Hoag Mem’l Hosp. Presbyterian v. Price, ___ F.3d ___, No. 15-56547, 2017 WL 3379000 (9th Cir. Aug. 7, 2017)
A group of California hospitals providing outpatient services to Medicaid beneficiaries challenged the U.S. Department of Health and Human Services’ approval of a state plan amendment (SPA) retroactively implementing a 10% rate reduction for outpatient services to Medi-Cal beneficiaries. The Secretary of HHS found the SPA adequately complied with section 1902(a)(30)(A) of the Social Security Act. That provision requires reimbursement rates to be sufficient to enlist enough providers so that care and services are available “at least to the extent that such care and services” were available to the general population in the geographic area. The Secretary deemed that provision satisfied based on evidence indicating that the SPA would not significantly impact the level of Medi-Cal beneficiary utilization of hospital outpatient services. The district court granted summary judgment for the Secretary. The court ruled that, under Managed Pharmacy Care v. Sebelius, 716 F.3d 1235 (9th Cir. 2013), section 30(A) required substantive results—not specific procedures—thus the Secretary’s approval of the SPA without data comparing the level of services available to Medi-Cal beneficiaries to that of the general public was permissible.
The Ninth Circuit reversed, holding that the Secretary’s understanding of section (30)(A) conflicted with the statute’s plain language and was not entitled to Chevron deference. The Court also determined that Managed Pharmacy Care did not apply because that case considered broad and diffuse language in section 30(A) involving “efficiency, economy, and quality of care,” not the specific statutory provision requiring that the level of access to care and services be equal to or greater than that of the general population. Because the Secretary did not consider any comparative-access data reflecting the general population’s level of access to care and services, the Secretary’s approval of the SPA was held to be arbitrary and capricious.
Thomas Watson
htwatson@horvitzlevy.com
Horvitz & Levy LLP
3601 W. Olive Ave., 8th Fl.
Burbank, CA 91505
818.995.0800
horvitzlevy.com
