Opinion ID: 598999
Heading Depth: 2
Heading Rank: 2

Heading: The Findings Requirement

Text: 18 In Wilder the Supreme Court was faced with the question of whether a health care provider could bring an action under 42 U.S.C. § 1983 to challenge a state's Medicaid reimbursement methodology. In a close decision, the Court ruled that the Medicaid Act, and specifically the Boren Amendment, did provide health care providers an enforceable right to the adoption of reimbursement rates that are reasonable and adequate to meet the costs of an efficiently and economically operated facility that provides care to Medicaid patients. Wilder, 496 U.S. at 509-10, 110 S.Ct. at 2517. 19 As the Court noted, this right is not merely a procedural one that rates be accompanied by findings and assurances (however perfunctory) of reasonableness and adequacy; rather the Act provides a substantive right to reasonable and adequate rates as well. Id. at 510, 110 S.Ct. at 2517. The right to findings, in the Court's opinion, means the right to accurate findings: It would make little sense for Congress to require a State to make findings without requiring those findings to be correct. Id. at 514, 110 S.Ct. at 2520. 20 How does a state ensure its findings comply with the Boren Amendment? The Wilder Court interpreted the statute as requiring a State, in making its findings, to judge the reasonableness of its rates against the objective benchmark of an 'efficiently and economically operated facility' providing care in compliance with federal and state standards while at the same time ensuring 'reasonable access' to eligible participants. Id. at 519, 110 S.Ct. at 2523. In following the Court's instructions, however, we are faced with the difficulty that neither the Act, the Secretary, or the Court define the terms efficient or economical nor do they require the states to do so. Id. at 507, 110 S.Ct. at 2516. 21 Given this definitional abyss, there predictably has been considerable litigation as to a state's obligations. Lett v. Magnant, 965 F.2d 251, 253 (7th Cir.1992). One of the more widely cited circuit decisions on the findings requirement is Amisub (PSL), Inc. v. Colorado Department of Social Services, 879 F.2d 789 (10th Cir.1989), cert. denied, 496 U.S. 935, 110 S.Ct. 3212, 110 L.Ed.2d 660 (1990). The Tenth Circuit interpreted the findings requirement as encompassing a three-part determination: 22 The plain language of federal Medicaid law mandates the State Medicaid Agency, at a minimum, to make 'findings' which identify and determine (1) efficiently and economically operated hospitals; (2) the costs that must be incurred by such hospitals; and, (3) payment rates which are reasonable and adequate to meet the reasonable costs of the state's efficiently and economically operated hospitals. 23 Id. at 796. 24 Amisub was written before Wilder and dealt with hospital reimbursement rates. Many federal courts, however, have found nothing in Wilder that would undermine the earlier case's validity. See, e.g., Temple Univ. v. White, 941 F.2d 201 (3d Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 873, 116 L.Ed.2d 778 (1992) (citing Amisub test). We find no discrepancy in possibly applying the Amisub test to nursing homes, as the Boren Amendment addresses hospital services, nursing facility services, and services in an intermediate care facility for the mentally retarded. 42 U.S.C. § 1396a(a)(13)(A). The Amisub approach satisfied the Tenth Circuit and deserves consideration, but we do not adopt it as a mandatory test. As the Tenth Circuit recognized, a state is free to create its own method for arriving at the required findings. 879 F.2d at 797. We agree. 25 In particular, we reject the inference that a state must identify a reasonable sample of particular existing nursing homes as paradigms of efficiency; such a task may be impossible. Also, the results of such an effort might lead to more controversy and a waste of money better spent on patients. Perhaps an effort to determine the median cost of operating nursing homes that pass all regulatory inspections while retaining private patients at the same level of care possibly could have some value, but those matters are for the state to solve by combining its economic expertise with its practical knowledge. A state must determine in its own way what it would consider to be efficient and economic nursing facilities and must make findings which establish a nexus between the costs of operating those facilities and the proposed reimbursement rates under the state plan. Pinnacle Nursing Home v. Axelrod, 928 F.2d 1306, 1314 (2d Cir.1991). 26 We now consider whether the state agency made the proper findings.