Explaining the Administration’s Brief against Suits to Block Medicaid Cuts

June 7, 2011

There’s a bit of dissension simmering among Medicaid advocates over the surprising amicus brief (pdf) filed with the Supreme Court a few weeks ago by then-acting Solicitor General Neal Katyal in the case of Douglas v. Independent Living Center of Southern California. The brief takes the position that Medicaid providers and beneficiaries do not have the right to sue state governments over cuts in provider payments, even if the cuts would violate federal Medicaid law. That might sound harsh, as it would leave people without a remedy when state cuts threaten to make vital medical care unavailable. But I would contend that Katyal’s brief for the Administration has it right. The remedy that is needed is a policy remedy—one that requires balancing interests and responsibilities of varied groups of citizens and multiple levels of government—and should be formulated, enacted, and overseen by policymakers, not the courts.

Medicaid is a cooperative program jointly administered and financed by the federal government and the states. States have flexibility in setting provider payment rates but must conform to certain federal requirements. The underlying dispute in the Independent Living case is about whether California’s decision to cut Medicaid rates breached those federal requirements.

Under 42 U.S.C. § 1396a(a)(30)(A) (“Section 30(A),” also known as the “equal access provision”), a state participating in the Medicaid program must:

provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the [state Medicaid] plan . . . as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that 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 at least to the extent that such care and services are available to the general population in the geographic area[.]

(Note: Don’t worry, there’s nothing wrong with your eyes or brain. You’ve just read a tiny portion of Title XIX of the Social Security Act, and it always feels like that.)

Now, the issue on appeal to the Supreme Court is not the substantive issue of whether California’s rate cuts violated the bolded provision, but the threshold issue of whether Medicaid beneficiaries and providers have the right to sue the state to enforce that provision. There’s a bit of a history to this, but the short version is that, at least since its 2002 decision in Gonzaga v. Doe, the Supreme Court has curtailed access to the courts in cases like this by narrowing application of Section 1983 of the Civil Rights Act (42 U.S.C. 1983). It was once, but is no longer, possible to sue state officials via Section 1983 for violations of Medicaid’s equal access provision. So the California plaintiffs in Independent Living had to get creative and find a cause of action elsewhere.

Enter the Supremacy Clause theory. The Ninth Circuit let the plaintiffs’ substantive claims go forward, holding that the state can be sued via a nonstatutory “implied” right of action under the Supremacy Clause of the U.S. Constitution. The idea here is intuitive: there’s gotta be some way to make states conform to the federal statute—federal law being the “supreme law of the land” and all.1

But that intuitive rationale assumes a false dilemma between private enforcement and none. And while every right deserves a remedy, not every provision of law confers a right. There are good reasons not to read Section 30(A) to establish an enforceable individual right. One is the difficulty of assessing what constitutes compliance—what payment levels are sufficient to ensure access to care and are “consistent with efficiency, economy, and quality”—and, hence, of fashioning an appropriate remedy. The judiciary’s institutional competence to make those assessments is, in a word, suboptimal.2 To give just a little flavor to the point, consider that for any rate cut in provider payments, the state saves money which it might then use to finance more Medicaid enrollment or more expansive coverage. (The likelihood that it would in fact do so is beside the point.) How’s a court to decide if the new allocation has worsened access or improved it?

The fundamental obstacle to realizing the promise of equal access in Medicaid has not been simply a failure of enforcement. It is deeper than that. The problem has been that there is no broadly accepted measure of access to care. But as a result of a new report from the Medicaid and CHIP Payment and Access Commission (MACPAC) established in 2009, CMS has now proposed regulations (pdf) which would require states to develop data and methods for evaluating Medicaid beneficiaries’ access to care. The MACPAC report lays out a framework for analyzing access along three dimensions: (1) enrollee needs, (2) availability of care and providers, and (3) utilization of services. Within that broad framework, states would have flexibility to design methods as they see fit. The data and analysis would be publicly available and reviewed by CMS for sufficiency of access whenever the state proposed to amend its State Medicaid Plan in a way that reduced rates or restructured payments.

Medicaid advocates say federal enforcement is not a viable alternative to private suits, because it is hampered by limited means. CMS may withhold federal funds from states who fall out of compliance with Section 30(A), but such withholding only hurts providers and beneficiaries of Medicaid, not the state officials responsible.

However, the new regulatory scheme, if adopted, would transform the whole landscape. The metrics developed will for the first time give CMS the ability to make evidence-based evaluations of state plan amendments and—crucially—to reject amendments that are inconsistent with the mandate of equal access.

The Administration’s brief in Independent Living is not some sort of concession to states who want to cut Medicaid, or a betrayal of the goals of PPACA. As Suzy Khimm suggested in a guest post at Ezra Klein’s blog last week, it should be understood as part of a strategy to consolidate federal regulation and oversight in Medicaid. It seems to me that’s the approach most likely to realize the promise of Medicaid’s equal access provision.

  1. There’s a deeper legal rationale to the Supremacy Clause theory—one which explains some mysterious gaps in federal court jurisprudence and which I may post on separately—but it would take us pretty far afield from the Medicaid policy implications of interest here, so I’ll leave it aside for now. But it’s important to note that this is not an established theory recognized by the Supreme Court, and the chances it will be adopted now are slim. Furthermore, it is not the case that a decision in agreement with Katyal’s argument would undo a vibrant regime of private enforcement of Section 30(A). At present there is no regime of private enforcement of 30(A). [↩]
  2. Prior to Gonzaga, private enforcement of the equal access provision had been the norm, and the federal circuit courts developed their own, sometimes inconsistent standards for evaluating state compliance. For helpful background, see this discussion (pdf) by Boston University law professor Abigail Moncrieff. Also, see Moncrieff’s article on the trend toward federal enforcement. [↩]
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3 Responses to “Explaining the Administration’s Brief against Suits to Block Medicaid Cuts”

  1. Brad F on June 9th, 2011 4:46 pm

    The proposed rule exempts Medicaid managed care from review, despite the fact that the access statute protects all beneficiaries, including the 70% who receive their care through managed care plans. Moreover, the proposed rule gives states an inordinately long 5 years to measure access within their residual fee-for-service programs, which overwhelmingly serve the beneficiaries with the most severe physical and mental health conditions…

    …a state must submit such information only if its changes “could result in access issues.” The wording of this requirement is so vague that it’s unclear whether the state or the secretary would make the determination that “access issues” are even a possibility…

    Indeed, because the rule specifies neither standards for adequate access nor an independent evidentiary process, it would be nearly impossible for the federal government to enforce the rule.

    These are selected quotes from NEJM piece out yesterday–Sara Rosenbaum is the author.

    If the current law cant define compliance, and proposed Federal solution is lacking–does the court have jurisdiction to act? By…

    throwing it back with a recommendation to solidify meaning of access of compliance, or is that a non-historical action for the court to take?

    Thanks
    Brad

  2. Brad F on June 9th, 2011 4:47 pm

    link:
    http://healthpolicyandreform.nejm.org/?p=14667&query=home

  3. Jim Hufford on June 12th, 2011 2:10 pm

    Thanks for pointing me to the Rosenbaum piece. She’s definitely an authority here, and her read of the proposed rule from CMS gives me pause. I’d admit up front that it’s possible my take is overly optimistic.

    A few notes:

    • It is a proposed rule—it can be improved.
    • “Access issues” is vague, sure, but I don’t think the proposed scheme is hopeless, necessarily. My understanding is that the states would determine methods for access analysis, which I assume would include pre-specification of what would constitute “access issues.” CMS would review the states’ analytical scheme/formula. That would be the crucial step—making sure the states adopt an analytical scheme that would accurately identify situations where there is inadequate access.
    • After that, CMS would merely need to monitor whether states plugged in the right numbers. (Though the data and formulas would need to be updated and reviewed.) And if states didn’t follow their own data and formulas, CMS could reject state plan amendments which reduced or restructured rates.
    • Again, maybe optimistic, but it could work, couldn’t it?
    • Re: Medicaid managed care. I’m not sure what to think about this. But the proposed rule says CMS is currently reviewing managed care access standards, contemplating new rules to supplement or update the existing rules that apply separately to Medicaid managed care plans (42 CFR 438.206 et seq.).
    • If I follow your question about courts, I’d say: No, a court can’t require CMS to issue interpretive guidance/rules if Congress didn’t tell them to develop such rules in the statute. But anyway for now it looks like there’s no way to challenge states’ rate cuts in court, so I don’t see how this would come up anyway. Maybe if CMS were a party in the suit, but that’d be another kind of case.

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