Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 1 of 10
`
`MISSOURI DEPARTMENT
`OF SOCIAL SERVICES
`221 West High Street
`Jefferson City, Missouri 65101
`
`Plaintiff,
`
`v.
`
`Civ. No. 1:20-cv-3611
`
`UNITED STATES DEPARTMENT
`OF HEALTH AND HUMAN SERVICES
`200 Independence Avenue, SW
`Washington, DC 20201
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
`__________________________________________
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`Defendants.
`__________________________________________)
`
`and
`
`ALEX M. AZAR II
`Secretary of the United States Department
`of Health and Human Services,
`in his official capacity,
`200 Independence Avenue, SW
`Washington, DC 20201
`
`COMPLAINT
`
`INTRODUCTION
`
`1.
`
`The Medicaid program, codified at Title XIX of the Social Security Act (“SSA”),
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`is “a cooperative endeavor in which the Federal Government provides financial assistance to
`
`participating States to aid them in furnishing health care to needy persons.” Harris v. McRae, 448
`
`U.S. 297, 308 (1980).
`
`2.
`
`The Missouri Department of Social Services (“DSS,” “Missouri,” or “the State”),
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`seeks review of a final administrative decision by the United States Department of Health and
`
`
`
`MISSOURI DEPARTMENT
`OF SOCIAL SERVICES
`221 West High Street
`Jefferson City, Missouri 65101
`
`Plaintiff,
`
`v.
`
`Civ. No. 1:20-cv-3611
`
`UNITED STATES DEPARTMENT
`OF HEALTH AND HUMAN SERVICES
`200 Independence Avenue, SW
`Washington, DC 20201
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
`__________________________________________
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`)
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`)
`)
`)
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`)
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`)
`)
`)
`)
`)
`)
`)
`Defendants.
`__________________________________________)
`
`and
`
`ALEX M. AZAR II
`Secretary of the United States Department
`of Health and Human Services,
`in his official capacity,
`200 Independence Avenue, SW
`Washington, DC 20201
`
`COMPLAINT
`
`INTRODUCTION
`
`1.
`
`The Medicaid program, codified at Title XIX of the Social Security Act (“SSA”),
`
`is “a cooperative endeavor in which the Federal Government provides financial assistance to
`
`participating States to aid them in furnishing health care to needy persons.” Harris v. McRae, 448
`
`U.S. 297, 308 (1980).
`
`2.
`
`The Missouri Department of Social Services (“DSS,” “Missouri,” or “the State”),
`
`seeks review of a final administrative decision by the United States Department of Health and
`
`
`
`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 2 of 10
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`Human Services (“HHS”) Departmental Appeals Board (“Board”) disallowing $487,351 in federal
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`reimbursement for contraceptive drugs provided to Medicaid-eligible individuals during calendar
`
`years (“CY”) 2009 and 2010. The HHS Departmental Appeals Board acts for the Secretary in
`
`disputes involving Medicaid disallowances. See 42 U.S.C. § 1316(e)(2)(A).
`
`3.
`
`Most of a State’s medical assistance expenditures are reimbursable at the “federal
`
`medical assistance percentage,” which in Missouri’s case was approximately 73 percent in 2009
`
`and 2010. However, Section 1903(a)(5) of the SSA provides that HHS shall reimburse a State for
`
`90 percent of the amount expended which is “attributable to the offering, arranging, and
`
`furnishing . . . of family planning services and supplies.” 42 U.S.C. § 1396b(a)(5).
`
`4.
`
`In the decision for which review is sought, the Board concluded that DSS was not
`
`entitled to reimbursement at 90 percent for contraceptive drugs which it could not establish were
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`prescribed “for a family planning purpose,” even though there was no question that all of the
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`questioned expenditures were for contraceptives.
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`5.
`
`Section 1903(a)(5) of the Social Security Act does not support a distinction between
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`reimbursement for contraceptives expressly prescribed for family planning purposes and those that
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`may have been prescribed for other purposes. Moreover, any such requirement would be contrary
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`to sound medical practice, significantly intrude on patient privacy, and impede access to
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`contraception, contrary to congressional intent.
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`6.
`
`The HHS Departmental Appeals Board’s decision upholding the disallowance of
`
`$487,351 in federal funds is arbitrary, capricious, an abuse of discretion, and not in accordance
`
`with either the text or the purpose of the Medicaid statute. The Court should set aside the Board’s
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`decision and the underlying disallowance.
`
`
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`2
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 3 of 10
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`JURISDICTION AND VENUE
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`7.
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`This action arises under Section 1116 of the Social Security Act, 42 U.S.C.
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`§ 1316(e)(2)(C), and Section 10 of the Administrative Procedure Act, 5 U.S.C. § 704. This Court
`
`has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1361.
`
`8.
`
`Venue is proper under 28 U.S.C. § 1391(e)(1) and 42 U.S.C. § 1316(e)(2)(C).
`
`PARTIES
`
`9.
`
`Plaintiff Missouri Department of Social Services is the “single State agency”
`
`responsible for administration of the State of Missouri’s participation in the federal Medicaid
`
`program. See 42 U.S.C. § 1396a(a)(5).
`
`10.
`
`Defendant United States Department of Health and Human Services (“HHS”) is the
`
`federal agency responsible for administering the Medicaid program.
`
`11.
`
`Defendant Alex. M. Azar II is the Secretary of HHS and is responsible for the
`
`overall administration of the agency. He is sued in his official capacity.
`
`STATUTORY AND REGULATORY BACKGROUND
`
`The Medicaid Program and Medicaid Funding
`
`12. Medicaid is a cooperative federal-state program in which the federal government
`
`provides financial assistance to participating States in connection with the provision of health care
`
`to lower-income individuals and families, referred to as “medical assistance.” Under the federal
`
`Medicaid statute (Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq.), States are
`
`entitled to federal reimbursement for their expenditures on medical assistance pursuant to a “state
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`plan” approved by the Centers of Medicare & Medicaid Services (“CMS”) within HHS. See id.
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`§ 1396a-b.
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`3
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 4 of 10
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`13.
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`The federal government’s share of a State’s expenditures under the Medicaid
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`program is called “federal financial participation” (“FFP”). 42 C.F.R. § 400.203; 45 C.F.R. § 95.4.
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`States are entitled to FFP for a specified percentage of the actual costs they incur in providing
`
`health care to their Medicaid-eligible populations. See 42 U.S.C. § 1396b(a).
`
`14.
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`For most Medicaid program expenditures for healthcare services and supplies, the
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`federal government reimburses States at the “federal medical assistance percentage” (“FMAP”),
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`which varies by State based on per capita income and can range from a statutory minimum of 50
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`percent to a maximum of 83 percent. Id. §§ 1396b(a)(1), 1396d(b).
`
`15.
`
`Using the statutory formula, Missouri’s FMAP was initially calculated to be 63.19
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`percent for fiscal year (“FY”) 2009 and 64.51 for FY 2010. 72 Fed. Reg. 67,306 (Nov. 28, 2007);
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`73 Fed. Reg. 72,052 (Nov. 26, 2008). However, it was temporarily increased to 73.27 percent
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`through December 31, 2010, pursuant to the American Recovery and Reinvestment Act of 2009
`
`(“ARRA”). See 74 Fed. Reg. 38630 (Aug. 4, 2009).
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`The 90 Percent Match Rate for Family Planning Services and Supplies
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`16.
`
`The Medicaid statute authorizes FFP at rates higher than the FMAP for some
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`expenditures. For example, States receive FFP at the rate of 90 percent for state Medicaid program
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`expenditures “attributable to the offering, arranging, and furnishing . . . of family planning services
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`and supplies.” 42 U.S.C. § 1396b(a)(5); 42 C.F.R. § 433.10(c)(1).
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`17.
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`Section 1905(a)(4)(C) of the Social Security Act requires state Medicaid programs
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`to furnish “family planning services and supplies . . . to individuals of child-bearing age (including
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`minors who can be considered to be sexually active) who are eligible under the State plan and who
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`desire such services and supplies.” 42 U.S.C. § 1396d(a)(4)(C).
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`4
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 5 of 10
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`18.
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`These sections were added to the Social Security Act in 1972. See Social Security
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`Amendments of 1972, Pub L. No. 92-603, 86 Stat. 1462. The legislative history makes clear that
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`such services are to be “voluntary and confidential.” S. Rep. 92-1230, at 67 (1972).
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`19.
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`Neither the Social Security Act nor federal regulation define family planning
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`“services and supplies.” See 42 C.F.R. § 440.40(c) (reserving definition).
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`20.
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`However, since 1988, Section 4270.B.1 of the State Medicaid Manual (“SMM”)
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`has provided that “pharmaceutical supplies and devices to prevent conception” are eligible for FFP
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`at the 90 percent rate.
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`21.
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`In the following subsection, the Manual goes on to state that FFP at the 90 percent
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`rate is not available for “costs related to” procedures “performed for medical reasons,” such as a
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`hysterectomy or removal of an intrauterine device due to infection. That section explains that
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`“[o]nly items and procedures clearly provided or performed for family planning purposes may be
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`matched at the 90 percent rate.” SMM § 4270.B.2.
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`The CMS Financial Management Review Guide for Family Planning Services
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`22.
`
`CMS has periodically published a “Financial Management Review Guide”
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`(“Review Guide”) governing “reviews of claims for family planning services.” There are versions
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`of the Review Guide from 1991, 2002, and 2010. The 2002 Review Guide was the version
`
`applicable during calendar year (“CY”) 2009, the first year at issue in this matter, and the 2010
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`Review Guide was the version applicable during CY 2010, the second year at issue.
`
`23.
`
`Both applicable versions of the Review Guide include a review of the statute, the
`
`legislative history, CMS guidance to States and regional offices on family planning issues, and
`
`HHS Departmental Appeals Board decisions involving claims for family planning.
`
`
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`5
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 6 of 10
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`24.
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`Both versions of the Review Guide state that the process for determining which
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`services qualify as family planning “is based on and driven primarily by procedure code.” The
`
`appendices include lists of the Current Procedural Terminology (“CPT”) and Healthcare Common
`
`Procedure Coding Systems (“HCPCS”) codes1 that should “always” be considered a family
`
`planning service and those which are “never” a family planning service. The Review Guides also
`
`note that there are some services which “may or may not represent” a family planning service.
`
`25.
`
`The 2010 Review Guide Appendices designate the following CPT/HCPCS codes
`
`as “always considered family planning” services: contraceptive cervical caps (A4261),
`
`contraceptive intrauterine devices (J7300), female condoms (A4268), male condoms (A4267) and
`
`contraceptive pills (S4993). The Guide states that “[a]ll claims paid under Category III codes [i.e.,
`
`codes categorized as “always considered family planning”] can be properly reimbursed at 90-
`
`percent FFP.”
`
`26.
`
`The Review Guides note that “[t]he majority of the pharmaceuticals covered as a
`
`family planning service at 90-percent FFP are medications used for birth control or for the
`
`stimulation of ovulation in infertile women. Other medications covered at 90-percent FFP are
`
`those required incidental to or as a part of a procedure done for family planning purposes (e.g.,
`
`pain medications following a sterilization procedure).”
`
`FACTUAL BACKGROUND
`
`27. Missouri, for decades, has claimed all contraceptive pharmaceuticals for
`
`reimbursement at the 90 percent federal match rate for family planning. The State uses
`
`
`1 CPT (also referred to as HCPCS Level I) is a standardized coding system developed by the
`American Medical Association and used by health care providers to describe medical, surgical,
`and diagnostic services provided. HCPCS Level II is used to identify products, supplies, and
`services not included in the CPT codes.
`
`
`
`6
`
`
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 7 of 10
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`contraceptive therapeutic class codes to determine if a drug claim qualifies as a contraceptive
`
`pharmaceutical.
`
`28.
`
`Upon information and belief, this is the process used by virtually all States in
`
`claiming federal financial participation for the cost of contraceptive drugs.
`
`29.
`
`From October 2012 through August 2013, the HHS Office of Inspector General
`
`(“OIG”) reviewed Missouri’s family planning drug claims made in CYs 2009 and 2010. See HHS
`
`OIG, Missouri Did Not Always Correctly Claim Costs for Medicaid Family Planning Drugs For
`
`Calendar Years 2009 and 2010, A-07-12-01118 (January 2014).
`
`30.
`
`The OIG did not follow the methodology set forth in the CMS Financial
`
`Management Review Guide for family planning services. Instead, the OIG auditors selected a
`
`random sample of prescribed contraceptive drug claims and then contacted the prescribing
`
`providers to determine “whether the drug on the sampled claim was prescribed for a family
`
`planning purpose.” Id. at App. B at 2.
`
`31.
`
`In its final audit report issued January 28, 2014, the OIG questioned 23 of the 107
`
`sampled family planning drug claims it reviewed because the OIG’s investigation of the
`
`prescribing providers and the medical records showed that the contraceptive drug had been
`
`prescribed for other than family planning purposes, or because the OIG was not able to determine
`
`the purpose of the prescription. All 23 questioned claims were for contraceptive drugs prescribed
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`to females of child-bearing age.
`
`32.
`
`Based on an extrapolation of the 23 claims in the sample, the OIG concluded that
`
`Missouri “received at least $487,351 in unallowable Federal reimbursement” with the respect to
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`the two years under review, because “the State agency’s internal controls automatically classified
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`7
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 8 of 10
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`contraceptive drugs as family planning services even in cases when the medication in question
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`may have been prescribed for another (non-family planning) purpose.” Id., at 3.
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`33.
`
`By letter dated March 2, 2018, CMS disallowed $487,351 in FFP based on the OIG
`
`audit findings for the family planning prescription drugs Missouri claimed during CY 2009 and
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`CY 2010. Ex. 1. The disallowance amount represents the difference between 90 percent federal
`
`financial participation and reimbursement at the federal medical assistance percentage.
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`34.
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`DSS appealed the disallowance.
`
`The Departmental Appeals Board Disallowance Decision
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`35.
`
`On October 13, 2020, the HHS Departmental Appeals Board issued a decision
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`sustaining the disallowance of $487,351 for contraceptive drugs Missouri claimed at the 90 percent
`
`FFP rate for family planning during CYs 2009 and 2010. See Missouri Dept’s of Soc. Servs., DAB
`
`No. 3019 (2020). In its decision, the Board agreed with HHS that “prescription contraceptive
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`drugs are ineligible for 90 percent FFP unless the drugs were prescribed for a family planning
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`purpose[.]” Id. at 8. Accordingly, the Board upheld the disallowance because Missouri “did not
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`proffer documentation or other evidence verifying that the sample claims . . . were for
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`contraceptive drugs that had been sought or prescribed for a family planning purpose.” Id. at 11.
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`36.
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`Because diagnosis codes are not submitted as part of a prescription for
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`contraceptives, the Board’s decision has ongoing implications for the State’s claiming practices.
`
`COUNT I
`(Administrative Procedure Act: Violation of the Medicaid Statute and Regulations and
`Arbitrary and Capricious Agency Action)
`
`Paragraphs 1 through 36 above are incorporated herein by reference.
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`37.
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`8
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 9 of 10
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`38.
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`The Defendants’ decision that “a prescription contraceptive drug is reimbursable at
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`the 90 percent rate only if it was provided for a family planning purpose” is arbitrary and
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`capricious, an abuse of discretion, and contrary to law.
`
`COUNT II
`(Administrative Procedure Act: Violation of the Medicaid Statute and Regulations and
`Arbitrary and Capricious Agency Action)
`
`Paragraphs 1 through 38 above are incorporated herein by reference.
`
`39.
`
`40.
`
`The Defendants’ decision upholding the disallowance of Missouri’s CYs 2009 and
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`2010 family planning drugs claims—which was based on the Defendants’ position that
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`prescriptive contraceptive drugs are reimbursable at the 90 percent rate only if provided for a
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`family planning purpose—is arbitrary and capricious, an abuse of discretion, and contrary to law.
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`REQUEST FOR RELIEF
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`WHEREFORE, Missouri requests that this Court grant the following relief:
`
`A.
`
`Set aside HHS Departmental Appeals Board Decision No. 3019 and the underlying
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`disallowance upheld by that decision;
`
`B.
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`Permanently enjoin Defendants and their agents, employees, successors in office,
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`and all persons acting in concert or participation with them, from disallowing the $487,351 at
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`issue;
`
`C.
`
`D.
`
`E.
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`Award Missouri such declaratory and other relief as may be just and proper;
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`Award Missouri the costs of this action, including attorneys’ fees; and
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`Retain jurisdiction over this action for such additional and supplemental relief as
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`may be required to enforce the order and judgment.
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`9
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`Case 1:20-cv-03611-ABJ Document 1 Filed 12/11/20 Page 10 of 10
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`Respectfully submitted,
`
`/s/ Caroline M. Brown
`Caroline M. Brown (D.C. Bar No. 438342)
`Rebecca E. Smith (D.C. Bar No. 166610)
`Brown & Peisch PLLC
`1233 20th Street NW, Suite 505
`Washington, DC 20036
`(202) 499-4258
`cbrown@brownandpeisch.com
`resmith@brownandpeisch.com
`
`Attorneys for Missouri Department of Social
`Services
`
`
`December 11, 2020
`
`
`
`10
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