Medicaid & Medicare Advantage Products Ass'n of PR v. Emanuelli-Hernandez

58 F.4th 5
CourtCourt of Appeals for the First Circuit
DecidedJanuary 18, 2023
Docket21-1297P
StatusPublished
Cited by14 cases

This text of 58 F.4th 5 (Medicaid & Medicare Advantage Products Ass'n of PR v. Emanuelli-Hernandez) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Medicaid & Medicare Advantage Products Ass'n of PR v. Emanuelli-Hernandez, 58 F.4th 5 (1st Cir. 2023).

Opinion

United States Court of Appeals For the First Circuit

Nos. 21-1297, 21-1379

MEDICAID AND MEDICARE ADVANTAGE PRODUCTS ASSOCIATION OF PUERTO RICO, INC.; MMM HEALTHCARE, LLC; TRIPLE-S ADVANTAGE, INC.; MCS ADVANTAGE, INC.; HUMANA HEALTH PLANS OF PUERTO RICO, INC.,

Plaintiffs, Appellees,

v.

DOMINGO EMANUELLI HERNÁNDEZ, in his official capacity as Attorney General for the Commonwealth of Puerto Rico; MARIANO A. MIER-ROMEU, in his official capacity as Puerto Rico Insurance Commissioner,

Defendants, Appellants,

ASOCIACION DE HOSPITALES DE PUERTO RICO, INC.; MENNONITE GENERAL HOSPITAL, INC.; SAN JORGE CHILDREN'S HOSPITAL, INC.; HOSPITAL MENONITA CAGUAS, INC.; HOSPITAL MENONITA GUAYAMA, INC.; PUERTO RICO COLLEGE OF PHYSICIANS-SURGEONS; CLINICAL LABORATORIES ASSOCIATION INC.; PUERTO RICO ASSOCIATION OF RADIOLOGY IMAGING CENTERS INC.,

Intervenors, Appellants.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

[Hon. Silvia Carreño-Coll, U.S. District Judge]

Before

Lipez, Howard, and Thompson, Circuit Judges. Mariola Abreu-Acevedo, Assistant Solicitor General, with whom Fernando Figueroa-Santiago, Solicitor General of Puerto Rico, Omar Andino-Figueroa, Deputy Solicitor General, and Carlos Lugo-Fiol were on brief, for defendant-appellants.

César T. Alcover, Carla S. Loubriel Carrión, Casellas Alcover & Burgos, P.S.C., Luis Sánchez Betances, Jaime Sifre Rodríguez, Jorge Flores de Jesús, Sánchez Betances, Sifre & Muñoz Noya, Omar E Martinez-Vázquez, Martinez & Martinez, Luis E. Romero Nieves, Luis M. Pellot-Juliá, and Pellot-González, P.S.C. on brief for intervenor-appellants.

Michael B. Kimberly, with whom Ankur J. Goel, Sarah P. Hogarth, McDermott Will & Emery LLP, Luis R. Román-Negrón, SBGB LLC, Roberto L. Prats-Palerm, RPP Law, José A. Hernández-Mayoral, Hernández Mayoral Law Office, Mariacté Correa-Cestero, Ricardo José Casellas-Santana, O'Neill & Borges LLC, Herman Colberg, and Pietrantoni Méndez & Alvarez LLC were on brief, for appellees.

January 18, 2023 LIPEZ, Circuit Judge. Facing an exodus of healthcare

providers from Puerto Rico for more lucrative employment in the

continental United States, the Puerto Rico legislature passed Act

90, which requires that Medicare Advantage plans compensate

healthcare providers in Puerto Rico at the same rate as providers

are compensated under traditional Medicare. After several

entities that manage Medicare Advantage plans challenged the law,

the district court determined in a thoughtful decision that Act 90

is preempted by federal law. We affirm.

I.

A. Medicare Advantage Program

The federal Medicare program, established by Title XVIII

of the Social Security Act, provides health insurance coverage to

people 65 years of age or older and certain other qualifying

beneficiaries, such as people with disabilities. See 42 U.S.C.

§ 1395c; Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 89 (1st

Cir. 2020). The Secretary of the Department of Health and Human

Services ("HHS") administers the Medicare program through the

Centers for Medicare and Medicaid Services ("CMS"), an agency

housed within HHS. See Visiting Nurse Ass'n Gregoria Auffant,

Inc. v. Thompson, 447 F.3d 68, 70 (1st Cir. 2006). Under the

"traditional" Medicare program (Parts A and B), the federal

government pays healthcare providers directly for a limited array

of specified services according to a fee-for-service schedule set

- 3 - by CMS. See First Med. Health Plan, Inc. v. Vega-Ramos, 479 F.3d

46, 48 (1st Cir. 2007); 42 U.S.C. §§ 1395c to 1395i-6 (Part A); 42

U.S.C. §§ 1395j to 1395w-6 (Part B).

The Medicare Advantage program, also known as Medicare

Part C, which is governed by the Medicare Prescription Drug,

Improvement, and Modernization Act of 2003 ("Medicare Advantage

Act"), Pub. L. No. 108-173, 117 Stat. 2066 (2003) (codified at 42

U.S.C. §§ 1395w-21 to 1395w-28), takes a different approach. Under

Medicare Advantage, CMS contracts with private organizations --

Medicare Advantage Organizations ("MAOs"), essentially private

insurers -- who in turn contract with healthcare providers to

supply core Medicare services as well as additional benefits, such

as hearing and dental care, which fall outside of the traditional

Medicare program. See UnitedHealthcare Ins. Co. v. Becerra, 16

F.4th 867, 872-73 (D.C. Cir. 2021).

Congress established the Medicare Advantage program to

expand the availability of private health plan options to Medicare

beneficiaries while generating cost savings for both the federal

government and for enrollees through market competition and the

greater use of managed care. See Medicare Program; Establishment

of the Medicare Advantage Program, 70 Fed. Reg. 4588, 4589 (Jan.

28, 2005) (codified at 42 C.F.R. pts. 417, 422). The Medicare

Advantage program aims to achieve these purposes through several

interrelated policies. Most relevant to this appeal, MAOs

- 4 - negotiate payment and network-inclusion terms with in-network

healthcare providers rather than paying these providers according

to a fixed fee-for-service schedule as under traditional Medicare.

See generally 42 U.S.C. § 1395w-23(a); 42 C.F.R. § 422.520(b)(2).

In lieu of fixed fee-for-service reimbursements, MAOs generally

receive a per-beneficiary monthly payment in return for providing

coverage to Medicare Advantage enrollees for all traditional

Medicare services as well as additional services outside the

traditional Medicare program. 42 U.S.C. § 1395w-23(b). Acting

through CMS, the Secretary of HHS determines an MAO's monthly

payment by comparing its bid -- the cost that the MAO estimates

for providing Medicare-covered services -- to a federal benchmark,

the maximum amount the federal government will pay under

traditional Medicare for providing those services in the plan's

geographic service area.1 See id.; UnitedHealthcare Ins. Co., 16

F.4th at 872-73.

1If the bid an MAO plan tenders is less than the federal benchmark, CMS pays the MAO its bid plus a rebate, which must be returned to enrollees in the form of additional benefits or coverage for services outside of traditional Medicare, such as dental or hearing benefits. 42 U.S.C. §§ 1395w-23(a)(1)(B)(i), (E); 1395w-24(b)(1)(C). If the MAO plan's bid is equal to or above the federal benchmark, the compensation that the MAO receives from CMS is the benchmark amount, and each enrollee in that plan will incur an additional premium to cover the amount by which the bid exceeds the federal benchmark. Id. §§ 1395w-23(a)(1)(B)(ii), 1395w-24(b)(1)(A), 1395w-24(b)(2)(C).

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Bluebook (online)
58 F.4th 5, Counsel Stack Legal Research, https://law.counselstack.com/opinion/medicaid-medicare-advantage-products-assn-of-pr-v-emanuelli-hernandez-ca1-2023.