Medicaid & Medicare Advantage Prods. Ass'n of P.R. v. Hernandez

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MEDICAID and MEDICARE ADVANTAGE PRODUCTS ASSOCIATION OF PUERTO RICO, INC., et al., Plaintiffs, v. DOMINGO EMANUELLI HERNANDEZ, in his official capacity as Secretary of Justice of Puerto Rico, et al., Defendants.

CIVIL No. 20-1760 (DRD)

United States District Court, D. Puerto Rico

March 8, 2023

OPINION AND ORDER

DANIEL R. DOMÍNGUEZ, UNITED STATES DISTRICT JUDGE

Pending before the Court is a Motion for Judgment on the Pleadings (Docket No. 47) filed by Plaintiffs, Medicaid and Medicare Advantage Products Association of Puerto Rico, Inc. (hereinafter, “MMAPA”), MMM Healthcare, LLC (hereinafter, “MMM”), Triple-S Advantage Inc., Triple-S Salud, Inc., Triple S-Vida, Inc. (hereinafter, collectively “Triple-S”), MCS Advantage, Inc. (hereinafter, “MCS”), First Medical Health Plan Inc. (hereinafter, “First Medical”), Humana Insurance of Puerto Rico and Humana Health Plans of Puerto Rico, Inc., (hereinafter, collectively “Humana”) (hereinafter collectively, “Plaintiffs”). Defendants Domingo Emanuelli-Hernandez and Alexander Adams Vega, in their official capacities as the Commonwealth of Puerto Rico's Attorney General and Insurance Commissioner, respectively, filed a Response in Opposition thereto. See Docket No. 53. A Reply and Surreply ensued shortly thereafter. See Docket Nos. 60 and 64.

Upon review, and for the reasons stated herein, the Court hereby GRANTS Plaintiffs' Motion for Judgment on the Pleadings (Docket No. 47) and accordingly, a dismissal of this case is warranted.

INTRODUCTION

The instant action stems from the Commonwealth of Puerto Rico's approval of Act 1382020 (2020 P.R. Laws 138) and Act 142-2020 (2020 P.R. Laws 142), which set new standards for the operation of health plans throughout the Commonwealth, including those operated under the Medicare Advantage program, Medicare Part D, the Federal Employee Retirement Income Security Act of 1974 (hereinafter “ERISA”), and the Federal Employees Health Benefits program (hereinafter, “FEHB”). Specifically, Act 138-2020 imposes obligations on insurers related to the timing of medical claims submissions and the payment of claims. In turn, Act 142-2020 prohibits providers' medical criteria regarding patients' treatments from being altered by insurers or health management organizations; while also requiring insurers or health management organizations to provide coverage of prescription drugs during the medical exception request process and sets the standard for payments to pharmacies for the initial drugs dispensed during this process. See Comp., at ¶ 3. Act 138 went into effect on November 30, 2020, and Act 142 went into effect on December 8, 2020. Id.

Plaintiffs claim that “[e]ach of these federal programs contains an express preemption clause like the one considered in [Medicaid & Medicare Advantage Prods. Ass'n of P.R., Inc. v. Emanuelli-Hernandez, No. CV 19-1940 (SCC) 2021 WL 792742 at *10 (D.P.R. Mar. 1, 2021)], prohibiting the Commonwealth from dictating the rules under which these plans operate.” Docket No. 47 at p. 7. Accordingly Plaintiffs seek declaratory and injunctive relief against the enforcement of both Acts. Id.

Defendants in Opposition argue that “[t]he federal legislation cited by plaintiffs in their Motion for Judgment on the Pleadings does not preempt Act-138-2020 and Act-142-2020” as “the Government is exercising its historic and traditional police power to ensure the health and safety of the citizens and residents of Puerto Rico.” Docket No. 53 at p. 31. Hence, according to Defendants, “the presumption against preemption to these laws apply to all healthcare payers and are not related to FEHB or ERISA plans.” Id.

The Court is once again called to determine whether federal programs under Medicare Advantage, Medicare Part D, ERISA and FEHB are protected by an express preemption clause against the Commonwealth's attempts to regulate how these plans operate.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Commonwealth of Puerto Rico approved Act 138-2020 and Act 142-2020. Particularly, Act 138-2020 amended Sections 30.020, 30.030, 30.040 and 30.050 of Act No. 77 of the Puerto Rico Insurance Code and Section 6 of Act-5 2014. Comp. at ¶ 29.

Act 138 dictates numerous aspects of claims payment between plans and providers. For instance, it incorporates into Act No. 77 a requirement that insurance companies pay healthcare providers within thirty (30) days of receiving a claim for services rendered, so long as the claim constitutes a clean claim (i.e., clean invoice). Id. at ¶ 30; see 2020 P.R. Law 138, ¶ 2. Act 138 specifically defines a clean claim as one that “has no defect, impropriety or special circumstance, such as the lack of necessary documentation that delays timely payment” while imposing new obligations related to the timing of claims submissions and payments of claims by insurers. Comp. at ¶¶ 31-32; see 2020 P.R. Law 138, § 1(i). In furtherance thereof, the Office of the Insurance Commissioner is directed “to prescribe, by regulations, the minimum content criteria for each type of claim, in order to properly establish the minimum content criteria for each type of clean claim, according to the service rendered.” Id. If a claim satisfies the minimum criteria, the health insurer is required to treat the claim as clean while prohibiting insurers from requiring additional documentation from providers unless the insurer has already specified such a requirement by contract. Id.

The Act further specifies the timeframe for the submission and payment of clean claims, by requiring providers to submit their claims for payment of services rendered within ninety (90) days of service, and that insurers and health service organizations pay clean claims within 30 days of receipt. Id. at § 2; see Comp. at ¶ 33. New requirements on the communications between insurers and providers regarding non-claim claims are also imposed by the Act. For instance, within 15 days of receiving a claim, insurers must notify providers if they determine that the claim cannot be processed. 2020 P.R. Law 138, § 4. The notification must include the outstanding information or documentation needed to process the claim. Id. Should a provider fail to notify within the applicable timeframe, the claim will be considered clean. Id. Once a provider receives notification of a claim's deficiency, they have ten (10) days to respond. Id. Upon receiving the provider's response, insurers have five (5) days to either object to or pay the claim. Id. An insurer's failure to object within the applicable five (5) days, shall result in the claim being considered actionable for payment. Id.; see Comp. at ¶ 34.

Finally, Act 138 orders the Puerto Rico Health Insurance Administration to regulate utilization review processes according to new principles, such as, mandating the utilization review be completed within 48 hours of service; prohibiting the use of retrospective review remedies; and providing that the clinical review criteria established in the Insurance Code shall be used as a reference only, with providers' professional judgments ultimately determining the medical necessity of a service. 2020 P.R. Law 138, § 5; see Comp. at ¶ 35.

In turn, Act 142-2020 amended Sections 2.030, 2.040 and 30.050 of Chapter 2 and Section 4.070 of Chapter 4 of Act 194-2011 of the Puerto Rico Insurance Code. Comp. at ¶ 29. Act 142 essentially regulates the handling of prescription drugs while setting standards for coverage of prescription drugs, as well as standards that health insurers must follow when a patient's claim for drug prescription coverage is denied. Comp. at ¶ 38. Namely, it incorporates a revision of the term “Clinical Review Criteria” for stating that physicians are not obligated to use these guidelines when deciding a patient's treatment plan and, as long as providers conform with generally accepted standards of medical practice, their professional judgment remains the exclusive criteria for determining necessary treatment. Id. at ¶ 39. Health Insurers, Pharmacy Benefit Managers (hereinafter, “PBMs”) and other entities that administer pharmacy services are required to provide temporary coverage of prescription drugs during the medical exception process. 2020 P.R. Law 142, § 2(B); Comp. at ¶ 40. The medical exception process is triggered when an enrollee or their prescriber requests coverage of a prescription drug that is not included on the health plan's formulary or seeks access to a non-preferred drug at the same cost sharing level as a preferred drug. Comp. at ¶ 41. While the exception is being considered, the Act mandates coverage of the drug even if the drug is excluded from the plan's formulary. The coverage determination must be made within 48 hours from the date of the receipt of the request, or the date of the receipt of certification, if required by the health insurance organization or insurer, whichever is later. For controlled drugs, the timeframe shall not exceed 24 hours. 2020 P.R. Law 142, § 3(E)(1); see Comp. at ¶ 42. Furthermore, the Act mandates that the insurer, PBM or other applicable entity providing the services pay the pharmacy for the initial dispensed drug while accepting electronic invoicing in lieu of paper. 2020 P.R. Law 142, § 2(B).

Medicare Advantage and Part D plans are highly regulated by the federal government. The Medicare statute and regulations establish a comprehensive and articulated framework governing the benefits that may be covered by Medicare Advantage and Part D plans, how beneficiaries may access such benefits, and other rights and responsibilities related to delivery and payment for healthcare items and services. Comp. at ¶ 45. In the Complaint, Plaintiffs claim that federal statutes and regulations directly address the topics covered by Laws 138 and 142. S...