Opinion ID: 765833
Heading Depth: 2
Heading Rank: 2

Heading: Application of the Boren Amendment to Out-of-State Hospitals

Text: 18 For services rendered to Medi-Cal patients, California reimburses its in-state hospitals differently from the way it reimburses out-of-state hospitals. Belshe argues the Boren Amendment permits this because Congress intended to limit payments under Boren to in-state hospitals, and applying Boren's requirements to out-of-state hospitals would impose a large, unintended administrative burden on the states. We reject Belshe's legislative intent argument because it runs counter to the plain meaning of the Boren Amendment and the statute's legislative history. We reject Belshe's administrative burden argument because we find it unpersuasive.
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20 Statutory interpretation begins with the language of the statute. See United States v. Ron Enters., Inc. , 489 U.S. 235, 241 (1989). When the plain meaning of a statutory provision is unambiguous, that meaning is controlling. Id. at 242. To determine the plain meaning of a statutory provision, we examine not only the specific provision at issue, but also the structure of the statute as a whole, including its object and policy. See Green v. Commissioner, 707 F.2d 404, 405 (9th Cir. 1983). If ambiguity exists, we may use legislative history as an aid to interpretation. See id.; Mt. Graham Red Squirrel v. Madigan, 954 F.2d 1441, 1453 (9th Cir. 1992). 21 In setting forth the reimbursement requirements, the text of the Boren Amendment refers to hospital services, without limiting such services to those provided by in-state hospitals. 42 U.S.C.A. S 1396a(a)(13)(A) (West 1992). Belshe argues that Congress's failure to refer to out-of-state hospitals in the Amendment points to Congress's intent to exclude them. We disagree. In fact, it is the converse of this argument that is persuasive. Because the statute does not distinguish between in-state and out-of-state hospitals, the plain meaning of the statute is that Congress did not intend to differentiate between the two. 22 This interpretation is buttressed by the fact that elsewhere in the Medicaid statute (though not in the Boren Amendment) Congress creates distinctions for in-state institutions. For example, when a state plan includes medical assistance for services in an intermediate care facility for the mentally retarded, Congress requires periodic on-site inspections of each such facility within the state.  42 U.S.C.A. S 1396(a)(31)(B) (West 1992). 23 Belshe refers to the definitions section of the Medicaid statute, 42 U.S.C. S 1396r-4(b)(1)(A), which sets forth the requirements for a hospital to be eligible for DSH payments. That section defines hospitals eligible for DSH payments by comparing them to the mean of hospitals receiving medicaid payments in the State. Belshe argues this language proves that the DSH payment requirement in the Boren Amendment applies only to in-state hospitals. This argument fails. 24 Section 1396r-4(b)(1)(A) provides that states administering their Medicaid programs are required to determine whether a hospital qualifies for DSH payments by referring to the mean number of Medicaid patients served by hospitals in their state. This language does not say that only hospitals within the state can qualify for DSH payments; instead, it uses in-state hospitals to calculate a benchmark for the number of Medicaid patients served to determine whether a hospital (in-state or out-of-state) qualifies for DSH payments. Hospitals serving a number of Medicaid patients at least one standard deviation above the mean qualify as DS hospitals. 42 U.S.C. S 1396r4(b)(1)(A). Thus, for example, a hospital in Arizona serving a number of Medicaid patients one standard deviation above the mean of hospitals serving Medicaid patients in California would meet this criterion for qualification, and could therefore seek DSH payments from California for treating MediCal patients. Or, alternately, an Arizona hospital qualifying for DSH payments under the Arizona Medicaid program because of comparison with the mean of Arizona hospitals would similarly meet this criterion. 25 No court, other than the district court in this case, has directly interpreted the language of the Boren Amendment with regard to its applicability to out-of-state hospitals. Two courts have concluded by implication, however, that the Boren Amendment applies to out-of-state hospitals. In West Virginia University Hospital, supra, 885 F.2d at 29, the Third Circuit concluded that Pennsylvania's reimbursement rate for a nearby West Virginia hospital that served many Pennsylvania Medicaid patients violated the requirements of the Boren Amendment. The court scrutinized the statutory language for its relevance to out-of-state hospitals: 26 Nothing in section 1396(a) speaks in terms of a dichotomy in rate reimbursement built on state boundary lines; it nowhere suggests that state boundary lines act as points of demarcation in reimbursement for the delivery of healthcare. Under the federal regulations . . . state boundary lines, except for administrative responsibility, bear an insignificant role, if any, with respect to the actual delivery of health care in a program designed on a national level to aid the poor in a highly mobile society. 27 Id. 28 In addition, a district court in this circuit has concluded by implication that the Boren Amendment applies to out-of-state hospitals. See Multicare Medical Center v. Washington, 768 F. Supp. 1349, 1401 (W.D. Wash. 1991) (holding that Washington must make DSH payments to out-of-state border hospitals that serve Washington's Medicaid recipients). These court decisions, while not directly on point, lend support to our conclusion that the Boren Amendment unambiguously applies to out-of-state hospitals. 29
30 Because the Boren Amendment is unambiguous, we need not examine its legislative history. See Green , 707 F.2d at 405. Nevertheless, given the importance of the issue and the present view of the Secretary and HCFA, we shall examine the statute's legislative history. See id. at 407. 31 Congress passed the Boren Amendment to give states greater flexibility in calculating reasonable costs and in containing the continuing escalation of those costs.  Folden, 981 F.2d at 1056. The Senate Report comments that, under the Boren Amendment, [s]tates would be free to establish rates on a statewide or other geographic basis, without reference to medicare principles of reimbursement. S. Rep. No. 97-139, 97th Cong., 1st Sess. 478, reprinted in 1981 U.S. Code Cong. & Admin. News 744. As the district court correctly observed, this statement suggests that Congress was not assuming rates would be set under the Boren Amendment according to state boundaries. 32 The Senate Report also states that [t]he flexibility given the States is not intended to encourage arbitrary reductions in payment that would adversely affect the quality of care. Id. This statement demonstrates Congress's underlying concern for maintaining quality health care, a goal which would be compromised if states could reduce their rates arbitrarily. Congress was also attentive to the broad purpose of the entire Medicaid program, which was to provide health care to low- income individuals. See West Virginia Univ. Hosp., 885 F.2d at 23 (explaining that the states' discretion was limited by Congress's desire to ensure that Medicaid recipients have access to services and that disproportionate share hospitals are not discouraged from providing care to Medicaid patients due to inadequate financial support). 33 As the district court wisely concluded, [i]nasmuch as the Boren Amendment was a sophisticated attempt to fulfill [the goal of quality care] while at the same time encouraging efficiency, it makes little sense to remove out-of-state hospitals from that worthy rubric. 34 Belshe asks us to defer to HCFA's current interpretation of the Boren Amendment, which interpretation it propounded in an amicus curiae brief filed in the district court. In that brief, HCFA took the position that the Boren Amendment does not apply to out-of-state hospitals. We reject Belshe's request. We may not defer to HCFA's interpretation where Congress has unambiguously addressed the issue. See Chevron, U.S.A., Inc. v. N.R.D.C., Inc., 467 U.S. 837, 843 (1984).
35 Belshe also argues that applying the Boren Amendment to out-of-state-hospitals would impose too high an administrative burden on the states. This argument relates to Congress's intent in enacting, and then repealing, the Boren Amendment. Belshe contends that the repeal of the Boren Amendment and its replacement with a simpler public notice and comment requirement is evidence that Congress thought applying the Boren Amendment to out-of-state hospitals was too burdensome on the states. We reject this argument. Belshe fails to identify any statements by Congress raising the concerns she cites. Moreover, common sense dictates that, if Congress were concerned about the administrative burden imposed on the states by applying the Boren Amendment to out-of-state providers, instead of repealing the Amendment, it would simply have added the words in-state to the hospital services language of the Amendment. Congress's actions, therefore, do not imply that the Amendment's repeal was prompted by a concern for the burden of complying with the Amendment's provisions for payments to out-of-state hospitals. 36 Nevertheless, Belshe argues Congress must have meant to exclude out-of-state hospitals from the Amendment because it would be impossible for a state to anticipate, and establish reimbursement rates for, all out-of-state hospitals where its Medicaid patients might receive care. Compounding the difficulty, Belshe argues, would be the necessity of determining whether the operational costs incurred by out-of-state facilities meet the efficiently and economically operated facility standard of the Boren Amendment. 37 The weakness in Belshe's argument is that she presumes the Boren Amendment requires states to apply the same methodology and administrative requirements to out-of-state hospitals that states apply to in-state hospitals. This is not so. As the Third Circuit noted in West Virginia University Hospital, [w]e neither hold nor suggest that Pennsylvania must apply precisely the same methodology to . . . out-of-state hospitals as it does for its in-state hospitals if there is a rational basis for departure. 885 F.2d at 29. The key is that[t]he methodology applied . . . be rational, not arbitrary or whimsical. Id. 38 In the case of out-of-state hospitals providing only occasional emergency care, a state could develop a reasonable methodology for reimbursement different from its in-state provider methodology. Indeed, as the district court observed, some of the impracticalities Belshe cites would not necessarily apply to out-of-state hospitals. For example, many of the regulations Belseh cites as being too difficult to apply, such as uniform cost reporting and period audits, apply only to participating providers, which are hospitals enrolled in a state's Medicaid program. See 42 C.F.R.S 447.253(g). An out-of-state hospital might not be enrolled in such a program, although it could be. As the district court noted in reviewing the State of Georgia's administration of its Medicaid program, some out-of-state hospitals are enrolled in Georgia's Medicaid program and Georgia reimburses these hospitals at the same rates it uses to reimburse in-state, enrolled hospitals. With regard to non-enrolled out-of-state hospitals, however, Georgia reimburses them at rates consistent with the other state's rates under the Medicaid program or at a specified percentage of allowable costs. 39 In sum, although the Boren Amendment has extensive reimbursement requirements, a factor that may well explain why Congress chose in 1997 to repeal it, the Amendment nonetheless permits states some flexibility in developing their reimbursement methodologies. We conclude, as did the Third Circuit in West Virginia University Hospital, that a state need not use the same rate-setting scheme for non-participating out-of-state hospitals as it does for in-state hospitals. Although the administrative burden on states in reimbursing out-of-state providers under the Boren Amendment may still be significant, this burden does not provide evidence that Congress did not intend to apply the Amendment's requirements to out-of-state hospitals.