Last week, CMS issued a proposed rule as part of a broader Administration-wide initiative to reduce regulatory and administrative burdens. The proposed rule would absolve states from many of the requirements of a final regulation issued by CMS in 2015 that requires states, before reducing or restructuring payments in their Medicaid programs, to conduct a review (called an access monitoring review plan, or AMRP) of the effect of the proposed rate reductions or restructuring on access to services. The agency is collecting comments on the rule for 60 days; comments are due by September 13, 2019.
We thought we would provide a bit of context on this proposed rule. CMS casts the rule as one to alleviate administrative burden on states, and it certainly does that. But the statutory requirement that underlies the rule – and the 2015 regulation that the rule amends – has a longstanding history that is important to understand before responding to the CMS request for comments.
The proposed rule – and the 2015 regulation – have as their genesis section 1902(a)(30)(A) of the Social Security Act, which is sometimes referred to as the "equal access" provision of Medicaid. Section 1902(a)(30)(A) requires that state Medicaid plans "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." In other words, state Medicaid plans have to pay providers enough to ensure that Medicaid beneficiaries have access to health care services that at least approximates the same level of access to health care services that non-Medicaid beneficiaries have.
But what if a state violates that requirement? Can a provider sue the state in federal court? Can a beneficiary sue the state? Or is the appropriate course of action some sort of complaint process with CMS? That's what we're going to discuss in our blog today.
It turns out that this precise question has been kicking around in the federal courts for almost 30 years. We've written about this before, on two separate occasions, but the issuance of the proposed rule gives us a good chance to address it once again. So let's dive in.
To begin with, part of the problem is that nowhere in the Medicaid statute is there an enforcement mechanism. The statute imposes over 80 requirements on state Medicaid plans, but the statute does not specify what happens if a state fails to comply with them. Perhaps Congress felt, in 1965, when Medicaid was enacted, that a state that failed to comply could face a loss of funding – but not liability in a federal lawsuit. In part, the failure of Congress to enact a precise enforcement mechanism is likely because our nation's federalist form of government contemplates that the states function as co-equal sovereigns with the federal government. After all, from the very foundation of our government, these principles of federalism were evident; the Eleventh Amendment to the United States Constitution – which was ratified in 1795, just eight years after the adoption of the Constitution – generally divested the federal courts of jurisdiction over lawsuits where states are a defendant.
So how to enforce the requirements of Medicaid? In 1990, in a case called Wilder v. Virginia Hospital Association, 496 U.S. 498 (1990), the United States Supreme Court ruled that if a state official violated a Medicaid requirement called the "Boren Amendment" – that at the time was very similar to the Medicaid equal access requirements – that state official could face liability under the federal Civil Rights statute. The Civil Rights statute says that if a state official deprives an individual physically present in a state any of the "rights, privileges or immunities" granted by the Constitution or a law enacted pursuant to the Constitution, that state official can be held liable in the federal courts. 42 U.S.C. § 1983. So, the theory went, if a state official (here, Governor Wilder, the then-Governor of Virginia) deprived an individual in the state (here, the hospitals in the state of Virginia) of a right they are guaranteed under federal law (here, the Boren Amendment in Medicaid), that state official (Governor Wilder) could face liability.
It took about a decade for the Supreme Court to begin to walk back the Wilder decision. The Wilder case was decided by the slimmest of margins – a 5-4 vote – and shortly after the decision, one of the justices in the majority – Justice Thurgood Marshall – retired and was replaced by Justice Clarence Thomas. Justice Thomas likely would not have been in the majority of the Wilder decision, and in a case called Gonzaga v. Doe, 536 U.S. 273 (2002), the Supreme Court (this time with Justice Thomas in the majority) denied a plaintiff the ability to use the Civil Rights statute to enforce a federal requirement against a state official – in that case, a teacher in the state of Washington.
Since the Gonzaga decision, the federal courts have continued to erode the enforcement of Medicaid in a judicial setting. In the case of Douglas v. Independent Living Center of Southern California, 565 U.S. 606 (2012), the Supreme Court declined to decide whether the Supremacy Clause of the Constitution – which prohibits states from enacting laws that are inconsistent with or preempted by federal law – could be used to sue a state for violation of § 1902(a)(30)(A). But a few years later, in Armstrong v. Exceptional Child Center, 135 S. Ct. 1378 (2015), the Supreme Court definitively ruled out the Supremacy Clause as an option, ruling 5-4 that it could not be used to enforce Medicaid's equal access requirements.
Shortly after Armstrong was decided, the Obama Administration (which had supported the state in the litigation, opposing the enforcement of § 1902(a)(30)(A)) promulgated the regulation we mentioned above that contained a guidepost to enforcement of the equal access requirements. That enforcement mechanism called on states to adopt the access monitoring review plan (AMRP) that we mentioned earlier every time a state proposed to cut rates or reduce services under Medicaid. CMS would use the AMRP to assess compliance with § 1902(a)(30)(A) in lieu of the ability of the federal courts to enforce the requirement.
It is this requirement that CMS has now proposed to essentially repeal. CMS says in the proposed rule that "States would still be required to submit information and analysis to demonstrate compliance with" the equal access requirements and that the agency will issue subregulatory guidance to provide further details to states. 84 Fed. Reg. at 33724 (July 15, 2019). But the submission of the AMRP would no longer be required if the CMS rule is adopted in final form.
So what is left? Well, the Supremacy Clause clearly cannot be used to enforce the requirements of Medicaid. Can the Civil Rights statute still be used? That's a closer call; the Supreme Court has never expressly overruled its 1990 Wilder decision. And there is some conflicting case law in the Circuit Courts of Appeal on this question. What does seem clear across all of the Circuit Courts is that the Civil Rights statute cannot be used to enforce the equal access requirements. But other provisions of Medicaid – such as the free choice of provider requirement or the payment adequacy to health centers requirement – may be enforceable (although there is a split in the Circuit Courts on both of those questions).
And last: in the Douglas decision, Justice Breyer (who wrote the majority opinion) made an interesting observation: that although a state cannot be sued to enforce Medicaid requirements via the Supremacy Clause, there is nothing stopping a plaintiff from suing CMS for approving the state plan that led to the putative violation. And indeed, we saw that play out recently, as the United States District Court for the District of Columbia struck down CMS's approval of the Arkansas and Kentucky waivers that authorized community engagement requirements for Medicaid beneficiaries in those states.
Here at the Medicaid and the Law Blog, we will be watching closely to see whether CMS finalizes its proposed rule, and monitoring what it means for Medicaid's equal access requirements in the years ahead.
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