Pennsylvania Medical Society v. Snider

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
7-20-1994
Penn Medical Society v. Snider
Precedential or Non-Precedential:
Docket 93-7775
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1994
Recommended Citation
"Penn Medical Society v. Snider" (1994). 1994 Decisions. Paper 87.
http://digitalcommons.law.villanova.edu/thirdcircuit_1994/87
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 1994 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________________
No. 93-7775
_______________________
PENNSYLVANIA MEDICAL SOCIETY;
DR. JAMES B. REGAN, M.D.,
v.
KAREN F. SNIDER, Individually and in
her Official Capacity as Secretary of Public Welfare;
DONNA E. SHALALA, Secretary of the
United States Department of Health and Human Services
Pennsylvania Medical society;
James B. Regan, M.D.
Appellants
_______________________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civ. Action No. 92-cv-00481)
_______________________
Argued: May 26, 1994
Before: COWEN, ROTH, Circuit Judges,
and BROWN, District Judge0
(Filed July 20, 1994)
_______________________
Robert B. Hoffman (argued)
Reed, Smith, Shaw & McClay
213 Market Street, 9th Floor
P. O. Box 11844
Harrisburg, PA 17108
Counsel for Appellants
0
Honorable Garrett E. Brown, Jr., United States District Court
for the District of New Jersey, sitting by designation.
1
Peter D. Coffman
United States Department of Justice
Federal Programs Branch,
Civil Division
9th and Pennsylvania Avenue, N.W.
P.O. Box 883
Washington, D.C. 20530
Richard A. Olderman (argued)
United States Department of Justice
Room 3617
Civil Division
10th and Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001
Counsel for Appellee Donna E. Shalala
Doris M. Leisch
Room 302
Commonwealth of Pennsylvania
Department of Public Welfare
1400 Spring Garden Street
State Office Building
Philadelphia, PA 19130
Counsel for Appellee Karen F. Snider
_______________________
OPINION OF THE COURT
_______________________
COWEN, Circuit Judge.
Under the Medicaid Act, a state participating in the
Medicaid program must pay certain cost-sharing expenses for
qualified Medicare beneficiaries (QMBs) in order to make these
QMBs eligible for certain Medicare benefits called Medicare Part
B services. The State of Pennsylvania, which participates in the
Medicaid program, limits its coinsurance and deductible payments
under Medicare Part B so that the total amount of the
2
reimbursements does not exceed the amount that the health care
provider would have received for the services pursuant to the
Medicaid plan. Pennsylvania Medical Society and Dr. James B.
Regan brought this action under 42 U.S.C. § 1983 seeking a
declaration that the Pennsylvania Medicaid Plan violated the
Medicare Act and the Medicaid Act. The district court denied
relief by granting summary judgment for the defendants. This
appeal followed.0 We have jurisdiction under 28 U.S.C. § 1291and our review is plenary because only purely legal questions are
involved. We hold that the Pennsylvania limitation on payment
violates both the Medicare Act and the Medicaid Act, and will
reverse the judgment of the district court.
I.
The question presented in this appeal implicates the
Medicare Act and the Medicaid Act. Accordingly, we will
summarize the relevant statutory provisions involved and sketch
the context from which the dispute arose.
A.
The Medicare Act, 42 U.S.C. §§ 1395-1395ccc,
established the Medicare program. Under the Medicare Act, the
federal government funds the Medicare program. Eligibility for
Medicare benefits is based on old age or disability: an
individual must be at least 65 years old or disabled to be
0
The appellants also sought an injunction requiring Pennsylvania
to implement 42 U.S.C. § 1395v(f). By letter dated May 10, 1994
the appellants advised the court that Pennsylvania had decided to
voluntarily implement § 1395v(f) and thus they would not pursue
this issue further.
3
eligible. 42 U.S.C. § 426(a). These individuals are commonly
referred to as Medicare-eligible patients.
Medicare coverage is primarily divided into two parts.
Part A covers all inpatient hospital expenses through an
insurance plan. See 42 U.S.C. §§ 1395c to 1395i-4. All
Medicare-eligible patients receive this benefit. This coverage
is not in dispute in this case.
Part B covers certain physician services, hospital
outpatient services, and other health services not covered under
Part A. See 42 U.S.C. §§ 1395j to 1395w-4(j). Part B coverage
is not freely or automatically available to all Medicare-eligible
patients. To obtain this coverage, Medicare-eligible patients
must first enroll in the Part B insurance program by paying
insurance premiums ("Part B insurance premiums"). See §§ 1395o-
1395s. Once this is done, the federal government pays 80% of the
"reasonable costs" of outpatient hospital services and 80% of the
"reasonable charges" for physician services rendered to the
insured. § 1395l. The Part B patients themselves must pay the
remaining 20% of the charges for the reasonable outpatient
hospital services and physician services (co-payments or
coinsurance), as well as an annual deductible. Id.;
§1395cc(a)(2)(A). Together, the Part B premiums, deductibles and
coinsurance are generally referred to as "Part B cost-sharing."
Reasonable costs and charges for the services covered under Part
B are established pursuant to the Medicare Act and its
implementing regulations. See § 1395w-4(a), (b).
4
However, the payment of the Part B insurance premiums,
the 20% coinsurance, and the deductibles poses a serious problem
for some poor Medicare-eligible patients. Therefore, these
individuals may have to forego Part B coverage completely. How
Congress resolved this problem is at the heart of the dispute in
this case.
B.
The Medicaid Act, 42 U.S.C. § 1396 et seq., established
the Medicaid program which is separate from the Medicare program.
Under the Medicaid Act, the federal government and the states
jointly fund the Medicaid program with the federal government
contributing approximately between 50% and 83% of the funding,
with the states responsible for the rest. § 1396d(b).
Eligibility for Medicaid benefits is based on need. A patient
becomes eligible if his or her income falls below a certain
level. See § 1396d(a).
A state is not required to participate in the Medicaid
program, but if it decides to participate, it must comply with
the Medicaid Act and its implementing regulations. § 1396c. A
participating state0 must propose a plan that meets certain
statutory requirements laid down in § 1396a(a). The plan must
establish a schedule of payment rates or payment methods for the
various kinds of medical care that a Medicaid patient may seek. §
1396a(a)(30). All parties agree that these rates are almost
0
The term "state" or "states" in the remainder of this opinion
refers to a state or states participating in the Medicaid
program.
5
always lower than the rates established under Medicare as
reasonable costs and charges. Medicaid service providers
(including doctors and hospitals) must accept the Medicaid
payment as payment in full, and may not ask the Medicaid patient
to pay any money beyond that amount. § 1320a-7b(d); 42 C.F.R.
§447.15 (1993). To become effective, the plan must be approved
by the Secretary of the United States Department of Health and
Human Services ("the Secretary"). § 1396a(b).
Some individuals are eligible for benefits under both
the Medicare and Medicaid Acts: they are either old-aged or
disabled, and they are poor. These individuals are commonly
called "dual eligibles." But some old-aged or disabled may not
be poor enough to be eligible for Medicaid benefits. Moreover,
for those dual eligibles who meet the Medicaid poverty
requirement but cannot pay for Medicare Part B coverage, Medicaid
may not provide for all the services covered by Medicare Part B.
C.
Since the very inception of the Medicare and Medicaid
programs, Congress has made several attempts to solve the
problems as sketched above. As a result, several provisions in
the Medicaid Act, see 42 U.S.C. §§ 1396a(a)(15) (repealed 1988),
1396a(a)(10)(E), 1396d(p), 1396a(n), established an interplay
between the Medicare Act and the Medicaid Act.
Congress enacted § 1396a(a)(15) in 1965 which at first
required states through their Medicaid programs to pay all of the
Medicare Part A premiums for dual eligibles, and permitted states
to impose part of the Part B cost-sharing on the individuals
6
based on their ability to pay.0 Congress eliminated this
distinction in 1967, permitting states to require dual eligibles
to share in the cost-sharing for both Part A and Part B
coverage.0 This amendment did not affect the command that
together dual eligibles and states were to pay the Part B cost-
sharing in full. See New York City Health & Hosps. Corp. v.
Perales, 954 F.2d 854, 860 (2d Cir.), cert. denied, ___ U.S. ___,
113 S. Ct. 461 (1992) (interpreting § 1396a(a)(15)).
In 1986, Congress permitted states to pay the Part B
cost-sharing for those Medicare-eligible individuals who are too
poor to pay the Part B cost-sharing on their own, but not poor
enough to be Medicaid-eligible, who are termed "qualified
Medicare beneficiaries (QMBs)." This is called the optional
0
In 1965, this provision read in part:
(15) in the case of eligible individuals 65 years
of age or older who are covered by either or both of
the insurance programs established by title XVIII, [the
State Medicaid plan must] provide--
(A) for meeting the full cost of any deductible
imposed with respect to any such individual under
the insurance program established by part A of
such title, and
(B) where, under the plan, all of any deductible,
cost sharing, or similar charge imposed with
respect to any such individual under the insurance
program established by part B of such title is not
met, the portion thereof which is met shall be
determined on a basis reasonably related
(determined in accordance with standards approved
by the Secretary and included in the plan) to such
individual's income or his income and resources.
Social Security Amendments of 1965, Pub. L. No. 89-97, § 121(a),
79 Stat. 286, 346 (repealed 1988).
0
This was accomplished by deleting § 1396a(a)(15)(A), and the
reference to "Part B" in § 1396a(a)(15)(B). See Social Security
Amendments of 1967, Pub. L. No. 90-248, § 235(a)(3), 81 Stat.
821, 908.
7
"buy-in" program whereby the states may pay the Part B cost-
sharing for the individuals to enroll them in the Medicare Part B
program. See the Omnibus Budget Reconciliation Act of 1986 (OBRA
'86), Pub. L. No. 99-509, § 9403, 100 Stat. 1874, 2053-55
(codified as amended at §§ 1396a(a)(10)(E), 1396d(p), 1396a(n)).
The dispute of this case focuses on these provisions.
Section 1396a(a)(10)(E) provided that the states have
an option whether to provide Part B cost-sharing to a QMB. The
statute specifically used the language of "at the option of a
State." Id., 100 Stat. at 2053 (repealed). A QMB was
essentially defined in § 1396d(p)(1) as a Medicare-eligible
individual whose income is below the federal poverty line but
"who, but for section [1396a(a)(10)(E)] and the election of the
State, is not eligible for medical assistance under the
[Medicaid] plan." Id., 100 Stat. 2054. Section § 1396d(p)(3)
defines cost-sharing as including Part B premiums, coinsurance
and deductibles and certain other enrollment premiums. Section
1396a(n) states that a state plan may provide a payment amount
for Part B services exceeding the amount otherwise payable under
a Medicaid plan.
The participation in the QMB program was low. By 1988
only one State had chosen to provide this benefit to QMBs. H.R.
Rep. No. 105(II), 100th Cong., 2d Sess. 59 (1988), reprinted in
1988 U.S.C.C.A.N. 857, 882. Concerned about this low
participation, and recognizing that Medicare coverage was being
expanded to cover certain services that were previously covered
by Medicaid, giving states certain savings, Congress made the
8
option to provide Medicare Part B benefits for the QMBs mandatory
by requiring the states to pay the Part B cost-sharing for the
QMBs. See id. at 59-60, reprinted in 1988 U.S.C.C.A.N. at 882-
83. This was accomplished by deleting "at the option of a State"
from § 1396a(a)(10)(E). Medicare Catastrophic Coverage Act of
1988 (MCCA), Pub. L. No. 100-360, § 301(a)(1), 102 Stat. 683,
748. No other substantive changes were made. In the same year,
the QMB definition was broadened by repealing § 1396d(p)(1)(B).
The Technical and Miscellaneous Revenue Act of 1988, Pub. L. No.
100-647, § 8434(a), 102 Stat. 3342, 3805. That is, this
amendment has the effect of making all dual eligibles QMBs. For
the sake of clarity, we will refer to these individuals covered
by the current definition of QMB as "QMBs and dual eligibles."
Section 1396a(a)(15), which covered only dual eligibles, was
deleted by the Family Support Act of 1988, Pub. L. No. 100-485,
Title VI, § 608(a)(14)(I)(iii), 102 Stat. 2343, 2416.
In 1989 Congress added § 1396a(a)(10)(E)(ii) which
mandates that participating states pay the cost-sharing for
certain qualified disabled and working individuals described in
§1396d(s) but limited the payment to only one item as listed in
§1396d(p)(3)(A)(i). Pub. L. No. 101-239, § 6408(d)(1), 103 Stat.
2106, 2268 (1989). In 1990 Congress added § 1396a(a)(10)(E)(iii)
which requires participating states to extend certain QMB
benefits to those Medicare-eligible individuals who are above the
federal poverty line, but specifically limits these benefits to
Part B premiums only. Pub. L. No. 101-508, § 4501(b)(3), 104
Stat. 1388, 1388-165 (1990).
9
In 1989 Congress further amended the Medicare Act to
require that physicians treating QMBs accept assignment, thereby
precluding physicians from balance-billing0 QMBs. Pub. L. No.
101-239, § 6102(a), 103 Stat. 2106, 2181-82 (1989) (codified at
42 U.S.C. § 1395w-4(g)(3)(A)). This provision took effect on
April 1, 1990. Id. § 6101, 103 Stat. 2168-69.
D.
The State of Pennsylvania is a participant in the
Medicaid program and has established a Medicaid plan which was
approved by the Secretary. Pennsylvania pays the QMBs' Medicare
Part B premiums in full, and pays the Medicare Part B deductible
and coinsurance only if, and to the extent that, the amount
already paid under Medicare Part B, plus its payment, does not
exceed the Medicaid allowance. An applicable Pennsylvania
regulation provides in part that "[i]f a [Medicaid] recipient
also has Medicare coverage, the [State] may be billed for charges
that Medicare applied to the deductible or coinsurance, or both.
Payment will be made in accordance with established [Medicaid]
rates and fees." 55 Pa. Code § 1101.64(b).
It appears that this regulation leads to a result that
Pennsylvania pays nothing once the patient's deductible has been
exhausted and pays at its lower Medicaid rates, rather than the
Medicare rates, before the deductible has been exhausted.0 See
0
Balance-billing is the practice whereby a provider bills the
patient directly for the balance of the reasonable costs and
charges if the Medicare or Medicaid program does not pay the full
amount of the reasonable costs and charges.
0
Under Medicaid, physicians are not permitted to bill the patient
for the balance of the bill.
10
App. at 35 (Stipulation ¶ 23). However, the Secretary and the
Pennsylvania Secretary of Public Welfare argue that Pennsylvania
is permitted to limit its coinsurance and deductible payments
under Medicare Part B so that the total amount of the
reimbursements does not exceed the amount that the health care
provider would have received for the services rendered under
Medicaid. Although there may be some slight differences between
the Pennsylvania regulation and the position the Secretary
asserts before us, we will treat them as the same. Any
difference is immaterial in the context of this appeal because
our holding requires payment of all Part B cost-sharing.
Under the Pennsylvania payment system, Pennsylvania
invariably pays little or no money for QMBs' Part B cost-sharing
because the Medicaid rates are invariably lower than the Medicare
rates, and are almost always lower than the Part B payment rates,
i.e., 80% of the Medicare rates. Health care providers who
supply services to QMBs in Pennsylvania thus may not recover the
Part B cost-sharing that non-QMB Medicare Part B patients would
pay on their own to service providers.
II.
The question presented is whether the Pennsylvania plan
and regulations (the "Penn Plan") limiting Medicaid payment to
the extent that the Medicaid payment, plus Medicare payment, does
not exceed the payment otherwise available under Medicaid
violates either the Medicare Act or the Medicaid Act. We hold
that the Penn Plan violates both the Medicare Act and the buy-in
provisions of the Medicaid Act. In so holding, we find support
11
in the statutory language, statutory context and legislative
history, as well as New York City Health & Hosps. Corp. v.
Perales, 954 F.2d 854 (2d Cir.), cert. denied, ___ U.S. ___, 113
S. Ct. 461 (1992), a decision of the Court of Appeals for the
Second Circuit, the only court of appeals that has tackled the
precise question before us.0
A.
Under the Medicare Act, the Secretary is authorized to
determine the reasonable costs or charges for Medicare Part B
services. 42 U.S.C. § 1395w-4(b). Once the reasonable costs and
charges are determined, a provider of Medicare services is
entitled to recover 100% of the reasonable amount: 80% from the
federal government, § 1395l, and 20% from the patient,
§1395cc(a)(2)(A). See also §§ 1395w-4(a)(1), 1395u(b)(3)(B). No
matter from whom, "providers who furnish medical care to
Medicare-eligible patients have the right to collect 100% of
their reasonable costs or charges." Perales, 954 F.2d at 858.
Furthermore, the Medicare Act contains no exception to the
reimbursement of 100% of the reasonable costs and charges for
QMBs and dual eligibles. Id. The Pennsylvania limitation on
payment of Part B cost-sharing in effect creates an exception to
the reimbursement for QMBs and dual eligibles. This violates the
Medicare Act. See id.
0
A district court in the Fourth Circuit took the same position as
the Court of Appeals for the Second Circuit. See Rehabilitation
Ass'n of Va., Inc. v. Kozlowski, 838 F. Supp. 243, 247-54 (E.D.
Va. 1993). Another district court took the contrary view. See
Haynes Ambulance Serv., Inc. v. Alabama, 820 F. Supp. 590, 592-95
(M.D. Ala. 1993).
12
The Secretary argues that QMBs and dual eligibles
should be treated as primarily Medicaid rather than Medicare
patients. We disagree. The obvious fact is that Congress did
not by statute make QMBs Medicaid-eligible (namely, receiving
Medicaid services). By requiring the states to enroll QMBs and
dual eligibles in the Medicare Part B program, Congress thereby
made them eligible for Medicare Part B benefits. The statutory
language is simply not susceptible of a reading that QMBs and
dual eligibles are primarily Medicaid patients. As the Perales
court articulated,
The Secretary's interpretation of dual eligibles as
primarily Medicaid patients leads to some oddities. If
Medicaid alone controlled with respect to dual
eligibles, then it would make little sense for Medicare
Part B to pay 80% of the Medicare rate for crossover
care. If Medicaid were in fact the controlling
program, then one would expect providers to be
compensated at the Medicaid rate, instead of at 80% of
the Medicare rate. Moreover, if crossovers [dual
eligibles] were "primarily Medicaid patients," there
would be no basis for Medicare to allow (as it does),
as a hospital's bad debt expense, the uncollected
Medicare cost-sharing amounts.
Perales, 954 F.2d at 858-59.
Legislative history indicates that Congress intended
that QMBs would be considered Medicaid beneficiaries primarily
13
for one purpose only--the provision of federal matching fund.
Congress explained that
Unlike those elderly and disabled covered under section
4602, individuals receiving assistance with Medicare
cost-sharing obligations would not be treated as
Medicaid beneficiaries for all purposes. However, as
in the case of the elderly and disabled covered under
section 4602, a State opting to offer this more limited
coverage would receive Federal matching payments for
its expenditures on behalf of these individuals.
H.R. Rep. No. 727, 99th Cong., 2d Sess. 105 (1986), reprinted in
1986 U.S.C.C.A.N. 3607, 3695.
Thus both the statutory framework and legislative
history reflect that Congress intended QMBs to be Medicare
patients rather than Medicaid patients. However, because QMBs
are poor and cannot financially shoulder the burden of paying the
Medicare Part B cost-sharing as can non-QMBs, Congress required
the states opting to cover QMBs to stand in the shoes of QMBs
with respect to the Part B cost-sharing payments. See id. at
106, reprinted in 1986 U.S.C.C.A.N. at 3696 ("For elderly and
disabled individuals whom the State chose to cover, the Medicaid
program would pay for the Part B deductible and the beneficiary's
20 percent coinsurance on Part B services.").
Accordingly, Medicare Part B service providers who
supply service to QMBs are entitled to recover 100% of the
reasonable costs and charges. The Penn Plan violates the
Medicare Act by limiting its payment of Part B cost-sharing to
14
the extent that its payment, plus the Medicare payment, would not
exceed the payment otherwise available under the Medicaid Act.
B.
Concluding that the Pennsylvania limitation on payment
of the Part B cost-sharing violates the Medicare Act does not end
the matter. The Secretary contends that Pennsylvania is
permitted by the buy-in provisions in the Medicaid Act,
§1396a(a)(10)(E)(i), 1396a(n), to limit its QMB Part B cost-
sharing payment to the extent that its payment, plus Medicare
Part B payment, does not exceed the Medicaid payment that would
otherwise be payable under the Medicaid plan. If so, we must
resolve the conflict between the buy-in provisions of the
Medicaid Act and the Medicare Act. However, the appellants
contend that the buy-in provisions, especially § 1396d(p)(3),
require the states participating in the Medicaid program to pay
the full amount of the Part B cost-sharing as defined in
§1396d(p)(3). We agree with the appellants and see no conflict
between the Medicare Act and the buy-in provisions of the
Medicaid Act.
(a)
We are called upon to determine the meaning of the buy-
in provisions of the Medicaid Act, §§ 1396a(a)(10)(E)(i),
1396d(p)(3), 1396a(n). "The task of resolving the dispute over
the meaning of [a statute] begins . . . with the language of the
statute itself." United States v. Ron Pair Enters., Inc., 489
U.S. 235, 241, 109 S. Ct. 1026, 1030 (1989). Accordingly, we
15
must first examine the language of the relevant statutory
provisions.
The current version of § 1396a(a)(10)(E)(i) provides:
A State plan for medical assistance must . .
(10) provide --
(E) (i) for making medical assistance available
for medicare cost-sharing (as defined in
section 1396d(p)(3) of this title) for
qualified medicare beneficiaries described in
section 1396d(p)(1) of this title;
. . .
except that . . . (VIII) the medical assistance made
available to a qualified medicare beneficiary described
in section 1396d(p)(1) of this title who is only
entitled to medical assistance because the individual
is such a beneficiary shall be limited to medical
assistance for medicare cost-sharing (described in
section 1396d(p)(3) of this title), subject to the
provisions of subsection (n) of this section and
section 1396o(b). . . .
§ 1396a(a)(10)(E)(i). Section 1396o(b) is not implicated in this
case. Section 1396d(p)(1) essentially defines the term
"qualified medicare beneficiary (QMB)" as an individual who is
eligible for Medicare Part A and who has an income below the
federal poverty line. Section § 1396d(p)(3) states:
The term "medicare cost-sharing" means the following
costs incurred with respect to a qualified medicare
beneficiary, without regard to whether the costs
incurred were for items and services for which medical
assistance is otherwise available under the plan:
(A)(i) premiums under section 1395i-2 or 1395i-2a
of this title, and
(ii) premiums under section 1395r of this title.
16
(B) Coinsurance under subchapter XVIII of this
chapter (including coinsurance described in
section 1395e of this title).
(C) Deductibles established under subchapter XVIII
of this chapter (including those described in
section 1395e and section 1395l(b) of this title).
(D) The difference between the amount that is paid
under section 1395l(a) of this title and the
amount that would be paid under such section if
any reference to "80 percent" therein were deemed
a reference to "100 percent".
Such term also may include, at the option of a State,
premiums for enrollment of a qualified medicare
beneficiary with an eligible organization under section
1395mm of this title.
§ 1396d(p)(3). This definition includes all of the cost-sharing
that a non-QMB Medicare Part B patient would have to pay in order
to obtain Part B coverage. Part B deductibles are included in
§1396d(p)(3)(C). Subsection (p)(3)(D) obviously refers to the
20% coinsurance payment. Section 1396a(n) is entitled "Payment
amounts." It provides that
In the case of medical assistance furnished under this
subchapter for medicare cost-sharing respecting the
furnishing of a service or item to a qualified medicare
beneficiary, the State plan may provide payment in an
amount with respect to the service or item that results
in the sum of such payment amount and any amount of
payment made under subchapter XVIII of this chapter
[Medicare Part B] with respect to the service or item
exceeding the amount that is otherwise payable under
the State plan for the item or service for eligible
17
individuals who are not qualified medicare
beneficiaries.
§ 1396a(n) (emphasis added).
"The apparent meaning" of § 1396d(p)(3), read together
with § 1396a(a)(10)(E)(i), according to the Perales court, is
that "the states that participate in Medicaid must allocate
Medicaid funds to the enrollment of all dual eligibles and QMBs
in Part B of Medicare and to the payment of 20% of reasonable
costs or charges along with the annual deductibles incurred in
this program." Perales, 954 F.2d at 859. We agree. Section
1396a(a)(10)(E)(i) uses the term "must" to impose an obligation
on the states participating in the Medicaid program to pay the
Medicare Part B cost-sharing, and the scope of that obligation is
defined by § 1396d(p)(3).0 The logical reading of these
provisions is that a Medicaid plan must pay everything listed in
§ 1396d(p)(3) unless this section qualifies the obligation.
Section 1396d(p)(3)(A)(ii) lists Part B premiums. Section
1396d(p)(3)(C) lists Part B deductibles. Section 1396d(p)(3)(D)
specifically includes the 20% coinsurance that is the
responsibility of a non-QMB Medicare Part B patient. Because
§1396d(p)(3) does not contain any qualification on the obligation
to pay the Part B cost-sharing, § 1396a(a)(10)(E)(i) therefore
obligates states participating in Medicaid to pay the entire
amount of the Part B cost-sharing.
0
The state Medicaid plans may impose only a nominal cost-sharing
on QMBs. See § 1396o(a) (imposition of certain charges in case
of individuals described in § 1396a(a)(10)(E)(i)).
18
The Secretary points out that the statutory language
itself does not state that the states must make payments in full.
We believe the explicit language of "payment in full" is
unnecessary in this context. Since § 1396d(p)(3) lists the Part
B premiums, the deductibles and the 20% coinsurance as part of
the scope of payment obligation, § 1396a(a)(10)(E)(i) which
imposes the payment obligation requires payment for the entire
amount of the Part B premiums, the deductibles and the 20%
coinsurance unless otherwise specifically qualified. Such a
qualification is absent from the § 1396d(p)(3). We thus read
§§1396a(a)(10)(E)(i) and § 1396d(p)(3) as requiring payment in
full. This was obviously the understanding of Congress when it
enacted the QMB program. The contemporaneous legislative history
language expressly and specifically stated that the states opting
to provide the QMB benefits must make payment in full either to
the provider or to the QMB. H.R. Rep. No. 727, 99th Cong., 2d
Sess. 106, reprinted in 1986 U.S.C.C.A.N. 3607, 3696 ("the
Medicaid program would pay for the Part B deductible and the
beneficiary's 20 percent coinsurance on Part B services" to the
provider if it took assignment, or to the beneficiary who would
"submit the claim for the 20% coinsurance requirement to the
State Medicaid programs").
The Secretary contends that because § 1396a(n), which
is titled "Payment amounts," uses the permissible term "may"
rather than "must," we should not read the requirement to pay
Part B cost-sharing as a requirement of paying 100% of the Part B
cost-sharing. We disagree.
19
In rejecting the Secretary's interpretation the Perales
court stated:
A statute requiring Medicaid funds to be made available
for Medicare cost-sharing can only sensibly be read as
requiring the funds to be made available to cover all
Medicare cost-sharing. It is counter-intuitive that a
statute requiring Medicaid funds to be made available
for cost-sharing only to the extent of the Medicaid
scheduled rates would not specify that qualification
expressly. Furthermore, it appears that the reason
that section a(n) authorizes payment beyond the
Medicaid amount, when it is required by another
section, is to clarify that the Medicaid Act does not
prohibit a provider from accepting more than the
Medicaid rate.
954 F.2d at 859 (footnote omitted).
The Perales court is correct in stating that had
Congress intended a qualification on the amount of the payment,
it would have specifically so stated. The statutory context
bears this out. In one instance in the "buy-in" provisions,
Congress expressly specified what part of the cost-sharing is
optional for the state. In the last paragraph of § 1396d(p)(3),
Congress stated that cost-sharing "also may include, at the
option of a State, premiums for enrollment of a [QMB] with an
eligible organization under section 1395mm of this title."
§1396d(p)(3) (§ 1395mm is part of Part C). In other instances,
Congress specifically limited the payment of cost-sharing to one
20
of the items listed in § 1396d(p)(3), with respect to certain
non-QMB individuals. See § 1396a(a)(10)(E) (ii) (limiting cost-
sharing payments for certain individuals to premiums described in
§ 1396d(p)(3)(A)(i)); 1396a(a)(10)(E)(iii) (limiting cost-sharing
payments for individuals whose income is above the federal
poverty line to premiums described in § 1396d(p)(3)(A)(ii)). This
statutory context strongly indicates that if Congress wanted the
payment to deviate from those Part B cost-sharing items listed in
§ 1396d(p)(3), it would have specifically so stated. The fact
that these subsections within §§ 1396a(a)(10)(E), 1396d(p)(3)
expressly provide for optional payment or limitations on the
payment supports the conclusion that if Congress intended to
permit the states to choose among the Part B cost-sharing items
to pay or to pay a certain percentage of an item, it surely would
have expressly so provided.
Moreover, we note that the Secretary does not argue the
states may pay only part of the Part B premium. She only argues
that the states may pay only part of the deductible and/or
coinsurance. Accordingly, the Secretary would have us read a
statute which on the face equally applies to the Part B premium,
deductible and coinsurance in a manner so as to permit disparate
treatment for the Part B premium, deductible and coinsurance. We
reject this proposition. We have found no basis in the statutory
language, context or legislative history for treating the Part B
cost-sharing items differently. Congress did not state that
under § 1396a(a)(10)(E)(i) the states may choose to pay an item
21
or part of an item out of those listed in § 1396d(p)(3), i.e.,
the Part B premiums, coinsurance and deductibles.
We believe § 1396a(n) was intended not to give states
the discretion to pay the Part B cost-sharing, but rather to
serve another important purpose in the context of the Medicaid
Act: to give the states the authority to make payments pursuant
to the rates set forth under the Medicare Act rather than those
set forth in the Medicaid plans, that is, to deviate from the
Medicaid payment schedules or payment methods. As is clear from
the Medicaid Act, a state plan must set forth a payment schedule
or payment methods for certain services. § 1396a(a)(30); 42
C.F.R. § 447.201(b), 447.203(a) (1993). Federal funding is
limited to expenditures made pursuant to such schedules or
payment methods established in a plan. § 1396b(a)(1) (the
Secretary shall pay the federal share of the "total amount
expended during such quarter as medical assistance under the
State [Medicaid] plan"). States may not subsequently deviate
from these payment schedules or payment methods without losing
the right to receive federal funding. See id.; §§ 1396c, 1316.
Section 1396a(n) authorizes the states to deviate from their
schedules or payment methods with respect to QMB Part B cost-
sharing payments, thus carving out an exception to the general
requirement to comply with the Medicaid fee schedules or payment
methods. Without the authorization under § 1396a(n), there would
be an apparent conflict between § 1396a(a)(10)(E)(i) and the
command that states only make payments according to their
schedules or payment methods as approved by the Secretary. The
22
legislative history buttresses this reading. The House Report
stated that "the total of Medicaid payments for Medicare cost-
sharing charges under this provision together with Medicare
payments may exceed the amounts otherwise payable under the State
Medicaid plan for such services." H.R. Conf. Rep. No. 1012, 99th
Cong., 2d Sess. 395-96 (1986), reprinted in 1986 U.S.C.C.A.N.
3868, 4040-41. This language emphasizes the comparison between
the Medicare and Medicaid rates of payment, rather than the
discretion of the states.
Even assuming that § 1396a(n) authorizes the states to
make discretionary payments, as the Secretary argues, this would
at best lead to a conflict between § 1396a(a)(10)(E)(i) and
§1396a(n). Given this conflict, the Secretary would not
necessarily prevail. Any conflict, if it exists, must be
resolved under the relevant statutory interpretation principles.
We must do so by giving full effect to all provisions. It is
well settled that "[s]tatutory construction is a holistic
endeavor . . . and, at a minimum, must account for a statute's
full text, language as well as punctuation, structure, and
subject matter." United States Nat'l Bank of Oregon v.
Independent Ins. Agents of Am., Inc., ___ U.S. ___, ___, 113 S.
Ct. 2173, 2182 (1993) (internal quotation marks and citations
omitted). Put another way, "`[i]n expounding a statute, we must
not be guided by a single sentence or member of a sentence, but
look to the provisions of the whole law, and to its object and
policy.'" Id. (quoting United States v. Heirs of Boisdore, 49
U.S. (8 How.) 113, 122, 12 L.Ed. 1009 (1849)). "[W]e are
23
obligated to give effect, if possible, to every word Congress
used." Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S. Ct.
2326, 2331 (1979). That is, "[a] statute should be construed so
that effect is given to all its provisions, so that no part will
be inoperative or superfluous, void or insignificant." 2A Norman
J. Singer, Sutherland Statutory Construction § 46.06, at 119-20
(5th ed. 1992) (citations omitted).
Since § 1396a(a)(10)(E)(i) provides that states must
pay the entire amount of the Part B cost-sharing, and § 1396a(n)
provides that states may pay more than the Medicaid amounts, both
sections may be reconciled by interpreting them as requiring
payment for the entire amount of the Part B cost-sharing. Such a
reading gives full effect to both and does no harm to either. On
the other hand, permitting payment up to only the Medicaid rates
would do irreconcilable harm to § 1396a(a)(10)(E)(i) which
requires payment of the entire amount of the Part B cost-sharing.
However, we reiterate that such a conflict resolution
is not necessary here because, as we concluded above, there is
simply no conflict: § 1396a(n) serves no purpose other than
giving the states the authority to deviate from the Medicaid
payment schedules or payment methods. Reading § 1396a(n) this
way gives full effect to this section without engendering a
conflict between it and § 1396a(a)(10)(E)(i).
Our reading of the statutory provisions is confirmed by
congressional intent as expressed in 1986. Congress itself did
not read § 1396(a)(n) as authorizing states to make discretionary
payments in excess of Medicaid rates. Nor did Congress intend
24
for this provision to detract from the command stated in
§1396a(a)(10)(E)(i). When Congress enacted both §
1396a(a)(10)(E) and § 1396a(n) in 1986, it explained that a state
must pay 100% of the Part B cost-sharing if it opted to enroll
QMBs in Medicare Part B. This cannot be more clearly stated than
the House Report:
For elderly and disabled individuals whom the State
chose to cover, the Medicaid program would pay for the
Part B deductible and the beneficiary's 20 percent
coinsurance on Part B services. If the beneficiary
uses a physician who takes assignment, Medicaid would
pay the physician directly for the 20 percent
coinsurance and the patient could not be billed for any
amounts above the Medicare reasonable charge. However,
if the physician elects not to take assignment, the
beneficiary would submit the claim for the 20 percent
coinsurance requirement to the State Medicaid program
and would be liable for an additional amount charged by
the physician.
H.R. Rep. No. 727, 99th Cong., 2d Sess. 106 (1986), reprinted in
1986 U.S.C.C.A.N. 3607, 3696. This House Report clearly
indicated that in addition to the Part B deductibles, the
Medicaid program must pay the 20% coinsurance payments for Part B
services either to the physician or to the patient directly.
Obviously, § 1396a(a)(10)(E) and 1396a(n), which were enacted by
Congress together in 1986, were understood by Congress as
requiring the states to pay 100% of the Part B cost-sharing, if
25
the states decided to participate in the QMB program. That is to
say, the option for the states is whether to join or not to join,
and not how much they have to pay. Once the states joined the
QMBs program, they were required to pay 100% of the Part B cost-
sharing, including the 20% coinsurance payment.
Since § 1963a(n) was not understood by Congress in 1986
to give states opting to participate in the QMB program the
discretion to pay only a portion of the Part B cost-sharing, it
cannot be read to give such discretion in 1994 when no change has
been made to § 1396a(n) or any other operative provisions with
respect to the scope of the Part B cost-sharing payment. The
evolution of the statutory provisions demonstrate that Congress
has not made any substantive amendment to those operative
provisions with respect to how much the states must pay under
§§1396a(a)(10)(E)(i), 1396d(p)(3) and § 1396a(n). The change
concerns whether the states have to pay at all. It merely
eliminated the states' option whether or not to join the program.
Now the states have no option; they must join. See H.R. Conf.
Rep. No. 661, 100th Cong., 2d Sess. 253 (1988), reprinted in 1988
U.S.C.C.A.N. 923, 1031 (the amendment "[m]akes mandatory the
current option for States to pay Medicare premiums, deductibles
and coinsurance"). This change in the option to join or not to
join does not affect the amount that the states are obligated to
pay. Therefore, the statute's established meaning as to how much
a state Medicaid plan must pay (that is, requiring payment of all
Part B cost-sharing) must be adhered to. It would be a strange
way to make a change in the content of an existing statutory
26
provision regarding the scope of payment without ever so slightly
modifying the language of those provisions specifying how much a
state must pay. Cf. Pierce v. Underwood, 487 U.S. 552, 567, 108
S. Ct. 2541, 2551 (1988) ("Quite obviously, reenacting precisely
the same language would be a strange way to make a change."). The
Secretary neither explicitly argues nor provides a rationale for
the proposition that changing the option whether or not to pay
the Part B cost-sharing at all into a mandate to pay somehow
changed the amount of the Part B cost-sharing which the states
are required to pay, where the statute defining the scope of the
payment had not been amended at all. She completely ignores the
House Report written in 1986 which explained the scope of Part B
cost-sharing payment.
Nor does the amendment broadening the definition of QMB
as including dual eligibles previously covered by § 1396a(a)(15)
substantively affect the operative provisions relating to the
obligation to pay all the Part B cost-sharing. First, no matter
what treatment dual eligibles received under § 1396a(a)(15), they
now receive the same treatment as QMBs under § 1396a(a)(10)(E)(i)
because they are brought under the coverage of
§1396a(a)(10)(E)(i). QMBs were not brought into the coverage of
§1396a(a)(15). The plain fact is that § 1396a(a)(15) was
repealed.
Moreover, § 1396a(a)(15) had been construed by the
Secretary as requiring states and dual eligibles combined to pay
the Part B cost-sharing in full at least until 1983, as set forth
in a 1981 memorandum and in the Secretary's position before a
27
district court in a 1983 case. See New York City Health & Hosps.
Corp. v. Perales, 954 F.2d 854, 861-62 (2d Cir. 1992)
(summarizing the Secretary's position). In Perales, the Court of
Appeals for the Second Circuit interpreted this provision, then
already repealed, as meaning "if the state chooses not to pay the
entire [Part B] cost-sharing amount, the state must pay what
remains after patients are allocated that portion of the
liability commensurate with their ability to pay." Id. at 860.
The legislative history indicates that Congress intended that the
individuals were to "share in the cost," S. Rep. No. 404, 89th
Cong., 1st Sess. 80 (1965), reprinted in 1965 U.S.C.C.A.N. 1943,
2020, with the state. Together, dual eligibles and states were
to pay the Part B cost sharing in full. Thus, before dual
eligibles were brought into the coverage of § 1396a(a)(10)(E)(i),
they were treated as favorably as QMBs. To the extent that the
repealed § 1396a(a)(15) had any relevance to the interpretation
of § 1396a(a)(10)(E)(i), it is consistent with our reading of the
latter. Perales, 954 F.2d at 860.0
(b)
To support its position that § 1396a(n) permits the
states to pay only a portion of the Part B cost-sharing, the
Secretary relies heavily on certain language0 in a House Report
0
But see Samuel v. California Dept. of Health Serv., 570 F. Supp.
566, 570 & n.2, 571 (N.D. Cal. 1983) (amended 572 F. Supp. 273(1983)).
0
The House Report stated:
The bill would require States to pay Medicare cost-
sharing, including coinsurance, on behalf of eligible
individuals. It is the understanding of the Committee
that, with respect to dual Medicaid-Medicare eligibles,
28
that was written in 1988 when Congress deleted the "at the option
of a State" language from § 1396a(a)(10)(E). The language as set
out in footnote 10 purported to recognize a state practice of not
paying the full amount of Part B cost-sharing. Obviously that
language addressed the state practice relating to dual eligibles.
That is, the practice mentioned therein is a practice under
§1396a(a)(15). See Perales, 954 F.2d at 861. Its relevance to
§1396a(a)(10)(E)(i) is obscure at best. First, there was no
state practice as to QMB Part B cost-sharing payments under
§1396a(a)(10)(E). It is not clear how much states actually paid
for the Part B cost-sharing for QMBs at that time, because
"[w]hile States could protect this population [QMBs] through the
some States pay the coinsurance even if the amount that
Medicare pays for the service is higher than the State
Medicaid payment rate, while others do not. Under the
Committee bill, States would not be required to pay the
Medicare coinsurance in the case of a bill where the
amount reimbursed by Medicare--i.e., 80 percent of the
reasonable charge--exceeds the amount Medicaid would
pay for the same item or service. However, if a State
chooses to pay some or all of the coinsurance in this
circumstance, Federal matching funds would, as under
current law, be available for this cost. For example,
assume that a physician actually charges a "buy-in"
patient $60 for performing a particular procedure; that
Medicare recognizes $50 as the reasonable charge; and
that the State Medicaid program only pays $35 for this
procedure. Whether or not the physician takes
assignment, Medicare will pay only 80 percent of $50,
leaving a $10 coinsurance obligation for the
beneficiary. However, since the State only recognizes
$35 as the fee for the procedure in question, and since
the Medicare program has already paid the physician
$40, the State is not required to pay any of the $10
coinsurance. If the State chooses to pay some or all
of the $10, however, its cost would qualify for Federal
matching payments at the regular rate for services.
H.R. Rep. No. 105(II), 100th Cong., 2d Sess. 61 (1988), reprinted
in 1988 U.S.C.C.A.N. 857, 884.
29
Medicaid `buy-in' option under current law, it is the Committee's
understanding that, to date, only one State [had] chosen to
implement this coverage." H.R. Rep. No. 105(II) at 59, reprinted
in 1988 U.S.C.C.A.N. at 882 (emphasis added).0 Second, as stated
above, in 1988 Congress did not amend the operative provisions
related to how much states should pay, but only mandated that the
states participate in the QMB program. Finally, the language of
the House Report, quoted in footnote 10, expressly refers to
"dual Medicaid-Medicare eligibles" and not to "QMBs."
As the Perales court pointed out, the 1988 House Report
language did not purport to interpret § 1396a(a)(15). Perales,
954 F.2d at 861. It merely took notice of a state practice of
not paying the Part B cost-sharing in full for dual eligibles.
Because § 1396a(a)(15) has been repealed, that language has
little value. Nor did that language purport to interpret
§1396a(a)(10)(E)(i) or § 1396d(p)(3) as to the scope of the
states' obligation to make payments for the Part B cost-sharing.
The Perales court rejected the Secretary's reliance on
the 1988 legislative history language for the additional reason
that it is post-enactment legislative history. Perales, 954 F.2d
at 861. We agree. The legislative history relied upon by the
Secretary is not post-enactment history as to the mandate
requiring the states to join the QMB program, but this mandate
does not affect the amount of the payment. The legislative
0
By letter dated May 12, 1994 (p. 9), the Secretary informed us
that she did not know how the one state which elected the
optional coverage of QMBs treated the coinsurance amounts.
30
history is post-enactment history as far as the payment amount is
concerned because Congress did not make any substantive
amendments to the operative provisions related to the scope of
the Part B cost-sharing payment at the time the House Report was
written. The House Report purported to comment on the language
that was not drafted by the reporting Committee in 1988 because
this language was already in the statute after the enactment of
OBRA '86. See Pierce v. Underwood, 487 U.S. 552, 568, 108 S. Ct.
2541, 2551 (1988).
Post-enactment legislative history is not a reliable
source for guidance. "[E]ven when a subsequent House Committee
has actually commented upon an earlier statute, the
interpretation carries little weight with the courts." Perales,
954 F.2d at 861. As the Supreme Court teaches, "[t]he views of a
subsequent Congress form a hazardous basis for inferring intent
of an earlier one." Untied States v. Price, 361 U.S. 304, 313 80
S. Ct. 326, 332 (1960).
We will disregard, as the Perales court did, the
legislative history relied upon by the Secretary. The Supreme
Court has rejected attempts to smuggle subsequent legislative
commentary into an existing statute. Pierce, 487 U.S. at 566-68,
108 S. Ct. at 2551; Consumer Product Safety Comm'n v. GTE
Sylvania, Inc., 447 U.S. 102, 116-20, 100 S. Ct. 2051, 2060-64
(1980); see also City of Chicago v. Environmental Defense Fund,
___ U.S. ___, 114 S. Ct. 1588, 1593 (1994). We do the same in
this case, not simply because of the Supreme Court's general
warning regarding the troublesome nature of subsequent
31
legislative history, but also because there are more specific
problems with relying upon the 1988 House Report.
Similar to those legislative materials discounted by
the Supreme Court in GTE Sylvania, Inc. and Pierce, the 1988
House Report commented on language that was not drafted by the
reporting Committee. The fact that in 1988 Congress deleted "at
the option of a State" from § 1396a(10)(E)(i) does not change the
fact that the 1988 reporting Committee did not draft the
provisions relating to the scope of payment. These provisions
were enacted in 1986. The Pierce Court disregarded legislative
comments made on the meaning of "substantially justified" in 28
U.S.C. § 2412(d)(1)(A), a provision which was contemporaneously
reenacted as those comments were written, although it was drafted
and enacted by a previous Congress to take effect provisionally
for five years. 487 U.S. at 566-68, 108 S. Ct. at 2551. Since
those comments were not given any weight by the Supreme Court in
Pierce, we will not give any weight to the comments in the 1988
House Report when Congress did not reenact or amend the
provisions defining the scope of payment. See also GTE Sylvania,
Inc., 447 U.S. at 118 n.13, 100 S. Ct. at 2061 n.13 ("[E]ven when
it would otherwise be useful, subsequent legislative history will
rarely override a reasonable interpretation of a statute that can
be gleaned from its language and legislative history prior to its
enactment.").
Moreover, the Secretary's interpretation of the 1988
House Report language directly conflicts with language in the
1986 House Report explaining that the states must pay the 20%
32
coinsurance either to the service provider if it took assignment
or to the QMB if the provider did not take assignment. H.R. Rep.
No. 727 at 106, reprinted in 1986 U.S.C.C.A.N. at 3696. This
conflict weakens any force of the Secretary's reliance on the
post hoc 1988 legislative history. See Pierce, 487 U.S. at 567,
108 S. Ct. at 2551.
Finally, the value of the 1988 House Report language
cited by the Secretary is further reduced because it, as
interpreted by the Secretary as giving states discretion to pay
only part of the deductibles, apparently conflicts with language
in another section of the same House Report, which purported to
illustrate the QMB program in the context of prescription drug
benefits. See H.R. Rep. No. 105(II) at 50-51, reprinted in 1988
U.S.C.C.A.N. at 873-74. There the House Report stated that the
entire amount of the drug deductible must be paid by states to
service providers or patients who would pay to the service
providers, or that states may provide the actual drugs.0 The
0
The House Report stated:
The Committee bill would require States, through
their Medicaid programs, to cover both the Medicare
Part B premium (including any increment attributable to
the prescription drug benefit), as well as the $500
prescription drug deductible, for all elderly and
disabled Medicare beneficiaries with incomes below 100
percent of the Federal poverty guidelines. . . . The
purpose of this provision, which parallels the general
Medicaid "buy-in" requirement found at section 208 of
the Committee bill, is to assure effective protection
against catastrophic drug costs for poor Medicare
beneficiaries.
With respect to coverage of the deductible, the
bill would give the States two options. A State could
either offer the Medicare beneficiary the same
prescription drug benefit that it offers to its
33
Secretary maintains that the legislative history language she
cites0 permits states to pay only part of the Part B deductibles.
See App. at 35 (Stipulation ¶ 23). The statutory provision0 and
categorically needy Medicaid eligibles until the
deductible is satisfied and Medicare coverage begins.
Or, it could simply reimburse the beneficiary directly
for the charges incurred for prescription drugs up to
$500. Whatever method the State selects must apply to
all qualified Medicare beneficiaries. If the State
elected to offer its Medicaid prescription drug
benefit, the calculation of whether the Medicare
deductible had been satisfied would have to be based on
the actual charges for the drugs used, not on the
amounts that the State actually reimbursed for the
drugs through its Medicaid program.
State expenditures for Medicare prescription drug
premiums and deductibles would be subject to Federal
Medicaid matching payments at the State's regular
matching rate for services. This buy-in requirement
would, on July 1, 1988, take effect whether or not
implementing regulations have been issued. Thus,
States would begin paying the monthly Part B premium
increments beginning July 1988, and would begin
assisting qualified beneficiaries to meet the
deductible with respect to drugs dispensed on or after
January 1, 1989.
H.R. Rep. No. 105(II) at 50-51, reprinted in 1988 U.S.C.C.A.N. at
873-74.
0
See supra note 10.
0
The statute provided that states may treat drug deductibles as
one of the deductibles listed in § 1396d(p)(3)(C) (the buy-in
provision) which states must pay for, or states must provide QMBs
with drugs under the Medicaid program until the cost of the drugs
reached the amount of the deductible:
In a State which provides medical assistance for
prescribed drugs under section 1396d(a)(12), instead of
providing to qualified medicare beneficiaries, under
paragraph (3)(C), medicare cost-sharing with respect to
the annual deductible for covered outpatient drugs
under section 1395m(c)(1), the State may provide to
such beneficiaries, before charges for covered
outpatient drugs for a year reach such deductible
amount, benefits for prescribed drugs in the same
amount, duration, and scope as the benefits made
available under the State plan for individuals
described in section 1396a(a)(10)(A)(i).
34
the legislative history language regarding drug benefits0 make
clear that states had two options to satisfy the obligation to
pay for the drug deductibles: either to provide drugs in kind or
reimburse $500 under the buy-in provision §1396d(p)(3)(C).
Neither option excuses the state from paying the full $500. It
is clear Congress envisioned the drug deductibles as part of the
Part B cost-sharing listed in § 1396d(p)(3)(C), not as a special
benefit separate from that provided by the buy-in provision. See
§ 1396d(p)(4), Pub. L. No. 100-360, §301(d)(2), 102 Stat. 671,
749 (1988) (repealed 1990) (referring to § 1396d(p)(3)(C)).
Assuming that the language relied upon by the Secretary could be
read to allow states to pay only part of any item of the Part B
cost-sharing listed in § 1396d(p)(3), that reading conflicts with
the language regarding the drug benefits. The fact that §
1396d(p)(4) as set out in note 14, supra, was repealed
subsequently, see Pub. L. No. 101-234, § 201(a)(1), (b)(2), (e),
103 Stat. 1981, 1985 (1989), does not eliminate the conflict
between the legislative comments as they existed in 1988. Such
commentary, therefore, at most exhibited confusion on the part of
the reporting Committee, which is one of the reasons why such
post hoc comments should not be given much weight.
The post-enactment legislative history language relied
upon by the Secretary thus conflicts with a logical reading of
the statutory provisions, with contemporaneous legislative
42 U.S.C. § 1396d(p)(4), Pub. L. No. 100-360, § 301(d)(2), 102
Stat. 671, 749 (1988) (repealed 1990, Pub. L. No. 101-234,
§201(a)(1), (b)(2), (e), 103 Stat. 1981, 1985 (1989)).
0
See supra note 12.
35
history, as well as language in another section of the same House
Report. "Even in the ordinary situation, [a] House Report would
not suffice to fix the meaning of language which that reporting
Committee did not even draft." Pierce, 487 U.S. at 567, 108 S.
Ct. at 2551. Given all the problems discussed above, we will
give no effect to the subsequent legislative history language
relied upon by the Secretary.
(c)
The Secretary and the district court also relied upon
§1395w-4(g)(3)(A), a statutory provision enacted in 1989 which
requires providers to take assignment of payment with respect to
the services provided to QMBs. See Pub. L. No. 101-239,
§6102(a), 103 Stat. 2181-82. This requirement took effect in
April 1990. Id. § 6101, 103 Stat. 2169. This section, which
only set forth a payment method, should not affect the
interpretation of how much the states must pay under
§1396a(a)(10)(E). Indeed, the legislative history states that
the amendment "does not change the current policy regarding the
amount which a Medicaid program must reimburse on such claims."
H.R. Rep. No. 247, 101st Cong., 1st Sess. 364, reprinted in 1989
U.S.C.C.A.N. 1906, 2090. Because taking assignment itself does
not affect the amount of payment, particularly if the payment
amount is considered to be the whole amount of the Part B cost-
sharing, taking assignment means only that providers are to
receive the whole amount from the states, rather than from QMBs
in whole or in part. The fact that between 1988 and April 1990,
service providers were permitted to balance-bill QMBs indicates
36
congressional intent that service providers be entitled to
collect the deductibles and the 20% coinsurance in full, if not
from the Medicaid plans, then from QMBs. A statutory provision
obligating service providers to take assignment and prohibiting
balance-billing does not reduce the amount of the payment but
regulates where the payment can come from.0
The Secretary and the district court also relied upon
the legislative history language relevant to § 1395w-4(g)(3)(A)
which again asserted that there was a current practice of not
paying Part B cost-sharing in full. See H.R. Rep. No. 247 at
364, reprinted in 1989 U.S.C.C.A.N. at 2090. This reliance is
misplaced for the same reasons that reliance upon the 1988 House
Report is misplaced. See supra Part II.B(b).
We also note that the ban on balance-billing appears to
apply only to an item of service that is covered by a Medicaid
state plan. See § 1395w-4(g)(3)(A) ("Payment for physicians'
services . . . with respect to such services under a State plan
approved [by the Secretary] may only be made on an assignment-
related basis" (emphasis added)). It appears, therefore, that
this provision does not apply to an item of service that is not
available under a State plan but available under Medicare Part B.
We do not know whether in such a situation a provider may
0
For the same reason, we believe the legislative history language
indicating that Congress intended to codify the practice relating
to the dual eligibles, see H.R. Rep. No. 247 at 364, reprinted in
1989 U.S.C.C.A.N. at 2090, refers only to the method of payment,
not the amount of payment. The codification addresses from where
the payment comes and from whom service providers may seek
payment, not about how much that payment could be.
37
balance-bill a QMB patient. We need not decide this question; it
suffices to point out that the Secretary's reliance on this
provision is fraught with problems.
(d)
Finally, the Secretary's interpretation leads to an odd
result and defeats congressional intent in creating the QMB
program. The odd result is that if an item of service is
available under Medicare Part B but not Medicaid, then no payment
is required by the buy-in provisions of the Medicaid Act; the
states have no basis to make any payment calculations. This is
exactly what the Secretary by regulation provides: "State
payment of Part B premiums on behalf of a Medicaid recipient does
not obligate it to pay on the recipient's behalf the Part B
deductible and coinsurance amounts for those Medicare Part B
services not covered in the Medicaid State plan." 42 C.F.R.
§431.625(c)(1) (1993). We believe this result contradicts clear
statutory command that states pay the Part B cost-sharing
including deductibles and coinsurance payments on behalf of QMBs,
regardless of whether an item of Part B service is available
under Medicaid. See § 1396d(p)(3)("without regard to whether the
costs incurred were for items and services for which medical
assistance is otherwise available under the [Medicaid] plan").
The language, context and history of the buy-in provisions of the
Medicaid Act do not permit viewing the obligation to pay the Part
B cost-sharing as depending upon whether an item of service is
available under Medicaid.
38
Moreover, because the Medicaid rates are invariably
lower that than those under Medicare Part B, the Secretary's
interpretation would lead to the result that states almost always
would not have to pay any amount at all. This conflicts with the
congressional intent in creating the QMB program: to put the
states opting to participate in the program in the shoes of QMBs
with respect to the responsibility for the Part B cost-sharing
payments. See H.R. Rep. No. 727 at 106, reprinted in 1986
U.S.C.C.A.N. at 3696 ("For elderly and disabled individuals whom
the State chose to cover, the Medicaid program would pay for the
Part B deductible and the beneficiary's 20 percent co-insurance
on Part B services."). In so doing, Congress took notice of the
fact that the Medicare beneficiaries faced substantial out of
pocket expenses. See id. at 102-03, reprinted in 1986
U.S.C.C.A.N. at 3692-93. QMBs were so poor that they could not
afford the Part B cost-sharing as did non-QMBs in order to obtain
Medicare Part B services, nor were they poor enough to obtain
certain coverage under Medicaid. The buy-in provisions thus were
designed to alleviate this plight of QMBs by requiring the states
to pay for the out of pocket expenses for them, if the states
opted to join the QMB program.
When changing the option into a mandate to join the QMB
program by deleting "at the option of a State" from
§1396a(a)(10)(E)(i), Congress was motivated primarily by one
consideration: the savings for the Medicaid programs that would
result from the expansion of Medicare coverage to services
previously covered by Medicaid. The House Committee on Energy
39
and Commerce believed that expansions in the Medicare program to
be made by the 1988 amendments would provide states with a
windfall of savings. See H.R. Rep. 105 (II) at 59-60, reprinted
in 1988 U.S.C.C.A.N. at 882-83. To channel that windfall into
the QMB program was the intent behind the 1988 amendment: "In the
view of the Committee, this Medicaid `windfall' should be
redirected toward catastrophic protection for the elderly and
disabled poor. Accordingly, the Committee bill would essentially
make mandatory the Medicaid `buy-in' option in current law." Id.
Thus, forcing states to use the windfall savings to pay for the
QMB Part B cost-sharing was the unmistakable purpose of the 1988
amendment. The Secretary's interpretation would require service
providers to foot the bill rather than redirecting the Medicaid
"windfall" to pay for the Part B cost-sharing, thus defeating the
congressional intent in passing the amendment in 1988.0
III.
The Secretary contends that she should be given
deference under Chevron, U.S.A., Inc., v. Natural Resources
Defense, 467 U.S. 837, 104 S. Ct. 2778 (1984). The Chevron rule
is predicated on the fact "the statute is silent or ambiguous
with respect to the specific issue." Id. at 843, 104 S. Ct. at
2782. Our analysis reflects that although interpreting the
relevant statutory provisions is not a simple task, there is in
0
We do not know whether the windfall referred to in the House
Report still exists at present time. If not, the states may have
considerable burden in providing payments for the Part B cost-
sharing. Such a problem, if it indeed exists, must be resolved
by Congress through corrective legislation, rather than by us
through questionable judicial interpretation of the statute.
40
fact no ambiguity as to how much states have to pay. Complexity
alone is not enough to trigger Chevron. As our discussion makes
clear, the statutory language, context and legislative history
demonstrate that Congress has spoken on the issue. Accordingly,
Chevron has no application. INS v. Cardoza-Fonseca, 480 U.S.
421, 446-48, 107 S. Ct. 1207, 1221 (1987); Chevron, 467 U.S. at843 & n.9, 104 S. Ct. at 2781 & n.9; Perales, 954 F.2d at 861.
Moreover, we note that the Secretary has changed her
position with respect to the issue of how much states must pay
for dual eligibles and QMBs. As the Perales court stated:
In a 1981 policy memorandum, the Secretary announced
that with respect to dual eligibles who have buy-in
Medicare coverage, "if the MediCal [Medicaid] agency
has made no payment at all, the physician/supplier may
collect coinsurance [i.e. 20% of reasonable charges]
and deductibles from the MediCal . . . eligible
patient." Department of Health & Human Services
Memorandum, September 29, 1981.
954 F.2d at 862 (alteration in Perales). The Secretary urged the
same position in a case before a district court at about the same
time. Id. This makes clear that the Secretary "presumed that
providers have the right to receive 100% of their reasonable
costs or charges for services to patients enrolled in Part B
Medicare pursuant to a buy-in arrangement, a right that providers
could assert even against indigent, Medicaid-eligible patients."
Id.41
The Secretary's change of position erodes the
confidence that a court should have when it defers to the
judgment of another decisionmaker. "An agency interpretation of a
relevant provision which conflicts with the agency's earlier
interpretation is `entitled to considerably less deference' than
a consistently held agency view." INS v. Cardoza-Fonseca, 480
U.S. at 446 n.30, 107 S. Ct. at 1221 (citations omitted). See
also Perales, 954 F.2d at 861; Samaritan Health Serv. v. Bowen,
811 F.2d 1524, 1529 (D.C. Cir. 1987) ("[a]ny deference that an
interpretative rule may claim depends on [among other things] . .
. `its consistency with earlier and later pronouncements.'"
(quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S. Ct.
161, 164 (1944)). Applying these principles, we will not give
any deference to the Secretary's new position.0
IV.
For the foregoing reasons, we hold that Pennsylvania
must pay the entire amount of the Part B cost-sharing on behalf
of QMBs. We will reverse the judgment of the district court and
remand the case with instructions that the district court enter
judgment for the appellants.
0
In Thomas Jefferson University v. Shalala, U.S. , 62
U.S.L.W. 4601, 1994 W.L. 276674 (U.S. June 24, 1994), the Supreme
Court gave substantial deference to the Secretary's
interpretation of her own regulation, namely, 42 C.F.R.
§413.85(c) (1993). As that case does not involve an issue of the
Secretary's interpretation of a statute, it has no relevance to
our analysis in the case sub judice.
42