Alaska Department of Health & Social Services v. Centers for Medicare & Medicaid Services

The Alaska Department of Health and Social Services (hereinafter the “State”) petitions for review of a final determination by the Administrator of the Centers for Medicare and Medicaid Services (“CMS” or “Agency”) disapproving a proposed Medicaid state plan amendment that would alter the rate at which the federal government reimburses State expenditures on behalf of patients at Indian tribal health facilities. The Administrator rejected the proposed amendment on two alternative grounds: (1) that it was inconsistent with the statutory requirement of efficiency, economy, and quality of care; and (2) that it failed to comply with a regulation governing payment ceilings. The State challenges the Administrator’s decision as arbitrary and capricious under the Administrative Procedure Act. We conclude that the Administrator’s interpretations of the statute and regulation were permissible and deny the petition for review.

I. BACKGROUND

A Statutory Framework

Medicaid is a cooperative federal-state program through which the federal government reimburses states for certain medical expenses incurred on behalf of needy persons. Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 502 , 110 S.Ct. 2510…