
In the case of the AB 97 rate cuts, the court found that the state failed to do this; instead the state used a process and data that likely created a distorted picture of access. In the case of physician services, for example, the state determined the number of participating Medicaid providers by counting the number of physicians who had submitted at least one claim per year. It did not, however, gather information about how many of these physicians actually treated Medi-Cal beneficiaries regularly, and what kind of services they provided in light of beneficiaries' needs. The state's access analysis also failed to take into account the proximity of providers to beneficiaries, beneficiaries' level of need, and patterns of utilization (what kind of care they received and where). The lack of meaningful inquiry into each of these factors meant that the state made a number of unrealistic and overly optimistic assumptions about the level or kind of services that certain providers would be able or willing to provide.
Quality of Care
Many of the potential access concerns raised by plaintiffs implicate quality of care concerns as well. Plaintiffs alleged the record demonstrated "'no consideration' at all by DHCS or CMS of the impact of the rate reduction on quality of care." In response, state officials argued that they designed a monitoring plan to monitor both access and quality of care. They also claimed that they could rely on existing health and safety laws that require a minimal standard of quality care to ensure that Medi-Cal beneficiaries would get adequate care. The court rejected both responses. Section 30A requires states to assess the possible impact of rate cuts on access and quality prior to rate implementation, and to use this information to either adjust the rates or implement other safeguards to prevent unnecessary harm. The state's monitoring plan was inadequate because it took a wait-and-see approach, creating a potential response only after a problem had been identified. Moreover, a number of courts have held that states can not rely on external quality protections as a way to satisfy 30A requirements. States must do their own quality impact assessment based on actual delivery trends and patient needs. States cannot use the fact that other laws regulate quality as a way to avoid their obligation to assure "that the payments themselves be consistent with quality care."
So what does this mean for the future of Medicaid access?
In a prior blog I posed a similar question about whether the Medicaid expansion would really improve health care access in light of existing barriers, including low reimbursement. At that time, I suggested that the answer would depend, in part, on the willingness of CMS to meaningfully review state Medicaid plans and to use its oversight power to enforce federal access protections. This case gives us the first glimpse of what we can expect under the Obama administration, and what it reveals is not very hopeful.
]]>The first issue, and the one that has received the most attention so far, is whether the individual mandate is a constitutional exercise of Congress' power to regulate interstate commerce or to tax and spend for the general welfare. When the mandate goes into effect in 2014, it will require individuals to purchase insurance, unless they qualify for an exemption. This mandate raises a novel and important question about the scope of the government's power to require individuals to purchase a service from a private entity. So far two appellate courts (the Sixth and DC Circuits) have upheld the mandate based on Congress' power to regulate commerce, while the Eleventh Circuit held the mandate unconstitutional. For more on the constitutionality of the individual mandate, click here.
]]> The Court will address two other issues related to the mandate. The first is a jurisdictional question about whether the federal courts are barred from even hearing a challenge to the mandate because of a provision in the federal tax code known as the Anti-Injunction Act ("AIA"). The penalty for failing to comply with the mandate is a tax collected by the IRS, but the AIA prohibits lawsuits that seek to prevent the assessment and collection of taxes before they are due. It requires individuals to pay their taxes first and sue later, which means the earliest an individual would be able to file suit to challenge the mandate would be in 2015. A number of cases have found that the AIA does not apply on the grounds that failure to comply with the mandate is not really enforced as a tax assessment, but rather is a "regulatory penalty" not subject to the AIA prohibition. So far, the Fourth Circuit is the only appellate court to dismiss a challenge to the mandate on this basis.The second issue concerns the fate of the broader health reform law in the event that the mandate is held unconstitutional, and this turns on the question of whether the mandate is severable from the rest of the law. If the mandate is severable, this leaves the rest of the law intact - this was the conclusion reached by the Eleventh Circuit in Florida v. HHS, the decision accepted for review by the Supreme Court. If the mandate is not severable, then the entire Affordable Care Act could fall with the mandate - the conclusion reached by a Florida District Court, before it was reversed by the Eleventh Circuit on appeal. For a more in-depth discussion of the severability of the individual mandate, click here.
The most surprising issue taken up by the Supreme Court is whether the Medicaid expansion is constitutional. Expanding public health insurance is a critical part of the Affordable Care Act, but it has not received nearly as much attention as the private insurance reforms. Historically, Medicaid has required coverage for only certain categories of people - pregnant women, children, people with disabilities, and low-income Medicare beneficiaries. The Act expands Medicaid eligibility criteria to include all adults with income up to 133% of the federal poverty level. It is surprising that the Supreme Court will consider the constitutionality of this expansion because it is clear that Congress can condition the receipt of federal funding on state compliance with federal law, as long as those conditions bear a reasonable relationship to the purpose of the spending. Eligibility criteria are precisely the kind of funding conditions that have been in place since Medicaid's enactment and they are necessary for achieving the federal goal of increasing health care access for those in need. Challengers claim that expanded eligibility creates new state requirements that are coercive and usurp state sovereignty, but such claims typically fail in the case of voluntary programs like Medicaid (states can choose to opt out) and so far no court has found the expansion unconstitutional. For more on why a legal challenge to the Medicaid expansion is likely to fail, click here.
For a copy of the petitions filed seeking Supreme Court review of the health reform law, click here. For a copy of the order listing the cases and arguments accepted for review, click here.
]]>Probably to most people's surprise, the Fourth Circuit dismissed both cases based on a lack of jurisdiction, and therefore did not reach the merits of the constitutional challenge. Practically, this will not impact whether the challenge is ultimately heard by the U.S. Supreme Court in light of the split between the Sixth and Eleventh Circuits. The court's reasoning for dismissal in the Liberty case is potentially significant, however, because it is the first time that a court has embraced the federal government's characterization of the mandate penalty as a "tax." This characterization has two important implications.
]]> The first is reflected in the majority's opinion, which held that plaintiffs could not bring a challenge to the mandate yet because of a provision in the federal tax code known as the Anti-Injunction Act. The Anti-Injunction Act is a federal law that prohibits law suits that seek to prevent the assessment and collection of taxes before they are due. It requires individuals to pay their taxes first and then file a lawsuit for a refund. This means that the earliest an individual would be able to file suit would be in 2015, and only if the person did not qualify for one of the exemptions provided in the law and chose to pay the tax penalty instead of purchasing insurance. Although I suggested that this might ban challenges to the mandate in a prior post, I was surprised by this decision because until now no court has adopted the federal government's characterization of the penalty as a "tax" subject to the Anti-Injunction Act bar.The court's characterization of the mandate penalty as a "tax" may also impact the more important question about the constitutionality of the mandate. In its defense of the mandate, the federal government has argued that the tax assessment imposed on those who fail to purchase insurance (and are not exempt from the mandate) is a constitutional exercise of the federal government's very broad power to tax and spend for the general welfare. However, every court that had considered this argument before yesterday rejected it. Even those upholding the mandate rejected the government's tax defense; they have all held that the penalty does not qualify as a "tax" but is instead a "regulatory penalty" that must be found to be a legitimate exercise of some other federal power - like the power to regulate interstate commerce.
Judge Wynn, one of the judges in the Liberty majority, wrote a concurring opinion that embraced the federal government's argument. Although Judge Wynn agreed that the challenge had to be dismissed, he went further to note that based on the same reasoning, the mandate should be upheld as a legitimate exercise of Congress' taxing power. According to Judge Wynn, the fact that the "tax" serves a regulatory function does not necessarily undermine its revenue-raising function because taxes typically do both. In addition, he found that the tax passes constitutional muster because it is expected to raise significant amounts of revenue, will be used for the general welfare, and will not infringe any other constitutional rights.
Defense of the mandate based on the "taxing power" has not received nearly as much attention as the interstate commerce argument, that is until the Fourth Circuit thrust it into spotlight yesterday. Two recent blogs discussing the case's implications are Health Care Challenge Rejected, by Lyle Denniston on SCOTUSblog, and Fourth Circuit Dismisses Two Challenges to the Individual mandate on Jurisdictional Grounds by Ilya Somin on The Volokh Conspiracy. For an earlier and more in-depth analysis of the tax justification for health reform, go to the O'Neill Institute's Legal Solutions in Health Reform webpage.
]]>According to Campbell, however, Pennsylvania used this gatekeeping function to prevent new construction in order to curb costs; community need was not considered. In fact, Pennsylvania's actions undermined access to nursing home care for its most vulnerable residents because it "exacerbated financial incentives, already existent in the state's Medicaid reimbursement system, for nursing home operators to seek out a greater share of private-paying customers." Private insurance was more desirable because it typically provided higher reimbursement and Medicaid coverage would kick in after the private insurance ran out. Nursing homes actively sought private pay patients by moving to the affluent suburbs, which had a much larger percentage of white residents over age sixty-five. Thus, Pennsylvania's moratorium had different effects for different communities: Philadelphia, which had a substantial non-white population over age sixty-five, experienced a significant loss in nursing home beds (806); by contrast, the three most affluent counties in suburban Philadelphia which had much higher percentages of white residents over sixty-five (96.4%, 94%, and 98.3%) experienced increases in bed supply (84, 54,and 40 beds, respectively).
In his paper, Campbell considers two other examples of policies that seem to have a disproportionate racial impact: Pennsylvania's implementation of a program designed to fund non-institutional long-term care alternatives to nursing home care for the elderly under Medicaid (the "PDA Waiver" program), and its decision to extend Medicaid coverage to children under age 18 with severe disabilities whose parents' income was too high to otherwise qualify for coverage through the federal disability program, Supplemental Security Income (SSI) program. Such policies clearly look beneficial on their face: health and disability advocates have long pushed for states to fund community-based care that helps people avoid institutionalization, and flexibility with respect to income limits that help children with disabilities get needed care is certainly good health policy. Campbell does not question the value of such coverage.
Campbell's examination of the way Pennsylvania has implemented these programs, and specifically the discretion Pennsylvania uses to determine eligibility requirements for each, does show that its policies may foster racial disparity in terms of access to services and the allocation of public funding. Campbell shows how, in each case, the state has made decisions that either indirectly resulted in a reallocation of services to disproportionately white communities, or a far greater expenditure of resources for programs that have primarily benefitted white residents. Campbell does not suggest that such policies are driven by intentional discrimination; rather he argues that such disparate effects should not be ignored by states.
Campbell points out that his proposal is consistent with recommendations made in the 2003 National Institute of Medicine (IOM) Report, Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care. This report detailed significant racial and ethnic disparities in health care access and outcomes, even when such groups were insured. One of the IOM's recommendations was "to structure payment systems to ensure an adequate supply of services to minority patients, and limit provider incentives that may promote disparities." Despite the federal government's apparent recognition of the problem, the U.S. Department of Health and Human Services (HHS) has not used its power to address this problem in a meaningful way.
Finally, Campbell joins a number of legal scholars and health advocates in criticizing our existing regulatory system as ineffective at policing health disparities caused by funding decisions. Federal law prohibits discriminatory funding and health policy decisions: Title VI of the Civil Rights Act prohibits discrimination by recipients of federal funding, and regulations promulgated by the U.S. Department of Health, Education, & Welfare (HHS's predecessor) make clear that this prohibits the use of criteria or methods, or even the choice of site locations that have a discriminatory effect. The regulatory agency charged with Title VI enforcement, the Office of Civil Rights, has never had the resources, information, or power necessary to uncover or prevent state discriminatory policies. States have a legal duty to comply with federal antidiscrimination law, but neither the federal government nor states have a process in place to ensure compliance. Requiring states to provide a racial impact statement of proposed changes that impact Medicaid beneficiaries -- such as changes in rate-setting, funding cuts, and elibility criteria -- would be a critical step toward meaningful enforcement of Title VI and the development of health policies that reduce, rather than foster, racial disparity.
]]>Despite striking down the mandate, the Eleventh Circuit rejected the part of the lower court's holding that would have invalidated the entire health reform law. The Eleventh Circuit's holding is consistent with the District Court's ruling in Virginia v. Sebelius discussed in greater detail at my prior blog post Will the battle over the individual mandate threaten the entire health reform law? Both courts emphasized the presumption in favor of severability: "Generally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem, severing any 'problematic portions while leaving the remainder intact." Given the lack of clear legislative intent regarding severability, and the fact that many provisions in the law were not directly tied to the mandate or even related to private insurance regulation, the Eleventh Circuit held that the mandate should be severed from the rest of the law.
Click here for a chart of key decisions about the constitutionality of the individual mandate with links to the cases. Go to Health Care Justice Blog for more information on each of the cases and links to the decisions.
]]> ]]>The Kansas case is significant because it went even further. It held that by targeting Planned Parenthood for exclusion because of its association with abortion, the state law created an "unconstitutional condition" on public funding that violated the First and Fourteenth Amendments. In this way, the court highlighted the real problem with state defunding attempts: it isn't simply about states getting carried away legislatively in ways the conflict with federal law; rather it is about states deliberately using their administrative power to punish not only providers that perform abortions, but those who actively seek to promote women's access to this kind of health care.
]]> State Law Exclusion of Planned ParenthoodKansas recently enacted legislation that effectively precluded Planned Parenthood from applying for Title X funds administered through the state. Title X is a federal program that has funded low-cost family planning services for low-income and uninsured women and families since 1970. The Kansas Department of Health and Environment (KDHE), the state agency that was awarded the federal grant in this case, is responsible for doling out Title X funds to providers of family planning services. KDHE has relied on Planned Parenthood as a Title X grantee for over 25 years. In fact, just last year, KDHE submitted an application requesting Title X funds as part of a 5-year grant, and in its grant application it represented that Planned Parenthood's Wichita and Hays health centers would be two of its subgrantees and that they received that largest amount of Title X funding distributed (about 13%). Notably, KDHE also touted Planned Parenthood's special Family Planning Male Involvement Information and Education Project to more fully involve males in reproductive health and pregnancy planning - a Title X program priority.
Despite these representations and KDHE's recognition of Planned Parenthood's important family planning services, the Kansas law, which took effect July 1, 2011, makes Planned Parenthood ineligible for Title X funds. Specifically, the law prioritizes funding to "government entities" (like state, county or local health clinics or departments) and to "hospitals or federally qualified health centers" that "provide comprehensive primary and preventative care in addition to family planning services." Under this law, Planned Parenthood is effectively precluded from even applying for Title X funds.
Violation of the Supremacy Clause
This case is very similar to the recent Indiana case, as well as to prior cases in which Title X exclusions have been found invalid under the Supremacy Clause in Article VI of the U.S. Constitution. The Supremacy Clause provides that all laws and treaties made by the federal government shall be the supreme law of the land; in other words, federal law trumps conflicting state law. There has not yet been a full hearing on the merits, but the court found that plaintiffs will likely succeed in proving a violation because requiring that a provider of family services be a government entity, hospital, or FQHC, added eligibility criteria for federal funding that conflicted with federal law. Title X specifically provides that "any entity" may apply for a Title X grant, and a number of courts have already held that a state law which excludes providers who would otherwise be eligible under federal law "is inconsistent with Title X's broad application" and "would seriously undermine and obstruct Congress' intent."
Unconstitutional Condition in Violation of the First & Fourteenth Amendments
Unlike the Indiana case, the Kansas court did not stop there. It also agreed with Planned Parenthood's claim that the state exclusion was an unconstitutional attempt to punish it for its support of abortion rights and its association with abortion services providers in violation of the First and Fourteenth Amendments. One of the state's defenses to this claim was that the law does not target Planned Parenthood on its face nor does it mention abortion; the law appears to simply exclude a certain category of provider - nonpublic entities that are not hospitals or FQHCs - from eligibility. The court quickly dismissed this, however, based on the legislative statements and activity surrounding the exclusion. It was clear from this evidence that the purpose of the law was to deprive Planned Parenthood of funding because of its association (or perceived association with abortion services). State Representative Lance Kinzer, who offered the amendment containing the exclusion, made this purpose clear to other legislators before the vote, and then in a press release and announcement on his facebook page immediately after the vote: "Delighted to announce that the KS House just approved my floor amendment to deny Title X funding to Planned Parenthood for the balance of FY 2011. The vote was 91-26, a great victory on the first pro-life floor vote of the season."
Indeed, proponents of the recent wave of state defunding attempts consistently claim that they are trying to prevent public funding from being used for abortion; however this justification was also rejected by the court because this is not what the state laws do. First, federal law (like Title X) and many states already prohibit public funding for abortion. Second, in this case, neither of the two Planned Parenthood facilities harmed by the exclusion even provided abortion services. Although one of their affiliates does, it is located in a different area of Kansas - financially and physically separate from the Planned Parenthood recipients of Title X. The affiliate that provides abortion services receives no Title X funds; it was entirely financed by private funds so no Title X funds can be used for abortions. Finally, current and prior laws that have excluded Planned Parenthood from public funding typically have exceptions for other kinds of providers (like hospitals and managed care plans) despite the fact that they may be providing abortions. No evidence has been offered to show a greater risk of commingling by Planned Parenthood than these other providers that would justify such differential treatment.
In fact, the Kansas law looks more like an attempt to punish Planned Parenthood by excluding it from any chance of receiving federal funding because of its association with abortion and promotion of abortion rights, and thus looks like an unconstitutional condition on the receipt of federal funds. The Supreme Court has made a critical distinction between government's refusal to fund a particular activity, which is constitutional, and its attempt to "penalize" someone for exercising a constitutional right, which is not. For example, in 1980 in Harris v. McRae, the Supreme Court upheld the Hyde Amendment, a federal law prohibiting funding for abortions except where life-threatening. In finding the funding limitation constitutional, the Court cautioned that "[a] substantial constitutional question would arise if Congress had attempted to withhold all Medicaid benefits from an otherwise eligible candidate simply because that candidate had exercised her constitutionally protected freedom to terminate her pregnancy by abortion." This kind of "broad disqualification from receipt of public benefits" looks more like an unconstitutional "penalty" for protected conduct.
Eleven years later, in Rust v. Sullivan, the Supreme Court made a similar distinction when it upheld regulations implementing Title X's prohibition on federal funds for abortion services. The regulations defined what kinds of activities were impermissible under Title X, and they required that recipients of Title X funding who performed abortions must create physical and financial separation between these prohibited activities and activities allowed under Title X. Essentially, the regulations created guidelines to prevent commingling of funds, guidelines with which the Planned Parenthood facilities under attack today have complied. Notably, though upholding these provisions, the Supreme Court drew a signficant distinction between this kind of legitimate restriction on the funding of certain activities and an unconstitutional penalty on those who otherwise engage in protected activity with private funds:
"[H]ere the Government is not denying a benefit to anyone, but is instead simply insisting that public funds be spent for the purposes for which they were authorized. The Secretary's regulations do not force the Title X grantee to give up abortion-related speech; they merely require that the grantee keep such activities separate and distinct from Title X activities. Title X expressly distinguishes between a Title X grantee and a Title X project. The grantee, which normally is a health-care organization, may receive funds from a variety of sources for a variety of purposes. The regulations govern the scope of the Title X project's activities, and leave the grantee unfettered in its other activities. The Title X grantee can continue to perform abortions, provide abortion-related services, and engage in abortion advocacy; it simply is required to keep them separate and independent from the project that receives Title X funds."
The court expressly acknowledged that this freedom to engage in protected activities with non-Title X funding is what makes this different from the "unconstitutional conditions" cases "in which the "Government has placed a condition on the recipient of the subsidy rather than on a particular program or services, thus effectively prohibiting the recipient from engaging in the protected conduct outside the scope of the federally funded program." The broad disqualification of Planned Parenthood from federal funding because of its association with abortion is one of the most compelling examples of such an unconstitutional condition.
* * *
For more on the Indiana case and the Supremacy clause claim, click here for my recent blog post. For more on state legislative activity that is threatening reproductive health generally, go to the National Women's Law Center website on Health Care and Reproductive Rights.
In May of this year, Indiana enacted a law prohibiting the state from contracting with entities that perform abortions, but it exempted hospitals and ambulatory surgical centers. Effectively, this meant that the state could exclude Planned Parenthood of Indiana (PPIN) from participating in its Medicaid program, as well as prevent it from receiving other grants administered through the state, such as the Disease Intervention Services grant funded entirely by federal money. A number of plaintiffs, including PPIN, Medicaid beneficiaries, and individual health care providers, challenged the law in Planned Parenthood of Indiana (PPIN) v. Commissioner of Indiana State Department of Health. In June, a federal district court judge enjoined the state from implementing the law, holding that the exclusion from both programs violated federal law. A full hearing on the merits has not occured yet, but the plaintiffs won the preliminary injunction because they were able to prove a likelihood of winning on the merits, a lack of adequate remedy at law, and future irreparable harm if the injunction were not granted. The plaintiffs challenged the exclusions on several grounds, but the court's decision turned on plaintiffs' claim that the Indiana law conflicted with express federal spending conditions that regulated each program, and thus was preempted under the Supremacy Clause of the U.S. Constitution.
]]> Exclusion from the Medicaid ProgramMedicaid is a joint federal-state program created to provide health care coverage for the very poor and disabled. Although the program is voluntary for states, every state participates in order to get significant federal funding. As a condition of this funding, states must agree to abide by certain program requirements and beneficiary protections set forth in the federal Medicaid Act. The particular provision at issue in this case is the "freedom of choice" provision (42 U.S.C. Section 1396a(a)(23)); it requires states to ensure that "any individual eligible for medical assistance ... may obtain such assistance from any institution, agency, community pharmacy, or person, qualified to perform the service or services required ... who undertakes to provide him such services...." Plaintiffs alleged that Indiana's law excluding PPIN would violate this "freedom of choice" provision by preventing many Medicaid beneficiaries from getting their preventive and other reproductive health services from PPIN, their provider of choice.
The Indiana commissioner argued that this exclusion did not conflict with federal law by pointing to another provision in the Medicaid Act that expressly permits states to exclude providers from the Medicaid program (42 U.S.C. 1396a(p)(1)); this provision says that "in addition to any other authority, a State may exclude any individual or entity [from Medicaid participation] for any reason for which [the federal government] could exclude the individual or entity." In other words, the commissioner argued, states have unfettered authority to exclude providers for any reason as long as it is pursuant to state law, and the recently enacted law deeming providers of abortion services as "unqualified" to participate in the Medicaid program provided this authority.
Thus, the court's decision turned on its reconciliation of these two seemingly inconsistent provisions within the Medicaid Act: the freedom of choice provision for beneficiaries and the apparently broad exclusion authority granted to states. Although the court acknowledged that states have a great deal of discretion in deciding how to structure and administer Medicaid plans, it also noted that this discretion is limited by other statutory protections. The court rejected the state's interpretation that state law is the only check on its power to exclude because this would implicitly render other beneficiary protections in the Medicaid Act, such as the "freedom of choice" provision, essentially meaningless.
The court looked to federal legislative history for guidance in reconciling the two provisions and found that the provision allowing state exclusion of providers was motivated by concerns of protecting the program from fraud and abuse, and protecting beneficiaries from incompetent or inadequate providers. Given the fact that states are the primary regulators of health care quality and essential partners in policing fraud and abuse, it makes sense that state law would be viewed as an important tool for enforcing these protections. Under this interpretation, the fact that PPIN also provided abortions did not make it "unqualified" or a danger to beneficiaries. Moreover, nothing in the legislative history suggested that this provision could be used to regulate the scope of services a provider offers. The court noted that this narrower interpretation of states' exclusion power is more consistent with prior interpretations by the Supreme Court "as giving Medicaid recipients the right to choose among a range of qualified providers, without government interference."
Finally, the court pointed to the fact that the federal regulatory agency charged with Medicaid oversight - the U.S. Department of Health and Human Services (HHS) - denied the state plan amendment submitted by Indiana that contained the defunding provisions. HHS concluded that PPIN's exclusion would violate the "freedom of choice" provision and would negatively impact access to family planning services, which receive special protection in Medicaid. The Medicaid Act requires HHS approval for any significant changes in state plans to ensure compliance with federal law, and therefore it is a critical check on state abuse of discretion. In denying Indiana's amendment, HHS has made clear that it would not allow Medicaid defunding to be used as an ideological weapon against health care providers who provide abortions. In fact, on June 1 of this year, HHS issued an information bulletin for all states to this effect.
Exclusion from the Disease Intervention Services (DIS) Program
The court held that PPIN's exclusion from the DIS program also conflicted with federal law. DIS is entirely federally funded, and the federal government has created a comprehensive funding and eligibility scheme for this program. The law does not authorize states to create additional eligibility criteria, and the court found that the state's attempt to create additional eligibility criteria without federal authorization violates federal law. The court said that its finding that the state law was preempted was consistent with a number of other cases in which state laws that excluded providers from participation in federal programs who would otherwise be eligible under federal law were found invalid under the Supremacy Clause.
Lack of Adequate Remedy at Law & Irreparable Harm
With respect to each exclusion above, the court found that the potential harm to PPIN, the women it served, and Medicaid beneficiaries in Indiana generally would be irreparable and warranted protection. The court also suggested that this harm was not justified by proponents' claims of trying to prevent funding for abortion, especially because federal law already prohibited this. The reality is that only a very small percentage of Planned Parenthood's services involve abortion (around 3%), and these services are paid for through private funding sources only. The overwhelming majority of Planned Parenthood services involve comprehensive reproductive and other preventive health care, such as family planning and birth control, cervical smears, cancer screening, sexually transmitted disease testing, and self-examination instructions. These services help low-income women prevent serious illness, learn healthy behavior, and prevent unwanted pregnancies that often lead to abortion. Defunding PPIN would jeopardize access to these services for the 76,000 patients it serves.
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