NO.

In the Supreme Court of the United States

MARY C. MAYHEW, in her capacity as Commissioner of
the Maine Department of Health and Human Services,
Petitioner,
v.
SYLVIA M. BURWELL, in her capacity as Secretary of the
U.S. Department of Health and Human Services and
JANET T. MILLS, in her capacity as Attorney General of Maine,
Respondents.
On Petition for Writ of Certiorari to the
United States Court of Appeals for the First Circuit

PETITION FOR WRIT OF CERTIORARI

Clifford H. Ruprecht
Counsel of Record
Andrea S. Manthorne
ROACH HEWITT RUPRECHT
SANCHEZ & BISCHOFF, P.C.
66 Pearl Street, Suite 200
Portland, ME 04101
(207) 747-4870
cruprecht@rhrsb.com
Counsel for Petitioner

Becker Gallagher Cincinnati, OH Washington, D.C. 800.890.5001

i
QUESTIONS PRESENTED FOR REVIEW
Section 2001(b) of the Patient Protection and
Affordable Care Act (ACA), Pub. L. No. 111-148, 124
Stat. 119 (2010), requires any State paying Medicaid to
19- and 20-year-olds as of the ACAs enactment to
continue to do so on the same terms until October 2019
or lose all its federal Medicaid funding. When the ACA
took effect, Maine was performing a promise to cover
19- and 20-year-olds through December 31, 2010 in
exchange for increased Medicaid reimbursement, as
part of the federal stimulus program. In 2012, Maine
proposed to cease such coverage. The Secretary ruled
that 2001(b) prohibited the change, and the First
Circuit affirmed over Maine DHHSs constitutional
objections. The questions presented for review are:
(i)

Whether 2001(b) exceeds Congresss power

under the Spending Clause and intrudes on the
sovereignty reserved to Maine under the Tenth
Amendment?

(ii)

Whether 2001(b) as applied to Maine is an

unconstitutional retroactive change to the
conditions on Maines participation in the
federal stimulus program?

(iii)

Whether Maines unequal access to the Medicaid

program by virtue of 2001(b)s requirement
that Maine cover individuals that Maines sister
States are not required to cover needs
justification as an infringement of Maines equal
sovereignty and, if so, whether promoting the
transition to a regime based on the ACAs
unconstitutional mandatory Medicaid Expansion
is adequate justification?

ii
PARTIES IN THE COURT OF APPEALS
Petitioner Mary Mayhew, as Commissioner of the
Maine Department of Health and Human Services,
(Maine DHHS or Commissioner), was the Petitioner
in the court of appeals.
Respondent Sylvia Burwell, as Secretary of the U.S.
Department of Health and Human Services,
(USDHHS or Secretary) was the Respondent below.
Janet Mills, Attorney General of the State of Maine,
intervened below as a party-in-interest supporting the
position of the Respondent USDHHS.

iii
TABLE OF CONTENTS
QUESTIONS PRESENTED FOR REVIEW . . . . . . i
PARTIES IN THE COURT OF APPEALS . . . . . . . . ii
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . viii
PETITION FOR A WRIT OF CERTIORARI . . . . . . 1
OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . 1
JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CONSTITUTIONAL
AND
STATUTORY
PROVISIONS INVOLVED . . . . . . . . . . . . . . . . . 2
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . 4
1. Maine Opts to Cover 19- and 20-Year-Olds
Under
Its
Medicaid
Program,
MaineCare, Even Though Such Coverage Is
Not Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Congress Enacts Changes to Medicaid Under the
2009 Stimulus Program, Increasing Maines
Reimbursement Rates in Exchange for Maines
Promise to Maintain Medicaid Eligibility
Through the End of 2010 for, Inter Alia, 19- and
20-Year-Olds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. During Maines Performance of the Stimulus
Bargain, Congress Enacts the Affordable Care
Act, Which Mandates That All States Cover 19and 20-Year-Olds Beginning in 2014 and
Mandates That Maine Do So Immediately or
Lose All Its Medicaid Funding. . . . . . . . . . . . . . . 5

iv
4. This Court Rules That Withholding of All
Medicaid Funds Cannot Be Used to Force the
States to Furnish Medicaid Coverage to the
Medicaid Expansion Population, and the
Secretary Uses the Maintenance-of-Effort
Provision to Force Coverage of the 19- and 20Year-Old Cohort of That Population. . . . . . . . . . 8
5. Maine DHHS Appeals the Secretarys
Continuing Mandate of Coverage of 19- and 20Year-Olds on the Basis of NFIB, Pennhurst, and
Shelby County, and the First Circuit Affirms. . . 9
REASONS FOR GRANTING THE PETITION . . . 12
1. The Decision of the Court of Appeals Directly
Conflicts with Relevant Decisions of This Court.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
a. The court of appeals ruling that
withholding all Medicaid funds is not
unconstitutionally coercive when it enforces
mandatory coverage of 19- and 20-year-olds
directly conflicts with this Courts holding in
NFIB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
i.

The court of appeals holding that

coercion by itself is insufficient to
invalidate a purported exercise of the
spending power directly conflicts with
NFIBs holding that Congress exceeds
its spending power when pressure
turns into compulsion. . . . . . . . . . . . 12

v
ii.

The court of appeals ruling that

mandatory coverage of 19- and 20year-olds is not a basic change
to Medicaid directly conflicts with
NFIB. . . . . . . . . . . . . . . . . . . . . . . . . . 15

iii.

The court of appeals upholding

mandatory coverage of 19- and 20-year
olds because Maine previously opted
to cover those persons, directly
conflicts with NFIBs holding that the
expansion of Medicaid to cover those
over 18 can be optional only. . . . . . . . 17

iv.

The court of appeals ruling that a

basic change to Medicaid is a sine qua
non for finding coercion conflicts in
principle with the Courts decision in
NFIB. . . . . . . . . . . . . . . . . . . . . . . . . . 18

b. The court of appeals holding that the ACAs

maintenance-of-effort provision was not a
retroactive change to the ARRAs Medicaid
maintenance-of-effort provision because
Congress reserved the power to amend
Medicaid renders the Pennhurst retroactivity
principle meaningless. . . . . . . . . . . . . . . . . . 22
c. The court of appeals holding on equal
sovereignty conflicts with Shelby Countys
holding that Congresss disparate treatment
of States needs some justification in all cases,
and the court of appeals resort in the
alternative to the ACAs unconstitutional
mandate as a sufficient justification cannot
be squared with that case. . . . . . . . . . . . . . . 24

vi
2. The Questions Presented Are Important and
Pressing Federal Questions Calling for This
Courts Prompt Intervention. . . . . . . . . . . . . . . 27
a. The questions presented are of national
importance in light of the ongoing debate
over whether States should opt in to the
Medicaid Expansion. . . . . . . . . . . . . . . . . . . 27
b. The questions presented are important
questions of federalism that have substantial
impact on Maines budget and healthcare
priorities for years to come. . . . . . . . . . . . . . 30
c. This Court should intervene now, in light of
the direct conflict with its own precedent,
rather than await development of a circuit
split. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
APPENDIX
Appendix A Opinion and Judgment in the United
States Court of Appeals for the First
Circuit
(November 17, 2014) . . . . . . . . . . App. 1
Appendix B Decision of the Administrator for the
Centers for Medicare & Medicaid
Services
(January 15, 2014) . . . . . . . . . . . App. 38
Appendix C Recommended
Decision
of the
Presiding Officer On the Motion for
Reconsideration in the Centers for
Medicare & Medicaid Services
(October 28, 2013) . . . . . . . . . . . App. 53

vii
Appendix D Initial Decision of the Acting
Administrator in the Centers for
Medicare & Medicaid Services
(January 7, 2013) . . . . . . . . . . . . App. 69
Appendix E Statutes Public Laws. . . . . . . . App. 77
Patient Protection and Affordable
Care Act, 2001 . . . . . . . . . . . . . App. 77
American Recovery and Reinvestment
Act of 2009, 5001 . . . . . . . . . . . App. 92
Act of August 10, 2010, P.L. 111-226,
201 . . . . . . . . . . . . . . . . . . . . . App. 104
Statutes Codified Statutes . . App. 106
42 U.S.C. 1396a(a)(10) . . . . . App. 106
42 U.S.C. 1396a(l) . . . . . . . . . App. 115
42 U.S.C. 1396a(gg) . . . . . . . App. 119
42 U.S.C. 1396b . . . . . . . . . . . App. 122
42 U.S.C. 1396c . . . . . . . . . . . App. 122
42 U.S.C. 1396d(a) . . . . . . . . App. 123

viii
TABLE OF AUTHORITIES
CASES
California v. United States,
104 F.3d 1086 (9th Cir. 1997) . . . . . . . . . . . . . . 13
National Federation of Independent Business v.
Sebelius,
, 132 S. Ct. 2566 (2012) . . . . . passim
567 U.S.
Nevada v. Skinner,
884 F.2d 445 (9th Cir. 1989) . . . . . . . . . . . . . . . 13
Oklahoma v. Schweiker,
655 F.2d 401 (10th Cir. 1989) . . . . . . . . . . . . . . 13
Pennhurst State School and Hospital v. Halderman,
451 U.S. 1 (1981) . . . . . . . . . . . . . . . . 9, 10, 22, 23
Shelby County v. Holder,
570 U.S.
, 133 S. Ct. 2612
(2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
South Dakota v. Dole,
483 U.S. 203 (1987) . . . . . . . . . . . . . . . . 12, 19, 21
Steward Machine Co. v. Davis,
301 U.S. 548 (1937) . . . . . . . . . . . . . . . . . . . 12, 13
CONSTITUTION
Me. Const. art. V, pt. 3d, 5 . . . . . . . . . . . . . . . . . . 30
Me. Const. art. IX, 11 . . . . . . . . . . . . . . . . . . . . . . 28
Me. Const. art. IX, 14 . . . . . . . . . . . . . . . . . . . . . . 30
U.S. Const. amend. X . . . . . . . . . . . . . . . . . . . . . . . . 2
U.S. Const. art. 1, 8, cl. 1 . . . . . . . . . . . . . . . . . . . . 2

ix
STATUTES AND LAWS
5 U.S.C. 706 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
28 U.S.C. 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 1
42 U.S.C. 1303 . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
42 U.S.C. 1316(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . 1
42 U.S.C. 1396a(a)(10) . . . . . . . . . . . . . . . . . . . . . . 2
42 U.S.C. 1396a(a)(10)(A)(ii) . . . . . . . . . . . . . . . . . 4
42 U.S.C. 1396a(l) . . . . . . . . . . . . . . . . . . . . . . . . . . 2
42 U.S.C. 1396a(l)(2)(A)(i) . . . . . . . . . . . . . . . . . . . 6
42 U.S.C. 1396a(l)(2)(A)(ii)(II) . . . . . . . . . . . . . . . . 6
42 U.S.C. 1396a(gg) . . . . . . . . . . . . . . . . . . . . . . . . 2
42 U.S.C. 1396b(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 2
42 U.S.C. 1396c . . . . . . . . . . . . . . . . . . . . . . . passim
42 U.S.C. 1396d(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2
42 U.S.C. 1396d(a)(i) . . . . . . . . . . . . . . . . . . . . . . . 4
42 U.S.C. 1396d(y)(1)(A) . . . . . . . . . . . . . . . . . . . 28
2011 Me. Laws c. 657, Pt. A . . . . . . . . . . . . . . . . . . 30
Act of August 10, 2010, P.L. 111-226, 114 Stat. 2389
(2010), 201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
American Recovery and Reinvestment Act of
2009 (ARRA), P.L. 111-5, 123 Stat. 115
(2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 7, 22
5000(a)(2), 123 Stat. 496 . . . . . . . . . . . . . . . . . . 5

x
5001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5001(f), 123 Stat. 499-500 . . . . . . . . . . . . . . . . . 5
Fla. Stat. 409.903(3) (2010) . . . . . . . . . . . . . . . . . 29
N.H. Rev. Stat. Ann. 126-A:5 (2014) . . . . . . . . . . 28
N.J. Admin. Code 10:78-1.1(c)(4) (2014) . . . . . . . 28
N.J. Admin. Code 10:78-1.1(c)(5) (2014) . . . . . . . 28
N.J. Stat. 30:4D-3(i)(6) (2010) . . . . . . . . . . . . . . . 29
Patient Protection and Affordable Care Act
(ACA), Pub. L. No. 111-148, 124 Stat. 119
(2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3
2001(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
2001(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
2001(a)(1)(C), 124 Stat. 271 . . . . . . . . . . . . . . . 6
2001(a)(3), 124 Stat. 272-73 . . . . . . . . . . . . . . . 7
2001(b)(2), 124 Stat. 275 . . . . . . . . . . . . . . . . . . 6
RULES
Fed. R. App. P. 35(c) . . . . . . . . . . . . . . . . . . . . . . . . . 1
Fed. R. App. P. 40(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 1

xi
OTHER AUTHORITIES
Governors veto of 2012-2013 Bill S2644 (identical
to Bill A4233) (July 29, 2013) available at
www.njleg.state.nj.us/bills/BillView.asp . . . . . . 28
Kaiser Family Foundation, Status of State Action
on the Medicaid Expansion Decision, available
at http://kff.org/health-reform/stateindicator/state-activity-around-expandingmedicaid-under-the-affordable-care-act/ . . . . . . 28

1
PETITION FOR A WRIT OF CERTIORARI
Petitioner Mary Mayhew, as Commissioner of the
Maine Department of Health and Human Services,
respectfully submits this petition for a writ of certiorari
to the United States Court of Appeals for the First
Circuit.
OPINIONS BELOW
The opinion of the Court of Appeals for the First
Circuit is reported at 772 F.3d 80 and is reproduced in
the Appendix hereto (App.) at App. 1. The final
determination of the Secretary of the United States
Department of Health and Human Services, denying
Maine DHHSs request for a State Plan Amendment
(App. 38), the Recommended Decision of the Presiding
Officer on the Motion for Reconsideration in the
Centers for Medicare & Medicaid Services (App. 53),
and the Initial Decision of the Acting Administrator in
the Centers for Medicare & Medicaid Services (App. 69)
are all unreported.
JURISDICTION
The First Circuit entered judgment on November
17, 2014. The time for filing a petition for rehearing en
banc elapsed 45 days later. Fed. R. App. P. 35(c),
40(a)(1)(B). This Court has jurisdiction under 28
U.S.C. 1254(1) and 42 U.S.C. 1316(a)(5).

2
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The U.S. Constitution, article 1, section 8, clause 1
provides:
The Congress shall have power to lay and
collect taxes, duties, imposts and excises, to pay
the debts and provide for the common defense
and general welfare of the United States; but all
duties, imposts and excises shall be uniform
throughout the United States.
The U.S. Constitution, amendment X, provides:
The powers not delegated to the United
States by the Constitution, nor prohibited by it
to the states, are reserved to the states
respectively, or to the people.
The appendix reproduces the following relevant
statutory sections:
Section 2001 of the Patient Protection and
Affordable Care Act, P.L. 111-148, 124 Stat. 119
(2010);
Section 5001 of the American Recovery and
Reinvestment Act of 2009, P.L. 111-5, 123 Stat. 115
(2009);
Section 201 of the Act of August 10, 2010, P.L. 111226, 114 Stat. 2389 (2010);
42 U.S.C. 1396a(a)(10), (l) and (gg);
42 U.S.C. 1396b(a)(1);
42 U.S.C. 1396c;
42 U.S.C. 1396d(a).

3
INTRODUCTION
The conflict between the decision below and this
Courts decision in National Federation of Independent
Business v. Sebelius, 567 U.S.
, 132 S. Ct. 2566
(2012) (hereinafter NFIB) is simple and direct: in
NFIB, this Court held that Congress cannot force
States to furnish Medicaid to low-income 19- and 20year-olds under 2001 of the Patient Protection and
Affordable Care Act (ACA), Pub. L. No. 111-148, 124
Stat. 119 (2010); the court of appeals held that 2001
can be used to force Maine to furnish such coverage.
The court of appeals decision impairs Maines
healthcare and budget priorities to the tune of millions
of dollars per year, at least until 2019 and possibly
indefinitely. It also injects substantial uncertainty into
the ongoing national debate over States decisions
whether to opt in to ACA 2001s Medicaid Expansion,
by suggesting that, NFIB notwithstanding, (i) all
States may be compelled to cover the 19- and 20-yearold cohort of the Expansion population, because
mandatory coverage of that age group is not coercive,
and (ii) opt-in States may be prohibited from ever
opting back out of the Expansion, because a States
election to cover an optional population allows the
Federal Government to force the State to continue such
coverage, even if the Government cannot mandate such
coverage in the first instance or for all States. This
Court should promptly intervene to remove such
uncertainty from an important ongoing national debate
and to eliminate the multiple conflicts of the decision
below with this Courts constitutional precedents,
discussed in further detail in this Petition.

4
STATEMENT OF THE CASE
1. Maine Opts to Cover 19- and 20-Year-Olds
Under Its Medicaid Program, MaineCare,
Even Though Such Coverage Is Not Required.
Medicaid is a state-federal cooperative program,
under which the States administer healthcare coverage
for the Nations neediest citizens, and the Federal
Government pays the States substantial Medicaid
reimbursements. See generally, NFIB, 132 S. Ct. at
2581. Medicaid constitutes by far the largest single
line item in state budgets, id. at 2664 (Scalia, J.,
dissenting); MaineCare [Maines Medicaid program]
makes up a major portion of Maines annual outlays,
accounting for just over one-third of the states total
budget in 2013. App. 6.
Prior to enactment of the ACA, extending Medicaid
coverage to 19- and 20-year-olds was generally optional
for the States. 42 U.S.C. 1396a(a)(10)(A)(ii),
1396d(a)(i). (In this Petition 19- and 20-year-olds is
used as a shorthand for low-income 19- and 20-yearolds who are not blind, disabled or pregnant; this
Petition concerns provisions that relate to coverage
based on age and income alone. Coverage for 19- and
20-year-olds who qualify for Medicaid based on other
factors such as blindness, disability and pregnancy is
not at issue here). For many years prior to the ACAs
enactment, Maine exercised the option to pay
MaineCare benefits to 19- and 20-year-olds and to
furnish them benefits that exceeded federal minimums.

5
2. Congress Enacts Changes to Medicaid Under
the 2009 Stimulus Program, Increasing
Maines Reimbursement Rates in Exchange
for Maines Promise to Maintain Medicaid
Eligibility Through the End of 2010 for, Inter
Alia, 19- and 20-Year-Olds.
In 2009, in response to the Great Recession,
Congress passed the American Recovery and
Reinvestment Act of 2009, P.L. 111-5, 123 Stat. 115
(ARRA). In order to protect and maintain State
Medicaid programs during a period of economic
downturn, including by helping to avert cuts to
provider payment rates and benefits or services, and to
prevent constrictions of income eligibility requirements
for such programs, Congress offered increased
Medicaid reimbursement rates to States that agreed
not to restrict their Medicaid eligibility criteria or
benefit levels through December 2010. ARRA
5000(a)(2), 5001(f), 123 Stat. 496, 499-500. Maine
accepted that deal. Accordingly, at the time of the
ACAs enactment, Maine was maintaining MaineCare
eligibility for 19- and 20-year-olds until December 31,
2010 in exchange for increased Medicaid
reimbursements under the stimulus program.
3. During Maines Performance of the Stimulus
Bargain, Congress Enacts the Affordable Care
Act, Which Mandates That All States Cover 19and 20-Year-Olds Beginning in 2014 and
Mandates That Maine Do So Immediately or
Lose All Its Medicaid Funding.
In 2001 of the ACA, Congress made coverage of
individuals over 18 mandatory under Medicaid in two
different ways. First, the Medicaid Expansion required

6
that every State pay Medicaid to all individuals over
181 and under 65 with family incomes at or below 133%
of the federal poverty line, beginning in 2014 (the
Medicaid Expansion). App. 77 (ACA 2001(a)(1)(C),
124 Stat. 271). Second, the maintenance-of-effort
provision (MOE) mandated that every State covering
19- and 20-year-olds at the time of ACA enactment
continue to do so on the same terms until October 2019.
App. 85-86 (ACA 2001(b)(2), 124 Stat. 275).
The enforcement mechanism for the MOEs new
mandate was different from the mechanism by which
the Medicaid Expansion would be enforced. By
operation of 42 U.S.C. 1396c, a State that did not
comply with the Medicaid Expansion could have some
or all of its federal Medicaid reimbursements withheld
by the Secretary. See NFIB, 132 S. Ct. at 2604. By
contrast, under ACA 2001(b), compliance with the
MOE is a condition for receiving any Federal
payments under Medicaid. App. 85 (ACA 2001(b)(2),
124 Stat. 275). A State that does not comply with the
MOE must lose all of its federal Medicaid
reimbursement. The statute vests no discretion in the
Secretary to withhold less than all reimbursement, as
she can do under 1396c.

The Medicaid Expansion refers specifically only to individuals

under 65, but it excludes those under age 19 from its scope. As
of ACA enactment, Medicaid already mandated coverage of all
individuals under 19 years old at or below 133% of the federal
poverty line, see 42 U.S.C. 1396a(l)(2)(A)(i) & (ii)(II), and the
Medicaid Expansion expressly excludes from its scope individuals
in any existing mandatory coverage category, see ACA
2001(a)(1)(C), 124 Stat. 271.

7
In practical effect, the MOE would require a State
that covered 19- and 20-year-olds prior to the ACA to
continue to cover such individuals until 2014.
Thereafter, the Medicaid Expansion would be the
principal source of required coverage for 19- and 20year-olds, and it would apply equally to all States.
From 2014 to 2019, the MOE would have a more
limited application, affecting only those States that
prior to ACA enactment had less restrictive eligibility
criteria or higher benefit levels for 19- and 20-year-olds
than the ACA, and requiring them to maintain that
more generous coverage.
As applied to Maine, the ACA extended by nine
years the duration of ARRAs required maintenance of
effort as to 19- and 20- year-olds and changed the
consequence of non-compliance from loss of increased
reimbursement to a loss of all Medicaid
reimbursement. The ACA did not make any new
Medicaid funds available to Maine in exchange for
these changes. Under the ACA, new increased
Medicaid reimbursements are available only for
payments to newly eligible individuals; Maines 19and 20-year-olds do not qualify as newly eligible both
because they were eligible under [Maines] State plan
on the date the ACA was enacted and because they are
under 19 years of age (or such higher age as the State
may have elected) as the age cap under its Medicaid
plan. App. 81-82 (ACA 2001(a)(3), 124 Stat. 272-73).

8
4. This Court Rules That Withholding of All
Medicaid Funds Cannot Be Used to Force the
States to Furnish Medicaid Coverage to the
Medicaid Expansion Population, and the
Secretary Uses the Maintenance-of-Effort
Provision to Force Coverage of the 19- and 20Year-Old Cohort of That Population.
This Court ruled in June 2012 that the Medicaid
Expansion could not be enforced by withdrawal of all
Medicaid reimbursement from non-compliant States.
NFIB, 132 S. Ct. at 2607. Although NFIB expressly
addressed only 2001(a)s Medicaid Expansion, its
ruling affected the operation of 2001(b)s
maintenance-of-effort provision. After NFIB, the MOE,
not the Medicaid Expansion, became the sole possible
source for mandatory coverage of 19- and 20-year-olds
coverage for whom could only be optional under the
Medicaid Expansion and that mandate applied
unequally to only some States, one of which is Maine,
rather than to all States equally as it did under the
Medicaid Expansion.
After the federal stimulus program expired and the
Medicaid Expansion was ruled optional, Maine DHHS
requested a State Plan Amendment (SPA) from the
Secretary to allow Maine to discontinue MaineCare for
19- and 20-year-olds. The Secretary denied the request
on the grounds that it violated the MOE. The
Secretary did not rule on the constitutionality of the
MOE, determining that she lacked the authority to rule
on that issue. App. 51-52.

9
5. Maine DHHS Appeals the Secretarys
Continuing Mandate of Coverage of 19- and
20-Year-Olds on the Basis of NFIB, Pennhurst,
and Shelby County, and the First Circuit
Affirms.
The Commissioner timely appealed to the Court of
Appeals for the First Circuit, on the grounds that
(i) the MOE is unconstitutionally coercive under NFIB;
(ii) application of the MOE to deny Maines SPA
request is unconstitutional under Pennhurst State
School and Hospital v. Halderman, 451 U.S. 1 (1981)
because it makes a retroactive change to the conditions
on Maines acceptance of the federal stimulus bargain;
and (iii) no sufficient justification exists, as required
under Shelby County v. Holder, 570 U.S. , 133 S. Ct.
2612 (2013), for the MOEs unequal treatment of
Maine, requiring Maine to pay MaineCare benefits to
categories of individuals that Maines sister States are
not required to include in their Medicaid programs and
do not include.
The First Circuit affirmed.
The court of appeals rejected the coercion argument
on the grounds that under NFIB mere coercion is not
enough to invalidate an exercise of the spending power.
The court of appeals interpreted NFIB to foreclose any
invalidation of Spending-Clause legislation based on
a finding of coercion alone and instead to require for
invalidation a condition on the receipt of funds that
is both coercive and that does not govern the use of
those funds. App. 17-18. The latter requirement was
not met in the court of appeals view because requiring
coverage of 19- and 20-year-olds (as opposed to
coverage of those 21 and over) does not effect a basic

10
change to Medicaid and therefore constitutes a
condition that does govern the use of Medicaid funds.
Id. That proposition, however, raised a further
question about NFIB and the Medicaid Expansion:
after NFIB, why is coverage of 19- and 20-year-olds
optional under 2001(a), even though the statute says
it is mandatory, if the Constitution allows all Medicaid
funds to be withheld for failure to cover that age group?
The court of appeals answered that this Court simply
overlooked the issue: whether to sever application of
the expansion to 18- [sic] to 20-year-olds from
application of the expansion to 21- to 64-year-olds was
not before the Court in NFIB. App. 26 n. 10 (emphasis
in original).
The court of appeals rejected the Pennhurst
retroactivity argument on the grounds that the Federal
Governments conditioning Maines receipt of increased
Medicaid reimbursement on Maines agreeing to
maintain MaineCare eligibility criteria and benefit
levels through December 31, 2010 does not prevent the
Federal Government from imposing additional, more
onerous maintenance-of-effort requirements on Maine
during the course of Maines performance of the
stimulus bargain: Maine was on notice, both before
and after accepting stimulus funds, that an
incremental alteration of Medicaid might change the
conditions on participation in the Medicaid program in
the way that [ 2001(b)] has. App. 27.
The court of appeals rejected the equal sovereignty
argument on the grounds that no question could be
raised about whether 2001(b) was sufficiently tailored
to the problem it targets unless Maine first showed
that it had been singled out by Congress for

11
disparate treatment, App. 29-30, and that such
disparate treatment intruded into sensitive areas of
state and local policymaking, App. 28 (quoting Shelby
County, 133 S. Ct. at 2627 and 2624). Finding no such
showing had been made, the court of appeals held the
question of sufficient justification did not even arise.
App. 30, 33. Additionally, if the question did arise, the
court of appeals found that 2001(a)s unconstitutional
mandatory design constituted sufficient justification for
the 2001(b) maintenance-of-effort requirement,
stating that 2001(b) directly serves the legitimate
purpose of ensuring that children do not lose health
insurance as the country transitions from the pre-ACA
Medicaid regime to the post-ACA Medicaid regime.
App. 35. As applied to 19- and 20-year-olds, the
transition to a post-ACA-regime must refer to the
ACAs Medicaid Expansion as originally designed and
not to the statute as limited by this Court in NFIB.
Under NFIB, the post-ACA regime is the same as the
pre-ACA regime: States are allowed, but not required,
to cover 19- and 20-year-olds.
This Petition timely follows.

12
REASONS FOR GRANTING THE PETITION
1. The Decision of the Court of Appeals Directly
Conflicts with Relevant Decisions of This
Court.
a. The court of appeals ruling that
withholding all Medicaid funds is not
unconstitutionally coercive when it
enforces mandatory coverage of 19- and 20year-olds directly conflicts with this
Courts holding in NFIB.
No adequate explanation can be given for why the
mandatory coverage of 19- and 20-year-olds under ACA
2001(a) cannot be enforced by withholding all
Medicaid funds, but such mandatory coverage under
2001(b) can. The court of appeals holding directly
conflicts with NFIB in that regard.
i.

The court of appeals holding that

coercion by itself is insufficient to
invalidate a purported exercise of
the spending power directly conflicts
with NFIBs holding that Congress
exceeds its spending power when
pressure turns into compulsion.

Prior to this Courts decision in NFIB, the Court

had observed that an act under the spending power
would be unconstitutional if it were so coercive as to
pass the point at which pressure turns into
compulsion, South Dakota v. Dole, 483 U.S. 203, 211
(1987) (quoting Steward Machine Co. v. Davis, 301
U.S. 548, 590 (1937)), but the Court had never
invalidated an exercise of the spending power as
unconstitutionally coercive. NFIB, 132 S. Ct. at 2634

13
(Ginsburg, J., dissenting in part). Thereafter, some
courts of appeals expressed doubt whether the Court
actually meant what it said: The difficulty if not the
impropriety of making judicial judgments regarding a
state's financial capabilities renders the coercion theory
highly suspect as a method for resolving disputes
between federal and state governments. Nevada v.
Skinner, 884 F.2d 445, 448 (9th Cir. 1989); see also
California v. United States, 104 F.3d 1086, 1092 (9th
Cir. 1997) (quoting Skinner and expressing doubt
whether there is any viability left in the coercion
theory); Oklahoma v. Schweiker, 655 F.2d 401, 414
(10th Cir. 1989) (follow[ing] the lead of other courts
that have explicitly declined to enter this thicket of
evaluating whether the states are faced here with an
offer they cannot refuse or merely a hard choice.).
This Courts decision in NFIB should have laid to
rest any such doubts. But in its decision below, the
First Circuit persisted in those doubts, expressly citing
for support California v. United States and Oklahoma
v. Schweiker. App. 25 (rejecting any coercion-based
claim on the grounds that an attempt to determine
when inducement to comply with a condition on the
use of federal funds crosses the line into compulsion
would plunge the law into endless difficulties (quoting
Steward Mach. Co., 301 U.S. at 590)); App. 23 (citing
California v. United States). The court of appeals read
NFIB as a fractured decision on the coercion doctrine,
App. 11, and rejected the view that the Expansion
could be invalidated based on a finding of coercion
alone. App. 18. Rather, the court of appeals read NFIB
as standing for a narrower holding of a plurality, id.:
to invalidate a Spending-Clause enactment a court
must find (1) that the [enactment] place[s] a condition

14
on the receipt of funds that does not govern the use of
those funds and (2) that the condition [is] unduly
coercive. App. 17-18.
In NFIB, seven justices agreed that the Medicaid
Expansion as written was unconstitutionally coercive.
They disagreed, however, on the remedy. Four of the
justices, joining in an opinion authored by Justice
Scalia, would have struck down the ACA entirely,
finding that the Medicaid Expansion could not be
severed from the Act as a whole. 132 S. Ct. at 2676-77
(Scalia, J., dissenting). Three justices, joining in an
opinion authored by the Chief Justice, held that the
mandate (and concomitant threat of withdrawal of all
Medicaid funds for non-compliance) could be severed
from the Expansion, which could be saved as a purely
optional enlargement of Medicaid. Id. at 2607 (Roberts,
C.J.).
While it is true, therefore, that the opinion in NFIB
is fractured, as the First Circuit said, App. 11, the
seven Justices who found the Expansion
unconstitutional as written fractured on the question
of remedy, not on the question of the viability of the
coercion doctrine or whether coercion alone makes a
Spending-Clause enactment unconstitutional.
Granted, the court of appeals reference to coercion
alone might be taken as no more than inartful
phrasing of the courts view that withholding all
Medicaid reimbursement is not per se coercive;
something more is necessary for the threat of
withdrawal to cross the line from pressure into
compulsion. The court of appeals did say that such
withholding is unconstitutional only when it enforces
a basic change in Medicaid, and 2001(b)s

15
mandatory coverage of 19- and 20-year olds is not such
a basic change. App. 24. But even recast in this way,
the decision of the court of appeals directly conflicts
with NFIB. Specifically, the court of appeals put itself
in direct conflict with this Court by ruling: (1) that
mandatory coverage of 19- and 20-year-olds is not a
basic change to Medicaid within the meaning of NFIB;
and (2) that Maines election of optional coverage of 19and 20-year-olds prevents any mandate of such
coverage from being unconstitutional as applied to
Maine. Moreover, should this Court grant certiorari,
Maine DHHS intends to argue, as an alternate basis
for reversal, that the court of appeals erred in ruling
that a basic change to Medicaid is a sine qua non under
NFIB for finding the withholding of all Medicaid
funding unconstitutionally coercive and that NFIB
instead implies that any withholding of all Medicaid
funds must be proportional to the Medicaid
requirement it enforces, due to the unique risk of
coercion posed by the threatened loss of all Medicaid
reimbursements. The court of appeals error in this
regard constitutes a conflict in principle with the
Courts decision in NFIB.
ii.

The court of appeals ruling that

mandatory coverage of 19- and 20year-olds is not a basic change to
Medicaid directly conflicts with NFIB.

The surest sign that mandatory coverage of 19- and

20-year-olds effects a basic change to Medicaid, as that
concept appears in NFIB, is that 2001(a) included
such mandatory coverage and was held to effect such a
basic change. The court of appeals ruling implies that
the Court would not have found 2001(a) to effect such

16
a basic change had the statute mandated coverage of
only those under 21 rather than those under 65. That
proposition is inconsistent with what the NFIB Court
did: Having determined the Expansion was
unconstitutional as written, the Court in NFIB labored
to sever from the statute the aspect that was
unconstitutional and then follow Congresss explicit
textual instruction to leave unaffected . . . the
application of [the challenged] provision to other
persons or circumstances. NFIB, 132 S. Ct. at 2607
(Roberts, C.J.) (quoting 42 U.S.C. 1303) (square
brackets in original). The Court severed 1396cs
withdrawal penalty as it applied to the entire
Expansion population, and did not leave the
application to 19- and 20-year-olds unaffected. The
court of appeals proposition is also inconsistent with
the Courts description of what constitutes a basic
change to Medicaid, and it is stunningly disruptive in
its implications.
The Court in NFIB said a basic change to Medicaid
involves mandating coverage for those not fairly
comprised in the four particular categories of the
needy that the original program was designed to
cover: the disabled, the blind, the elderly, and needy
families with dependent children. NFIB, 132 S. Ct. at
2605-06 (Roberts, C.J.). According to the NFIB Court,
low-income childless adults over age 18 whose
coverage was mandated in the Medicaid Expansion and
is also mandated in the maintenance-of-effort provision
are not within those categories, and mandating
coverage of them effects a basic change to Medicaid.
Moreover, the implications of the court of appeals
ruling are remarkably disruptive. If the court of

17
appeals is correct, then the application of the Medicaid
Expansion to those under 21 can be enforced by
withholding all Medicaid funds from non-compliant
States. That conflict with the Courts decision in NFIB
disrupts understandings of the ACA and of States
options widely relied on after NFIB.
iii.

The court of appeals upholding

mandatory coverage of 19- and 20year olds because Maine previously
opted to cover those persons, directly
conflicts with NFIBs holding that the
expansion of Medicaid to cover those
over 18 can be optional only.

To the extent the court of appeals differentiated the

2001(b) mandate from the 2001(a) mandate not
based on the mandated populations age but rather
based on Maines prior election to cover that
population, App. 22 (distinguishing 2001(b) from
2001(a) because Maine is required only to maintain
its current benefits for 19- and 20-year olds), 24
(rejecting argument that changing young adult
coverage from optional to mandatory changes
Medicaid), the conflict with NFIB becomes more, not
less, severe. A holding that Congress can force a State
to maintain coverage for any population that the State
previously chose to cover, or lose all its Medicaid
funding, calls into question any long-term viability of
NFIBs holding. Following the NFIB decision, many
States have opted to cover the very low-income nonelderly population that NFIB squarely holds they
cannot be forced to cover. The court of appeals
reasoning suggests that Congress could require all ACA
opt-in States to continue covering all low-income

18
adults under age 65 or lose all their Medicaid funding.
Indeed, the court of appeals reasoning can be read as
authorizing the Secretary to withhold Plan approval
from any State that seeks to opt back out of the
Expansion once it has opted in. Congress already has
mandated in 2001(a) that States cover all low-income
adults under 65; NFIB merely restricts the
enforcement under 1396c of that mandate. The court
of appeals now has held that the Secretary can
withhold Plan approval from a State that seeks to
discontinue coverage of categories mandated under the
ACA, so long as the State voluntarily chose to cover
those categories in the first place. The court of appeals
decision offers no principle that would prohibit the
Secretary from withholding approval of an SPA seeking
to opt back out of the Expansion on the same grounds
namely, that the amendment does not comport with
an ACA mandate, and such mandate is enforceable
based on the States prior election to cover the
categories subject to that mandate. What this Court
articulated in NFIB as a limit on federal power
becomes, under the court of appeals reasoning, no such
thing. And whether opt-in States have the choice to opt
back out of the ACA Expansion becomes at best, under
the court of appeals reasoning, a matter of legislative
or administrative grace, not constitutional principle.
iv.

The court of appeals ruling that a

basic change to Medicaid is a sine
qua non for finding coercion conflicts
in principle with the Courts decision
in NFIB.

The Court in NFIB expressly disavowed any

attempt or need to define the condition without which

19
a withdrawal of all Medicaid funds might be mere
pressure rather than compulsion: We have no need to
fix a line . . .. It is enough for today that wherever that
line may be, this statute is surely beyond it. NFIB,
132 S. Ct. at 2606. Whatever the significance of the
pluralitys finding of a basic change to Medicaid, it was
not to fix the line where the threat of withdrawal of all
Medicaid funds first becomes unconstitutionally
coercive.
This case does not require the Court to fix a line
any more than NFIB did. But if this Court were to fix
such a line, as it applies to the withholding of all
Medicaid reimbursement, it should hold that such
withholding is unconstitutionally coercive when it is
disproportionate to the Medicaid condition that it
enforces. That principle would acknowledge what must
be true namely, that a State can lose all its Medicaid
funding for non-compliance that is equivalent to
wholesale failure to participate in the Medicaid
program and would harmonize with this Courts
decision in NFIB that the Secretary can withhold the
funds dedicated to the Medicaid Expansion from States
that do not go along with the Expansion, but cannot
withhold other Medicaid funds. The principle also
would accord with this Courts observation in Dole that
any condition Congress imposes must be sufficiently
related to the program funded. Dole, 483 U.S. at 207.
Finally, it would be consistent with the general
principle that the Secretarys discretion under 42
U.S.C. 1396c to choose among the full-withholding
remedy and the remedy of withholding only funds
related to the non-compliance found is limited by the
general requirement that agencies not abuse their
discretion, or arbitrarily, capriciously, or unreasonably

20
impose grossly disproportionate penalties. See, e.g., 5
U.S.C. 706. Finally, such a requirement is suited to
the unique risk of coercion posed by the potential loss
of Medicaid funding, a risk significantly different in
degree than the risk in other spending programs.
While neither the plurality opinion nor the joint
dissent in NFIB deemed the loss of all Medicaid
funding per se unconstitutionally coercive, they both
were in accord that the size of the Medicaid program is
relevant in determining whether there is
impermissible coercion. 132 S. Ct. at 2661 (Scalia, J.,
dissenting). And the plurality opinion is just as forceful
as the joint dissent in articulating the unique pressure
created by the threat of withdrawal of all Medicaid
funds. Given the fiscal and administrative obstacles
involved, the States are unfree, in fact if not in
theory, to withdraw from the program:
In this case, the financial inducement Congress
has chosen is much more than relatively mild
encouragement it is a gun to the head. . . . A
State that opts out of the Affordable Care Acts
expansion in health care coverage thus stands to
lose not merely a relatively small percentage of
its existing Medicaid funding, but all of it.
Medicaid spending accounts for over 20 percent
of the average States total budget, with federal
funds covering 50 to 83 percent of those
costs. . . . In addition, the States have developed
intricate statutory and administrative regimes
over the course of many decades to implement
their objectives under existing Medicaid. It is
easy to see how the Dole Court could conclude
that the threatened loss of less than half of one

21
percent of South Dakotas budget left that State
with a prerogative to reject Congresss desired
policy, not merely in theory but in fact. The
threatened loss of over 10 percent of a States
overall budget, by contrast, is economic
dragooning that leaves the States with no real
option but to acquiesce in the Medicaid
expansion.
NFIB, 132 S. Ct. at 2604-05 (Roberts, C.J.) (quoting
South Dakota v. Dole, 483 U.S. 203, 211-12 (1987))
(emphasis in original) (citations omitted). Against that
background, threats to withhold all Medicaid funds are
potentially coercive in more applications than
2001(a)s mandate alone, and NFIBs coercion ruling
applies equally to the Expansions helpmate provision,
2001(b)s maintenance-of-effort requirement.
A proportionality requirement would suffice to
strike down the MOE as it applies to Maines coverage
of 19- and 20-year-olds. Just as the Secretary cannot
withhold all Medicaid funds from a State that declines
to cover all low-income adults over 18 (as the Medicaid
Expansion was written to require), so the Secretary
cannot withhold all Medicaid funds for a failure to
cover a much smaller subset of that population, 19- and
20-year-olds. Enforcement of 2001(b) would be far
more disproportionate than the result struck down in
NFIB: the same enormous penalty would be imposed,
but on account of a far more limited failure to comply.
USDHHS can withhold funds from Maine that would
have been paid for covering 19- and 20-year-olds, if
Maine declines to do so, but it cannot impose the much
harsher penalty of a withdrawal of all Medicaid
funding, or, what amounts to the same thing,

22
disapprove of Maines State Plan Amendment,
effectively barring Maine from participating in
Medicaid unless it covers those young adults.
b. The court of appeals holding that the
ACAs maintenance-of-effort provision was
not a retroactive change to the ARRAs
Medicaid maintenance-of-effort provision
because Congress reserved the power to
amend Medicaid renders the Pennhurst
retroactivity principle meaningless.
Under the ARRA, Maine accepted a deal with the
Federal Government: Maine would receive increased
Medicaid reimbursement rates in exchange for its
maintenance of effort in the Medicaid program through
December 2010. If Maine ceased maintaining its
MaineCare eligibility and benefit levels before the end
of 2010 say, on March 24, 2010 Maine would lose
any increased reimbursement. Once the ACA was
enacted, if Maine failed on March 24, 2010 to maintain
MaineCare eligibility and benefit levels, it would lose
all of its Medicaid reimbursements, not just its rate
increase. The court of appeals determined that the
ACA was not a retroactive change to the stimulus
bargain, because the ACA was a condition placed on
Maines acceptance of Medicaid funds, which Congress
always reserves the power to alter or amend: Maine
was not unaware of the conditions [on its participation
in Medicaid] . . . when it chose to receive funds under
Medicaid or under the ARRA. App. 27 (quoting
Pennhurst, 451 U.S. at 17) (square brackets in
original). That reasoning is mere wordplay: the ARRA
stimulus funds in question were nothing other than

23
increased Medicaid reimbursements, conditioned on
Medicaid maintenance of effort.
The court of appeals reasoning guts the
retroactivity principle. It is literally true of every
spending program (as it is true of statutes generally)
that Congress can later repeal or amend it. The
Pennhurst principle limits such exercise of
congressional power. If the Pennhurst principle means
anything, it is that spending-power enactments are in
the nature of a contract to which Congress cannot
unilaterally add after-the-fact conditions, despite
Congresss general power to repeal or amend existing
legislation.
Any claim that the ACA condition was unrelated to
the stimulus and was only a condition on Maines
continued acceptance of new Medicaid funds has no
basis in practical reality. That claim suggests that on
and after March 23, 2010, Maine could turn down new
Medicaid funding but keep the stimulus deal.
Impossible. If Maine ceased participating in the
Medicaid program, it would have no way to continue to
receive the increased Medicaid reimbursements it
bargained for in the stimulus program. In practical
reality, the ACA condition can only be characterized as
a retroactive change to the stimulus deal, and the court
of appeals decision can only be characterized as a flat
rejection of the Pennhurst retroactivity principle.

24
c. The court of appeals holding on equal
sovereignty conflicts with Shelby Countys
holding that Congresss disparate
treatment of States needs some
justification in all cases, and the court of
appeals resort in the alternative to the
ACAs unconstitutional mandate as a
sufficient justification cannot be squared
with that case.
The court of appeals rejected Maine DHHSs equal
sovereignty arguments on two grounds: (i) that the
doctrine did not apply in this case at all, and (ii) that
even if it did apply, the MOE was sufficiently justified
as a means of promoting the transition to the postACA Medicaid regime, in which coverage of all 19- and
20-year-olds would be mandatory for all States.
App. 35. The court of appeals ruling puts it in direct
conflict with this Courts decision in Shelby County in
three respects.
First, the court of appeals ruling that the need for
sufficient justification does not arise unless a State has
been singled out for disparate treatment, finds no
support in Shelby County.
The Courts equal
sovereignty doctrine does not turn on any kind of
discriminatory animus on Congresss part. Unequal
treatment of a State without adequate justification is
foreign to our federalism, regardless of Congresss
motives. The court of appeals went astray by assuming
that, because there was evidence in Shelby County that
the challenged preclearance formula had been reverse
engineered, the equal sovereignty doctrine requires a
congressional intent to disadvantage particular States
in order for the equal sovereignty doctrine to apply.

25
That is a misreading of the significance of reverse
engineering in Shelby County.
The significance of reverse engineering in Shelby
County was not that it showed any kind of
congressional animus, but that it was outdated.
Relying on an old engineered formula showed an
insufficient effort by Congress to tailor the
preclearance formula to jurisdictions where a
particular problem namely, second-generation
barriers to voting had been identified. Shelby
County, 133 S. Ct. at 2629. This Court struck down
that effort not because Congress cannot
constitutionally focus on particular jurisdictions where
it perceives a problem in need of correction. Quite the
contrary. Congress must tailor statutes that treat the
States differently so that the statutes fit the problem
Congress is trying to solve. See id. That is the
sufficient justification that Shelby County requires for
any infringement of States equal sovereignty. Because
the problem Congress had in view in the Voting Rights
Act had no necessary connection to the jurisdictions it
engineered the preclearance formula to fit, the statute
had to be struck down in Shelby County. See id. It was
the lack of any sufficient justification for the formula
based on the second-generation barriers that Congress
had in view that rendered the statute constitutionally
infirm, not the fact that Congress had set out to design
a formula that fit jurisdictions where Congress
perceived a problem. Indeed, should Congress correctly
identify the jurisdictions where the problem of secondgeneration barriers now needs correction, Congress
may draft another formula based on current
conditions. Id. at 2631.

26
Second, the court of appeals ruling that disparate
treatment of a State needs no justification unless it
intrudes on an area of traditional state concern,
App. 32, also finds no support in Shelby County.
Certainly, the regulation of elections, at issue in Shelby
County, is a particularly sensitive area of local concern,
but that factor was not a necessary precondition to the
need to justify unequal treatment of the States. Such
an intrusion on an area of core sovereignty may be
more difficult to justify and less likely to satisfy the
equal-sovereignty doctrine, but that does not mean
other unequal treatment of States needs no
justification.
Third, the only justification the court of appeals
could find for the MOE is inadequate namely,
promotion of the constitutional wrong that this Court
identified in NFIB. The court of appeals seized on the
justification offered by the Government for the first
time at oral argument on appeal: that the MOE served
the purpose of maintaining the status quo while the
country transitioned to the post-ACA regime.
App. 34-35.
As an initial matter, the cited justification that
Congress may just not want to shift from an existing
program to one that is now funded through [new]
federal dollars, App. 34 (quoting counsel for the
United States oral argument) (square brackets in
original), is particularly inapt here: Congress offered
Maine no new federal dollars for covering 19- and 20year-olds.
More broadly, the regime-transition
argument is not a sufficient justification here, because
it amounts to justifying 2001(b) on the grounds that

27
it promotes the 2001(a) mandate that this Court
struck down as unconstitutional.
The court of appeals reference to a new regime
cannot have meant the post-NFIB ACA regime under
which the Medicaid Expansion is purely optional,
because: (i) Congress clearly did not contemplate such
a regime when it designed the ACA, and (ii) with
respect to the 19- and 20-year-olds at issue under the
MOE, there is no transition after NFIB coverage of
that population is optional before and after the ACA
Expansion under NFIBs holding. Hence, the court of
appeals justification boils down to the claim that the
maintenance-of-effort provision is necessary to prevent
the covered States from retreating to ACA minimum
coverage for 19- and 20-year-olds, while those States
transition to mandatory coverage of the rest of the nonelderly adult low-income population under 2001(a).
But that new regime of mandatory coverage is a
constitutional wrong, remedied by this Court in NFIB.
Promotion of that constitutional wrong cannot serve as
the sufficient justification for disparate treatment that
Shelby County requires.
2. The Questions Presented Are Important and
Pressing Federal Questions Calling for This
Courts Prompt Intervention.
a. The questions presented are of national
importance in light of the ongoing debate
over whether States should opt in to the
Medicaid Expansion.
To date, twenty-eight States and the District of
Columbia have opted in to the Medicaid Expansion;
seven other States are considering whether to opt in,

28
and fifteen States have chosen not to do so. See Kaiser
Family Foundation, Status of State Action on the
Medicaid Expansion Decision, available at
http://kff.org/health-reform/state-indicator/stateactivity-around-expanding-medicaid-under-theaffordable-care-act/ (accessed on Feb. 10, 2015).
Decisions whether to opt in or not have been
controversial, and the matter remains one of robust
debate at the local level. In Maine, for example, as the
court of appeals noted, the Legislature recently voted
to opt in to the Expansion; the Governor vetoed the
Legislation; the Legislature failed to override the veto,
App. 12 n. 5, and the Governor has since been
popularly re-elected. The Maine Attorney General,
who is elected by the Maine Legislature, Me. Const.
art. IX, 11, disagrees with the Governor as a matter
of policy and has intervened in this lawsuit to oppose
Maine DHHS. Similarly, some States opt-ins have
been tentative. For example, New Hampshires
statutory opt-in expires on December 31, 2016, see N.H.
Rev. Stat. Ann. 126-A:5 (2014), XXIII-XXV the
date on which the Federal Government ceases its 100%
reimbursement for newly-eligible individuals, see 42
U.S.C. 1396d(y)(1)(A). New Jerseys Governor vetoed
the State Legislatures opt-in, see Governors veto of
2012-2013 Bill S2644 (identical to Bill A4233) (July 29,
2013) available at www.njleg.state.nj.us/bills/
BillView.asp (accessed Feb. 10, 2015), and opted in by
executive action instead, see N.J. Admin. Code 10:781.1(c)(4) & (5) (2014), reserving the option to opt back
out without legislative action.
Opt-in, as well as opt-out or undecided States are
affected by the MOE and potentially by the decision of

29
the court of appeals. Some States, like Maine, are
covering 19- and 20-year-olds under the MOE even
though they have not opted in to the Medicaid
Expansion because they covered that age group in
2010. See, e.g., Fla. Stat. 409.903(3) (2010) (child
under 21 in certain low-income two-parent families).
Some opt-in States would become subject to the MOE
if they opted back out of the Expansion, because they
offered pre-ACA coverage to 19- and 20-year-olds. See,
e.g., N.J. Stat. 30:4D-3(i)(6) (2010) (providing
coverage to persons under 21 years of age who would be
income eligible for Title IV-A (TANF) benefits, but for
the dependent child requirement).
The decision of the court of appeals below injects
substantial uncertainty into this fraught local debate.
States covered by the MOE need to know whether they
are bound to cover 19- and 20-year-olds if they have not
opted in or if they choose to opt out. Additionally, opt-in
States not covered by the MOE need to know whether
that choice can be made irrevocable under the
reasoning espoused by the court of appeals below,
either by a subsequent Act of Congress or by USDHHS
withholding State Plan approval from any State that
tries to opt back out. Those States need to know
whether they are free to opt back out or whether they
will be saddled with continuing Expansion obligations
following any sunset of their opt-in legislation,
subsequent repeal, or change of executive policy. States
that are considering opting in but have not yet done so
need to know whether the option to cover a nonmandatory population is irreversible. In fairness, they
deserve to know the answer to that question before
they make a decision to opt in. The ruling below
creates uncertainty that unnecessarily complicates

30
States decisions about what path to follow and how to
budget for the choices they are considering or have
taken already whether those States are in the First
Circuit, like New Hampshire which faces a statutory
sunset in 2016, or in other circuits where the court of
appeals decision here might be followed.
b. The questions presented are important
questions of federalism that have
substantial impact on Maines budget and
healthcare priorities for years to come.
More narrowly, the decision below will have a longstanding impact on Maines budget and healthcare
priorities at least until 2019. Medicaid reimbursement
is approximately 22% of Maines annual budget, see 1st
Cir. Appendix to the Briefs at 9, and Maine has
developed a substantial healthcare administrative
apparatus built around Medicaid.
Maine has no
practical choice but to participate in Medicaid.
For 2012-13, Maine DHHS projected an eightmonth savings of approximately $3.7 million ($5.5
million annualized) from eliminating Medicaid
payments for 19- and 20-year-olds. 2011 Me. Laws
c. 657, Pt. A. Maine is constitutionally required to
balance its budget, Me. Const. art. V, pt. 3d, 5; art.
IX, 14, and Maine agencies struggle to keep their
budgets within the bounds that Maine can afford and
that Maines Legislature will fund. The Commissioner
believes there are fundamental services which are core
to the mission of Maines Medicaid program that are
higher priorities for the limited dollars in the DHHS
budget than Medicaid for young non-disabled adults
for example, the critical need to address home and
community-based services for Maines elderly and

31
individuals with cognitive and developmental
disabilities, which have been chronically underfunded
and are not generally covered by traditional Medicaid.
The millions of dollars per year that Maine is
unconstitutionally forced to spend covering 19- and 20year-olds under MaineCare substantially interferes
with Maines setting healthcare and budget priorities.
Under the court of appeals decision, Maine is being
forced to continue such coverage until at least 2019,
and will be forced to continue it indefinitely if
USDHHS determines in the future that Maine must
conform to the mandate of the Medicaid Expansion as
it applies to 19- and 20-year-olds, because such a
mandate is permissible as applied to a population that
Maine previously elected to cover.
c. This Court should intervene now, in light
of the direct conflict with its own
precedent, rather than await development
of a circuit split.
The Court should take up the questions presented
without awaiting a circuit split, for three reasons.
First, the need for this Court to intervene to ensure
uniformity in the relevant federal law has already
arisen, due to the direct conflict with this Courts
relevant precedents. This is not a case where this Court
has not spoken on an issue, and it is wise for the Court
to wait to determine whether any disharmony emerges
in lower courts interpretations of uniform federal law.
Here, the Court has declared the relevant
constitutional principles, and a court of appeals has
simply declined to follow them. The decision below has
created non-uniformity in federal law, and the Court
should remedy it now.

32
Second, awaiting competing views from another
court of appeals does not promise to aid the Courts
analysis of the questions presented in a way that
justifies allowing the lower courts errors here to go
uncorrected. While in some cases the Court may find it
helpful to await the full development of a spectrum of
views among courts of appeals on an issue the Court
has not previously decided, this is not such a case. The
Court has already weighed competing arguments on
the issues presented for review and has announced
relevant precedents most pointedly, on how the
coercion doctrine applies to the ACAs mandate of
coverage for persons over 18 never before required to be
covered under Medicaid. Moreover, the array of views
the Court received, the volume of briefing, and even the
amount of oral argument the Court took, before
announcing its decision in NFIB were extraordinary.
There is no need for the Court to await further
development in the courts of appeals on an issue that
the Court has subjected to such close scrutiny before
deciding. The Court should intervene to ensure
adherence to the law it has announced.
Third, the urgency of the questions and the
uncertainty that the court of appeals decision below
casts over the ongoing national debate over States
decisions to opt in to the Medicaid Expansion counsel
even more strongly against waiting for further
developments in the courts of appeals. The States need
to know now whether electing to cover individuals that
Medicaid does not require them to cover will empower
the Secretary to reject any SPA seeking to opt back out
of such expanded coverage or will allow a future
Congress to mandate such coverage, despite NFIBs

33
clear holding that such optional coverages cannot
constitutionally be forced on the States.
CONCLUSION
For all the foregoing reasons, the Court should issue
a writ of certiorari to the United States Court of
Appeals for the First Circuit to review the Questions
Presented by this Petition.
Respectfully submitted,
Clifford H. Ruprecht
Counsel of Record
Andrea S. Manthorne
ROACH HEWITT RUPRECHT
SANCHEZ & BISCHOFF, P.C.
66 Pearl Street, Suite 200
Portland, ME 04101
(207) 747-4870
cruprecht@rhrsb.com
Counsel for Petitioner
February 12, 2015

APPENDIX

i
APPENDIX
TABLE OF CONTENTS
Appendix A Opinion and Judgment in the United
States Court of Appeals for the First
Circuit
(November 17, 2014) . . . . . . . . . . App. 1
Appendix B Decision of the Administrator for the
Centers for Medicare & Medicaid
Services
(January 15, 2014) . . . . . . . . . . . App. 38
Appendix C Recommended
Decision
of the
Presiding Officer On the Motion for
Reconsideration in the Centers for
Medicare & Medicaid Services
(October 28, 2013) . . . . . . . . . . . App. 53
Appendix D Initial Decision of the Acting
Administrator in the Centers for
Medicare & Medicaid Services
(January 7, 2013) . . . . . . . . . . . . App. 69
Appendix E Statutes Public Laws. . . . . . . . App. 77
Patient Protection and Affordable
Care Act, 2001 . . . . . . . . . . . . . App. 77
American Recovery and Reinvestment
Act of 2009, 5001 . . . . . . . . . . . App. 92
Act of August 10, 2010, P.L. 111-226,
201 . . . . . . . . . . . . . . . . . . . . . App. 104
Statutes Codified Statutes . . App. 106
42 U.S.C. 1396a(a)(10) . . . . . App. 106

ii
42 U.S.C. 1396a(l) . . . . . . . . . App. 115
42 U.S.C. 1396a(gg) . . . . . . . App. 119
42 U.S.C. 1396b . . . . . . . . . . . App. 122
42 U.S.C. 1396c . . . . . . . . . . . App. 122
42 U.S.C. 1396d(a) . . . . . . . . App. 123

App. 1

APPENDIX A
United States Court of Appeals
For the First Circuit
No. 14-1300
[Filed November 17, 2014]
__________________________________________
MARY C. MAYHEW, in her capacity as
)
Secretary of the Maine Department of
)
Health and Human Services,
)
Petitioner,
)
)
v.
)
)
SYLVIA M. BURWELL, in her capacity as )
Secretary of the U.S. Department of
)
Health and Human Services,
)
Respondent,
)
)
and
)
)
JANET T. MILLS, in her capacity as
)
Attorney General of Maine,
)
Intervenor.
)
_________________________________________ )
____________________
PETITION FOR REVIEW FROM A DECISION
OF THE DEPARTMENT OF HEALTH
AND HUMAN SERVICES
____________________

App. 2
Before
Lynch, Chief Judge,
Selya and Barron, Circuit Judges.
____________________
Clifford H. Ruprecht, with whom Christopher T.
Roach, Geraldine G. Sanchez, and Roach, Hewitt,
Ruprecht, Sanchez & Bischoff, P.C. were on brief, for
petitioner.
Alisa B. Klein, Appellate Staff Attorney, with whom
Beth S. Brinkmann, Deputy Assistant Attorney
General, Mark B. Stern, Appellate Staff Attorney,
Stuart F. Delery, Assistant Attorney General, William
B. Schultz, General Counsel, Janice L. Hoffman,
Associate General Counsel, Susan Maxson Lyons,
Deputy Associate General Counsel for Litigation, and
Bridgette Kaiser were on brief, for respondent.
Christopher C. Taub, Assistant Attorney General,
with whom Janet T. Mills, Attorney General, was on
brief, for intervenor.
Martha Jane Perkins, Catherine McKee, and Jack
Comart on brief for National Health Law Program,
Maine Equal Justice Partners, Maine Psychological
Association, Maine Chapter of the American Academy
of Pediatrics, Maine Medical Association, Preble Street,
Maine Childrens Alliance, and Young Invincibles,
amici curiae.
____________________
November 17, 2014
____________________

App. 3
LYNCH, Chief Judge. After providing Medicaid
coverage for over 20 years for 19- and 20-year old
children whose families met low-income requirements,
in 2012, Maine DHHS1 sought to drop that coverage by
proposing an amendment to its Medicaid state plan.
The federal Department of Health and Human Services
(DHHS) Secretary disapproved the amendment, stating
that it plainly violates a federal statute, 42 U.S.C.
1396a(gg), part of the Patient Protection and
Affordable Care Act (ACA), Pub. L. No. 111-148, 124
Stat. 119 (2010). Section 1396a(gg) requires states
accepting Medicaid funds to maintain their Medicaid
eligibility standards for children until October 1, 2019.
Maine DHHS now petitions for review, arguing that
the federal disapproval is unconstitutional. It says that
under portions of National Federation of Independent
Businesses v. Sebelius (NFIB), 132 S. Ct. 2566 (2012),
1396a(gg) as applied here is unconstitutionally
coercive in violation of the Spending Clause and,
independently, that it violates Maines right to equal
sovereignty as recognized in Shelby County v. Holder,
133 S. Ct. 2612 (2013), and like cases.

Maine DHHS, as used in this opinion, refers to petitioner Mary

C. Mayhew, in her capacity as Secretary of the Maine Department
of Health and Human Services. Maine DHHS has petitioned for
judicial review of the decision of the U.S. Department of Health
and Human Services disapproving Maines proposed state plan
amendment. Maines Attorney General has declined to represent
Maine DHHS in this lawsuit, citing strong[] disagreements with
the state agency as a matter of law and public policy. The Maine
Attorney General authorized outside counsel for Maine DHHS and
has intervened in this suit on the side of respondent Sylvia
Burwell, in her capacity as Secretary of the U.S. DHHS.

App. 4
The United States says the statute as applied here
is constitutional, fitting easily within congressional
spending power to condition federal Medicaid grants.
The Attorney General of Maine, Janet T. Mills, as
interested party-intervenor, argues that the rejection
of Maine DHHSs proposed amendment is
constitutional. And amici health professionals explain
the history and importance of the Medicaid health care
provisions for this age group.2
For the reasons that follow, we hold that the statute
is constitutional as applied here.
I. Background
The Medicaid Act, 42 U.S.C. 1396 et seq., first
enacted in 1965, provides federal funds to states to
assist them in paying for the medical care of needy
individuals. NFIB, 132 S. Ct. at 2581. The Secretary of
the U.S. DHHS administers the Medicaid program
through the Centers for Medicare and Medicaid
Services (CMS). Ark. Dept of Health & Human Servs.
v. Ahlborn, 547 U.S. 268, 275 (2006).
States are not required to participate in Medicaid,
but all of them do. Id. Maine began participating in
Medicaid in 1966, shortly after the programs inception.
See U.S. Advisory Commn on Intergovernmental
Relations, Intergovernmental Problems in Medicaid 19
(1968), available at http://digital.library.unt.edu/
ark:/67531/metadc1397/m1/35/?q=maine. In order to
receive [Medicaid] funding, States must comply with
federal criteria governing matters such as who receives
care and what services are provided at what cost.
2

We express our appreciation to the amici for their assistance.

App. 5
NFIB, 132 S. Ct. at 2581. To this end, States must
submit to . . . CMS . . . a state Medicaid plan that
details the nature and scope of the States Medicaid
program. [States] must also submit any amendments
to the plan that [they] may make from time to time.
And [they] must receive the agencys approval of the
plan and any amendments. Douglas v. Indep. Living
Ctr. of S. Cal., Inc., 132 S. Ct. 1204, 1208 (2012). CMS
reviews the states plans and their proposed
amendments to determine whether they comply with
the statutory and regulatory requirements governing
the Medicaid program. Id. (citing 42 U.S.C.
1316(a)(1), (b), 1396a(a), (b); 42 C.F.R. 430.10 et
seq.).
When Congress passed the Medicaid Act, it
expressly reserved [t]he right to alter, amend, or
repeal any provision of the Medicaid statute. NFIB,
132 S. Ct. at 2605 (quoting 42 U.S.C. 1304). It has
exercised that power. Congress has, in fact, provided
greater Medicaid eligibility on numerous occasions.
From the start, the Act has mandated coverage for
certain children, and over time it has increased the
eligibility by changing age and income requirements.
See Social Security Amendments of 1965, Pub. L. No.
89-97, sec. 121(a), 1902(b), 79 Stat. 286, 348 (codified
at 42 U.S.C. 1396a(b) (1969)). For example,
approximately 25 years ago, Congress required
participating States to include among their
beneficiaries pregnant women with family incomes up
to 133% of the federal poverty level, children up to age
6 at the same income levels, and children ages 6 to 18
with family incomes up to 100% of the poverty level.
NFIB, 132 S. Ct. at 2631 (Ginsburg, J., dissenting).

App. 6
Before the expansion of Medicaid effected by the
ACA in 2010, Medicaid did not require states to cover
non-pregnant, non-disabled children ages 18 to 20 as a
condition of participation in the program, but it
permitted states to do so at the states option. See 42
U.S.C. 1396d(a)(i). States which chose to do so were
required to provide the same mandatory benefits to
children aged 18 to 20 as they provided for other
children.
From 1991 to the present, Maines Medicaid
program, MaineCare, has provided Medicaid coverage
to low-income individuals aged 18 to 20. Although
considered children for Medicaid purposes, such
individuals are otherwise considered adults under
Maine law. See Me. Rev. Stat. tit. 1, 72(1), 73.
MaineCare makes up a major portion of Maines
annual outlays, accounting for just over one-third of the
states total budget in 2013.3
In 2009, as part of the American Recovery and
Reinvestment Act (ARRA), Pub. L. No. 111-5, 123 Stat.
115 (2009), Congress offered stimulus funds to states
which agreed to maintain their Medicaid eligibility
criteria at July 1, 2008 levels until December 31, 2010.
Id. 5001(f)(1)(A), (h)(3), 123 Stat. at 500, 502. Two of
the purposes of the ARRA were to preserve and create
jobs and promote economic recovery and to stabilize
State and local government budgets, in order to

Maines total state and federal Medicaid expenditures for fiscal

year 2012 were $2.4 billion. According to Attorney General Mills,
coverage for 19- and 20-year-olds (the group for which Maine
sought to repeal coverage) represented less than two percent of
that figure.

App. 7
minimize and avoid reductions in essential services and
counterproductive state and local tax increases. Id.
3(a), 123 Stat. at 11516. Maine accepted those funds
and the concordant conditions, which included
continuing to provide coverage to low-income 18- to 20year-olds until December 31, 2010.
The ACA, enacted on March 23, 2010, contains a
maintenance-of-effort (MOE) provision, now codified
at 42 U.S.C. 1396a(gg), which provides, in relevant
part, that states, in order to continue receiving
Medicaid funds,
shall not have in effect eligibility standards,
methodologies, or procedures . . . that are more
restrictive than the eligibility standards,
methodologies, or procedures, respectively . . .
that [as of March 23, 2010] are applicable to
determining the eligibility for medical assistance
of any child who is under 19 years of age (or
such higher age as the State may have elected).
Maine had elected to cover 18- to 20-year-olds. The
requirement of the MOE provision is in effect until
October 1, 2019. 42 U.S.C. 1396a(gg)(2). In other
words, beginning March 23, 2010, in order to continue
receiving those Medicaid funds they had received for
this population, states were required to freeze their
eligibility standards for children for a period of
approximately nine years. Those standards included
Maines provision of coverage for 18- to 20-year-olds.
In short, in 2009, Maine agreed to continue
providing coverage, as it had since 1991, for low-income
individuals aged 18 to 20 through 2010 as a condition
of receiving federal stimulus funds under the ARRA.

App. 8
The ACA in 2010 then required Maine to continue
doing so for another nine years as a condition of
receiving Medicaid funds. Maine DHHS complains that
it did not have an opportunity to restrict its eligibility
standards for children after it accepted funds under the
ARRA but before the ACA went into effect.
Maine is required by its state constitution to have
a balanced budget. See Me. Const. art. 5, pt. 3d, 5; id.
art. 9, 14. Faced with a budget deficit in 2012,
Maines governor proposed eliminating MaineCare
eligibility for 19- and 20-year-olds not otherwise
covered by Medicaid. The legislature voted in favor of
that elimination of coverage, among other budget cuts.
Maine DHHS projected that removing 19- and 20-yearolds from the program would save Maine $3.7 million
but cause the state to lose $6.9 million in federal funds.
In August 2012, Maine DHHS submitted a state
plan amendment to the U.S. DHHS that eliminated
coverage of 19- and 20- year-olds, among other changes.
On January 7, 2013, CMS issued an initial decision
allowing most other cuts but declining to approve
Maine DHHSs amendment as to eliminating coverage
for 19- and 20- year-olds because it did not comply with
1396a(gg). CMS rejected Maine DHHSs arguments
that the MOE provision was an unconstitutional
exercise of Congresss spending power under the
Supreme Courts decision in NFIB. CMS, on
reconsideration, affirmed the disapproval of the state
plan amendment, this time simply stating that the
proposed amendment was inconsistent with the MOE
provision and that the agency did not have the
authority to adjudicate the constitutional questions

App. 9
raised by Maine DHHS. This petition for judicial
review followed.
Maine DHHS brings a twofold constitutional
challenge to the MOE provision before us. First, it
renews its argument that the MOE provision is
unconstitutional under the Spending Clause. Second,
it contends for the first time that the MOE provision
violates the doctrine of equal sovereignty as articulated
in Shelby County v. Holder, 133 S. Ct. 2612 (2013).
We review these constitutional challenges de novo.
See 5 U.S.C. 706 (court reviewing agency action must
decide all relevant questions of law and interpret
constitutional and statutory provisions, and shall set
aside agency action . . . found to be . . . contrary to
constitutional right, power, privilege, or immunity);
see also United States v. Rene E., 583 F.3d 8, 11 (1st
Cir. 2009) (review of constitutional challenge to a
federal statute is de novo).4
4

We asked the parties to provide supplemental briefing on the

issue of whether we have jurisdiction to address Maine DHHSs
constitutional claims, even though the agency did not address
those claims because it disclaimed the authority to render
decisions regarding the constitutionality of congressional
enactments.
After reviewing the parties arguments, we conclude that we
have jurisdiction. Under 42 U.S.C. 1316(a), [a]ny State which is
dissatisfied with a final determination made by the Secretary on
. . . reconsideration regarding approval of the states Medicaid
plan may file with the United States court of appeals for the
circuit in which such State is located a petition for review of such
determination. . . . The court shall have jurisdiction to affirm the
action of the Secretary or to set it aside, in whole or in part. The
Supreme Court has approved of the appellate court[s] reviewing
the decision of an administrative agency to consider a

App. 10
II. Spending Clause Challenge
The Spending Clause grants Congress the power to
pay the Debts and provide for the . . . general Welfare
of the United States. NFIB, 132 S. Ct. at 2601
(quoting U.S. Const. art. I, 8, cl. 1). Maine DHHS
argues that application of 1396a(gg) in these
circumstances exceeds Congresss power under the
Spending Clause for two reasons: (1) it is
unconstitutionally coercive under NFIB and (2) it
violates the anti-retroactivity principle of Pennhurst
State School & Hospital v. Halderman, 451 U.S. 1, 17,
25 (1981). NFIB itself shows that both of these
contentions are without merit. The MOE provision is
analogous to past modifications of Medicaid that NFIB
deemed constitutionally permissible.

constitutional challenge to a federal statute that the agency

concluded it lacked authority to decide. Elgin v. Dept of Treasury,
132 S. Ct. 2126, 2137-38 n.8 (2012) (collecting cases). In Preseault
v. ICC, 853 F.2d 145 (2d Cir. 1988), one of the cases cited in the
Elgin footnote, the court, in the course of reviewing an agencys
decision, held that it had jurisdiction over a challenge to the
constitutionality of the statute under which the agency acted, even
though the claim was presented for the first time on appeal.
Preseault, 853 F.2d at 14849. The Preseault court rejected the
agencys argument that the petitioners constitutional challenge
should be brought in federal district court in the first instance,
concluding that it would be nonsensical to require a bifurcated
challenge, relegating the constitutional challenge to the statute to
a district court that did not have jurisdiction over the review of
the underlying agency proceeding. Id. at 149. We find Preseaults
analysis persuasive. Under 1316(a), we have jurisdiction to
review the U.S. DHHSs disapproval of Maine DHHSs state plan
amendment, and that jurisdiction encompasses the power to
adjudicate Maine DHHSs constitutional challenges to 1396a(gg).

App. 11
A. NFIB v. Sebelius and the Spending Clause
In NFIB, the Supreme Court considered
constitutional challenges to two provisions of the ACA:
to the individual mandate, which required most
Americans to maintain a minimum level of health
insurance coverage, and to the significant expansion of
the Medicaid program, which required states to provide
specified health care to all individuals with incomes
below 133 percent of the poverty level (but at a higher
federal financial participation rate) as a condition of
the states continued participation in Medicaid. 132 S.
Ct. at 2577, 2582. In a fractured decision, the Court
upheld the individual mandate as a permissible
exercise of Congresss taxing power, but found
severable and struck down as beyond Congresss
Spending Clause authority the provision penalizing
states that did not participate in the new expansion of
the Medicaid funding with the loss of all Medicaid
funding. Id. at 2608. The Court struck down only the
penalty for noncompliance, not the expansion itself. Id.
at 2607. That is, the Court held that the U.S. DHHS
could not condition the granting of all federal Medicaid
funds on a states participation in the new expanded
program, but was permitted to condition funds for the
new expanded program on participation in the new
program. The Court made this explicit:
Nothing in our opinion precludes Congress from
offering funds under the Affordable Care Act to
expand the availability of health care, and
requiring that States accepting such funds
comply with the conditions on their use. What
Congress is not free to do is to penalize States
that choose not to participate in that new

App. 12
program by taking away their existing Medicaid
funding.
Id.5
Seven Justices concluded that the penalty of taking
away existing Medicaid funding from states which
declined to sign up for the new expanded Medicaid
program was unconstitutional, but they were unable to
agree on a single or consistent rationale. Chief Justice
Roberts, in a plurality opinion joined by Justice Breyer
and Justice Kagan, offered one rationale for that
holding. A joint dissent authored by Justice Scalia,
Justice Kennedy, Justice Thomas, and Justice Alito
offered another.
1. The pluralitys approach
The plurality began its analysis by noting that the
Medicaid expansion of the ACA dramatically
increase[d] state obligations under Medicaid. Id. at
2601. Under the pre-ACA system, states were required
to cover only certain discrete categories of needy
individuals -- pregnant women, children, needy

Maine has opted not to participate in the Medicaid expansion. In

June 2013, Maines legislature passed a bill that would have
expanded the states Medicaid program in order to receive the
additional federal funding offered under the ACA. LD 1066, 126th
Leg., 1st Reg. Session (Me. 2013). Maines governor vetoed the bill,
and the legislature failed to pass it over his veto. Id.; An Act to
Increase Access to Health Coverage and Qualify Maine for Federal
Funding: Roll Call Vote #339, 126th Leg., 1st Reg. Session (Me.
2013); The Advisory Board Company, Where the States Stand on
Medicaid Expansion, Daily Briefing (Sep. 4, 2014),
http://www.advisory.com/daily-briefing/resources/primers/medicaid
map.

App. 13
families, the blind, the elderly, and the disabled. Id.
(citing 42 U.S.C. 1396a(a)(10)). The Medicaid
program expansion, in contrast, require[d] States to
expand their Medicaid programs . . . to cover all
individuals under the age of 65 with incomes below 133
percent of the federal poverty line. Id. (citing 42 U.S.C.
1396a(a)(10)(A)(i)(VIII)).6
The plurality reiterated the longstanding rule that
Congress may use its power under the Spending Clause
to condition federal grants to states upon the States
taking certain actions that Congress could not require
them to take. Id. (quoting Coll. Sav. Bank v. Fla.
Prepaid Postsecondary Educ. Expense Bd., 527 U.S.
666, 686 (1999)). But, in order for an exercise of the
spending power to be deemed legitimate, the state
must voluntarily and knowingly accept the terms of
the deal. Id. at 2602 (quoting Pennhurst, 451 U.S. at
17). Put differently, Congress may use its spending
power to create incentives for States to act in
accordance with federal policies, but it oversteps its
authority when pressure turns into compulsion. Id.
(quoting Charles C. Steward Mach. Co. v. Davis, 301
U.S. 548, 590 (1937)). This limit on Congresss
spending power is necessary to ensur[e] that Spending
Clause legislation does not undermine the status of the
States as independent sovereigns in our federal
system. Id.

The Medicaid program expansion was projected to increase

federal Medicaid spending by $434 billion in its first six years.
Reply Br. of State Petrs on Medicaid at 19, Florida v. U.S. Dept
of Health & Human Servs., 132 S. Ct. 2763 (2012) (No. 11-400),
2012 WL 864598 at * 19.

App. 14
The plurality opinion reasoned that, while Congress
is entitled to condition the receipt of funds on the
States complying with restrictions on the use of those
funds in order to ensure[] that the funds are spent
according to [Congresss] view of the general Welfare,
when Congress places conditions on funds that do not
govern the use of those funds, the conditions are
properly viewed as a means of pressuring the States to
accept policy changes. Id. at 260304. The plurality
determined that the latter situation obtained with
respect to the Medicaid program expansion. That
expansion, Chief Justice Roberts explained,
accomplishe[d] a shift in kind, not merely
degree. The original program was designed to
cover medical services for four particular
categories of the needy: the disabled, the blind,
the elderly, and needy families with dependent
children. . . . Previous amendments to Medicaid
eligibility merely altered and expanded the
boundaries of these categories. Under the [ACA],
Medicaid . . . is no longer a program to care for
the neediest among us, but rather an element of
a comprehensive national plan to provide
universal health insurance coverage.
Id. at 260506. The plurality viewed the Medicaid
expansion as creating an entirely new health care
program, participation in which was a condition of
states receiving even continued funding for an old
program (pre-ACA Medicaid). See id. at 2606. This
meant that the Medicaid expansion was a condition
upon the receipt of funds that did not govern the use of
those funds.

App. 15
The plurality next considered whether the
financial inducement offered by Congress [as to the
new program expansion] was so coercive as to pass the
point at which pressure turns into compulsion. Id. at
2604 (quoting South Dakota v. Dole, 483 U.S. 203, 211
(1987)) (internal quotation marks omitted). The
precedent for this portion of the analysis was the
Courts decision in Dole. Dole had considered whether
Congresss threat to withhold five percent of a states
federal highway funds if the state did not raise its
minimum drinking age to 21 was permissible under the
Spending Clause. Dole, 483 U.S. at 211. Dole held that
it was permissible. Id. at 21112. The NFIB plurality
distinguished Dole, saying while the condition was not
a restriction on how the highway funds . . . were to be
used, it was not impermissibly coercive, because
Congress was offering only relatively mild
encouragement to the States. NFIB, 132 S. Ct. at
2604 (quoting Dole, 483 U.S. at 211).
By contrast, the plurality found that the financial
inducement and penalty in the new Medicaid program
expansion was much more than relatively mild
encouragement -- it [was] a gun to the head. Id.
Importantly, the plurality expressly acknowledged that
Congress is permitted to modify the Medicaid program,
and to condition states continuing participation in
Medicaid upon compliance with those modifications, as
it has done on numerous occasions in the past. Id. at
2605.7
7

That was in accord with settled law, see California v. United

States, 104 F.3d 1086, 1092 (9th Cir. 1997); Stowell v. Ives, 976
F.2d 65, 69 (1st Cir. 1992); Oklahoma v. Schweiker, 655 F.2d 401,
41314 (D.C. Cir. 1981), and the NFIB Court did nothing to

App. 16
The plurality found that the new Medicaid program
expansion was much more than a simple modification -it was a dramatic[] transform[ation] of the program.
NFIB, 132 S. Ct. at 260506. States could not have
anticipated that their entitlement to Medicaid funds
would become conditioned on providing new medical
care to all individuals with incomes below 133 percent
of the poverty line. Id. Thus, the new Medicaid program
expansion violated the anti-retroactivity rule of
Pennhurst, which provides that Congress may not
surpris[e] states participating in a federal-state
cooperative program with post-acceptance or
retroactive conditions. Id. (quoting Pennhurst, 451
U.S. at 25).
2. The joint dissents approach
The joint dissents analysis of the constitutionality
of the Medicaid expansion differed significantly from
that of the plurality. The primary8 focus of the joint
dissent was on the concept of coercion, which it
defined simply: [I]f States really have no choice other
than to accept the package, the offer is coercive, and
unsettle that law. See also 42 C.F.R. 430.12(c)(1) (state plan
must provide that it will be amended whenever necessary to
reflect . . . [c]hanges in Federal law, regulations, policy
interpretations, or court decisions).
8

The joint dissent also noted that conditions attached to grants

must be unambiguous, must be related to the federal interest in
particular national projects or programs, and may not induce the
States to engage in activities that would themselves be
unconstitutional. NFIB, 132 S. Ct. at 2659 (Scalia, Kennedy,
Thomas & Alito, JJ., dissenting) (citations omitted) (internal
quotation marks omitted). These criteria support the
constitutionality of 1396a(gg) here.

App. 17
the conditions cannot be sustained under the spending
power. Id. at 2661 (Scalia, Kennedy, Thomas & Alito,
JJ., dissenting). The Justices cautioned, however, that
courts should not conclude that legislation is
unconstitutional on this ground unless the coercive
nature of an offer is unmistakably clear. Id. at 2662.
Emphasizing that Medicaid constitutes the largest line
item in states budgets, as well as the apparent view of
Congress that no state would refuse to participate in
the new Medicaid program expansion, the joint dissent
concluded that the expansion exceeded Congresss
power under the Spending Clause. Id. at 266266.
B. Application of NFIB to the Disapproval Here Based
on 1396a(gg)
When a majority of the Supreme Court agrees on a
result but no single rationale explaining the result
enjoys the assent of five Justices, the holding of the
Court may be viewed as that position taken by those
Members who concurred in the judgments on the
narrowest grounds . . . . Marks v. United States, 430
U.S. 188, 193 (1977) (quoting Gregg v. Georgia, 428
U.S. 153, 169 n.15 (1976) (plurality opinion)). In NFIB,
the plurality invalidated the Medicaid expansion on
narrower grounds than did the joint dissent. The
plurality found a Spending Clause violation because it
determined that the Medicaid program expansion was
an entirely new program, participation in which was a
condition on continued receipt of pre-ACA Medicaid
funds, and because the loss of pre-ACA Medicaid funds
would have been so consequential to the states that
states had no real option to refuse. In other words, the
plurality found (1) that the expansion placed a
condition on the receipt of funds that did not govern the

App. 18
use of those funds and (2) that the condition was
unduly coercive. The joint dissent, in contrast, would
have invalidated the expansion based on a finding of
coercion alone. Hence, the pluralitys rationale was
narrower. See E. Pasachoff, Conditional Spending After
NFIB v. Sebelius: The Example of Federal Education
Law, 62 Am. U. L. Rev. 577, 593-96 (2013); cf. S.
Bagenstos, The Anti-Leveraging Principle and the
Spending Clause After NFIB, 101 Geo. L.J. 861, 873
(2013) (rejecting the proposition that the pluralitys
analysis relied only upon the size of the grant at issue).
Thus, we apply the pluralitys approach to 1396a(gg).
Under that analysis, Maine DHHSs Spending
Clause challenge fails. Indeed, the plurality opinion
precludes us from finding that there is a Spending
Clause problem with 1396a(gg). The MOE provision
applied to the long-standing provision of care to 19- and
20-year-olds, unlike the new Medicaid program
expansion first appearing in the ACA, is not a new
program. It is simply an unexceptional alter[ation] . . .
[of] the boundaries of the categories of individuals
covered under the old Medicaid program, completely
analogous to the many past alterations of the program
that NFIB expressly found to be constitutional. See
NFIB, 132 S. Ct. at 2606.
Section 1396a(gg) differs from the new program
expansion considered in NFIB in several critical ways.
As an initial matter, 1396a(gg) does not expand
Medicaid eligibility at all. It simply requires a state, as
a condition of continued participation in Medicaid, to
maintain its Medicaid eligibility standards for
children for nine years. See 42 U.S.C. 1396a(gg)(2)
(MOE provision applies to the eligibility standards,

App. 19
methodologies, and procedures . . . that are applicable
to determining the eligibility for medical assistance of
any child who is under 19 years of age (or such higher
age as the State may have elected)). As NFIB noted,
the Medicaid expansion require[d] States to expand
their Medicaid programs by 2014 to cover all
individuals under the age of 65 with incomes below 133
percent of the federal poverty line and establishe[d]
a new [e]ssential health benefits package. 132 S. Ct.
at 2601 (citing 42 U.S.C. 1396a(a)(10)(A)(i)(VIII),
1396a(k)(1), 1396u7(b)(5), 18022(b)).
What is more, 1396a(gg) requires states to
maintain eligibility standards for a population -- lowincome children of certain ages -- that has historically
been covered by Medicaid. Maine DHHS admits in its
argument that the classic form of Medicaid provided
coverage for the blind, the disabled, the elderly, and
needy families with dependent children. In fact, the
Medicaid program has an extensive history of covering
18- to 20-year-olds. At the time of Medicaids
enactment in 1965, the program included some 19- and
20- year-olds within the population of children that
states had to cover. It did so first by requiring states to
match the coverage of social assistance programs like
Aid for Families with Dependent Children (AFDC),
which defined eligible children to include 19- and 20year-olds in particular educational programs. See 42
U.S.C. 606(a) (1964) (providing that AFDC was
available to any dependent child, defined as a needy
child (1) who has been deprived of parental support or
care . . . and who is living with [one of several
enumerated relatives] . . ., and (2) who is (A) under the
age of eighteen, or (B) under the age of twenty-one and
. . . a student regularly attending [certain educational

App. 20
programs]); Social Security Amendments of 1965, Pub.
L. No. 89-97, sec. 121(a), 1902(a)(10), 79 Stat. 286,
344-45 (codified at 42 U.S.C. 1396a(a)(10) (1969)) (A
state plan for medical assistance must . . . provide for
making medical assistance available to all individuals
receiving aid or assistance under State plans approved
under [AFDC] . . . .).
The Medicaid program also mandated that states
provide medical assistance to all under-21 individuals
who would have qualified as children for AFDC but
for their age, thus removing the educational condition
that limited the class of 19- and 20-year-olds covered
under AFDC. See id. 1902(b), 79 Stat. at 348
(codified at 42 U.S.C. 1396a(b) (1969)); see also id.
1904, 79 Stat. at 351 (codified at 42 U.S.C.
1396d(a)(i) (1969)). Thus, from its early days,
Medicaid contemplated mandatory coverage of some
19- and 20-year-olds, due to their status in federal law
as children in need. Such a mandatory coverage
requirement was in place when Maine joined Medicaid
in 1966. The mandate to cover children under 21 who
would qualify for AFDC but for their age did not
become optional until more than a decade later. See
Omnibus Budget Reconciliation Act of 1981, Pub. L.
No. 97-35, 2172(b)(1), 95 Stat. 357, 808 (1981)
(codified at 42 U.S.C. 1396d(a)(i)); id. 2172(a), 95
Stat. at 808 (codified at 42 U.S.C. 1396a(b) (1983)).
There is an additional relevant point. The category
of children for which a state must provide coverage has
remained subject to expansion throughout the history
of Medicaid. Alterations to the category of needy
children occurred repeatedly in the 1980s, with states
being required to cover an expanding group of children

App. 21
based on changing age and income requirements.
Importantly, in 1990, Congress required states to cover
all 18-year-olds who met certain income eligibility
requirements, irrespective of their dependent status.
Omnibus Budget Reconciliation Act of 1990, Pub. L.
No. 101508, 4601(a)(2), 104 Stat. 1388, 1388-166
(1990) (codified at 42 U.S.C. 1396d(n)(2)); id.
4601(a)(1)(A), 104 Stat. at 1388-166 (codified at 42
U.S.C. 1396a(a)(10)(A)(i)(VII)). In this way, children
aged 18 -- historically treated by AFDC and Medicaid
in the same manner as children under 21 -- thus
became included in the mandatorily covered category
without any condition other than their income level.
That is so even though 18-year-olds are for many other
purposes, including voting, treated as adults rather
than children.
The history of Medicaids treatment of 18-, 19-, and
20-year-olds further demonstrates that application of
1396a(gg) here as to the treatment of 19- and 20-yearolds accomplishes a shift in . . . degree, rather than in
kind. NFIB, 132 S. Ct. at 2605; see also id. at 2606
(noting that a Medicaid amendment requiring States
to cover pregnant women and increasing the number of
eligible children . . . . can hardly be described as a
major change in a program that -- from its inception -provided healthcare for families with dependent
children (emphasis added)).9
Two further differences between the MOE provision
and the new Medicaid program expansion considered

The pregnancy program was not directly at issue in NFIB, but

this language strongly suggests that the plurality viewed it as a
permissible alteration of the old program.

App. 22
in NFIB support the conclusion that the MOE provision
did not accomplish a shift in kind. First, the MOE
provision uses the same pre-existing funding
mechanism as pre-ACA Medicaid, whereas the
expansion uses a new, more generous federal funding
mechanism. Second, under 1396a(gg), Maine is
required only to maintain its current benefits for 19and 20-year olds, whereas the Medicaid expansion
required states to provide a new [e]ssential health
benefits package . . . to all new Medicaid recipients.
NFIB, 132 S. Ct. at 2601 (first alteration in original).
The NFIB Court explicitly mentioned both of these
features of the expansion in its analysis. It noted that
the manner in which the expansion [was] structured
indicate[d] that . . . Congress . . . recognized it was
enlisting the States in a new health care program
because Congress created a separate funding provision
to cover the costs of providing services to any person
made newly eligible by the expansion and because
Congress mandated that newly eligible persons receive
a level of coverage that is less comprehensive than the
traditional Medicaid benefit package. Id. at 2606.
In short, the MOE provision as applied here does
not create a new program and falls comfortably within
Congresss express reservation of power to alter or
amend the terms of the Medicaid statute in its
coverage of previously covered groups. See Cong.
Research Serv., Selected Issues Related to the Effect of
NFIB v. Sebelius on the Medicaid Expansion
Requirements in Section 2001 of the Affordable Care
Act 5-6 (July 16, 2012), available at
http://www.ncsl.org/documents/health/aca_medicaid_
expansion_memo_1.pdf (concluding that the MOE
provision of the ACA remains valid after NFIB because

App. 23
it is not part of the new Medicaid expansion program
for which the states must have a genuine choice).
Further, the states had notice at the inception of the
Medicaid program that continued participation by a
state in Medicaid might be conditioned on a
requirement such as the MOE provision here.
As a result, there is no Spending Clause violation
under NFIB. See also California v. United States, 104
F.3d 1086, 1092 (9th Cir. 1997) (rejecting Californias
argument that Congress cannot introduce new
conditions on participation in Medicaid because
California now has no choice but to remain in the
program in order to prevent a collapse of its medical
system); Stowell v. Ives, 976 F.2d 65, 69 (1st Cir. 1992)
(finding that statute providing that U.S. DHHS would
not approve a state plan for medical assistance if the
state reduced payment levels for the AFDC program
provided incentives -- not commands -- to the States,
since states could choose to maintain AFDC benefits or
to reduce them and risk losing federal funding).
Rather, this is one of the typical case[s] in which we
look to the States to defend their prerogatives by
adopting the simple expedient of not yielding to
federal blandishments when they do not want to
embrace the federal policies as their own. NFIB, 132
S. Ct. at 2603 (quoting Massachusetts v. Mellon, 262
U.S. 447, 482 (1923)).
Maine DHHSs arguments to the contrary are
unconvincing. First, Maine DHHS argues that the
MOE provisions are an integral part of the Medicaid
expansion that was considered in NFIB, and so they
must be struck down as a direct implementation of the
ruling in NFIB. Not so. The plurality focused

App. 24
exclusively on the amendments to Medicaid that
required states to meet the health care needs of the
entire nonelderly population with income below 133
percent of the poverty level. NFIB, 132 S. Ct. at 2606.
The Court did not hold, or even intimate, that other
changes to Medicaid wrought by the ACA, such as the
MOE provision at issue here, were constitutionally
infirm. To the contrary, the plurality expressly stated
that it was holding unconstitutional only the sanction
of withholding all Medicaid funding from states that
refused to accept this basic change in the nature of
Medicaid. Id. at 2608. That remedy d[id] not require
striking down other portions of the Affordable Care
Act. Id.
Second, Maine DHHS contends that, regardless of
its earlier choice to provide coverage for low-income 19and 20-year-olds, Congress had not previously
mandated this coverage, so the now-mandated MOE
coverage is new. It argues that Congress cannot
threaten to withdraw all Medicaid funds from a State
for failing or refusing to cover categories of adults for
whom Medicaid has never previously mandated
coverage, regardless of the fact the state had chosen to
provide such coverage. In fact, Congress can do so and
it has done so, on numerous occasions. Moreover, the
NFIB plurality expressly said Congress is allowed to do
so, so long as the change effected by the expansion is a
shift in degree rather than a shift in kind. See id. at
2605. NFIB approved of a past amendment that newly
required states to cover pregnant women; that was a
shift in degree and not in kind, as is this. Id. at
260506. Further, application here of 1396a(gg)
concerns children, a classic Medicaid program
objective, not adults.

App. 25
Third, Maine DHHS argues that 1396a(gg) is
coercive because when a federal program is as large
as Medicaid is . . ., the State has no option but to
participate. That is not the test NFIB has adopted.
Even were the question of tests open, Maine DHHSs
Spending Clause claim based upon coercion alone
does not work. As the Supreme Court noted long ago,
an attempt to determine when inducement to comply
with a condition on the use of federal funds crosses the
line into compulsion would plunge the law into
endless difficulties. Davis, 301 U.S. at 590 (Cardozo,
J.); see also Oklahoma v. Schweiker, 655 F.2d 401, 41314 (D.C. Cir. 1981) (The courts are not suited to
evaluating whether the states are faced . . . with an
offer they cannot refuse or merely a hard choice.).
Maine DHHSs argument that the MOE provision is
indistinguishable from the Medicaid expansion
considered in NFIB is, as explained, unpersuasive. As
it affects Maine, the MOE provision requires Maine to
do no more than continue to cover low-income
individuals aged 18 to 20 for a period of nine years, and
in exchange Maine will receive the classic funding. By
contrast, the new Medicaid program expansion would
have required Maine to cover all low-income
individuals indefinitely. NFIB, 132 S. Ct. at 2606.
Those changes are not the same nor even analogous.10

10

In briefing and at oral argument, counsel for Maine DHHS

argued that, because the NFIB Court did not sever the application
of the Medicaid expansion only to those 21 and above, the decision
means that Congress may not make coverage of 19- and 20-yearolds mandatory. We see no basis to so conclude. The question of

App. 26
C. Claimed Pennhurst Anti-Retroactivity Violation
Maine DHHS also argues that the application to it
of the MOE provision violates the Pennhurst antiretroactivity principle because Congress changed the
deal it offered to Maine in 2009. Maine DHHS points
out that, in 2009, Maine was required to maintain
eligibility standards only through 2010 in order to get
the stimulus funds it had chosen to seek. Then, in
2010, with the passage of the ACA, Maine was required
to maintain those standards through 2019 in order to
avoid losing all Medicaid funds.
This retroactivity argument fails. In Pennhurst, the
Supreme Court explained that legislation enacted
pursuant to the spending power is much in the nature
of a contract: in return for federal funds, the States
agree to comply with federally imposed conditions. 451
U.S. at 17. But a state cannot voluntarily and
knowingly accept[] the terms of the contract if it is
unaware of the conditions or is unable to ascertain
what is expected of it. Id. Thus, if Congress intends to
impose a condition on the grant of federal moneys, it
must do so unambiguously; it may not surpris[e]
participating States with post acceptance or
retroactive conditions. Id. at 17, 25.
The ACA did not surprise Maine with a
retroactive condition. Because Congress has reserved
in the Medicaid Act the power to alter or amend the
Medicaid program, states have had fair notice that

whether to sever application of the expansion to 18- to 20-year-olds

from application of the expansion to 21- to 64-year-olds was not
before the Court in NFIB.

App. 27
Congress may make incremental changes such as
increasing the number of eligible children. NFIB, 132
S. Ct. at 2606.11 Here, Congress did not even go that
far; instead, it merely required that states continue
providing coverage to children on the same terms as
were in effect on the date of the ACAs passage. Maine
DHHS appears to argue that it could not have foreseen
that in exchange for stimulus funds it would be locked
into those coverage levels at a later time. But this
modest change falls within the Medicaid Acts broad
reservation clause. Maine was on notice, both before
and after accepting stimulus funds, that an
incremental alteration of Medicaid might change the
conditions on participation in the Medicaid program in
the way that 1396a(gg) has. Put differently, Maine
was not unaware of the conditions [on its participation
in Medicaid] or . . . unable to ascertain what [was]
expected of it, Pennhurst, 451 U.S. at 17, when it
chose to receive funds under Medicaid or under the
ARRA. There is no constitutional infirmity here.
III. Equal Sovereignty Claim
Maine DHHS also argues that the MOE provision
deprives Maine of its right to equal sovereignty under
Shelby County v. Holder, 133 S. Ct. 2612 (2013),
because it prohibit[s] Maine from exercising the
prerogative to design its Medicaid laws in ways that
many of its sister States remain free to do. This

11

As explained in greater detail above, at the inception of the

Medicaid program, states were required to cover individuals aged
18 to 20 if they would have qualified for the AFDC program but for
their age, and Congress at one point expanded Medicaid to cover
18-year-olds regardless of their status as dependents.

App. 28
argument fails at every step of the analysis. First,
Maine DHHSs premise that 1396a(gg) singles out
certain states for disparate treatment is wrong. Shelby
County is also not relevant here because 1396a(gg)
does not similarly effect a federal intrusion into a
sensitive area of state or local policymaking. Finally,
there is no constitutional problem because any
disparate treatment caused by 1396a(gg) is
sufficiently related to the problem that the statute was
designed to address.
A. Shelby County
Shelby County considered the continuing
constitutionality of 4 and 5 of the Voting Rights Act
(VRA) of 1965. Section 4 set forth a coverage formula
that identified jurisdictions with a history of voter
discrimination, and 5 required those jurisdictions to
obtain preclearance for any change in voting
procedures by proving that the change had neither the
purpose [nor] the effect of denying or abridging the
right to vote on account of race or color. Id. at 261820
(alteration in original). In the years after the VRAs
passage, Congress repeatedly re-authorized the Act
(most recently in 2006), but it made no changes to 4s
coverage formula after 1975. Id. at 262021.
The Shelby County Court held that 4s coverage
formula unconstitutionally infringed the equal
sovereignty of the states. Id. at 262331. The majority
explained that, when a statute authorizes federal
intrusion into sensitive areas of state and local
policymaking, . . . and represents an extraordinary
departure from the traditional course of relations
between the States and the Federal Government, id.
at 2624 (citations omitted) (internal quotation marks

App. 29
omitted), any disparate geographic coverage must be
sufficiently related to the problem that it targets. Id.
at 2627 (quoting Nw. Austin Mun. Util. Dist. No. One
v. Holder, 557 U.S. 193, 203 (2009)).12 The Court found
that 4s coverage formula as used in Shelby County
did not satisfy this test because it was based on
decades-old data and eradicated practices. Id. at 2627.
B. Disparate Treatment
Maine DHHSs premise that 1396a(gg) results in
disparate treatment of states, as that phrase was
used in Shelby County, is mistaken. On its face, the
MOE provision applies the same rule to each state:
freeze eligibility standards in existence as of March 23,
2010 until October 1, 2019, or risk losing Medicaid

12

Shelby County relied primarily on two cases for its discussion of

the equal sovereignty doctrine: Coyle v. Smith, 221 U.S. 559
(1911), and Northwest Austin. Coyle held that
when a new state is admitted into the Union, it is so
admitted with all of the powers of sovereignty and
jurisdiction which pertain to the original states, and that
such powers may not be constitutionally diminished,
impaired, or shorn away by any conditions, compacts, or
stipulations embraced in the act under which the new
state came into the Union, which would not be valid and
effectual if the subject of congressional legislation after
admission.
221 U.S. at 573. In other words, Congress can enact laws affecting
a state differently from other states at the time of its admission
only if Congress could constitutionally do so after the states
admission. Northwest Austin expressed concerns in dicta that the
VRA might conflict with our historic tradition that all the States
enjoy equal sovereignty. 557 U.S. at 203 (quoting United States
v. Louisiana, 363 U.S. 1, 16 (1960)).

App. 30
funding. In Shelby County, the government admitted
that the coverage formula was reverse-engineered:
Congress identified the jurisdictions to be covered and
then came up with criteria to describe them. Id. at
2628. In contrast, Maine has not been singled out at
all. The rule is uniform and performs an important
function of not providing incentives to states to act in
ways Congress wishes to avoid. See, e.g., Bennett v. Ky.
Dept of Educ., 470 U.S. 656, 67172 (1985). Every
state has simply been required to continue for a limited
period of time13 to fund Medicaid services for those
children it was funding before the ACA.
Maine DHHS resists this distinction, pointing out
that even the preclearance requirement in Shelby
County, in a sense, applied to all states. This
contention is unpersuasive. In Shelby County, the
government expressly admitted that it had singled out
certain states for disfavored treatment and then
reverse-engineered a coverage formula that would
target only those states. 133 S. Ct. at 2628. Here, in
contrast, there is no suggestion that the MOE provision
was reverse-engineered; from all indications,
Congress came up with the criteria without regard to
which states would be covered by their application.
C. Intrusion Into a Sensitive Area of State or Local
Policymaking
We reject Maine DHHSs equal sovereignty claim
for another reason as well. Shelby County involved a
situation of federal intrusion[s] into sensitive areas of

13

Section 1396a(gg) will remain in effect only until 2019. See 42

U.S.C. 1396a(gg)(2).

App. 31
state and local policymaking, id. at 2624, and required
in that context that disparate treatment must be
sufficiently related to the problem that it targets, id.
at 2627. The Court repeatedly emphasized that the
VRA marked an extraordinary departure from basic
principles of federalism because it intruded into a
realm (regulation of state and local elections) that has
traditionally been the exclusive province of the states.14
Id. at 2618 (characterizing 5 as a drastic departure
from basic principles of federalism); id. at 2623 (noting
that the Framers intended the States to keep for
themselves . . . the power to regulate elections); id. at
2624 (stating that the VRA authorizes federal
intrusion into sensitive areas of state and local
policymaking, . . . and represents an extraordinary
departure from the traditional course of relations
between the States and the Federal Government); id.
at 2630 (explaining, [a]t the risk of repetition, that
the VRA is far from ordinary); id. at 2631 (stating
that any preclearance formula must reflect conditions
that justify[] such an extraordinary departure from
the traditional course of relations between the States
and the Federal Government). The equal sovereignty
doctrine has been applied only in such extraordinary
situations. See NCAA v. Governor of N.J., 730 F.3d

14

Similarly, in Coyle v. Smith, the challenged federal statute

mandated that Oklahoma, as a condition of admittance to the
Union, establish its state capital in a particular city. See 221 U.S.
559, 564 (1911). The Court found that this statute violated the
equal sovereignty doctrine, noting that [t]he power to locate its
own seat of government, and to determine when and how it shall
be changed from one place to another, and to appropriate its own
public funds for that purpose, are essentially and peculiarly state
powers. Id. at 565.

App. 32
208, 239 (3d Cir. 2013) ([T]here is nothing in Shelby
County to indicate that the equal sovereignty principle
is meant to apply with the same force outside the
context of sensitive areas of state and local
policymaking. (quoting Shelby County, 133 S. Ct. at
2624)).15 This is not such an extraordinary situation.
Federal laws that have differing impacts on different
states are an unremarkable feature of, rather than an
affront to, our federal system. Indeed, MOE provisions
like the one at issue here have long been a common
feature of federal spending programs, including
Medicaid. See, e.g., Social Security Amendments of
1965, Pub. L. No. 89-97, sec. 121(a), 1902(c), 79 Stat.
286, 348 (codified at 42 U.S.C. 1396a(c) (1969)) (MOE
provision in the original Medicaid statute); Bennett,
470 U.S. at 671 (describing MOE provision in the
Elementary and Secondary Education Act of 1965).
The MOE provision at issue here does not intrude
on an area of traditional state concern; to the contrary,
it simply requires an extension of states prior choices
to participate in a limited federal-state cooperative
program. Maine DHHSs assertion that the MOE
provision affects its ability to pass and implement
15

In NCAA, the Third Circuit rejected an equal sovereignty

challenge to a statute that, in effect, prohibits casino-operated
sports books outside of Nevada. The Third Circuit held that the
Commerce Clause, under which the challenged statute had been
enacted, does not require geographic uniformity. Id. at 238
(quoting Morgan v. Virginia, 328 U.S. 373, 388 (1946)
(Frankfurter, J., concurring)).
We need not and do not hold that the equal sovereignty
doctrine is categorically inapplicable to congressional action under
the Spending Clause. We simply find the doctrine inapplicable on
the facts of this case.

App. 33
laws, in the exercise of the fundamental police power
over health and welfare is stated at much too high a
level of generality to be true. A states ability to set the
conditions of eligibility for participation in a federal
health insurance program that is funded primarily by
the federal government is not a core sovereign state
function in the same way as is a states ability to
regulate the conduct of its elections. Cf. NCAA, 730
F.3d at 23739 (reasoning that the equal sovereignty
doctrine did not apply to a statute affecting a states
ability to pass laws legalizing sports gambling).
Put simply, the MOE provision is not at all an
intrusion, much less an intrusion into state
sovereignty as was true of 4 of the VRA. The equal
sovereignty doctrine of Shelby County is not applicable
to this case.
D. Sufficient Justification
Maine DHHS makes, and we reject, an argument
that under Shelby County the MOE provision is not
sufficiently related to the problem it targets. Shelby
County permits legislation that single[s] out states if
the singling out makes sense in light of current
conditions. 133 S. Ct. at 2629. The coverage formula of
4 of the VRA failed that test because it was based on
decades-old data and eradicated practices. Id. at 2627.
Section 1396a(gg), in contrast, does make[] sense in
light of current conditions, and so, to the extent that
it results in disparate treatment of states at all, the
disparity is permissible.
Congress has long used temporary MOE provisions
in Medicaid and other benefits programs for a specific,
legitimate purpose: to protect low-income individuals

App. 34
from losing public assistance in times of transition
between different statutory schemes for delivering that
assistance.16 The MOE provision at issue here is no
different. As counsel for the United States explained at
oral argument, when Congress passed the ACA, it did
not want to create incentives for states to drop children
previously covered on the often mistaken premise that
they will be easily transitioned to new coverage, when
in fact, there are gaps in enrollment, people lose better
benefits packages, or Congress may just not want to
shift from an existing program to one that is now
funded through [new] federal dollars. And as amici
point out, Congress was entitled to consider that
widespread withdrawal of coverage for children could
have a serious impact on the public fisc, since children
who have health insurance are more likely to avoid
serious (and expensive) long-term health problems that
often beset children who lack insurance. The MOE
provision avoided these potential negative
consequences of the shift from the pre-ACA regime.
The coverage conditions here are based on current
conditions and address real problems.
Thus, we reject Maine DHHSs argument that the
MOE provisions . . . [are] not sufficiently tailored to

16

For example, when Congress passed the Medicaid statute in

1965, it included a provision prohibiting the U.S. DHHS from
approving a state plan that would result in a reduction in aid or
assistance provided under any of the five assistance programs
related to Medicaid eligibility, such as AFDC. See Social Security
Amendments of 1965, Pub. L. No. 89-97, sec. 121(a), 1902(c), 79
Stat. 286, 348 (codified at 42 U.S.C. 1396a(c) (1969)).

App. 35
any constitutional purpose.17 To the contrary,
1396a(gg) directly serves the legitimate purpose of
ensuring that children do not lose health insurance as
the country transitions from the pre-ACA Medicaid
regime to the post-ACA Medicaid regime. This is a far
cry from the situation the Court confronted in Shelby
County, where Congress reenacted a formula based on
40-year-old facts having no logical relation to the
present day. 133 S. Ct. at 2629. Any disparity in
treatment caused by the MOE provision is justified.
IV. Conclusion
We deny the petition for review and find no
constitutional violation. Costs are awarded against
Maine DHHS.

17

Maine DHHS contends that, because the MOE provisions . . .

form an integral part . . . of the Medicaid Expansion, [i]t is clear
that the purpose of the MOE provisions is promotion of a
constitutional wrong: the mandatory Medicaid Expansion under
ACA 2001. But Maine DHHSs premise that the MOE provisions
were an integral part of the new Medicaid program expansion
considered in NFIB is pure speculation; as Maine DHHS admits,
Congress did not, and was not required to, make explicit findings
as to the rationale behind the MOE provision. Moreover, even if
Maine DHHSs speculation were correct, it remains true that the
independent justification for the MOE provision offered by the
United States -- preserving public assistance benefits for children
in a time of transition between different public assistance
programs -- is entirely valid.

App. 36
United States Court of Appeals
For the First Circuit
No. 14-1300
[Filed November 17, 2014]
__________________________________________
MARY C. MAYHEW, in her capacity as
)
Secretary of the Maine Department of
)
Health and Human Services,
)
Petitioner,
)
)
v.
)
)
SYLVIA M. BURWELL, in her capacity as )
Secretary of the U.S. Department of
)
Health and Human Services,
)
Respondent,
)
)
and
)
)
JANET T. MILLS, in her capacity as
)
Attorney General of Maine,
)
Intervenor.
)
_________________________________________ )
____________________
JUDGMENT
Entered: November 17, 2014
This cause came on to be heard on a petition for
review of an order of the [Enter Agency] and was
argued by counsel.
Upon consideration whereof, it is now here ordered,
adjudged and decreed as follows: The petition for
review is denied, and we find no constitutional

App. 37
violation. Costs are awarded against
Department of Health and Human Services.

Maine

By the Court:
/s/ Margaret Carter, Clerk
cc: Mr. Comart, Ms. Klein, Ms. Mills, Ms. Perkins, Mr.
Roach, Mr. Ruprecht, Ms. Sanchez, Mr. Stern & Mr.
Taub.

App. 38

APPENDIX B
CENTERS FOR MEDICARE &
MEDICAID SERVICES
Decision of the Administrator
Docket No. 13-02
[Filed January 15, 2014]
____________________________________
In the matter of:
)
)
The Disapproval of Maine State Plan )
Amendment 12-010
)
___________________________________ )
This case is before the Administrator, Centers for
Medicare & Medicaid Services (CMS) for final agency
action pursuant to 42 CFR 430.102. The State
requested that the Administrator reconsider the
disapproval of the State Plan Amendment (SPA) 12010. The CMS Presiding Officers recommended
decision was issued on November 22, 2013, affirming
the Administrators disapproval of SPA 12-010. The
State filed exceptions.
Issue
The issue involves the reconsideration of CMS
disapproval of the SPA 12-010, which proposed changes
to eligibility for parents, caretaker relatives, and
children whose income is at, or below, 133 percent of
the Federal poverty level (FPL). The proposal would
make eligibility standards, methods, and procedures
more restrictive than those in effect on March 23, 2010.

App. 39
Background
The State of Maine submitted SPA 12-010,1 which
specifically proposed changes to eligibility for parents,
caretaker relatives, and children who have income at or
below 133 percent of the FPL.2 The State of Maine
proposed reducing the income eligibility limit from 150
percent of the FPL to 100 percent for parents and
caretaker relatives, who may qualify under sections
1902(a)(10)(A)(i)(I) and 1931 of the Social Security Act.
The proposed SPA would therefore impose more
restrictive eligibility standards on adults whose income
was above 100 percent and at or below 133 percent of
the FPL. The SPA 12-010 also proposed to reduce the
1

See e.g., CMS Exhibits at 160-171 (August 7, 2012 proposed SPA

revisions); 175-197 (August 1, 2012 SPA request).
2

Maine SPA 12-010 initially also proposed, inter alia, to reduce

income eligibility for the Medicare Savings Plans (MSPs) through
the elimination of certain income disregards. The SPA was
eventually split into two parts: SPA 12-010 and the proposal
relating to MSPs as 12-010A. Pursuant to the subsequent
correspondence between CMS and the State, the State of Maine
also requested the non-application of the MOE requirement for
certain populations for the period July 1, 2012 through June 30,
2103, based on a projected deficient for the States fiscal year 2013.
CMS approved SPA 12-010(A) by a separate notice dated January
7, 2013, effective March 1. 2013. CMS Exhibits at 15-17.
Transmittal #12-010(A) approved the States request to:
1) eliminate an optional group of parents and caretaker relatives;
2) reduce the income eligibility standard for the section 1931 group
from 150 percent of the FPL to 133 percent of the FPL; and
3) reduce certain eligibility for certain individuals also eligible for
Medicaid based on their eligibility for Medicare. The approval was
tied to the budget deficit certified for the State through June 30,
2013.

App. 40
age limit for eligibility under its State plan for
individuals who meet the income and resource
requirements of the Aid to Families with Dependent
Children (AFDC) state plan but would not have
received AFDC benefits because of age. The proposed
change would lower the age limit of eligibility from 20
to 18 for children who met the eligibility requirements
for the AFDC state plan, but who would not have
received AFDC based on age and thus eliminate
eligibility for such individuals who are ages 19 and 20.
By notice dated January 7, 2013, CMS disapproved the
proposed SPA after consulting with the Secretary, as
the SPA was not consistent with the requirements of
sections 1902(a)(74) and 1902(gg) of the Act. The
proposal would have eliminated Medicaid eligibility for
parents, caretaker relatives, and children eligible
under sections 1902(a)(10)(A)(i)(I) and 1931 whose
incomes are between 100 percent and 133 percent of
the FPL, and Medicaid eligibility of certain individuals
considered children under Maines State Medicaid
plan. CMS found that the proposed SPA constituted
more restrictive eligibility standards than those in
effect in the State of Maine as of March 23, 2010 that
could not be excepted from the maintenance-of-effort
(MOE) mandate that Maine is subject to under sections
1902(a)(74) and (gg) of the Social Security Act. Maine
has covered parents and caregivers relatives with
incomes up to 150 percent of the FPL since 2005 and
the proposal would impose more restrictive eligibility
standards on adults between 100 and 133 percent of
the FPL which is inconsistent with the MOE
requirements. Maine has also covered 19 and 20 year
olds who meet the income and resource requirements

App. 41
of the AFDC state plan since 1991.3 Because the
individuals were previously covered by the State based
on their status as children, the reduction of eligibility
for these individuals is not permitted under the budget
deficit certification (MOE) exception as it is only
available for non-pregnant and nondisabled adults, and
even if considered adults, their income would fall below
133 percent of the FPL.
In the disapproval, CMS also responded to the States
claim that the National Federation of Independent
Business v Sebelius, 567 U.S.----, 132 S. Ct. 2566 (2012)
(NFIB) directed approval of the SPA. CMS explained
that the Supreme Court did not strike down any
provision of the Patient Protection and Affordable Care
Act including the MOE requirement. The Supreme
Court limited Federal enforcement remedies with
respect to States that elect not to proceed with the
Medicaid adult eligibility expansion and thus have
State plans provisions that are out of compliance with
the provisions of section 1902(a) of the Act. The MOE
provisions require the State plans to continue coverage
of needy families with dependent children that the
State has covered for many years, rather than
implement a new program. Thus, the analysis in NFIB
makes it clear that the MOE provision is well within
Congresses authority. CMS also rejected the States
claim that the MOE requirement retroactively
penalized the State for having maintained eligibility
levels during the period financial incentives for doing
so were available under the American Recovery and
3

The State would make an exception to this reduction of eligibility

for 19 and 20 year olds who are independent foster care adolescent.
See CMS Disapproval, dated January 7, 2013, at n. 1.

App. 42
Reinvestment Act of 2009 (ARRA), without continuing
the incentives that were present under ARRA.
However, CMS found that the Maine coverage of the
groups at issue began long before the ARRA and the
State continues to have flexibility to achieve budgetary
objective consistent with the MOE requirement. The
CMS Administrator notified the State that CMS
determined that the proposed SPA was contrary to the
MOE statutory provision as it relates to parents and
caretaker relatives as well as children, ages 19 and 20.
The State requested reconsideration of the CMS
disapproval of SPA 12-010. By letter dated April 4,
2013, CMS scheduled a reconsideration hearing by
notice dated April 4, 20134 and designating a Presiding
Officer. The date for a hearing was named. The parties
subsequently agreed that the administrative
proceedings would be conducted based on a written
record.
CMS Presiding Officers Recommended Decision
After a review of the administrative record and the
respective parties briefs in support of their positions,
the CMS Presiding Officer held that the State of Maine
had properly exhausted its administrative remedies by
timely presenting its administrative appeal. The
parties agreed that there were no material questions of
fact and that it was undisputed that the SPA 12-010, if
approved, would violate the statutory MOE
requirement at sections 1902(a)(74) and 1902(gg) of the

The Notice of Hearing: Reconsideration of Disapproval of Maine

State Plan Amendments (SPA) 12-010 was published at 78 Fed
Reg. 21608 (April 11, 2013).

App. 43
Act. The CMS Presiding Officer concluded that the
administrative tribunal does not have the authority to
render a decision regarding the constitutionality of the
ACA. Accordingly, the CMS Presiding Officer affirmed
the CMS disapproval of SPA 12-010. The CMS
Presiding Officers recommended decision was issued
November 22. 2013.
Exceptions
Exceptions were received timely from the State of
Maine with respect to the CMS Presiding Officers
recommended decision. The State filed exceptions
stating that the CMS Presiding Officer was incorrect in
his assertion that this administrative tribunal does not
have the authority to decide the sole substantive
dispute in this matter concerning the constitutionality
of the ACA MOE provision as applied to Maines SPA
by CMS in its disapproval of SPA 12-010. The State
cited to Thunder Basin Coal Co. v. Reich, 510 U.S. 210,
215 (1994), for the proposition that it is not a
mandatory rule that an administrative agency cannot
adjudicate the constitutionality of an congressional
enactment and given the circumstances of this matter,
it would be appropriate for the agency to exercise this
discretion. However, to avoid further delay, the State
waived its objection to the failure of the agency to
render a decision regarding the constitutionality of the
ACA MOE provision as applied in this matter.
Accordingly, the State requested that CMS
immediately approve, in full, the SPA at issue. In the
alternative, without waiving its constitutional
argument, the State requested CMS immediately issue
a final decision accepting the CMS Presiding Officers

App. 44
proposed decision and, thereby, allow the State to
petition for judicial review.
Discussion
The Medicaid program, enacted in 1965 as Title XIX of
the Act, is a cooperative Federal State program created
to provide medical assistance to eligible low income
families and individuals. The program is jointly
financed by the Federal and State governments and is
administered by the States. Under Section 1901 of the
Social Security Act (Title XIX of the Social Security Act
also referred to as the Medicaid Statute), the Federal
Government shares the costs of Medicaid with States
that elect to participate in the Medicaid program.5
While participation in the program is voluntary,
participating States must comply with certain
requirements imposed by the Act and regulations
promulgated by the Secretary of Health and Human
Services (Secretary).6 Under Section 1902(a) of the
Social Security Act, States that elect to participate
5

Section 1901 of the Act provides that: For the purpose of

enabling each State, as far as practicable under the conditions in
such State, to furnish (1) medical assistance on behalf of families
with dependent children and of aged, blind, or disabled individuals,
whose income and resources are insufficient to meet the costs of
necessary medical services, and (2) rehabilitation and other
services to help such families and individuals attain or retain
capability for independence or self-care, there is hereby authorized
to be appropriated for each fiscal year a sum sufficient to carry out
the purposes of this title. The sums made available under this
section shall be used for making payments to States which have
submitted, and had approved by the Secretary, State plans for
medical assistance. See also 42 C.F.R. 430.0.

See section 1902 of the Act.

App. 45
must submit to the Secretary, and have approved, a
State plan to provide medical assistance. Section 1903
of the Act requires the Secretary of Health and Human
Services to make grants to States to share in the cost
of State programs pursuant to approved State plans for
medical assistance to the needy individuals. States that
elect to participate in the Medicaid program must
submit a comprehensive plan for the provision of
services that must be approved by the Secretary.7 The
regulation at 42 CFR 430.10 explains that:
The State plan is a comprehensive written
statement submitted by the agency describing
the nature and scope of its Medicaid program
and giving assurance that it will be
administered in conformity with the specific
requirements of title XIX, the regulations in this
Chapter IV, and other applicable official
issuances of the Department. The State plan
contains all information necessary for CMS to
determine whether the plan can be approved to
serve as a basis for Federal financial
participation (FFP) in the State program
The Secretary delegates power to review and approve
State plans to CMS. CMS reviews the State plan to
determine whether its provisions are consistent with
Federal policy and law. The regulations at 42 CFR
430.12(c) provides that a:

See section 1116 of the Act. .(Whenever a state plan is submitted

to the Secretary by a state for approval under title ... XIX, he shall,
not later than 90 days after the date the plan is submitted to him,
make a determination as to whether it conforms to the requirements
for approval under such title.) (Emphasis added.)

App. 46
Plan amendments. (1) The plan must provide
that it will be amended whenever necessary to
reflect
(i) Changes in Federal law, regulations, policy
interpretations, or court decisions; or
(ii) Material changes in State law, organization,
or policy, or in the States operation of the
Medicaid program. For changes related to
advance directive requirements, amendments
must be submitted as soon as possible, but no
later than 60 days from the effective date of the
change to State law concerning advance
directives.
(2) Prompt submittal of amendments is
necessary
(i) So that CMS can determine whether the plan
continues to meet the requirements for approval;
and
(ii) To ensure the availability of FFP in
accordance with 430.20.
CMS then exercises its delegated authority either to
approve or disapprove the State plan after consulting
with the Secretary.8 The regulation at 42 CFR 430.15
explains that:
(a) Basis for action.
(1) Determinations as to whether State plans
(including plan amendments and administrative
practice under the plans) originally meet or
continue to meet the requirements for approval
are based on relevant Federal statutes and
regulations.
8

See 42 CFR 430.15(b)-(c).

App. 47
(2) Guidelines are furnished to assist in the
interpretation of the regulations.
***
(c) Disapproval authority. (1) The Administrator
retains authority for determining that proposed
plan material is not approvable or that
previously approved material no longer meets
the requirements for approval. (2) The
Administrator does not make a final
determination of disapproval without first
consulting the Secretary.
Relevant to this proposed SPA, sections 1902(a)(74)
and 1902(gg) of the Social Security Act, were added by
section 2001(b) of the Patient Protection and Affordable
Care Act (ACA).9 Section 1902(a) provides the criteria
necessary for approval of a State plan for medical
assistance. One criteria for approval of a State plan is
at paragraph (a)(74) which sets forth that a State plan
for medical assistance must provide for maintenance
of effort under the State plan or under any waiver of
the plan in accordance with subsection (gg) Relevant
to this proposed SPA, section 1902(gg) states that:
MAINTENANCE OF EFFORT.
(1) GENERAL REQUIREMENT TO MAINTAIN
ELIGIBILITY STANDARDS UNTIL STATE EXCHANGE

Pub. Law 111-148 as amended by the Health Care and Education

Reconciliation Act of 2010 (Pub. Law 111-152) (together known as
the Affordable Care Act or ACA). A similar provision was
previously enacted in section 5001(f)(1) of the American Recovery
and Reinvestment Act (Recovery Act, Pub. Law 111-5). See also
CMS State Medicaid Director Letter, dated February 25, 2011,
SMDL #11-001, ACA #14 (Re: Maintenance of Effort).

App. 48
IS FULLY OPERATIONAL.Subject to the
succeeding paragraphs of this subsection, during
the period that begins on the date of enactment
of the Patient Protection and Affordable Care
Act and ends on the date on which the Secretary
determines that an Exchange established by the
State under section 1311 of the Patient
Protection and Affordable Care Act[53] is fully
operational, as a condition for receiving any
Federal payments under section 1903(a) for
calendar quarters occurring during such period,
a State shall not have in effect eligibility
standards, methodologies, or procedures under
the State plan under this title or under any
waiver of such plan that is in effect during that
period, that are more restrictive than the
eligibility standards, methodologies, or
procedures, respectively, under the plan or
waiver that are in effect on the date of
enactment of the Patient Protection and
Affordable Care Act.
(2) CONTINUATION OF ELIGIBILITY STANDARDS
FOR CHILDREN UNTIL OCTOBER 1, 2019.The
requirement under paragraph (1) shall continue
to apply to a State through September 30, 2019,
with respect to the eligibility standards,
methodologies, and procedures under the State
plan under this title or under any waiver of such
plan that are applicable to determining the
eligibility for medical assistance of any child who
is under 19 years of age (or such higher age as
the State may have elected).
As referenced at section 1902(a)(74) of the Act, the
provisions at section 1902(gg) are referred to as the

App. 49
maintenance of effort or MOE requirement. Thus,
except for certain exceptions, as a condition of receiving
Federal Medicaid funding, States must maintain
eligibility standards, methodologies, and procedures
that are no more restrictive than those in effect as of
March 23, 2010 (the date of enactment of Patient
Protection and Affordable Care Act or ACA), for a
limited period of time. Pursuant to section 1902(gg)(1)
of the Act, the MOE requirement applies to adults until
the Secretary determines that an Exchange
established by the State under section 1311 of the
[ACA] is fully operational and, under paragraph (2),
shall continue to apply to children through September
30, 2019.
In addition, Section 1902(gg)(3) of the Act provides an
exception for non-application of the MOE requirement
for a limited period, for certain populations, stating
that:
(3) NONAPPLICATION.
During the period that begins on January 1,
2011, and ends on December 31, 2013, the
requirement under paragraph (1) shall not apply
to a State with respect to nonpregnant,
nondisabled adults who are eligible for medical
assistance under the State plan or under a
waiver of the plan at the option of the State and
whose income exceeds 133 percent of the poverty
line (as defined in section 2110(c)(5)) applicable
to a family of the size involved if, on or after
December 31, 2010, the State certifies to the
Secretary that, with respect to the State fiscal
year during which the certification is made, the
State has a budget deficit, or with respect to the

App. 50
succeeding State fiscal year, the State is
projected to have a budget deficit. Upon
submission of such a certification to the
Secretary, the requirement under paragraph
(1) shall not apply to the State with respect to
any remaining portion of the period described in
the preceding sentence.
Thus, section 1902(gg)(3) of the Act offers a partial nonapplication of the MOE requirement during the period
between January 1, 2011 and December 31, 2013, when
a State certifies to the Secretary that it has a budget
deficient during the fiscal year for which it is seeking
the non-application or projects a deficient in the
succeeding fiscal year. This non-application is limited
to non-pregnant, nondisabled, adults who are eligible
for medical assistance under the state plan or under a
waiver of the plan at the option of the state and whose
income exceeds 133 percent of the poverty line.10
On review, the Administrator hereby affirms and
adopts the CMS Presiding Officers recommended
decision. As explained in the CMS Presiding Officers
recommended decision, the Secretary is required to
approve a SPA that comports with the requirements of
the law. Conversely, the Secretary has no authority to
approve a SPA that fails to meet the requirements of
the law. In this reconsideration, the record establishes
that approval of the SPA would be contrary to sections
1902(a)(74) and 1902(gg) of the Act and, therefore, the
SPA cannot be approved. The record establishes that
10

CMS also provided general guidance and explained in more

detail examples of changes which would not be considered an MOE
violation in Medicaid in the SMDL # 11-001.

App. 51
Maine has covered parents and caregiver relatives with
incomes up to 150 percent of the FPL since 2005 and
that the proposal would impose more restrictive
eligibility standards on adults whose income is above
100 percent and at or below 133 percent of the FPL,
which is inconsistent with the MOE requirements. The
State of Maine has also covered, since 1991, 19 and 20
year old individuals who meet the income and resource
requirements of the AFDC State plan. Because the
individuals were previously covered by the State plan
based on their status as children, the reduction of
eligibility for these individuals is not permitted under
the budget deficit certification provided for a MOE
exception as it is only available for non-pregnant and
nondisabled adults. Moreover, even if these individuals
were considered adults, their income would be at or
below 133 percent of the FPL and thus fall below the
MOE exception income threshold.
In this case, the law and material facts are not in
dispute.11 Instead, the State is challenging the
constitutionality of the MOE provisions. Generally,
case law establishes that administrative tribunals do
not have the authority to render decisions regarding
the constitutionality of congressional enactments.12
Consistent with that general rule, there is no authority

11

12

See e.g. Maine Brief at 4.

See e.g. Louisiana Public Service Commission v FCC, 472 U.S.

355, 374 (1986); Eligin v. Department of the Treasury, 132 S. Ct.
2126, 2136 (2012)(citing to Thunder Basin Coal Co. v. Reich, 510
U.S. 210, 215 (1994); Shalala v, Illinois Council on Long Term
Care, 529 U.S. 1, 23 (1999); Weinberger v Salfi, 422 U.S. 749,765
(1975).

App. 52
granted by Congress for such agency review of the law
in the Medicaid statute, nor, consequently, in the
implementing regulations. The CMS Presiding Officer
properly determined that the administrative tribunal
does not have the authority to decide the
constitutionality of the MOE provisions at issue as set
forth in the Affordable Care Act. In this
reconsideration, the record establishes that approval of
the SPA would be contrary to sections 1902(a)(74) and
1902(gg) of the Act and, therefore, the SPA cannot be
approved. Thus, the Administrator affirms and adopts
the CMS Presiding Officers recommended decision.
The proposed Maine SPA 12-010 is disapproved.
Decision
The Administrator affirms and adopts the CMS
Presiding Officers recommended decision. The
proposed Maine SPA 12-010 is disapproved.
THIS CONSTITUTES THE FINAL
ADMINISTRATIVE DECISION OF THE
SECRETARY OF HEALTH AND HUMAN
SERVICES
Date: 1/15/14

/s/
Marilyn Tavenner
Administrator
Centers for Medicare & Medicaid
Services

App. 53

APPENDIX C
DEPARTMENT OF HEALTH AND HUMAN SERVICES
CENTERS FOR MEDICARE AND MEDICAID SERVICES
PROPOSED DECISION OF THE PRESIDING OFFICER
[Filed October 28, 2013]
_________________________________________________
In the Matter of:
Reconsideration of Disapproval of Maine State
Plan Amendment No. 12-010
(Hearing Docket Number 13-02)
Administrative Record Hearing
__________________________________________________
INDEX
Page No.
I.

Legal Authority .......................................

1
A. Jurisdiction
B. State Plan Amendment Review Process
C. Recent Legislation and Related Case Law

II.

Factual and Procedural Background.......

III.

Contentions Regarding Presiding Officers

Authority ..................................................
7

IV.

Proposed Decision and Order...................

App. 54
I.

LEGAL AUTHORITY
A. Jurisdiction

The Centers for Medicare and Medicaid Services (CMS)

is an operating division of the United States
Department of Health and Human Services (HHS).
This proposed decision concerns CMS disapproval of a
State Plan Amendment (SPA) proposal submitted by
the State of Maine (Maine, or the State), and is
provided pursuant to 42 C.F.R. 430.102. The CMS
Presiding Officer designated by the CMS Administrator
to conduct the subject administrative proceeding is the
undersigned, Benjamin R. Cohen.
B. State Plan Amendment Review Process
Medicaid was enacted in 1965 as Title XIX of the Social
Security Act (the Act). Title XIX Grants to States for
Medical Assistance Programs authorizes CMS, under
delegations from the Secretary of HHS (the Secretary),
to make federal funds available to assist the states in
providing medical assistance to persons whose income
and resources are insufficient to meet the costs of
necessary medical services.1 Program regulations state
that, Within broad federal rules, each State decides
eligible groups, types and range of services, payment
levels for services, and administrative and operating
procedures.2 Under Medicaid, the Federal Government
shares the cost of providing medical assistance under
the program. This cost allocation is calculated by
applying the federal medical assistance percentage
1

42 U.S.C. 1396.

42 C.F.R. 430.0.

App. 55
(FMAP) to the states total Medicaid expenditures.3 The
FMAP represents the federal governments share of
Medicaid costs and, by statute, must fall between 50
percent and 83 percent for each state.4
States that choose to participate in the Medicaid
program must submit to the Secretary, and have
approved, a state plan to provide medical assistance.5
The Medicaid statute explicitly provides that the
Secretary shall approve any plan which meets
requirements as outlined in 42 U.S.C. 1396(a). The
regulations at 42 C.F.R. Part 430 implement the
statute setting forth the state plan requirements,
standards, procedures, and conditions for obtaining
federal financial participation (FFP). The Secretary has
authority to issue regulations under the program6 and
has delegated responsibility for approving state plans
and state plan amendments to CMS.7
The regulation at 42 C.F.R. 430.10 describes the
required contents of a state plan as follows:
The State plan is a comprehensive written
statement submitted by the agency describing
the nature and scope of its Medicaid program

42 U.S.C. 1396b(a)(1).

42 U.S.C. 1396d(b). See also Federal Matching Shares for

Medicaid, 77 Fed. Reg. 71,420, 71,422 (Nov. 30, 2012).
5

42 U.S.C. 1396.

42 C.F.R. 430.1.

42 C.F.R. 430.14, 430.15.

App. 56
and giving assurance that it will be
administered in conformity with the specific
requirements of title XIX, the regulations in this
Chapter IV, and other applicable official
issuances of the Department. The State plan
contains all information necessary for CMS to
determine whether the plan can be approved to
serve as a basis for federal financial
participation [FFP] in the State program.8
The regulation at 42 C.F.R. 430.15 outlines, in
relevant part, the basis and authority for the CMS
Administrators initial review of proposed state plan
material as follows:
(a) Basis for action.
(1)
Determinations as to whether State
plans (including plan amendments
and administrative practice under the
plans) originally meet or continue to
meet the requirements for approval
are based on relevant Federal statutes
and regulations.
(2)
Guidelines are furnished to assist in
the interpretation of the regulations.
(b) Approval authority. The Regional
Administrator exercise delegated authority to
approve the State plan and plan amendments on
the basis of policy statements and precedents
previously approved by the Administrator.
(c) Disapproval authority.
(1)
The Administrator retains authority
for determining that proposed plan
8

(Emphasis added).

App. 57

(2)

material is not approvable or that

previously approved material no
longer meets the requirements for
approval.
The Administrator does not make a
final determination of disapproval
without first consulting the
Secretary.9

Ultimately, pursuant to 42 C.F.R. 413.16(b)(2), the

Administrator may give notice of disapproval of an SPA
if the plan does not meet federal requirements.
The statute at 42 U.S.C. 1316(a)(2) provides that
states dissatisfied with the disapproval action may
request a reconsideration hearing.10 The section states,
in relevant part:
Any State dissatisfied with a determination of
the Secretary . . . with respect to any plan may,
within 60 days after it has been notified of such
determination, file a petition with the Secretary
for reconsideration of the issue of whether such
plan conforms to the requirements for approval
. . . .11
The regulations at 42 C.F.R. 430.66 and 430.102
provide that the Administrator may designate a
presiding officer to conduct a hearing and issue
recommended findings and a proposed decision. After

(Emphasis added).

10

42 U.S.C. 1316(a)(2).

11

Id. See also 42 C.F.R. 430.18.

App. 58
the Administrator reviews the presiding officers
proposed decision and issues his or her own decision,
the decision constitutes a final determination and
final agency action and a state has a right to judicial
review with the United States Court of Appeals for the
circuit in which the state is located.12
C. Recent Legislation and Related Case Law
In February 2009, the American Recovery and
Reinvestment Act of 2009 (ARRA) was enacted.13 This
law was passed in response to the nations economic
crisis and aimed to preserve and create jobs and
promote economic recovery.14 Relevant to the current
proceeding, the ARRA also sought to stabilize State
and local government budgets, in order to minimize
and avoid reductions in essential services and
counterproductive state and local tax increases.15 To
this end, the ARRA offered increased Medicaid FMAP
funding to those states that agreed to maintain the
Medicaid eligibility standards that were in effect from

12

42 U.S.C. 1316(a)(2) and (3), 42 C.F.R. 430.38(a) and (b),

430.102 (b) and (c).
13

Pub. L. No. 111-5, 123 Stat. 115. See also What is Recovery.gov?,
RECOVERY.GOV, http://www.recovery.gov/Pages/default.aspx (last
visited Sept. 18, 2013 (a website established by the United States
Government under the Recovery Act, in order to show the
American public how Recovery funds are being spent by recipients
of contracts, grants, and loans, and the distribution of Recovery
entitlements and tax benefits)).

14

Pub. L. No. 111-5, sec. 3, 123 Stat. 115 (2009).

15

Id.

App. 59
July 1, 2008 to December 31, 2008.16 The ARRAs
increase in FMAP funding was made available to states
for a prescribed period of time that spanned from
October 1, 2008 through December 27, 2010.17 This
time period was later extended to June 30, 2011
through additional legislation.18
The Patient Protection and Affordable Care Act
(PPACA or ACA), enacted on March 23, 2010, featured
additional changes to the Medicaid program.19 For
example, as a condition of Medicaid participation, the
ACA required states to expand their covered
populations by 2014 and offered increased federal
funds to assist the states in this process.20 ACA

16

See ARRA, H.R. 1, 111th Cong. 5001(h)(3) (2009), available at

http://www.gpo.gov/fdsys/pkg/BILLS-111hr1enr/pdf/BILLS111hr1enr.pdf. ARRA 5001(f) provides: STATE INELIGIBILITY;
LIMITATION; SPECIAL RULES [A] State is not eligible for an
increase. . . if eligibility standards, methodologies, or procedures
under its State plan. . . are more restrictive than the eligibility
standards, methodologies, or procedures, respectively, under such
plan (or waiver) as in effect on July 1, 2008.
17

Id. at 5001(h)(3).

18

See 2010 Education, Jobs, and Medicaid Assistance Act, Pub. L.

No. 111-226, 124 Stat. 2389.
19

20

Pub. L. No 111-148, 124 Stat. 119 (2010).

See 42 U.S.C. 1396a(a)(10)(A)(i)(VIII) (explaining that states

are required to cover all persons under the age of 65 with incomes
below 133 percent of the federal poverty line); 42 U.S.C.
1396d(y)(1) (stating that the Federal Government is to pay 100
percent of costs associated with Medicaid expansion under the
ACA).

App. 60
required states to maintain the Medicaid eligibility
standards that were in place as of the ACAs
enactment. Specifically, 42 U.S.C 1396a(a)(74)
contains a mandate requiring State Medicaid plans to
provide for maintenance of effort under the State plan
or under any waiver of the plan in accordance with
subsection (gg).21 The referenced provision, 42 U.S.C.
1396a(gg) provides:
(1) General requirement to maintain eligibility
standards until State exchange is fully
operational
Subject to the succeeding paragraphs of this
subsection, during the period that begins on
March 23, 2010 and ends on the date on which
the Secretary determines that an Exchange
established by the State under section 18031 of
this title is fully operational, as a condition for
receiving any Federal payments under section
1396(b)(a) of this title for calendar quarters
occurring during such period, a State shall not
have in effect eligibility standards,
methodologies, or procedures under the State
plan under this subchapter or under any waiver
of such plan that is in effect during that period,
that are more restrictive than the eligibility
standards, methodologies, or procedures,
respectively, under the plan or waiver that are
in effect on March 23, 2010.

21

Collectively, 42 U.S.C. 1396a(a)(74) and 1396(a)(gg) are

referred to as the ACA maintenance of effort (MOE) provisions.

App. 61
(2) Continuation of eligibility standards for
children until October 1, 2019
The requirement under paragraph (1) shall
continue to apply to a State through September
30, 2019, with respect to the eligibility
standards, methodologies, and procedures under
the State plan under this subchapter or under
any waiver of such plan that are applicable to
determining the eligibility for medical assistance
of any child who is under 19 years of age (or
such higher age as the State may have elected).
The statute also explains the circumstances when the
maintenance of effort (MOE) requirements are not
applicable. The MOE provisions do not apply during
the period January 1, 2011 through December 31, 2013
to non-pregnant, non-disabled adults with incomes
exceeding 133 percent of FPL, if the State certifies that
it has or projects a budget deficit during the succeeding
year.22
The United States Supreme Court reviewed the
constitutionality of the ACA in its 2012 National
Federation of Independent Businesses v. Sebelius
(NFIB) decision.23 While the Court upheld the ACAs
individual mandate, it indicated that Congress had
exceeded its authority with regard to the requirement
that states expand their respective Medicaid programs
or risk losing existing federal matching funds. The
decision concluded:
22

23

42 U.S.C. 1396a(gg)(3).

National Federation of Independent Business v. Sebelius (NFIB),

367 U.S. __, 132 S.Ct. 2566 (2012).

App. 62
As for the Medicaid expansion, that portion of
the Affordable Care Act violates the Constitution
by threatening existing Medicaid funding.
Congress may offer the States grants and
require the States to comply with accompanying
conditions, but the States must have a genuine
choice whether to accept this offer. The States
are given no such choice in this case: They must
either accept a basic change in the nature of
Medicaid, or risk losing all Medicaid funding.
The remedy for that constitutional violation is to
preclude the Federal Government from imposing
such a sanction. That remedy does not require
striking down other portions of the Affordable
Care Act.24
II.

FACTUAL AND PROCEDURAL BACKGROUND

In order to receive additional FMAP funding pursuant

to the ARRA for fiscal year 2011, Maine explains that
it voluntarily held its Medicaid eligibility requirements
at the July 1, 2008 levels, which exceeded the federal
minimum standards.25 However, Maine offers that
pursuant to the passage of the ACA MOE provisions,
its 2008 eligibility levels were automatically extended
through 2014 for adults and through 2019 for children,
absent additional ARRA Medicaid funding.

24

25

Id. at 2608.

ARRA, H.R. 1, 111th Cong. 5001(f)(1)(A) (2009), available at

http://www.gpo.gov/fdsys/pkg/BILLS-111hr1enr/pdf/BILLS111hr1enr.pdf.; 2010 Education, Jobs, and Medicaid Assistance
Act, Pub. L. No. 111-226, 124 Stat. 2389. See also Appeal Record
at 178, 180, 184, Letter from State to CMS (Aug. 1, 2012).

App. 63
Maine, whose state constitution requires a balanced
budget, projected a budget deficit for fiscal year 2013.
Accordingly, the State requested relief from the MOE
requirements for the period spanning from July 1, 2012
to June 30, 2013.26 On August 1, 2012, Maine requested
that CMS approve certain changes to its Medicaid
eligibility criteria. Under its proposed SPA request, No.
12-010 (to be effective October 1, 2012), the State would
reduce/restrict its Medicaid eligibility standards but
such changes still would result in Maines Medicaid
eligibility remaining well above the mandated federal
standards.27
Additionally, the State contested the constitutionality
of the ACA MOE provisions claiming that such
provisions are not applicable or void in the wake of
the Supreme Courts NFIB decision.28 Maine argued
that the MOE provisions are part and parcel of the
Medicaid expansion that the Court reviewed and are
therefore equally, if not more, coercive as the provision
reviewed by the Supreme Court.29 Therefore, Maine
argued, requiring the State to maintain Medicaid

26

Maine certified this projected budget deficit on December 20,

2011. See Appeal Record at 199, Letter from State to CMS (Dec.
20, 2011). See also Appeal Record at 172-174, Letter from Maine
Governor to HHS Secretary (Aug. 1, 2012) (indicating that Maine
must comply with its constitutionally-mandated balanced budget
provision).
27

Appeal Record at 175-199, 175, Letter from State to CMS (Aug.

1, 2012).
28

Id.

29

Id. at 182.

App. 64
eligibility standards above Federal minimum levels
exceeds Congressional spending power and violates
principles of federalism reflected in the Tenth
Amendment to the United States Constitution.30
Ultimately, by letter dated January 7, 2013, CMS
disapproved SPA No. 12-010.31 The agency determined
that Maines SPA proposal violated the MOE statutory
provision as it relates to parents and caretaker
relatives32 as well as children ages 19 and 20 as the
proposal would make eligibility standards, methods,
and procedures more restrictive than those in effect on
March 23, 2010.33 Moreover, CMS rejected Maines
assertion that on a constitutional basis, the NFIB
holding requires that SPA 12-010 be approved despite
these violations of the MOE statutory requirements34

30

See also infra note 36.

31

Appeal Record at 1014, Letter from CMS Administrator to

Maine Department of Health and Human Services (Jan. 7, 2013)
( SPA Denial Letter). Also, the record contains written
communications between federal and state officials during the
timeframe between the August 1, 2012 SPA submission and the
January 7, 2013 disapproval of SPA 12-010. See, e.g., Appeal
Record at 18, 21, 22, 148, 152, 154, 155, 160.
32

Appeal Record at 11, SPA Denial Letter. CMS determined that

the SPA would reduce income eligibility levels for parents and
caretaker relatives, from 150 to 100 percent of the FPL. Id.
33

34

Appeal Record at 10, SPA Denial Letter.

Id. at 12. CMS contended that the NFIB decision did not
authorize approval of state plan provisions that do not comply
with other provisions of the law, including the MOE
requirements. CMS explained that the MOE provisions continue

App. 65
The agencys denial letter also indicated that the State
may petition for reconsideration pursuant to 42 C.F.R.
430.18.
Maine requested reconsideration of the SPA
disapproval. By letter dated April 4, 2013, CMS
scheduled a reconsideration hearing to be held on May
23, 2013.35 In lieu of a live hearing, the parties
stipulated that this administrative proceeding would be
conducted based on the written record after Maine filed
a narrative brief and CMS filed a response. The parties
further agreed that CMS would provide a copy of the
administrative record to the Presiding Officer.
III.

C ONTENTIONS R EGARDING
OFFICERS AUTHORITY

P RESIDING

In their respective briefs, both parties represented that

no material factual disputes exist and that the
remaining substantive dispute centers upon the
constitutionality of the ACA MOE provisions as applied
to Maines SPA. It is undisputed that these changes in
SPA 12-010 would have made Maines eligibility
standards, methods, and procedures more restrictive
than those in effect on March 23, 2010 and that the
SPA proposal violated the ACA MOE requirement.

medical assistance for existing covered populations and are not

part of a new program; accordingly, the analysis in NFIB makes
it clear that the MOE provisions are well within Congresss
authority.
35

The letter was published in the Federal Register on April 11,

2013 Notice of Hearing, Reconsideration of Disapproval of Maine
State Plan Amendments (SPA) 12-010, 78 Fed. Reg. 2160810
(Apr. 11, 2013).

App. 66
In its brief, the State did not present a detailed
analysis addressing the Presiding Officers and the
agencys authority in further considering this
substantive dispute; but rather, Maine focused upon
developing legal support regarding its assertion that
the MOE, as applied, is unconstitutional.36 Conversely,
CMS responsive brief did not further develop its
constitutional position outlined in the January 7, 2013
denial but instead focused upon procedural
considerations. CMS articulated:
In seeking reconsideration, Maine has properly
presented the agency with its constitutional
challenge to the MOE provision; but the Hearing
Officer is without authority to decide that
challenge. When an agency does not decide
constitutional claims, these can be
meaningfully addressed in the Court of
Appeals. Thunder Basin Coal Co., 510 U.S. at
215. After SPA #12-010 is upheld, as it must be,
Maine may present its constitutional arguments

36

See generally Maine Br. Maine further articulates the relief that
it seeks comports with common sense and fair play in that Maine
would fully comport with and exceed the minimums that the
federal government views as appropriate and would be punished
for past generosity which may no longer be affordable. Maine
alleges that its current choice whether to abide by the forced
extension of its previous discretionary choice or potentially lose
substantial federal funding is more coercive than the Medicaid
expansion provisions deemed unconstitutional in the NFIB
decision. The State also cites Arlington Central School District
Board of Education v. Murphy, 548 U.S. 291, 296 (2006) for the
proposition, States cannot knowingly accept conditions of which
they are unaware or which they are unable to ascertain.

App. 67
to the United States Court of Appeals for the
First Circuit. 42 U.S.C. 1316(a)(3), (b).37
IV.

PROPOSED DECISION AND ORDER

Maine has properly exhausted its administrative

remedies by timely presenting its administrative
appeal. This appeal was raised in accordance with the
requirements outlined in 42 C.F.R. Part 430 and the
CMS Notice of Hearing dated April 4, 2013. The parties
agree that there are no material questions of fact
related to Maines relevant standards, which exceeded
the federal minimum mandates prior to the enactment
of ARRA. Moreover, the submissions provide that the
ACA MOE provision as applied to Maine extended the
freeze of Maines higher than required eligibility
standards until 2014 for adult recipients and until
2019 with respect to 19 and 20 year old recipients38
while the enhanced [ARRA] federal reimbursement was
no longer available. Furthermore, it is undisputed that
SPA 12-010, if approved, would violate the statutory
MOE requirements at 42 U.S.C. 1396(a)(74),

37

CMS Br. at 7-8. As support for its explanation regarding this

tribunals absence of authority to adjudicate this matter, CMS
cites to various cases. See, e.g., Louisiana Pub. Serv. Commn v.
FCC, 472 U.S. 355, 374 (1986) (An agency literally has no power
to act . . . unless and until Congress confers power upon it.); Elgin
v. Dept of the Treasury, 132 S. Ct. 2126, 2136 (2012) (quoting
Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 215 (1994)
([A]djudication of the constitutionality of congressional
enactments has generally been thought beyond the jurisdiction of
administrative agencies).
38

CMS Br. at 3, Maine Br. at 8.

App. 68
1396(gg) and fall outside the budget certification
exception.
This administrative tribunal does not have the
authority to render a decision regarding the
constitutionality of the Affordable Care Acts MOE
provisions as applied to Maines proposed State Plan
Amendment. Accordingly, CMS January 7, 2013 and
April 4, 2013 determinations to disapprove SPA No. 12010 are therefore affirmed.
/s/
Benjamin R. Cohen
Presiding Officer
October 28, 2013

App. 69

APPENDIX D
DEPARTMENT OF HEALTH
& HUMAN SERVICES
Centers for Medicare & Medicaid Services
__________________________________________________
Administrator
Washington, DC 20201
[Dated January 7, 2013]
Ms. Mary Mayhew
Commissioner
Department of Health and Human Services
11 State House Station
221 State Street
Augusta, ME 04333-0011
Dear Ms. Mayhew:
I am responding to your request for approval of the
State of Maines Medicaid state plan amendment (SPA)
#12-010, received by the Centers for Medicare &
Medicaid Services (CMS) on August 1, 2012. The state
subsequently split the SPA into two separate SPAs,
#12-010 and #12-010A.
Today, under separate cover, we are approving #12010A, which makes changes to eligibility for parents,
caretaker relatives, and individuals who are eligible for
Medicaid based on their eligibility for Medicare, whose
income is above 133 percent of the federal poverty line
(FPL).

App. 70
In SPA #12-010, Maine proposes changes to eligibility
for parents, caretaker relatives and children whose
income is at or below 133 percent of the FPL. The
proposal would make eligibility standards, methods,
and procedures more restrictive than those in effect on
March 23, 2010. For the reasons set forth below, I am
unable to approve SPA #12-010 because it does not
comply with the requirements of sections 1902(a)(74)
and 1902(gg) of the Social Security Act (Act).
Medicaid Maintenance of Effort Requirements
Under sections 1902(a)(74) and 1902(gg) of the Act,
added to the Social Security Act by the Affordable Care
Act, state plans must maintain Medicaid eligibility
standards, methodologies, and procedures that are no
more restrictive than those in effect on March 23, 2010,
(the date of enactment of the Affordable Care Act) for
a limited period of time. We refer to those provisions as
maintenance of effort (MOE) requirements. For adults,
under 1902(gg)(1), MOE provisions apply until a health
insurance Exchange is operational on January 1, 2014.
To the extent that the state certifies that it has an
actual or projected budget deficit, under 1902(gg)(3),
there is a limited exception under which MOE
provisions do not apply to non-pregnant, non-disabled
adults in optional populations who have income above
133 percent of the FPL for the applicable family size.
The Affordable Care Act MOE provisions relating to
adults are aimed at maintaining stability during the
period between enactment of the Affordable Care Act
and 2014, when the Exchanges will become
operational.

App. 71
Discussion
As discussed above, it is not consistent with the MOE
requirements in sections 1902(a)(74) and 1902(gg) of
the Act for Maine to have eligibility standards,
methods, or procedures under its State plan that are
more restrictive for children until September 30, 2019,
and for adults until a health insurance Exchange is
operational in the state (on January 1, 2014), except,
based on the states budget deficit certification, for nonpregnant, non-disabled adults whose income exceeds
133 percent of the FPL. Based on Maines certification
of a projected budget deficit, on February 10, 2012,
CMS notified the state that Maine qualified for the
exception to the MOE provisions pursuant to section
1902(gg)(3) of the Act for the period from July 1, 2012,
through June 30, 2013. This exception applies to nonpregnant, non-disabled adults whose income exceeds
133 percent of the FPL. This provision of law allows us
to approve SPA #12-010A.
The provisions of SPA 12-010 would violate the
permissible limitations by reducing eligibility for
children and for parents and caretaker relatives who
have income below 133 percent of the FPL. As a result,
we cannot approve proposed SPA 12-010 as consistent
with the requirements of sections 1902(a)(74) and
1902(gg) of the Act.
Specifically, the areas of MOE violation are as follows:
1. Parents and Caretaker Relatives: Maine
proposed to reduce income eligibility levels for
parents and caretaker relatives, eligible under
sections 1902(a)(10)(A)(i)(I) and 1931 of the Act,
from 150 to 100 percent of the FPL. Since 2005,

App. 72
the Maine plan has covered parents and
caregiver relatives with income up to 150
percent of the FPL. The proposed amendment
thus would impose more restrictive eligibility
standards on adults between 100 and 133
percent of the FPL, which is not consistent with
the MOE requirements.
2. Children Ages 19 and 20: Maine proposed to
reduce the age limit for eligibility under its state
plan for individuals who meet the income and
resource requirements of the AFDC state plan
but would not have received AFDC benefits
because of age. This proposed change would
eliminate eligibility for such individuals who are
ages 19 and 20. Since 1991, the Maine plan has
covered 19 and 20 year olds who meet the
income and resource requirements of the AFDC
state plan.1 Because the individuals were
previously covered by the state based on their
status as children, reduction of eligibility for
these individuals is not permitted under the
budget deficit certification exception, which is
available only for non-pregnant, non-disabled
adults. Even if these individuals were treated as
adults, the budget deficit certification exception
would not apply because the income level of

The state would make an exception to this reduction of eligibility

for 19 and 20 year olds who are independent foster care
adolescents.

App. 73
these individuals (based on the AFDC state plan
standards) is below 133 percent of the FPL.2
We do not agree with your claim that National
Federation of Independent Businesses v. Sebelius, 567
U.S. __, 132 S. Ct. 2556 (2012) (NFIB), requires that
SPA 12-010 be approved despite these violations of the
MOE requirements. In NFIB, the Supreme Court did
not strike down any part of the Affordable Care Act.
The Court limited federal enforcement remedies with
respect to states that elect not to proceed with the
Medicaid adult eligibility expansion and thus have
state plans that are out of compliance with the
provisions of section 1902(a) of the Act. The Court did
not strike down any provision of the law, nor did it
authorize approval of state plan provisions that do not
comply with other provisions of the law, including the
MOE requirements. Accordingly, we do not agree with
your assertion that the Courts reasoning in NFIB
implies that the MOE provision in section 1902(gg) of
the Act is unconstitutional or that it would be
unconstitutional for the Secretary to disapprove the
proposed state plan amendments due to their
inconsistency with section 1902(a)(74) of the Act.
In NFIB, the Court likened the Medicaid adult
eligibility expansion to an entirely new program
because it will expand Medicaid coverage to all lowincome adults, where Medicaid has previously covered
only the disabled, the blind, the elderly and needy
families with dependent children. NFIB, 132 S. Ct. at
2605-06. The Court concluded that this shift is a shift
2

For example, the amount for a family of three with an adult in

the home is approximately 28% percent of the FPL.

App. 74
in kind, not merely in degree, and distinguished it
from earlier eligibility expansions under the Medicaid
program, which had merely altered and not expanded
the boundaries of these categories. Id. In concluding
that the Secretary could not, constitutionally, withhold
all funding for a states existing Medicaid program if
the state refused to implement the Medicaid adult
eligibility expansion, the Court reasoned that, while
Congress may have styled the expansion a mere
alteration of existing Medicaid, it recognized it was
enlisting the States in a new health care program. Id.
at 2606 (emphasis added). The Court concluded that
Congress could not make existing Medicaid funding
contingent upon a states agreement to implement this
new health care program. Id. at 2605-07.
The MOE provisions are not part of the Medicaid adult
eligibility expansion. To the contrary, the MOE
provisions require the state to continue providing
medical assistance to populations that were previously
covered by the states Medicaid program. The
populations that Maine has proposed to eliminate from
the state Medicaid program are needy families with
dependent children, populations that have long been
covered by the states Medicaid program. Medicaid
coverage for parents and caretaker relatives was first
authorized under the original enactment of the
Medicaid statute in 1965, and Maine has covered them
at the current income level since 2005. Similarly,
Medicaid coverage for 19 and 20 year old children was
first authorized in the original enactment of the
Medicaid statute in 1965, and Maine has covered them
at the current income level since 1991. Thus, as
relevant here, because the MOE provisions require the
state plan to continue coverage of needy families with

App. 75
dependent children that the state has covered for many
years rather than implement a new program, the
analysis in NFIB makes it clear that the MOE
provisions are well within Congresss authority.
You also assert that the MOE requirements
retroactively penalize the state for having maintained
its eligibility levels during the period financial
incentives for doing so were available under the
American Recovery and Reinvestment Act of 2009
(ARRA), without continuing the incentives that were
present under ARRA. However, as discussed above,
Maines coverage of the groups of individuals it now
proposes to drop from Medicaid began long before
ARRA.
To the extent that Maine now faces economic
pressures, Maine still has substantial flexibility to
achieve budgetary objectives consistent with the MOE
requirements. The state retains flexibility to adjust
benefit levels or provider payment rates and to increase
the effectiveness and efficiency of service delivery
consistent with many of the new opportunities afforded
states under the Affordable Care Act as well as existing
flexibilities in the Medicaid program.
For these reasons, and after consulting with the
Secretary as required by federal regulations at 42 CFR
430.15(c), I am unable to approve this SPA. If you are
dissatisfied with this determination, you may petition
for reconsideration within 60 days of receipt of this
letter in accordance with the procedures set forth at 42
CFR 430.18. Your request for reconsideration may be
sent to Ms. Cynthia Hentz, Centers for Medicare &
Medicaid Services, Center for Medicaid, CHIP and

App. 76
Survey & Certification, 7500 Security Boulevard, Mail
Stop S2-26-12, Baltimore, MD 21244-1850.
If you have any questions or otherwise wish to discuss
this determination, please contact Mr. Richard
McGreal, Associate Regional Administrator, JFK
Federal Building, Government Center, Room 2275,
Boston, MA 02203.
Sincerely,
/s/
Marilyn Tavenner
Acting Administrator
cc:
Regional Administrator, Boston RO
Associate Regional Administrator, Boston RO

App. 77

APPENDIX E
STATUTES PUBLIC LAWS
PATIENT PROTECTION AND
AFFORDABLE CARE ACT, 2001
TITLE IIROLE OF PUBLIC PROGRAMS
Subtitle AImproved Access to Medicaid
SEC. 2001. MEDICAID COVERAGE
INCOME POPULATIONS.

FOR THE

LOWEST

(a) COVERAGE FOR INDIVIDUALS WITH INCOME AT OR

BELOW 133 PERCENT OF THE POVERTY LINE.
(1) BEGINNING 2014.Section 1902(a)(10)(A)(i) of

the Social Security Act (42 U.S.C. 1396a) is

amended
(A) by striking or at the end of subclause (VI);
(B) by adding or at the end of subclause (VII);
and
(C) by inserting after subclause (VII) the
following:
(VIII) beginning January 1, 2014, who are under
65 years of age, not pregnant, not entitled to, or
enrolled for, benefits under part A of title XVIII, or
enrolled for benefits under part B of title XVIII, and
are not described in a previous subclause of this
clause, and whose income (as determined under
subsection (e)(14)) does not exceed 133 percent of
the poverty line (as defined in section 2110(c)(5))
applicable to a family of the size involved, subject to
subsection (k);.

App. 78
(2) PROVISION OF AT LEAST MINIMUM ESSENTIAL
COVERAGE.
(A) IN GENERAL.Section 1902 of such Act (42
U.S.C. 1396a) is amended by inserting after
subsection (j) the following:
(k)(1) The medical assistance provided to an
individual described in subclause (VIII) of
subsection (a)(10)(A)(i) shall consist of
benchmark coverage described in section
1937(b)(1) or benchmark equivalent coverage
described in section 1937(b)(2). Such medical
assistance shall be provided subject to the
requirements of section 1937, without regard to
whether a State otherwise has elected the option
to provide medical assistance through coverage
under that section, unless an individual
described in subclause (VIII) of subsection
(a)(10)(A)(i) is also an individual for whom,
under subparagraph (B) of section 1937(a)(2),
the State may not require enrollment in
benchmark coverage described in subsection
(b)(1) of section 1937 or benchmark equivalent
coverage described in subsection (b)(2) of that
section..
(B) CONFORMING AMENDMENT.Section 1903(i)
of the Social Security Act, as amended by section
6402(c), is amended
(i) in paragraph (24), by striking or at the
end;
(ii) in paragraph (25), by striking the period
and inserting ; or; and
(iii) by adding at the end the following:
(26) with respect to any amounts expended for
medical assistance for individuals described in
subclause (VIII) of subsection (a)(10)(A)(i) other

App. 79
than medical assistance provided through
benchmark coverage described in section 1937(b)(1)
or benchmark equivalent coverage described in
section 1937(b)(2)..
(3) FEDERAL FUNDING FOR COST OF COVERING
NEWLY ELIGIBLE INDIVIDUALS.Section 1905 of the
Social Security Act (42 U.S.C. 1396d), is amended
(A) in subsection (b), in the first sentence, by
inserting subsection (y) and before section
1933(d); and
(B) by adding at the end the following new
subsection:
(y) INCREASED FMAP FOR MEDICAL ASSISTANCE FOR
NEWLY ELIGIBLE MANDATORY INDIVIDUALS.
(1) AMOUNT OF INCREASE.
(A) 100 PERCENT FMAP.During the period
that begins on January 1, 2014, and ends on
December 31, 2016, notwithstanding subsection
(b), the Federal medical assistance percentage
determined for a State that is one of the 50
States or the District of Columbia for each fiscal
year occurring during that period with respect to
amounts expended for medical assistance for
newly eligible individuals described in subclause
(VIII) of section 1902(a)(10)(A)(i) shall be equal
to 100 percent.
(B) 2017 AND 2018.
(i) IN GENERAL.During the period that
begins on January 1, 2017, and ends on
December 31, 2018, notwithstanding
subsection (b) and subject to subparagraph
(D), the Federal medical assistance
percentage determined for a State that is one
of the 50 States or the District of Columbia
for each fiscal year occurring during that

App. 80
period with respect to amounts expended for
medical assistance for newly eligible
individuals described in subclause (VIII) of
section 1902(a)(10)(A)(i), shall be increased
by the applicable percentage point increase
specified in clause (ii) for the quarter and the
State.
(ii) APPLICABLE PERCENTAGE POINT
INCREASE.
(I) IN GENERAL.For purposes of clause
(i), the applicable percentage point
increase for a quarter is the following:
For any
fiscal year
quarter
occurring in
the calendar
year:

If the State is
an expansion
State, the
applicable
percentage
point
increase is:

If the State is
not an
expansion
State, the
applicable
percentage
point
increase is:

2017

30.3

34.3

2018

31.3

33.3

(II) EXPANSION STATE DEFINED.For

purposes of the table in subclause (I), a
State is an expansion State if, on the date
of the enactment of the Patient Protection
and Affordable Care Act, the State offers
health benefits coverage statewide to
parents and nonpregnant, childless adults
whose income is at least 100 percent of
the poverty line, that is not dependent on

App. 81
access to employer coverage, employer
contribution, or employment and is not
limited to premium assistance, hospitalonly benefits, a high deductible health
plan, or alternative benefits under a
demonstration program authorized under
section 1938. A State that offers health
benefits coverage to only parents or only
nonpregnant childless adults described in
the preceding sentence shall not be
considered to be an expansion State.
(C) 2019 AND SUCCEEDING YEARS.Beginning
January 1, 2019, notwithstanding subsection (b)
but subject to subparagraph (D), the Federal
medical assistance percentage determined for a
State that is one of the 50 States or the District
of Columbia for each fiscal year quarter
occurring during that period with respect to
amounts expended for medical assistance for
newly eligible individuals described in subclause
(VIII) of section 1902(a)(10)(A)(i), shall be
increased by 32.3 percentage points.
(D) LIMITATION.The Federal medical
assistance percentage determined for a State
under subparagraph (B) or (C) shall in no case
be more than 95 percent.
(2) DEFINITIONS.In this subsection:
(A) NEWLY ELIGIBLE.The term newly eligible
means, with respect to an individual described
in subclause (VIII) of section 1902(a)(10)(A)(i),
an individual who is not under 19 years of age
(or such higher age as the State may have
elected) and who, on the date of enactment of the
Patient Protection and Affordable Care Act, is
not eligible under the State plan or under a

App. 82
waiver of the plan for full benefits or for
benchmark coverage described in subparagraph
(A), (B), or (C) of section 1937(b)(1) or
benchmark equivalent coverage described in
section 1937(b)(2) that has an aggregate
actuarial value that is at least actuarially
equivalent to benchmark coverage described in
subparagraph (A), (B), or (C) of section
1937(b)(1), or is eligible but not enrolled (or is on
a waiting list) for such benefits or coverage
through a waiver under the plan that has a
capped or limited enrollment that is full.
(B) FULL BENEFITS.The term full benefits
means, with respect to an individual, medical
assistance for all services covered under the
State plan under this title that is not less in
amount, duration, or scope, or is determined by
the Secretary to be substantially equivalent, to
the medical assistance available for an
individual described in section
1902(a)(10)(A)(i)..
(4) STATE OPTIONS TO OFFER COVERAGE EARLIER
AND PRESUMPTIVE ELIGIBILITY; CHILDREN REQUIRED
TO HAVE COVERAGE FOR PARENTS TO BE ELIGIBLE.
(A) IN GENERAL.Subsection (k) of section 1902
of the Social Security Act (as added by
paragraph (2)), is amended by inserting after
paragraph (1) the following:
(2) Beginning with the first day of any fiscal year
quarter that begins on or after January 1, 2011, and
before January 1, 2014, a State may elect through
a State plan amendment to provide medical
assistance to individuals who would be described in
subclause (VIII) of subsection (a)(10)(A)(i) if that
subclause were effective before January 1, 2014. A

App. 83
State may elect to phase-in the extension of
eligibility for medical assistance to such individuals
based on income, so long as the State does not
extend such eligibility to individuals described in
such subclause with higher income before making
individuals described in such subclause with lower
income eligible for medical assistance.
(3) If an individual described in subclause (VIII) of
subsection (a)(10)(A)(i) is the parent of a child who
is under 19 years of age (or such higher age as the
State may have elected) who is eligible for medical
assistance under the State plan or under a waiver
of such plan (under that subclause or under a State
plan amendment under paragraph (2), the
individual may not be enrolled under the State plan
unless the individuals child is enrolled under the
State plan or under a waiver of the plan or is
enrolled in other health insurance coverage. For
purposes of the preceding sentence, the term
parent includes an individual treated as a
caretaker relative for purposes of carrying out
section 1931..
(B) PRESUMPTIVE ELIGIBILITY.Section 1920 of
the Social Security Act (42 U.S.C. 1396r1) is
amended by adding at the end the following:
(e) If the State has elected the option to provide a
presumptive eligibility period under this section or
section 1920A, the State may elect to provide a
presumptive eligibility period (as defined in subsection
(b)(1)) for individuals who are eligible for medical
assistance under clause (i)(VIII) of subsection (a)(10)(A)
or section 1931 in the same manner as the State
provides for such a period under this section or section
1920A, subject to such guidance as the Secretary shall
establish..

App. 84
(5) CONFORMING AMENDMENTS.
(A) Section 1902(a)(10) of such Act (42 U.S.C.
1396a(a)(10)) is amended in the matter following
subparagraph (G), by striking and (XIV) and
inserting (XIV) and by inserting and (XV) the
medical assistance made available to an
individual described in subparagraph (A)(i)(VIII)
shall be limited to medical assistance described
in subsection (k)(1) before the semicolon.
(B) Section 1902(l)(2)(C) of such Act (42 U.S.C.
1396a(l)(2)(C)) is amended by striking 100 and
inserting 133.
(C) Section 1905(a) of such Act (42 U.S.C.
1396d(a)) is amended in the matter preceding
paragraph (1)
(i) by striking or at the end of clause (xii);
(ii) by inserting or at the end of clause (xiii);
and
(iii) by inserting after clause (xiii) the
following: (xiv) individuals described in
section 1902(a)(10)(A)(i)(VIII),.
(D) Section 1903(f)(4) of such Act (42 U.S.C.
1396b(f)(4)) is amended by inserting
1902(a)(10)(A)(i)(VIII),
after
1902(a)(10)(A)(i)(VII),.
(E) Section 1937(a)(1)(B) of such Act (42 U.S.C.
1396u7(a)(1)(B)) is amended by inserting
subclause (VIII) of section 1902(a)(10)(A)(i) or
under after eligible under.
(b) MAINTENANCE OF MEDICAID INCOME
ELIGIBILITY.Section 1902 of the Social Security Act
(42 U.S.C. 1396a) is amended
(1) in subsection (a)
(A) by striking and at the end of paragraph
(72);

App. 85
(B) by striking the period at the end of
paragraph (73) and inserting ; and; and
(C) by inserting after paragraph (73) the
following new paragraph:
(74) provide for maintenance of effort under the
State plan or under any waiver of the plan in
accordance with subsection (gg).; and
(2) by adding at the end the following new
subsection:
(gg) MAINTENANCE OF EFFORT.
(1) GENERAL REQUIREMENT TO MAINTAIN
ELIGIBILITY STANDARDS UNTIL STATE EXCHANGE IS
FULLY OPERATIONAL. Subject to the succeeding
paragraphs of this subsection, during the period
that begins on the date of enactment of the Patient
Protection and Affordable Care Act and ends on the
date on which the Secretary determines that an
Exchange established by the State under section
1311 of the Patient Protection and Affordable Care
Act is fully operational, as a condition for receiving
any Federal payments under section 1903(a) for
calendar quarters occurring during such period, a
State shall not have in effect eligibility standards,
methodologies, or procedures under the State plan
under this title or under any waiver of such plan
that is in effect during that period, that are more
restrictive than the eligibility standards,
methodologies, or procedures, respectively, under
the plan or waiver that are in effect on the date of
enactment of the Patient Protection and Affordable
Care Act.
(2) CONTINUATION OF ELIGIBILITY STANDARDS FOR
C HILDREN UNTIL O CTOBER 1, 2019.The
requirement under paragraph (1) shall continue to
apply to a State through September 30, 2019, with

App. 86
respect to the eligibility standards, methodologies,
and procedures under the State plan under this title
or under any waiver of such plan that are applicable
to determining the eligibility for medical assistance
of any child who is under 19 years of age (or such
higher age as the State may have elected).
(3) NONAPPLICATION.During the period that
begins on January 1, 2011, and ends on December
31, 2013, the requirement under paragraph (1) shall
not apply to a State with respect to nonpregnant,
nondisabled adults who are eligible for medical
assistance under the State plan or under a waiver
of the plan at the option of the State and whose
income exceeds 133 percent of the poverty line (as
defined in section 2110(c)(5)) applicable to a family
of the size involved if, on or after December 31,
2010, the State certifies to the Secretary that, with
respect to the State fiscal year during which the
certification is made, the State has a budget deficit,
or with respect to the succeeding State fiscal year,
the State is projected to have a budget deficit. Upon
submission of such a certification to the Secretary,
the requirement under paragraph (1) shall not
apply to the State with respect to any remaining
portion of the period described in the preceding
sentence.
(4) DETERMINATION OF COMPLIANCE.
(A) STATES SHALL APPLY MODIFIED GROSS
INCOME. A States determination of income in
accordance with subsection (e)(14) shall not be
considered to be eligibility standards,
methodologies, or procedures that are more
restrictive than the standards, methodologies, or
procedures in effect under the State plan or
under a waiver of the plan on the date of

App. 87
enactment of the Patient Protection and
Affordable Care Act for purposes of determining
compliance with the requirements of paragraph
(1), (2), or (3).
(B) STATES MAY EXPAND ELIGIBILITY OR MOVE
WAIVERED POPULATIONS INTO COVERAGE UNDER
THE STATE PLAN.With respect to any period
applicable under paragraph (1), (2), or (3), a
State that applies eligibility standards,
methodologies, or procedures under the State
plan under this title or under any waiver of the
plan that are less restrictive than the eligibility
standards, methodologies, or procedures, applied
under the State plan or under a waiver of the
plan on the date of enactment of the Patient
Protection and Affordable Care Act, or that
makes individuals who, on such date of
enactment, are eligible for medical assistance
under a waiver of the State plan, after such date
of enactment eligible for medical assistance
through a State plan amendment with an
income eligibility level that is not less than the
income eligibility level that applied under the
waiver, or as a result of the application of
subclause (VIII) of section 1902(a)(10)(A)(i),
shall not be considered to have in effect
eligibility standards, methodologies, or
procedures that are more restrictive than the
standards, methodologies, or procedures in effect
under the State plan or under a waiver of the
plan on the date of enactment of the Patient
Protection and Affordable Care Act for purposes
of determining compliance with the
requirements of paragraph (1), (2), or (3)..

App. 88
(c) MEDICAID BENCHMARK BENEFITS MUST CONSIST OF
AT LEAST MINIMUM ESSENTIAL COVERAGE.Section
1937(b) of such Act (42 U.S.C. 1396u7(b)) is
amended
(1) in paragraph (1), in the matter preceding
subparagraph (A), by inserting subject to
paragraphs (5) and (6), before each;
(2) in paragraph (2)
(A) in the matter preceding subparagraph (A), by
inserting subject to paragraphs (5) and (6)
after subsection (a)(1),;
(B) in subparagraph (A)
(i) by redesignating clauses (iv) and (v) as
clauses (vi) and (vii), respectively; and
(ii) by inserting after clause (iii), the
following: (iv) Coverage of prescription
drugs. (v) Mental health services.; and
(C) in subparagraph (C)
(i) by striking clauses (i) and (ii); and
(ii) by redesignating clauses (iii) and (iv) as
clauses (i) and (ii), respectively; and
(3) by adding at the end the following new
paragraphs:
(5) MINIMUM STANDARDS.Effective January 1,
2014, any benchmark benefit package under
paragraph (1) or benchmark equivalent coverage
under paragraph (2) must provide at least essential
health benefits as described in section 1302(b) of the
Patient Protection and Affordable Care Act.
(6) MENTAL HEALTH SERVICES PARITY.
(A) IN GENERAL.In the case of any benchmark
benefit package under paragraph (1) or
benchmark equivalent coverage under
paragraph (2) that is offered by an entity that is
not a medicaid managed care organization and

App. 89
that provides both medical and surgical benefits
and mental health or substance use disorder
benefits, the entity shall ensure that the
financial requirements and treatment
limitations applicable to such mental health or
substance use disorder benefits comply with the
requirements of section 2705(a) of the Public
Health Service Act in the same manner as such
requirements apply to a group health plan.
(B) DEEMED COMPLIANCE.Coverage provided
with respect to an individual described in section
1905(a)(4)(B) and covered under the State plan
under section 1902(a)(10)(A) of the services
described in section 1905(a)(4)(B) (relating to
early and periodic screening, diagnostic, and
treatment services defined in section 1905(r))
and provided in accordance with section
1902(a)(43), shall be deemed to satisfy the
requirements of subparagraph (A)..
(d) ANNUAL REPORTS ON MEDICAID ENROLLMENT.
(1) STATE REPORTS.Section 1902(a) of the Social
Security Act (42 U.S.C. 1396a(a)), as amended by
subsection (b), is amended
(A) by striking and at the end of paragraph
(73);
(B) by striking the period at the end of
paragraph (74) and inserting ; and; and
(C) by inserting after paragraph (74) the
following new paragraph:
(75) provide that, beginning January 2015, and
annually thereafter, the State shall submit a
report to the Secretary that contains
(A) the total number of enrolled and newly
enrolled individuals in the State plan or under a
waiver of the plan for the fiscal year ending on

App. 90
September 30 of the preceding calendar year,
disaggregated by population, including children,
parents, nonpregnant childless adults, disabled
individuals, elderly individuals, and such other
categories or sub-categories of individuals
eligible for medical assistance under the State
plan or under a waiver of the plan as the
Secretary may require;
(B) a description, which may be specified by
population, of the outreach and enrollment
processes used by the State during such fiscal
year; and
(C) any other data reporting determined
necessary by the Secretary to monitor
enrollment and retention of individuals eligible
for medical assistance under the State plan or
under a waiver of the plan..
(2) REPORTS TO CONGRESS.Beginning April 2015,
and annually thereafter, the Secretary of Health
and Human Services shall submit a report to the
appropriate committees of Congress on the total
enrollment and new enrollment in Medicaid for the
fiscal year ending on September 30 of the preceding
calendar year on a national and State-by-State
basis, and shall include in each such report such
recommendations for administrative or legislative
changes to improve enrollment in the Medicaid
program as the Secretary determines appropriate.
(e) STATE OPTION FOR COVERAGE FOR INDIVIDUALS WITH
INCOME THAT EXCEEDS 133 PERCENT OF THE POVERTY
LINE.
(1) COVERAGE AS OPTIONAL CATEGORICALLY NEEDY
GROUP. Section 1902 of the Social Security Act
(42 U.S.C. 1396a) is amended
(A) in subsection (a)(10)(A)(ii)

App. 91
(i) in subclause (XVIII), by striking or at
the end;
(ii) in subclause (XIX), by adding or at the
end; and
(iii) by adding at the end the following new
subclause:
(XX) beginning January 1, 2014, who are
under 65 years of age and are not
described in or enrolled under a previous
subclause of this clause, and whose
income (as determined under subsection
(e)(14)) exceeds 133 percent of the poverty
line (as defined in section 2110(c)(5))
applicable to a family of the size involved
but does not exceed the highest income
eligibility level established under the
State plan or under a waiver of the plan,
subject to subsection (hh); and
(B) by adding at the end the following new
subsection:
(hh)(1) A State may elect to phase-in the extension of
eligibility for medical assistance to individuals
described in subclause (XX) of subsection (a)(10)(A)(ii)
based on the categorical group (including nonpregnant
childless adults) or income, so long as the State does
not extend such eligibility to individuals described in
such subclause with higher income before making
individuals described in such subclause with lower
income eligible for medical assistance.
(2) If an individual described in subclause (XX) of
subsection (a)(10)(A)(ii) is the parent of a child who
is under 19 years of age (or such higher age as the
State may have elected) who is eligible for medical
assistance under the State plan or under a waiver
of such plan, the individual may not be enrolled

App. 92
under the State plan unless the individuals child is
enrolled under the State plan or under a waiver of
the plan or is enrolled in other health insurance
coverage. For purposes of the preceding sentence,
the term parent includes an individual treated as
a caretaker relative for purposes of carrying out
section 1931..
(2) CONFORMING AMENDMENTS.
(A) Section 1905(a) of such Act (42 U.S.C.
1396d(a)), as amended by subsection (a)(5)(C), is
amended in the matter preceding paragraph
(1)
(i) by striking or at the end of clause (xiii);
(ii) by inserting or at the end of clause (xiv);
and
(iii) by inserting after clause (xiv) the
following: (xv) individuals described in
section 1902(a)(10)(A)(ii)(XX),.
(B) Section 1903(f)(4) of such Act (42 U.S.C.
1396b(f)(4)) is amended by inserting
1902(a)(10)(A)(ii)(XX),
after
1902(a)(10)(A)(ii)(XIX),.
(C) Section 1920(e) of such Act (42 U.S.C.
1396r1(e)), as added by subsection (a)(4)(B), is
amended by inserting or clause (ii)(XX) after
clause (i)(VIII).
AMERICAN RECOVERY AND
REINVESTMENT ACT OF 2009, 5001
SEC. 5001. TEMPORARY INCREASE
FMAP.

OF

MEDICAID

(a) PERMITTING MAINTENANCE OF FMAP.Subject to

subsections (e), (f), and (g), if the FMAP determined
without regard to this section for a State for

App. 93
(1) fiscal year 2009 is less than the FMAP as so
determined for fiscal year 2008, the FMAP for the
State for fiscal year 2008 shall be substituted for
the States FMAP for fiscal year 2009, before the
application of this section;
(2) fiscal year 2010 is less than the FMAP as so
determined for fiscal year 2008 or fiscal year 2009
(after the application of paragraph (1)), the greater
of such FMAP for the State for fiscal year 2008 or
fiscal year 2009 shall be substituted for the States
FMAP for fiscal year 2010, before the application of
this section; and
(3) fiscal year 2011 is less than the FMAP as so
determined for fiscal year 2008, fiscal year 2009
(after the application of paragraph (1)), or fiscal
year 2010 (after the application of paragraph (2)),
the greatest of such FMAP for the State for fiscal
year 2008, fiscal year 2009, or fiscal year 2010 shall
be substituted for the States FMAP for fiscal year
2011, before the application of this section, but only
for the first calendar quarter in fiscal year 2011.
(b) GENERAL 6.2 PERCENTAGE POINT INCREASE.
(1) IN GENERAL.Subject to subsections (e), (f), and
(g) and paragraph (2), for each State for calendar
quarters during the recession adjustment period (as
defined in subsection (h)(3)), the FMAP (after the
application of subsection (a)) shall be increased
(without regard to any limitation otherwise
specified in section 1905(b) of the Social Security
Act (42 U.S.C. 1396d(b))) by 6.2 percentage points.
(2) SPECIAL ELECTION FOR TERRITORIES.In the
case of a State that is not one of the 50 States or the
District of Columbia, paragraph (1) shall only apply
if the State makes a one-time election, in a form
and manner specified by the Secretary and for the

App. 94
entire recession adjustment period, to apply the
increase in FMAP under paragraph (1) and a 15
percent increase under subsection (d) instead of
applying a 30 percent increase under subsection (d).
(c) ADDITIONAL RELIEF BASED ON INCREASE IN
UNEMPLOYMENT.
(1) IN GENERAL.Subject to subsections (e), (f), and
(g), if a State is a qualifying State under paragraph
(2) for a calendar quarter occurring during the
recession adjustment period, the FMAP for the
State shall be further increased by the number of
percentage points equal to the product of
(A) the State percentage applicable for the State
under section 1905(b) of the Social Security Act
(42 U.S.C. 1396d(b)) after the application of
subsection (a) and after the application of of
the increase under subsection (b); and
(B) the applicable percent determined in
paragraph (3) for the calendar quarter (or, if
greater, for a previous such calendar quarter).
(2) QUALIFYING CRITERIA.
(A) IN GENERAL.For purposes of paragraph (1),
a State qualifies for additional relief under this
subsection for a calendar quarter occurring
during the recession adjustment period if the
State is 1 of the 50 States or the District of
Columbia and the State satisfies any of the
following criteria for the quarter:
(i) The State unemployment increase
percentage (as defined in paragraph (4)) for
the quarter is at least 1.5 percentage points
but less than 2.5 percentage points.
(ii) The State unemployment increase
percentage for the quarter is at least 2.5

App. 95
percentage points but less than 3.5
percentage points.
(iii) The State unemployment increase
percentage for the quarter is at least 3.5
percentage points.
(B) MAINTENANCE OF STATUS.If a State
qualifies for additional relief under this
subsection for a calendar quarter, it shall be
deemed to have qualified for such relief for each
subsequent calendar quarter ending before July
1, 2010.
(3) APPLICABLE PERCENT.
(A) IN GENERAL.For purposes of paragraph (1),
subject to subparagraph (B), the applicable
percent is
(i) 5.5 percent, if the State satisfies the
criteria described in paragraph (2)(A)(i) for
the calendar quarter;
(ii) 8.5 percent if the State satisfies the
criteria described in paragraph (2)(A)(ii) for
the calendar quarter; and
(iii) 11.5 percent if the State satisfies the
criteria described in paragraph (2)(A)(iii) for
the calendar quarter.
(B) MAINTENANCE OF HIGHER APPLICABLE
PERCENT.
(i) HOLD HARMLESS PERIOD.If the percent
applied to a State under subparagraph (A)
for any calendar quarter in the recession
adjustment period beginning on or after
January 1, 2009, and ending before July 1,
2010, (determined without regard to this
subparagraph) is less than the percent
applied for the preceding quarter (as so
determined), the higher applicable percent

App. 96
shall continue in effect for each subsequent
calendar quarter ending before July 1, 2010.
(ii) NOTICE OF L OWER A PPLICABLE
PERCENT.The Secretary shall notify a State
at least 60 days prior to applying any lower
applicable percent to the State under this
paragraph.
(4) COMPUTATION OF STATE UNEMPLOYMENT
INCREASE PERCENTAGE.
(A) IN GENERAL.In this subsection, the State
unemployment increase percentage for a State
for a calendar quarter is equal to the number of
percentage points (if any) by which
(i) the average monthly unemployment rate
for the State for months in the most recent
previous 3-consecutive-month period for
which data are available, subject to
subparagraph (C); exceeds
(ii)
the
lowest
average
monthly
unemployment rate for the State for any 3consecutive-month period preceding the
period described in clause (i) and beginning
on or after January 1, 2006.
(B) AVERAGE MONTHLY UNEMPLOYMENT RATE
DEFINED.In this paragraph, the term average
monthly unemployment rate means the average
of the monthly number unemployed, divided by
the average of the monthly civilian labor force,
seasonally adjusted, as determined based on the
most recent monthly publications of the Bureau
of Labor Statistics of the Department of Labor.
(C) SPECIAL RULE.With respect to
(i) the first 2 calendar quarters of the
recession adjustment period, the most recent
previous 3-consecutive-month period

App. 97
described in subparagraph (A)(i) shall be the
3-consecutive-month period beginning with
October 2008; and
(ii) the last 2 calendar quarters of the
recession adjustment period, the most recent
previous 3-consecutive-month period
described in such subparagraph shall be the
3-consecutive-month period beginning with
December 2009, or, if it results in a higher
applicable percent under paragraph (3), the
3-consecutive-month period beginning with
January 2010.
(d) INCREASE IN CAP ON MEDICAID PAYMENTS TO
TERRITORIES.Subject to subsections (f) and (g), with
respect to entire fiscal years occurring during the
recession adjustment period and with respect to fiscal
years only a portion of which occurs during such period
(and in proportion to the portion of the fiscal year that
occurs during such period), the amounts otherwise
determined for Puerto Rico, the Virgin Islands, Guam,
the Northern Mariana Islands, and American Samoa
under subsections (f) and (g) of section 1108 of the
Social Security Act (42 6 U.S.C. 1308) shall each be
increased by 30 percent (or, in the case of an election
under subsection (b)(2), 15 percent). In the case of such
an election by a territory, subsection (a)(1) of such
section shall be applied without regard to any increase
in payment made to the territory under part E of title
IV of such Act that is attributable to the increase in
FMAP effected under subsection (b) for the territory.
(e) SCOPE OF APPLICATION.The increases in the
FMAP for a State under this section shall apply for
purposes of title XIX of the Social Security Act and
shall not apply with respect to

App. 98
(1) disproportionate share hospital payments
described in section 1923 of such Act (42 U.S.C.
1396r4);
(2) payments under title IV of such Act (42 U.S.C.
601 et seq.) (except that the increases under
subsections (a) and (b) shall apply to payments
under part E of title IV of such Act (42 U.S.C. 670 et
seq.) and, for purposes of the application of this
section to the District of Columbia, payments under
such part shall be deemed to be made on the basis
of the FMAP applied with respect to such District
for purposes of title XIX and as increased under
subsection (b));
(3) payments under title XXI of such Act (42 U.S.C.
1397aa et seq.);
(4) any payments under title XIX of such Act that
are based on the enhanced FMAP described in
section 2105(b) of such Act (42 U.S.C. 1397ee(b)); or
(5) any payments under title XIX of such Act that
are attributable to expenditures for medical
assistance provided to individuals made eligible
under a State plan under title XIX of the Social
Security Act (including under any waiver under
such title or under section 1115 of such Act (42
U.S.C. 1315)) because of income standards
(expressed as a percentage of the poverty line) for
eligibility for medical assistance that are higher
than the income standards (as so expressed) for
such eligibility as in effect on July 1, 2008,
(including as such standards were proposed to be in
effect under a State law enacted but not effective as
of such date or a State plan amendment or waiver
request under title XIX of such Act that was
pending approval on such date).

App. 99
(f) STATE INELIGIBILITY; LIMITATION; SPECIAL RULES.
(1) MAINTENANCE OF ELIGIBILITY REQUIREMENTS.
(A) IN GENERAL.Subject to subparagraphs (B)
and (C), a State is not eligible for an increase in
its FMAP under subsection (a), (b), or (c), or an
increase in a cap amount under subsection (d), if
eligibility standards, methodologies, or
procedures under its State plan under title XIX
of the Social Security Act (including any waiver
under such title or under section 1115 of such
Act (42 U.S.C. 1315)) are more restrictive than
the eligibility standards, methodologies, or
procedures, respectively, under such plan (or
waiver) as in effect on July 1, 2008.
(B) STATE REINSTATEMENT OF ELIGIBILITY
PERMITTED.Subject to subparagraph (C), a
State that has restricted eligibility standards,
methodologies, or procedures under its State
plan under title XIX of the Social Security Act
(including any waiver under such title or under
section 1115 of such Act (42 U.S.C. 1315)) after
July 1, 2008, is no longer ineligible under
subparagraph (A) beginning with the first
calendar quarter in which the State has
reinstated eligibility standards, methodologies,
or procedures that are no more restrictive than
the eligibility standards, methodologies, or
procedures, respectively, under such plan (or
waiver) as in effect on July 1, 2008.
(C) SPECIAL RULES.A State shall not be
ineligible under subparagraph (A)
(i) for the calendar quarters before July 1,
2009, on the basis of a restriction that was
applied after July 1, 2008, and before the
date of the enactment of this Act, if the State

App. 100
prior to July 1, 2009, has reinstated
eligibility standards, methodologies, or
procedures that are no more restrictive than
the eligibility standards, methodologies, or
procedures, respectively, under such plan (or
waiver) as in effect on July 1, 2008; or
(ii) on the basis of a restriction that was
directed to be made under State law as in
effect on July 1, 2008, and would have been
in effect as of such date, but for a delay in the
effective date of a waiver under section 1115
of such Act with respect to such restriction.
(2) COMPLIANCE WITH PROMPT PAY
REQUIREMENTS.
(A) APPLICATION TO PRACTITIONERS.
(i) IN GENERAL.Subject to the succeeding
provisions of this subparagraph, no State
shall be eligible for an increased FMAP rate
as provided under this section for any claim
received by a State from a practitioner
subject to the terms of section 1902(a)(37)(A)
of the Social Security Act (42 U.S.C.
1396a(a)(37)(A)) for such days during any
period in which that State has failed to pay
claims in accordance with such section as
applied under title XIX of such Act.
(ii) REPORTING REQUIREMENT.Each State
shall report to the Secretary, on a quarterly
basis, its compliance with the requirements
of clause (i) as such requirements pertain to
claims made for covered services during each
month of the preceding quarter.
(iii) WAIVER AUTHORITY.The Secretary may
waive the application of clause (i) to a State,
or the reporting requirement imposed under

App. 101
clause (ii), during any period in which there
are exigent circumstances, including natural
disasters, that prevent the timely processing
of claims or the submission of such a report.
(iv) APPLICATION TO CLAIMS.Clauses (i) and
(ii) shall only apply to claims made for
covered services after the date of enactment
of this Act.
(B) APPLICATION TO NURSING FACILITIES AND
HOSPITALS.
(i) IN GENERAL.Subject to clause (ii), the
provisions of subparagraph (A) shall apply
with respect to a nursing facility or hospital,
insofar as it is paid under title XIX of the
Social Security Act on the basis of
submission of claims, in the same or similar
manner (but within the same timeframe) as
such provisions apply to practitioners
described in such subparagraph.
(ii) GRACE PERIOD.Notwithstanding clause
(i), no period of ineligibility shall be imposed
against a State prior to June 1, 2009, on the
basis of the State failing to pay a claim in
accordance with such clause.
(3) STATES APPLICATION TOWARD RAINY DAY
FUND.A State is not eligible for an increase in its
FMAP under subsection (b) or (c), or an increase in
a cap amount under subsection (d), if any amounts
attributable (directly or indirectly) to such increase
are deposited or credited into any reserve or rainy
day fund of the State.
(4) NO WAIVER AUTHORITY.Except as provided in
paragraph (2)(A)(iii), the Secretary may not waive
the application of this subsection or subsection (g)

App. 102
under section 1115 of the Social Security Act or
otherwise.
(5) LIMITATION OF FMAP TO 100 PERCENT.In no
case shall an increase in FMAP under this section
result in an FMAP that exceeds 100 percent.
(6) TREATMENT OF CERTAIN EXPENDITURES.With
respect to expenditures described in section
2105(a)(1)(B) of the Social Security Act (42 U.S.C.
1397ee(a)(1)(B)), as in effect before April 1, 2009,
that are made during the period beginning on
October 1, 2008, and ending on March 31, 2009, any
additional Federal funds that are paid to a State as
a result of this section that are attributable to such
expenditures shall not be counted against any
allotment under section 2104 of such Act (42 U.S.C.
1397dd).
(g) REQUIREMENTS.
(1) STATE REPORTS.Each State that is paid
additional Federal funds as a result of this section
shall, not later than September 30, 2011, submit a
report to the Secretary, in such form and such
manner as the Secretary shall determine, regarding
how the additional Federal funds were expended.
(2) ADDITIONAL REQUIREMENT FOR CERTAIN
STATES.In the case of a State that requires
political subdivisions within the State to contribute
toward the non-Federal share of expenditures under
the State Medicaid plan required under section
1902(a)(2) of the Social Security Act (42 U.S.C.
1396a(a)(2)), the State is not eligible for an increase
in its FMAP under subsection (b) or (c), or an
increase in a cap amount under subsection (d), if it
requires that such political subdivisions pay for
quarters during the recession adjustment period a
greater percentage of the non-Federal share of such

App. 103
expenditures, or a greater percentage of the nonFederal share of payments under section 1923, than
the respective percentage that would have been
required by the State under such plan on
September 30, 2008, prior to application of this
section.
(h) DEFINITIONS.In this section, except as otherwise
provided:
(1) FMAP.The term FMAP means the Federal
medical assistance percentage, as defined in section
1905(b) of the Social Security Act (42 U.S.C.
1396d(b)), as determined without regard to this
section except as otherwise specified.
(2) POVERTY LINE.The term poverty line has the
meaning given such term in section 673(2) of the
Community Services Block Grant Act (42 U.S.C.
9902(2)), including any revision required by such
section.
(3) RECESSION ADJUSTMENT PERIOD.The term
recession adjustment period means the period
beginning on October 1, 2008, and ending on
December 31, 2010.
(4) SECRETARY.The term Secretary means the
Secretary of Health and Human Services.
(5) STATE.The term State has the meaning given
such term in section 1101(a)(1) of the Social
Security Act (42 U.S.C. 1301(a)(1)) for purposes of
title XIX of the Social Security Act (42 U.S.C. 1396
et seq.).
(i) SUNSET.This section shall not apply to items and
services furnished after the end of the recession
adjustment period.
(j) LIMITATION ON FMAP CHANGE.The increase in
FMAP effected under section 614 of the Childrens
Health Insurance Program Reauthorization Act of 2009

App. 104
shall not apply in the computation of the enhanced
FMAP under title XXI or XIX of the Social Security Act
for any period (notwithstanding subsection (i)).
ACT OF AUGUST 10, 2010, 201
PUBLIC LAW 111226AUG. 10, 2010
124 STAT. 2393
TITLE II
STATE FISCAL RELIEF AND
PROVISIONS; REVENUE OFFSETS
Subtitle AState
Provisions

Fiscal

Relief

OTHER

and

Other

EXTENSION OF ARRA INCREASE IN FMAP

SEC. 201. Section 5001 of the American Recovery and
Reinvestment Act of 2009 (Public Law 1115) is
amended
(1) in subsection (a)(3), by striking first calendar
quarter and inserting first 3 calendar quarters;
(2) in subsection (b)
(A) in paragraph (1), by striking paragraph (2)
and inserting paragraphs (2) and (3); and
(B) by adding at the end the following:
(3) PHASE-DOWN OF GENERAL INCREASE.
(A) SECOND QUARTER OF FISCAL YEAR
2011.For each State, for the second quarter of
fiscal year 2011, the FMAP percentage increase
for the State under paragraph (1) or (2) (as
applicable) shall be 3.2 percentage points.
(B) THIRD QUARTER OF FISCAL YEAR 2011.For
each State, for the third quarter of fiscal year
2011, the FMAP percentage increase for the

App. 105
State under paragraph (1) or (2) (as applicable)
shall be 1.2 percentage points.; (3) in subsection
(c)
(A) in paragraph (2)(B), by striking July 1,
2010 and inserting January 1, 2011;
(B) in paragraph (3)(B)(i), by striking July 1,
2010 and inserting January 1, 2011 each
place it appears; and
(C) in paragraph (4)(C)(ii), by striking the 3consecutive-month period beginning with
January 2010 and inserting any 3-consecutivemonth period that begins after December 2009
and ends before January 2011;
(4) in subsection (e), by adding at the end the
following: Notwithstanding paragraph (5), effective
for payments made on or after January 1, 2010, the
increases in the FMAP for a State under this
section shall apply to payments under title XIX of
such Act that are attributable to expenditures for
medical assistance provided to nonpregnant
childless adults made eligible under a State plan
under such title (including under any waiver under
such title or under section 1115 of such Act (42
U.S.C. 1315)) who would have been eligible for child
health assistance or other health benefits under
eligibility standards in effect as of December 31,
2009, of a waiver of the State child health plan
under the title XXI of such Act.;
(5) in subsection (g)
(A) in paragraph (1), by striking September 30,
2011 and inserting March 31, 2012;
(B) in paragraph (2), by inserting of such Act
after 1923; and
(C) by adding at the end the following:

App. 106
(3) CERTIFICATION BY CHIEF EXECUTIVE
OFFICER.No additional Federal funds shall be
paid to a State as a result of this section with
respect to a calendar quarter occurring during the
period beginning on January 1, 2011, and ending on
June 30, 2011, unless, not later than 45 days after
the date of enactment of this paragraph, the chief
executive officer of the State certifies that the State
will request and use such additional Federal
funds.; and
(6) in subsection (h)(3), by striking December 31,
2010 and inserting June 30, 2011.
STATUTES CODIFIED STATUTES
42 U.S.C. 1396a(a)(10)
(a) Contents
A State plan for medical assistance must
* * *

(10) provide
(A) for making medical assistance available,
including at least the care and services listed in
paragraphs (1) through (5), (17), (21), and (28) of
section 1396d(a) of this title, to
(i) all individuals
(I) who are receiving aid or assistance
under any plan of the State approved
under subchapter I, X, XIV, or XVI of this
chapter, or part A or part E of subchapter
IV of this chapter (including individuals
eligible under this subchapter by reason
of section 602(a)(37), [1] 606(h), [1] or
673(b) of this title, or considered by the
State to be receiving such aid as

App. 107
authorized under section 682(e)(6) [1] of
this title),
(II)
(aa) with respect to whom
supplemental security income benefits
are being paid under subchapter XVI
of this chapter (or were being paid as
of the date of the enactment of section
211(a) of the Personal Responsibility
and Work Opportunity Reconciliation
Act of 1996 (P.L. 104193) and would
continue to be paid but for the
enactment of that section), (bb) who
are qualified severely impaired
individuals (as defined in section
1396d(q) of this title), or (cc) who are
under 21 years of age and with respect
to whom supplemental security
income benefits would be paid under
subchapter XVI if subparagraphs (A)
and (B) of section 1382(c)(7) of this
title were applied without regard to
the phrase the first day of the month
following,
(III) who are qualified pregnant women or
children as defined in section 1396d(n) of
this title,
(IV) who are described in subparagraph
(A) or (B) of subsection (l)(1) of this
section and whose family income does not
exceed the minimum income level the
State is required to establish under
subsection (l)(2)(A) of this section for such
a family; [2]

App. 108
(V) who are qualified family members as
defined in section 1396d(m)(1) of this
title,
(VI) who are described in subparagraph
(C) of subsection (l)(1) of this section and
whose family income does not exceed the
income level the State is required to
establish under subsection (l)(2)(B) of this
section for such a family,
(VII) who are described in subparagraph
(D) of subsection (l)(1) of this section and
whose family income does not exceed the
income level the State is required to
establish under subsection (l)(2)(C) of this
section for such a family; [2]
(VIII) beginning January 1, 2014, who are
under 65 years of age, not pregnant, not
entitled to, or enrolled for, benefits under
part A of subchapter XVIII, or enrolled for
benefits under part B of subchapter
XVIII, and are not described in a previous
subclause of this clause, and whose
income (as determined under subsection
(e)(14)) does not exceed 133 percent of the
poverty line (as defined in section
1397jj(c)(5) of this title) applicable to a
family of the size involved, subject to
subsection (k); [2] or
(IX) who
(aa) are under 26 years of age;
(bb) are not described in or enrolled
under any of subclauses (I) through
(VII) of this clause or are described in
any of such subclauses but have
income that exceeds the level of

App. 109
income applicable under the State
plan for eligibility to enroll for medical
assistance under such subclause;
(cc) were in foster care under the
responsibility of the State on the date
of attaining 18 years of age or such
higher age as the State has elected
under section 675(8)(B)(iii) of this
title; and
(dd) were enrolled in the State plan
under this subchapter or under a
waiver of the plan while in such foster
care; [3] So in original. Probably
should be followed by and.
(ii) at the option of the State, to [4] any
group or groups of individuals described in
section 1396d(a) of this title (or, in the case of
individuals described in section 1396d(a)(i) of
this title, to [4] any reasonable categories of
such individuals) who are not individuals
described in clause (i) of this subparagraph
but
(I) who meet the income and resources
requirements of the appropriate State
plan described in clause (i) or the
supplemental security income program
(as the case may be),
(II) who would meet the income and
resources requirements of the appropriate
State plan described in clause (i) if their
work-related child care costs were paid
from their earnings rather than by a
State agency as a service expenditure,
(III) who would be eligible to receive aid
under the appropriate State plan

App. 110
described in clause (i) if coverage under
such plan was as broad as allowed under
Federal law,
(IV) with respect to whom there is being
paid, or who are eligible, or would be
eligible if they were not in a medical
institution, to have paid with respect to
them, aid or assistance under the
appropriate State plan described in clause
(i), supplemental security income benefits
under subchapter XVI of this chapter, or
a State supplementary payment; [2]
(V) who are in a medical institution for a
period of not less than 30 consecutive
days (with eligibility by reason of this
subclause beginning on the first day of
such period), who meet the resource
requirements of the appropriate State
plan described in clause (i) or the
supplemental security income program,
and whose income does not exceed a
separate income standard established by
the State which is consistent with the
limit established under section
1396b(f)(4)(C) of this title,
(VI) who would be eligible under the State
plan under this subchapter if they were in
a medical institution, with respect to
whom there has been a determination
that but for the provision of home or
community-based services described in
subsection (c), (d), or (e) of section 1396n
of this title they would require the level of
care provided in a hospital, nursing
facility or intermediate care facility for

App. 111
the mentally retarded the cost of which
could be reimbursed under the State plan,
and who will receive home or
community-based services pursuant to a
waiver granted by the Secretary under
subsection (c), (d), or (e) of section 1396n
of this title,
(VII) who would be eligible under the
State plan under this subchapter if they
were in a medical institution, who are
terminally ill, and who will receive
hospice care pursuant to a voluntary
election described in section 1396d(o) of
this title; [2]
(VIII) who is a child described in section
1396d(a)(i) of this title
(aa) for whom there is in effect an
adoption assistance agreement (other
than an agreement under part E of
subchapter IV of this chapter) between
the State and an adoptive parent or
parents,
(bb) who the State agency responsible
for adoption assistance has
determined cannot be placed with
adoptive parents without medical
assistance because such child has
special needs for medical or
rehabilitative care, and
(cc) who was eligible for medical
assistance under the State plan prior
to the adoption assistance agreement
being entered into, or who would have
been eligible for medical assistance at
such time if the eligibility standards

App. 112
and methodologies of the States foster
care program under part E of
subchapter IV of this chapter were
applied rather than the eligibility
standards and methodologies of the
States aid to families with dependent
children program under part A of
subchapter IV of this chapter; [2]
(IX) who are described in subsection (l)(1)
of this section and are not described in
clause (i)(IV), clause (i)(VI), or clause
(i)(VII); [2]
(X) who are described in subsection (m)(1)
of this section; [2]
(XI) who receive only an optional State
supplementary payment based on need
and paid on a regular basis, equal to the
difference between the individuals
countable income and the income
standard used to determine eligibility for
such supplementary payment (with
countable income being the income
remaining after deductions as established
by the State pursuant to standards that
may be more restrictive than the
standards for supplementary security
income benefits under subchapter XVI of
this chapter), which are available to all
individuals in the State (but which may
be based on different income standards by
political subdivision according to cost of
living differences), and which are paid by
a State that does not have an agreement
with the Commissioner of Social Security

App. 113
under section 1382e or 1383c of this title;
[2]
(XII) who are described in subsection
(z)(1) of this section (relating to certain
TB-infected individuals); [2]
(XIII) who are in families whose income is
less than 250 percent of the income
official poverty line (as defined by the
Office of Management and Budget, and
revised annually in accordance with
section 9902(2) of this title) applicable to
a family of the size involved, and who but
for earnings in excess of the limit
established under section 1396d(q)(2)(B)
of this title, would be considered to be
receiving supplemental security income
(subject, notwithstanding section 1396o of
this title, to payment of premiums or
other cost-sharing charges (set on a
sliding scale based on income) that the
State may determine); [2]
(XIV) who are optional targeted
low-income children described in section
1396d(u)(2)(B) of this title; [2]
(XV) who, but for earnings in excess of the
limit established under section
1396d(q)(2)(B) of this title, would be
considered to be receiving supplemental
security income, who is at least 16, but
less than 65, years of age, and whose
assets, resources, and earned or unearned
income (or both) do not exceed such
limitations (if any) as the State may
establish; [2]

App. 114
(XVI) who are employed individuals with
a medically improved disability described
in section 1396d(v)(1) of this title and
whose assets, resources, and earned or
unearned income (or both) do not exceed
such limitations (if any) as the State may
establish, but only if the State provides
medical assistance to individuals
described in subclause (XV); [2]
(XVII) who are independent foster care
adolescents (as defined in section
1396d(w)(1) of this title), or who are
within any reasonable categories of such
adolescents specified by the State; [2]
(XVIII) who are described in subsection
(aa) of this section (relating to certain
breast or cervical cancer patients); [2]
(XIX) who are disabled children described
in subsection (cc)(1); [2]
(XX) beginning January 1, 2014, who are
under 65 years of age and are not
described in or enrolled under a previous
subclause of this clause, and whose
income (as determined under subsection
(e)(14)) exceeds 133 percent of the poverty
line (as defined in section 1397jj(c)(5) of
this title) applicable to a family of the size
involved but does not exceed the highest
income eligibility level established under
the State plan or under a waiver of the
plan, subject to subsection (hh); [2]
(XXI) who are described in subsection (ii)
(relating to individuals who meet certain
income standards); [2] or

App. 115
(XXII) who are eligible for home and
community-based services under needsbased criteria established under
paragraph (1)(A) of section 1396n (i) of
this title, or who are eligible for home and
community-based services under
paragraph (6) of such section, and who
will receive home and community-based
services pursuant to a State plan
amendment under such subsection;
42 U.S.C. 1396a(l)
(l) Description of group
(1) Individuals described in this paragraph are
(A) women during pregnancy (and during the
60-day period beginning on the last day of the
pregnancy),
(B) infants under one year of age,
(C) children who have attained one year of age
but have not attained 6 years of age, and
(D) children born after September 30, 1983 (or,
at the option of a State, after any earlier date),
who have attained 6 years of age but have not
attained 19 years of age,
who are not described in any of subclauses (I) through
(III) of subsection (a)(10)(A)(i) of this section and whose
family income does not exceed the income level
established by the State under paragraph (2) for a
family size equal to the size of the family, including the
woman, infant, or child.
(2)
(A)
(i) For purposes of paragraph (1) with respect
to individuals described in subparagraph (A)

App. 116
or (B) of that paragraph, the State shall
establish an income level which is a
percentage (not less than the percentage
provided under clause (ii) and not more than
185 percent) of the income official poverty
line (as defined by the Office of Management
and Budget, and revised annually in
accordance with section 9902(2) of this title)
applicable to a family of the size involved.
(ii) The percentage provided under this
clause, with respect to eligibility for medical
assistance on or after
(I) July 1, 1989, is 75 percent, or, if
greater, the percentage provided under
clause (iii), and
(II) April 1, 1990, 133 percent, or, if
greater, the percentage provided under
clause (iv).
(iii) In the case of a State which, as of July 1,
1988, has elected to provide, and provides,
medical assistance to individuals described
in this subsection or has enacted legislation
authorizing, or appropriating funds, to
provide such assistance to such individuals
before July 1, 1989, the percentage provided
under clause (ii)(I) shall not be less than
(I) the percentage specified by the State
in an amendment to its State plan
(whether approved or not) as of July 1,
1988, or
(II) if no such percentage is specified as of
July 1, 1988, the percentage established
under the States authorizing legislation
or provided for under the States
appropriations;

App. 117
but in no case shall this clause require the
percentage provided under clause (ii)(I) to
exceed 100 percent.
(iv) In the case of a State which, as of
December 19, 1989, has established under
clause (i), or has enacted legislation
authorizing, or appropriating funds, to
provide for, a percentage (of the income
official poverty line) that is greater than 133
percent, the percentage provided under
clause (ii) for medical assistance on or after
April 1, 1990, shall not be less than
(I) the percentage specified by the State
in an amendment to its State plan
(whether approved or not) as of December
19, 1989, or
(II) if no such percentage is specified as of
December 19, 1989, the percentage
established under the States authorizing
legislation or provided for under the
States appropriations.
(B) For purposes of paragraph (1) with respect to
individuals described in subparagraph (C) of
such paragraph, the State shall establish an
income level which is equal to 133 percent of the
income official poverty line described in
subparagraph (A) applicable to a family of the
size involved.
(C) For purposes of paragraph (1) with respect to
individuals described in subparagraph (D) of
that paragraph, the State shall establish an
income level which is equal to 100 percent (or,
beginning January 1, 2014, 133 percent) of the
income official poverty line described in

App. 118
subparagraph (A) applicable to a family of the
size involved.
(3) Notwithstanding subsection (a)(17) of this
section, for individuals who are eligible for medical
assistance because of subsection (a)(10)(A)(i)(IV),
(a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), or
(a)(10)(A)(ii)(IX) of this section
(A) application of a resource standard shall be at
the option of the State;
(B) any resource standard or methodology that
is applied with respect to an individual
described in subparagraph (A) of paragraph (1)
may not be more restrictive than the resource
standard or methodology that is applied under
subchapter XVI of this chapter;
(C) any resource standard or methodology that
is applied with respect to an individual
described in subparagraph (B), (C), or (D) of
paragraph (1) may not be more restrictive than
the corresponding methodology that is applied
under the State plan under part A of subchapter
IV of this chapter;
(D) the income standard to be applied is the
appropriate income standard established under
paragraph (2); and
(E) family income shall be determined in
accordance with the methodology employed
under the State plan under part A or E of
subchapter IV of this chapter (except to the
extent such methodology is inconsistent with
clause (D) of subsection (a)(17) of this section),
and costs incurred for medical care or for any
other type of remedial care shall not be taken
into account.

App. 119
Any different treatment provided under this
paragraph for such individuals shall not, because of
subsection (a)(17) of this section, require or permit
such treatment for other individuals.
(4)
(A) In the case of any State which is providing
medical assistance to its residents under a
waiver granted under section 1315 of this title,
the Secretary shall require the State to provide
medical assistance for pregnant women and
infants under age 1 described in subsection
(a)(10)(A)(i)(IV) of this section and for children
described in subsection (a)(10)(A)(i)(VI) of this
section or subsection (a)(10)(A)(i)(VII) of this
section in the same manner as the State would
be required to provide such assistance for such
individuals if the State had in effect a plan
approved under this subchapter.
(B) In the case of a State which is not one of the
50 States or the District of Columbia, the State
need not meet the requirement of subsection
(a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), or
(a)(10)(A)(i)(VII) of this section and, for purposes
of paragraph (2)(A), the State may substitute for
the percentage provided under clause (ii) of such
paragraph any percentage.
42 U.S.C. 1396a(gg)
(gg) Maintenance of effort
(1) General requirement to maintain eligibility
standards until State exchange is fully operational
Subject to the succeeding paragraphs of this
subsection, during the period that begins on March
23, 2010, and ends on the date on which the

App. 120
Secretary determines that an Exchange established
by the State under section 18031 of this title is fully
operational, as a condition for receiving any Federal
payments under section 1396b(a) of this title for
calendar quarters occurring during such period, a
State shall not have in effect eligibility standards,
methodologies, or procedures under the State plan
under this subchapter or under any waiver of such
plan that is in effect during that period, that are
more restrictive than the eligibility standards,
methodologies, or procedures, respectively, under
the plan or waiver that are in effect on March 23,
2010.
(2) Continuation of eligibility standards for children
until October 1, 2019
The requirement under paragraph (1) shall
continue to apply to a State through September 30,
2019, with respect to the eligibility standards,
methodologies, and procedures under the State plan
under this subchapter or under any waiver of such
plan that are applicable to determining the
eligibility for medical assistance of any child who is
under 19 years of age (or such higher age as the
State may have elected).
(3) Nonapplication
During the period that begins on January 1, 2011,
and ends on December 31, 2013, the requirement
under paragraph (1) shall not apply to a State with
respect to nonpregnant, nondisabled adults who are
eligible for medical assistance under the State plan
or under a waiver of the plan at the option of the
State and whose income exceeds 133 percent of the
poverty line (as defined in section 1397jj(c)(5) of this
title) applicable to a family of the size involved if, on
or after December 31, 2010, the State certifies to

App. 121
the Secretary that, with respect to the State fiscal
year during which the certification is made, the
State has a budget deficit, or with respect to the
succeeding State fiscal year, the State is projected
to have a budget deficit. Upon submission of such a
certification to the Secretary, the requirement
under paragraph (1) shall not apply to the State
with respect to any remaining portion of the period
described in the preceding sentence.
(4) Determination of compliance
(A) States shall apply modified adjusted gross
income
A States determination of income in accordance
with subsection (e)(14) shall not be considered to
be eligibility standards, methodologies, or
procedures that are more restrictive than the
standards, methodologies, or procedures in effect
under the State plan or under a waiver of the
plan on March 23, 2010, for purposes of
determining compliance with the requirements
of paragraph (1), (2), or (3).
(B) States may expand eligibility or move
waivered populations into coverage under the
State plan
With respect to any period applicable under
paragraph (1), (2), or (3), a State that applies
eligibility standards, methodologies, or
procedures under the State plan under this
subchapter or under any waiver of the plan that
are less restrictive than the eligibility standards,
methodologies, or procedures, applied under the
State plan or under a waiver of the plan on
March 23, 2010, or that makes individuals who,
on March 23, 2010, are eligible for medical
assistance under a waiver of the State plan,

App. 122
after March 23, 2010, eligible for medical
assistance through a State plan amendment
with an income eligibility level that is not less
than the income eligibility level that applied
under the waiver, or as a result of the
application of subclause (VIII) of subsection
(a)(10)(A)(i), shall not be considered to have in
effect eligibility standards, methodologies, or
procedures that are more restrictive than the
standards, methodologies, or procedures in effect
under the State plan or under a waiver of the
plan on March 23, 2010, for purposes of
determining compliance with the requirements
of paragraph (1), (2), or (3).
42 U.S.C. 1396b
(a) Computation of amount
From the sums appropriated therefor, the Secretary
(except as otherwise provided in this section) shall pay
to each State which has a plan approved under this
subchapter, for each quarter, beginning with the
quarter commencing January 1, 1966
(1) an amount equal to the Federal medical
assistance percentage (as defined in section 1396d
(b) of this title, subject to subsections (g) and (j) of
this section and section 1396r4(f) of this title) of
the total amount expended during such quarter as
medical assistance under the State plan; plus
* * *
42 U.S.C. 1396c
If the Secretary, after reasonable notice and
opportunity for hearing to the State agency

App. 123
administering or supervising the administration of the
State plan approved under this subchapter, finds
(1) that the plan has been so changed that it no
longer complies with the provisions of section 1396a
of this title; or
(2) that in the administration of the plan there is a
failure to comply substantially with any such
provision;
the Secretary shall notify such State agency that
further payments will not be made to the State (or, in
his discretion, that payments will be limited to
categories under or parts of the State plan not affected
by such failure), until the Secretary is satisfied that
there will no longer be any such failure to comply.
Until he is so satisfied he shall make no further
payments to such State (or shall limit payments to
categories under or parts of the State plan not affected
by such failure).
42 U.S.C. 1396d(a)
For purposes of this subchapter
(a) Medical assistance
The term medical assistance means payment of part
or all of the cost of the following care and services or
the care and services themselves, or both (if provided in
or after the third month before the month in which the
recipient makes application for assistance or, in the
case of medicare cost-sharing with respect to a
qualified medicare beneficiary described in subsection
(p)(1) of this section, if provided after the month in
which the individual becomes such a beneficiary) for
individuals, and, with respect to physicians or dentists
services, at the option of the State, to individuals (other

App. 124
than individuals with respect to whom there is being
paid, or who are eligible, or would be eligible if they
were not in a medical institution, to have paid with
respect to them a State supplementary payment and
are eligible for medical assistance equal in amount,
duration, and scope to the medical assistance made
available to individuals described in section
1396a(a)(10)(A) of this title) not receiving aid or
assistance under any plan of the State approved under
subchapter I, X, XIV, or XVI of this chapter, or part A
of subchapter IV of this chapter, and with respect to
whom supplemental security income benefits are not
being paid under subchapter XVI of this chapter, who
are
(i) under the age of 21, or, at the option of the State,
under the age of 20, 19, or 18 as the State may
choose,
* * *