UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


MCCREARY, MAURICE

v.

OFFNER, PAUL


98-5155a

D.C. Cir. 1999


*	*	*


Tatel, Circuit Judge: Under Medicaid's "buy-in" program,  states must
use Medicaid funds to enroll certain needy,  Medicare-eligible
individuals in Medicare's Part B supplemen- tal insurance program. In
this case, we must determine  whether the buy-in program requires
states to reimburse  Medicare providers the entire twenty percent
copayment that  patients normally pay for a particular service under
Part B,  or whether, as the United States Department of Health and 
Human Services has long permitted, states may limit reim- bursement to
the almost always lower Medicaid rate for the  same service. Relying
on HHS policy, the District of Colum- bia began capping copayment
reimbursement at Medicaid  rates in 1990. Appellants, a group of
District of Columbia  doctors, challenge the District's policy,
arguing that until  Congress amended the buy-in statutes in 1997, the
law re- quired the District to reimburse them at Medicare rates. 
Finding the pre-1997 statutes ambiguous as to state copay- ment
reimbursement obligations, and finding HHS's interpre- tation
reasonable, we affirm the district court's grant of  summary judgment


I


Enacted in 1965, Medicare finances medical procedures for  people over
65 and people with disabilities. See 42 U.S.C.  ss 1395-1395ccc
(1994). Medicare has two parts, Part A and  Part B. Part A provides
reimbursement for inpatient hospi- tal care and related post-hospital,
home health, and hospice  care. See id. ss 1395c to 1395i-4.
Enrollment in Part A is  automatic. Part B is voluntary. It provides


insurance for hospital out-patient services, physician services,  and
other medical services not covered under Part A. See id.  ss 1395j to
1395w-4. Part B imposes cost-sharing obli- gations on people who
choose to participate. These include  an annual deductible, monthly
premiums, and--of particular  relevance to this case--copayments.
Copayments consist of  twenty percent of the "reasonable charge" for
the service  rendered, an amount determined annually by HHS. See id. 
s 1395l(a). Medicare directly reimburses Part B providers  for the
remaining eighty percent. See id.


Also enacted in 1965, Medicaid, a cooperative federal-state  program,
finances medical care for the poor, regardless of  age. See 42 U.S.C.
ss 1396-1396v (1994). Participating  states must establish financial
eligibility criteria, identify  covered medical services, develop rate
schedules, and submit  their plans to HHS for approval. See id. ss
1396a(a),  1396a(b). HHS approval entitles a state to substantial
feder- al funding, ranging from fifty percent to eighty-three percent 
of the cost of medical services provided under the plan. See  id. s
1396d(b). Doctors and other health care providers are  not required to
service Medicaid patients, but if they do they  must accept
reimbursement from the state at its Medicaid  rate as payment in full;
they may not demand additional  payment from patients. See id. ss
1320a-7b(d), 1396o.  State Medicaid rates for any given service are
almost always  lower than the "reasonable charge" for the same service
 under Medicare Part B. Indeed, Medicaid rates are often  even lower
than the eighty percent of the reasonable charge  that the federal
government reimburses Medicare providers.


Medicare and Medicaid intersect with respect to the elderly 
poor--so-called "dual eligibles." While these people are eligi- ble to
purchase supplemental medical insurance through  Medicare Part B, many
cannot afford Part B's premiums,  deductibles, and copayments.
Medicaid has therefore long  allowed states to use Medicaid dollars to
enroll dual eligibles  in Medicare Part B by paying their cost-sharing
obligations.  See Pub. L. No. 89-97, s 121(a), 79 Stat. 286, 346
(1965)  (codified at 42 U.S.C. s 1396a(a)(15)) (repealed 1988). Be-
cause the federal government heavily subsidizes Medicaid, 


this "buy-in" program enables states to shift a large portion  of the
cost of caring for the elderly poor to the federal  treasury.


In 1986, Congress expanded the buy-in program beyond  dual eligibles to
include a newly created category of "qualified  medicare
beneficiaries" ("QMBs"): elderly people not quite  poor enough to
qualify for Medicaid but who nonetheless met  certain neediness
criteria. See Pub. L. No. 99-509, s 9403,  100 Stat. 1874, 2053-55
(1986) (codified at 42 U.S.C.  ss 1396a(a)(10)(E), 1396d(p)(1)
(1994)). Initially optional, the  QMB buy-in program became mandatory
in 1988. See Pub.  L. No. 100-360, s 301, 102 Stat. 683, 748 (1988)
(deleting "at  the option of a State" from 42 U.S.C. s
1396a(a)(10)(E)).  Also in 1988, Congress redefined the term "QMB" to
include  dual eligibles. See Pub. L. No. 100-485, s 608(d), 102 Stat. 


This appeal presents the following issue: Are Medicare  providers
performing Part B services to QMBs entitled to  state reimbursement
for the entire twenty percent copayment  that a non-QMB Medicare
patient would normally pay, or  may states limit reimbursement such
that providers receive  no more than the state's Medicaid rate for the
same service?  For example, suppose that the reasonable charge for a
given  Part B service is $100, but a state's Medicaid rate for the 
same service is only $90. If a Medicare doctor performs that  service,
the federal government reimburses the doctor $80,  whether or not the
patient is a QMB. If the patient is a  QMB, does the buy-in scheme
require the state to reimburse  the doctor for the patient's entire
$20 Medicare Part B  copayment? Or may the state give the doctor only
$10 so  that total reimbursement, including the federal government's 
$80, equals $90, the Medicaid rate? If the Medicaid rate for  the
particular service is $70, may the state refuse to reim- burse the
doctor at all because the $80 provided by the  federal government
already exceeds the Medicaid rate? See  Paramount Health Sys., Inc. v.
Wright, 138 F.3d 706, 708  (7th Cir. 1998) (using this example).


Four statutory provisions added to the buy-in scheme in  1986 frame
this issue. Read alone, two suggest that states  must use Medicaid
funds to reimburse Medicare providers  performing Part B services to
QMBs for the full twenty  percent copayment ($20 in the above example)
for which non- QMB Medicare patients would be responsible. Under 42 
U.S.C. s 1396a(a)(10)(E)(i), a state Medicaid plan "must"  provide for
"making medical assistance available for medicare  cost-sharing ...
for qualified medicare beneficiaries." Sec- tion 1396d(p)(3)(D) in
turn defines "medicare cost-sharing" to  include Medicare premiums,
deductibles, and "[t]he difference  between the [80 percent of the
reasonable charge that the  federal government reimburses providers
under Part B] and  the amount that would be paid ... if any reference
to '80  percent' ... were deemed a reference to '100 percent.' " 
Section 1396a(a)(10)(E)(i)'s mandatory language coupled with  section
1396d(p)(3)(D)'s reference to specific percentages sug- gests that
states must use buy-in funds to reimburse provid- ers for the entire
twenty percent Part B copayment.


The other two provisions enacted in 1986 suggest a differ- ent
interpretation. Section 1396a(a)(VIII) provides that  "medical
assistance made available to [QMBs] ... shall be  limited to medical
assistance for medicare cost-sharing ...,  subject to the provisions
of [section 1396a(n)]." Before its  amendment in 1997, section
1396a(n), entitled "Payment  amounts," in turn provided:


In the case of [Medicaid funds provided] for medicare  cost-sharing
respecting the furnishing of a service or  item to a qualified
medicare beneficiary, the State plan  may provide payment in an amount
... that results in a  sum of such payment amount and any amount of
pay- ment made [by the federal government under Medicare  Part B for]
the service or item exceeding the amount  that is otherwise payable
under the State [Medicaid] plan  for the item or service for eligible
individuals who are not  qualified medicare beneficiaries.


Id. s 1396a(n) (amended 1997) (emphasis added). Section  1396a(n)'s use
of the word "may" rather than "shall" suggests 


that states are permitted, not obligated, to reimburse Part B 
providers above the Medicaid rate--$10 if as in the above  example the
Medicaid rate were $90, or zero if the Medicaid  rate were $80 or


Even before the 1986 enactment of these four QMB provi- sions, HHS had
long taken the position that the buy-in  scheme required states to
reimburse providers for Part B  copayments only in an amount equal to
the difference, if any,  between the Medicaid payment and the eighty
percent of the  Medicare Part B charge that the federal government
pays.  See Policy Information Memorandum from Director, Bureau  of
Program Policy, Department of Health and Human Ser- vices, to
Associate Regional Administrators (Sept. 29, 1981)  ("California's
payment of amounts only up to its standard  maximum allowable rate
under its [Medicaid] program is  acceptable."); Policy Information
Memorandum No. 6 from  Associate Commissioner for Program
Coordination, Depart- ment of Health, Education and Welfare, to Health
Services  Administration Regional Staff (Mar. 4, 1971) ("[T]he [state]
 agency is not necessarily obligated to pay the full amount of  the
deductibles and co-insurance costs according to the rates  established
under [Medicare], but only that amount which will  satisfy the
requirement for payment in full according to the  [Medicaid] method of
payment."). HHS reiterated this policy  following the 1986 amendments
to the buy-in scheme. See  Dep't of Health & Human Svcs., State


In 1990, the District of Columbia (a state for Medicaid  purposes)
amended its Medicaid program to limit reimburse- ment for QMB Part B
copayments to the Medicaid rate. See  37 D.C. Reg. 5593 (1990). HHS
approved the District's plan  in 1991. The District implemented its
plan for more than six  years without challenge.


In 1997, a coalition of D.C. doctors and the Medical Society  of the
District of Columbia sued the city in the Superior  Court for the
District of Columbia, claiming that the buy-in  statutes required
states to pay QMB Part B copayments in  full. Alleging breach of
contract, unjust enrichment, and 


promissory estoppel, the doctors sought retroactive reim- bursement.
The doctors also sued the District for injunctive  relief in the
United States District Court for the District of  Columbia. The city
removed the first suit to federal court,  where the two cases were
consolidated.


One month later, Congress enacted the Balanced Budget  Act of 1997,
Pub. L. No. 105-33, 111 Stat. 251 ("Budget Act").  Section 4714(a) of
the Budget Act, entitled "Clarification  Regarding State Liability for
Medicare Cost-Sharing," ex- pressly authorized states to limit
Medicare cost-sharing pay- ments for QMBs based on Medicaid rates. See
id. s 4714(a),  111 Stat. at 509-10. Section 4714(c) applied this
putative  "clarification" retroactively to any pending lawsuit seeking
 reimbursement from states under the buy-in program. See  id. s
4714(c), 111 Stat. at 510. Recognizing the prospective  validity of
section 4714(a), the doctors abandoned their re- quest for injunctive
relief. Instead, they amended their  complaint to challenge the
constitutionality of section  4714(c)'s retroactivity provision,
claiming that it violates the  Takings and Due Process Clauses of the
Fifth Amendment as  well as principles of separation of powers. The
United States  intervened to defend the constitutionality of the


The district court upheld section 4714(c), concluding:


[O]ne thing is clear: the law regarding state liability to  pay for the
health services provided to QMBs has never  been crystal clear.
Section 4714 has certainly provided  clarification where it was
needed. For this reason, the  Court concludes that applying section
4714 retroactively,  as Congress directed, is not impermissible under
the  Constitution.


McCreary v. Offner, 1 F. Supp. 2d 32, 37 (D.D.C. 1998).  Because
section 4714's clarification of the buy-in scheme  undermined the
theory of the doctors' breach of contract  action--that pre-1997 law
required reimbursement at Medi- care rates--the district court granted
summary judgment for  the District. See id. The doctors appeal. Our
review is de 


novo. See Heller v. Fortis Benefits Ins. Co., 142 F.3d 487,  491-92
(D.C. Cir. 1998).


II


According to the doctors, pre-1997 law clearly required  states to
reimburse them for all Part B cost-sharing obli- gations incurred by
QMBs. The Budget Act, they argue,  could not constitutionally change
that requirement retroac- tively. The United States (supported by the
District) re- sponds that: (1) pre-1997 law was ambiguous regarding
state  cost-sharing obligations, and under Chevron U.S.A. Inc. v. 
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),  we must
defer to HHS's reasonable interpretation of that  scheme; (2) even if
Chevron deference to HHS's interpreta- tion of the pre-1997 scheme is
inappropriate, under Loving v.  United States, 517 U.S. 748, 770
(1996) ("subsequent legisla- tion declaring the intent of an earlier
statute is entitled to  great weight in statutory construction")
(internal quotation  omitted), we should give deference to Congress's
1997 inter- pretation of the prior scheme, as did the district court;
and  (3) if the Budget Act did change the buy-in scheme retroac-
tively, then the doctors' constitutional arguments fail on the 
merits. Mindful of our obligation to avoid constitutional  questions
when possible, see Ashwander v. TVA, 297 U.S. 288,  341 (1936)
(Brandeis, J., concurring), we begin by addressing  the government's
Chevron argument. After all, if Chevron  deference to HHS's
interpretation of pre-1997 law is appro- priate, we must sustain the
District's reimbursement cap  without regard to the Budget Act.


The doctors insist--as they must to avoid Chevron defer- ence--that
before 1997 sections 1396a(a)(10)(e) and  1396d(p)(3)(D) unambiguously
required states to reimburse  providers in full for copayments for
Part B services per- formed on QMBs. They argue that the permissive
"may"  language in section 1396a(n) comports with this reading, 
interpreting that section simply to authorize states to deviate  from
their otherwise rigid Medicaid payment schedules. Ac- cording to the
doctors, section 1396a(n) did nothing more than  provide an exception
to the general rule that states must 


never reimburse Medicaid providers in excess of HHS- approved
schedules. Section 1396a(n) used the permissive  "may" instead of the
mandatory "shall," the doctors contend,  because state Medicaid rates
occasionally exceed the Medi- care rates for the same service.


The doctors' interpretation of the buy-in statutes is certain- ly
plausible. But as we read the pre-1997 statutes and their  legislative
history, we think Congress has not so "unambigu- ously expressed" its
intent as to make the doctors' interpreta- tion mandatory. Chevron,
467 U.S. at 843; see also Air  Transp. Ass'n of America v. FAA, 1999
WL 110689, at *3  (D.C. Cir. Mar. 5 1999) ("Although the inference
petitioner  would draw as to the statute's meaning is not by any means
 unreasonable, it is also not inevitable.").


To begin with, if the buy-in statutes really spoke as clearly  as the
doctors contend, section 1396a(n) would have had no  need to provide
separately that states could deviate from  their otherwise mandatory
Medicaid schedules. Addressing  the same issue, the Seventh Circuit
put it this way: "[I]f ...  [sections 1396a(a)(10)(e) and
1396d(p)(3)(D) of] the statute  clearly entitle[ ] [providers] to
reimbursement at Medicare  rates (if it is not clear, Chevron is back
in play), the state  could hardly be penalized for such reimbursement.
That  would be penalizing it for complying with the statute." Para-
mount, Inc., 138 F.3d at 709; see also Rehabilitation Ass'n v. 
Kozlowski, 42 F.3d 1444, 1469 (4th Cir. 1994) (Niemeyer, J., 
dissenting) ("It is utterly implausible, I submit, to believe that 
Congress would create a new section in the [Medicaid] Act  solely to
acknowledge that it is permissible for states to do  what Congress
requires them to do in other sections."). The  United States makes
this argument, but the doctors nowhere  respond.


The government also points out that the very provision  from which the
doctors derive a state obligation to pay cost- sharing in
full--section 1396a(a)(10)(E)(i)--requires that state  plans make
cost-sharing available for QMBs. Because states  must detail their QMB
cost-sharing policies in their Medicaid  regulations before submitting
those regulations to HHS for 


approval, the argument goes, states' cost-sharing obligations  could
never cause them to run afoul of their own regulations.  This argument
makes sense. Again, the doctors nowhere  respond.


The doctors' interpretation of section 1396a(n) suffers from  another
problem. During the almost twenty years prior to its  enactment,
states often reimbursed providers for Medicare  cost-sharing in excess
of Medicaid rates. Why then did Con- gress need to enact section
1396a(n) to authorize such reim- bursement? See Paramount, 138 F.3d at
709 (making this  point). The doctors point out that during the twenty
years  prior to the enactment of section 1396a(n) states had not used 
Medicaid funds to pay cost-sharing for "pure QMBs" (QMBs  not
otherwise eligible for Medicaid) because the QMB pro- gram did not
even exist during that period. True as that may  be, the doctors
cannot dispute that by 1986 states had often  exceeded their own
Medicaid rates with respect to dual  eligibles.


The doctors claim to find support for their position in the  House
Report accompanying the 1986 enactment of the QMB  program, which
stated that "the Medicaid program would pay  the Part B deductible and
the beneficiary's 20 percent coin- surance." H.R. Rep. No. 99-727, at
106 (1986), reprinted in  1986 U.S.C.C.A.N. 3607, 3696. But because
this language did  not speak to whether states must make the entire
copayment  even in excess of Medicaid rates, it helps the doctors
little.  Moreover, subsequent legislative history squarely conflicts 
with the doctors' interpretation of the buy-in program. The  House
Report accompanying the 1988 amendments said:


It is the understanding of the Committee that, with  respect to dual
Medicaid-Medicare eligibles, some States  pay the coinsurance even if
the amount that Medicare  pays for the service is higher than the
State Medicaid  payment rate, while others do not. Under the Commit-
tee bill, States would not be required to pay the Medi- care
coinsurance in the case of a bill where the amount  reimbursed by
Medicare--i.e., 80 percent of the reason-


able charge--exceeds the amount Medicaid would pay for  the same item
or service.


H.R. Rep. No. 100-105(II), at 61 (1987), reprinted in 1988 
U.S.C.C.A.N. 857, 884; see also H.R. Rep. No. 101-247, at 364  (1989),
reprinted in 1989 U.S.C.C.A.N. 1906, 2090 ("The  Medicaid programs
typically pay the Medicare coinsurance  only to the extent that their
payment, plus the Medicare  payment, does not exceed what the Medicaid
program would  pay for the service in question.... The Committee bill
...  does not change the current policy regarding the amount  which a
Medicaid program must reimburse on such claims.").  Although
post-enactment legislative history may or may not  be a valid tool for
ascertaining congressional intent, see  United States v. Carlton, 512
U.S. 26, 39 (1994) (Scalia, J.,  concurring) (referring to
"post-legislation legislative history"  as an "oxymoron"), our task
here is not to divine conclusively  the meaning of section 1396a(n),
but rather to determine  whether it is reasonably susceptible to more
than one mean- ing. With respect to this question, post-enactment
legislative  commentary offering a plausible interpretation is
certainly  relevant, much like plausible interpretations from
litigants,  other courts, law review articles, or any other source
would  be. The fact that the 1988 and 1989 House Reports inter- preted
section 1396a(n) differently from the interpretation  favored by the
doctors suggests that the statute is far from  unambiguous.


We have a similar reaction to four pre-Budget Act circuit  court
decisions that found the buy-in scheme unambiguous.  See Haynes
Ambulance Serv., Inc. v. Alabama, 36 F.3d 1074,  1077 (11th Cir. 1994)
(per curiam); Pennsylvania Med. Soc'y  v. Snider, 29 F.3d 886, 891-902
(3d Cir. 1994); Rehabilitation  Ass'n, 42 F.3d at 1451-58; New York
City Health & Hospi- tals Corp. v. Perales, 954 F.2d 854, 858-59 (2d
Cir. 1992).  Although all four circuits found the statutes
sufficiently clear  to preclude Chevron deference, they were not
unanimous  about the meaning of the supposedly unambiguous scheme. 
The Second, Third, and Eleventh Circuits essentially adopted  the
interpretation the doctors urge in this case. The Fourth  Circuit
expressly rejected this reading, as well as the position 


HHS took there (and takes here). Instead, it held that  section
1396a(n) allowed states to pay more cost-sharing for  pure QMBs than
for dual eligibles. See Rehabilitation Ass'n,  42 F.3d at 1454-55. The
plausibility of these competing  interpretations simply confirms our
view that the buy-in  scheme is ambiguous. See Smiley v. Citibank, 517
U.S. 735,  739 (1996) ("In light of the two dissents from the opinion
of  the Supreme Court of California, and in light of the opinion of 
the Supreme Court of New Jersey creating the conflict that  has
prompted us to take this case, it would be difficult indeed  to
contend that the [statute] is unambiguous with regard to  the point at
issue here.") (citation and footnote omitted).


III


Proceeding to the second step of the Chevron inquiry, we  ask whether
HHS has reasonably interpreted the buy-in  statutes. The United
States's position is simple: Because the  word "may" in section
1396a(n) is permissive, not mandatory,  states are allowed to but need
not exceed their Medicaid  rates. To us, this seems eminently
reasonable--"may" means  may.


The doctors make only one argument challenging the rea- sonableness of
HHS's interpretation. Relying on INS v.  Cardoza-Fonseca, 480 U.S.
421, 446 n.30 (1987), which stated  that "[a]n agency interpretation
of a relevant provision which  conflicts with the agency's earlier
interpretation is entitled to  considerably less deference than a
consistently held agency  view," the doctors claim that HHS has not
consistently inter- preted the buy-in statutes. In support, they cite
the follow- ing commentary from a 1983 HHS rulemaking:


Since 1971, HHS policy has been to require State  agencies that have a
"buy-in" agreement to pay, in  addition to the Part B premium, the
Part B coinsurance  and deductible amount for services provided to
beneficia- ries under Part B, even if the services are not routinely 
provided under the Medicaid State Plan.


48 Fed. Reg. 10,378, 10,379 (1983) (notice of proposed rule- making).
That rulemaking has no relevance to the question 


presented here, however, because there HHS merely conclud- ed that the
buy-in program does not require states to pay  Part B cost-sharing for
services not covered by their Medic- aid plans; the rulemaking did not
address whether a state  must pay QMBs' full copayments for services
that are cov- ered under its Medicaid plan. The most relevant commen-
tary in the rulemaking, moreover, actually comports with the  position
HHS takes in this case: "[I]f a State limits the  amount, duration or
scope of Medicaid services covered in the  State plan, then the State
may similarly limit payment of  Medicare Part B cost sharing amounts
on those same services  in accordance with its Medicaid service
limitations." 52 Fed.  Reg. 47,926, 47,928 (1987) (final rule). Not
only does this  rulemaking suggest no agency inconsistency, but the
doctors  have failed to cite any other instances of alleged agency 
inconsistency in the twenty-eight years since HHS first artic- ulated
its copayment reimbursement policy. Indeed, HHS  appears to have
approved the Medicaid plans of every state  that has chosen to limit
total copayment reimbursement to  Medicaid rates.


Because we conclude that HHS's interpretation of the buy- in statutes
is reasonable, we have no need to reach the  doctors' constitutional
challenge to the Budget Act. The  district court's grant of summary
judgment for the District is  affirmed.


So ordered.