ADEA State Update

U.S. Court of Appeals for the Ninth Circuit Rules California Illegally Halted Medicaid Coverage, Including Adult Dental Coverage, in 2009

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On July 5, the United States Court of Appeals for the Ninth Circuit struck down California’s 2009 Medicaid cuts, which were made to save the state money as it battled a budget crisis.

The state of California argued that coverage of adult dental, podiatry, optometry and chiropractic services for low-income people in rural and underserved areas is not mandatory, but optional, under the Medicaid Act. Specifically, according to the opinion, California read the Medicaid Act as permitting it to reimburse rural health clinics (RHCs) and federally-qualified health centers (FQHCs) for only those ’physicians’ services‘ performed by doctors of medicine and osteopathy. Further, California interpreted the Medicaid Act as stating physicians’ services provided by other types of physicians, including dentists, podiatrists, optometrists and chiropractors are not covered. The Centers for Medicare and Medicaid Services, the federal agency that works with states to administer Medicaid, agreed with the state, and permitted California’s cuts via the approval of its state plan amendment.

The question the Ninth Circuit was tasked with answering was whether Congress has defined unambiguously the scope of physicians’ services for which the RHCs and FQHCs must be reimbursed. The court held that Medicaid imposes an obligation on participating states to cover RHC and FQHC services, and that Medicaid imports the Medicare definition of those terms. Specifically, the court stated that the RHC and FQHC services that Medicaid requires states to cover are coequal to those services as they are defined in portions of the Medicare statute. In other words, whatever meaning the Medicare statute gives to those terms, they bear the same meaning in the Medicaid statute. The Medicare Act (see PDF, page 7) defines the term physician to include five categories of professionals: doctors of medicine and osteopathy, doctors of dental surgery or dental medicine, doctors of podiatry, doctors of optometry, and chiropractors. Thus, Medicare unambiguously defines the RHC and FGHC services to include services performed by dentists, podiatrists, optometrists and chiropractors, in addition to services provided by doctors of medicine and osteopathy.

The Ninth Circuit reversed and remanded the decision of the district court stating that California’s legislation, which eliminated coverage for certain health care services, was in conflict with the Medicaid Act and as a result, was invalid. The California Department of Health Care Services is currently considering whether to appeal the Ninth Circuit decision.

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