Community Health Center, Inc. v. Wilson-Coker
| Decision Date | 30 November 2001 |
| Docket Number | No. 3:01CV146 (JBA).,3:01CV146 (JBA). |
| Citation | 175 F.Supp.2d 332 |
| Parties | COMMUNITY HEALTH CENTER, INCORPORATED, Plaintiff, v. Patricia WILSON-COKER, Defendant. |
| Court | U.S. District Court — District of Connecticut |
Richard R. Brown, Brown, Paindiris & Scott, Hartford, CT, Steven William Varney, Brown, Paindiris & Scott, Glastonbury, CT, James L. Feldesman, Jennifer B. Pennington, Feldesman, Tucker, Leifer, Fidell & Bank LLP, Washington, DC, for Plaintiff.
Phyllis E. Hyman, Richard J. Lynch, Attorney General's Office, Hartford, CT, for Defendant.
Community Health Center, Incorporated ("CHCI") filed this suit on January 26, 2001, challenging a variety of payment practices related to the reimbursement it receives from the State of Connecticut under the Medicaid program.
After several procedural turns, the sole defendant in the case is Patricia Wilson-Coker, the Commissioner of Connecticut's Department of Social Services ("DSS"), and the relief sought is an injunction barring further use of a 4,200 visit provider productivity screen that reduces the amount DSS reimburses CHCI for the care CHCI provides to Medicaid recipients. Both parties have moved for summary judgment on the sole remaining issue in the case, which is the legality of the specific productivity screen employed by DSS to reduce CHCI's Medicaid reimbursement.
Resolution of this dispute requires a detailed examination of an arcane and complex area of law. This case presents thorny issues of statutory interpretation and administrative law, including what deference this Court must give to the policies and procedures of the Centers for Medicare and Medicaid Services ("CMS"),1 an agency created by Congress and charged with administering the Medicaid program.2
For the reasons set out below, the Court will grant summary judgment in CHCI's favor and enjoin Wilson-Coker from using the 4,200 visit screen to reduce future payments to CHCI.
CHCI is a non-profit, tax-exempt primary health care clinic that receives grant funds under Section 330 of the Public Health Service Act, 42 U.S.C. § 254b, which provides for primary and preventive health care services in medically-underserved areas throughout the United States. As a recipient of grant funds under 42 U.S.C. § 254b, CHCI is a Federally-Qualified Health Center, or FQHC, under both the Medicare and Medicaid programs. 42 U.S.C. §§ 1395x(aa)(4) (Medicare) and 1396d(l)(2)(B) (Medicaid).
Medicaid was established in 1965 as Title XIX of the Social Security Act ("Grants to States for Medical Assistance Programs"), codified at 42 U.S.C. §§ 1396 et. seq., to assist states in the provision of adequate medical care to eligible needy persons. A state elects to participate in the program, i.e., receive financial assistance from the federal government, by filing a state plan. Within broad national guidelines contained in federal law, each state (through its state plan) establishes its own eligibility standards; determines the type, amount, duration, and scope of services; sets the rate of payment for services; and administers its own program. See 42 U.S.C. § 1396a. Covered services to eligible beneficiaries are paid for by the state; federal financial participation is provided by grants from the federal government to the states. 42 U.S.C. § 1396b.
In recognition of the special niche filled by FQHCs in the provision of health care,3 federal law requires that state Medicaid plans cover services rendered at FQHCs. 42 U.S.C. §§ 1396a(a)(10)(A) & 1396d(a)(2)(C). This is a special provision in favor of FQHCs, because states generally have significant latitude in determining which providers and services will be included in the state plan and thus covered by Medicaid.
Until recently, the Medicaid statute also required cost-based reimbursement for FQHC services. 42 U.S.C. § 1396a(aa).4 This was another special provision favoring FQHCs in that it existed despite the latitude states are normally given to set the rate of payment for covered services, and despite the fact that cost-based reimbursement has generally fallen out of favor because of its inflationary tendencies.5
Given that FQHCs are not-for-profit entities that cannot pass budgetary shortfalls onto owners or other payers, Congress was particularly concerned that states might indirectly use Public Health Service grants under 42 U.S.C. § 254b () to subsidize state Medicaid costs (which are paid in part by the states):
To ensure that Federal PHS Act grant funds are not used to subsidize health center or program services to Medicaid beneficiaries, States would be required to make payment for these services at 100 percent of the costs which are reasonable and related to the cost of furnishing these services.
H.R.Rep. No. 101-247 at 393, reprinted in 1989 U.S.C.C.A.N. 2119.
The cost-based reimbursement mechanism for FQHCs in the Medicaid program is contained in 42 U.S.C. § 1396a(aa)(2), which provides:
[T]he State plan shall provide for payment for such services in an amount (calculated on a per visit basis) that is equal to 100 percent of the average of the costs of the center or clinic of furnishing such services during fiscal years 1999 and 2000 which are reasonable and related to the cost of furnishing such services, or based on such other tests of reasonableness as the Secretary prescribes in regulations under [Medicare], or, in the case of services to which such regulations do not apply, the same methodology used under [Medicare], adjusted to take into account any increase or decrease in the scope of such services furnished by the center or clinic during fiscal year 2001.
Connecticut's state plan requires payments to providers to be lowered if the providers fail to meet a 4,200 visit productivity screen, which has been in place since 1996.6 This screen reduces the payments that DSS makes to CHCI (and any other FQHC Medicaid provider) if the clinic's physicians have fewer than 4,200 patient visits per year. The screen sets 4,200 visits as the baseline assumption; if a physician has fewer visits, DSS reduces the clinics reimbursement on a pro rata basis. For example, if a CHCI physician had only 3,800 patient visits in one year, DSS would only reimburse CHCI 90.4% of CHCI's actual cost of providing those visits. The state contends that the screen promotes efficiency by mandating a certain level of volume, while CHCI claims the screen is too blunt a tool for that task in that it fails to take account of more subtle factors bearing on the reasonableness of a physician's productivity, such as the nature of the physician's practice and his or her patients' needs.
Without the screen in place, CHCI would receive approximately $90,000 more per year in Medicaid reimbursement. CHCI asserts that this dramatic shortfall cannot be recouped from other payers and thus threatens its ability to serve its needy patients.
The issue in this case is whether the productivity screen present in the state plan is valid in light of the statutory cost-based reimbursement provision, which represents Congress's mandate that FQHCs be reimbursed on a cost basis.
All provisions of a state plan must comply with federal statutes, regulations and official issuances of CMS. 42 C.F.R. § 430.10. "`In passing on the validity of a state Medicaid plan under federal law, the court must determine whether the plan is procedurally and substantively in compliance with the requirements of the Federal Medicaid Act and its implementing regulations.'" DeLuca v. Hammons, 927 F.Supp. 132, 133 (S.D.N.Y.1996), quoting Amisub (PSL), Inc. v. Colorado Dep't of Social Servs., 879 F.2d 789, 795 (10th Cir.1989).
It is clear from the text of the statutory reimbursement mechanism, 42 U.S.C. § 1396a(aa)(2), that only "reasonable" costs will be reimbursed — not all costs. Two key disputes between the parties are who gets to determine which costs are reasonable and how they must do so.
The statutory reimbursement mechanism is exactly the same as it was when originally enacted in 1989 — except for a change in punctuation in the last enactment, on December 21, 2000.7 The old statute read:
[T]he State plan shall provide for payment for such services in an amount (calculated on a per visit basis) that is equal to 100 percent of the average of the costs of the center or clinic of furnishing such services during fiscal years 1999 and 2000 which are reasonable and related to the cost of furnishing such services or based on such other tests of reasonableness, as the Secretary prescribes in regulations under [42 U.S.C. § 13951(a)(3)], or, in the case of services to which such regulations do not apply, the same methodology used under [42 U.S.C. § 13951(a)(3)], adjusted to take into account any increase or decrease in the scope of such services furnished by the center or clinic during fiscal year 2001.
What has changed is the placement of one comma, which has moved eight words to the left. The former statute reads:
[The state shall pay FQHCs] 100 percent of the average of the costs ... which are reasonable and related to the cost of furnishing such services or based on such other tests of reasonableness, as the Secretary prescribes in regulations under [Medicare].
Under the old version, it was clear that any definition of or limitation on the reasonableness of costs had to be found in the Medicare statute or regulations.
The current statute reads:
[The state shall pay FQHCs] 100 percent of the average of the costs ... which are reasonable and related to the cost of furnishing such services, or based on such other tests of reasonableness as the Secretary prescribes in regulations under [Medicare].
By shifting the comma eight words to...
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Community Health Center v. Wilson-Coker
...thoughtful opinion, the District Court granted summary judgment in favor of CHC on November 30, 2001. See Cmty. Health Ctr., Inc. v. Wilson-Coker, 175 F.Supp.2d 332, 333 (D.Conn.2001). The District Court first determined that the Medicaid statutory phrase, "reasonable and related to the cos......