Justia Public Benefits Opinion Summaries

The Seventh Circuit affirmed the judgment of the district court denying Heart of CarDon, LLC's motion for judgment on the pleadings in this interlocutory appeal concerning section 1557 of the Patient Protection and Affordable Care Act, holding that T.S. was a proper plaintiff against CarDon under section 1557, and his suit may continue on that basis.CarDon was a healthcare provider that was reimbursed by Medicare and Medicaid for its serves. CarDon provided health insurance to its employees and their depends through a self-funded employee benefits plan. T.S., a dependent who had autism, brought this action alleging that the plan's exclusion of coverage for autism treatment violated section 1557. CarDon moved for judgment on the pleadings, arguing that only a recipient of CarDon's healthcare services was a permissible plaintiff under section 1557. The district court denied the motion. The Seventh Circuit affirmed, holding that T.S. plausibly alleged an interest that comes within the zone of interests section 1557 seeks to protect. View "T.S. v. Heart of CarDon, LLC" on Justia Law

In 2016, the Secretary of Health and Human Services (“HHS”) issued a final rule that implemented The Protecting Access to Medicare Act of 2014 (“PAMA” or “Act”), definition of “applicable laboratory” (“2016 Rule”). The American Clinical Laboratory Association (“ACLA”) filed a lawsuit challenging the 2016 Rule as arbitrary and capricious under the Administrative Procedure Act (“APA”) on the basis that it depresses Medicare reimbursement rates by excluding most hospital laboratories from PAMA’s reporting requirements. ACLA contended that because hospital laboratories tend to charge higher prices than standalone laboratories, their exclusion from reporting obligations results in an artificially low weighted median.   On remand, the parties cross-moved for summary judgment. The district court declined to reach the merits of ACLA’s APA challenge to the 2016 Rule, based on its determination that the Secretary had issued a new rule (“2018 Rule”) that superseded the 2016 Rule and mooted ACLA’s lawsuit.   The DC Circuit concluded that the case is not moot. Accordingly, the court reversed the district court’s dismissal for lack of subject matter jurisdiction and reached the merits of ACLA’s APA claim. The court explained that the 2016 Rule is arbitrary and capricious because the agency “failed to consider an important aspect of the problem.” The court wrote that PAMA provides that an applicable laboratory “means a laboratory that” receives “a majority” of its Medicare revenues from the Physician Fee Schedule or Clinical Laboratory Fee Schedule. Thus, hospital laboratories that provide outreach services may, in some instances, constitute “applicable laboratories” under PAMA. View "American Clinical Laboratory Association v. Xavier Becerra" on Justia Law

Illinois moved its Medicaid program from a fee‐for‐service model, where a state agency pays providers’ medical bills, to one dominated by managed care, where private insurers pay medical bills. Most patients of Saint Anthony Hospital are covered by Medicaid, so Saint Anthony depends on Medicaid payments. Over the last four years, it has lost roughly 98% of its cash reserves, allegedly because managed‐care organizations have repeatedly and systematically delayed and reduced Medicaid payments to it. Saint Anthony sued, arguing that Illinois officials owe it a duty under the Medicaid Act to remedy the late and short payments.The Seventh Circuit reversed the dismissal of the suit, concluding that Saint Anthony has alleged a viable claim for relief under 42 U.S.C. 1396u‐ 2(f) and may seek injunctive relief under 42 U.S.C. 1983 against the state official who administers the Medicaid program in Illinois. Illinois has tools available to remedy systemic slow payment problems—problems alleged to be so serious that they threaten the viability of a major hospital and even of the managed‐care Medicaid program as administered in Illinois. If Saint Anthony can prove its claims, the chief state official could be ordered to use some of those tools to remedy systemic problems that threaten this literally vital health care program. View "Saint Anthony Hospital v. Eagleson" on Justia Law

Genesis Healthcare was a healthcare provider participating in the federal “340B Program,” which was designed to provide drugs to qualified persons at discounted prices. Under the Program, the Secretary of the Department of Health and Human Services (“HHS”) enters into agreements with drug manufacturers to sell drugs at discounted prices to entities such as Genesis Healthcare, which could, in turn, sell the drugs to their patients at discounted prices. After Genesis Healthcare purchased the covered drugs from the manufacturers, it dispensed them to patients through its wholly owned pharmacies or contract pharmacies. After the Health Resources and Services Administration (“HRSA”) conducted an audit of Genesis Healthcare in June 2017 for Program compliance, HRSA removed Genesis Healthcare from the 340B Program. The audit report found, among other things, that Genesis Healthcare dispensed 340B drugs to individuals who were ineligible because they were not “patients” of Genesis Healthcare. HRSA rejected Genesis Healthcare’s challenges; Genesis Healthcare, in turn, filed suit seeking a declaration it did not violate the requirements of the Program, and injunctive relief requiring HRSA to reinstate it into the Program and to retract any notifications that HRSA had provided to manufacturers stating that Genesis Healthcare was ineligible under the Program. In response to the lawsuit, HRSA ultimately: (1) notified Genesis Healthcare by letter that it “ha[d] voided” all audit findings and that Genesis Healthcare “ha[d] no further obligations or responsibilities in regard to the audit” and (2) filed a motion to dismiss Genesis Healthcare’s action as moot based on the letter. The district court granted HRSA’s motion, finding that the action was moot. The Fourth Circuit reversed the district court's finding the case was moot: Genesis Healthcare continued to be governed by a definition of “patient” that, Genesis maintained, was illegal and harmful to it. Therefore, there remained a live controversy between the parties. View "Genesis HealthCare, Inc. v. Becerra" on Justia Law

Once a person turns 65 or has received federal disability benefits for 24 months, he becomes “entitled” to Medicare Part A, 42 U.S.C. 426(a)–(b) benefits. Not all patients who qualify for Medicare Part A have their hospital treatment paid for by the program; a patient’s stay may exceed Medicare’s 90-day cap or a patient may be covered by private insurance.Medicare pays hospitals a fixed rate for in-patient treatment based on the patient’s diagnosis, regardless of the hospital’s actual cost, subject to the “disproportionate share hospital” (DSH) adjustment, which provides higher-than-usual rates to hospitals that serve a higher-than-usual percentage of low-income patients. The DSH adjustment is calculated by adding the Medicare fraction (proportion of a hospital’s Medicare patients who have low incomes) and the Medicaid fraction (proportion of a hospital’s total patients who are not entitled to Medicare and have low incomes). A 2004 HHS regulation provides: If the patient meets the basic statutory criteria for Medicare, that patient counts in the denominator and, if poor, in the numerator of the Medicare fraction. The Ninth Circuit declared the regulation invalid.The Supreme Court reversed. In calculating the Medicare fraction, individuals “entitled to" Medicare Part A benefits are all those qualifying for the program, regardless of whether they receive Medicare payments for a hospital stay. Counting everyone who qualifies for Medicare benefits in the Medicare fraction—and no one who qualifies for those benefits in the Medicaid fraction—accords with the statute’s attempt to capture, through separate measurements, two different segments of a hospital’s low-income patient population. Throughout the Medicare statute, “entitled to benefits” is essentially a term of art meaning “qualifying for benefits” and coexists with limitations on payment. View "Becerra v. Empire Health Foundation, For Valley Hospital Medical Center" on Justia Law

The employer-sponsored group health plan offers all of its participants the same limited coverage for outpatient dialysis. A dialysis provider sued the plan, citing the Medicare Secondary Payer statute, which makes Medicare a “secondary” payer to an individual’s existing insurance plan for certain medical services, including dialysis, when that plan already covers the same services, 42 U.S.C. 1395y(b)(1)(C), (2), (4). To prevent plans from circumventing their primary-payer obligation for end-stage renal disease treatment, a plan may not differentiate in the benefits it provides between individuals having end-stage renal disease and other individuals based on the existence of end-stage renal disease, the need for renal dialysis, “or in any other manner” and may not take into account that an individual is entitled to or eligible for Medicare due to end-stage renal disease. The Sixth Circuit ruled that the limited payments for dialysis treatment had a disparate impact on individuals with end-stage renal disease.The Supreme Court reversed. The plan's coverage terms for outpatient dialysis do not violate section 1395y(b)(1)(C) because those terms apply uniformly to all covered individuals. The statute prohibits a plan from differentiating in benefits between individuals with and without end-stage renal disease; it cannot be read to encompass a disparate-impact theory. The statute simply coordinates payments between group health plans and Medicare without dictating any particular level of dialysis coverage. The plan does not “take into account” whether its participants are entitled to or eligible for Medicare. View "Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc." on Justia Law

The formula that the Department of Health and Human Services must employ annually to set reimbursement rates for certain outpatient prescription drugs provided by hospitals to Medicare patients, 42 U.S.C. 1395l(t)(14)(A)(iii), provides two options. If HHS has conducted a survey of hospitals’ acquisition costs for each covered outpatient drug, it may set reimbursement rates based on the hospitals’ “average acquisition cost” for each drug, and may “vary” the reimbursement rates “by hospital group.” Absent a survey, HHS must set reimbursement rates based on “the average price” charged by manufacturers for the drug as calculated and adjusted by the Secretary. For 2018 and 2019, HHS did not conduct a survey but issued a final rule establishing separate reimbursement rates for hospitals that serve low-income or rural populations through the “340B program” and all other hospitals. The district court concluded that HHS had acted outside its statutory authority. The D.C. Circuit reversed. A unanimous Supreme Court reversed. The statute does not preclude judicial review of HHS’s reimbursement rates. Absent a survey of hospitals’ acquisition costs, HHS may not vary the reimbursement rates only for 340B hospitals; HHS’s 2018 and 2019 reimbursement rates for 340B hospitals were therefore unlawful. HHS’s power to increase or decrease the price is distinct from its power to set different rates for different groups of hospitals and HHS’s interpretation would make little sense given the statute’s overall structure. Congress, when enacting the statute, was aware that 340B hospitals paid less for covered prescription drugs and may have intended to offset the considerable costs of providing healthcare to the uninsured and underinsured in low-income and rural communities. View "American Hospital Association v. Becerra" on Justia Law

Plaintiff filed a lawsuit alleging state law claims arising from SelectHealth’s administration of her deceased husband’s MA plan and his death. Under Part C of the Medicare Act, beneficiaries can enroll in an MA plan and receive Medicare benefits through private MA organizations instead of the government. SelectHealth removed the action to federal court on the basis of diversity jurisdiction.   The Ninth Circuit affirmed the district court’s summary judgment in favor of SelectHealth, Inc. because the Medicare Act’s express preemption provision, 42 U.S.C. Section 1395w-26(b)(3), barred Plaintiff’s state law claims.   The court held that Section 1872 of Title XVIII of the SSA provides that Section 205(h) is applicable to cases under the Medicare Act to the same extent as in cases under Title II. The court concluded that enrollees in an MA plan must likewise first exhaust their administrative remedies before seeking judicial review of a claim for benefits.   Next, the court concluded that Plaintiff’s claims were not subject to the SSA’s exhaustion requirement because the dispute was not whether Plaintiff’s husband received a favorable outcome from the internal benefits determination process but rather whether he should have received the services earlier.   Further, the court held that Plaintiff’s claim that SelectHealth breached a duty to process timely her husband’s October 7, 2016, appeal was expressly preempted. Because the standards established under Part C supersede any state law duty that would impose obligations of MA plans on the same subject. View "NAOMI AYLWARD V. SELECTHEALTH, INC." on Justia Law

The Supreme Court reversed the judgment of the trial court denying ResCare Health Service's request for a declaratory judgment, holding that ResCare sufficiently pleaded its declaratory judgment request.ResCare, which operates intermediate care facilities in Indiana for individuals with intellectual disabilities, petitioned for administrative reconsideration after an auditor with the Indiana Family & Social Services Administration’s Office of Medicaid Policy and Planning (FSSA) adjusted cost reports to prevent ResCare from recovering costs for over-the-counter medicines under Medicaid. An ALJ granted summary judgment for ResCare. The trial court affirmed the agency's final decision. The Supreme Court reversed, holding (1) ResCare did not need to file a separate complaint for a declaratory judgment; (2) ResCare sufficiently pleaded its declaratory judgment claim; and (3) ResCare's patients did not have to be joined to the litigation before the declaratory judgment request could be considered. View "ResCare Health Services Inc. v. Indiana Family & Social Services Administration" on Justia Law

In 2012, United Healthcare of Mississippi (United) entered into provider agreements with Mississippi’s fourteen Community Mental Health Centers (CMHCs) to provide Medicaid services under the Division of Medicaid’s (DOM’s) managed care program. From 2012 until 2019, United paid the CMHCs an agreed upon amount for Medicaid services - 100 percent of the medicaid fee schedule rates. In July 2019, United unilaterally imposed a 5 percent rate cut, retroactive to January 1, 2019, and later demanded that the CMHCs refund 5 percent of all payments made from July 1, 2018, through December 31, 2018, all of which totaled more than $1 million. The CMCHs demanded that United immediately cease and desist from the 5 percent rate cut and recoupments. When United refused, the CMHCs filed a Complaint for Damages and Injunctive Relief, specifically requesting, inter alia, a preliminary injunction. United responded with a motion to compel arbitration and to stay the proceedings. After a two-day evidentiary hearing, the circuit court denied United’s motion to compel arbitration, granted the CMHCs’ request for injunctive relief, and issued a preliminary injunction. The limited issues presented to the Mississippi Supreme Court were whether the trial court properly enjoined United from imposing a 5 percent rate cut and whether the trial court erred by denying arbitration. After review, the Supreme Court affirmed the trial court’s decision to grant a preliminary injunction and to deny the motion to compel arbitration. View "United Healthcare of Mississippi Inc. et al. v. Mississippi's Community Mental Health Commissions, et al." on Justia Law