case is admittedly unclear but the legislative history and congressional intent here is actually very clear and very straightforward for you giving up on the chevron argument in the first minute of your presentation no of standard tools of statutory construction the step one analysis is really determining congressional intent and if that can be deterred i thought chevron was all about whether in step one the language is ambiguous or not with respect your honor no the question in chevron step one is whether congressional intent is clear and although the statutory language is obviously the first stop and the most important one at determining congressional intent where as here the statutory language on its face is unclear there is necessary recourse to the other normal tools of statutory construction and here the structure of the statute itself is really what is telling because in acting the congress really did two important and very closely related and complimentary things the first thing that it did which is really not disputed in this case is that it made indian health service facilities eligible to receive medicaid funds what that meant essentially was that indian health service facility services that were provided to indigent or to be more precise medica eligible native americans were being shifted by this statute from the indian health service budget to the medicaid budget that was the first and most important  innovation of the ikea now if that had been all that the statute did it would have shifted significant costs from the federal government to the states because the federal government provides one hundred percent of the funding of indian and the states and federal government share the medicaid costs so if all that that congress had done was shift those costs from the i h s budget to the medicaid budget it would have shifted significant expenses to the states and  the record is very clear that congress did not want to shift new costs to the states i doing this and that's why in an acted the portion of the statute that is at issue here today th special one hundred percent reimbursement rate and it's sad the purpose of this one hundred percent reimbursement rate is to ensure that the first part of the statute the shift from the indian health services budget to the medicaid budget does not result in new cost to the states so for the services that are being new newly being made eligible for medicaid funding those services will be also eligible for special one hundred percent medicaid reimbursement rate so that no new costs are imposed on the states those two portions of the statute i think it exactly together now the only remaining question then for this court to answer is prior to the an act made of the who was paying for medicaid services that were not performed by the indian health service but were  performed by private providers to whom a patient had been referred and the answer that question is also very straightforward and relatively simple because as this court acknowledged in mcnabb and as our opponents also acknowledge the indian health service has always applied the pair of last resort rule to any referrals and what that means is that all the services that issue in this case are medicaid eligible services any service that is a medicaid eligible service is automatically not paid for by the indian health service under its referral program because the indian health services referral program again as this court pointed out in mcnabb is the payer of last resort and is specifically the payer of last resort with respect to medicaid so as long as an individual receiving a service is eligible for medicaid it is the medicaid program that has the responsibility to pay for those services was true before ikea was and acted that is still true today the statute did not really affect those referred services in any respect i don't like to hear your clear presentation of the legislati that when i looked at it i didn't see anything quite so clear is there anything in the legislative history you can point to that would say it was congress's intent not to lessen the burden on the states i understand that they didn't want to raise to the burden of payment on the state but i didn't see anything suggesting that they they wanted it to be exactly even if they were just cancelling out the additional burden that that would happen by the shift the medicaid  well i think you are correct your honor that there is no specific statement that congress did not that in addition to not wanting to impose any new burden  there is no specific statement that says and by the way we also don't want to last in the states for and i think we have to take what congress said at face value it would be very odd if congress in fact intended to lessen the burden for it instead of saying that to say all we want to do well to say that what we are doing is being sure that we don't impose any new birth it's sort of  pregnant negative if you will the fact that what congress actually said is we have we are in acting this one hundred percent rate in order to avoid imposing new costs in the case that that is the purpose if congress wanted to enact this special one hundred percent rate in order to actually lessen the state's burden one would have expected it to say so and it didn't do that there's nothing and then for the first  no state for decades even attempted to recover one hundred percent for these types of services but in one thousand nine i believe is when this started at least for arizona and it went through the normal administrative process so that the first line payer who dealt with arizona did make payments based upon arizona's representation that these services were eligible for the one hundred percent rate but that went through the normal administrative procedures and what was that decision if you will that payment was ultimately reversed by by the secretary's proxy which is the departmental of appeals board here  prepared by regional office and then that was ultimately rejected that that is there any history of policy interpretations that are consistent with what you're now saying is the correct interpretation of the statute yes there is and without going into too much detail there's a tremendous amount of detail of that history in the decision of the department of appeals board which is in the excerpts of record interpretation of the secretary has been consistent the first interpretation was issued i believe within a year of the enactment of the ikea and the departmental peals board decision goes through a series of communications specifically with arizona there also communications with others that are consistent in presenting the secretary's interpretation that in order to qualify for the special one hundred percent reimbursement rate the indian health service facility has to be responsible for the provision of the services and in fact an important part of the da bees decision points out the fact that it really would have been grossly unfair for arizona to claim to have relied on the single memorandum when it's surrounded by other memoranda that make clear the secretary's decision and frankly to be fair even that nine hundred ninety seven memorandum on which arizona places so much weight it does not say anything that is inconsistent with the secretary's opinion opinion here and it would be absurd to think that that the secretary would announce a change of its twenty year long can see distant policy and issue that has a nationwide application and involves hundreds of millions of dollars annually in a memo by a regional director that's to one state to one region that doesn't even address the entire nation and addresses a question that was presented about a very narrow issue of emergency transportation just doesn't make sense to me i'm sorry this interpretation is it's based on that was services is not the most well named program but what what the contract services provide is really a referral program coupled with a payer of last resort  provision so what what it means is that the the i h s essentially has a list of providers that have agreed to a certain rate cap on their services and the i h s will make referral s to these providers and at the same time will agree to be the payer of last resort with respect to those services now with respect to the services that are at issue in this case the pair of last resort provision never comes into play the i never pays for these services and the reason is that we're talking about medicaid and we're talking about medicaid eligible individuals it is clear from mcnab that the hierarchy is that medicaid pays first so none of the services that are actually provided in this case are in fact contract health services because contract health services are only when the i h s functions as the pair of last resort situation there might be an indian health service facility that has say ten physicians who work there and if you were a patient those ten physicians would essentially be identical to you in their functioning but it might be that for fiscal reasons or because some of them only work part time or for other types of reasons that some of those physicians are employees of the indian health service and some of those positions are independent contractors hired by the indian health service they would function in a centrally an identical way but they would be paid or hired in a different way some of them would be employees some of them would be contractors but their work would be treated the same certainly for purposes of medicaid reimbursement and for other purposes in the sense that no matter whether you are service was performed by an indian health service employee or by an independent contractor in this sense the indian health service would be responsible for providing the services if it were covered by medicaid the indian health service would be all medicaid and it would be subject to the one hundred percent reimbursement these services received through and i guess was still the way yes and it went why is the services provided in the service facilities used and thirteen ninety six well the reason the reason that there's a difference there is that there are there's a very narrow class of categories of services that are in fact in the in health service still of the services that might not be provided in the fall four walls of an indian health service hospital there might be an outpatient  clinic for example that indian health service employees or independent contractors with indian health service doctors go to a different side and provide services for which the indian health service is responsible those are services provided through an indian health service facility they're not services provided in but are they treated differently in terms reimbursement no they are treated the saying in terms of reimbursement because they are services provided through an indian health service facility on the by contrast the services we're talking about here are performed by providers who have almost no relationship certainly no independent contractor no employee relationship with the indian health service they're private contractors and the only reason the indian health services is even in the picture is that the patient you know walk into an indian health service facility in health service facility said you know we can't won't or won't perform that service but if you go down the block there's a private provider who can do it and will be pair of last resort but that doesn't really apply to you because you have medicaid and that's the only connection i thought there was a little more connection in fact and that's that well the the indian also has to be eligible according to arizona to to charge only certain rates but again that's a vast difference between say an independent contractor whose work is the work of the indian health service the indian health is responsible for it in every sense of the word as opposed to you know what might occur in the legal profession to i might refer a client to a colleague and simply have an arrangement that the colleague will charge a certainly hourly rate to to that counsel what is the government's position with respect to the circuit case north dakota versus centers for well the we respectfully request that you not go into conflict with that decision which held at chevron step one phase that the the issue that you raised first in this argument your honor it it's said that the that the legislative language was unclear but it still held that the legislative intent was i think object based on a very dubious frankly in terms of a proper chevron analysis well with respect we agree with the chevron analysis in the sense that these other ways of determining congressional intent can and should be looked at step one of the chevron analysis and at the legislative intent is clear at step one using those usual tools that what congress wanted to do was an act of one hundred percent reimbursement rate enormous position is the language is unambiguous no nos are strike a strike that is is  you know i can't leave the podium without saying that to the extent this court disagrees and we are in chevron step to land it is obvious should be obvious that the secretary's interpretation is a reasonable one that you know may proceed thank you you may please the court good morning my name is dawn writings and i represent the pelleas in this matter the arizona health care cost containment system which is the state medicaid agency of arizona and its director today i'd like to cover two main points time permitting first i'd like to explain why we believe the language of the statute its context and structure all support arizona's interpretation of the statute discuss why the legislative history of this statute and in particular the burden shifting language which i believe we agree is the principal and key statement of legislative intent in the legislative history supports the state's interpretation and not the federal government's and in the process i'll try to respond to some of the points raised in the reply brief and today to the arguments now analysis of the statute begins with its language and you hear that phrase standing alone but from that point of departure what the federal government does is leaps in their brief and i again i believe in oral argument to the legislative history we dispute that analysis of the legislative history and i'll address that in a moment but before reaching the legislative history it is critical to complete the analysis of the language of the statute using the tools of statutory construction that the supreme court and this court have laid down in its decisions by looking at the language and the structure and the context and the purpose of the statute let me begin by explaining why we believe that arizona's interpretation is faithful to and we have to presume that in congress intended that these two separate statutory provisions meant distinct things but what services was congress referring to in these two separate provisions well congress was not interdependent components the first component of the i h s system was what was called direct care those who swear services provided by or provided in the the i h s facilities themselves so just to take an example with a native american child that's playing outside in breaks or arm is taken to a facility the arm is sat she's treated and goes home that was a direct care service provided by the  could not provide the full range of services that native americans needed which is why this second component of the i h s system was so very critical at that time and still today and that is the preferred service system would refer to native americans to contract care providers so for example when a patient presents with help chest pains there's no cardio facilities their equipment the patient to be stabilized referred to another hospital where that person could be treated by nine i just provided under a contractual arrangement with the facility and then the contract that we were second peak component of that i guess health care delivery system they had to be because the i chose facilities and cells simply were not equipped to provide the full range of services so the  congress was legislating against was this this two components system of direct here and for its services and i think in assigning meaning to the phrases the congress used in the statute provided in and we see ved through it's important that the interpretation account for this system as it existed at the time that congress was legislating and that is precisely what arizona's interpretation is it is natural to read the phrase provided in services provided in states interpretation i think accounts for these two distinct phrases in a way that makes sense that is natural and accords with the system as it existed at the time the congress was legislating as described in the house report and the government's interpretation does not moving beyond that particular statute it's also helpful we believe to look at the medicaid statute itself title nineteen of the social security act because their congress has repeatedly defined categories of medicaid services and what services are eligible for various medicaid benefits and what are not and aren't sure potations consistent with language the congress has used in other sections of the medicates that you can we describe some of those in pages twenty three to twenty four of our brief and we think that those examples show that congress knew very well the difference between a service that was provided  in a change in approach compared to the last twenty years what's your response i think we have a slightly different view of the last twenty years your honor not let me just leave that now i mean that the suggestion  i think that in response to judge sand's question that arizona has simply sat idly by for some twenty or twenty five years doing nothing and then suddenly a state employee thought they had a great idea to try to get some some more federal medica dollars it's simply not correct the fact is that over the last twenty years arizona has consulted with and twice litigated with the agency over the federal government's responsibility for services that are provided hundred eighty six litigation had already commenced between arizona and the agency over the issue of who was responsible for paying for services indigent native americans who received care outside of the i h s system and in fact in that very case the parties were litigating over the meaning of an earlier version of the alternate resource rule that my colleague described the return of the alternate resource rule in a simply bringing it to your attention as part of the factual record in the public record of the disputes and their origins which were in the federal government and specifically arizona over who is responsible for non i services now that was in issue that the agency issued a notice of proposed rule making where they propose to a man or change the language of that alternate resource rule the reason that they cited for doing that was that they had received adverse decisions from th and i should say was actually the nine hundred ninety final rule where the agency cited the may have an arizona decisions as a basis for making that change that new rule set off a new flurry of  debate and discussion and arguments between the agency in arizona much of that is chronicled in the administrative record of this case not the not all of that is in the excerpts of record but certainly there are a number of letters and correspondence going back and forth in the ninety nine after the agency said that it didn't it took the position that referred services were not covered under the terms of this memo so that's that's that's that's the sort of high level summary of some of the back and forth that's fallen on but i think if it demonstrates nothing else it demonstrates that arizona has vigorously disagreed with the federal agencies view of its responsibility for native american health care outside of the system and what the relative responsibilities w so to conclude with with the language of the statute we believe that that both the language and the structure in the context of the health care delivery system as it existed at the time the proposed contrasting language in the statute itself and other provisions of the medicaid act also supports the state's interpretation of the statutory language that services received through do encompass the referred services which were a critical component of the health care delivery system hundred seventy six when congress was legislating if i may i'd like to move with my remaining time and address the legislative history side of the equation and specifically the burden shifting language that counsel in this court have focused on already this morning we all agree that at a minimum the objective was to avoid shifting a federal responsibility to the states so the question we agree is what was the federal government's responsibility in one nine hundred seventy six for referred services provided to two native americans who sought care first from  the legislative history as this court is recognizing they can they have speaks expansively about the federal responsibility for native american health care not as an exclusive responsibility and i want to be clear for this panel that it's not our position that the federal government is responsible for all native american health care but certainly for native americans who have elected to remain on reservations who have continued to choose the i guess as their provider of health care the federal responsibility is paramount now in this case the federal government claims that states were paying a portion of this preferred services care before nine hundred seventy six you know i'm not in a position to say that on behalf of arizona arizona was a paying it because arizona was not in the medicaid program but the federal government certainly has not put in any evidence that a single other state paid a single claim for a single will they they say that the alternate resource rule which is a federal regulation required states to pay a portion of this prior to one thousand nine hundred seventy six and that medicaid was secondary page twelve of their reply brief i want to focus on this they cite two regulations they say forty two c f r one thirty six point sixty one and then they cite its predecessor regulations forty response to this court's decisions to make and they have in arizona and we all agree on that the predecessor regulation thirty six point twenty three did predate the mcnay have the stations and in fact in its mcnab decision which we think is quite important in this case this court trace the evolution of that alternate resource rule and i want to call this court's attention to page seven hundred ninety of its decision the mcnabb at page seven hundred ninety this court stated quote the alternate resource rule is promulgated already with the requirements of the administrative procedures act a p a close quote at that point then went on and said quote notice of the proposed  rulemaking was published in the federal register in one nine hundred seventy six close quote it then cited to the point in the federal register at that went on to say that this court wrote quote the final regulation was published in the federal register hundred seventy eight and has been included in the code of federal regulations since one nine hundred seventy nine close quote so as this court found in mcnabb and as best as we can determine the specific regulations that were cited in that in that reply brief were not promulgated until after the union health care act was enacted now i want to hasten to add that it is my understanding that prior to one nine hundred seventy six the federal agency did have an internal policy or a policy position that i just had the option of assuming residual payer status to medicaid and i want to be very clear about that but to the extent that the government relying on the regulations cited in its brief and discussed in nickname ad i'm not aware of a predecessor regulation to the ones that did not become final until after the indian health care act  now if if if one if one agrees with the formulation of page sixteen of the federal agencies reply brief that the proper question is whether the i h s paid for referred services for native americans with access to medicaid when the ice cia was an active i don't think we can agree with that formulation because as we know i i and large native american simply did not have access to medicaid at that time so for that reason we believe that this court can actually completely avoid all of this alternate resource argument altogether on the basis that native americans as a rule were not enrolled in medicaid to have access to medicaid services and on that basis states could not have been paying for those services but if this court agrees that perhaps there was a native american somewhere didn't medicaid because because they they did not have access to the medicaid program that you not have access to providers and because the i h s was paying was taken care of their medical services either directly or through the referred services program that i described so like again we do think that that the court does not have to resolve the alternate resource argument here because the legislative history is so clear but if it does would have paid for all the referred services unless i mean perhaps a native american was a person of means and pay themselves or maybe had another insurance plan which was primary so there would have certainly been a situations where that would have thank you your honor what we have here with respect to what was going on prior to nine hundred seventy six is a lack of direct evidence my posing counsel has come up here and said the government presented no evidence that the government was paying and of course he has presented no evidence as to whether the states were or were not paying we don't have direct evidence what we do have is we know what the rules were and there was a very long explanation up here that is essentially  incorrect on our brief on page twenty five we site to fifty five federal register four six zero eight which explains the history of the payer of last resort rule and traces it all the way back to nine rules and paid entirely for referred services even when the state was responsible i don't think that's a responsible supposition for him or for this court to make i think the logical inference is that the indian health service had a payer of last resort rule and that it followed that rule meaning that it was the pair of last resort and that if the native american was medicaid eligible and covered by medicaid his referred services would have to be paid for by medicaid first and therefore not by the indian agreement that congress is intent with the one hundred percent reimbursement rate was to only have that rate apply to services that were at the time being paid for by the federal government if  was following its own regulations which we believe is the hypothesis the court should follow then the federal government was not paying for referred services for medicaid covered native americans at the time the ikea was inaccurate and it would therefore be contrary to congressional intent to apply the one hundred percent rate in this circumstance thank you kelsi your time has expired thank you he's just dorgan will be submitted for decision and we will hear argument