New York State Ophthalmological Society v. Otis R. Bowen, Secretary, Health and Human Services

854 F.2d 1379, 272 U.S. App. D.C. 170, 1988 U.S. App. LEXIS 11323
CourtCourt of Appeals for the D.C. Circuit
DecidedAugust 19, 1988
Docket87-5057 and 87-5065
StatusPublished
Cited by37 cases

This text of 854 F.2d 1379 (New York State Ophthalmological Society v. Otis R. Bowen, Secretary, Health and Human Services) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York State Ophthalmological Society v. Otis R. Bowen, Secretary, Health and Human Services, 854 F.2d 1379, 272 U.S. App. D.C. 170, 1988 U.S. App. LEXIS 11323 (D.C. Cir. 1988).

Opinions

[1381]*1381Opinion for the Court filed by Circuit Judge MIKVA.

Concurring Opinion filed by Circuit Judge STEPHEN F. WILLIAMS.

MIKVA, Circuit Judge:

This is a consolidated appeal from a district court judgment for appellee, the Secretary of the Department of Health and Human Services (“HHS”), in a class action brought by individual ophthalmologists, their patients, and two professional associations in New York and California suing on behalf of all ophthalmologists and cataract patients in those states (“appellants”). Appellants challenge the constitutionality of § 9307(c) of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), which adds subsections (k)(l) and (2) to § 1842 of the Social Security Act, 42 U.S.C. § 1395u. These amendments prohibit physicians from billing individuals enrolled in Medicare Part B for services of an assistant cataract surgeon (“CAS”) unless those services have been approved by an insurance carrier or designated state Peer Review Organization (“PRO”).

The district court denied appellants’ motion for a preliminary injunction and granted HHS’ motion to dismiss. Appellants seek a permanent injunction to restrain enforcement of these amendments and a declaratory judgment that these provisions interfere with patients’ and physicians’ constitutional rights. On review, we reject appellants’ contention that the statute facially violates patients’ and physicians’ constitutional right to privacy, and affirm the district court’s grant of HHS’ motion to dismiss with respect to this challenge. We dismiss appellants’ remaining constitutional claims as not presently ripe for review.

I. Background

Cataract surgery involves the removal of a clouded lens from the eye and its replacement with a prosthetic lens. An estimated one million cataract removals are performed annually, most on elderly patients enrolled in Medicare. Consequently, reimbursement for cataract surgery constitutes a substantial expense to the Medicare Part B Program, which reimburses for physicians’ services. According to a 1985 audit report conducted by the HHS Inspector General, 1983 expenditures for ophthalmology services by surgeons and assistant surgeons in cataract operations amounted to $822 million and $42 million respectively. About 90 percent of Medicare reimbursement costs for eye surgery were related to cataract surgery. See Office of Inspector General,' Office of Audit, Department of Health and Human Services, Review of Medicare Payments for Assistant Surgeon Services During Cataract Surgery 6 (1985) (“Report”), Joint Appendix (“J.A.”) at 43.

In an effort to reduce these costs, the Inspector General reviewed the Medicare reimbursement policies for these services and investigated the use of cataract assistant surgeons nationwide. Before 1987, Medicare reimbursed patients for the use of an assistant surgeon if such use was the “generally accepted procedure among ophthalmologists in the local community.” Report at 5, J.A. at 42. The determination of allowability of these services was the responsibility of the carrier in each state, based on the “prevailing practice that exists in that locality.” Id. The Medicare regulations “[did] not comment upon the issue of the medical necessity for assistant surgeons for these services.” Id. In his review of cataract surgery in 29 states, the Inspector General found that carriers acting for HHS in at least nine states restricted reimbursement for the services of assistant surgeons in cataract operations. The Report disclosed that the states with “lower ratios of paid assistant surgeon services * * * were states that also had restrictions regarding * * * payment.” Id. at 6, J.A. at 43. In those locales, trained technicians, resident physicians, and paramedical personnel provided assistance at surgery. Ophthalmologists from those states generally agreed with the carriers that two physicians were unnecessary.

The Inspector General did not cite data demonstrating the relative complication rates or comparative safety of the use of personnel with different levels of training [1382]*1382as assistants. The Report nevertheless concluded that

in view of the numerous cataract surgeries successfully performed nationwide without the use of assistant surgeons * * * the payment of an assistant surgeon for routine cataract surgery results in unnecessary and ineffective use of Medicare program funds. Individual surgeons’ preferences with respect to the use of assistant surgeons notwithstanding, other qualified medical personnel are normally available and routinely used during surgery.

Id. at 10, J.A. at 47. The Report recommended that the Health Care Financing Administration (“HCFA”) promulgate a national policy for eliminating Medicare coverage for second surgeons in routine cataract operations. It also suggested that HCFA establish a mechanism of prior approval for those cases in which the use of a second surgeon is medically indicated.

Influenced by this report, Congress in 1986 amended the legislation governing the Medicare funding program to regulate the use of assistant surgeons for cataract operations by adding sections 1395y(a)(15) and 1395u(k) to Title 42. Section 1395y(a)(15) provides that Medicare will only reimburse for the services of a CAS if a designated state PRO finds that the patient has a “complicating medical condition.” The PROs are charged with the responsibility of formulating procedures to determine which patients shall be approved. See 42 U.S.C. § 1320c-3(a)(8). Sections 1395u(k)(l) and (2) provide that any physician who “knowingly and willfully” bills patients enrolled in Medicare Part B for services of an assistant at cataract surgery without prior PRO approval will incur civil sanctions as provided in § 1395u(j)(2), including a fine or disqualification for up to 5 years from participation as a Medicare Part B provider. Congress’ decision to penalize physicians charging patients for second surgeons was motivated by the concern that Medicare beneficiaries would be forced to bear the cost of the services that Medicare would no longer reimburse. See H.R. Rep. No. 241, 99th Cong., 2d Sess. 42 (1986) U.S.Code Cong. & Admin.News 1986, pp. 42, 620 (bill authorizes sanctions to “ensure that beneficiaries are protected from additional out-of-pocket costs”); see also 131 Cong.Rec. 29,831 (1985) (remarks of Rep. Waxman) (describing a bill to “reduce Medicare and Medicaid outlays without harming program beneficiaries”).

Enforcement of these amendments was temporarily delayed at the request of Congress to allow the PROs and insurance carriers the opportunity to set up pre-ap-proval programs in accordance with HCFA guidelines. In January 1987, HCFA formulated pre-procedure review guidelines that were to apply to operations performed after March 1, 1987. Designated PROs in both New York and California established criteria for granting approval for assistant surgeons based on “complicating medical conditions.”

Appellants sued in district court for a preliminary injunction to prevent the agency from putting the penalty provisions into effect.

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Bluebook (online)
854 F.2d 1379, 272 U.S. App. D.C. 170, 1988 U.S. App. LEXIS 11323, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-state-ophthalmological-society-v-otis-r-bowen-secretary-health-cadc-1988.