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Memorandum of Support

Supplemental Memo of Support: The Appeal Rights Provided in A.4996 Do Not Violate Federal Law

The Appeal Rights Provided in A.4996 (Gottfried) do Not Violate Federal Law – and in fact are required by the Medicaid Law and the Due Process Clause

As we said in our Memorandum of Support, the Empire Justice Center strongly supports A.4996, which protects and strengthens the due process appeal rights of some of the most vulnerable in our communities – elderly or disabled Medicare recipients who also are poor enough to qualify for Medicaid, known as dual eligibles.  A.4996 seeks to clarify due process protections for this vulnerable population and ensure that dual eligibles mandated into the MLTC Program have the same procedural rights to notice and fair hearings as other Medicaid recipients.  Specifically, the bill addresses two disparities in the protections afforded enrollees that have emerged during the implementation of the Managed Long Term Care program:

1)  The State has the right under federal regulations to permit dual eligibles in the MLTC program to request a fair hearing without exhausting internal plan appeal processes.

It is clear that federal regulations give states the option to require exhaustion of internal appeals before a fair hearing. [1]  New York has never exercised that option in twenty years of its mandatory managed care program.  The legislature never authorized the change imposed by the Department of Health newly requiring exhaustion of internal appeals in managed long term care.  This bill merely clarifies that the State does not elect this option. 

2)  AID CONTINUING – The bill’s clarification of the right to “aid continuing” pending an appeal by an MLTC member of a plan’s reduction of services does not violate federal law.    

The right to “aid continuing” is one of the most fundamental rights guaranteed by the Due Process clause of the Fourteenth Amendment.  In Goldberg v. Kelly, [2] the United States Supreme Court held that recipients of benefits are entitled to notice and a hearing before their benefits are reduced or terminated.  New York State has complied with this Supreme Court ruling for over forty years by requiring local departments of social services to issue a written notice giving the right to request a hearing with “aid continuing” prior to reducing or terminating long term care services. [3] 

The federal regulation regarding Medicaid managed care plans provides the circumstances in which a managed care organization must continue the enrollee’s benefits pending an appeal.  The regulation provides:

  • Continuation of benefits.  The MCO or PIHP must continue the enrollee’s benefits if
    • The enrollee or the provider files the appeal timely;
    • The appeal involves the termination, suspension, or reduction of a  previously authorized course of treatment;
    • The services were ordered by an authorized provider;
    • The original period covered by the original authorization has not expired; and
    • The enrollee requests extension of benefits.

42 CFFR 438.420(b).  This regulation sets a floor, or minimum standard, for when the MCO must provide aid continuing.  If the original authorization period has expired, the MCO is not required to provide aid continuing, but there is nothing that prohibits a state from requiring aid continuing.  To the contrary, the federal Medicaid Act at 42 U.S.C. § 1396a(a)(3) provides “A state plan for medical assistance must: provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness.  The Medicaid regulations, which specifically implement Goldberg’s constitutional protections, require continued benefits pending appeal.”  42 C.F.R. § 431.231(c).  The regulation at 438.420(b) concerns only the duties of the MCO, not those of the single state Medicaid agency.  Even if the MCO is not required to pay for the cost of the services during the aid continuing period, the state is required as single state agency to provide and pay for them. 

In Shakhnes v. Eggleston, the Court rejected the state agency’s argument that the long-recognized due process rights under 42 C.F.R. part 431 do not extend to enrollees in Medicaid managed care programs, finding that the managed care provisions do not “foreclose[] mutual obligations” under the Medicaid statute and the implementing regulations.  740 F. Supp. 2d 602 (S.D.N.Y. 2010); aff’d in part and vacated in part on other grounds sub nom. Shakhnes v. Berlin, _ F.3d _, 2012 WL 3264099 (2d Cir. Aug. 13, 2012) (confirming that Medicaid part 431 regulations apply to all Medicaid enrollees, in both fee-for-service and MCO systems).  See also Jonathan C., 2006 WL 3498494 (E.D. Tex. 2006); Hamby v. Neel, 368 F.3d 549 (6th Cir. 2004).

Further, the state agency must furnish Medicaid to all eligible individuals, 42 U.S.C. § 1396a (a)(8), and the implementing regulation specifies that the state agency must “continue to furnish Medicaid regularly to all eligible individuals until they are found to be ineligible.”  42 C.F.R. § 435.930(b).  Applying this regulation to Medicaid services, it is established constitutional doctrine that if there is no change in an individual Medicaid recipient’s medical needs or other circumstances, that his or her Medicaid personal care services may not be reduced from the amount previously authorized.  Mayer v. Wing, 922 F. Supp. 902 (S.D.N.Y. 1996).  In Mayer, the New York City Medicaid program was enjoined “from reducing a recipient’s …personal care services unless they state in the notice that the reduction is justified because of:  (1) a change in the recipient’s medical, mental, economic or social circumstances; (2) a mistake that occurred in the previous authorization of services, …” and other limited reasons.  Id. at 911 (“The City Defendant has, without any adequate justification, repeatedly determined to reduce services initially authorized to home care recipients.  The capricious nature of these decisions is evidenced by the fact that Plaintiffs received notices of reduction while in the same or worse physical condition they were in when home care was initially authorized, and were given no explanation for why they were assessed differently the second time around.”)  Although Mayer concerned NYC’s administration of Medicaid, the case holdings apply with equal force in managed care settings.  Under this doctrine, there is no basis for distinguishing a reduction in services that happens at the end of an arbitrarily selected authorization period, and a reduction that occurs in the midst of such a period.

For these reasons, Empire Justice Center strongly supports the consumer protection provisions of A.4996.

End Notes:
 [1] 42 C.F.R. § 438.402
 [2] 397 U.S. 254 (1970)
 [3] 18 NYCRR §§ 358-3.6, 505.14(b)(5)(v)(b)