Saint Francis Medical Center v. Alex M. Azar II

894 F.3d 290
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 29, 2018
Docket17-5098
StatusPublished
Cited by16 cases

This text of 894 F.3d 290 (Saint Francis Medical Center v. Alex M. Azar II) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Saint Francis Medical Center v. Alex M. Azar II, 894 F.3d 290 (D.C. Cir. 2018).

Opinions

Concurring opinion filed by Circuit Judge Kavanaugh.

Katsas, Circuit Judge:

In 2013, the Secretary of Health and Human Services promulgated a regulation that bars hospitals from seeking additional Medicare payments by challenging factual determinations that are relevant to the payment year at issue, but that were made many years earlier. By its terms, the 2013 regulation applies only to reopenings, which are proceedings through which various administrative actors within HHS may reconsider their own prior decisions. We consider whether the regulation also applies to appeals from one set of administrative actors to another.

I

A

The Medicare program provides federally-funded health insurance to qualifying elderly and disabled individuals. 42 U.S.C. § 1395 et seq. As originally enacted, Medicare paid hospitals for any "reasonable costs" of providing covered services to beneficiaries. See Methodist Hosp. of Sacramento v. Shalala , 38 F.3d 1225, 1227 (D.C. Cir. 1994). In 1983, however, Congress created a new Prospective Payment System, under which hospitals are paid a fixed amount for each beneficiary treated, regardless of their actual costs. See id.

Prospective payment amounts are determined annually, under a statutory formula that depends in part on base rates known as "standardized amounts." See 42 U.S.C. § 1395ww(d)(2)(C). In turn, the standardized amounts depend in part on the "allowable operating costs per discharge of inpatient hospital services." See id. § 1395ww(d)(2)(A). Although prospective payment amounts are adjusted over time in various ways, the standardized amounts themselves are not. See id. § 1395ww(d)(3). Those amounts were calculated in 1983, based on hospitals' cost-reporting data from 1981. See Prospective Payments for Medicare Inpatient Hospital Services, 48 Fed. Reg. 39,752, 39,763 -67 (Sept. 1, 1983). To this day, therefore, Medicare payments for inpatient services depend in part on factual determinations derived from 1981 data and embedded in 1983 calculations, including the calculation of "allowable operating costs per discharge."

In the first instance, decisions about how much to pay individual hospitals are made by fiscal intermediaries (now called "Medicare administrative contractors") acting on behalf of the Centers for Medicare & Medicaid Services ("CMS"), the component *292within HHS that administers Medicare for the Secretary. See 42 U.S.C. § 1395h ; Sebelius v. Auburn Reg'l Med. Ctr. , 568 U.S. 145, 150, 133 S.Ct. 817, 184 L.Ed.2d 627 (2013). At the end of every year, participating hospitals submit a cost report to an intermediary, which reviews the report, determines appropriate payments for the services rendered, and then issues a Notice of Program Reimbursement. See id.

A dissatisfied hospital has two ways to challenge such an annual reimbursement decision. First, under the Medicare Act, the hospital may appeal as of right to the Provider Reimbursement Review Board ("PRRB" or "Board"), an administrative tribunal appointed by the Secretary, within 180 days of receiving notice of the fiscal intermediary's final decision. 42 U.S.C. § 1395oo (a)(3). After an adverse PRRB decision, a hospital may seek further review by the Secretary and then by a federal district court. See id. § 1395oo (f)(1). Second, under HHS regulations, a hospital may request the "reopening" of a "Secretary determination, a contractor determination, or a decision by a reviewing entity." 42 C.F.R. § 405.1885(a)(1). Such a request must be received "no later than 3 years after the date of the determination or decision that is the subject of the requested reopening." Id. § 405.1885(b)(2)(i). Reopenings are considered by the entity whose decision is at issue. See id. § 405.1885(a)(1). The decision whether to reopen is purely discretionary, and it thus "is not subject to further administrative review or judicial review." Id. § 405.1885(a)(6).

B

A recurring issue under this scheme has been whether a hospital, in the course of pursuing a timely-filed reopening or PRRB appeal, may contest so-called "predicate facts"-factual determinations that are relevant to the payment year at issue, but that were made in earlier years. The Secretary has argued that the three-year limitations period in the reopening regulation bars hospitals from challenging-in either reopenings or appeals to the PRRB-any predicate facts determined more than three years before the reopening or the appeal was begun.

We addressed such a contention in Kaiser Foundation Hospitals v. Sebelius , 708 F.3d 226 (D.C. Cir. 2013). Although Kaiser involved an appeal to the PRRB, we rejected the Secretary's argument under the plain terms of the reopening regulations in effect at the time.

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Cite This Page — Counsel Stack

Bluebook (online)
894 F.3d 290, Counsel Stack Legal Research, https://law.counselstack.com/opinion/saint-francis-medical-center-v-alex-m-azar-ii-cadc-2018.