Nitta v. Department of Human Services. ( 2022 )

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Electronically Filed
Supreme Court
SCWC-XX-XXXXXXX
04-NOV-2022
08:06 AM
Dkt. 22 OP
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
________________________________________________________________
FREDERICK NITTA, M.D.,
Respondent/Appellant-Appellant,
vs.
DEPARTMENT OF HUMAN SERVICES, STATE OF HAWAI‘I,
Petitioner/Appellee-Appellee,
and
CATHY BETTS, DIRECTOR,
Respondent/Appellee-Appellee.
________________________________________________________________
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-XX-XXXXXXX; CIVIL NO. 3CC16-1-0000297)
NOVEMBER 4, 2022
RECKTENWALD, C.J., McKENNA, WILSON, AND EDDINS JJ., AND
CIRCUIT JUDGE KAWAMURA, IN PLACE OF NAKAYAMA, J., RECUSED
OPINION OF THE COURT BY McKENNA, J.
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I. Introduction
This case arises out of the State of Hawai‘i Department of
Human Services’ (“DHS”) attempt to recover payments made to
Frederick Nitta, M.D. (“Dr. Nitta”) from its Medicaid Primary
Care Physician Program (“the Program”). The Program was
established by a federal statute within the Affordable Care Act
(“ACA”), specifically 42 U.S.C. § 1396a(a)(13)(C)(“the
Statute”). The Statute enabled physicians “with a primary
specialty designation of family medicine, general internal
medicine, or pediatric medicine” to temporarily receive
increased payments for primary care services provided to
Medicaid patients in 2013 and 2014. DHS, through its Med-QUEST
division, administers the Program in the State of Hawai‘i.
Dr. Nitta, who has been board-certified in obstetrics and
gynecology (“OB/GYN”) since the early 1990’s, but who has been
serving as a primary care physician (“PCP”) to Medicare and
Medicaid patients in East Hawaiʻi for many years, became a
participant in the Program when a staff member signed him up on-
line at the suggestion of an AlohaCare representative. In 2015,
however, DHS told Dr. Nitta he was ineligible because he did not
meet specialty requirements for Program participants as set
forth in a federal administrative rule, 42 C.F.R. § 447.4002
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(“the Rule”). DHS then demanded repayment of more than $200,000
in enhanced payments received by Dr. Nitta through the Program.
Dr. Nitta requested an administrative hearing and an
administrative appeal at DHS. He later filed for a judicial
appeal by the Circuit Court of the Third Circuit (“circuit
court”). All deemed Dr. Nitta ineligible. Dr. Nitta then
brought a secondary appeal to the Intermediate Court of Appeals
(“ICA”).
While the ICA appeal was pending, the Court of Appeals for
the Sixth Circuit issued an opinion invalidating the Rule.
Averett v. United States Dep’t of Health & Hum. Servs., 943 F.3d
313, 319 (6th Cir. 2019). In a published opinion, the ICA
adopted the Sixth Circuit’s analysis in Averett. Nitta v. Dep’t
of Hum. Servs., 151 Hawaiʻi 123, 128, 508 P.3d 1209, 1214 (App.
2022). Because DHS and the circuit court had relied on the
invalidated Rule to order repayment by Dr. Nitta, the ICA
ordered a remand to DHS for further proceedings as may be
necessary. Nitta, 151 Hawaiʻi at 129, 508 P.3d at 1215.
On certiorari, DHS does not contest the Sixth Circuit and
ICA’s invalidation of the Rule. Instead, DHS argues the ICA
erred because (1) Dr. Nitta was still ineligible for the Program
under the Statute; (2) the circuit court had also relied on the
Statute in deeming Dr. Nitta ineligible; and (3) DHS is required
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to recoup the overpayment because there was never money
appropriated to pay Dr. Nitta.
With respect to the first issue, the ICA did not address
whether Dr. Nitta would in any event be precluded from enhanced
payments based on the Statute. In Averett, the Sixth Circuit
held the Statute’s phrase, “physician with a primary specialty
designation,” to mean “a physician who has himself designated,
as his primary specialty, one of the specialties recited in [the
Statute].” Averett, 943 F.3d at 319. The ICA adopted this
holding, Nitta, 151 Hawaiʻi at 128, 508 P.3d at 1214, but did not
address whether Dr. Nitta qualified.
We agree with DHS that Dr. Nitta’s eligibility for the
Program under the Statute can and should be addressed. We also
agree with the Sixth Circuit and the ICA that the Rule is
invalid as it contravenes the Statute. Contrary to DHS’s
position, however, we hold Dr. Nitta was entitled to enhanced
payments under the Statute based on the reasoning below.
This holding resolves DHS’s second issue on certiorari,
that the circuit court had also relied on the Statute to hold
Dr. Nitta ineligible. If the circuit court had so held, it
would have been wrong. But, in any event, the circuit court
(and DHS) relied solely on the invalidated Rule in deeming Dr.
Nitta ineligible and did not rely on the Statute.
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Finally, we also reject DHS’s third issue on certiorari,
that DHS is required to recoup the overpayment because there was
never money appropriated to pay Dr. Nitta. This is a new
argument never raised below and is therefore waived.
Hence, we vacate the ICA’s March 23, 2022 judgment on
appeal to the extent it remanded the case “to the DHS
Administrative Appeals Office for further proceedings as may be
necessary.” We otherwise affirm the ICA’s judgment on appeal.
II. Background
A. Factual Background
1. The Program
As explained by the ICA, Medicaid provides medical
assistance to qualifying individuals and families, and is
jointly funded and administered by the federal and state
governments. Nitta, 151 Hawaiʻi at 124, 508 P.3d at 1210. In
2010, Congress enacted the ACA and also temporarily increased
payments in 2013 and 2014 to certain physicians who provided
primary-care services to Medicaid patients. Id. Specifically,
the Statute, 42 U.S.C. § 1396a(a)(13)(C), allowed for such
increased payments provided “by a physician with a primary
specialty designation of family medicine, general internal
medicine, or pediatric medicine.” The Statute provides:
(a) A State plan for medical assistance must—
. . . .
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(13) provide—
. . . .
(C) payment for primary care services (as
defined in subsection (jj)) furnished in 2013
and 2014 by a physician with a primary
specialty designation of family medicine,
general internal medicine, or pediatric
medicine at a rate not less than 100 percent of
the payment rate that applies to such services
and physician under part B of subchapter XVIII
(or, if greater, the payment rate that would be
applicable under such part if the conversion
factor under section 1395w-4(d) of this title
for the year involved were the conversion
factor under such section for 2009)[.]1
As further explained by the ICA, the Centers for Medicare
and Medicaid Services (“CMS”) administers Medicaid, and
promulgated the Rule, 42 C.F.R. § 447.400, further delineating
physician eligibility for the Program. Nitta, 151 Hawaiʻi at
125, 508 P.3d at 1211. The Rule set out a board certification
1 42 U.S.C. § 1396a(jj) then provides:
(jj) Primary care services defined
For purposes of subsection (a)(13)(C), the term
“primary care services” means—
(1) evaluation and management services that are
procedure codes (for services covered under
subchapter XVIII) for services in the category
designated Evaluation and Management in the
Healthcare Common Procedure Coding System
(established by the Secretary under section 1395w-
4(c)(5) of this title as of December 31, 2009, and as
subsequently modified); and
(2) services related to immunization administration
for vaccines and toxoids for which CPT codes 90465,
90466, 90467, 90468, 90471, 90472, 90473, or 90474
(as subsequently modified) apply under such System.
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or a sixty-percent billing threshold requirement, requiring
that:
(a) [s]tates pay for services furnished by a physician as
defined in § 440.50 of this chapter, or under the personal
supervision of a physician who self-attests to a specialty
designation of family medicine, general internal medicine
or pediatric medicine or a subspecialty recognized by the
American Board of Medical Specialties (ABMS), the American
Board of Physician Specialties (ABPS) or the American
Osteopathic Association (AOA). Such physician then attests
that [they]:
(1) [Are] Board Certified with such a specialty or
subspecialty and/or
(2) Has furnished evaluation and management services
and vaccine administration services under codes
described in paragraph (b) of this section that equal
at least 60 percent of the Medicaid codes he or she
has billed during the most recently completed CY or,
for newly eligible physicians, the prior month.
42 C.F.R. § 447.400(a). Nitta, 151 Hawaiʻi at 125, 508 P. 3d at
1211.
Thus, the Statute allowed for enhanced payments to “a
physician with a primary specialty designation of family
medicine, general internal medicine, or pediatric medicine.”
The Rule, however, further required physicians to self-attest to
a specialty designation of family medicine, general internal
medicine or pediatric medicine and then also attest that they
are board-certified in one of those designations (or a
recognized subspecialty2) or show that at least sixty percent of
their billings were for the provision of PCP services.
2 According to the American Board of Medical Specialties, the
subspecialties of family medicine are adolescent medicine, geriatric
(continued. . .)
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In Hawai‘i, pursuant to the Rule, DHS required physicians
seeking enhanced payments to complete a form on its website
self-attesting to those requirements (“self-attestation form”).
The form tracked Rule requirements and also said it could not be
completed by anyone on the provider’s behalf. Nitta, 151 Hawaiʻi
at 125, 508 P.3d at 1211.
2. Dr. Nitta’s involvement with the Program
Dr. Nitta was board-certified as an OB/GYN in the early
1990’s and has practiced medicine in Hilo, Hawai‘i for many
years. When Dr. Nitta began practicing in 1993, he submitted an
application to DHS to participate as a Medicaid provider,
listing OB/GYN as his specialty. In 2006, Dr. Nitta received
(continued. . .)
medicine, hospice and palliative medicine, pain medicine, sleep medicine,
sports medicine; the subspecialties of internal medicine are adolescent
medicine, adult congenital heart disease, advanced heart failure and
transplant cardiology, cardiovascular disease, clinical cardiac
electrophysiology, critical care medicine, endocrinology, diabetes, and
metabolism, gastroenterology, geriatric medicine, hematology, hospice and
palliative medicine, infectious disease, interventional cardiology, medical
oncology, nephrology, neurocritical care, pulmonary disease, rheumatology,
sleep medicine, sports medicine, and transplant hepatology; and the
subspecialties of pediatric medicine are adolescent medicine, child abuse
pediatrics, development-behavioral pediatrics, hospice and palliative
medicine, medical toxicology, neonatal-perinatal medicine, pediatric
cardiology, pediatric critical care medicine, pediatric emergency medicine,
pediatric endocrinology, pediatric gastroenterology, pediatric hematology-
oncology, pediatric hospital medicine, pediatric infectious diseases,
pediatric nephrology, pediatric pulmonology, pediatric rheumatology,
pediatric transplant hepatology, sleep medicine, and sports medicine. See
Specialty and Subspecialty Certificates, AMERICAN BOARD OF MEDICAL SPECIALTIES,
https://www.abms.org/member-boards/specialty-subspecialty-certificates/
[perma.cc/D666-JDHK] (last visited November 1, 2022).
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his National Provider Identifier, which also indicated a
specialty of OB/GYN.3
More than ninety percent of Dr. Nitta’s patients, however,
are eligible for Medicaid or Medicare and do not have other
doctors. Thus, although he is a board-certified OB/GYN
physician, Dr. Nitta provides PCP services for his patients, is
recognized in the community as a PCP, and provides a broad range
of services to his patients.
Hence, in 2013, at the suggestion of an AlohaCare
representative, a staff member from Dr. Nitta’s office enrolled
him in the Program via the DHS website. The parties do not
dispute that Dr. Nitta was attested to have a specialty
designation of family medicine, general internal medicine, or
pediatric medicine.
It appears Dr. Nitta first learned he was participating in
the Program when he received a letter from DHS dated July 7,
2015 telling him he was ineligible because he did not satisfy
Rule requirements. Then, in a letter dated November 6, 2015,
DHS demanded repayment of $205,940.13 in payments made to him
via the Program.
3 The National Provider Identifier program is discussed in Section IV.A.2
below.
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B. Procedural background
1. At DHS
a. DHS administrative hearing decision
On December 4, 2015, Dr. Nitta submitted an administrative
hearing request with DHS contesting the repayment demand. On
March 18, 2016, the parties participated in a hearing before a
DHS hearing officer.4 On June 16, 2016, the hearing officer
issued his decision in DHS’s favor and against Dr. Nitta. In
summary, the hearing officer ruled DHS was entitled to repayment
because Dr. Nitta was board certified in OB/GYN, not in family
medicine, general internal medicine, or pediatric medicine, and
because Dr. Nitta had not met the sixty percent billing
requirement under the Rule.
b. DHS final decision
Dr. Nitta then sought an administrative appeal with DHS.
On July 25, 2016, then-DHS Deputy Director Pankaj Bhanot issued
DHS’s final decision, basically adopting the hearing officer’s
decision.
This final decision, however, also included findings that
HMSA, UnitedHealthcare, AlohaCare, and Hilo Medical Center all
4
The testifiers were Kurt Kresta, the DHS Financial Integrity Staff
investigator in charge of Dr. Nitta’s case; Dr. Nitta; Dr. Lori Kanemoto, an
OB/GYN familiar with Dr. Nitta and his practice; and Della Marie Shirota, a
coding auditor for Hilo Medical Center, who opined Dr. Nitta was eligible for
the enhanced payments.
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identified Dr. Nitta as a PCP (with an OB/GYN specialization),
and that Hilo Medical Center listed Dr. Nitta as a PCP. In
addition, the final decision noted that community medical
professionals identified Dr. Nitta as a PCP who practices in the
areas of OB/GYN and primary care. The DHS final decision
ordered repayment from Dr. Nitta, however, based on his
inability to meet Rule requirements for the Program.
2. Circuit court appeal (Civil No. 16-1-0297)
Dr. Nitta then filed an appeal with the circuit court. On
April 12, 2017, the circuit court5 issued its decision and order.
The circuit court noted that, under CMS guidance, physicians had
to (1) self-attest to a specialty in one of the enumerated areas
or in a recognized subspecialty; and (2) be board certified in
that specialty or subspecialty or meet the sixty percent billing
threshold. The circuit court ruled that (1) Dr. Nitta failed to
meet the self-attestation requirement of the Program because his
staff member had completed the attestation; (2) Dr. Nitta did
not have a specialty or subspecialty designation in one of the
requisite areas; (3) because Dr. Nitta was ineligible, there was
no need to address DHS’s calculations regarding the sixty
percent billing threshold; and (4) a review of the DHS
overpayment calculations showed Dr. Nitta owed $205,338.88, not
5 The Honorable Greg K. Nakamura presiding.
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$205,220.886. The circuit court affirmed the DHS final decision
and entered its judgment on May 9, 2017.
3. ICA appeal
a. The appeal
On May 19, 2017, Dr. Nitta filed an appeal with the ICA.
The parties basically repeated their arguments below.
b. Amicus brief (HMA & AMA)
The Hawaiʻi Medical Association (“HMA”) and the American
Medical Association (“AMA”) (“amici”) filed an amicus brief.
Amici highlighted the critical and worsening physician shortage
in Hawaiʻi, noting that primary care has the greatest shortage,
especially for Medicaid patients in East Hawaiʻi.6 Amici posited
6 Citing articles and other reports, the amici explained that, on
neighbor islands in particular, patients often wait four to five months for a
doctor’s appointment. On Hawaiʻi Island, it is sometimes two to three times
more difficult to find a PCP. Consequently, many residents seek care at the
nearest hospital emergency room, costing them “upward of $600-$800 for an
emergency room visit, as opposed to an average co-pay of $15-$50 for a visit
to a primary care physician.”
The amici attributed Hawaiʻi’s physician shortage to a number of issues:
(1) having one of the oldest physician workforces in the nation, meaning an
exacerbated shortage as physicians retire; (2) Hawaiʻi’s high cost of living
in conjunction with the costs of attending medical school; and (3) the lack
of funding for physicians at hospitals and in private practice. The last
issue, in particular, limits the number of physicians a hospital is able to
hire and forces physicians in private practice to adopt business models that
exclude Medicaid patients. In rural areas, the effect on Medicaid patients
is even greater.
Also, according to the federal Health Resources and Services
Administration, East Hawaiʻi, where Dr. Nitta practices, is a “Health
Professional Shortage Area.” Thus, Dr. Nitta is a physician who provides
“vital services to vulnerable populations with limited access to medical
care.” Amici asserted DHS’s recoupment efforts against Dr. Nitta jeopardizes
(continued. . .)
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that DHS’s continued recoupment efforts against physicians
providing primary care services to Medicaid beneficiaries only
worsens the shortage. Amici also urged that the payments to Dr.
Nitta were consistent with the ACA’s purpose to “benefit
physicians that provide primary care services to the Medicaid
population.”7
(continued. . .)
his ability to continue his practice, threatening to further reduce the
already limited number of PCPs in the area.
7 According to amici, DHS “arbitrarily determined that medical directory
listings were the deciding factor of a physician’s practice
characteristics[.]” Amici also argued that DHS arbitrarily and capriciously
interpreted and applied the Rule by providing DHS with “unfettered discretion
to determine physician eligibility.” They pointed to Questions and Answers
(“Q&As”) published by CMS regarding how states might review physician
eligibility for the Program. There, the CMS provided a non-exhaustive list
of ways a state could verify a physician’s practice characteristics (i.e.,
how the physician represented himself in the community, medical directory
listings, billings to other insurers, advertisements, etc.). Amici contended
other evidence demonstrated Dr. Nitta’s PCP status: (1) recognition by other
doctors and medical providers in the East Hawaiʻi community as a PCP; (2)
acceptance and payment by medical insurers as a PCP; and (3) hundreds of
written and oral testimony by people in support of a finding that he is a
PCP.
Amici also argued that DHS’s “formula to determine the sixty-percent-
threshold requirement [was] in complete disregard for actual medical
practice.” To determine whether a physician met the threshold, DHS used
“paid billing codes,” which do not take into account the “percentage of total
services provided in a managed care environment by that physician.” The CMS
interpretation of the Medicaid Enhanced Payment Statute, however, stated that
physicians could also self-attest that, as an alternative, sixty percent of
all Medicaid services they “provide[] in a managed care environment” are PCP
services.
Amici noted that, in actual practice, PCPs sometimes bill under their
provider number for ancillary services (i.e., urine testing, blood work, X-
rays) furnished by other professions under the physician’s supervision. In
group practices, physicians sometimes also bill for ancillary services under
the group provider number. By including these ancillary services in the
denominator (i.e., the total services provided by the physician) of its
formula, according to amici, DHS unfairly skews the actual ratio of PCP
services to total services provided by a physician.
(continued. . .)
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c. Averett
While the ICA appeal was pending, the Sixth Circuit issued
its Averett opinion invalidating the Rule that set forth
additional eligibility requirements for the Program. 943 F.3d
at 319. In Averett, Tennessee’s Medicaid agency, TennCare, had
sought to recoup an average of more than $100,000.00 per
physician from twenty-one physicians practicing in family
medicine in rural Tennessee. Averett, 943 F.3d at 316.
TennCare alleged that the physicians had not met the sixty
percent billing requirement of the Rule.8 Id. In turn, the
(continued. . .)
According to amici, in Dr. Nitta’s case, a medical billing and coding
expert had testified that a full audit of his patient records, not just his
billing records, showed that well over sixty percent of his time and work
went toward providing PCP services to Medicaid beneficiaries. Amici
concluded that DHS’s “use of ‘paid billing codes’ rather than a full audit of
a physician’s patient records in consideration of services provided in a
managed care environment is a manipulation that produces absurd results
contrary to the intent of the Medicaid Enhanced Payment Statute.” Thus,
amici requested that the ICA vacate and remand the DHS and lower court’s
decisions.
8 Recall that the CMS Final Medicaid Payment Rule defined “primary
specialty designation” by requiring either board certification in one of the
listed specialties (or a recognized subspecialty) or the satisfaction of a
sixty percent billing threshold:
(a) States pay for services furnished by a physician as
defined in § 440.50 of this chapter, or under the personal
supervision of a physician who self-attests to a specialty
designation of family medicine, general internal medicine
or pediatric medicine or a subspecialty recognized by the
American Board of Medical Specialties (ABMS), the American
Board of Physician Specialties (ABPS) or the American
Osteopathic Association (AOA). Such physician then attests
that he/she:
(1) Is Board Certified with such a specialty or
subspecialty and/or
(continued. . .)
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physicians challenged the requirement, arguing that it
contravened the Statute. Id.
After the district court declared the rule invalid and
TennCare appealed, the Sixth Circuit addressed
whether, in the [Rule], [CMS] correctly interpreted the
phrase “primary specialty designation” as used in [the
Statute], to mandate not only that the physician have the
requisite designation of primary specialty, but also that
the physician either be board-certified in that specialty
or satisfy the 60-percent-of-billings requirement.
Averett, 943 F.3d at 317. The Sixth Circuit opined that the
term “primary specialty designation” in the Statute was
unambiguous. Id. Neither party disputed the meanings of
“primary specialty” as the physician’s principal area of
practice or expertise, or the meaning of the word “designate,”
as in “[t]o indicate or specify; point out.” Id. (citing The
American Heritage Dictionary 506 (3d ed. 1992)).
The Sixth Circuit discussed CMS’s interpretation of the
term “primary specialty designation” under a parallel Medicare
provision. Averett, 943 F.3d at 317. Although Congress used
the same term in the same context for both the Medicare and
Medicaid programs, CMS interpreted the term differently from the
(continued. . .)
(2) Has furnished evaluation and management services and
vaccine administration services under codes described in
paragraph (b) of this section that equal at least 60
percent of the Medicaid codes he or she has billed
during the most recently completed CY or, for newly
eligible physicians, the prior month.
42 C.F.R. § 447.400(a).
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Medicaid and Medicare counterpart rules. Averett, 943 F.3d at
318. For Medicaid, CMS added board certification and sixty
percent billing threshold requirements to the Rule. Id. For
Medicare, however, CMS interpreted the term to simply mean “the
physician’s own designation, as her primary specialty, of one of
the specialties recited in that Medicare provision.” Averett,
943 F.3d at 317 (citing 42 C.F.R. § 414.80(a)(i)(A)).
The Sixth Circuit determined that the latter was the proper
interpretation because, unlike the Rule,9 it did not conflict
with the language of the Statute. Averett, 943 F.3d at 318-19.
It indicated this interpretation made “perfect sense, given the
apparently uniform practice of physician self-designation under
Medicare and Medicaid.” Averett, 943 F.3d at 317. Thus, the
Sixth Circuit held that the phrase “a physician with a primary
specialty designation” for purposes of the Statute meant “a
physician who has himself designated, as his primary specialty,
one of the specialties recited in those provisions.” Averett,
9 The Sixth Circuit also noted that CMS did not offer any actual
interpretation of the Statute in support of its construction; it offered only
policy arguments. Averett, 943 F.3d at 318. CMS had argued that, because
Congress did not limit the definition of “primary specialty designation,” CMS
was required and had authority to do so itself. Id. The Sixth Circuit
disagreed, stating that the “specific limitations” were the words themselves,
and that no one seemed to be confused about what they meant. Id.
Additionally, Congress had included a sixty percent billing threshold in its
Medicare provision but specifically left it out of its Medicaid provision.
Averett, 943 F.3d at 318-19.
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943 F.3d at 319. The Sixth Circuit invalidated the Rule as
inconsistent with the Statute. Id.
d. Supplemental briefing
On December 23, 2021, the ICA ordered the parties to submit
supplemental briefing “addressing whether and how Averett
applied to the issues on appeal, and the relief sought, in light
of Averett.”
On January 4, 2022, Dr. Nitta filed his supplemental brief,
arguing that, like the physicians in Averett, he was entitled to
enhanced payments under the Program. On January 5, 2022, DHS
filed its supplemental brief, arguing that Averett invalidated
the Rule only and not the Statute. DHS argued the plain
language of the Statute still required Dr. Nitta to have a
primary specialty designation of “family medicine, general
internal medicine, or pediatric medicine.”
DHS also argued Averett also defined “primary specialty
designation” and had discussed two sources that would indicate a
physician’s primary specialty: the physician’s Medicaid
application and the National Provider Identifier (“NPI”). DHS
argued that both Dr. Nitta’s 1993 Medicaid application and 2006
NPI form listed his primary specialty designation as OB/GYN.
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e. ICA opinion
On February 11, 2022, the ICA published an opinion holding
that (1) the Rule was invalid; and (2) the DHS self-attestation
form modelled on the Rule was therefore also invalid. Nitta,
151 Hawaiʻi at 128-29, 508 P.3d at 1214-15. The ICA adopted the
Sixth Circuit’s analysis in Averett and held the circuit court
wrongly concluded that Dr. Nitta was ineligible by relying on
the Rule. Id. Based on Averett, the ICA also held that DHS’s
self-attestation form conflicted with the Statute because it
included the Rule’s additional requirements. Nitta, 151 Hawaiʻi
at 129, 508 P.3d at 1215.
The ICA (1) vacated DHS’s final decision and the circuit
court’s decision and order; and (2) remanded the case to the DHS
Administrative Appeals Office “for further proceedings as may be
necessary.” Id.
4. Certiorari application
On May 23, 2022, DHS filed its application for writ of
certiorari, arguing (1) Dr. Nitta was still ineligible for
enhanced payments based on the Statute; (2) the circuit court’s
conclusions relied on the Statute; and (3) DHS is required to
recoup the overpayment because there was never money
appropriated to pay Dr. Nitta.
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III. Standards of Review
For judicial review of contested administrative cases, HRS
§ 91-14(g) (2012) provides:
(g) Upon review of the record the court may affirm the
decision of the agency or remand the case with instructions
for further proceedings; or it may reverse or modify the
decision and order if the substantial rights of the
petitioners may have been prejudiced because the
administrative findings, conclusions, decisions, or orders
are:
(1) In violation of constitutional or statutory
provisions;
(2) In excess of the statutory authority or jurisdiction
of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole record;
or
(6) Arbitrary, or capricious, or characterized by abuse
of discretion or clearly unwarranted exercise of
discretion.
IV. Discussion
A. Dr. Nitta is eligible for the Program under the Statute
1. DHS’s position
DHS does not contest the ICA’s adoption of the Averett
holding invalidating the Rule. DHS instead argues that the ICA
should have addressed Dr. Nitta’s eligibility under the Statute,
and that he was still ineligible. DHS contends that Dr. Nitta
was ineligible because his “primary specialty designation” was
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OB/GYN, not family medicine, general internal medicine, or
pediatric medicine.
We agree that Dr. Nitta’s eligibility under the Statute
should be addressed, and we now do so. We disagree with DHS,
however, that Dr. Nitta was not eligible for the Program under
the Statute. For the reasons below, he was.
2. A physician can have more than one specialty
At the outset, it is important to note that the term
“primary specialty designation” appears in 42 U.S.C., which
concerns “The Public Health and Welfare,” only twice: in the
Medicaid Statute at issue here, 42 U.S.C. § 1396a(a)(13)(C), and
in the parallel Medicare statute discussed in Averett, 42 U.S.C.
§ 1395l(x).
DHS asserts Dr. Nitta’s 1993 Medicaid application and 2006
NPI specialty designation control what constitutes his “primary
specialty designation” for purposes of the Program. DHS posits
that because Dr. Nitta had previously designated a “specialty”
of OB/GYN, he was precluded from later self-designating a
different “primary specialty” under the Statute.10 Thus, DHS
assumes that a physician cannot have more than one specialty.
10 The NPI program replaced previous provider identifiers. See NPI Fact
Sheet: For Healthcare Providers Who Are Individuals, CMS (Jan. 2006),
https://www.cms.gov/Regulations-and-Guidance/Administrative-
Simplification/NationalProvIdentStand/Downloads/NPIFactSheet012606.pdf
(continued. . .)
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Just as the Rule at issue here could not contravene the
Statute, however, NPI designations required pursuant to
administrative guidance cannot violate the statutes on which
they are based.
In this regard, the Sixth Circuit discussed the NPI in the
following introductory passage:
The Medicare program is funded and administered by the
federal government; the Medicaid program is funded largely
by the federal government but administered primarily by the
states. In 1996, Congress directed the Secretary of Health
and Human Services to create a “standard unique health
identifier” for each “health care provider” participating
in the Medicare and Medicaid programs and to “take into
account” each provider's “specialty classifications.” 42
U.S.C. § 1320d-2(b). Accordingly, at the time relevant
here, the Secretary required Medicare and Medicaid
providers to complete a “National Provider Identifier” form
that required providers to designate their “primary
specialty.” See Form CMS-10114 (11/08) at 1–2. Medicare
providers also completed a form that required them to
“designate [their] primary specialty[.]” See CMS-855I
(02/08) at 8. Medicaid providers likewise designated their
primary specialties through “self-attestation” during most
if not all states’ enrollment processes. See 77 Fed. Reg.
66,673–75 (Nov. 6, 2012).
Averett, 943 F.3d at 315 (emphasis added).
As indicated in Averett, NPI designations are based on
administrative guidance promulgated pursuant to 42 U.S.C. §
1320d-2(b). This statute is part of 42 U.S.C. Chapter 7 (Social
Security), Subchapter XI (General Provisions, Peer Review, and
Administrative Simplification), Part C (Administrative
(continued. . .)
[perma.cc/EWL2-EWK2] (last visited November 1, 2022). We therefore address
the effect of Dr. Nitta’s 2006 NPI identifier.
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Simplication); in other words, 42 U.S.C. § 1320d et. seq. is
concerned with “administrative simplification.”11
Within this Part C, 42 U.S.C. § 1320d-2 is titled
“Standards for information transactions and data elements.”
Subsection (b) provides:
(b) Unique health identifiers
(1) In general
The Secretary shall adopt standards providing for a
standard unique health identifier for each individual,
employer, health plan, and health care provider for use in
the health care system. In carrying out the preceding
sentence for each health plan and health care provider, the
Secretary shall take into account multiple uses for
identifiers and multiple locations and specialty
classifications for health care providers.
(2) Use of identifiers
The standards adopted under paragraph (1) shall specify the
purposes for which a unique health identifier may be used.
(Emphasis added.) Hence, 42 U.S.C. § 1320d-2 created NPIs
11 The NPI system was actually established for billing and payment
purposes. 42 U.S.C. § 1395u(r):
(r) Establishment of physician identification system
The Secretary shall establish a system which provides for a
unique identifier for each physician who furnishes services
for which payment may be made under this subchapter. Under
such system, the Secretary may impose appropriate fees on
such physicians to cover the costs of investigation and
recertification activities with respect to the issuance of
the identifiers.
See also National Provider Identifier Standard (NPI), CMS (Dec. 1, 2021),
https://www.cms.gov/Regulations-and-Guidance/Administrative-
Simplification/NationalProvIdentStand [perma.cc/DR7S-V7Q9] (last visited
November 1, 2022).
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for informational and data purposes.12 This statute requires a
“standard unique health identifier for each individual . . .
health care provider for use in the health care system.” But,
pursuant to 42 U.S.C. § 1320d-2(b)(1), the NPI system clearly
allows for “multiple . . . specialty classifications for health
care providers.”
This raises the question of whether an individual physician
can be a “health care provider” with “multiple specialty
classifications.” In this regard, 42 U.S.C. § 1320d provides
definitions for all terms under Part C. 42 U.S.C. § 1320d(3)
then defines “health care provider” as follows:
(3) Health care provider
The term “health care provider” includes a provider of
services (as defined in section 1395x(u)13 of this title), a
provider of medical or other health services
(as defined in section 1395x(s) of this title), and any
other person furnishing health care services or supplies.
(Emphasis added.) Thus, pursuant to 42 U.S.C. § 1320d(3), a
“provider of medical or other health services (as defined in
section 1395x(s)” can be a “health care provider” with “multiple
specialty classifications” under 42 U.S.C. § 1320d-2(b)(1). The
12 Again, the NPI system was actually created for billing and payment
purposes. See supra note 11.
13 “Provider of services” is defined by 42 U.S.C. § 1395x(u) as “a
hospital, critical access hospital, rural emergency hospital, skilled nursing
facility, comprehensive outpatient rehabilitation facility, home health
agency, hospice program”; thus, an individual physician cannot be a “provider
of services” under this definition.
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additional question then is whether an individual physician can
be a “provider of medical or other health care services” “as
defined in section 1395x(s).”
42 U.S.C. § 1395x(s) provides as follows:
(s) Medical and other health services
The term “medical and other health services” means any of the
following items or services:
(1) physicians' services;
. . . .
(2)
(L) certified nurse-midwife services;
(M) qualified psychologist services;
(N) clinical social worker services (as defined in subsection
(hh)(2))[.]
(Emphasis added.) 42 U.S.C. § 1395x(s) makes clear that an
individual physician (like an individual nurse-midwife,
psychologist, or clinical social worker), as a provider of
“medical and other health services,” is a “health care
provider.”
Therefore, under governing federal law, individual
physicians can have multiple specialty classifications under the
NPI system. Thus, the fact that Dr. Nitta’s initial NPI
designation listed a specialty of OB/GYN did not prevent him
from having another “specialty” that was his “primary specialty”
during the time period at issue.
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3. Dr. Nitta self-designated as having one of the
requisite specialties as his “primary specialty”
Accordingly, Dr. Nitta was authorized to have more than one
medical specialty. In order to qualify for the Program under
the Statute, however, Dr. Nitta was required to have a “primary
specialty designation” of “family medicine, general internal
medicine, or pediatric medicine” for the relevant time period.
The issue then is how that designation was to occur.
In this respect, we agree with the Sixth Circuit and the
ICA that the Rule, which contained requirements inconsistent
with Statute, was invalid. We also agree with the Sixth Circuit
and ICA that “a physician with a primary specialty designation”
for purposes of the eligibility under the Statute means “a
physician who has himself designated, as his primary specialty,
one of the specialties recited in those provisions[,]” which
are family, general internal, or pediatric medicine.
DHS and the circuit court ruled Dr. Nitta ineligible based
on invalidated Rule requirements. The parties do not actually
dispute that Dr. Nitta did designate, as his primary specialty,
either family medicine, general internal medicine, or pediatric
medicine.
As the Rule and self-attestation form have been
invalidated, the fact that Dr. Nitta did not personally submit
the on-line application is immaterial. To the extent a staff
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member had enrolled Dr. Nitta in the Program based on the
recommendation of AlohaCare, Dr. Nitta ratified the action of
his office staff regarding the “self-designation” and indicated
that because he practices in internal medicine “all day,” he was
self-attesting to being a PCP who works in general internal
medicine. Thus, Dr. Nitta did self-designate internal medical
as his principal area of practice, or primary specialty, for the
time period of the Program. This self-designation was
consistent with the findings in DHS’s final decision that HMSA,
UnitedHealthcare, AlohaCare, and Hilo Medical Center, as well as
Hilo community medical professionals in general, recognized Dr.
Nitta as a PCP.
Accordingly, we hold that Dr. Nitta was eligible for
enhanced payments under the Statute.
Our holding is consistent with the purposes of the Program.
Congress clearly intended the enhanced payments as incentives
for the provision of primary care services, regardless of a
physician’s other practice areas. We agree with amici that
[t]he legislative history accompanying the [Statute]
indicates that the enhanced payments were meant to address
Medicaid reimbursement rates for primary care services that
were substantially lower than the Medicare rates for the
same services. [See H.R. Rep. No. 111-299, pt. 1, at 617-
19 (2009).] Congress stated that the enhancements were
necessary because:
These low Medicaid payment rates do not provide
adequate incentives for physicians to participate in
Medicaid, limiting access to physicians’ services by
Medicaid beneficiaries. In addition, low Medicaid
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payment rates discourage young physicians and other
health professionals from entering careers in primary
care, undermining efforts to address the shortage of
primary care practitioners in many areas of the
country. [Id.]
The legislative history further indicates that Congress
intended the enhanced payments to apply broadly to “primary
care services furnished by any participating physician or
health professional, not just a primary care physician or
professional[.]” [Id. at 618 (emphasis added).]
For all of these reasons, Dr. Nitta was eligible for
enhanced payments pursuant to the Statute.
B. DHS’s other points on certiorari lack merit
1. The circuit court relied solely on the invalid Rule
when it deemed Dr. Nitta ineligible for the Program
DHS also asserts on certiorari that the circuit court did
not solely rely on the Rule, but also relied on the Statute when
it deemed Dr. Nitta ineligible for the Program.
Our holding above resolves this issue. If the circuit
court had determined Dr. Nitta ineligible based on the Statute,
it would have been wrong. But the record reflects the circuit
court (and DHS) relied solely on the invalidated Rule in deeming
Dr. Nitta ineligible and not did not rely on the Statute.
2. DHS waived its appropriation argument
Finally, we reject DHS’s third issue on certiorari, that
DHS is required to recoup the overpayment because there was
never money appropriated to pay Dr. Nitta. This is a new
argument never raised below and is therefore waived. See Ass’n
of Apt. Owners of Wailea Elua v. Wailea Resort Co., 100 Hawaiʻi
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97, 107, 58 P.3d 608, 618 (2002) (“Legal issues not raised in
the trial court are ordinarily deemed waived on appeal.”)
V. Conclusion
Having determined Dr. Nitta eligible for enhanced payments
under the Statute, we vacate the ICA’s March 23, 2022 judgment
on appeal to the extent it remanded the case “to the DHS
Administrative Appeals Office for further proceedings as may be
necessary.” The ICA’s judgment on appeal is otherwise affirmed.
Erin N. Lau /s/ Mark E. Recktenwald
for petitioner
/s/ Sabrina S. McKenna
Eric A. Seitz
for respondent /s/ Michael D. Wilson
Frederick Nitta, M.D.
/s/ Todd W. Eddins
/s/ Shirley M. Kawamura
28