The Medicaid program of the Social Security Act (Act) provides
medical assistance to persons whose income and resources are
insufficient to meet the costs of necessary care and services.
States participating in the program must provide coverage to the
"categorically needy," that is, persons eligible for cash
assistance under either the Supplemental Security Income for the
Aged, Blind, and Disabled (SSI) program or the Aid to Families with
Dependent Children (AFDC) program. A participating State also may
elect to provide Medicaid benefits to the "medically needy," that
is, persons who meet the nonfinancial eligibility requirements for
cash assistance under AFDC or SSI, but whose income or resources
exceed the financial eligibility standards for those programs.
Under 42 U.S.C. § 1396a(a)(17), the medically needy may qualify for
Medicaid benefits if they incur medical expenses,
i.e.,
"spend down," in an amount that reduces their income to the
eligibility level. That section provides that a State is to take
into account, "except to the extent prescribed by the Secretary [of
Health and Human Services], the costs . . . incurred for medical
care," and must determine eligibility under standards that are
"reasonable" and "comparable for all groups." Pursuant to §
1396a(a)(17), the Secretary issued a regulation permitting States
to employ a maximum spenddown period of six months to compute
income of the medically needy. Under § 1396a(a)(10)(C)(i)(III), a
state Medicaid plan must prescribe
"the single standard to be employed in determining income and
resource eligibility for all such groups, and the methodology to be
employed in determining such eligibility which shall be the same
methodology which would be employed under [AFDC or SSI]."
Under the Massachusetts Medicaid plan, persons who lack
sufficient income measured on a monthly basis to meet their basic
needs automatically qualify for Medicaid. Massachusetts also
provides Medicaid benefits to persons who earn enough to meet their
basic needs, but whose medical expenses within a 6-month period
consume the amount by which their earnings exceed what is required
for basic needs. The Massachusetts Department of Public Welfare
denied respondents Medicaid benefits because their income exceeded
the Medicaid eligibility limit, and they incurred insufficient
medical expenses within a 6-month period.
Page 477 U. S. 155
After the denial was upheld on administrative review,
respondents sought injunctive relief from the Massachusetts
Superior Court against use of the 6-month spenddown period. That
court held the period invalid, and the Massachusetts Supreme
Judicial Court agreed, holding that, in providing that the "same
methodology" be used for both the categorically needy and the
medically needy, the Act requires that a l-month period be applied
in eligibility calculations for the medically needy.
Held: Massachussets' 6-month spenddown period for
calculating the income of the medically needy does not violate the
Act's "same methodology" requirement. Pp.
477 U. S.
161-167.
(a) The Secretary's regulation permitting States to employ a
maximum spenddown period of six months plainly permits what
Massachusetts has done. Because that regulation is supported by the
Act's plain language and was adopted pursuant to the Act's explicit
grant of rulemaking authority, it is entitled to "legislative
effect," and is controlling unless it is arbitrary, capricious, or
manifestly contrary to the Act. Pp.
477 U. S.
161-162.
(b) The history of the "same methodology" requirement
demonstrates that it was never intended to control the length of
the spenddown, but rather simply to instruct States to treat
components of income similarly for both medically needy and
categorically needy persons. Pp.
477 U. S.
162-166.
395 Mass. 189,
479
N.E.2d 639, reversed.
BLACKMUN, J., delivered the opinion for a unanimous Court.
Page 477 U. S. 156
JUSTICE BLACKMUN delivered the opinion of the Court.
This case concerns the means by which a State may calculate
eligibility for medical assistance benefits (Medicaid) under Title
XIX of the Social Security Act.
In Massachusetts, persons who lack sufficient income, measured
on a monthly basis, to meet their basic needs automatically qualify
for Medicaid. The Commonwealth, however, also provides Medicaid
benefits to persons, like respondents, who earn enough to meet
their basic needs, but whose medical expenses within a 6-month
period consume the amount by which their earnings exceed what is
required for basic needs. Construing the Act's requirement that
assistance for the two groups be calculated using the "same
methodology," the Massachusetts Supreme Judicial Court held invalid
the Commonwealth's use of a 6-month period for measuring medical
expenses. The court ruled that, inasmuch as a l-month period is
used to measure the income of those with insufficient means, an
identical period must be used to measure medical expenses for
persons like respondents. Because this holding conflicts with
rulings of two Federal Courts of Appeals, [
Footnote 1] we granted certiorari. 474 U.S. 1018
(1985).
I
Medicaid, enacted in 1965 as Title XIX of the Social Security
Act, 79 Stat. 343, as amended, 42 U.S.C. § 1396
et seq.
(1982 ed. and Supp. II), is designed to provide medical assistance
to persons whose income and resources are insufficient to meet the
costs of necessary care and services.
See Schweiker v.
Hogan, 457 U. S. 569,
457 U. S. 571
(1982). The Federal Government shares the costs of Medicaid with
States that
Page 477 U. S. 157
elect to participate in the program. In return, participating
States are to comply with requirements imposed by the Act and by
the Secretary of Health and Human Services.
See 42 U.S.C.
§ 1396a (1982 ed. and Supp. II);
Schweiker v. Gray
Panthers, 453 U. S. 34,
453 U. S. 36-37
(1981).
States participating in the Medicaid program must provide
coverage to the "categorically needy." 42 U.S.C. § 1396a(a)(10)(A)
(1982 ed. and Supp. II). These are persons eligible for cash
assistance under either of two programs: Supplemental Security
Income for the Aged, Blind, and Disabled (SSI), 42 U.S.C. § 1381
et seq. (1982 ed. and Supp. II), or Aid to Families with
Dependent Children (AFDC), 42 U.S.C. § 601
et seq.
[
Footnote 2] (1982 ed. and
Supp. II). Congress considered these persons "especially deserving
of public assistance" for medical expenses,
see Gray
Panthers, 453 U.S. at
453 U. S. 37, because one is eligible for AFDC or SSI
only if, in a given month, he or she earns less than what has been
determined to be required for the basic necessities of life. AFDC
and SSI assistance are intended to cover basic necessities, but not
medical expenses. Thus, if a person in this category also incurs
medical expenses during that month, payment of those expenses would
consume funds required for basic necessities.
A participating State also may elect to provide medical benefits
to the "medically needy," that is, persons who meet the
nonfinancial eligibility requirements for cash assistance under
AFDC or SSI, but whose income or resources exceed the financial
eligibility standards of those programs. [
Footnote 3]
See
Page 477 U. S.
158
Schweiker v. Hogan, 457 U.S. at
457 U. S.
581-582. Under 42 U.S.C. § 1396a(a)(17), the medically
needy may qualify for financial assistance for medical expenses if
they incur such expenses in an amount that effectively reduces
their income to the eligibility level. Only when they "spend down"
the amount by which their income exceeds that level are they in
roughly the same position as persons eligible for AFDC or SSI: any
further expenditures for medical expenses then would have to come
from funds required for basic necessities.
In creating the spenddown mechanism of 42 U.S.C. § 1396a(a)(17)
(1982 ed. and Supp. II), Congress provided that a State is to take
into account, "except to the extent prescribed by the Secretary,
the costs . . . incurred for medical care." Pursuant to this
statute, the Secretary of Health and Human Services has instructed
state agencies to "use a prospective period of not more than 6
months to compute income" of the medically needy. 42 CFR § 435.831
(1985).
A State electing to assist the medically needy must determine
eligibility under standards that are "reasonable" and "comparable
for all groups." 42 U.S.C. § 1396a(a)(17). In addition, and
significantly for present purposes, state plans for Medicaid must
describe
"the single standard to be employed in determining income and
resource eligibility for all such groups, and the methodology to be
employed in determining such eligibility which
shall be the
same methodology which would be employed under [AFDC or
SSI]."
42 U.S.C. § 1396a(a)(10)(C)(i)(III) (emphasis added).
Page 477 U. S. 159
II
Respondent Rivera is employed outside her home, and is the
mother of two children. She receives no medical benefits from her
job, and earns an amount slightly in excess of that which would
permit her to qualify for AFDC. In 1983, Rivera applied to the
Massachusetts Department of Public Welfare for Medicaid.
Massachusetts has chosen to participate in the Medicaid program,
Mass.Gen.Laws § 118E:1
et seq. (1984), and also to provide
coverage to medically needy persons.
To determine Rivera's eligibility for Medicaid, the Department
first calculated her gross monthly income.
See 106 Code of
Mass.Regs. (CMR) §§ 505.200, 505.210, 505.320 (1985). Next, the
Department prescribed certain deductions and disregards to arrive
at her monthly "countable income" of $535.30. [
Footnote 4]
See 106 CMR §§ 505.200 and
506.100-506.200 (1985).
See also 42 CFR § 435.831(a)
(1985). Rivera's monthly countable income exceeded the Medicaid
eligibility limit by $100.30.
See 106 CMR § 506.400
(1985).
See also 42 U.S.C. §§ 1382(c)(1) and 602(a)(13)
(1982 ed. and Supp. II). As a result, she did not qualify for
Medicaid at that time. She would be able to qualify at a later
date, provided her excess income was subject to being consumed or
spent down by medical expenses.
Massachusetts has adopted a 6-month period over which the
spenddown is calculated. Mass.Gen.Laws § 118E:10 (1984); 106 CMR §§
506.400 and 506.510 (1985). This is the maximum permitted under the
federal regulations.
See 42 CFR § 435.831 (1985).
Accordingly, the Department multiplied Rivera's excess $100.30 by
six; she thus could receive Medicaid during the 6-month period
beginning with the date of her first medical service only after she
spent down $601.80
Page 477 U. S. 160
on medical expenses. [
Footnote
5] The Department's decision denying assistance was upheld by
the Welfare Appeals Referee. App. to Pet. for Cert. A46.
Rivera then sought injunctive relief in State Superior Court
against use of the 6-month period. She argued that the 6-month
period for calculating the income of medically needy applicants
violates the "same methodology" requirement of 42 U.S.C. §§
1396a(a)(10)(C)(i)(III) and 1396a(a)(17) (1982 ed. and Supp. II),
because the Act mandates that AFDC and SSI determinations be
calculated on the basis of income earned in a l-month period. The
use of the shorter period would have permitted Rivera to receive
Medicaid after incurring only $100.30 in medical expenses.
[
Footnote 6]
The court certified a class of all persons who have been, are
being, or will be subjected to the Department's 6-month spenddown
requirement. On a motion for summary judgment, the court found that
the Department's use of the 6-month spenddown period violated the
statutory requirement that the "same methodology" be used for
determining eligibility of the medically needy as is used for the
categorically needy. App. to Pet. for Cert. A28.
The Department appealed to the Massachusetts Supreme Judicial
Court. It argued there that, since the eligibility determination
for the categorically needy does not involve a spenddown at all,
there is no methodology for the Department to match. The Department
further argued that federal regulations explicitly allow a 6-month
period.
Page 477 U. S. 161
The Supreme Judicial Court, by a unanimous panel vote, held that
the Massachusetts requirement for a 6-month spenddown period was
invalid.
Rivera v. Commissioner of Public Welfare, 395
Mass. 189,
479
N.E.2d 639 (1985). It relied in part,
id. at 197, 479
N.E.2d at 644-645, on a ruling by the United States District Court
for the District of Massachusetts sustaining an identical challenge
to the Department's 6-month spenddown regulation.
See Hogan v.
Heckler, 597 F.
Supp. 1106, 1110-1113 (1984),
subsequently reversed,
769 F.2d 886 (CA1 1985),
cert. pending sub nom. Hogan v.
Bowen, No. 85-6386. Although noting that eligibility
determinations for the categorically needy do not involve
spenddowns, the court observed that such determinations do require
the use of a l-month computation period. Therefore, it concluded,
in providing that the "same methodology" be employed, the Act
requires that a l-month period be applied in eligibility
calculations for the medically needy.
III
Congress created the spenddown provision in 1965 to eliminate a
perceived weakness in the medical assistance program then in
effect.
See Social Security Amendments of 1960, § 601(a),
74 Stat. 987. A 1965 Senate Report explained that, under existing
law, some States used an absolute-income cutoff point. An
individual with income just under the specified limit thus was able
to obtain all the aid provided under the state plan, while one with
income just over the limit was unable to obtain any assistance,
even if the excess income was small when compared with the cost of
the medical care needed.
See S.Rep. No. 404, 89th Cong.,
1st Sess., pt. 1, p. 78 (1965).
To cure this problem, the Medicaid statute was amended to
require state eligibility standards to measure income in terms of
both the State's allowance for basic maintenance needs and the cost
of the medical care required. The standards applied to the
medically needy are to be "reasonable"
Page 477 U. S. 162
and "comparable for all groups." Congress imposed no further
instruction on the spenddown, stating only that a State is to take
into account the costs incurred for medical care, "except to the
extent prescribed by the Secretary." 42 U.S.C. § 1396a(a)(17).
Pursuant to this authority, the Secretary has provided, from the
inception of Medicaid until the present time, that States may
employ a maximum spenddown period of six months.
See 45
CFR § 248.21(a)(4) (1970), originally promulgated as HEW Handbook
of Public Assistance Administration, Supplement D, Medical
Assistance Programs, D-4220(A)(4) (June 17, 1966). This regulation
plainly permits what Massachusetts has done. We long have
recognized that, perhaps due to the intricacy of the Act, "Congress
conferred on the Secretary exceptionally broad authority to
prescribe standards for applying certain sections of the Act."
Gray Panthers, 453 U.S. at
453 U. S. 43.
See Batterton v. Francis, 432 U.
S. 416,
432 U. S. 425
(1977). The broad delegation to the Secretary in the spenddown
provision includes the authority to provide the period in which the
spenddown is to be calculated. Because the Secretary's regulation
appears supported by the plain language of the statute and is
adopted pursuant to the explicit grant of rulemaking authority in §
1396a(a)(17), it is "
entitled to more than mere deference or
weight.'" Gray Panthers, 453 U.S. at 453 U. S. 44,
quoting Batterton v. Francis, 432 U.S. at 432 U. S. 426.
Indeed, it is entitled to "legislative effect," id. at
432 U. S. 425,
and is controlling "unless [it is] arbitrary, capricious, or
manifestly contrary to the statute," Chevron
U.S.A. Inc. v. Natural Resources Defense Council,
Inc., 467 U. S. 837,
467 U. S. 844
(1984).
IV
Respondents contend that the Secretary's regulation, and
Massachusetts' 6-month spenddown enacted pursuant thereto, are
"manifestly contrary to the statute." Respondents point to another
section of the Act, 42 U.S.C. § 1396a(a)(10)(C)
Page 477 U. S. 163
(i)(III), requiring that a State's plan describe
"the single standard to be employed in determining income . . .
eligibility . . . and the methodology to be employed in determining
such eligibility, which shall be the same methodology"
employed under SSI or AFDC. To respondents, this statutory
language is an express congressional mandate that the same
methodology, here the 1-month budget period, be applied to
eligibility determinations for the medically needy. This
requirement, the argument goes, operates as an express limitation
on the Secretary's authority to regulate the state administration
of spenddowns. Similarly, it is a direct restriction on the States,
requiring them to use a 1-month period in which the medically needy
must spend down, on medical expenses, their excess income.
B
The history of the "same methodology" proviso, which first
appeared in the Act in 1981, demonstrates that it was never
intended to control the length of the spenddown. Rather, the "same
methodology" requirement simply instructs States to treat
components of income --
e.g., interest or court-ordered
support payments -- similarly for both medically and categorically
needy persons.
The "same methodology" proviso was not Congress' first attempt
to regulate the relationship between treatment of the categorically
needy and treatment of the medically needy. To understand the
precise purpose of the "same methodology" proviso requires a brief
foray into Congress' earlier efforts to address this relationship,
for the proviso reflects Congress' desire to overrule a particular
interpretation that had been advanced by the Secretary.
When Medicaid was first enacted, Congress did not require that
the "same methodology" be used for determining the eligibility of
categorically and medically needy individuals. Instead, it required
only that a State's Medicaid plan use
Page 477 U. S. 164
"comparable" standards for both groups. [
Footnote 7] The Secretary and several Courts of Appeals
interpreted the original "comparability" language to require
virtually identical treatment.
See, e.g., 38 Fed.Reg.
32216 (1973), originally codified as 45 CFR § 248.2;
Caldwell
v. Blum, 621 F.2d 491, 495 (CA2 1980),
cert. denied,
452 U.S. 909 (1981);
Greklek v. Toia, 565 F.2d 1259, 1261
(CA2 1977),
cert. denied sub nom. Blum v. Toomey, 436 U.S.
962 (1978);
Fabula v. Buck, 598 F.2d 869, 872-873 (CA4
1979). Notably, no one advanced the claim that this "comparability"
language prevented States from using a spenddown period of up to
six months. [
Footnote 8]
Congress concluded that the administrative and judicial
interpretation of the "comparability" provision denied States
necessary flexibility to set eligibility standards and to adjust
the scope of services to fit the varying requirements of medically
needy persons.
See H.R.Rep. No. 97-208, p. 971 (1981).
Thus, as part of the Omnibus Budget Reconciliation Act of 1981
(OBRA), 95 Stat. 357, Congress amended the
Page 477 U. S. 165
Medicaid Act by deleting the "comparability" requirement. After
the amendment, a State was required only to include in its plan for
the medically needy "a description of . . . the criteria for
determining eligibility of individuals . . . for medical
assistance." OBRA § 2171(a)(3)(C)(i), 95 Stat. 807.
The Secretary interpreted OBRA to authorize States to use income
and resource criteria for medically needy different from those for
categorically needy individuals:
"States are no longer required to apply a uniform methodology
for treating income and resources in such matters as deemed income,
interest, court-ordered support payments, and infrequent and
irregular income. Rather, the State plan must specify the
methodology that will be used, and that methodology must be
reasonable."
46 Fed.Reg. 47980 (1981). The regulations promulgated by the
Secretary accordingly left the States free to use eligibility
standards that were unrelated to the standards used in AFDC or SSI,
as long as the standards were "reasonable." [
Footnote 9] The Secretary's regulations did not
address treatment of excess income for the medically needy or the
calculation of spenddowns. Despite the various changes that
followed OBRA's passage, many States continued
Page 477 U. S. 166
to use a 6-month spenddown, in conformity with the
still-existing regulation permitting that choice.
Congress disagreed with the Secretary's interpretation.
See,
e.g., 127 Cong.Rec. 23363 (1981) (remarks of Rep. Waxman).
This disagreement led to the enactment of the "same methodology"
proviso, as part of the Tax Equity and Fiscal Responsibility Act of
1982 (TEFRA), § 137(a)(8), 96 Stat. 378. The House Report explained
that TEFRA
"makes clear that the Department [of Health and Human Services]
had no authority to alter the rules that applied before September
30, 1981, with respect to medically needy income levels, medically
needy resource standards, and the methodology for treating
medically needy income and resources."
H.R.Rep. No. 97757, pt. 1, p. 13 (1982). The House Report
further explained that TEFRA reaffirmed "the financial requirements
previously in effect for the medically needy."
Ibid.
Thus, the "same methodology" proviso was designed to correct a
problem wholly unrelated to the 6-month spenddown, which had
remained in force from the inception of Medicaid. The proviso
operated solely to invalidate the post-OBRA regulations permitting
the income and resource standards in state Medicaid plans to
deviate from those used in the AFDC and SSI programs in "such
matters as deemed income, interest, court-ordered support payments,
and infrequent and irregular income."
See 46 Fed.Reg.
47980 (1981). Treatment of excess income and the calculation of
spenddowns were left untouched by the "same methodology" proviso.
[
Footnote 10]
Page 477 U. S. 167
V
The Medicaid Act itself is silent as to how many months' excess
income the State may require an individual or a family to
contribute to medical expenses before Medicaid coverage of further
medical expenses begins. The Secretary's interpretation of the Act
is consistent with congressional intent, and, under that
interpretation, Massachusetts is free to choose a 6-month
spenddown. Accordingly, the judgment of the Supreme Judicial Court
is reversed.
It is so ordered.
[
Footnote 1]
See Hogan v. Heckler, 769 F.2d 886 (CA1 1985),
cert. pending sub nom. Hogan v. Bowen, No. 85-6386
(construing Massachusetts provision);
DeJesus v. Perales,
770 F.2d 316 (CA2 1985),
cert. pending, No. 85-6337
(construing identical New York provision).
[
Footnote 2]
Congress created SSI in 1972, 86 Stat. 1465, to replace three
existing categorical assistance programs -- Old Age Assistance, 42
U.S.C. § 301
et seq. (1970 ed.); Aid to the Blind, 42
U.S.C. § 1201
et seq. (1970 ed.); and Aid to the
Permanently and Totally Disabled, 42 U.S.C. § 1351
et seq.
(1970 ed.). These programs, together with AFDC, previously had been
state-administered, with state-eligibility standards.
See
Schweiker v. Hogan, 457 U. S. 569,
457 U. S.
581-582, n. 18 (1982).
[
Footnote 3]
In Massachusetts, the income eligibility level for the medically
needy is comparable in most, but not all, instances to the
corresponding SSI or AFDC standard of need. The maximum income
eligibility limits for some medically needy applicants are, in the
case of small families (one to three persons), higher than those
used for AFDC coverage.
See 106 Code of Mass. Regs. §§
506.410 and 304.410 (1985). This results in some medically needy
families in Massachusetts qualifying for Medicaid without use of a
spenddown.
[
Footnote 4]
In administrative and state court proceedings, Rivera raised a
challenge to the manner in which certain portions of her income
were disregarded. That issue, however, is not presently before this
Court.
[
Footnote 5]
The spenddown may be satisfied by submission of paid or unpaid
medical bills. 106 CMR § 506.540 (1985).
[
Footnote 6]
Respondent Madeline McKenna was permitted to intervene in the
Superior Court proceedings. McKenna, like Rivera, was denied
Medicaid. McKenna's monthly countable income was calculated to be
$531.66, which is $106.66 in excess of the $425 eligibility
standard for a family of two. Thus, McKenna could receive medical
assistance only after incurring medical expenses of $639.96 in a
6-month period.
[
Footnote 7]
The 1965 legislation was to the effect that a State choosing to
extend assistance to the medically needy provide
"for making medical or remedial care and services available to
all individuals who would, if needy, be eligible for aid or
assistance under any . . . State [cash assistance program] and who
have insufficient (as determined in accordance with comparable
standards) income and resources to meet the costs of necessary
medical or remedial care and services."
79 Stat. 345.
[
Footnote 8]
The current version of the Act also contains a "comparability"
requirement.
See § 42 U.S.C. § 1396a(a)(17). Although the
Supreme Judicial Court did not rely on "comparability" in arriving
at its result, we note that that requirement did not mandate the
use of a 1-month spenddown. The very purpose of § 1396a(a)(17) is
to regulate the standards under which persons having incomes higher
than allowed in the cash-assistance programs may still qualify for
Medicaid; therefore, "comparability" cannot be read to require that
the standards must be identical with those in the cash assistance
programs. Because the medically and categorically needy are
different in a fundamental way, this Court previously has
recognized that the comparability provisions of Medicaid "did not
require that the medically needy be treated comparably to the
categorically needy in all respects."
Schweiker v. Hogan,
457 U. S. 569,
457 U. S. 587
(1982).
See DeJesus v. Perales, 770 F.2d at 323-324;
Hogan v. Heckler, 769 F.2d at 891-897.
[
Footnote 9]
The Secretary further explained:
"Before the 1981 Amendments, the methodology for treatment of
income and resources of the medically needy depended on the
individual's relationship to a specific cash assistance program.
For example, the methodology for deeming the income of medically
needy aged, blind, and disabled was taken from the SSI program. . .
. [T]he 1981 Amendments revised the Medicaid statute so that the
direct linkage between the cash assistance programs and the
medically needy is no longer explicit. . . . Therefore, we have
concluded that the State need not adopt the methodology of a
related cash assistance program in treating income and resources of
the medically needy. Rather, the State may develop its own.
However, section 1902(a)(17)(C) of the Act has not been amended.
Consequently, these final regulations require that the State must
use a methodology for the treatment of income and resources that is
reasonable."
46 Fed.Reg. 47980 (1981).
[
Footnote 10]
Subsequent legislative history is to the same effect, and makes
clear that TEFRA did not address the length of the spenddown. In
the Deficit Reduction Act of 1984, § 2373(c)(1), 98 Stat. 1112,
Congress amended § 1396a(a)(17) to impose a moratorium on
disapproving state Medicaid plans that might be inconsistent with
the "same methodology" requirement. In doing so, Congress
reaffirmed that its sole intent in enacting the "same methodology"
requirement had been to invalidate the Secretary's 1981
regulations.
See H.R.Rep. No. 98-861, pp. 1366-1367
(1984).