Boston Medical Center Corp. v. Secretary of Executive Office of Health & Human Services

28 Mass. L. Rptr. 105
CourtMassachusetts Superior Court
DecidedDecember 20, 2010
DocketNo. 092959BLS2
StatusPublished
Cited by1 cases

This text of 28 Mass. L. Rptr. 105 (Boston Medical Center Corp. v. Secretary of Executive Office of Health & Human Services) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Boston Medical Center Corp. v. Secretary of Executive Office of Health & Human Services, 28 Mass. L. Rptr. 105 (Mass. Ct. App. 2010).

Opinion

Fabricant, Judith, J.

[106]*106INTRODUCTION

This action challenges decisions of the Secretary of the Executive Office of Health and Human Services setting reimbursement rates under the Massachusetts Medicaid program, known as MassHealth, for services provided by Boston Medical Center and its managed care affiliate, Boston Medical Center Health Plan. Before the Court is the Secretary’s motion for judgment on the pleadings or, in the alternative, for partial summary judgment. The central argument underlying the motion for judgment on the pleadings is that neither state nor federal law authorizes judicial review of the rates set by the Secretary. The Court agrees, and accordingly will order the complaint dismissed. The Court will not reach the alternative request for partial summary judgment.

BACKGROUND1

States operate Medicaid programs under plans approved by federal authorities pursuant to federal statutory and regulatory standards. Among the governing provisions of federal law is 42 U.S.C. §1396(a)(30)(A), which requires that each state plan:

provide such methods and procedures relating to . . . the payment for care and services ... as may be necessary to . . . ensure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available ... at least to the extent that such care and services are available to the general population in the geographic area . . .

Chapters 118E and 118G of the General Laws govern the Massachusetts Medicaid program, known as MassHealth. Section 1 of c. 118E vests responsibility for administration of the program in the Secretary of the Executive Office for Health and Human Services. Section 36 of c. 118E provides that participation in MassHealth “shall be limited to providers of services who . . . indicate their intention ... to so participate . . . [and] agree to accept, as payment in full, the amounts paid in accordance with the fee schedules' provided in this chapter." Chapter 118G, §2A, confers on the Secretary “sole responsibility for establishing rates of payment” for services provided under MassH-ealth, and directs the Secretary to set rates that shall be “adequate to meet the costs incurred by efficiently and economically operated facilities,” and “within the financial capacity of the commonwealth.” Section 11 governs the setting of rates for acute and non-acute hospitals. It directs that such rates “shall be established by contract. . . [e]xcept as provided in subsections (a) and (b).” Subsection (a) provides that “[f]or disproportionate share hospitals,2 the executive office shall establish rates that equal the financial requirements3 of providing care to recipients of medical assistance.”4

Pursuant to the mandate of c. 118G, §11, the secretary sets rates for each acute hospital by issuing an annual Request for Applications (REA). Each RFA describes the methodology for setting rates for that year, and specifies that hospitals submitting applications thereby agree to accept the rates set based on the methodology set forth in the RFA “as payment in full.” Each hospital responds to the RFA by submitting an application and executing a form contract, in which the hospital agrees to provide services at the rates set by EOHHS. The contract provides that EOHHS may amend rates “as it determines necessary.” A hospital may respond to a notification of amendment by returning an executed amendment, terminating its participation in MassHealth, or requesting correction of any error in calculation. If the hospital does not respond to an amendment in one of those ways, EOHHS “may exercise its discretion either to terminate for cause (upon 30 days prior written notice) or continue the Contractor’s participation.”

Among the components of each hospital’s rate is the so-called Standard Payment Amount Per Discharge, or SPAD. This is a hospital-specific amount paid for the first twenty days of service to each MassHealth in-patient who is not enrolled in a managed care plan. Each RFA describes the methodology for calculating the SPAD rate. EOHHS’s method for calculating SPAD rates, as set forth in each RFA, begins with a statewide average payment amount per discharge, which EOHHS then adjusts for each hospital based on factors including case-mix and geographic and hospital-specific cost differences, subject to a limit based on a so-called “efficiency standard.” EOHHS sets the efficiency standard at a specified percentile of all MassH-ealth discharges statewide for a given period. The efficiency standard was 75% from the early 1990s through 2006. EOHHS raised the efficiency standard to 90% for 2007 and 2008, but then, by an amendment effective December 7, 2008, lowered it back to 75% for 2009.

Plaintiff Boston Medical Center Corporation (BMC) is the non-profit corporation that operates Boston Medical Center. Boston Medical Center was established by the City of Boston, pursuant to statutory authorization granted in the Boston Public Health Act of 1995, St. 1995, c. 146 (the BPH Act), as a result of the merger of the former Boston City Hospital and the former Boston University Medical Center. Section 1(a) of the BPH Act declared “that the city should be empowered to provide for the establishment of a new medical center,” which would have as its “mission . . . to consistently provide excellent and accessible health care services to all in need of care, regardless of status or ability to pay... play an important role as a referral, tertiary level hospital serving the region in a financially responsible manner and continue to serve the most acutely ill patient populations.” Section 1 (b) proceeded to set forth “six equally important guiding principles” to which “the new medical center shall commit itself.” Among these was “ensuring the availability of a full range of primary through tertiary medical programs,” [107]*107“serving both urban and suburban communities in a culturally and linguistically competent manner,” “enhancing its role as a major academic medical center,” and “participating effectively and competitively in managed care plans serving the patient population.”

Section 5 of the BPH Act empowered the city to execute an agreement providing for the merger of the former Boston City Hospital with the former Boston University Medical Center, “providing that the corporation resulting from such merger . . . accepts as its mission the statement of policy set forth in paragraph (b) of section one, and agrees with the city to utilize the acute-care hospitals and other health care facilities under its custody and control ... to provide a single standard of health care to all in need of care, including vulnerable populations within the city, with equal access regardless of status or ability to pay.” Section 5(f) of the BPH Act provided that “the hospital resulting from such merger . . . shall be deemed to retain the status which Boston City Hospital had . . . as a public service hospital” for purposes of specified regulations then in effect, and of eligibility for payments pursuant to specified statutes and regulations then in effect, including “payments to high public payer hospitals,” “disproportionate share adjustments for safely net providers,” payments “from the uncompensated care pool,” and “payment from and participation in medical assistance programs ...

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Bluebook (online)
28 Mass. L. Rptr. 105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/boston-medical-center-corp-v-secretary-of-executive-office-of-health-masssuperct-2010.