Opinion ID: 186194
Heading Depth: 2
Heading Rank: 2

Heading: The Best Interests of Medicaid Recipients

Text: 14 Next, the appellants argue, as in Walsh, that the Medicaid Agreement violates the general statutory requirement that a state Medicaid plan provide such safeguards as may be necessary to assure that eligibility for care and services under the plan will be determined, and such care and services will be provided, in a manner consistent with simplicity of administration and the best interests of the recipients.  42 U.S.C.A. § 1396a(a)(19) (emphasis added). Specifically, they argue that, by making a drug available to Medicaid beneficiaries without prior authorization only if the drug's manufacturer has signed the Non-Medicaid Agreement, the Initiative benefits EPIC and MOMS participants at the expense of Medicaid beneficiaries and therefore is not in the best interests of Medicaid recipients. We reject this argument as well. 15 We first consider whether the Secretary's interpretation of section 1396a(a)(19) is permissible under Chevron and find that it is. The Secretary construes the best interests requirement to allow a state to establish a Medicaid prior authorization program in order to secure rebates on drugs for non-Medicaid populations if a state demonstrates `through appropriate evidence that the prior authorization program will further the goals and objectives of the Medicaid program.' Fed. Appellant's Br. at 29 (quoting 9/18/2002 HHS Letter to State Medicaid Directors at 3). Specifically, the Secretary concluded that by making prescription drugs accessible to the EPIC and MOMS populations, which are closely related to Medicaid populations in terms of financial and medical need, it is reasonable to conclude that these populations (and in the case of the MOMS program, their children) will maintain or improve their health status and be less likely to become Medicaid eligible. Non-Medicaid Approval Letter at 2. Conversely, in the Secretary's view, the failure to implement the Non-Medicaid Agreement could require cuts in the two non-Medicaid programs that will necessarily result in some individuals enrolling in Medicaid, and for others, lead to a decline in their health status and resources that will result in Medicaid eligibility or increased Medicaid expenses and the [i]ncreased Medicaid enrollments and expenditures for newly qualified Medicaid recipients will strain already scarce Medicaid resources in a time of State budgetary shortfalls. Id. at 3. The Secretary's conclusion that a prior authorization program that serves Medicaid goals in this way can be consistent with Medicaid recipients' best interests, as required by section 1396a(a)(19), is reasonable on its face. If the prior authorization program prevents borderline populations in Non-Medicaid programs from being displaced into a state's Medicaid program, more resources will be available for existing Medicaid beneficiaries. Six Justices in Walsh acknowledged that such an effect can be in the best interests of Medicaid beneficiaries. 10 The plurality decision there, authored by Justice Stevens and joined by Justices Souter and Ginsburg, relied on precisely this reasoning in determining that Maine's program served the best interests of Medicaid recipients, see 123 S.Ct. at 1867-68 ([T]here is the possibility that, by enabling some borderline aged and infirm persons better access to prescription drugs earlier, Medicaid expenses will be reduced. If members of this borderline group are not able to purchase necessary prescription medicine, their conditions may worsen, causing further financial hardship and thus making it more likely that they will end up in the Medicaid program and require more expensive treatment.). In her separate opinion, Justice O'Connor, joined by Chief Justice Rehnquist and Justice Kennedy, also suggested that this rationale, although not self-evident, would suffice if supported by facts in the record. 123 S.Ct. at 1881. 16 Having concluded the Secretary's statutory interpretation is permissible, we must next consider whether his specific determination that the Initiative serves valid Medicaid goals is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, 5 U.S.C. § 706(2)(A). We conclude that it is not. The two Michigan Non-Medicaid programs, unlike Maine's program (or the two other Michigan programs for which the Secretary declined to approve a Medicaid prior authorization requirement, see Letter from Medicaid Administrator Scully to DCH Director Olszewski), are open only to borderline populations many of whom may become Medicaid beneficiaries without the support of EPIC and MOMS. See Walsh, 123 S.Ct. at 1878 (O'Connor, J.) (rejecting plurality rationale in part because Maine Program was open to all Maine residents, rich and poor, did not purport to further a Medicaid-related purpose and was not tailored to have such an effect). 11 The EPIC program provides prescription drug benefits to seniors age 65 and older with household income levels below 200% of the federal poverty level. Michigan estimated that 3% of its beneficiaries (the figure used in similar calculations by the neighboring states of Indiana and Wisconsin), or 3,000 persons, would convert to Medicaid without the EPIC program. Based on an average monthly cost per member of $1,220, Michigan calculated that EPIC saves the state Medicaid program $44,147,760 per year. For the MOMS program, which provides prenatal care for women below 185% of the federal poverty level, adolescents under 18, persons eligible under Medicaid for emergency services only and incarcerated beneficiaries, Michigan focused on newborns who would be at risk for neonatal intensive care in the absence of prenatal care. Based on state birth data, Michigan estimated that 3.2% of babies born to the 5,287 MOMS beneficiaries who will not become Medicaid-eligible, or 169 newborns, would require neonatal intensive care in the absence of MOMS prenatal care. Then, based on the average annual cost for neonatal intensive care of $27,461 per infant, Michigan estimated MOMS saved Medicaid $4,646,002 per year. While the record support for Michigan's estimates is less than overwhelming, it is sufficient to persuade us the Secretary's determination of Medicaid-related benefit is not arbitrary, particularly given the absence of any demonstrable significant impediment to Medicaid services from Michigan's prior authorization requirement. See 123 S.Ct. at 1868 (plurality concluding that prior authorization program must not severely curtail[] Medicaid recipients' access to prescription drugs); id. at 1881 (O'Connor, J.) (noting concrete evidence of the burdens that Maine Rx's prior-authorization requirement would impose on Medicaid beneficiaries). 17 The undisputed evidence establishes that the Initiative's prior authorization procedure affords Medicaid beneficiaries reasonable and prompt access to those drugs subject to prior authorization. Under the Initiative, DCH's pharmacy benefits manager immediately authorizes a prior authorization drug if (1) the drug is needed due to a specific medical condition or necessity, such as a drug allergy; (2) the beneficiary has used the drug for several months and changing drugs is medically inadvisable; (3) the beneficiary has tried available drugs in the class and experienced treatment failure or side effects; or (4) the drug works better in combination with other medications the beneficiary uses. Viele Decl. ¶ 46. If the drug fits none of these categories, the request is immediately forwarded to a pharmacist who after further conversation with the physician either authorizes the drug or informs the physician of his right to appeal to a DCH physician. Id. ¶ 47. If the request is not immediately resolved with a DCH physician, the treating physician may prescribe an emergency 72-hour supply. Id. ¶ 48. Perhaps most important, at the end of the prior authorization process, the prescribing physician has the final say as to whether or not the requested drug will be approved provided he can attest to medical necessity. Id. ¶ 49. And the available data confirm that in practice the prior authorization requirement has proved neither burdensome nor overly time-consuming. 12