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Federal Register / Vol. 86, No. 146 / Tuesday, August 3, 2021 / Proposed Rules
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Following the district courts decision in California v. Azar, we examined the statutory language and legislative history, and now conclude that the prohibition in section 1902a32 of the Act is better read to be limited in its applicability to Medicaid payments to a third party pursuant to an assignment, power of attorney, or other similar arrangement. In other words, the statutory prohibition is better viewed as an anti-reassignment provision that only governs assignment-like payment arrangements. We do not believe this provision should be interpreted as a broad prohibition on any and all types of Medicaid payment arrangements beyond those provided directly to Medicaid beneficiaries and providers or enumerated in the statutory exceptions.
As such, we propose to amend 447.10
to add a new paragraph i, which would incorporate similar language from paragraph g4 as a new provision describing who may receive payment, rather than as an exception to the statutory prohibition in section 1902a32 of the Act.
Specifically, 447.10i would specify that the payment prohibition in section 1902a32 of the Act and 447.10d does not apply to payments to a third party on behalf of an individual practitioner for benefits such as health insurance, skills training, and other benefits customary for employees, in the case of a class of practitioners for which the Medicaid program is the primary source of revenue.3
The text of the statute addresses only assignments and related payment arrangements wherein a providers right to claim and/or receive full payment for services furnished to Medicaid beneficiaries is transferred to a third party. The statute includes examples of the types of payment arrangements intended to be prohibited, under an assignment or power of attorney or otherwise. The general term or otherwise is listed following two specific and related phases. Statutory interpretation principles suggest that when general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding 3 We note that, to the extent state agencies utilize this option to deduct union dues, union dues may only be deducted from Medicaid payments with the affirmative consent of the practitioner; to do otherwise would be in violation of the First Amendment. See Janus v. Am. Fedn of State, Cty., and Mun. Emps., Council 31, 138 S.Ct. 2448, 2486
2018 Neither an agency fee nor any other payment to the union may be deducted from a nonmembers wages, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay..

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specific words. Sutherland Statutory Construction 47:17; Circuit City Stores, Inc. v. Adams, 532 U.S. 105 2001.
Accordingly, the language or otherwise is best read as referencing payments made under arrangements that are similar to an assignment and a power of attorney such that the reach of the prohibition under section 1902a32 of the Act does not extend to payment arrangements that are wholly distinct from such types of arrangements. Consistent with this interpretation, we are also proposing to amend 447.10a to include the phrase under an assignment or power of attorney or a similar arrangement. This change aligns the regulation with the applicable statutory language and our reading of that language, and creates a consistent framework for proposed new paragraph i.
Blacks Law Dictionary defines assignment in relevant part as the transfer of rights or property, and power of attorney as an instrument granting someone authority to act as agent or attorney-in-fact for the grantor. 4 Thus, the inclusion of these examples of the types of arrangements intended to be prohibited under section 1902a32 of the Act supports the conclusion that the statute was intended to address scenarios where the right to a providers Medicaid receivables or the right to submit claims on behalf of the provider are transferred to a third party.
Moreover, the introductory language in section 1902a32 of the Act specifies that no payment under the plan for any care or service furnished to an individual shall be made to anyone other than such individual or the person or institution providing such care or service. This prohibition applies only to payments for any care or service, which we interpret to prohibit full diversion of the right to claim and/or receive such payments to third parties absent an exception, but not to apply to partial deductions from payments at the request or with the consent of the provider, in order to make payments to third parties on behalf of the provider.
An examination of the statutory exceptions to the general prohibition also supports the conclusion that the prohibition under section 1902a32 of the Act does not extend to payment arrangements that are outside the 4 See Blacks Law Dictionary 11th ed. 2019; see also Merriam Webster, available at https
www.merriam-webster.com/dictionary/assignment defining the term assignment in the law as the transfer of property; Merriam Webster, available at https www.merriam-webster.com/
dictionary/power%20of%20attorney defining the term power of attorney as a legal instrument authorizing one to act as the attorney or agent of the grantor.

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category of payments with assignments or assignment-like arrangements. The excepted arrangements or transactions are all similar to assignments in that they involve third parties submitting claims directly to the state Medicaid agency for reimbursement or having the right to receive the full amount of all payments due to the provider for services furnished to Medicaid beneficiaries. More specifically, section 1902a32 of the Act contains several specific exceptions to the general principle of direct payment to individual practitioners. There are exceptions for payments for practitioner services where payment is made to the employer of the practitioner, and the practitioner is required as a condition of employment to turn over fees to the employer; payments for practitioner services furnished in a facility when there is a contractual arrangement under which the facility bills on behalf of the practitioner; reassignments to a governmental agency, through a court order, or to a billing agent; payments to a practitioner whose patients were temporarily served by another identified practitioner; and payments for a childhood vaccine administered before October 1, 1994. While these exceptions may appear to be largely unrelated, they all involve payment arrangements where third parties are submitting claims to the Medicaid agency and/or where the right to receive all of the payments due to a provider for services furnished to Medicaid beneficiaries is transferred to a third party.
The fact that the only types of transactions that are explicitly excepted by the statute are assignment-like transactions that involve the transfer to a third party of either a providers right to submit claims directly to the state and/or to receive all payments otherwise due a provider for services furnished supports our proposed interpretation that the scope of the statutory prohibition extends only to payments to a third party that involve similar types of arrangements. By contrast, partial deductions from Medicaid payments requested by a provider in order to make separate payment to a third party on behalf of the provider for benefits customary for employees does not involve third parties receiving direct payment from the state for care or services provided to Medicaid beneficiaries. Nor does this arrangement allow such third parties to pursue independent claims against the state for Medicaid reimbursement.
The legislative history of section 1902a32 of the Act supports our conclusion that the statutory text is best read as an anti-assignment prohibition.

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