Opinion ID: 574343
Heading Depth: 2
Heading Rank: 2

Heading: Scope of the Secretary's Review under the Boren Amendment

Text: 33 Our threshold determination is to ascertain what Congress intended under the Boren Amendment as the proper scope for the Secretary's review of state medical assistance plans. The Secretary argues that Congress intended the Boren Amendment to substantially reduce his function in reviewing state plans; that it eliminated the requirement for detailed federal review of state payment methodologies and substituted a very limited federal review function. The Secretary asserts that under the Medicaid regulations, a state is required only to supply assurances and related information and that he is obligated only to evaluate the reasonableness of the assurances in light of this related information. He further asserts that his role in approving state plan amendments is not to validate through close technical analyses that the states' methodology actually meets the federal requirement of reasonable and adequate payment rates to efficiently and economically operated providers. See 48 Fed.Reg. 56,046, 56,052 (1983) (the federal review procedure is not directed toward judging or validating a State's payment methods and standards from a technical standpoint). The district court agreed with this construction. 34 Under this view of the Boren Amendment, HCFA's review function would be hardly more than ministerial and would not provide any federal oversight into the reasonableness and adequacy of the states' Medicaid reimbursement rates. We do not read so sweeping a circumscription of federal authority and so sharp an escalation in state power in the language of the Boren Amendment. On the contrary, the congressional history reveals Congress' intention only to reduce the Secretary's potentially stifling and excessive federal oversight of state methodologies, West Virginia Univ. Hosps. v. Casey, 885 F.2d at 23, in advance of the submission of a state plan amendment, but not to eliminate entirely his ultimate review function into the reasonableness and adequacy of the states' payment rates. The House Conference Committee Report explaining the Boren Amendment explicitly noted that the final authority of the Secretary to approve or disapprove rates of reimbursement remained intact. The report stated that while the States have discretion to develop the methods and standards on which the rates of reimbursement are based, the Secretary retains final authority to review the rates and to disapprove those rates if they do not meet the requirements of the statute. H.R.Conf.Rep. No. 1479, 96th Cong., 2nd Sess. 154 (1980), reprinted in 1980 U.S.C.C.A.N. 5903, 5944 (emphasis added). 35 In addition, in 1981 when Congress extended the Boren Amendment standard to state reimbursement of hospitals, the committee report accompanying the bill confirmed Congress' expectation that the Secretary would ensure state compliance with the Medicaid statute. See, S.Rep. No. 139, 97th Cong., 1st Sess. 478 (1981), reprinted in 1981 U.S.C.C.A.N. 396, 744 (The committee expects that the Secretary will keep regulatory and other requirements to the minimum necessary to assure proper accountability.... It is expected that the assurances made by the States will be considered satisfactory in the absence of a formal finding to the contrary by the Secretary.) (emphasis added). The Supreme Court has interpreted the foregoing legislative history to mean that, 36 [b]y reducing the Secretary's role in establishing the rates, Congress intended only that the primary responsibility for rates be transferred to the States; the Secretary was still to ensure compliance with the provision. 37 Wilder, 496 U.S. at ----, 110 S.Ct. at 2521 (citations omitted) (emphasis added). Otherwise, none of the state plans would be subject to any requisite federal overview and states would possess absolute power to fix rates of reimbursement. Thus, the Secretary is unduly modest and, indeed, incorrect in concluding that the Boren Amendment emasculated his power to review and approve state payment rate methodologies. Although Congress introduced greater flexibility for states to develop payment rates by limiting federal oversight in the development of state plans, it left undisturbed the Secretary's authority to approve or disapprove state payment methodologies when submitted for review. 38 Regardless of a state's obligation under the Boren Amendment to make assurances to HCFA that it has complied with Medicaid statutory requirements and regulations, HCFA still has the final responsibility to evaluate the assurances to determine whether the State has made a finding to substantiate that the payment rates are reasonable and adequate. 48 Fed.Reg. at 56,05 2. See also id. (HCFA's approval of a state plan amendment indicates that the State has complied with the requirements in the statute and regulations.). Although containment of the soaring cost of health care in this nation is to be commended and encouraged, the effectiveness of the Medicaid program depends, inter alia, on a federal review process which assures payment to providers of reasonable and adequate rates. The Secretary's review obligation under the Boren Amendment is not, as he contends, to focus simply on the states' assurances of compliance without examining the bases underlying those assurances. Otherwise, the states' assurances assume the function of unreviewed finality. 39 The Secretary argues that the regulations do not compel states to submit the findings or the underlying data used to support their assurances. See id. at 56,050. He asserts that this is evidence that he is not required to request and examine such information to ensure that a state's plan reimburses facilities with reasonable and adequate rates. But the Secretary's conclusion does not necessarily follow from his predecessor's declination to adopt such a procedure. Rather, the commentary accompanying the publication of the final regulations explains that HHS did not believe that the reporting of more background data would aid the federal evaluation of an individual state's assurances because the information that a state included might not in itself necessarily be indicative of reasonable and adequate rates. Id. In addition, the commentary points out that, if necessary, HCFA could request additional background information from an individual state in order to complete review of an individual state's assurances. Id. (emphasis added). Thus, states may submit their assurances of reasonable and adequate payment rates without substantiating information, but the Secretary is obliged to ensure that each state complies with the statute by requesting data justifying an individual state's assurances when those assurances are suspect. 40 For the federal review provision of the Medicaid statute to have any meaning, the Secretary must be required to confirm, at the very least cursorily, the validity of states' assurances of reasonable and adequate payment rates. Otherwise, a state deliberately could submit false assurances that its amended plan provided reasonable and accurate rates, or even could submit assurances that were based, unbeknownst to the state, on faulty statistical findings. Under the Secretary's viewpoint, as long as the submitted assurances and related information were facially convincing, he could accept the State's amendment. 5 We perceive no plausible reason to read the Medicaid Act to reduce the Secretary's review of rates fixed by the states to a pro forma procedure that will nearly always result in his automatic imprimatur. New York by Perales v. Sullivan, 894 F.2d at 24. Such a procedure would eviscerate the federal oversight still retained in the Boren Amendment and result effectively in no federal oversight at all. As the Supreme Court has observed, 41 It would make little sense for Congress [under the Boren Amendment] to require a State to make findings without requiring those findings to be correct. In addition, there would be no reason to require a State to submit assurances to the Secretary if the statute did not require the States' findings to be reviewable in some manner by the Secretary. We decline to adopt an interpretation of the Boren Amendment that would render it a dead letter. 42 Wilder, 496 U.S. at ----, 110 S.Ct. at 2518 (emphasis added). We therefore reject the Secretary's attenuated interpretation of his responsibility to review state medical assistance plans under the Boren Amendment. 6 43