Medicaid Pharmacy Benefits Waiver Programs: A Deference Argument for Process in Informal Agency Actions

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Medicaid Pharmacy Benefits Waiver Programs: A Deference Argument for Process in Informal Agency Actions

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Title: Medicaid Pharmacy Benefits Waiver Programs: A Deference Argument for Process in Informal Agency Actions
Author: Geertsma, Meleah A.
Citation: Medicaid Pharmacy Benefits Waiver Programs: A Deference Argument for Process in Informal Agency Actions (2003 Third Year Paper)
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Abstract: The proper level of judicial review for Section 1115 Medicaid demonstration program waiver (“waiverâ€) decisions made by the Secretary of the Department of Health and Human Services (“the Secretaryâ€) is an important question of law regarding one of the federal and state governments’ largest social programs. Judicial review of waivers is of particular importance in the area of pharmacy benefits. In the absence of Congressional action to address the dual problems of drug costs and coverage that are driving much of health care spending, several states have turned to Medicaid waivers as a means to implement innovative pharmacy benefits programs and garner federal funds for their finance. Many more states are looking to enact such programs in the future. Pharmaceutical access is an issue of national importance due to the broad need for drugs among different groups of health care consumers. The supply-side impacts of pharmaceutical access also are nationwide: large-scale drug manufacturers sell their standardized products in a national pharmaceutical market. While the need for pharmaceutical access may be universal and the market at least semi-national, the proper contours of pharmacy coverage may take different forms based on the particulars of each state’s population, financial resources, and health care system structure. Thus it is imperative that federal and state health agencies work together to address and provide a check for each other on the issue of drug access. More importantly, debates about the proper policy role of the federal and state governments in providing pharmacy assistance, such as those ongoing in the Medicaid waiver context, should be open to all interested parties. A closed process between CMS and individual state agencies risks omitting important consumer and industry voices from the policy debate. In the past, courts have granted substantial deference to the Secretary’s waiver determinations. Recent administrative case law both identifies the need for and demands a more reasoned justification for such deference than past courts have provided. Over the two terms from 2000 to 2002, the federal district courts for the District of Columbia issued a set of opinions ruling on the authority of the Secretary of the Department of Health and Human Services (DHHS) to approve state Medicaid waiver requests to expand pharmaceutical benefits to otherwise ineligible residents. As the opinions suggest, confusion existed at the time as to the appropriate level of deference to grant the Secretary’s actions under the Administrative Procedure Act (APA) and the lead case on the question of deference, Chevron v. Natural Resources Defense Council . A mere ten days after the final substantive ruling on the pharmaceutical benefits waiver cases, the Supreme Court issued its decision in United States v. Mead Corporation. The Mead Court distinguished those agency actions due heightened deference under the Court’s prior decision in Chevron from other, more informal agency actions which are due an intermediate level of deference in keeping with their “power to persuade.†In elaborating on the proper standard of review for informal agency actions, the Mead Court set up a new framework for future courts faced with Medicaid waiver decisions. Courts first must ask whether Congress delegated to the Secretary the authority to make waiver determinations that “carry the force of law†and whether the Secretary acted in exercise of that authority before granting Chevron deference. The purpose of this paper is not to challenge the Mead decision, but to apply its holding and legal concepts to the specific case of Section 1115 Medicaid waivers for pharmacy benefits expansion proposals.
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Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:8965613

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