TERMINATING BEYOND THE LIMITS: CMS IS OVERREACHING IN ITS ATTEMPT TO REGULATE ACOS ACCORDING TO ANTITRUST STANDARDS

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TABLE OF CONTENTS

INTRODUCTION ... 782

I. BRIEF HISTORY OF HEALTH CARE REFORM ... 784

II. CMS’S INTERPRETATION OF THE TERMINATION PROVISION IS INVALID UNDER CHEVRON ... 787

A. Basics of the Chevron Test ... 789

B. The PPACA’s Text Reveals the Scope of the Termination Power ... 791

1. The “Precise Issue in Controversy” ... 791

2. The Secretary’s Authority to Create Eligibility Requirements and Quality Performance Standards ... 793

3. Quality Performance Standards and Measures ... 797

C. Legislative History as Additional Evidence of Congressional Intent ... 802

D. Policy Considerations Militate Against CMS’s Interpretation of Its Termination Power ... 807

1. CMS Is Not an Antitrust Law Enforcement Agency ... 807

2. CMS’s Claimed Authority is Harmful to Health Care Reform Goals ... 809

3. The Antitrust Agencies Have Not Fully Agreed on Enforcement of ACOs ... 810

CONCLUSION... 811

† Executive Editor, Cardozo Law Review. J.D. Candidate (May 2013), Benjamin N. Cardozo School of Law; M.S. in Organic Chemistry, California Institute of Technology, 2007; B.A., summa cum laude, Middlebury College, 2005. Thanks to Professor Bierschbach, Daniel Tracer, Danielle Shultz, and Mario Lucero for helping me guide this Note to publication. I would also like to acknowledge the members of Cardozo Law Review, Volumes 33 and 34; you all are the reason I have so much fun editing.

INTRODUCTION

Congress enacted the Patient Protection and Affordable Care Act¹ in March 2010, and the Health Care and Education Reconciliation Act,² a substantial package of amendments, soon thereafter.³ As with many revolutionary pieces of legislation,⁴ Congress delegated the responsibility of interpreting the statutes to administrative agencies formulating more specific rules and guidance.⁵ While some provisions of the health care reform law took effect immediately, the preponderance of programs created by the statute still await guidance from the respective administrative agencies responsible for breathing regulatory life into the framework Congress designed. The Department of Health and Human Services (HHS), through its subsidiary agency the Centers for Medicare and Medicaid Services (CMS),⁶ recently promulgated final rules⁷ for one provision, the Medicare Shared Savings Program (MSSP).⁸ This section of the law, touted as a significant cost- reducing measure that will focus health care providers on quality rather than quantity of care,⁹ allows accountable care organizations (ACOs) to receive a subsidy from the federal government based on the amount of savings they generate during a year.¹⁰

Congress delegated no small measure of authority over MSSP to the Secretary of HHS. Indeed, § 1395jjj(b) gives the Secretary the power to determine which health care providers may be eligible for the program,¹¹ as well as to establish certain requirements each applicant

1 Pub. L. No. 111-148, 124 Stat. 119 (codified at 42 U.S.C. §§ 18001–18121).

2 Pub. L. No. 111-152, 124 Stat. 1029.

3 Hereinafter, I will refer to the combined legislation as the “health care reform law.”

President Obama signed the PPACA into law on March 23, 2010 and HCERA on March 30, 2010. Together, the health care reform package is known as the Affordable Care Act (ACA).

4 See generally Robert A. Anthony, Which Agency Interpretations Should Bind Citizens and the Courts?, 7 YALE J. ^ON R^EG. 1 (1990).

5 PPACA delegates authority to many different agencies, such as the Internal Revenue Service (IRS), Department of Health and Human Services (HHS), Office of Inspector General (OIG), and the Department of Justice (DOJ), to establish regulatory guidance to health care providers, insurance companies, and other entities.

6 Organizations in HHS—FAQs, HHS.GOV, http://answers.hhs.gov/categories/5 (last visited Oct. 1, 2012).

7 An administrative agency has the authority under the Administrative Procedure Act (APA) to enact regulations setting specific standards of enforcement for regulated entities. See 5 U.S.C. § 553 (2006). The agency must first follow the formal rule-making process articulated in APA, which includes submission of proposed rules for public comment, before the regulations may take effect. Id. § 553(b).

8 Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, § 3022, 124 Stat. 119, 395 (codified at 42 U.S.C. § 1395jjj). Hereinafter, I will refer to specific sections of the health care reform law using the relevant provisions of 42 U.S.C. § 1395jjj, which the health care reform law added to include MSSP.

9 See, e.g., 155 CONG.R^EC. S13851 (daily ed. Dec. 23, 2009) (statement of Sen. Russ Feingold); 155 C^ONG.R^EC. H13294 (daily ed. Nov. 19, 2009) (statement of Rep. John Spratt).

10 42 U.S.C.S. § 1395jjj (Lexis 2012).

11 “[T]he following groups of providers of services and suppliers . . . are eligible to

must meet in order to join the program and to continue participating.¹² More importantly, however, the PPACA gives the Secretary the authority to terminate an ACO from the Shared Savings program “if it does not meet the quality performance standards established by the Secretary under subsection (b)(3).”¹³

From this authority, CMS claims in its final rules that it has the power to terminate any ACO that does not adhere to the eligibility requirements after joining MSSP.¹⁴ Specifically, the final rules state that CMS will terminate any ACO that violates, inter alia, antitrust laws, which could include situations in which an ACO receives notice that the Department of Justice (DOJ) or the Federal Trade Commission (FTC) may review the ACO for anticompetitive practices.¹⁵ CMS purports to justify this broad reading of its authority by asserting the Secretary’s discretion over ACO eligibility criteria.¹⁶ The agency further claims that such a discretionary termination power is necessary to ensure regulatory consistency.¹⁷

As this Note will demonstrate, however, Congress distinctly articulated the extent of the agency’s termination power in the statutory language which created MSSP.¹⁸ The termination clause, unlike the interpretation expressed in the final rules, explicitly provides for termination of an ACO only if the ACO fails to meet CMS’s quality performance standards.¹⁹ Therefore, CMS’s power to terminate an ACO from the program on antitrust law grounds is legitimate only if the term

“quality performance standards” encompasses anticompetitive practices.

This Note uses a Chevron analysis²⁰ to argue that CMS’s recently released final rules, setting criteria under which the agency may terminate an ACO from the shared savings program, are manifestly contrary to both the statutory language and the congressional intent of the health care reform law, and that a reviewing court would likely declare these rules ultra vires. The language of the statute itself is sufficient evidence of Congress’s intent to void CMS’s rule under step

participate as ACOs under the program under this section: . . . (E) Such other groups of providers of services and suppliers as the Secretary determines appropriate.” Id. § 1395jjj(b)(1).

12 See, e.g., id. § 1395jjj(b)(2)(H) (“The ACO shall demonstrate to the Secretary that it meets patient-centeredness criteria specified by the Secretary . . . .”); id. § 1395(b)(3) (“The Secretary shall determine appropriate measures to assess the quality of care furnished by the ACO . . . .”).

13 Id. § 1395jjj(d)(4).

14 Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 67,802, 67,958–60 (Nov. 2, 2011).

15 Id. at 67,960.

16 Id. at 67,958–59.

17 Id. at 67,959.

18 42 U.S.C.S. § 1395jjj(d)(4). One other provision also allows termination in the isolated circumstance of an ACO avoiding at-risk patients. Id. § 1395jjj(d)(3). Since this is a unique and extremely limited condition, this Note shall not address its application.

19 Id. § 1395jjj(d)(4).

20 Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).

one of the Chevron analysis. Indeed, even the broadest possible reading of the language cannot justify CMS’s attempt to create broader regulatory power.²¹ Even if one could construe the actual text of the termination clause as ambiguous, the fact that Congress enacted the current provision instead of broader language that would have delegated termination authority to the Secretary shows that Congress had the specific intent to limit the Secretary’s interpretive power.²² When a federal agency steps this far outside the boundaries defined by Congress, federal courts have a responsibility to rein in the overreaching agency.²³

Part I of this Note explores the background of PPACA, as well as CMS’s promulgated rules. Part II explains Chevron’s two-step procedure to determine whether a court should defer to an agency’s interpretation of a statute, as well as how courts have traditionally applied it to agency regulations. Using step one of the Chevron analysis, Part II.A dissects the text of the MSSP provision of the health care reform law, as well as CMS’s interpretation thereof, to show the final rules constitute unauthorized agency rulemaking. Part II.B explores legislative history relevant to the specificity of the text and explicit Congressional intent.

Part II.C completes step one of the Chevron analysis by discussing likely policy consequences of CMS’s regulation and why such results would be contrary to Congress’s goals in passing the health care reform law. The first step of Chevron provides a comprehensive analysis of Congress’s intent on the specific issue and is dispositive in this case; thus, application of step two is unnecessary.²⁴

I. BRIEF HISTORY OF HEALTH CARE REFORM

Congress passed the health care reform law amidst a wave of public discontent with the disjointed management of health care in the United States, the health insurance industry, the quality of medical care, and the entailed costs. After noting the paradox that more frequent use of health care or more expensive treatment does not result in higher quality,²⁵ the Medicare Payment Advisory Council’s (MedPAC)²⁶ 2009 report to

21 See infra Part II.B.2.

22 See infra Part II.C.

23 See RICHARD J. PIERCE ET AL.,ADMINISTRATIVE L^{AW AND} P^ROCESS § 5 (4th ed. 2004).

24 Additionally, since the agency action here has obviously engaged in rulemaking pursuant to 5 U.S.C. § 553, the resulting regulations have the force of law and are not limited by considerations affecting interpretive rules and other lesser agency rulings. Cf. United States v.

Mead Corp., 533 U.S. 218 (2001).

25 M^EDPAC, REPORT TO THE C^ONGRESS: I^MPROVING INCENTIVES IN THE M^EDICARE P^ROGRAM xi (2009) [hereinafter I^MPROVING I^NCENTIVES], available at http://www.medpac.gov/

documents/jun09_entirereport.pdf.

26 Congress formed MedPAC pursuant to the Balanced Budget Act of 1997, Pub. L. No.

105-33, to advise Congress on matters pertaining to the operation of the Medicare program, such as pricing of services, beneficiaries’ access to health care, and quality of health care. About

Congress delivered the grave assessment that “[t]he current trajectory of Medicare spending is unsustainable.”²⁷ The Medicare Board of Trustees²⁸ also issued a warning in its contemporaneous report that the Hospital Insurance trust fund would become insolvent by 2017.²⁹ Members of Congress used similar language to emphasize the scope and immediacy of problems with the national health care system.³⁰ Indeed, the MedPAC report admitted that the health care incentives created in the law at that point were incongruous, and even inimical, to an efficient, patient-centered system.³¹

One of the major focal points for reform was the promotion of efficient health care delivery through new incentives for health care providers to offer coordinated care.³² In fact, the MedPAC report included an entire chapter to introduce the ACO as a proposed mechanism for such increased efficiency.³³ MedPAC defined an ACO as

“a set of fee-for-service . . . providers responsible for the health care of a population of Medicare beneficiaries.”³⁴ Commentators who foresaw that value of ACOs also articulated support for this model, stating that

“[t]he lesson of [these] high-quality, low-cost communities is that someone has to be accountable for the totality of care.”³⁵ Members of Congress overwhelmingly supported creating incentives for health care

MedPAC, MEDPAC,http://www.medpac.gov/about.cfm (last visited Aug. 24, 2012).

27 IMPROVING I^NCENTIVES, supra note 25, at 43.

28 The Social Security Act established two trust funds, the Hospital Insurance (HI) and the Supplemental Medical Insurance (SMI) trusts, to provide fiscal support for the operation of the Medicare program and appointed a board of trustees to oversee and manage investment and disbursement of the funds. Social Security Act, 42 U.S.C. §§ 1395i, 1395t (2006). The trustees are responsible for reporting on the financial status of the trust funds and the funds’ abilities to meet Medicare beneficiaries’ current and future needs. See generally M^EDICARE B^{OARD OF} T^RUSTEES, 2009A^NNUAL REPORT OF THE B^{OARDS OF} TRUSTEES OF THE F^EDERAL H^OSPITAL INSURANCE AND F^EDERAL SUPPLEMENTARY M^EDICAL I^NSURANCE T^RUST F^UNDS (2009) [hereinafter M^EDICARE T^RUSTEES R^EPORT], available at http://www.cms.gov/Research- Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR 2009.pdf.

29 MEDICARE T^RUSTEES R^EPORT, supra note 28, at 2.

30 See 155 CONG.R^EC. S11,133 (daily ed. Nov. 5, 2009) (statement of Sen. Mark Udall) (“The unsustainable growth in health care costs and lack of stable affordable coverage for millions of Americans continue to jeopardize not only our Nation’s fiscal well-being but also the physical well-being of our families and neighbors . . . .”).

31 I^MPROVING I^NCENTIVES,supra note 25, at xi(“Medicare must . . . creat[e] new payment methods that reward higher quality, promote efficient use of limited resources, and encourage effective integration of care.”).

32 See 155 CONG.R^EC. S11,133 (daily ed. Nov. 5, 2009) (statement of Sen. Mark Udall) (stating no incentives for collaborative groups to exist under the law before passage of PPACA).

33 I^MPROVING I^NCENTIVES, supra note 25, at ch. 2.

34 Id. at 43. Fee-for-service is the default model of Medicare payments to health care providers, whereby a patient receives a certain treatment and the Medicare program compensates “each provider of services with respect to the services furnished by it.” 42 U.S.C.

§ 1395g(a) (2006); see also Robert A. Berenson & Eugene C. Rich, US Approaches to Physician Payment: The Deconstruction of Primary Care, 25 J.G^EN.I^NTERNAL M^ED. 613 (2010).

35 Atul Gawande, The Cost Conundrum: What a Texas Town Can Teach Us About Health Care, NEW Y^ORKER, Jun. 1, 2009, at 36, 45.

providers to integrate their services to form ACOs as part of health care reform.³⁶ The health care reform law also created MSSP, which allows participating Medicare providers³⁷ to receive a portion of realized savings from efficient procedures³⁸ as a unique incentive to form ACOs.³⁹

Of course, health care provider integration and consolidation creates antitrust concerns even in the absence of government-created incentives,⁴⁰ but the inclusion of such incentives in health care reform necessitated regulatory action. The health care reform law gave governmental sanction and support for doctors, specialists, suppliers, and hospitals to combine services into financially integrated entities.⁴¹ Accordingly, health care providers eagerly initiated significant mergers, sparking concern among health care industry observers.⁴² In response to such concerns, the Federal Trade Commission or DOJ (the Antitrust

36 See, e.g., Public Bills and Resolutions 155 CONG.R^EC. H7022 (“A bill . . . to establish an [ACO] pilot program to reduce the growth of expenditures and improve health outcomes under the Medicare program . . . ”); 155 C^ONG. R^EC. H13,294 (daily ed. Nov. 19, 2009) (statement of Rep. John Spratt) (“[ACOs] encourage providers to improve quality and control costs . . . .”); 155 C^ONG.R^EC. S11,133 (daily ed. Nov. 5, 2009) (statement of Sen. Mark Udall) (“These organizations would encourage groups of health care professionals to team up to provide more coordinated, streamlined care to Medicare patients.”); 155 C^ONG.R^EC. S12,125 (daily ed. Dec. 2, 2009) (statement of Sen. Tom Coburn) (“Wouldn’t it be better to incentivize good behavior by [health care providers] through [ACOs], through transparency for both quality and price?”).

37 While PPACA grants the Secretary the discretion to deem various health care providers or suppliers eligible to participate in MSSP, the statute allows groups or partnerships of hospitals, physicians, and other licensed medical practitioners to join ACOs. 42 U.S.C.S.

§ 1395jjj(b)(1), (h) (Lexis 2012).

38 The greatest advantage of ACOs, which congressional supporters prominently touted during floor debates, is the ability to comprehensively coordinate health care for an enrolled beneficiary, which reduces burdens due to consultation times, transfers of medical records, and referrals. See, e.g., 155 C^ONG.R^EC. S12,648 (daily ed. Dec. 8, 2009). Also, CMS will encourage ACOs to employ electronic medical records, which presumably will lower costs by ensuring that all of a patient’s health care providers have efficient access to the correct patient information. See Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 67,802, 67,878–79 (Nov. 2, 2011); see also 155 C^ONG.R^EC. H4574 (daily ed. Apr. 21, 2009) (statement of Rep. Burgess).

39 See 42 U.S.C.S. § 1395jjj(a)(1).

40 See, e.g., Health Care Provider Market Power: Hearing on Health Care Consolidation Before the Subcomm. on Health of the H. Comm. on Ways and Means, 112th Cong. 1 (2011) (testimony by Paul B. Ginsburg, President, Center for Health System Change), available at http://waysandmeans.house.gov/uploadedfiles/ginsburg_testimony_9-9-11_final.pdf; Maria T.

Currier, Medicare Payment Reform: Accelerating the Transformation of the U.S. Healthcare Delivery System and Need for New Strategic Provider Alliances, 22 HEALTH L^AW. 1 (2010);

Thomas L. Greaney, Whither Antitrust? The Uncertain Future of Competition Law in Health Care, 21 HEALTH A^FFAIRS 185 (2002).

41 Health care providers integrated into an ACO must receive shared savings payments under a single taxpayer identification number (TIN). Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 19,528, 19,537 (Apr. 7, 2011) (to be codified at 42 C.F.R. pt. 425).

42 See, e.g., Health Care Provider Market Power: Hearing, supra note 40, at 1; Robert Pear, Antitrust Concerns Are Raised on New Law’s Doctor-Hospital Collaborations, N.Y.T^IMES, Feb.

9, 2011, at A19.

Agencies)⁴³ released a joint statement concerning antitrust enforcement policy that it would apply to ACOs.⁴⁴

While the antitrust enforcement policy governs ACOs, in general, DHHS also required a mechanism to control ACOs since the health care reform law contemplates ACOs as the primary health care delivery services eligible for shared savings.⁴⁵ The text of the Act defines the eligibility criteria for an ACO to participate in the program, and grants authority to the Secretary of HHS to develop a payment method that will reward ACOs for reducing costs while adhering to “quality performance standards” for Medicare beneficiaries.⁴⁶ Thus, Congress delegated authority to HHS and, ultimately, to CMS to create rules to give effect to the broad scheme embodied in § 1395jjj.

The resulting final rules governing MSSP specify CMS’s preferred regulatory regime pursuant to MSSP’s provisions in the health care reform law. The rules include eligibility and quality standards that an ACO must follow to gain the benefit of shared savings, as well as circumstances under which CMS may terminate an ACO from the program.⁴⁷ While the final rules do not clearly identify these circumstances, CMS originally proposed terminating an ACO upon notice that the Antitrust Agencies are likely to review the ACO under antitrust laws, or when the Antitrust Agencies conclude that an ACO has violated such laws.⁴⁸ The statute further denies administrative and judicial review to an ACO if CMS terminates the organization under

§ 1395jjj(d)(4).⁴⁹

II. CMS’S INTERPRETATION OF THE TERMINATION PROVISION IS INVALID

U^NDER C^HEVRON

Judicial oversight has a critical moderating effect on the reach of administrative agencies.⁵⁰ A reviewing court must “limit agency

43 Congress has granted these two agencies authority over antitrust enforcement via the Sherman Act and the Clayton Act. See infra Part II.D.

44 Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program, 76 Fed. Reg. 21,894 (Apr.

19, 2011); see also Robert Pear, U.S. Sets Standards for Joint Ventures to Improve Health Care, N.Y.T^IMES, Apr. 1, 2011, at A20 (discussing circumstances attending the proposed policy statement).

45 42 U.S.C.S. § 1395jjj(b)(1) (“[T]he following groups of providers of services and suppliers which have established a mechanism for shared governance are eligible to participate as ACOs under the program under this section . . . .”).

46 See id. § 1395jjj(a)(1).

47 See Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 67,802 (Nov. 2, 2011) (to be codified at 42 C.F.R. pt. 425).

48 Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 19,528, 19,626 (Apr. 7, 2011).

49 42 U.S.C.S. § 1395jjj(g)(6).

50 Courts have jurisdiction to review instances of agency rule-making procedure to ensure

discretion within boundaries established by legislation” embodying specific congressional intent.⁵¹ This role “provides a check and balance, ensuring that legislative and executive actions remain within certain bounds.”⁵² However, an enduring presumption that an agency has superior knowledge within its area of expertise instructs courts to afford an agency a measure of discretion when the issue at hand involves intricate, technical questions.⁵³ The Chevron analysis incorporates these standards of agency review and supports strong deference to agency discretion unless its decisions appear “arbitrary, capricious, or manifestly contrary to the statute” that delegated rulemaking authority to the agency.⁵⁴

Essentially, CMS interprets Congress’s silence about the agency’s power to enforce MSSP eligibility requirements as implicit permission to use the termination power when an applying or a participating ACO fails to comply with these requirements.⁵⁵ Thus, the agency claims that Congress, upon granting the Secretary the power to create new eligibility requirements for ACOs, also impliedly conferred on the Secretary the authority to terminate ACOs based on violations of these criteria. CMS argues that its interpretation deserves deference because the agency believes it is acting according to Congress’s unstated intent.

The following Sections will show that this interpretation cannot survive Chevron step one because: 1) CMS may not read a general termination power into the discretion to create eligibility standards, and 2) CMS may not redefine the only bases of termination, namely “quality performance measures,” or “quality performance standards,” to include antitrust considerations.

This Part begins by describing the Chevron test that a reviewing court will apply when considering whether an agency has acted beyond a statutory delegation of authority. Step one of this test directs a court to analyze both the statutory language and other evidence of congressional intent to determine whether Congress has evinced a specific intent to limit the agency’s authority. Parts II.B and II.C then apply this test to

that the agency followed APA formalities. A court may also determine whether an agency’s regulatory interpretation of a statute is “arbitrary, capricious, or otherwise contrary to law.” Id.

§ 553.

51 PIERCE ET AL., supra note 23, at 119.

52 Kenneth W. Starr, Judicial Review in the Post-Chevron Era, 3 Y^ALE J. ^ON R^EG. 283, 304 (1986).

53 See PIERCE ET AL., supra note 23, at 123.

54 5 U.S.C. § 706(2)(A) (2006).

55 Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 67,802, 67,958–59 (Nov. 2, 2011) (“Although sections 1395jjj(d)(3) and (d)(4) of the Act authorize termination for avoidance of at-risk beneficiaries and for failure to meet the quality standards, we do not believe that Congress intended the remainder of the regulatory scheme to be unenforceable. We believe that the Shared Savings Program participation agreement with an ACO should be contingent upon that ACO continuing to meet the requirements for eligibility and other program requirements.”)

CMS’s final rules, which interpret the delegation of power in MSSP’s termination clause to imply that Congress has granted the agency a general termination power predicated on the Secretary’s discretion to set ACO eligibility requirements. Part II concludes with a brief discussion of prominent policy reasons to foreclose CMS’s arrogation of a broader termination power.

A. Basics of the Chevron Test

In Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., the Supreme Court articulated a two-step test to determine appropriate deference to an agency’s interpretation of statutory language and attendant rulemaking.⁵⁶ The first step seeks to give effect to the language of the statute as prescribed by Congress, and rejects any agency rule that directly contravenes that language.⁵⁷ At this stage, the court must use the “traditional tools of statutory construction,”⁵⁸ including analysis of the text, legislative history, and policy consequences of the statute,⁵⁹ to determine “whether Congress has directly spoken to the precise question at issue.”⁶⁰ If, after carefully parsing the statutory text and scrutinizing the pertinent legislative history, a court cannot discern a clear congressional prescription on the specific issue⁶¹ or determines that Congress left an implicit regulatory gap for the agency to fill,⁶² the analysis of the agency’s regulation moves to step two. Upon reaching Chevron step two, deference to the agency’s construction is typical, as

56 See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc. 467 U.S. 837 (1984); see also FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000). Many authors, however, have also described the Chevron analysis as a comprehensive analysis to determine congressional intent in step one with a conditional “reasonableness” determination, which incorporates consideration of the same evidence, rather than as a discrete two-step procedure. See, e.g., Michael Herz, Deference Running Riot: Separating Interpretation and Lawmaking Under Chevron, 6 ADMIN. L.J.A^M.U. 187, 203–207 (1992); Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 DUKE L.J. 511, 515; Laurence H. Silberman, Chevron—The Intersection of Law & Policy, 58 GEO. W^ASH. L. R^EV. 821, 825–827 (1990) (describing D.C. Circuit Judge Williams’s approach to Chevron analysis as a “glide rather than two separate steps”).

57 Chevron, 467 U.S. at 842–43 (“If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”); see also Nutritional Health Alliance v. FDA, 318 F.3d 92, 98 (D.C. Cir.

2003) (“It is the statutory text that delegates power to an administrative agency.”).

58 Chevron, 467 U.S. at 843 n.9.

59 All of these tools are appropriate for a court’s application of Chevron step one. Scalia, supra note 56, at 515; see also Brown & Williamson, 529 U.S. 120 (2000) (employing a comprehensive analysis of statutory text, legislative history, and the historical statutory scheme in determining whether Congress addressed the precise issue).

60 Chevron, 467 U.S. at 842.

61 Chevron, 467 U.S. at 843; see also Evan J. Criddle, Chevron’s Consensus, 88 B.U. L. Rev.

1271, 1276–81 (2008).

62 See, e.g., Herz, supra note 56, at 212–16.

long as the court finds the construction “reasonable.”⁶³ A court may still strike down a regulation in step two, however, if the agency’s interpretation of its authority is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”⁶⁴

At the threshold, a reviewing court applying Chevron step one will employ textual analysis to examine congressional intent behind a statute that the agency has, in turn, interpreted through rulemaking.⁶⁵ Since the enacted statute expressing Congress’s intent is binding on the agency,⁶⁶ and since Congress may express its intent to limit the agency in various ways,⁶⁷ Chevron step one is necessarily a multifaceted process. After determining the specific issue in controversy, step one routinely begins with a thorough analysis of the relevant statutory language⁶⁸ to determine whether Congress’s chosen language directly addresses that specific issue.⁶⁹ If the text explicitly limits the authority delegated to the agency, then this unambiguous evidence obviates review of the legislative history or other indicators of congressional intent.⁷⁰

When Congress actually delegates express authority to the agency in statutory language, it does so by employing standard, formulaic phrases, which may confer broad or narrow authority.⁷¹ Broad grants of authority typically delegate to an agency’s head the power to make regulations that, in her judgment, are necessary to enforce the statutory provisions.⁷² Words such as “reasonable,” “feasible,” or “as the Secretary finds necessary” with respect to the regulatory power typically denote such a delegation.⁷³ For instance, a statute may grant the Federal Reserve Board “the authority to prescribe regulations containing ‘such classifications, differentiations, or other provisions,’ as in the judgment of the Board, ‘are necessary or proper to effectuate the purposes of [the

63 Chevron, 467 U.S. at 865.

64 Administrative Procedure Act, 5 U.S.C. § 706(2)(A) (2006).

65 Chevron 467 U.S. at 843 n.9.

66 Id.

67 See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000); see also Herz, supra note 56; Scalia, supra note 56.

68 See, e.g., Brown & Williamson, 529 U.S. at 133–34; ETSI Pipeline Project v. Missouri, 484 U.S. 495 (1988); Bd. of Governors of the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S.

361 (1986); Chevron, 467 U.S. 837; Catawba Cnty. v. EPA, 571 F.3d 20, 32 (D.C. Cir. 2009).

69 Chevron, 467 U.S. at 842–43.

70 Performance Coal Co. v. Fed. Mine Safety & Health Review Comm’n, 642 F.3d 234, 238 (D.C. Cir. 2011) (citing United States ex rel. Totten v. Bombadier Corp., 380 F.3d 488, 494 (D.C. Cir. 2004)).

71 See, e.g., Silberman, supra note 56, at 823.

72 See, e.g., Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005) (“Congress has delegated to the [Federal Communications Commission] the authority to ‘execute and enforce’ the Communications Act, § 151, and to ‘prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions’ of the Act.”

(quoting 47 U.S.C. § 201(b) (2000)); Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 238 (2004).

73 Such language usually constitutes “express delegation.” See Anthony, supra note 4, at 25–

35; see also Silberman, supra note 56, at 825–26.

Truth in Lending Act], to prevent circumvention . . . thereof, or to facilitate compliance therewith.’”⁷⁴ Few would doubt, as the Supreme Court found, that Congress “specifically designated” the Federal Reserve to serve as the primary interpreter and enforcer of the particular law at issue.⁷⁵ While such statutory language arguably limits the Board’s authority to set “classifications, differentiations, or other provisions” in certain, defined cases,⁷⁶ a reviewing court is not likely to find that the Board overstepped its bounds if the regulation pertained to enforcement of the Truth in Lending Act. In contrast, other statutes contain similar language that alone would represent a delegation of broad authority, but to which Congress appended qualifying phrases. The language may confine agency rulemaking to specific provisions of the statute,⁷⁷ preclude agency interpretation of portions of the text,⁷⁸ or may make agency decisions pursuant to the statute subject to another agency’s authority.⁷⁹

B. The PPACA’s Text Reveals the Scope of the Termination Power

1. The “Precise Issue in Controversy”

The initial task in employing Chevron step one is to identify the

“precise issue in controversy” that Congress supposedly addressed via the statutory language.⁸⁰ In the issue at hand, CMS’s final regulations assert that the agency may “terminate the participation agreement with an ACO when an ACO . . . fail[s] to comply with any of the requirements of the Shared Savings Program under this part.”⁸¹ Grounds for termination of an ACO under the termination power include “[n]on-compliance with eligibility and other requirements described in this part,”⁸² as well as “[v]iolations of . . . antitrust laws.”⁸³

In its original version of the proposed rules, CMS mandated that each applicant ACO seek a preliminary antitrust review to determine

74 Household Credit Servs., 541 U.S. at 238 (quoting 15 U.S.C. § 1604(a) (2000)).

75 Id. (quoting Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566 (1980)).

76 Id.

77 See Gonzales v. Oregon, 546 U.S. 243, 243 (2006); see also Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995).

78 See, e.g., Bd. of Governors of the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 374 (1986); Performance Coal Co. v. Fed. Mine Safety & Health Review Comm’n, 642 F.3d 234 (D.C. Cir. 2011); Fin. Planning Ass’n v. Sec. & Exch. Comm’n, 482 F.3d 481 (D.C. Cir. 2007).

79 ETSI Pipeline Project v. Missouri, 484 U.S. 495 (1988).

80 Thomas W. Merrill, Chevron’s Domain, 89 G^EO.L.J. 833, 853 (2001).

81 Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 67,802, 67,980 (Nov. 2, 2011) (to be codified at 42 C.F.R. § 425.218(a)).

82 Id. (to be codified at 42 C.F.R. § 425.218(b)(1)).

83 Id. (to be codified at 42 C.F.R. § 425.218(b)(3)).

eligibility to participate in MSSP.⁸⁴ If an ACO could not provide CMS with a letter stating that the Antirust Agencies had no intention of reviewing the applicant, that ACO would be ineligible.⁸⁵ While CMS has retreated from its proposed requirement that ACOs obtain such a letter during the application process,⁸⁶ CMS does not make clear in its final rules that receiving notice that the Antitrust Agencies intend to review the ACO’s practices during participation will not result in termination.

Instead, CMS appears to imply that it still intends to wield the latter power by “reserv[ing] the right to terminate a participation agreement immediately” when “the circumstances are more serious or pose risk of harm to beneficiaries or access to care.”⁸⁷ Pursuant to this intent, the final regulations state rather ambiguously that CMS may terminate an ACO upon “[t]he imposition of sanctions or other actions taken against the ACO by [a] . . . Federal . . . government agency leading to inability of the ACO to comply with the requirements under this part.”⁸⁸ This language, along with CMS’s failure to define when an ACO actually

“violates” antitrust law, interprets CMS’s power broadly by permitting it to terminate an ACO upon receipt of a letter of potential review from the Antitrust Agencies.

The agency bases this authority on its statutory ability to create eligibility criteria in addition to those specified by Congress.⁸⁹ Pursuant to this power, the final rules state that “CMS may terminate an ACO’s participation in the Shared Savings Program for, among other reasons, violation of antitrust laws.”⁹⁰ The agency’s commentary also reveals that it will review the ACOs adherence to the quality performance standards as well as all other eligibility criteria when enforcing § 1395jjj(d)(4), the termination provision.⁹¹ Therefore, the “precise issue in controversy” is whether Congress intended delegation of authority to establish eligibility criteria to imply a termination power based on those criteria, and if not, whether CMS may justify such a power by defining “quality performance standards” to include antitrust considerations.

84 Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 19,528, 19,629 (Apr. 7, 2011).

85 Id.

86 See Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 67,802, 67,842 (Nov. 2, 2011).

87 Id. at 67,959.

88 Id. at 67,980 (to be codified at 42 C.F.R. § 425.218).

89 Id. at 67,842.

90 Id.

91 Id. at 67,951.

2. The Secretary’s Authority to Create Eligibility Requirements and Quality Performance Standards

a. The Statutory Language Creating MSSP

The most salient provision under which CMS claims its authority,

§ 1395jjj(a)(1), defines the Secretary’s general power to establish eligibility requirements for admission to the MSSP.⁹² The Secretary’s authority to create eligibility requirements and quality performance standards under this provision is incontrovertibly broad. A court could justifiably interpret “criteria specified by the Secretary,” absent explicit limitations elsewhere in the MSSP, as an implied delegation of discretion to “fill the gaps” pertaining to program eligibility that Congress left in the specified areas of the statutory scheme.⁹³ CMS derives from § 1395jjj(a)(1) the power to establish eligibility criteria and quality performance standards in addition to those Congress specified in § 1395jjj(b)(1)–(2).⁹⁴ This conclusion of a specific congressional delegation appears to be correct given the noted absence of limiting words or phrases from the general statement that such criteria shall be established “by the Secretary.”

According to precedent interpreting rulemaking authority of administrative agencies, however, this interpretation appears logical only in isolation. CMS, seeking to justify its decision to read beyond the express statutory language, asserts that the text of the law is ambiguous⁹⁵ and that Congress impliedly delegated authority,⁹⁶ both of which find support in previous cases. The supposed ambiguity stems from Congress’s explicit intent to grant the Secretary the power to specify eligibility criteria, but the language neither sets limits on this authority nor specifies means of enforcement. Congress must have tacitly extended the Secretary’s enforcement power of termination to violations of the eligibility requirements, CMS reasons. Therefore, if the agency establishes a rule that an applicant ACO must not be engaging in anticompetitive practices nor be in danger of review by the Antitrust Agencies at the time of application as a new eligibility criterion, CMS will have the authority to terminate an ACO upon any violation of that

92 42 U.S.C.S. § 1395jjj(a)(1) (Lexis 2012) (“Under such a program . . . groups of providers of services and suppliers meeting criteria specified by the Secretary may work together to manage and coordinate care . . . through an [ACO].”)

93 See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159 (2000).

94 See supra notes 14–17 and accompanying text.

95 See, e.g., Brown & Williamson, 529 U.S. at 126–29 (reciting the FDA’s argument that its authority over “drugs” and “devices,” conferred by the organic statute, sufficed to warrant new rules regulating cigarettes); Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S.

837, 859–62 (1984).

96 See, e.g., ETSI Pipeline Project v. Missouri, 484 U.S. 495 (1988); Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995).

requirement at any time after admission to MSSP.

b. Interpretation of the Statutory Language in Light of Precedent

Read in its entirety, however, the language of the statute forecloses this reasoning in three critical respects. First, far from remaining silent about the Secretary’s authority to terminate ACOs from MSSP, the health care reform law explicitly grants such authority to the Secretary, albeit with significant limitations. Section 1395jjj(d)(4) reads quite simply, “Termination – The Secretary may terminate an agreement with an ACO if it does not meet the quality performance standards established by the Secretary under subsection (b)(3).”⁹⁷ Thus, Congress has confined the administrative agency’s power to terminate a MSSP participant to specific determinations that the ACO has failed to observe the prescribed “quality performance standards.” This language effectively restricts CMS’s discretion to use its termination power to circumstances in which an ACO violates a specified class of standards which the Secretary may establish.⁹⁸ Therefore, while the Secretary may still dictate the terms of the termination power, any power to enlarge the termination power derives from the definitions in § 1395jjj(b)(3).⁹⁹ Courts have repeatedly held that when the statute expresses Congress’s clear intent to limit a specific enforcement power, the agency may not create ambiguity through creative interpretation.¹⁰⁰

Second, the text of the termination clause specifically limits use of that power to one class of requirements which the Secretary may enact at her discretion. Section 1395jjj(a)(1) articulates two separate discretionary powers for the Secretary: the discretion 1) to establish eligibility requirements, and 2) to establish quality performance standards.¹⁰¹ The eligibility requirements allow various health care providers, applying as a unit and meeting the criteria, to collaborate and participate in MSSP as an ACO.¹⁰² The quality performance standards provide a means of reviewing an ACO once it becomes part of the

97 42 U.S.C.S. § 1395jjj(d)(4).

98 The Secretary has the authority to set quality performance standards. See supra note 92 and accompanying text.

99 See discussion infra Part III.B.3.

100 See Performance Coal Co. v. Fed. Mine Safety & Health Review Comm’n, 642 F.3d 234 (D.C. Cir. 2011); see also Natural Res. Def. Council, Inc. v. EPA, 643 F.3d 311, 323 (D.C. Cir.

2011) (holding that the EPA may not reinterpret Congress’s language to broaden its authority even though unfair treatment of regulated entities would result); Fin. Planning Ass’n v. Sec. &

Exch. Comm’n, 482 F.3d 481 (D.C. Cir. 2007) (holding that an administrative agency’s interpretation of a statute enlarging the agency’s discretionary power at the expense of the explicit restrictions in other related sections of the statute was impermissibly contrary to Congress’s intent).

101 42 U.S.C.S. § 1395jjj(a)(1)(A)–(B).

102 Id. § 1395jjj(b)(1)–(2).

program.¹⁰³

Although Congress granted the power to formulate both classes of requirements to the Secretary, Congress conspicuously chose to incorporate only one class in the termination power: the quality performance standards.¹⁰⁴ While it is true that provisions defining these standards appear as subsections of § 1395jjj(b), which comprises criteria for a group of health care providers to participate in MSSP as an

“eligible ACO,” the termination clause specifies only non-adherence to prescribed quality performance standards as the criteria for termination.

Therefore, CMS’s assertion that Congress impliedly authorized the Secretary to enforce MSSP eligibility requirements through termination appears strained, as Congress consciously included quality performance standards in the termination power while explicitly excluding eligibility criteria. Far from a defense, CMS’s stated belief that Congress did not intend “the remainder of the regulatory scheme to be unenforceable”¹⁰⁵ acknowledges its cognizance of the limited language of Congress and simultaneously manifests the agency’s desire to deliberately deviate from Congress’s intentional statutory scheme.

Courts have typically dismissed similar appeals to broad statutory purposes to give credence to an agency’s assertion of deficiency in Congress’s language.¹⁰⁶ This same conviction holds even when the agency declares that failure to recognize its putative authority would result in procedural inconsistencies.¹⁰⁷ Even though CMS avers failure to recognize its power to terminate ACOs based on violations of the eligibility criteria after admission to the MSSP will result in unacceptable consequences, “Congress knows full well how to confer the power to” enforce compliance with the eligibility requirements, and

“it chose not to do so here.”¹⁰⁸

Third, CMS’s final rules claim a power that the Supreme Court has expressly prevented various administrative agencies from exercising: the

103 See discussion infra Part II.B.3.b.

104 See 42 U.S.C.S. § 1395jjj(d)(4).

105 Medicare Program; Shared Savings Program: Accountable Care Organizations, 76 Fed.

Reg. 67,802, 67958 (Nov. 2, 2011).

106 See, e.g., Bd. of Governors of the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 374 (1986) (“Invocation of the plain purpose of the legislation at the expense of the terms of the statute itself takes no account of the processes of compromise and, in the end, prevents the effectuation of congressional intent.” (internal quotation marks omitted)); Texas v. United States, 497 F.3d 491, 502 (5th Cir. 2007) (citing Platte River Whooping Crane Critical Habitat Maint. Trust v. Fed. Energy Regulatory Comm’n, 962 F.2d 27, 33 (D.C. Cir. 1992)).

107 Natural Res. Def. Council, Inc. v. EPA, 822 F.2d 104, 130 (D.C. Cir. 1987) (presenting EPA’s theory that “‘construction of a discharge source generally proceeds in reliance on future Federal action . . . [and] [w]ithout the permit the source would be unable to operate as intended,’” and responding that “it is a considerable leap, and one we decline to make in light of the statute’s silence, to conclude that the agency is vested with power to call a halt to construction activity [absent issuance of a discharge permit]”) (quoting National Pollutant Discharge Elimination System Permit Regulations, 49 Fed. Reg. 37,998, 38,018 (Sept. 26, 1984)).

108 Id. at 128.

discretion to “correct flaws” in statutes that Congress duly enacted.¹⁰⁹ Agencies have attempted on many occasions to “fill the gap” Congress left through its failure to articulate every instance in which the agency may not act.¹¹⁰ Although the Chevron doctrine contemplates that the judiciary will frequently defer to an agency within its delegated authority,¹¹¹ when Congress has delineated the contours of the Secretary’s power of discretion, “neither the agency nor the courts are free to assume that Congress intended the Secretary to act in situations left unspoken.”¹¹²

Furthermore, in determining whether the statutory text warrants transition to Chevron step two, reviewing courts have noted that an administrative agency may not wield congressional silence as a shield to protect its interpretation whenever Congress fails to mention a particular manifestation of agency authority.¹¹³ CMS’s assertion of authority to terminate an ACO based on eligibility requirements constitutes such an attempt to cure Congress’s elision of these factors from the termination clause of the promulgated health care reform act, by reading ambiguity into ostensibly straightforward statutory text.

Therefore, in light of Congress’s unambiguous language in establishing MSSP, CMS cannot expand the termination power Congress provided by citing the Secretary’s authority to create eligibility requirements.

109 Dimension, 474 U.S. at 374 (“The statute may be imperfect, but the [agency] has no power to correct flaws that it perceives in the statute it is empowered to administer. Its rulemaking power is limited to adopting regulations to carry into effect the will of Congress as expressed in the statute.”); see also FDA v. Brown & Williamson Tobacco Corp. 519 U.S. 120, 125 (2000) (“Regardless of how serious the problem an administrative agency seeks to address, however, it may not exercise its authority ‘in a manner that is inconsistent with the administrative structure that Congress enacted into law.’”) (quoting ETSI Pipeline Project v.

Missouri, 484 U.S. 495, 517 (1988)).

110 See Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995); see also Texas v. United States, 497 F.3d at 502–03.

111 Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984) (“We have long recognized the considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations has been consistently followed by this Court . . . .”). Judges disagree as to the true level of judicial deference owed to administrative agencies. Compare Silberman, supra note 56, at 823–25 (agreeing generally with Justice Stevens’s observation that a reviewing court should defer to an agency’s expertise when Congress’s intent is not immediately clear from the text), with Scalia, supra note 56, at 521 (arguing that Congress’s intent is “apparent from [the statute’s] text” more often than not, and therefore, a reviewing court should rarely reach Chevron step two and agency deference under this method of statutory construction).

112 Texas v. United States, 497 F.3d at 502 (emphasis added).

113 Id. at 503 n.9 (“[C]ongressional silence on an issue [cannot] be used as a panacea justifying rulemaking authority untethered from any from any trace of congressional intent. ‘To suggest . . . that Chevron step two is implicated any time a statute does not expressly negate the existence of a claimed administrative power . . . is both flatly unfaithful to the principles of administrative law and refuted by precedent.’” (quoting ABA v. FTC, 430 F.3d 457, 468 (D.C.

Cir. 2005))).

3. Quality Performance Standards and Measures

Since Congress limited the Secretary’s termination power to circumstances in which an ACO fails to meet “the quality performance standards established by the Secretary under subsection (b)(3),”¹¹⁴ CMS must attempt to classify antitrust status under this rubric to provide statutory support for its enlargement of the termination power. The health care reform law grants the Secretary the authority to establish both quality performance “standards” and “measures” for assessing ACO efficiency in providing health care.¹¹⁵ Therefore, to establish the limits of the Secretary’s power to terminate ACOs from MSSP, we must scrutinize Congress’s intended meaning of these terms and the context in which Congress used them by employing the “traditional tools of statutory construction.”¹¹⁶ Subsequently, we must decide whether antitrust considerations comport with Congress’s chosen statutory language.

a. Antitrust Considerations as Quality Performance Measures

The first option, incorporating antitrust considerations into quality performance measures, is impracticable because Congress’s use of

“measure,” which appears in § 1395jjj(b)(3)(A), precludes such an interpretation. Congress, by its own language, intended these measures to pertain to CMS’s assessment of the “quality of care” an ACO provides to beneficiaries in specific contexts.¹¹⁷ CMS would certainly assert in response that “quality of care” includes business quality as well as medical quality. When read in context, however, the “measures to assess the quality of care furnished by ACOs” include clinical data, utilization data, and patient experiences.¹¹⁸ Also, under § 1395jjj(b)(3)(B), the data an ACO must provide to CMS “on measures . . . to evaluate the quality of care furnished by ACOs” comprise “care transitions . . . including hospital discharge planning and post-hospital discharge follow-up.”¹¹⁹ Therefore, Congress has precluded conflation of “quality of care” with antitrust status and other business quality considerations in the definition of “measure.”

Congress defines “measures to assess quality of care” through

114 42 U.S.C.S. § 1395jjj(d)(4) (Lexis 2012).

115 Id. § 1395jjj(b)(3).

116 Chevron, 467 U.S. at 843 n.9.

117 42 U.S.C.S. § 1395jjj(b)(3)(A) (“The Secretary shall determine appropriate measures to assess the quality of care furnished by the ACO, such as measures of—(i) clinical processes and outcomes; (ii) patient and, where practicable, caregiver experience of care; and (iii) utilization (such as rates of hospital admissions for ambulatory care sensitive conditions).”).

118 Id.

119 Id. § 1395jjj(b)(3)(B).

examples corresponding to the medical care services a health care provider performs: clinical outcomes, patient experience, and utilization data. In this context, Congress apparently intended “measures” to mean

“metrics,” a method by which to gauge the degree of quality of medical care so that CMS may effectively compare ACOs with one another.

Also, the language of the “quality performance measure” requirements neither mentions antitrust considerations nor grants the Secretary broad power to set any other standards that she deems necessary. Instead,

§ 1395jjj(b)(3)(C) grants the Secretary the power to set standards to

“assess the quality of care” and to improve progressively that care by promulgating “higher standards or measures for purposes of assessing such quality of care.”¹²⁰

The agency argued in its proposed rules that it has an overarching duty under the health care reform law to protect Medicare beneficiaries from the anticompetitive practices of maleficent health care providers.¹²¹ CMS could seek to broaden the definition of “measure” to include “an action taken as a means to an end”¹²² under this perceived duty. This subjective reading of the statutory language would potentially allow CMS to include restrictive “measures” of an ACO’s anticompetitive activities to improve the quality of care to patients.

When read alongside § 1395jjj(b)(3)(C), however, in which

“standards” and “measures” appear together, we must logically conclude that Congress included the word “measure” to mean “metric,” rather than the more general “rule.” Although the statutory language explicitly gives the Secretary authority to develop other “measures,” the agency must read this authority in light of ejusdem generis,¹²³ a common canon of statutory construction. The examples of quality measures that Congress articulates in the statute relate to clinical use and medical quality data, and cannot be read to incorporate the investigations or determinations of other agencies. Therefore, to the extent that the listed measures prescribe limits to the types of other measures the Secretary may create, CMS may not promulgate a “quality measure” that bases eligibility of an ACO on its investigation status with the Antitrust Agencies.

120 Id. § 1395jjj(b)(3)(C).

121 Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 19,528, 19,630 (Apr. 7, 2011) (“[T]he proposal maintains competition for the benefit of Medicare beneficiaries by reducing the potential for the creation of ACO’s with market power. . . . Competition benefits the Shared Savings Program by . . . accelerat[ing] the advancements in quality and efficiency.”).

122 W^EBSTER’^S IIN^EW R^IVERSIDE U^NIVERSITY D^ICTIONARY (1994).

123 This term refers to a canon of construction limiting ambiguous terms following a list of specific terms to the same class to which the specific terms belong. See B^LACK’^S L^AW D^ICTIONARY 594 (9th ed. 2010).