BOSTON (CN) — The Puerto Rico government begged the First Circuit for help Thursday in keeping hundreds of doctors from fleeing the island to seek higher wages and better working conditions in the continental U.S., but the court seemed to think federal law preempts the commonwealth’s solution — mandating higher Medicare reimbursement rates.
“Wouldn’t it be completely at odds with that statutory and policy choice to say Puerto Rico can regulate here?” U.S. Circuit Judge Kermit Lipez asked the island government’s attorney. “How can you reconcile that with a clear federal policy and law to the contrary?”
The attorney, Mariola Abreu of Pietrantoni, Mendez & Alvarez in San Juan, pressed a rather technical argument based on the statutory text but Lipez kept returning to Congress’ intent to limit local regulation. He called Abreu’s position “an odd and difficult logic to defend.”
The exodus of doctors from Puerto Rico has been going on for years but was exacerbated by Hurricane Maria in 2017. By the following year there were only 9,500 physicians left for a population of 3.2 million, with the result that it can take nine months to see a specialist and as long as 13 hours to be admitted to a facility, according to a 2020 federal government report. And the island continues to lose hundreds of medical professionals each year.
One of the biggest reasons that doctors are fleeing is low wages. In 2016 the average hourly wage for physicians in Puerto Rico was only $41.45, far below the average of $99.48 for practitioners on the mainland, according to the U.S. Bureau of Labor Statistics.
To help stem the tide, the Puerto Rico government enacted a law in 2019 that said that Medicare Advantage organizations, known as MAOs, can’t pay doctors less for services than the amount that traditional Medicare pays them. But a group of such organizations challenged the law, and a lower court held that it was preempted by a 2003 federal Medicare statute.
MAOs contract with Medicare but, instead of receiving fees for services, they get paid a fixed amount per person per year. They then turn around and contract with doctors, often paying them less than traditional Medicare does.
Lawmakers in Puerto Rico designed a fix for this by setting the traditional Medicare reimbursement rate as a floor. This was seen as a way to help, but even that proved cold comfort to many doctors since Medicare’s reimbursement rates for Puerto Rico remain the lowest in the U.S.
The law also tried to provide job security by saying that doctors could be fired only for cause. The lower court held that this provision was also preempted by the 2003 statute, under which doctors can be fired without cause if they get 60 days’ notice.
“Medicare Advantage is semi-privatized and depends on competition among MAOs,” stressed the plaintiffs’ lawyer, Michael Kimberly of McDermott, Will & Emery in Washington, D.C.
“Congress decided it would get out of the business of dictating terms and assign that to MAOs that would set their own terms. MAOs would have the leeway they need to innovate and compete. That scheme would be turned entirely upside down if the court were to side with the Commonwealth,” Kimberly told the judges.
Abreu noted that the 2003 statute preempted only local rules that conflicted with Medicare “standards” and said there were no relevant regulatory standards. Lipez said that argument had “some force,” but Kimberly replied Congress meant the word “standards” to refer to something broader — and even if it didn’t, there were standards that conflicted here.
This was especially true with regard to the “firing without cause” provision, Kimberly said, and U.S. Circuit Judge O. Rogeriee Thompson, an Obama appointee, came very close to getting Abreu to concede on that issue.
Lipez, who was appointed by President Clinton, remained focused on the larger picture of congressional intent. “There’s clear legislative history that in adopting Medicare Advantage Congress wanted to avoid mandated pricing because they wanted as a matter of policy a free enterprise system to produce lower prices and competition,” he said. “Shouldn’t we look beyond the text to the totality of the statutory structure and history?”
And Thompson suggested that if Puerto Rico really wants to fix its problem, its best bet might be to lobby Congress to change the law.
“It’s clear that Puerto Rico was trying to stop the flight of doctors,” she told Abreu, “but should there be a political solution to this? It might be a matter of trying to get Congress to give you a political solution rather than trying to make an argument here.”