FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM; ANTHONY D. RODGERS, in his official capacity as Director of the Arizona Health Care Cost Containment System, Plaintiffs-Appellees, v. MARK B. MCCLELLAN, in his official capacity as administrator of the Centers for Medicare and Medicaid Services; MIKE LEAVITT, No. 05-16386 in his official capacity as Secretary of the US Department of D.C. No. CV-03-02445-PGR Health and Human Services; THE CENTERS FOR MEDICARE AND OPINION MEDICAID SERVICES; THOMAS A. SCULLY, Administrator, in his official capacity as administrator of the Centers for Medicare and Medicaid Services; DEPARTMENT OF HEALTH & HUMAN SERVICES; TOMMY G. THOMPSON, in his official capacity as Secretary of the US Department of Health and Human Services, Defendants-Appellants. Appeal from the United States District Court for the District of Arizona Paul G. Rosenblatt, District Judge, Presiding
15641 15642 ARIZONA HEALTH CARE v. MCCLELLAN Argued and Submitted May 15, 2007—San Francisco, California
Filed December 3, 2007
Before: Diarmuid F. O’Scannlain and Sandra S. Ikuta, Circuit Judges, and Leonard B. Sand,* Senior Judge.
Opinion by Judge Ikuta
*The Honorable Leonard B. Sand, Senior United States District Judge for the Southern District of New York, sitting by designation. ARIZONA HEALTH CARE v. MCCLELLAN 15645
COUNSEL
Jonathan H. Levy, Civil Division, U.S. Department of Justice, Washington, D.C., for the defendants-appellants.
Charles A. Miller and Donald J. Ridings Jr., Covington & Burling, Washington, D.C., for the plaintiffs-appellees.
OPINION
IKUTA, Circuit Judge:
This appeal requires us to resolve conflicting statutory interpretations of § 402(e) of the Indian Health Care Improve- ment Act, 42 U.S.C. § 1396d(b), which requires the federal government to pay 100 percent of certain Medicaid costs for services “which are received through an Indian Health Service facility.”1 The Arizona Health Care Cost Containment System
1 42 U.S.C. § 1396d(b) states, in pertinent part: Notwithstanding the first sentence of this section [explaining how the “Federal medical assistance percentage,” the federal share of Medicaid expenses, will be calculated for each state], the Federal medical assistance percentage shall be 100 per centum with respect to amounts expended as medical assistance for services which are received through an Indian Health Service facility whether operated by the Indian Health Service or by an Indian tribe or tribal organization (as defined in section 1603 of Title 25). 15646 ARIZONA HEALTH CARE v. MCCLELLAN (“Arizona”), the state entity that administers Arizona’s Med- icaid program, interprets this language as requiring the federal government to reimburse states for all health care services provided to Medicaid-eligible Indians under referral agree- ments between health care service providers and the Indian Health Service (“IHS”). By contrast, the Health Care Financ- ing Administration (“HCFA”),2 the federal entity that admin- isters Medicaid, interprets this language as requiring the federal government to reimburse states only for health care services provided by “an IHS facility which offers, is respon- sible for and bills Medicaid for the services provided.” The district court held that Arizona’s interpretation was correct and granted Arizona’s motion for summary judgment. We have jurisdiction pursuant to 28 U.S.C. § 1291 and now reverse.
I
As part of its unique government-to-government relation- ship with American Indian Tribes and Alaska Native corpora- tions, the federal government provides health care services to roughly 1.9 million American Indian and Alaska Native peo- ple. See 25 U.S.C. § 1601; Lincoln v. Vigil, 508 U.S. 182, 185 (1993); IHS Fact Sheet (2007), http://info.ihs.gov/Files/ IHSFacts-Jan2007.doc (last visited November 7, 2007). Since 1955, IHS, now a federal agency within the Department of Health and Human Services (“HHS”), has been responsible for providing these services. From its inception, IHS had sought to accomplish its objectives primarily by building and staffing its own facilities on or near Indian communities. Am. Indian Policy Review Comm’n, Report on Indian Health 94, 105 (Comm. Print 1976). Geographical, logistical, and finan- cial limitations made it impossible for IHS to provide the full 2 Although the Health Care Financing Administration (“HCFA”) was renamed the Centers for Medicare & Medicaid Services, 66 Fed. Reg. 35,437 (July 5, 2001), we will use the term HCFA, which was the name of the federal agency during the time period at issue here. ARIZONA HEALTH CARE v. MCCLELLAN 15647 range of medical services in this manner, and IHS routinely entered into different types of agreements with other health services providers to fill in gaps in IHS services. Id. at 105.
In 1965, the Medicaid program was signed into law. Med- icaid, a joint federal and state medical welfare program, pro- vides for state Medicaid agencies to reimburse health care providers for the cost of covered services delivered to Medic- aid beneficiaries. 42 U.S.C. §§ 1396, 1396a. The federal gov- ernment then reimburses the states for all or part of those expenditures. 42 U.S.C. §§ 1396b, 1396d(b). The rate at which the federal government reimburses the states for Med- icaid expenditures, called the “federal medical assistance per- centage,” or “FMAP,” typically ranges from 50 to 83 percent. See 42 U.S.C. § 1396d(b). The federal government recalcu- lates the FMAP reimbursement rate annually based on each state’s per capita income. See id. §§ 1396d(b), 1301(a)(8)(B). Although Medicaid-eligible Indians were entitled to use non- IHS service providers to the same extent as other citizens of a state, the degree to which Indians actually benefitted from the newly established Medicaid programs is “unclear.” Report on Indian Health, supra, at 85.
In 1976, Congress found that many IHS facilities were “in- adequate, outdated, inefficient, and undermanned,” and enacted the Indian Health Care Improvement Act (“IHCIA”) to “implement the Federal responsibility for the care and edu- cation of the Indian people by improving the services and facilities of Federal Indian health programs and encouraging maximum participation of Indians in such programs.” IHCIA, Pub. L. No. 94-437, 90 Stat. 1400 (1976). Title IV of the IHCIA contained numerous provisions aimed at upgrading the overall quality of IHS facilities. See IHCIA §§ 401-03.
Relevant here, § 402(a) of the IHCIA amended the Social Security Act to permit IHS facilities to obtain Medicaid reim- bursement for services provided to Medicaid-eligible Indians. See IHCIA § 402(a), 42 U.S.C. § 1396j. As a result, IHS facil- 15648 ARIZONA HEALTH CARE v. MCCLELLAN ities could receive reimbursement from Medicaid as well as funding through direct Congressional appropriations. Because states previously did not provide Medicaid funding for IHS health care services, this enactment would have imposed an additional burden on states’ Medicaid programs. To avoid this result, Congress amended § 1905(b) of the Social Security Act, 42 U.S.C. § 1396d(b), by inserting the following lan- guage:
Notwithstanding the first sentence of this section [explaining how the “federal medical assistance per- centage” will be calculated for each state], the Fed- eral medical assistance percentage shall be 100 per centum with respect to amounts expended as medical assistance for services which are received through an Indian Health Service facility.
IHCIA § 402(e), 42 U.S.C. § 1396d(b) (emphasis added).
Immediately after the enactment of the IHCIA, and for the next twenty years, HCFA interpreted this language as requir- ing a FMAP reimbursement rate of 100 percent for health care services provided by IHS for Medicaid-eligible Indians, when IHS billed Medicaid directly for those services. HCFA did not allow a FMAP reimbursement rate of 100 percent for health care services provided by non-IHS providers, even when IHS had entered into referral agreements with those providers.
HCFA’s interpretation of § 402(e) corresponded to the dif- ferent types of agreements IHS had used to supplement its services. In some cases, an IHS facility would offer a health care service to its Indian patients, and provide the service by purchasing it from a contractor (a non-IHS health service pro- vider). After the enactment of the IHCIA, IHS billed Medic- aid directly for these services. IHS also entered into referral agreements with non-IHS providers. Under these agreements, the non-IHS provider agreed to furnish medical services at a rate no higher than the prevailing Medicare allowable rates to ARIZONA HEALTH CARE v. MCCLELLAN 15649 Medicaid-eligible Indians referred by IHS. Reimbursement Rates for Health Care Services Authorized Under the Indian Health Service Contract Health Service Regulations, 51 Fed. Reg. 23,540 (June 30, 1986). IHS did not bill Medicaid for such services. Before 1997, Arizona neither received nor claimed a FMAP reimbursement rate of 100 percent for ser- vices provided to Medicaid-eligible Indians under these refer- ral agreements.
In 1997, HCFA issued a memorandum to an associate regional administrator in HCFA Region IX3 in response to Arizona’s question whether non-emergency transportation provided to Indians was eligible for a FMAP reimbursement rate of 100 percent. The HCFA memo stated:
[W]e do not agree that non-emergency transportation is a service provided “through an IHS facility.” Our position on this issue is that in order for IHS services to qualify for 100% FMAP, the service must be: (1) provided by IHS, or a contractual agent of an IHS or tribal facility, (2) considered as a “facility service”; that is, a service that would be within the proper scope of services which can be claimed by that facil- ity, and (3) claimed by the IHS facility as a service of that facility. These services are referred to in regu- lation at 42 CFR 440.10 (“Inpatient hospital ser- vices”) and 42 CFR 440.20 (“Outpatient hospital services and rural health facility services”)[.]
For most facilities, services are furnished within the physical confines of the facility. Satellite facilities owned or leased, and operated by IHS or tribal 638 programs, are also considered to be within the physi- cal confines of an IHS/tribal facility.4 Referred ser- 3 Currently, Region IX includes Arizona, California, Hawaii, Nevada, and the Territories of American Samoa, Guam and the Commonwealth of the Northern Mariana Islands. 4 Facilities owned or operated by tribes or tribal organizations under agreements with IHS are known as “638” facilities after the public law 15650 ARIZONA HEALTH CARE v. MCCLELLAN vices, provided through a contractual arrangement, can also be considered provided “through an IHS facility” and reimbursed at the 100% FMAP rate as long as these are services that could be provided as a “facility service”, as referenced by regulation above. Any other type of services, such as non- emergency transportation, are not considered to be “facility services”, and therefore should be reim- bursed at the normal State/Federal match rate.
Memorandum from the Acting Dir., Medicaid Bureau, to the Assoc. Reg’l Adm’r, Div. of Medicaid, Region IX (May 15, 1997) (emphasis added).
Arizona interpreted the memorandum’s statement that a FMAP reimbursement rate of 100 percent applied to “[r]eferred services, provided through a contractual arrange- ment” as extending to all health care services provided under referral agreements between IHS and non-IHS service provid- ers. As a result of this interpretation, Arizona developed a procedure for claiming a FMAP reimbursement rate of 100 percent for services that met five criteria: (1) the recipient was a Medicaid-eligible Indian who had chosen IHS as his or her health plan as of the date of the service; (2) the service was provided by a non-IHS provider; (3) the service was furnished pursuant to an agreement between an IHS facility and the non-IHS provider at the time the service was provided; (4) the service was a “facility service,” under 42 C.F.R. § 440.10 or § 440.20;5 and (5) the date of the service was on or after May 15, 1997, the date of the non-emergency transportation mem- orandum.
number of the Indian Self-Determination and Education Assistance Act of 1975, Pub. L. No. 93-638, 88 Stat. 2203. 5 42 C.F.R. § 440.10 (defining “inpatient hospital services”) and 42 C.F.R. § 440.20 (defining “outpatient hospital services and rural health clinic services”) identify services that are reimbursable through FMAP for purposes of Medicaid. See 42 U.S.C. § 1396d(a); 42 C.F.R. § 440.1. ARIZONA HEALTH CARE v. MCCLELLAN 15651 Arizona made its first claim under the new procedure for the quarter ending March 31, 1999. As a result of its new pro- cedure, Arizona claimed an additional $1,838 of federal reim- bursement, which HCFA allowed without deferral or investigation. However, in late 1999, HCFA began to defer action on Arizona’s reimbursement claims, and ultimately dis- allowed Arizona’s subsequent claims to the extent they exceeded the normal FMAP reimbursement rate.
Arizona appealed HCFA’s disallowance of approximately $36 million of Arizona’s claims. The Departmental Appeals Board (“DAB”)6 upheld HCFA’s disallowance in a 2001 administrative decision. In this decision, the DAB held that the meaning of “received through an Indian Health Service facility” was ambiguous, because it could mean “by means of” or “in.” Following its long-standing procedures for resolv- ing disputes over ambiguous statutory language, the DAB held:
(1) HCFA’s reasonable and long-standing interpreta- tion of the costs eligible for 100% FMAP was lim- ited to those ‘received through’ an IHS facility which offers, is responsible for and bills Medicaid for the services provided; (2) Arizona was notified of and long operated consistently with this interpreta- tion; (3) HCFA did not change this policy in its memorandum of May 1997; (4) Arizona did not rea- sonably rely on an alternative interpretation; and (5) the costs disallowed here were not eligible for 100% FMAP rate under HCFA’s interpretation. 6 The DAB is a separate adjudicatory department within HHS that pro- vides independent review of disputed decisions for many HHS programs. The DAB generally issues HHS’s final decision, which may then be appealed to a federal court. Among its many functions, the DAB hears dis- putes pertaining to HCFA’s (now CMS’s) disallowances of FMAP reim- bursement. See 42 U.S.C. § 1316(d); 42 C.F.R. § 430.42(b). 15652 ARIZONA HEALTH CARE v. MCCLELLAN Accordingly, the DAB upheld all the disallowances at issue.7
Arizona brought suit in the District of Arizona to challenge the DAB’s decision. Ruling on cross-motions for summary judgment and applying the framework of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the district court ruled in favor of Arizona. Noting its agreement with the only two federal courts that had then addressed the issue, North Dakota ex rel. Olson v. Ctrs. for Medicare & Medicaid Servs., 286 F. Supp. 2d 1080 (D.N.D. 2003), rev’d, 403 F.3d 537 (8th Cir. 2005), and Ellenbecker v. Ctrs. for Medicare & Medicaid Servs., 335 F. Supp. 2d 999 (D.S.D. 2003), rev’d, 403 F.3d 537 (8th Cir. 2005), the dis- trict court reversed the DAB, concluding that “as a matter of law . . . the language of [§ 402(e)] at issue is clear and unam- biguous and . . . the phrase ‘received through’ is properly interpreted as pertaining [to] services that are provided as a result of a referral from an IHS facility by private health care providers who bill the state Medicaid program for those ser- vices.”8 The district court determined that HCFA’s interpreta- tion (to which the DAB had deferred) was unreasonable. Therefore, the district court granted Arizona’s motion for summary judgment, which HCFA now appeals. 7 The DAB subsequently issued a second decision that incorporated the first decision and upheld the remaining disallowance. 8 After the district court rendered its decision, the Eighth Circuit reversed the decisions of the South Dakota and North Dakota district courts. North Dakota ex rel. Olson v. CMS, 403 F.3d 537, 540 (8th Cir. 2005). The Eighth Circuit ruled that the language of § 402(e) was unclear, but the legislative history “is clear and consistent” and established that Congress’s use of “received through” rather than “provided in” did not cover services provided by non-IHS providers under a referral agreement such as those at issue in this appeal. Id. Therefore, the Eighth Circuit con- cluded that a FMAP reimbursement rate of 100 percent did not apply to services provided by non-IHS health care providers under a referral con- tract with IHS. Id. ARIZONA HEALTH CARE v. MCCLELLAN 15653 II
[1] We review the district court’s grant of Arizona’s motion for summary judgment de novo. Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999). There is no dispute that the DAB’s decision is the product of formal adjudication that merits Chevron deference. See United States v. Mead Corp., 533 U.S. 218, 226-27 (2001). Therefore, we follow a two-step process in reviewing the DAB’s interpretation of federal law. Chevron, 467 U.S. at 842-43. First, “if a court determines that Congress has directly spoken to the precise question at issue, then 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.” United States v. Haggar Apparel Co., 526 U.S. 380, 392 (1999) (internal citations and quotations omitted). Second, if “the agency’s statutory interpretation fills a gap or defines a term in a way that is reasonable in light of the legislature’s revealed design, we give [that] judgment con- trolling weight.” Id. (internal citations and quotations omit- ted).
A
We begin with the plain language of the statute. Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., Inc., 484 U.S. 49, 56 (1987). The district court focused on the meaning of the word “through” in the phrase “services which are received through an Indian Health Service facility,” in § 402(e). The word “through” is not defined elsewhere in the statute or by regulation. Accordingly, we consider whether there is an unambiguous common sense meaning of the word that resolves the question whether this phrase includes services provided by non-IHS providers via a referral agreement with IHS, as Arizona would have it, or is limited to services “pro- vided by a particular IHS facility within its scope of services” and billed by that facility to Medicaid, as the DAB held. See Wilderness Soc’y v. U.S. Fish & Wildlife Serv., 353 F.3d 1051, 1061 (9th Cir. 2003) (en banc) (when no statutory or 15654 ARIZONA HEALTH CARE v. MCCLELLAN regulatory provision defines the meaning of a term, we con- sider the common sense meaning of the words, including review of dictionaries), amended by 360 F.3d 1374 (9th Cir. 2004) (en banc).
[2] After referring to dictionaries that were current when Congress was drafting this legislation, we are unable to resolve this ambiguity. As noted by the DAB, the phrase “through” can mean “by means of” and “by the help or agency of,” Webster’s Third New International Dictionary 2384 (1971), which supports Arizona’s interpretation, as well as “in” and “within,” which supports HCFA’s interpretation. Black’s Law Dictionary 1652 (4th ed. 1968).9
In construing specific words in a statute, we must also look to the “language and design of the statute as a whole,” K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988), and read the specific words “with a view to their place in the overall statu- tory scheme.” Wilderness Soc’y, 353 F.3d at 1060 (quoting Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 809 (1989)). Arizona argues that because Congress used the phrases “provided in” or “offered by” in various Medicaid provisions, it intended the phrase “received through” in § 402(e) to mean something different. For example, the IHCIA provides that states must be reimbursed under Medic- aid for “services provided in [Indian Health] Service facili- ties,” IHCIA § 402(a), (b). In addition, various subsections within 42 U.S.C. § 1396d restrict Medicaid coverage to ser- vices that are provided “by” or “in” a facility. See, e.g., id. § 1396d(a)(13) (“medical assistance” includes physician- recommended medical services “provided in a facility”); § 1396d(a)(2) (medical assistance includes ambulatory ser- vices “offered by a rural health clinic”); § 1396d(t)(4) (cover- ing laboratory services “customarily provided by or through, 9 Black’s Law Dictionary is one source this court has used to determine the “common sense meaning” of statutory language. See, e.g., Wilderness Soc’y, 353 F.3d at 1061. ARIZONA HEALTH CARE v. MCCLELLAN 15655 a general practitioner, family medicine physician, internal medicine physician, obstetrician/gynecologist, or pediatri- cian”). Because a court must presume that Congress intended a different meaning when it uses different words in connec- tion with the same subject, see SEC v. McCarthy, 322 F.3d 650, 656 (9th Cir. 2003), Arizona contends it is clear that Congress did not intend to limit the FMAP reimbursement rate of 100 percent to services provided in or offered by an IHS facility.
[3] We agree that Congress has used a variety of expres- sions to describe the relationship between Medicaid-covered medical services and the service provider, and has variously limited Medicaid coverage to services provided in, by, or through a particular type of provider. However, this conclu- sion does not explain what Congress meant by the language in § 402(e), providing a FMAP reimbursement rate of 100 percent for services “received through an IHS facility.” Even if we agreed that Congress did not intend the FMAP reim- bursement rate of 100 percent to be limited to services received by patients within the boundaries of an IHS facility, we note that HCFA does not interpret § 402(e) as imposing this limitation. Rather, HCFA interpreted the FMAP reim- bursement rate of 100 percent as applying to services pro- vided by certain non-IHS contractors so long as the services are billed through the IHS facility. Despite Arizona’s efforts to distinguish “received through” from other similar expres- sions, Congress’s use of the phrase “received through” does not answer the question whether the FMAP reimbursement rate of 100 percent applies to services provided by a non-IHS health services provider under a referral agreement with an IHS facility. To this extent, we agree with the Eighth Circuit, that “even if ‘received through’ has a broader connotation than ‘provided in,’ the statute does not specify how far ‘received through’ should extend. Thus the statutory language is susceptible to multiple interpretations and does little to resolve the present controversy.” North Dakota ex rel. Olson 15656 ARIZONA HEALTH CARE v. MCCLELLAN v. Ctrs. for Medicare & Medicaid Servs., 403 F.3d 537, 540 (8th Cir. 2005).
[4] Moreover, reading “received through an IHS facility” in the context of the IHCIA as a whole weighs in favor of HCFA’s more limited interpretation. HCFA argues that Con- gress linked the FMAP reimbursement rate of 100 percent to IHS facilities and their services, rather than to other health service providers. In other words, the purpose of Title IV of the IHCIA was to benefit IHS facilities by enabling them to receive Medicaid reimbursement, which must be placed in a special fund and used “exclusively for the purpose of making any improvements in the facilities of such Service which may be necessary to achieve compliance with the applicable condi- tions and requirements of [Title XIX of the Social Security Act].” See IHCIA § 402(c), 25 U.S.C. § 1642(a). Therefore, the statutory structure better supports interpreting “received through an IHS facility” to ensure that the FMAP reimburse- ment benefits the IHS facility. Interpreting § 402(e) as apply- ing the FMAP reimbursement rate of 100 percent only to services paid for (and billed to Medicaid by) IHS furthers this goal better than the more expansive Arizona interpretation.10
B
At the next step in the Chevron analysis, the parties argue that any ambiguity in § 402(e) is clarified by legislative his- tory. See United States v. Daas, 198 F.3d 1167, 1174 (9th Cir. 10 HCFA also argues that Alaska Department of Health & Social Ser- vices v. Centers for Medicare & Medicaid Services, 424 F.3d 931 (9th Cir. 2005), defined the word “through” when it characterized the FMAP reim- bursement rate of 100 percent as applying to “state expenditures on behalf of eligible Native Americans at IHS facilities.” Id. at 935 n.1 (emphasis added). However, this footnote merely provides background about the funding of IHS facilities, and does not purport to address the scope of § 402(e). When “a statement is made casually and without analysis,” it does not constitute a precedential decision of this court on an undecided issue. United States v. Johnson, 256 F.3d 895, 915 (9th Cir. 2001). ARIZONA HEALTH CARE v. MCCLELLAN 15657 1999). We disagree, and part company with the Eighth Circuit in its conclusion to that effect. HCFA argues, and the Eighth Circuit held, that Congress intended § 402(e)’s FMAP reim- bursement rate of 100 percent to apply only to services pro- vided “in” a facility, because various congressional committee reports described that rate as being limited to services pro- vided “in” IHS facilities. See H.R. Rep. No. 94-1026, pt. I, at 108, reprinted in 1976 U.S.C.C.A.N. 2652, 2746 (FMAP reimbursement rate of 100 percent “for services provided to any Indian in an IHS facility”); id., pt. III, at 7, reprinted in 1976 U.S.C.C.A.N. 2652, 2782 (“services provided to Indians in IHS facilities”); id., pt. III, at 21, reprinted in 1976 U.S.C.C.A.N. 2652, 2796 (“Indians receiving services in IHS facilities”). However, the change in terminology from com- mittee reports to Congressional enactment equally supports the opposite conclusion, namely, that in enacting § 402(e), Congress decided not to use the narrower phrase “provided in.” Instead, Congress opted for a broader scope of reimburse- ment when it chose to use the phrase “received through,” the words that actually appear in the statute.
Arizona relies on legislative history and the structure of the IHCIA to argue that Congress intended the FMAP reimburse- ment rate of 100 percent to apply to all referred services. Title V of the IHCIA specifically addresses the health care needs of urban Indians, who do not live on reservations and do not necessarily rely on the IHS system for health care. See IHCIA §§ 501-08, 25 U.S.C. §§ 1651-58. Arizona points to commit- tee report language indicating that Congress intended Title IV of the IHCIA (which includes the statutory language at issue) to focus on the plight of Indians who do live on or near reser- vations, and primarily rely on the IHS system for health care. See, e.g., H.R. Rep. No. 94-1026, pt. I, at 16-18, 107, 114, reprinted in 1976 U.S.C.C.A.N. 2652, 2655-57, 2745, 2752. Arizona argues that because improving the health status of reservation Indians was the principal concern of Title IV, Congress intended the FMAP reimbursement rate of 100 per- cent to apply to all services provided in the IHS system, 15658 ARIZONA HEALTH CARE v. MCCLELLAN including all referred services. By contrast, health services outside of the IHS system, such as those used by some urban Indians, would not be subject to the FMAP reimbursement rate of 100 percent. According to Arizona, “Congress’s deci- sion . . . thus reflected a well understood distinction between these two groups of Native Americans at the time the IHCIA was enacted.”
We are not persuaded. First, the statutory sections within Title IV do not distinguish between urban Indians and reser- vation Indians. Also, the legislative history does not establish that Congress sought to assist reservation Indians by ensuring a FMAP reimbursement rate of 100 percent for the broadest possible range of IHS health care services, such as those res- ervation Indians receive from a non-IHS health care provider with a referral agreement. Finally, the higher FMAP reim- bursement rate does not assist Indians, whether living on res- ervations or in cities; rather, it merely adjusts the financial responsibility for health care between the state and federal fiscs. Neither the distinction between reservation and urban Indians, nor Arizona’s purported principal purpose of Title IV resolves the ambiguity in § 402(e).
The parties also reach opposite conclusions based on lan- guage in a House Report indicating that the “Committee [on Interior and Insular Affairs] took the view that it would be unfair and inequitable to burden a State Medicaid program with costs which normally would have been borne by [IHS].” H.R. Rep. No. 94-1026, pt. I, at 108, reprinted in 1976 U.S.C.C.A.N. 2652, 2746. The House Report suggests that Congress included § 402(e) in order to eliminate such a bur- den.
Both parties draw support from this legislative language. HCFA argues that in light of the payor of last resort rule, which has been in place since 1956,11 the Medicaid program 11 See 55 Fed. Reg. 4606, 4608 (Feb. 9, 1990). The rule is currently located at 42 C.F.R. § 136.61. Under the “payor of last resort” rule, IHS does not pay if there is another source of health care funds available such as Medicaid. 42 C.F.R. § 136.61. ARIZONA HEALTH CARE v. MCCLELLAN 15659 would have been responsible for the costs of services pro- vided by non-IHS providers to any Medicaid-eligible Indians. Because the standard FMAP reimbursement rate would have applied to such costs before Congress enacted the IHCIA, HCFA argues that its interpretation of § 402(e) does not shift any costs previously borne by IHS to state governments.12
Arizona, on the other hand, argues that as a practical mat- ter, IHS generally paid for services provided by non-IHS pro- viders under its various agreements with IHS. The same House Report mentions the Senate Finance Committee’s acknowledgment that “with respect to matters relating to Indi- ans, the Federal Government has traditionally assumed major responsibility.” H.R. Rep. No. 94-1026, pt. I, at 108, reprinted in 1976 U.S.C.C.A.N. 2652, 2746; see also id., pt. I, at 14, reprinted in 1976 U.S.C.C.A.N. 2652, 2653-54. Arizona also relies on language indicating that many otherwise-eligible Indians did not enroll or participate in Medicaid because of geographical constraints and reliance on IHS health care, id., pt. I, at 107, reprinted in 1976 U.S.C.C.A.N. 2652, 2745, but the report states that predicting this number would be “nearly impossible.” Id., pt. I., at 26, reprinted in 1976 U.S.C.C.A.N. 2652, 2665-66.
[5] Based on our review of the record, neither party has established whether the state or IHS paid for services pro- vided by non-IHS service providers under referral agreements before Congress passed the IHCIA. Nor does the legislative history suggest that in 1976, Congress knew that IHS had this burden, and thus intended for a FMAP reimbursement rate of 100 percent to apply to such expenditures. In the absence of 12 Arizona argues that HCFA’s burden-shifting argument is not applica- ble to Arizona because it was the only state not a member of the Medicaid program in 1976 when the IHCIA was enacted. However, for purposes of interpreting the meaning of a generally applicable federal statute, Arizo- na’s specific status under Medicaid is irrelevant. 15660 ARIZONA HEALTH CARE v. MCCLELLAN such evidence, the legislative history is of no assistance in clarifying the meaning of § 402(e).13
C
[6] Because the statutory language is ambiguous, and is not clarified by the usual interpretive aids, we must turn to the DAB’s interpretation of § 402(e) and determine whether it is based on a “permissible construction of the statute.” Chevron, 467 U.S. at 843. If a statute’s language can reasonably be con- strued in more than one way, a court “may not substitute its own construction” of the statute “for a reasonable interpreta- tion made by” the agency that Congress has entrusted to implement the legislation. United Food & Commercial Work- ers Union v. NLRB, Local 1036, 307 F.3d 760, 767 (9th Cir. 2002) (en banc) (quoting Chevron, 467 U.S. at 844). An agen- cy’s interpretation of a statute is permissible unless it is “arbi- trary, capricious, or manifestly contrary to the statute.” Chevron, 467 U.S. at 844.
[7] Here, the DAB interpreted “received through” in § 402(e) by deferring to HCFA’s long-standing interpretation that the costs eligible for a FMAP reimbursement rate of 100 percent were “limited to those ‘received through’ an IHS facility which offers, is responsible for and bills Medicaid for the services provided.” This interpretation is not “manifestly 13 Arizona also asks us to consider a bill introduced in 1973 but never enacted, which provided that states were entitled to a FMAP reimburse- ment rate of 100 percent for medical costs of individuals “who . . . resided on or adjacent to a Federal Indian reservation.” H.R. 3153, 93d Cong. § 174(a), 119 Cong. Rec. 38350, 38367 (1973). Arizona argues that Con- gress intended the “received through” language in § 402(e) to mean the same thing as “on or adjacent to.” The Supreme Court has considered pre- decessor bills when the operative language of the original bill was carried forward into the enacted legislation and the legislative history of the enacted legislation referred to the older bill. See United States v. Enmons, 410 U.S. 396, 405 n.14 (1973). In this case, however, the enacted legisla- tion makes no reference to the 1973 bill, which thus is irrelevant. ARIZONA HEALTH CARE v. MCCLELLAN 15661 contrary” to § 402(e), Chevron, 467 U.S. at 844, but rather is consistent with the statutory language. Under the DAB’s interpretation, the FMAP reimbursement rate of 100 percent is not limited to costs incurred solely within the boundaries of an IHS facility, but would cover the costs for some services received at a non-IHS facility, in those cases where IHS has taken responsibility for providing that service to its Indian patient and actually bills Medicaid for that service. This inter- pretation is consistent with and gives effect to the statutory language used by Congress. Moreover, HCFA adopted this interpretation contemporaneously with the enactment of the IHCIA, and has adhered to it for over 20 years. We should “normally accord particular deference to an agency interpreta- tion of ‘longstanding’ duration.” Barnhart v. Walton, 535 U.S. 212, 220 (2002). Because the DAB’s interpretation of § 402(e) is not arbitrary, capricious, or manifestly contrary to the statute, we must defer to it.
Arizona argues that the DAB’s interpretation is unreason- able both because it conflicts with HCFA’s 1997 memoran- dum and because it is bad policy. HCFA argues that its 1997 memorandum is consistent with its long-standing interpreta- tion of § 402(e) and is good policy. We need not resolve this dispute, because “[i]nterpretations such as those in opinion letters — like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law — do not warrant Chevron-style defer- ence.” Christensen v. Harris County, 529 U.S. 576, 587 (2000); see also City of Los Angeles v. U.S. Dep’t of Com- merce, 307 F.3d 859, 874 (9th Cir. 2002). Nor should we make policy decisions for the agency:
When a challenge to an agency construction of a statutory provision, fairly conceptualized, really cen- ters on the wisdom of the agency’s policy, rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail. In such a case, federal judges — who have no constitu- 15662 ARIZONA HEALTH CARE v. MCCLELLAN ency — have a duty to respect legitimate policy choices made by those who do.
Chevron, 467 U.S. at 866.
III
The DAB’s interpretation of § 402(e) is a permissible con- struction of an ambiguous statute. We therefore defer to the DAB’s interpretation that the costs eligible for a FMAP reim- bursement rate of 100 percent are “limited to those ‘received through’ an IHS facility which offers, is responsible for and bills Medicaid for the services provided.” The district court erred in interpreting the phrase “received through” to mean “pertaining [to] services that are provided as a result of a referral from an IHS facility by private health care providers who bill the state Medicaid program for those services.” We therefore reverse the district court’s grant of Arizona’s motion for summary judgment, and remand for proceedings consis- tent with this ruling.
REVERSED and REMANDED.