Opinion ID: 1032019
Heading Depth: 3
Heading Rank: 2

Heading: The Medicaid Act Prohibits the Limitations

Text: Contained in § 14131.10
Approval After the district court entered judgment, CMS approved the SPA the Clinics challenge on appeal. We ordered the parties to brief the effect of this approval on the pending appeal and to address the level of deference, if any, we owed CMS’s approval of the SPA. It is clear that we cannot defer to CMS on any issue about which “Congress has directly spoken,” such that “the intent of Congress is clear.” See Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842 (1984). While the question of statutory interpretation before us is difficult, we cannot fairly say that Congress was “silent or ambiguous with respect to the issue at hand.” Alaska Dep’t of Health, 424 F.3d at 939. Thus, we hold that Chevron deference does not apply, and we therefore do not defer to CMS’s approval of the challenged SPA. In considering whether Chevron deference applies, we must first identify the “precise question at issue.” Chevron, 467 U.S. at 842. As discussed, Medicaid requires states plans to cover, among other things, “rural health clinic services” and “Federally-qualified health center services.” 42 U.S.C. §§ 254b(a)(1), 1396d(l)(1)–(2), 1395x(aa)(2), (4). Both these categories of services incorporate “physicians’ services.” Compare 42 U.S.C. § 1395x(r)(1)–(5) with § 1396d(a)(5)(A). California reads the Medicaid Act as permitting it to reimburse RHCs and FQHCs for only those “physicians’ services” performed by doctors of medicine and CAL. ASS’N OF RURAL HEALTH CLINICS V . DOUGLAS 15 osteopathy. Cal. Welf. & Inst. Code § 14131.10. Physicians’ services provided by other types of physicians, including dentists, podiatrists, optometrists and chiropractors, are no longer covered. Id. CMS implicitly approved California’s interpretation of the Medicaid Act when it approved the Department’s SPA post-judgment. The question we must answer is whether Congress has defined unambiguously the scope of physician’s services for which the Clinics must be reimbursed. As we discuss in the following section, the statutory text provides a clear answer, and, thus, we do not defer to CMS’s approval of the SPA. Our recent decision in Managed Pharmacy Care v. Sebelius, ___ F.3d ___, No. 12-55067 (9th Cir. May 17, 2013), does not alter our view. There, we considered whether reductions in Medi-Cal reimbursement rates were consistent with Medicaid’s requirement “that payments are consistent with efficiency, economy, and quality of care.” 42 U.S.C. § 1396a(a)(30)(A). We described the statutory language there as “amorphous” and “broad and diffuse.” Managed Pharmacy, at 30 (quoting Sanchez v. Johnson, 416 F.3d 1051, 1060 (9th Cir. 2005)). We noted that the statute “uses words like ‘consistent,’ ‘sufficient,’ ‘efficiency,’ and ‘economy’” but “without describing any specific steps a State must take in order to meet those standards.” Id. Thus, the imprecise language in question made the agency’s expertise relevant to determining how to understand and interpret the statute. Id. Here, however, the statutory text does not use vague and amorphous words. Instead, it outlines specifically the types of services provided by RHCs and FQHCs that a state plan must cover. “Congress has directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842. Because “the 16 CAL. ASS’N OF RURAL HEALTH CLINICS V . DOUGLAS intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Id. at 842–43. Because we do not defer to CMS’s approval of the SPA, we must interpret Medicaid to determine whether § 14131.10 conflicts with federal law.
The Medicaid Act requires participating states to cover certain services in their state plans. 42 U.S.C. § 1396a(a)(10) (referring to 42 U.S.C. § 1396d(a)(1)–(5), (17), (21), (28)). These mandatory services include RHC and FQHC services. Id. § 1396d(a)(2)(B)–(C). Specifically, Medicaid requires payment for “rural health clinic services (as defined in subsection (l)(1) of this section) and any other ambulatory services which are offered by a rural health clinic (as defined in subsection (l)(1) of this section) and which are otherwise included in the plan” and “Federally-qualified health center services (as defined in subsection (l)(2) of this section) and any other ambulatory services offered by a Federallyqualified health center and which are otherwise included in the plan.” Id. § 1396d(a)(2). Subsections (l)(1) and (l)(2) refer to 42 U.S.C. § 1396d(l)(1) and (2) of the Medicaid Act, which define RHC and FQHC services by referring to the Medicare Act. Id. § 1396d(l)(1) & (l)(2) (cross-referencing 42 U.S.C. § 1395x(aa) & (aa)(1)). Medicare defines RHC and FQHC services to include “physicians’ services” and services furnished by a physician’s assistant, nurse practitioner, clinical psychologist or clinical social worker. Id. § 1395x(aa)(1), (3). As noted by the district court, the parties agree on this description of the law to this point. They also agree that the CAL. ASS’N OF RURAL HEALTH CLINICS V . DOUGLAS 17 “physicians’ services” referenced in the Medicare statute are the core services that RHCs and FQHCs must provide pursuant to Medicaid and for which they are entitled to reimbursement. But here the parties diverge: They disagree on which source of law—Medicaid or Medicare—defines “physicians’ services” with respect to RHCs and FQHCs. The Clinics predicate their claim on a theory of federal conflict preemption. See Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 204 (1983) (“[S]tate law is pre-empted to the extent that it actually conflicts with federal law. Such a conflict arises . . . where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”) (citations and quotations omitted). The Clinics contend that the expansive Medicare definition of “physicians’ services” should control because in defining RHC and FQHC services, the Medicaid Act refers to the Medicare Act. 42 U.S.C. § 1396d(l)(1) (referring to 42 U.S.C. § 1395x(aa)). Because the Medicare Act defines a “physician” as a doctor medicine or osteopathy, a dentist, a podiatrist, an optometrist or a chiropractor, the Clinics argue that the services provided by these six classes of professionals are those services for which California must reimburse them. Id. § 1395x(r)(1)–(5). Thus, the Clinics argue that federal law requires California to reimburse them for the panoply of “physicians’ services” described in the Medicare Act and therefore, that § 14131.10 conflicts with federal law. The Department, on the other hand, contends that the Medicaid definition of “physicians’ services” controls because there is no basis for referring to the definitions contained in Medicare to determine what Medicaid requires. Medicaid defines “physicians’ services” as “services 18 CAL. ASS’N OF RURAL HEALTH CLINICS V . DOUGLAS furnished by a physician (as defined in section 1395x(r)(1) of this title).” Id. § 1396d(a)(5)(A). Section 1395x(r)(1) defines “physician” as a “doctor of medicine or osteopathy.” Id. § 1395x(r)(1). While the subsequent subsections of § 1395x(r) list the other types of physicians contained in the Medicare Act, including dentists, podiatrists, optometrists and chiropractors, the Medicaid Act provision defining “physicians’ services” refers only to § 1395x(r)(1). Thus, the Department argues, the services provided by doctors of medicine and osteophathy are required services, while those provided by dentists, podiatrists, optometrists and chiropractors are optional and do not require reimbursement to RHCs and FQHCs. We begin our analysis with the text of the statute. Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 296 (2006). The Supreme Court has “stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.” Id. (citation and quotation omitted). “When the statutory language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.” Id. (citation and quotation omitted). First and foremost, we note that Medicaid requires state plans to cover, as a floor, various services listed in 42 U.S.C. § 1396d(a). See 42 U.S.C. § 1396a(a)(10)(A) (requiring state plans to cover the services listed in paragraphs (1) through (5), (17), (21) and (28)). But two provisions are of particular interest. Medicaid specifically requires coverage for: “rural health clinic services (as defined in subsection (l)(1) of this section) and . . . Federally-qualified health center services (as defined in subsection (l)(2) of this section) . . . .” 42 U.S.C. CAL. ASS’N OF RURAL HEALTH CLINICS V . DOUGLAS 19 § 1396d(a)(2). In addition, Medicaid requires coverage for “physicians’ services,” defined as services “furnished by a physician (as defined in section 1395x(r)(1) of this title).” Id. § 1396d(a)(5). By its very terms, then, Medicaid requires state plans to cover both RHC and FQHC services and, separately, it also requires state plans to cover “physicians’ services furnished by a physician.” Id. Next we note that these two provisions refer explicitly to two paragraphs in the definitional section of the Medicaid statute that define “rural health clinic services” and “Federally-qualified health services.” Id. § 1396d(l)(1), (l)(2). Section 1396d(l)(1) states: “The terms ‘rural health clinic services’ and ‘rural health clinic’ have the meanings given such terms in section 1395x(aa) . . . .” Section 1396d(l)(2) provides: “The term ‘Federally-qualified health center services’ means services of the type described in subparagraphs (A) through (C) of section 1395x(aa)(1) . . . .” These statutory commandments are unambiguous. The RHC services and FQHC services that Medicaid requires states to cover are coequal to those services as they are defined in § 1395x(aa) of the Medicare statute. In other words, whatever meaning the Medicare statute gives to those terms, they bear the same meaning in the Medicaid statute. Medicaid imports the Medicare definitions wholesale. Thus, we must determine how Medicare defines the relevant terms. Medicare provides that “rural health clinic services” and “Federally qualified health center services” both include “physicians’ services.” 42 U.S.C. § 1395x(aa)(1)(A), (3). Medicare defines “physician” to include five categories of professionals: doctors of medicine and osteopathy, doctors of dental surgery or dental medicine, doctors of podiatry, doctors of optometry and chiropractors. 20 CAL. ASS’N OF RURAL HEALTH CLINICS V . DOUGLAS Id. § 1395x(r)(1)–(5). It is clear then that the “physicians’ services” that the Clinics provide, and for which they must be reimbursed, include not only the services furnished by doctors of medicine and osteopathy, but also the services furnished by dentists, podiatrists, optometrists and chiropractors. We hold that Medicaid imposes on participating states an obligation to cover “rural health clinic services” and “Federally-qualified health center services,” and Medicaid imports the Medicare definition of those terms. Thus, Medicare unambiguously defines the Clinics’ services to include services performed by dentists, podiatrists, optometrists and chiropractors, in addition to services provided by doctors of medicine and osteopathy. Any alternate reading of the statute would do violence to Medicaid’s command that the terms “rural health clinic services,” “rural health clinic” and “Federally-qualified health center services” shall have the meanings given those terms in Medicare. 42 U.S.C. § 1396d(l)(1), (l)(2). We therefore reverse the district court grant of summary judgment to the Department.