Briggs v. Com.

• Decision Date: 22 March 1999
• Parties: Christian BRIGGS v. COMMONWEALTH & another. 1 Supreme Judicial Court of Massachusetts, Suffolk
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 355

707 N.E.2d 355

429 Mass. 241

Christian BRIGGS v. COMMONWEALTH & another. ¹

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Jan. 8, 1999.

Decided March 22, 1999.

Edward F. Haber, Boston (Harvey J. Barnett, Chicago, IL, & Christine E. Morin, Boston, with him) for the plaintiff.

Douglas H. Wilkins, Assistant Attorney General, for the defendants.

Present: ABRAMS, LYNCH, GREANEY, FRIED, MARSHALL, & IRELAND, JJ.

MARSHALL, J.

Two elderly patients insured by the Federal Medicare program received identical medical services from a physician. Medicare did not dispute the physician's charges, and paid him eighty per cent, as provided by Medicare. The physician then billed the first patient for her twenty per cent "copayment." She paid him, as she had agreed to do under the Medicare program. The second patient could not afford to pay her twenty per cent "copayment," so the physician turned to the division of medical assistance, the Massachusetts agency responsible for administering the Medicaid program. The division refused to pay the physician. It said he was entitled to the Medicaid, not the Medicare, rate of reimbursement for his services, and that the eighty per cent he had already received from Medicare was more than the division would pay for treating a Medicaid patient. The physician sued. This illustrative example presents the question to be decided: must the division pay the physician the remaining twenty per cent of his charges.

In more technical terms, this case concerns a dispute between the division and a physician-provider ² regarding the method of calculating certain deductible and coinsurance reimbursements made by the division on behalf of a class of Medicare beneficiaries known as qualified Medicare beneficiaries (QMBs). On April 28, 1997, the plaintiff filed his class action in the Superior Court. He filed an amended complaint on July 21, 1997. On September 25, 1997, the Commonwealth and the Commissioner (collectively the division) filed a motion to dismiss, claiming that § 4714 of the Balanced Budget Act of 1997 (BBA), Pub.L. 105-33, Title IV, § 4714, 111 Stat. 509-510 (1997), barred the plaintiff's claims. A judge in the Superior Court granted the motion. Judgment entered on March 9, 1998, and the plaintiff took an appeal. We granted the plaintiff's application for direct appellate review. We conclude that the division was authorized to cap reimbursements for medical services provided to QMBs at the applicable Medicaid rate. We affirm the dismissal of the complaint.

I

Because this case concerns the interplay between two complex statutory schemes, Medicare and Medicaid, a discussion of the relevant aspects of each will provide the context for the dispute. ³ Medicare, Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq., first enacted in 1965, provides two types of federally funded medical benefits to certain disabled individuals and people over the age of sixty-five years, regardless of financial need. 42 U.S.C. §§ 426(a), 1395c. Medicare Part A essentially covers hospital, post-hospital, and other inpatient services, and coverage is automatic. ⁴ 42 U.S.C. §§ 1395c--1395i-4. Medicare Part B is a supplemental, voluntary insurance program providing coverage for physician and outpatient services. To obtain Part B coverage, patients must pay monthly premiums, and coverage does not begin until patients meet an annual deductible ($100). 42 U.S.C. §§ 1395l(b), 1395r, 1395s. Most important, once the deductible is met, Medicare covers only eighty per cent of the "reasonable charges" ⁵ for a covered service; the patient is responsible for the remaining twenty per cent, known as the copayment. 42 U.S.C. §§ 1395 l(a), 1395w-4. Collectively, the premium, deductibles, and copayment are referred to as "cost-sharing." 42 U.S.C. § 1396d(p)(3).

Medicaid, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq., also enacted first in 1965, provides necessary medical assistance for certain low-income individuals, based on financial need. ⁶ Administered by the States, ⁷ the program provides Federal financial assistance to States that elect to provide medical services to low-income individuals. A State that chooses to participate in Medicaid must submit a plan (Medicaid State plan) for approval to the Secretary of the United States Department of Health and Human Services (Secretary or HHS), and must comply with all Federal statutes and regulations. 42 U.S.C. § 1396. Massachusetts has chosen to participate in this public assistance program.

The Federal government reimburses Massachusetts for some, but by no means all, of the costs of participating in Medicaid. See 42 U.S.C. §§ 1396a, 1396b, 1396d(b). States must establish a schedule of reimbursement rates for Medicaid covered services. See 42 U.S.C. § 1396a(a)(13). Because the State Medicaid reimbursement rates generally are lower than the Federal Medicare rates, service providers who participate in the Medicaid program generally receive less than the "reasonable charge" determined by the Secretary for the same service covered under Medicare. See Rehabilitation Ass'n of Va., Inc. v. Kozlowski, 42 F.3d 1444, 1447 (4th Cir.1994), cert. denied, 516 U.S. 811, 116 S.Ct. 60, 133 L.Ed.2d 23 (1995). The Medicaid rate frequently is even less than the eighty per cent of the "reasonable charge" paid to providers by the Federal government under Medicare. Id.

The Medicare and Medicaid statutes overlap for coverage of the population of elderly or disabled persons (eligible for Medicare) who are also poor (eligible for Medicaid). Referred to as QMBs, they are individuals who qualify for Medicare but who cannot afford to pay for the optional Medicare Part B premiums, deductibles, and copayments. ⁸ 42 U.S.C. § 1396d(p)(1). QMBs, in turn, fall into two groups: those who are not poor enough to qualify for Medicaid ("pure" QMBs) and those whose level of financial need is so great as to qualify them for Medicaid ("dual eligibles").

Because QMBs are poor and unable to pay for Part B coverage, those for whom the Medicare safety net is most needed are at risk of being excluded from the full range of Medicare protection. From the beginning of Medicare and Medicaid, at least as to dual eligibles, Congress has attempted to address this conundrum. In the intervening thirty-four years, Congress has visited and revisited the issue. ⁹ Of relevance to this lawsuit, QMBs no longer have to pay for Medicare Part B cost sharing. The State bears these costs because, since 1988, Federal law has made a State's participation in the Medicaid program conditional on the State's agreeing to pay on behalf of all QMBs the Part B costs that Medicare does not reimburse, 42 U.S.C. §§ 1396a(a)(10)(E)(i), 1396d(p)(3). ¹⁰ Medicare (administered by the Federal government) and the division (administering the Medicaid program) employ an automatic crossover billing process by which providers first submit their bills for Medicare Part B services provided to QMBs to Medicare. After Medicare pays its eighty per cent share, the bills automatically are sent to the division for payment of the remaining charges. (Individuals who are not QMBs, of course, pay any additional sums themselves.)

II

Briggs, a physician who practices in Nantucket, provided medical services to Medicare Part B eligible patients, including QMBs. ¹¹ From 1988 to 1996, he claims, the division impermissibly capped reimbursements of QMB copayments at the lower amounts allowable under the Commonwealth's Medicaid State plan, rather than paying him the (higher) Medicare rates. ¹² Briggs alleges several theories of liability: breach by the division of its Medicare contract with the Federal government (claiming he was an intended beneficiary); breach of his Medicaid provider agreement (claiming the Federal requirement that the division reimburse full Part B cost-sharing for QMBs was incorporated by reference into his provider agreement); and violation of the Medicaid Act. He also alleges that the division's refusal to reimburse him at the Medicare rate deprived him of his property without due process of law in violation of his Federal constitutional rights. Briggs sought damages for the full amount of unreimbursed Medicare cost-sharing for Medicare Part B services provided to QMBs from 1988 to January 31, 1996.

In 1988, Congress amended the Medicaid Act to require participating States to enroll all QMBs in Medicare Part B by paying the insurance premiums, deductibles, and twenty per cent copayments with Medicaid funds, or risk losing Federal matching funds. ¹³ Medicare Catastrophic Coverage Act of 1988, Pub.L. 100-360, Title III, § 301(a)(1), 102 Stat. 683, 748, codified at 42 U.S.C. § 1396a(a)(10)(E)(i). Specifically, § 1396a(a)(10)(E)(i) provides that "[a] State plan for medical assistance must ... provide ... for making medical assistance available for medicare cost-sharing (as defined in section 1396d[p] of this title) ¹⁴ for [QMBs]" (emphasis added). Two years previously, in 1986, Congress had amended the Medicaid Act to provide:

"In the case of medical assistance furnished under this subchapter for medicare cost-sharing respecting the furnishing of a service or item to a [QMB], 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 ... exceeding the amount that is otherwise payable under the State plan for the item or service for eligible individuals who are not [QMBs]" (emphasis added).

42 U.S.C. § 1396a(n). The division took the position (as did the Secretary) ¹⁵ that § 1396a(n) authorized it to reimburse QMB providers at the Commonwealth's Medicaid plan rate, not the Medicare rate. See 130 Code Mass. Regs. § 450.317(A) and § 450.318 (1989), the relevant portions of which are set out in the margin. ¹⁶ There matters stood until 1996 when, apparently in response to decisions of four Courts of Appeals (discussed later), the...