United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 23, 1998 Decided July 16, 1999
No. 98-5142
United Seniors Association, Inc., et al.,
Appellants
v.
Donna E. Shalala, Secretary,
United States Department of Health and Human Services,
Appellee
Appeal from the United States District Court
for the District of Columbia
(No. 97cv03109)
Kent Masterson Brown argued the cause for appellants.
With him on the briefs was Frank M. Northam. Jerome P.
Friedlander, II, entered an appearance.
Thomas M. Bondy, Attorney, U.S. Department of Justice,
argued the cause for appellee. With him on the brief were
Frank W. Hunger, Assistant Attorney General, Wilma A.
Lewis, U.S. Attorney, and Barbara C. Biddle, Attorney, U.S.
Department of Justice.
John S. Hoff, Arthur B. Spitzer and Jeffrey P. Altman
were on the brief for amici Citizens Against Government
Waste, et al.
Before: Williams, Sentelle and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Garland.
Garland, Circuit Judge: Section 4507 of the Balanced
Budget Act of 1997 provides that, for certain medical services,
a doctor may not contract with a Medicare beneficiary outside
of Medicare unless the doctor agrees to abstain from partici-
pating in the Medicare program for two years. Plaintiffs, a
senior citizens' organization and four individual Medicare
beneficiaries, contend that section 4507 is unconstitutional on
a number of grounds. The district court found the statute
constitutional and granted summary judgment for the Secre-
tary of Health and Human Services. We affirm the grant of
summary judgment without reaching the constitutional ques-
tions because the Secretary's recently-clarified interpretation
of section 4507, to which we must defer, eliminates the injury
that is the basis of plaintiffs' constitutional attack.
I
Medicare is a comprehensive insurance program designed
to provide health insurance benefits for individuals 65 and
over, as well as for certain others who come within its terms.
See 42 U.S.C. ss 1395c, 1395j. The program is administered
by the Health Care Financing Administration (HCFA), a part
of the U.S. Department of Health and Human Services
(HHS). In broad terms, Medicare Part A, which is not at
issue in this case, covers care provided by institutional health
care providers including hospitals. See id. ss 1395c-1395i.
Medicare Part B, which is the focus here, covers medical
services including those provided by physicians. See id.
ss 1395j to 1395w-4. Part B is financed by a combination of
government funding and premiums paid by beneficiaries. See
id. s 1395j. Doctors who provide medical services to Part B
beneficiaries must submit claim forms identifying the services
provided. See id. s 1395w-4(g)(4)(A)(i). They receive com-
pensation in accordance with fee schedules that limit the
amount they may charge and be paid. See id. s 1395w-
4(g)(2)(C), (D).1
Certain kinds of medical services, such as routine physical
checkups, are categorically excluded from Medicare coverage.
See id. s 1395y(a)(7). Those that are not categorically ex-
cluded may only be reimbursed when medically "reasonable
and necessary." Id. s 1395y(a)(1)(A). If a service is deemed
not to have been reasonable and necessary, Medicare will not
make payment and the doctor generally is prohibited from
charging the patient. See id. s 1395u(b)(3)(B)(ii), (l)(1)(A).2
Because at the time a physician provides a service it may
not be certain whether Medicare will regard it as reasonable
and necessary, the Medicare program includes a provision for
an "Advance Beneficiary Notice" ("ABN"). Under this provi-
sion, in advance of providing a service the doctor may give
the patient an ABN, which advises that Medicare may not
pay for the service. See id. s 1395u(l)(1)(C)(ii). If the
__________
1 Under Medicare, "participating physicians" generally do not
bill their patients, but instead take an assignment of their patients'
rights and receive payment directly from Medicare. "Nonpartici-
pating physicians" may accept assignments on a case-by-case basis
or bill their patients directly. In the latter circumstance, it is the
patient who obtains reimbursement from Medicare. In all cases,
however, the fee schedules effectively limit the doctor's compensa-
tion. See 42 U.S.C. ss 1395u(b), (h), (i); id. ss 1395w-4(a), (b), (g);
42 C.F.R. ss 402.1, 402.105, 405.504.
2 HHS enters into contracts with insurance carriers which
receive and process claims for payment for medical services provid-
ed to Part B enrollees. 42 U.S.C. s 1395u(a). Claims are submit-
ted to a carrier, which makes an initial determination as to whether
the service is covered. 42 C.F.R. s 405.803; id. s 421.200. Medi-
care beneficiaries, or the physicians to whom they have assigned
their rights to payment, may require carriers to review their
determinations and are entitled to post-review hearings. Id.
s 405.801.
patient agrees to pay from his or her own funds if Medicare
does not, and if Medicare subsequently denies payment, the
doctor may bill the patient directly. See id.
In August 1997, Congress enacted section 4507 of the
Balanced Budget Act of 1997, Pub. L. 105-33, s 4507, 111
Stat. 251, 439 (codified at 42 U.S.C. s 1395a). The section
establishes rules for what it describes as "the use of private
contracts by medicare beneficiaries." Id. Section 4507(b)(1)
permits doctors and patients to contract for certain services
outside of Medicare and without its fee limitations:
Subject to the provisions of this subsection, nothing in
this title shall prohibit a physician or practitioner from
entering into a private contract with a medicare benefi-
ciary for any item or service--
(A) for which no claim for payment is to be submitted
under this title, and
(B) for which the physician or practitioner receives
... no reimbursement under this title....
42 U.S.C. s 1395a(b)(1); see id. s 1395a(b)(4). Section
4507(b)(2), entitled "[b]eneficiary protections," lists certain
provisions that private contracts authorized by (b)(1) must
include:
Any contract to provide items and services to which
paragraph (1) applies shall clearly indicate ... that by
signing such contract the Beneficiary--
(i) agrees not to submit a claim (or to request that the
physician or practitioner submit a claim) under this
title for such items or services even if such items or
services are otherwise covered by this subchapter;
(ii) agrees to be responsible, whether through insur-
ance or otherwise, for payment of such items or ser-
vices and understands that no reimbursement will be
provided under this title for such items or services;
(iii) acknowledges that no limits under this title ...
apply to amounts that may be charged for such items
or services;
... ; and
(v) acknowledges that the medicare beneficiary has
the right to have such items or services provided by
other physicians or practitioners for whom payment
would be made under this title.
Id. s 1395a(b)(2)(B).
Finally, section 4507(b)(3) further provides that such pri-
vate contracts are authorized only if the physician signs an
affidavit which states that he or she
will not submit any claim under this title for any item or
service provided to any medicare beneficiary (and will
not receive any [Medicare] reimbursement ... for any
such items or service) during the 2-year period begin-
ning on the date the affidavit is signed....
Id. s 1395a(b)(3)(B)(ii). This means that a doctor who enters
into a section 4507 private contract with even a single patient
is barred from submitting a claim to Medicare on behalf of
any patient for a two-year period.
II
Plaintiffs contend that section 4507 effectively makes it
impossible for them to contract for medical services outside of
the Medicare system--particularly for services Medicare will
not cover, either because they are categorically excluded or
because Medicare deems them unreasonable or unnecessary
in a particular case. As plaintiffs read the section, it governs
almost any agreement between a doctor and patient to pro-
vide medical services outside of Medicare, without regard to
whether Medicare would pay for the service if a claim were
submitted. Plaintiffs argue that it will be virtually impossible
to find a doctor willing to enter into such an agreement, given
the importance of Medicare to doctors' practices and the two-
year bar the statute imposes for entering into even a single
private contract.3 The Secretary concedes that very few
__________
3 Plaintiffs note that over 96% of practicing physicians receive
Medicare Part B reimbursement. Pl. Br. at 11-12. They also note
that to date, only 300 doctors nationwide have filed section 4507
doctors will be willing to opt out of Medicare, Oral Arg. Tr. at
22, and generally agrees that the two-year restriction "repre-
sents a substantial barrier to the receipt of contracted ser-
vices." United Seniors Ass'n., Inc. v. Shalala, 2 F. Supp. 2d
39, 41 (D.D.C. 1998).
Plaintiffs also reject the suggestion that the ABN proce-
dure provides a way to relieve the constraints imposed by
section 4507. They recognize that an agreement under an
ABN is not a "private contract" under section 4507, and
hence is not subject to its two-year bar. See 63 Fed. Reg.
58,814, 58,851 (1998). In theory this should mean that pa-
tients can obtain services they and their doctors consider
reasonable or necessary, even if Medicare ultimately does not,
by executing ABNs. But plaintiffs regard the ABN option as
unworkable. First, it does not apply to services categorically
excluded from Medicare. Second, plaintiffs contend that
under HCFA rules, doctors who routinely use ABNs to obtain
reimbursement for services Medicare deems unreasonable or
unnecessary are subject to penalties and sanctions. Thus,
plaintiffs do not view ABNs as a practical solution to the
problem created by section 4507.
Nor, plaintiffs contend, is it realistic to suggest that senior
citizens can avoid the restrictions of section 4507 by simply
opting out of Medicare Part B altogether. Notwithstanding
the government's repeated suggestion that "plaintiffs may
disenroll at any time" from Part B, see, e.g., HHS Br. at 3, 27,
28, 29, at oral argument it conceded there is no "meaningful
equivalent to Medicare" in the private market. Oral Arg. Tr.
at 18-19.4 Accordingly, opting out is hardly a viable way for
patients to bypass section 4507.
Plaintiffs' complaint charges that the restrictions imposed
by section 4507 violate the First, Fourth, Fifth, Ninth, Tenth
__________
contracts with the Secretary of Health and Human Services. Pl.
Reply Br. at 4 (citing 9 Medicare Rep. (BNA) 18 (May 1, 1998)).
4 See United Seniors, 2 F. Supp. 2d at 41 n.2 ("Medicare is, in
effect, the only primary health insurance available to people over
65. No private health insurance companies offer 'first dollar'
insurance to this group; they offer only supplemental insurance.").
and Fourteenth Amendments to the Constitution, as well as
the Spending Clause of Article I, section 8. Plaintiffs contend
those restrictions violate their liberty to contract privately for
health care services, violate their ability to maintain the
privacy of their medical information by requiring them to file
claims for all medical services, and violate their equal protec-
tion and due process rights by denying them the same liberty
to contract enjoyed by other citizens. They also contend that
section 4507 exceeds Congress' powers under the Spending
Clause, and invades the reserved powers of the States and
the people under the Tenth Amendment, by regulating health
care for which the federal government does not pay.
Critical to our analysis is that the injury plaintiffs assert is
to their ability to purchase services for which Medicare will
not itself pay, thus rendering them unable to obtain those
services on any terms. Oral Arg. Tr. at 4-6. The right they
assert is to contract for services they and their doctors
regard as necessary or even merely salutary, regardless
whether Medicare agrees. Section 4507 abridges this right,
they contend, by making it virtually impossible to find a
doctor willing to enter into a private contract with a Medicare
beneficiary. Plaintiffs made clear at oral argument, however,
that they disavow any claim to a constitutional right to pay
their doctors more than the Medicare fee limits for services
they can obtain through Medicare. Id.
III
The district court examined plaintiffs' constitutional claims,
rejected them on the merits, and granted summary judgment
for the Secretary. See United Seniors, 2 F. Supp. 2d at
42. We review the grant of summary judgment de novo.
Hunter-Boykin v. George Washington Univ., 132 F.3d 77, 79
(D.C. Cir. 1998). When we do so, we find we have no need to
reach the merits of plaintiffs' constitutional claims. After
careful examination and clarification of the Secretary's inter-
pretation of section 4507, we find that interpretation effective-
ly eliminates the injury--whether of constitutional magnitude
or not--that plaintiffs fear, and provides them with all the
relief they seek.
The Secretary contends that plaintiffs have simply misun-
derstood section 4507. The purpose of the section, she
argues, is to prevent doctors from coercing elderly patients
into paying more for Medicare-covered services than Medi-
care's fee schedules permit. HHS Br. at 10, 12. Consistent
with that purpose, the section--including its two-year bar--
applies only to services that Medicare would reimburse but
for the private contract. Id.; Oral Arg. Tr. at 51-52. If a
patient and doctor want to enter into a private contract for
such services, the doctor must wholly opt out of the system
for two years. HHS Br. at 14.
The Secretary stresses, however, that section 4507 does not
do what plaintiffs assert--that is, it does not impose restric-
tions on agreements to provide services for which Medicare
would not pay. Hence, if a doctor and patient agree with
respect to a service that would not be reimbursed by Medi-
care--either because it is categorically excluded or because it
is deemed unreasonable or unnecessary in the particular
case--then the agreement does not fall within section 4507
and the doctor is not subject to the two-year bar. HHS Br.
at 9-10, 18, 23; Oral Arg. Tr. at 48-49. The Secretary also
contends that plaintiffs have misunderstood the ABN proce-
dure which, she says, provides a workable way to handle
those charges as to which Medicare payment is uncertain.
HHS Br. at 23.
At oral argument, plaintiffs made clear that if section 4507
really says what the Secretary says it says, then their case is
at an end. Oral Arg. Tr. at 4-5, 59. Plaintiffs have no
interest, they aver, in obtaining the right to enter into
agreements to pay more for services they can obtain for less
under Medicare. Id. Rather, their interest--and the consti-
tutional right they assert--is in obtaining services they can-
not get under Medicare at any price. Id. at 6. The plaintiffs
are skeptical, however, that section 4507 really means what
the Secretary says it means--and equally skeptical that the
Secretary actually reads and applies it that way.
Plaintiffs' skepticism is not unjustified. The meaning of
section 4507 is hardly plain on its face. Moreover, because
HCFA did not promulgate formal regulations regarding the
section until ten days after the oral argument in this case, its
own interpretation could only be gleaned from memoranda
issued to Medicare carriers and testimony delivered to Con-
gress, of which Medicare beneficiaries may well have been
unaware. Nonetheless, as we discuss below, the Secretary's
interpretation is a reasonable interpretation of the less-than-
plain language of section 4507. In addition, the Secretary's
current interpretation, as foreshadowed in the briefs filed in
this case and expressed in the subsequent regulations, is
consistent with the position HCFA has taken since the section
was enacted. Under Chevron U.S.A. Inc. v. National Re-
sources Defense Council, Inc., if a statute is ambiguous we
must defer to an agency's reasonable interpretation of its
terms. 467 U.S. 837, 842-45 (1984); see United States v.
Haggar Apparel Co., 119 S. Ct. 1392, 1395 (1999). This is so
regardless whether there may be other reasonable, or even
more reasonable interpretations. See Serono Labs., Inc. v.
Shalala, 158 F.3d 1313, 1321 (D.C. Cir. 1998). Following the
injunction of the Supreme Court, we are required to accord
such deference here.
A
Section 4507 of the Balanced Budget Act does not clearly
indicate the kinds of services to which it applies. Paragraph
(1) of subsection (b) states that "[s]ubject to the provisions of
this subsection, nothing in this title shall prohibit a physician
or practitioner from entering into a private contract with a
Medicare beneficiary for any item or service ... for which no
claim for payment is to be submitted under this title...." 42
U.S.C. s 1395a(b)(1). This provision is the source of plain-
tiffs' apprehension, since it appears to apply to any service--
Medicare-reimbursable or not--for which no claim for pay-
ment is submitted.
But the introductory clause of paragraph (1) makes it
"[s]ubject to the provisions of this subsection." To under-
stand the scope of paragraph (1), therefore, we must examine
the balance of subsection (b). The key language is in para-
graph (2), which states that "[a]ny contract to provide items
and services to which paragraph (1) applies shall clearly
indicate ... that the medicare beneficiary has the right to
have such items or services provided by other physicians or
practitioners for whom payment would be made under this
title." 42 U.S.C. s 1395a(b)(2)(B) (emphasis added). The
Secretary argues that since "any" private contract under
section 4507 must indicate that the beneficiary has "the right"
to have the same services paid for by Medicare, section 4507
should be read as applying only to services that Medicare
would reimburse but for the parties' private contract. Al-
though we find the relationship between paragraphs (1) and
(2) less than plain, the Secretary's interpretation of section
4507 is at least a reasonable one.
B
Our parsing of the language of section 4507 leads us to
conclude that it is reasonable to read section 4507 as applying
only to private contracts for services that are reimbursable
under Medicare. Plaintiffs question, however, whether that
truly is the way HCFA reads section 4507. Although it is
unquestionably the view expressed in the Secretary's briefs in
this case, plaintiffs contend it has not previously been the
position of HCFA.
Even if the legal briefs contained the first expression of the
agency's views, under the appropriate circumstances we
would still accord them deference so long as they represented
the agency's "fair and considered judgment on the matter."
Auer v. Robbins, 117 S. Ct. 905, 912 (1997); see Association
of Bituminous Contractors, Inc. v. Apfel, 156 F.3d 1246,
1251-52 (D.C. Cir. 1998); Tax Analysts v. IRS, 117 F.3d 607,
613 (D.C. Cir. 1997). In this case, however, HCFA has
expressed similar views since Congress first enacted section
4507. Although until recently those views were expressed
only in the form of memoranda and congressional testimony,
"an agency need not promulgate a legislative rule setting
forth its interpretation of a statutory term for that interpreta-
tion to be entitled to deference." Association of Bituminous
Contractors, 156 F.3d at 1252. Moreover, although HHS'
past pronouncements have not been perfectly clear, an agen-
cy's interpretation of its own rules is "controlling unless
'plainly erroneous or inconsistent' " with them. Auer v. Rob-
bins, 117 S. Ct. at 911; see United States v. Stinson, 508 U.S.
36, 45 (1993). In this case, the agency's past and current
views are not inconsistent.
The Secretary first calls our attention to a program memo-
randum and fact sheet HCFA issued to all Medicare carriers
in November 1997. See HCFA, Program Memorandum,
Transmittal No. B-97-9 (Nov. 1997) (Joint Appendix ("J.A")
207-08). Consistent with the Secretary's position here, the
fact sheet describes section 4507 as applying to "private
contracts with Medicare beneficiaries to provide covered ser-
vices." Id. The document then expressly states that "[w]ith
respect to non-covered services, a private contract is unneces-
sary and section 4507 does not apply." Id. at 208. This
means, the fact sheet says, that "beneficiaries continue to be
able to pay for any services that Medicare does not cover out
of their own pockets ... without having to enter into a
private contract subject to the provisions of section 4507."
The HCFA fact sheet lists cosmetic surgery, hearing aids
and routine physical examinations as examples of "non-
covered" services. Although these services are all of the
categorically-excluded variety, the next paragraph of the fact
sheet states that a physician may also "furnish a service that
Medicare covers under some circumstances but which the
physician anticipates would not be deemed 'reasonable and
necessary' by Medicare in the particular case." Id.; see also
Oral Arg. Tr. at 53 (HHS counsel's explanation of "non-
covered" as including services not necessary in particular
case). If the beneficiary receives an ABN for such a service,
the fact sheet continues, "a private contract [under s 4507] is
not necessary to bill the beneficiary if the claim is denied."
J.A. 208.
The fact sheet concludes that when a physician and benefi-
ciary enter into a private contract to provide services "that
would otherwise be covered by Medicare," the physician must
" 'opt out' of Medicare for a two-year period." Id. The
phrase, "would otherwise be covered by Medicare," is not free
from ambiguity. Plaintiffs suggest, and worry, that it refers
to services that would be covered but for Medicare's conclu-
sion that they are not reasonable and necessary in the
particular case. Under that reading, services the doctor
believes are necessary but Medicare does not could only be
provided under section 4507 (with its two-year bar). But
such a reading would be inconsistent with the language
discussed in the preceding paragraph, which makes clear that
payment for a claim denied on the ground that the service
was not necessary does not require a section 4507 contract.
The Secretary, by contrast, interprets "would otherwise be
covered by Medicare" as meaning "covered but for the fact
that the parties have entered into a private contract." This
reading is consistent both with the rest of the fact sheet, and
with the Secretary's position that physicians must opt out of
Medicare only if they enter into contracts for services that
Medicare would reimburse but for those contracts them-
selves.5
__________
5 Another HCFA program memorandum, issued to all Medicare
carriers in January 1998 and specifically addressed to "the imple-
mentation of ... s 4507," is also consistent with this interpretation.
See HCFA, Program Memorandum, Transmittal No. B-97-17 (Jan.
1998) (J.A. 225-26) (stating that private contracts with their attend-
ant opt-out rules are not required for services: (1) that are "cate-
gorically exclude[d]" from Medicare; (2) that are "not covered
because, under Medicare rules, the service is never found to be
medically necessary to treat illness or injury"; or (3) for which
On February 26, 1998, the Administrator of HCFA submit-
ted a statement to the Senate Finance Committee intended to
"clarify" "substantial misunderstanding about what section
4507 of the Balanced Budget Act does." J.A. 254. Consis-
tent with the HCFA fact sheet just discussed, the Adminis-
trator stated that a private contract under section 4507 is one
for which the service "would be covered if a claim were
submitted" to Medicare, id. at 252, and that such a contract is
the only kind to which the opt-out rule applies, id. at 254. "A
physician does not have to opt out of Medicare for two years,"
she said, "in order to provide a non-covered service to a
Medicare beneficiary." Id. at 255. Nor does a physician
have to opt out when, employing the ABN procedure, the
doctor provides a service Medicare later determines was not
reasonable and necessary. Id. at 256.6
At oral argument, counsel for the Secretary advised that
HCFA was planning to issue formal regulations incorporating
the above-stated views. Those regulations were published on
November 2, 1998. See 63 Fed. Reg. at 58,901. Consistent
with the position recounted above, the explanatory preamble
__________
"Medicare denies the claim on the basis that the service was not
medically necessary" in the particular beneficiary's case).
6 The Administrator used prostate specific antigen tests (PSAs)
as an example to make her point. J.A. 256. Medicare currently
covers such tests only when used for diagnosis to evaluate a
symptom of a particular patient, and only when such use is reason-
able and necessary. Medicare will not pay for the tests when used
for screening patients across the board. "Therefore," the Adminis-
trator said, "a private contract is not needed when a beneficiary
wants a PSA test for screening purposes because it is not now a
covered service." Id. Likewise, the Administrator explained, a
physician may believe "that Medicare is likely to deny payment for
a certain diagnostic PSA (for example, when the patient wants to
have the test more frequently than Medicare would likely pay for
[it])." Id. In such circumstances, although an ABN should be
used, section 4507 does not apply. Id. at 256-57. See also Bal-
anced Budget Act of 1997, Pub. L. 105-33, s 4103, 111 Stat. 251, 362
(codified at 42 U.S.C. s 1395l(h)(1)(A)) (providing coverage for
screening PSA tests beginning in the year 2000).
states that "[t]he private contracting rules do not apply to ...
services that Medicare does not cover." Id. at 58,850. It
further states that when a physician "furnishes a service that
does not meet Medicare's criteria for being reasonable and
necessary, and the [physician] has furnished the beneficiary
with an ABN ... , there are no limits on what the [physician]
may charge the beneficiary.... [and] [t]he act of providing
an ABN does not then require that the [physician] opt-out of
Medicare...." Id. at 58,851.
On the basis of our examination of HCFA's announced
views, we conclude that the agency has consistently interpret-
ed section 4507 and its opt-out rules as applying only to
contracts for services that Medicare itself would reimburse.
C
Finally, we briefly address plaintiffs' contention that the
ABN procedure is not a realistic way to ensure patients'
access to services they or their doctors regard as necessary
but Medicare does not. Under the ABN procedure, before
providing a service the physician informs the patient that
Medicare may not pay, and obtains the patient's agreement to
pay on his or her own if Medicare denies the claim. See 42
U.S.C. s 1395u(l)(1)(C)(ii). As noted above, because an ABN
is not considered a private contract under section 4507, if
Medicare does not pay the doctor may receive payment from
the patient without being subject to the opt-out rule. See 63
Fed. Reg. at 58,851.7
Plaintiffs contend that the ABN option is illusory because
HCFA has a policy of sanctioning doctors who repeatedly use
ABNs for services they believe warranted but Medicare
regards as unnecessary and will not reimburse.8 The Secre-
__________
7 An ABN is neither utilized nor necessary for services categor-
ically excluded from Medicare, and section 4507 has no application
to such services. See J.A. 255-57 (statement of HCFA Administra-
tor).
8 Plaintiffs also contend that if their doctor is a "participating
physician" who bills Medicare directly, see supra note 1, or if the
tary vehemently denies having such a policy. HHS Br. at 24.
At least on their face, HCFA's pronouncements support the
Secretary since they expressly advise doctors to employ
ABNs in precisely those circumstances. Standard ABN
forms, for example, require a statement that the patient has
"been informed by my physician that he or she believes that,
in my case, Medicare is likely to deny payment." J.A. 94; see
also 42 C.F.R. s 411.408(f) ("[T]he physician must inform the
beneficiary ... that the physician believes Medicare is likely
to deny payment."). Similarly, a 1998 HCFA program memo-
randum explains that where a service is not covered by
Medicare because it is "never found to be medically neces-
sary," the physician may charge the patient without opting
out "only if he or she gives the beneficiary" an ABN. J.A.
225.9 These pronouncements would make no sense if HCFA
did not intend doctors to use ABNs for services they believe
Medicare would regard as unnecessary.
The preamble to HCFA's new regulations should also give
plaintiffs some comfort. It notes that ABNs may state that
__________
medical service they seek is one statutorily required to be provided
on an assignment basis, see, e.g., 42 U.S.C. s 1395l(h)(5)(C) (clinical
diagnostic laboratory tests), then the ABN procedure may not be
used. Although the language of the statutory ABN provision
appears to support this contention, see id. s 1395u(l)(1)(A), the
Secretary interprets other statutory provisions and HCFA regula-
tions to permit a doctor to obtain an ABN agreement in such
circumstances and to charge the patient if Medicare denies pay-
ment. HHS Br. at 25 n.5 (citing 42 U.S.C. s 1395pp; 42 C.F.R.
ss 411.402(a)(2), 411.404; HCFA, Medicare Carriers Manual
ss 7300.5, 7330.D).
9 Where the service is one Medicare never finds medically
necessary, the memorandum states that "no claim need be submit-
ted." J.A. 225. A claim "must be submitted," however, if the
service "is one which Medicare has determined is medically neces-
sary where certain clinical criteria are met, but is not medically
necessary where these criteria are not met." Id. In both cases, "if
Medicare denies the claim on the basis that the service was not
medically necessary, the physician or practitioner who has given the
advance beneficiary notice may bill the beneficiary." Id.
the physician "believes that the service will not be covered by
Medicare" and that the "act of providing an ABN does not
then require that the physician or practitioner opt-out of
Medicare so that he or she avoids being at risk of having a
penalty assessed...." 63 Fed. Reg. 58,851. And it closes
with an effort to assuage precisely the concern plaintiff
expresses here: "[P]hysicians and practitioners should not
hesitate to furnish services to Medicare beneficiaries when
the physician or practitioner believes that those services are
in accordance with accepted standards of medical care, even
when those services do not meet Medicare's particular and
often unique coverage requirements." Id.
It should not be missed, of course, that HCFA exempts
from this note of encouragement those services not "in accor-
dance with accepted standards of medical care." Id. This
qualifier may well explain some of the confusion. Although a
HCFA regulation does state that ABNs are not acceptable if
the "physician routinely gives this notice to all beneficiaries
for whom he or she furnishes services," 42 C.F.R.
s 411.408(f)(2)(i), the Secretary makes clear that this rule is
aimed at a doctor who "require[s] all his patients to sign
ABNs on a blanket basis in order to bill them for unwarrant-
ed procedures." HHS Br. at 24 (citing s 411.408) (emphasis
added). Needless to say, billing patients for unwarranted
procedures may well be subject to sanction, see generally 42
U.S.C. s 1320a-7(b)(6)(B), and plaintiffs do not urge other-
wise.
In sum, the evidence before us does not support the
assertion that HCFA interprets the ABN procedures in a
manner that denies plaintiffs access to services they regard
as reasonable or necessary. We have briefly addressed this
question because of plaintiffs' contention that it is linked to
the section 4507 issue. We should note, however, that the
ABN issue is analytically distinct from plaintiffs' facial chal-
lenge to the constitutionality of section 4507, since ABNs are
not private contracts under that section and are not governed
by it. To the extent plaintiffs feel HCFA enforces the ABN
statute and regulations in a manner inconsistent with the
agency's own pronouncements, they are of course free to
challenge such enforcement in a particular case.
IV
Because the Secretary's reading of section 4507 eliminates
the constitutional injury plaintiffs allege, and because we are
bound under Chevron to defer to that interpretation, the
order of the district court is affirmed.