209 F. Supp. 3d 98
D.D.C.2016Background
- Plaintiffs (Kort, Kovnat, Hepburn) exhibit cognitive impairment and seek Medicare coverage for beta‑amyloid PET scans (BA Scans) that can help exclude Alzheimer’s disease; BA Scans were FDA‑approved for that use.
- CMS issued a National Coverage Determination (NCD) denying Medicare coverage for BA Scans (except in limited clinical studies), concluding evidence was insufficient to show BA Scans improve health outcomes or inform patient management.
- Lilly (manufacturer of the Amyvid tracer) requested national Medicare coverage after FDA approval; CMS held public comment periods, convened MEDCAC, issued a Proposed Decision Memo, and then the final Decision Memo denying coverage.
- Plaintiffs sued under the Administrative Procedure Act (APA), arguing CMS’s coverage standard (requiring evidence of improved health outcomes/disease management even for diagnostic tests) conflicts with the Medicare Act and is inconsistently applied (especially compared to CMS’s prior coverage of FDG PET scans).
- The district court reviewed the administrative record under Chevron and the arbitrary‑and‑capricious standard and concluded CMS’s reliance on health‑outcomes/patient‑management evidence was permissible under the Medicare Act but that CMS failed to adequately explain its disparate treatment of BA Scans vs. FDG PET.
- Remedy: cross‑motions for summary judgment granted in part and denied in part; the NCD was remanded to CMS for further proceedings limited to the identified defect (no vacatur of the NCD).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Medicare Act precludes CMS from requiring diagnostic tests to show improved health outcomes/disease management | The statute’s disjunctive “diagnosis or treatment” means diagnostic value alone must suffice for coverage | “Reasonable and necessary” is broad; CMS reasonably may consider outcomes/management when deciding coverage | Court: Chevron Step 1 — statute does not bar CMS from considering outcomes/management; agency discretion upheld |
| Whether CMS’s coverage standard (requiring outcomes/management evidence) is arbitrary and capricious | CMS misapplied its standard inconsistently and treated BA Scans differently than similar diagnostics | CMS relied on relevant literature and expert panels; its standard is supported by reasoned analysis | Court: CMS’s overall standard is permissible, but application here was arbitrary in at least one respect (see FDG PET comparison) |
| Whether CMS treated similarly situated tests (FDG PET) inconsistently without reasoned explanation | FDG PET was covered despite lack of studies showing impact on outcomes; denying BA Scans on that basis is arbitrary | FDG PET is a fundamentally different technology (measures metabolism vs amyloid burden) and prior expert consensus supported FDG PET | Held: CMS failed to provide an adequate explanation reconciling coverage of FDG PET with denial of BA Scans; arbitrary and capricious → remand required |
| Whether the Decision Memo is internally inconsistent (e.g., acknowledges negative BA Scan "virtually excludes" Alzheimer’s yet denies coverage) | Concession that a negative scan ‘‘virtually excludes’’ Alzheimer’s implies diagnostic value that should affect management/outcomes and thus require coverage | Statements were hypothetical/qualified; CMS examined harms and concluded evidence did not show improved outcomes/management | Held: No internal inconsistency sufficient to overturn the decision; CMS’s qualified statements do not compel coverage given record conclusions |
Key Cases Cited
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (framework for judicial review of agency statutory interpretations)
- Heckler v. Ringer, 466 U.S. 602 (1984) (agency discretion in determining Medicare "reasonable and necessary")
- Williams Natural Gas Co. v. FERC, 943 F.2d 1320 (D.C. Cir. 1991) (broad delegation where statute does not define "reasonable" or "necessary")
- Hays v. Sebelius, 589 F.3d 1279 (D.C. Cir. 2009) (interpretation of Medicare coverage language and limits on Secretary's authority)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary and capricious standard requires reasoned explanation)
- County of Los Angeles v. Shalala, 192 F.3d 1005 (D.C. Cir. 1999) (agency must adequately explain treating similar situations differently)
- Burlington N. & Santa Fe Ry. Co. v. Surface Transp. Bd., 403 F.3d 771 (D.C. Cir. 2005) (arbitrary to apply different standards to similarly situated entities without reasoned explanation)
- Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971) (post hoc rationalizations are inadequate to sustain agency action)
- Allied‑Signal, Inc. v. NRC, 988 F.2d 146 (D.C. Cir. 1993) (remand is appropriate where agency decision has legal error but vacatur discretionary)