MATTHEW F. LEITMAN, UNITED STATES DISTRICT JUDGE.
In this action, a group of Tennessee physicians who provide primary care services to Medicaid recipients seek to invalidate an administrative rule adopted by the Centers for Medicare and Medicaid Services ("CMS"). The rule relates to a physician's eligibility for enhanced payments for primary care services under Medicaid. The parties have filed cross-motions for summary judgment. (See Pls.' Mot. for Summ. J., ECF #22; Defs.' Cross-Mot. for Summ. J., ECF #29.) For the reasons explained below, the Court
In March 2010, Congress passed, and President Barack Obama signed, comprehensive healthcare reform legislation known as the Affordable Care Act (the "ACA"). The ACA was designed to "increase the number of Americans covered by health insurance and decrease the cost of health care." Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519, 538, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012). The ACA "was not one single health care bill that became law, but two — the initial health care legislation, the Patient Protection and Affordable Care Act (PPACA), and the Health Care and Education Reconciliation Act of 2010 (HCERA), passed almost immediately after the PPACA to amend that legislation." John Cannan, A Legislative History of the Affordable Care Act: How Legislative Procedure Shapes Legislative History, 105 Law Libr. J. 131, 133-34 (2013). Congress passed the PPACA on March 21, 2010, and President Obama signed it into law on March 23, 2010. Congress passed the HCERA on March 25, 2010, and President Obama signed that bill into law on March 30, 2010.
Among other things, the ACA incentives physicians to provide primary care services to vulnerable populations. It does so by authorizing enhanced payments to certain doctors who provide primary care to participants in Medicare and Medicaid. These increased payments are set out in two separate ACA provisions, one for Medicare and another for Medicaid.
The provision that authorizes increased payments for primary care services under Medicare appears in Section 5501 of the PPACA, 42 U.S.C. § 1395l(x) (the "Medicare Payment Statute"). The Medicare Payment Statute authorizes enhanced payments to "primary care practitioners" for "primary care services furnished on or after January 1, 2011, and before January 1, 2016...." It defines the term "primary care practitioner" as a physician (1) "who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine" and (2) "for whom primary care services accounted for at least 60 percent of the allowed charges" under Medicare during a prior period of time determined by the Secretary of Health and Human Services.
The provision that authorizes increased payments for primary care services under
42 U.S.C. § 1396a(a).
After Congress passed the ACA, CMS, an agency within the United States Department of Health and Human Services, adopted rules to implement the Medicare Payment Statute and the Medicaid Payment Statute.
CMS promulgated the final rule implementing the Medicare Payment Statute, 42 C.F.R. § 414.80(a), on November 29, 2010 (the "Final Medicare Payment Rule"). As relevant here, the Final Medicare Payment Rule confirms that a "primary care practitioner" is eligible to receive enhanced Medicare payments for primary care services. 42 C.F.R. § 414.80(b). It further defines "eligible primary care practitioner" as a physician who satisfies two criteria:
42 C.F.R. § 414.80(a)(i). Notably, the Final Medicare Payment Rule does not define the term "primary specialty designation" nor does it establish any criteria for determining whether a physician has one of the specified "primary specialty designations."
CMS promulgated the final rule implementing the Medicaid Payment Statute, 42 C.F.R. § 447.400(a), on November 6, 2012 (the "Final Medicaid Payment Rule"). The Final Medicaid Payment Rule authorizes enhanced Medicaid payments to a physician with one of the specified "primary specialty designation[s]" listed in the Final
42 C.F.R. § 447.400(a). (For ease of reference, the Court will refer to the billing metric in subsection (2) of the Final Medicaid Payment Rule as the "60% Billing Code Threshold.")
CMS explained that it included the 60% Billing Code Threshold in the definition of "primary specialty designation" in part because Congress included a 60 percent allowed-charge threshold requirement in the Medicare Payment Statute:
(Admin. R., ECF #21-2 at Pg. ID 305.)
During the notice and comment period for the Final Medicaid Payment Rule, a number of commentators objected that the 60% Billing Code Threshold was contrary to Congress' intent. These commentators highlighted that Congress included a billing metric in the Medicare Payment Statute but did not include such a provision in the Medicaid Payment Statute. The commentators argued that Congress' omission of a billing metric from the Medicaid Payment Statute under these circumstances demonstrated that Congress intended that the enhanced payments under Medicaid would be available regardless of whether physicians met any billing metric.
The Plaintiffs in this action are physicians who practice primary care medicine in Tennessee. Many of the Plaintiffs serve disadvantaged citizens in rural areas, and all of them participate in the Tennessee Medicaid program. The Tennessee Bureau of TennCare ("TennCare") administers the Tennessee Medicaid program.
In mid-2013, each Plaintiff attested to TennCare that he or she was eligible for the enhanced payments under the Medicaid Payment Statute and the Final Medicaid Payment Rule. Because none of the Plaintiffs are board certified, they attested that they had the required "primary specialty designation" based upon their billing histories. More specifically, they reported that 60 percent of their Medicaid claims for the prior year were for billing codes specified in the Final Medicaid Payment Rule. (See, e.g., Ex. A to Decl. of Britain Sexton (the "Sexton Decl."), ECF #25-1 at Pg. ID 1176-77; Ex. B to Sexton Decl., ECF #25-2 at Pg. ID 1186-87.) In reliance upon Plaintiffs' attestations, TennCare paid Plaintiffs enhanced Medicaid payments for primary care services during 2013 and 2014.
In 2015, TennCare conducted an audit and determined that the Plaintiffs did not qualify for the increased Medicaid payments. (See id.) The audit found that Plaintiffs had not satisfied the 60% Billing Code Threshold. Therefore, TennCare concluded that Plaintiffs lacked the "primary specialty designation" necessary to make them eligible for the enhanced payments.
On October 31, 2016, the Plaintiffs filed this action against the United States Department of Health and Human Services, the Secretary of the United States Department of Health and Human Services, the Centers for Medicare and Medicaid Services, and the Administrator of the Centers for Medicare and Medicaid Services. (See Compl., ECF #1; Am. Compl., ECF #19.) The Plaintiffs allege that the Final Medicaid Payment Rule is invalid and that they were entitled to the enhanced payments for primary care services that they received. (See id.)
Plaintiffs' claims focus on the provision of the Final Medicaid Payment Rule that defines "primary specialty designation" by reference to whether the physician satisfied the 60% Billing Code Threshold. They contend that this aspect of the rule is "contrary to the text, purpose, and legislative history of the Medicaid [Payment Statute], harm[ful] [to] the very physicians whom Congress intended to benefit, and []
Plaintiffs filed a motion for summary judgment and supporting memorandum on May 19, 2017. (See ECF ##22, 23.) Defendants filed a cross-motion for summary judgment and supporting memorandum on July 7, 2017. (See ECF ##29, 29-1.) The Court held a hearing on the motions on October 30, 2017, and subsequently ordered supplemental briefing. (See ECF #39.) Both parties filed supplemental briefs. (See Defs.' Supp. Br., ECF #40; Pls.' Supp. Br., ECF #41.)
"An agency's interpretation of a statute that is reflected in a regulation adopted through notice-and-comment rulemaking is reviewed using the two-step framework outlined in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)." Metro. Hosp. v. U.S. Dep't of Health & Human Servs., 712 F.3d 248, 254 (6th Cir. 2013). At step one of a Chevron analysis, a court asks whether "Congress has directly spoken to the precise question at issue." Chevron, 467 U.S. at 842, 104 S.Ct. 2778. If Congress has spoken to the precise question at issue, then "the reviewing court must give effect to the will of Congress irrespective of any contrary agency interpretation." Mid-Am. Care Found. v. N.L.R.B., 148 F.3d 638, 642 (6th Cir. 1998).
"[I]f the intent of Congress on a matter of statutory meaning is ambiguous, however, the court is to proceed to `step two' of the Chevron inquiry: whether the agency's interpretation is a permissible construction of the statute." Sierra Club v. U.S. E.P.A., 793 F.3d 656, 665 (6th Cir. 2015). At step two, "[t]he court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding." Id. (quotations omitted). Nevertheless, a reviewing court will not defer to an agency's construction if it is "arbitrary, capricious, or manifestly contrary to the statute." Clark Reg'l Med. Ctr. v. U.S. Dep't of Health & Human Servs., 314 F.3d 241, 245 (6th Cir. 2002) (quotations omitted).
The Court begins its Chevron step one analysis by identifying the "precise question" presented by Plaintiffs' challenge to the Final Medicaid Payment Rule. That question is: does a physician's eligibility for enhanced payments for primary care services under the Medicaid Payment Statute relate to whether the physician satisfies any particular billing metric? In answering that question, the Court uses "traditional tools" of statutory interpretation, including "analysis of the statutory text, the structure of the statute, and its legislative history." Sierra Club, 793 F.3d at 665.
As explained below, the relevant tools of statutory construction, taken together, point to one inescapable conclusion: Congress did not intend to link a physician's
The Court starts its analysis of whether Congress has spoken to the precise question presented, as it must, by reviewing "the language of the statute itself." Vander Boegh v. EnergySolutions, Inc., 772 F.3d 1056, 1059 (6th Cir. 2014) (quotations omitted). As noted above, the Medicaid Payment Statute provides that "a physician with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine" is eligible for increased Medicaid payments for primary care services. 42 U.S.C. § 1396a(a)(13)(C) (emphasis added).
Congress' use of the word "designation" signals that eligibility for the enhanced payments is not related to billing metrics. "In common usage, the term `designate' means `to make known directly.'" Richardson v. C.I.R., 125 F.3d 551, 556 (7th Cir. 1997) (quoting Webster's Third New International Dictionary Unabridged 612 (1981)).
Notably, CMS itself has used the term in this manner — i.e., to mean a physician's self-labeling of her specialty irrespective of her billing history. As early as 2001, CMS required doctors enrolling in Medicare to "designate" their primary "specialty(s)" in their applications. (See Pls.' Supp. Br., ECF #41 at Pg. ID 1418-19; 2001 CMS 855I Form, ECF #42-1 at Pg. ID 1446.) And in 2006, CMS again instructed physicians applying to participate in Medicare to "[d]esignate [their] primary specialty and all secondary specialty(s) [sic]." (2006 CMS 855I Form, ECF #42-2 at Pg. ID 1476.) CMS did not suggest on its forms that a physician's "primary specialty designation" was tied to whether the physician satisfied any particular billing metrics.
For these reasons, Congress' use of the term "primary specialty designation" supports the conclusion that Congress did not intend to link a physician's entitlement to enhanced payments to her billing history. As explained below, that conclusion becomes inescapable when "primary specialty
Congress' use of the term "primary specialty designation" in the Medicare Payment Statute confirms that it did not intend that that same term, as used in the Medicaid Payment Statute, would be linked to billing metrics. As noted above, the Medicare Payment Statute provides that "primary care practitioners" are eligible for increased Medicare payments. See 42 U.S.C. § 1395l(x)(2)(A). The Medicare Payment Statute then defines "primary care practitioner" as an individual who satisfies two conditions. First, the individual must be "a physician ... who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine...." Id. (emphasis added). Second, the individual must be someone "for whom primary care services accounted for at least 60 percent of the allowed charges under this part...." Id.
Critically, in the Medicare Payment Statute, Congress lists the physician's "primary specialty designation" and billing history as separate and independent elements of the "primary care practitioner" definition. Congress would not have done so if the term "primary specialty designation" already included a consideration of billing metrics. See TRW Inc. v. Andrews, 534 U.S. 19, 31, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001) ("It is a cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant." (quotations omitted)). Thus, the term "primary specialty designation" as used in the Medicare Payment Statute is distinct and independent from a billing threshold or metric.
There is no reason to believe that Congress intended this same term to have a different meaning in the Medicaid Payment Statute. The provisions were passed at essentially the same time by the same Congress; they each relate to a similar subject matter; and they have the same purpose — incentivizing physicians to provide primary care medical services to vulnerable populations.
Adena is particularly instructive. The court in Adena interpreted a provision of a Medicare statute governing payments to hospitals for treating a significantly disproportionate number of low-income patients. Under that provision, the payment amount was determined in part by the number of patients "eligible for medical assistance under a State plan approved under [Medicaid]." Id. at 178. To determine the meaning of "medical assistance" as used in that phrase, the D.C. Circuit looked to a similar provision in the Medicaid statute that also contained the same phrase, i.e., "eligible for medical assistance under a State plan approved under [Medicaid]." Id. at 180. The court determined that it was proper to ascribe the same meaning to that phrase in both the Medicare and Medicaid provisions because, among other things, they served the same purpose:
Id. (citations omitted) (emphasis added).
In addition, the term "primary specialty designation" in the Medicaid Payment Statute should be construed to have the same meaning as that same term in the Medicare Payment Statute because Congress had the Medicare statute in mind when it enacted the Medicaid Payment Statute. We know that because the Medicaid Payment Statute expressly references the Medicare statute and specifically ties the minimum enhanced payment for primary care services under Medicaid to the minimum enhanced payment for such services under the Medicare statute. See 42 U.S.C. § 1396a(a)(13)(C) (specifying that a state Medicaid plan must provide payments to a "physician with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine at a rate not less than 100 percent of the payment rate that applies to such services and physician under part B of subchapter XVIII of this chapter [i.e., under Medicare]" (emphasis added)). Where, as here, Congress cites the Medicare statute in a provision of the Medicaid statute and then includes in
The Sixth Circuit reached this same conclusion in Owensboro Health, Inc. v. United States Dep't of Health & Human Services, 832 F.3d 615 (6th Cir. 2016). In Owensboro Health, the Sixth Circuit, like the D.C. Circuit in Adena, construed the phrase "medical assistance under a State plan approved under [Medicaid]," as used in the Medicare statute. The Sixth Circuit concluded that the term "medical assistance," as used in the Medicare provision under review, had the same meaning as that identical term in a parallel provision of the Medicaid statute because, among other things, the Medicare provision "specifically refers to the subchapter [of the Medicaid statute] where the definition of medical assistance is found." Owensboro Health, 832 F.3d at 623; see also Adena, 527 F.3d at 180 (construing term "medical assistance under a State plan approved under [Medicaid]" in the Medicare statute to have same meaning as the identical term in parallel provision of the Medicaid statute because, among other things, the relevant provision of Medicare statute "expressly refers to the Medicaid statute"). As Owensboro and Adena make clear, Congress' reference to Medicare in the Medicaid Payment Statute is persuasive evidence that Congress intended the term "primary specialty designation" in the Medicaid Payment Statute to have the same meaning as that term in the Medicare Payment Statute. And since that term in the Medicare Payment Statute clearly does not relate to whether a physician has reached any billing metric, the term as used in the Medicaid Payment Statute also does not relate to a physician's billing history.
The Defendants counter that the Medicare Payment Statute and the Medicaid Payment Statute should not be interpreted together because they were enacted separately. In support of that argument, Defendants primarily rely upon two cases in which courts refused to construe Medicare and Medicaid provisions together. However, those cases are distinguishable.
Defendants first cite Abraham Lincoln Memorial Hospital v. Sebelius, 698 F.3d 536 (7th Cir. 2012). In Abraham Lincoln Memorial Hospital, the plaintiffs contended that a "hold harmless" provision in a Medicaid statute should be interpreted to have the same meaning as a "reasonable cost" provision in a Medicare statute because the provisions had the same purpose. Id. at 554. The Seventh Circuit rejected that argument on the ground that the provisions of the Medicare and Medicaid statutes in question did not share the same language or use identical terms. And the Seventh Circuit distinguished Adena on the basis that the D.C. Circuit ascribed the same meaning to identical terms in the Medicare and Medicaid statutes. See id. The decision in Abraham Lincoln Memorial Hospital thus says little, if anything, about whether identical terms in parallel provisions of the Medicaid and Medicare statutes — like "primary specialty designation" in the Medicaid Payment Statute and the Medicare Payment Statute — should be construed to have the same meaning.
Defendants next cite Community Health Center v. Wilson-Coker, 311 F.3d 132 (2d Cir. 2002), but their reliance on that decision is likewise misplaced. In Community Health Center, the Second Circuit declined to give the terms "reasonable" and "reasonable and related" in a provision of the Medicare statute the same meaning that those terms had under a provision of the Medicaid statute. See id.
In sum, Defendants have failed to persuade the Court that the term "primary specialty designation" as used in the Medicaid Payment Statute should not be construed in light of — and, indeed, identical to — that same term as used in the Medicare Payment Statute.
Application of another canon of statutory construction also supports the conclusion that a physician's entitlement to enhanced payments under the Medicaid Payment Statute is not related to her billing history. This canon provides that "[o]mitting a phrase from one statute that Congress has used in another statute with a similar purpose `virtually commands the ... inference' that the two have different meanings." Prewett v. Weems, 749 F.3d 454, 461 (6th Cir. 2014) (quoting United States v. Ressam, 553 U.S. 272, 276-77, 128 S.Ct. 1858, 170 L.Ed.2d 640 (2008)).
Defendants counter that the Prewett canon does not control here because (1) "although the [Medicaid Payment Statute and Medicare Payment Statute] were enacted closely in time, they are the product of two
As explained above, in Owensboro Health, the Sixth Circuit was called upon to interpret the meaning of "eligible for medical assistance under a State plan approved under [Medicaid]," as used in a Medicare provision. 832 F.3d at 620. As part of that court's analysis, it compared the language of the Medicare provision with language in a parallel provision of the Medicaid provision. And the court did so even though the provisions were enacted at different times in different public acts.
Defendants next contend that the Prewett canon does not apply here because the canon rests on "a hypothesis of careful draftsmanship" that is absent in this case. (Defs.' Memo in Support of Mot. for Summ. J., ECF #29-1 at Pg. ID 1260 (quoting Port Auth. Trans-Hudson Corp. v. Sec'y, U.S. Dep't of Labor, 776 F.3d 157, 164-65 (3d Cir. 2015)).) Defendants argue that the "process that produced both the PPACA and HCERA was [] extraordinarily complicated," and they direct the Court to the Supreme Court's observation in King v. Burwell, ___ U.S. ___, 135 S.Ct. 2480, 192 L.Ed.2d 483 (2015) that, as a result of that process, "`[t]he Affordable Care Act contains more than a few examples of inartful drafting.'" (Id. (quoting King, 135 S.Ct. at 2492.))
This argument is unpersuasive for at least two reasons. First, the process that produced the ACA, even if complicated, reinforces the interconnectedness of the PPACA and the HCERA. As the Court explained above, (1) the two acts were passed and signed into law within days of each other and (2) the HCERA was specifically passed to amend the PPACA.
Second, the Supreme Court in King did not suggest that the inartful drafting in the ACA somehow freed federal courts from applying ordinary rules of statutory construction — like the Prewett canon — to that Act. On the contrary, in King, the Supreme Court attempted to apply an often-significant canon of statutory construction — the canon against construing statutory language as surplusage — and determined that the canon was not controlling because other tools of statutory construction "compel[led]" a conclusion at odds with the one suggested by the canon. King, 135 S.Ct. at 2492-93. In contrast here, the plain language of the Medicaid Payment Statute, its statutory context, and the canons of construction applicable to the provision all support the same conclusion: Congress did not intend that a physician's eligibility for enhanced payments under Medicaid be linked to her billing history. Because other tools of statutory construction do not compel — nor even suggest — a conclusion at odds with application of the Prewett canon, the Court may properly apply the canon here.
Finally, the Defendants argue that the Court should not apply the Prewett canon because the Medicaid Payment Statute and the Medicare Payment Statute "are not parallel" and do not contain the same exact language. (Defs.' Memo in Support of Mot. for Summ. J., ECF #29-1 at Pg. ID 1259.) Defendants stress that the basis for applying the canon "`grows weaker with each difference in the formulation of the provisions under inspection,'" (id. (quoting City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 435-36, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002)), and they highlight that "[t]he Medicare statute applies to `primary care practitioner[s]' while [in contrast] the Medicaid statute applies to a `physician with a primary specialty designation of family medicine.'" (Id. (citations omitted).)
This difference, however, does not preclude the Court from applying the Prewett canon. The similarities between the two provisions — such as their use of the term "primary specialty designation" and their same purpose — counterbalance the difference in language identified by Defendants and support application of the canon. And in any event, while the difference in language may cause the interpretive force of the canon be "weaker" than it may be where the language of the two provisions is identical, Ours Garage & Wrecker Serv., Inc., 536 U.S. at 435-36, 122 S.Ct. 2226, the difference is not an absolute bar to application of the canon. So, while the Prewett canon may not "virtually command" the inference that Congress intended the Medicaid Payment Statute and the Medicare Payment Statute to have different meanings, Prewett, 749 F.3d at 461, the canon nonetheless provides additional support for that conclusion.
In sum, all of the tools of statutory construction relevant here — analysis of the plain language of the Medicaid Payment Statute, a review of the Medicaid Payment Statute as it relates to the parallel Medicare Payment Statute, and application of the Prewett canon — considered collectively, yield the conclusion that Congress did not intend to link a physician's eligibility for enhanced Medicaid payments for primary care services to her billing history.
But Congress did say something about whether a physician's eligibility for enhanced Medicaid payments for primary care services should be linked to the physician's billing history. Indeed, as explained above, by using the term "primary specialty designation" and by omitting a billing metric from the Medicaid Payment Statute, Congress expressed its clear intent that the enhanced Medicaid payments would not be linked to a physician's billing history.
Simply put, the 60% Billing Code Threshold cannot be justified on the ground that Congress' failure to specifically define "primary specialty designation" left some room for CMS to interpret that phrase and to establish eligibility standards for enhanced payments under the Medicaid Payment Statute. While Congress did not specifically identify what CMS could consider when it determined whether a physician has a qualifying "primary specialty designation," Congress did make clear what CMS could not consider in making that determination — a physician's billing history.
Moreover, Defendants' contention that CMS had to "formulate some standard" for assessing whether a physician has a "primary specialty designation" is inconsistent with CMS' own practices. CMS did not formulate any standard for "primary specialty designation" in the Final Medicare Payment Rule. CMS' contention that it had to define this same term in the Final Medicaid Payment Rule thus rings hollow. Likewise, Defendants' contention that CMS included the 60% Billing Code Threshold in the definition of "primary specialty designation" because it needed to establish a "uniform, auditable standard[] for identifying eligible physicians," (Defs.' Memo in Support of Mot. for Summ. J., ECF #29-1 at Pg. ID 1245), is equally unpersuasive. CMS did not establish a mechanism to audit a physician's self-attested "primary specialty designation" in the Final Medicare Payment Rule.
For all of the reasons explained above, the 60% Billing Code Threshold in the Final Medicaid Payment Rule is contrary to Congress' intent, fails at step one of
The final question before the Court is: what is the proper remedy that flows from the Court's determination that the 60% Billing Code Threshold in the Final Medicaid Payment Rule is invalid? Stated another way: should the Court void the entire rule, or may it affirm the provision of the rule tying "primary specialty designation" to a physician's board certification? The Court determines that it must invalidate the rule in its entirety.
"Whether an administrative agency's order or regulation is severable, permitting a court to affirm it in part and reverse it in part, depends on the issuing agency's intent. Where there is substantial doubt that the agency would have adopted the same disposition regarding the unchallenged portion if the challenged portion were subtracted, partial affirmance is improper." State of N.C. v. F.E.R.C., 730 F.2d 790, 795-96 (D.C. Cir. 1984); see also Am. Petroleum Inst. v. Envtl. Prot. Agency, 862 F.3d 50, 71 (D.C. Cir. 2017) (explaining that a court will "sever and affirm a portion of an administrative regulation only when [it] can say without any substantial doubt that the agency would have adopted the severed portion on its own" (quotations omitted)).
Here, the Court cannot "say without any substantial doubt" that CMS would have adopted a rule establishing board certification as the sole path to a "primary specialty designation." In fact, during the notice and comment period, CMS said that it would not have adopted such a rule. CMS explained that it "would not limit specified providers to physicians who are Board certified." (Admin. R., ECF #21-2 at Pg. ID 305; emphasis added.) CMS' statement precludes severance and affirmance of the portion of the rule establishing board certification as the sole path to a "primary specialty designation." See Nat'l Ass'n of Mfrs. v. NLRB, 717 F.3d 947, 963-64 (D.C. Cir. 2013) (declining to sever and affirm portion of rule because "we know" that agency would not have adopted that portion standing alone), overruled on other grounds by Am. Meat Inst. V. USDA, 760 F.3d 18 (D.C. Cir. 2014).
Furthermore, under the "substantial doubt" standard, a court should sever and affirm only if the provisions at issue "operate[] entirely independently of one another." Am. Petroleum Inst., 862 F.3d at 71 (quoting Davis Cty. Solid Waste Mgmt. v. EPA, 108 F.3d 1454, 1459 (D.C. Cir. 1997)). If a court is "not sure" that the provisions are "wholly independent," then the non-challenged provision of the rule cannot be severed, and the court must invalidate the rule in its entirety. Id.
The Court is "not sure" that the 60% Billing Code Threshold and the board certification provision operate wholly independently of one another. Structurally, these provisions are presented as alternative paths to a "primary specialty designation," and eliminating one while retaining the other would substantially alter the scope of physicians qualifying for the enhanced payments. More importantly, throughout the rulemaking process, CMS considered both provisions together, and it never suggested that it could achieve Congress' intent of expanding primary care services by adopting board certification as the lone path to a qualifying "primary specialty designation." (See Admin. R., ECF #21-2 at Pg. ID 301-21; Admin. R., ECF #21-10,
Defendants counter that in answering the remedy question, the Court should should "appl[y] a prejudicial error rule," under which "a mistake that has no bearing on the ultimate decision or causes no prejudice shall not be the basis for reversing an agency's determination." (Defs.' Supp. Br., ECF #40 at Pg. ID 1406-07; quotations omitted).) Defendants contend that the Court should leave intact the provision of the rule equating board certification with "primary specialty designation" because (1) CMS could have validly established board certification as the only path to a "primary specialty designation" and (2) Plaintiffs cannot show that they were prejudiced by CMS' decision to offer the 60% Billing Code Threshold as a second, alternative path to a "primary specialty designation." (See id.) But the "prejudicial error rule" that Defendants invoke does not govern the question of whether provisions of an administrative rule are severable. Indeed, neither of the "prejudicial error rule" cases that Defendants rely upon involve challenges to final administrative rules.
Accordingly, because the Court has "substantial doubt" that CMS would have adopted the Final Medicaid Payment Rule with board certification as the sole path to a qualifying "primary specialty designation," the Court will not sever and affirm the board certification provision of the rule. Instead, the Court will vacate the Final Medicaid Payment Rule in its entirety and remand to CMS for further proceedings.
Finally, because the Court is invalidating the Final Medicaid Payment Rule in toto, the Court concludes TennCare is not entitled to recoup enhanced payments made to the Plaintiffs on the ground that Plaintiffs were ineligible for those payments under the rule.
For the above reasons,
42 U.S.C. § 1395l(x).
