Painter v. Shalala

97 F.3d 1351, 1996 U.S. App. LEXIS 26316, 1996 WL 570170
CourtCourt of Appeals for the Tenth Circuit
DecidedOctober 7, 1996
Docket95-1331
StatusPublished
Cited by60 cases

This text of 97 F.3d 1351 (Painter v. Shalala) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Painter v. Shalala, 97 F.3d 1351, 1996 U.S. App. LEXIS 26316, 1996 WL 570170 (10th Cir. 1996).

Opinion

BRISCOE, Circuit Judge.

Plaintiff M. Ray Painter, M.D., filed this action for injunctive, mandamus, and declaratory relief against defendants United States Department of Health and Human Services (HHS), and Donna Shalala, Secretary of HHS (the Secretary), arising out of defendants’ alleged failure to comply with certain budget neutrality provisions of the Medicare Act. The district court dismissed the action for lack of subject matter jurisdiction. We affirm.

I.

A The Medicare Part B 'payment scheme

Medicare, the federal medical insurance program for the aged and disabled, is composed of two parts — A and B. Part A provides hospital insurance benefits, and is funded from social security taxes. See 42 U.S.C. §§ 1395c-1395i—4. Part B, which is at issue in this case, is a voluntary program that provides Medicare beneficiaries with supplemental medical insurance benefits for physicians’ and other health care services. See id. at §§ 1395j-1395w-4. Funding for Part B is derived from monthly premiums paid by beneficiaries, as well as from federal government contributions. By statute, HHS is responsible for administering the program, and it contracts with private insurance carriers to perform certain administrative functions on behalf of the Secretary. See id. at § 1395u. These functions include evaluation and payment of Part B claims. See id.

Prior to 1992, the payment amount for Part B claims was the lesser of (1) the physician’s actual charge; (2) the physician’s customary charge; or (3) the prevailing charge in the locality for similar services. See 42 U.S.C. § 1395(a) (1988). Effective January 1, 1992, Congress revised the method for calculating the payment amount for Part B claims for physicians’ services to the lesser of (1) the physician’s actual charge; or (2) an amount determined pursuant to a fee schedule set by the Secretary. 42 U.S.C. § 1395w-4(a). Under the fee schedule, the payment amount is calculated by multiplying three factors: (1) the relative value for the service; (2) the conversion factor; and (3) the geographic adjustment factor. 42 U.S.C. § 1395w-4(b)(1).

The three factors utilized in determining the payment amount are all Established by the Secretary. Only the conversion factor is at issue in this case. In 1991, the Secretary was directed by Congress, in what is referred to by the parties as the “budget neutrality” provision, to set the initial value for *1354 the conversion factor in such a manner that, “if [the new payment scheme] were to apply during 1991 using such conversion factor, [it] would result in the same aggregate amount of payments ... for physicians’ services as the estimated aggregate amount of the payments ... for such services in 1991.” 42 U.S.C. § 1395w-4(d)(1)(B).

Once established, the conversion factor must be annually updated. “Not later than April 15 of each year ... the Secretary [is required to] transmit to the Congress a report that includes a recommendation on the appropriate update ... in the conversion factor ... for all physicians’ services ... in the following year.” 42 U.S.C. § 1395w-4(d)(2)(A). In making the annual recommendation, the Secretary is required to consider, among other things, “the percentage by which actual expenditures for all physicians’ services and for the services involved under [Part B] for the fiscal year ending in the year preceding the year in which such recommendation is made were greater or less than actual expenditures for such services in the fiscal year ending in the second preceding year.” 42 U.S.C. § 1395w-4(d)(2)(A)(ii). The Secretary is also required to include in the annual recommendation “a statement of the percentage by which (I) the actual expenditures for physicians’ services under [Part B] (during the fiscal year ending in the preceding year... ) ... exceeded, or was less than (II) the expenditures projected for the fiscal year.” 42 U.S.C. § 1395w-4(d)(2)(i).

By May 15 of each year, the Physician Payment Review Commission (PPRC) is required to review the Secretary’s recommendation and submit to Congress its own report, “including its recommendations respecting the update ... in the conversion factor ... for the following year.” 42 U.S.C. § 1395w-4(d)(2)(F). Thereafter, “[u]nless Congress otherwise provides, ... the update for a year is equal to the Secretary’s estimate of the percentage increase in the appropriate update index ... for the year.” 42 U.S.C. § 1395w-4(d)(3)(A)(i).

Once the annual update is established, the Secretary is required “to have published in the Federal Register, during the last 15 days of October ..., the conversion factor ... which will apply to physicians’ services for the following year and the update ... determined ... for such year.” 42 U.S.C. § 1395w-4(d)(1)(C)(ii). Prior to January 1 of each year, the Secretary is also required to send an updated fee schedule, including the conversion factor, to each physician providing Medicare Part B services (including both participating and non-participating physicians). 42 U.S.C. §§ 1395w-4(b)(1), 1394w-4(h). The fee schedule is transmitted to physicians in conjunction with notices relating to the participating physician program under 42 U.S.C. § 1395u(h). See 42 U.S.C. § 1395w-4(h). Accordingly, physicians have the right to review the fee schedule for a given year and decide whether to be participating or non-participating physicians.

B. Participating and non-participating physicians

The following information is taken directly from the Sixth Circuit’s opinion in American Academy of Ophthalmology v. Sullivan, 998 F.2d 377 (6th Cir.1993), and is applicable to the new Medicare Part B payment scheme at issue in this case:

Physicians have two options for receiving payment for the services they provide to Medicare beneficiaries.

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Bluebook (online)
97 F.3d 1351, 1996 U.S. App. LEXIS 26316, 1996 WL 570170, Counsel Stack Legal Research, https://law.counselstack.com/opinion/painter-v-shalala-ca10-1996.