A federal appeals court on Friday ordered a new hearing for Arizona community health centers claiming the state Medicaid system is wrongly denying reimbursement for chiropractic, dental, optometric and podiatric care.
A three-judge jury of the US 9th Circuit Court of Appeals overturned a lower court decision that dismissed the Arizona Alliance for Community Health Centers case against the Arizona Health Care Cost Containment System, the provider state Medicaid.
In his view, region judge Richard R. Clifton commended the district court judge and the attorneys on both sides “for their skillful handling of the unusually complex issues presented by this case.” But he said the decision to dismiss the case was wrong and ordered the case to be returned to the district court for a new hearing.
A health centers attorney declined to comment on the case on Friday until he could speak to his clients. AHCCCS officials said they were still studying the ruling and would not be able to comment until next week.
The case was filed in 2019 by health centers, federally qualified health centers that claimed to have “a federal law applicable to reimbursement for FQHC services, which include the services of its dentists, podiatrists, optometrists and chiropractors (among others other).”
They claimed that AHCCCS chiropractors “categorically excluded” from coverage and unduly limited reimbursement for adult dental, podiatric and optometric services, everything they said is mandatory under Medicaid and the state plan for Medicaid.
But AHCCCS attorneys said the agency “does not, as the plaintiffs claim, ‘categorically excludes’ any dentistry, podiatry, optometry or chiropractic services” – it includes such services, the agency said, but only covers these. limited services “.
The district court judge agreed with the health centers that AHCCCS cannot exclude such services, but said the law does not prohibit them from limiting coverage. And he dismissed the claim that chiropractors were excluded, noting that service coverage for patients under the age of 21 is included in the state plan.
He dismissed the case, sparking the appeal of the health centers.
The appeals committee disagreed with the district court judge, finding that “Arizona’s categorical exclusion of adult chiropractic services violates … the Medicaid Act.” Clifton’s view continued to reject AHCCCS’s interpretation of the Medicaid Act, which, he said, “would allow a state to categorically exclude all coverage for all FQHC services.”
Finally, the appeals court said the lower court misapplied “Chevron deference,” a legal principle that requires judges to generally refer to an administrative agency’s interpretation of the rules it applies to the case.
AHCCCS said its restrictions had been approved by the regional administrator for the Centers for Medicare and Medicaid Services (CMS), the federal office that oversees state plans for Medicaid and their enforcement.
But the appeals court said that in order for Chevron to apply, there must be a clear record of the decision-making process that went to approval. Clifton said the record “lacks evidence of CMS reasoning” about the Arizona rules.
“We conclude that the record ahead of us does not state that Chevron’s deference applies to Arizona’s restrictions on adult dentistry, optometry and podiatry services,” wrote Clifton.
While the Supreme Court “has long held that ‘nothing in the statute (Medicaid) suggests that participating States are required to fund every medical procedure’” included in the mandatory categories, CMS must justify the reason for the decision to exclude coverage. Clifton said no.
The case was referred to the district court to consider, among other things, whether there is sufficient evidence to use the Chevron doctrine in this case.