[00:00:01] Speaker 01: Case number 16 is 5255, Alina Health Services doing business as United Hospital, doing business as Unity Hospital, doing business as Abbott Northwestern Hospital at L Appellants versus Thomas E. Price. [00:00:18] Speaker 01: Ms. [00:00:18] Speaker 01: Webster for the Appellants, Ms. [00:00:20] Speaker 01: Marcus for the Appellate. [00:01:02] Speaker 04: Miss Webster, good morning. [00:01:05] Speaker 04: Good morning. [00:01:07] Speaker 04: My name is Stephanie Webster. [00:01:08] Speaker 04: I represent the appellate hospitals that are before this court again due to the continued procedural irregularities of the Secretary's reversal on Part C patient days and the Medicare Part A disproportionate share hospital payment calculation. [00:01:24] Speaker 02: Before you get started, can I ask you just so I understand how broad this case is. [00:01:30] Speaker 02: We're dealing with the 2012 year, right? [00:01:35] Speaker 02: Correct. [00:01:36] Speaker 02: Rulemaking that takes effect in 2014, what years are going to be affected by this decision? [00:01:45] Speaker 02: Just 2012 or up to 2014 and what of those years are left that haven't been calculated? [00:01:53] Speaker 04: Sure, I see that there are three different categories. [00:01:57] Speaker 04: There's before 2004, which is governed by the Northeast Hospital case, 2013 and forward governed by the prospective rule, and then there's 2004 to 2013. [00:02:09] Speaker 02: Are the pre-2004 still being disputed? [00:02:14] Speaker 02: not to my knowledge. [00:02:16] Speaker 02: So we're beyond 2004. [00:02:17] Speaker 02: We are beyond 2004. [00:02:19] Speaker 02: How about from 2004 to when the 2013 rulemaking takes effect? [00:02:24] Speaker 04: Right, that is the subject of the dispute here. [00:02:28] Speaker 04: How many of those years? [00:02:31] Speaker 04: Nine years, fiscal year 2005 through 2013. [00:02:35] Speaker 05: So just to clarify, because they said they didn't actually [00:02:42] Speaker 05: They had the 2007 technical amendment rules. [00:02:46] Speaker 05: They said, oops, we forgot to actually implement the regulatory change that we announced in 2004. [00:02:52] Speaker 05: So between 2004 and 2007, though, were they counting the Part C individuals in their dish calculations or not? [00:03:01] Speaker 04: There's a mix between 2004 and 2007. [00:03:04] Speaker 04: There was actually a regulatory change made in 2004 to remove the word covered from the regulation. [00:03:09] Speaker 04: The agency did not begin to implement the regulatory change until much later and actually it wasn't until 2009 that the hospitals here initiated the initial litigation because it wasn't until then that the initial [00:03:24] Speaker 04: fractions reflecting the policy were issued. [00:03:28] Speaker 05: So that actually all the way up to 2009, up to 2009, they were continuing to compute the fraction without counting the Part C individuals in the Medicare fraction? [00:03:42] Speaker 04: Correct. [00:03:42] Speaker 04: In 2009, the agency first issued its Part A SSI fractions for the 2007 federal fiscal year. [00:03:54] Speaker 04: The core question here is whether the agency can re-adopt the same Medicare payment standard from the now vacated 2004 rule without notice and comment rulemaking for periods prior to the 2013 prospective only rulemaking that we just discussed. [00:04:10] Speaker 04: The answer does not turn on whether the 2014 issuance itself is a legislative or interpretive rule or even a rule at all. [00:04:18] Speaker 04: The special notice and comment rulemaking provision of the Medicare Act, different in scope from the APA's, requires notice and comment to change a substantive legal standard governing payment either by rule requirement or statement of policy. [00:04:32] Speaker 04: In addition, the APA requires notice and comment to depart from the pre-2004 regulation that was reinstated by the vacator of the 2004 rule, and that rule includes only those days covered and paid under the Part A fee-for-service program, a category that does not include Part C Medicare Advantage plan days. [00:04:58] Speaker 04: The Medicare, the plain language, the structure, and the legislative history of the Medicare Act's rulemaking provision require notice and comment here. [00:05:07] Speaker 04: 42 USC 1395 HHA 2, as I said, requires notice and comment for any rule requirement or other statement of policy that establishes or changes a substantive legal standard governing payment. [00:05:21] Speaker 04: When Congress enacted that provision, it incorporated the good cause exception for notice under the APA, but did not incorporate the APA's interpretive rule exception. [00:05:33] Speaker 04: And the text of that section expressly contemplates that an interpretive rule can make a change in substantive legal standard. [00:05:43] Speaker 00: In particular... So how does adjudication fit into this, then? [00:05:47] Speaker 00: That's one of the things the government relies on. [00:05:49] Speaker 00: They can do this by adjudication. [00:05:53] Speaker 04: Sure. [00:05:54] Speaker 04: The government's position is that the 2014 issuance was the first step in adjudication. [00:06:01] Speaker 04: So not even the government can sense that an adjudication has occurred here. [00:06:05] Speaker 04: Under the Medicare Act, [00:06:10] Speaker 04: in order to establish or change the standard, the substantive legal standard governing payment, notice and comment rulemaking is required. [00:06:18] Speaker 04: So our position would be that adjudication would not be proper here. [00:06:25] Speaker 05: Okay. [00:06:25] Speaker 05: Sorry, so I mean, do we need to even address A2, even A4 in this case, the requirement that if they essentially overshoot in a prior regulation, [00:06:39] Speaker 05: It's not a non-logical outgrowth. [00:06:42] Speaker 05: They have to do that. [00:06:43] Speaker 05: It's incumbent rulemaking. [00:06:46] Speaker 04: Our position is exactly that, that 1395 HHA 4 requires that the initial rule invalidated for a failure of logical outgrowth needs to be treated as a proposed rule. [00:07:02] Speaker 04: and that it can't take effect until a further opportunity for comment. [00:07:07] Speaker 05: So, provided that provision, we don't have to interpret what substantive legal standard means or address the adjudication question, if that one governs? [00:07:17] Speaker 04: Correct. [00:07:18] Speaker 04: That would be correct. [00:07:22] Speaker 04: And that is exactly the provision that the Atlanta One Court was looking at when it said that, but that the Medicare statute is similar to the APA hardly means it is identical and the government has presented no reason to depart from the plain meaning of the text. [00:07:39] Speaker 04: The Atlanta One Court was evaluating that section and deciding whether there was harmless error and the proper remedy in Atlanta One. [00:07:51] Speaker 04: The legislative history, of course, to the Medicare Act also supports a requirement of notice of comment here. [00:07:57] Speaker 04: It was designed to fix a situation where the APA was not requiring enough rulemaking. [00:08:03] Speaker 04: Congress wanted to broaden the requirement to publication as regulations of significant policies. [00:08:13] Speaker 05: How do you define substantive legal standard? [00:08:16] Speaker 04: Well, a substantive legal standard is not defined in the statute, but if you look at the entirety of that provision and the structure of the statute, you see that it's different from an APA legislative rule. [00:08:32] Speaker 04: It's not dependent on form, because the statute says it could be a rule, a requirement, or a statement of policy. [00:08:39] Speaker 04: and it's irrelevant how closely tied the standard is to statutory language or regulatory language. [00:08:46] Speaker 04: In a case before the district court that actually did not assume that the APA and Medicare Act standards were the same, the district court called it a standard deployed in making a decision, and we think that that approach makes good sense. [00:09:05] Speaker 05: Well, it's not just any, it's got to be a substantive standard. [00:09:09] Speaker 05: Given the state of APA law at the time this was adopted, how do we know Congress didn't mean by using that language to capture the difference between legislative and interpretive rules? [00:09:20] Speaker 04: Well, I think we know that from, again, from looking at the language of 1395 HHA 2, which indicates that a rule [00:09:29] Speaker 04: requirement or other statement of policy that establishes or changes a substantive legal standard triggers the notice of comment requirement. [00:09:42] Speaker 05: It must be a substantive legal standard rule or substantive legal standard requirement. [00:09:47] Speaker 04: Right, but it can come in the form of a rule, either interpret or legislative, or it could come in the form of a requirement of some sort, irrespective of, oh, sorry, excuse me. [00:09:56] Speaker 02: Or a procedural legal standard. [00:09:59] Speaker 02: I mean, to me, substantive, the opposite of substantive usually is procedural. [00:10:05] Speaker 04: That's correct. [00:10:08] Speaker 04: You could view substantive as being the opposite of procedural, although I think there may be some situations where [00:10:16] Speaker 04: what the agency might construe as procedural would have the effect on a substantive legal standard that could therefore trigger this. [00:10:24] Speaker 02: That's not the case we have here, of course, because we don't think that... It seems to me a calculation is substantive, not procedural. [00:10:31] Speaker 02: I suppose somebody could argue that a calculation, the fractions we're dealing with [00:10:36] Speaker 02: is a procedure you use, but it seems to me that it is a calculation, a substantive standard used to figure out payment for services. [00:10:47] Speaker 04: Right. [00:10:48] Speaker 04: Right. [00:10:48] Speaker 04: And we think it's helpful to look at the Northeast Hospital case on this, which found that altering the method for calculating the fractions, the dish fractions, that is, changes the legal consequences of treating low-income patients. [00:11:04] Speaker 04: So we think at the very least that finding [00:11:06] Speaker 04: Northeast Hospital would suggest that this is a substantive legal standard here. [00:11:14] Speaker 04: And beyond the Medicare Act, we contend that the Administrative Procedure Act also requires notice and comment rulemaking. [00:11:22] Speaker 04: The 2014 issuance, which includes Part C days not paid under the Part A fee-for-service program, is inconsistent with the reinstated pre-2004 regulation. [00:11:37] Speaker 00: We don't need to reach that if we agree with you on the Medicare Act though, correct? [00:11:41] Speaker 02: Correct. [00:11:45] Speaker 00: But several courts have not agreed with you on the Medicare Act. [00:11:48] Speaker 00: How do you explain that? [00:11:52] Speaker 00: Missing the text? [00:11:54] Speaker 04: It's interesting. [00:11:58] Speaker 04: I mean, I think the other courts really haven't taken a deep dive into the statutory text and have [00:12:03] Speaker 04: One assumes that they're the same, and then the other cites the one that assumed that they're the same, and so on and so on. [00:12:10] Speaker 04: And so I do think that this issue is increasingly important after mortgage bankers. [00:12:18] Speaker 04: I think that there will be an increased focus in the Medicare context on what this provision really means. [00:12:26] Speaker 05: Do you want to briefly address the jurisdictional issue at some point that they raised about the board's [00:12:33] Speaker 05: Yes, indeed. [00:12:34] Speaker 05: What happens if the board makes the decision you asked, so you have your final board action, but if it were a wrong-headed decision by them? [00:12:42] Speaker 05: I know you don't think it is, but assume the board, just assume in a hypothetical, the board grants expedited judicial review, but does it for a reason that is just wrong? [00:12:52] Speaker 04: Well, our view is that the Secretary's Provider Reimbursement Review Board, and as its name suggests, it's a board of reimbursement experts, including non-lawyers. [00:13:03] Speaker 04: believe that strongly that the statute should be read to allow review regardless of whether that decision was correct. [00:13:11] Speaker 04: That no authority determination has been delegated to the board and itself triggers jurisdiction, just as a failure of that board to make a decision on its own authority would trigger the availability of expedited judicial review. [00:13:26] Speaker 05: So do you agree or disagree with courts that have said that [00:13:30] Speaker 05: courts can review the board's determination that it lacks authority to decide something in trans-expedition review. [00:13:38] Speaker 04: I disagree, but that question doesn't even need to be reached because here it's so clear that the board lacked authority to review the procedural validity of the 2014 issuance. [00:13:51] Speaker 05: And what's the basis for saying we don't have the authority to review that question? [00:13:55] Speaker 05: The statute says it's the final decision of the secretary. [00:13:59] Speaker 05: And so we can normally review final decision agency action, final decision subject to judicial review. [00:14:08] Speaker 04: The statute actually says that the the provider shall have a right and this the statutes in the government's addendum at two That they'll have that the providers shall have a right to obtain judicial review of any action which involves a question of law or regulation Relevant to the matters and controversy whenever the board determines that it's without the authority to decide the question and then subsequent to that decision is [00:14:33] Speaker 04: the providers or hospitals are entitled to review of the matters in controversy and not just the decision as to whether there was authority. [00:14:44] Speaker 02: Do you have a position on whether HHS under F1 can even obtain judicial review of the PRRB? [00:14:55] Speaker 02: I mean, the way I read this, providers shall have the right to obtain judicial review. [00:15:00] Speaker 02: It doesn't say anything about the secretary. [00:15:02] Speaker 02: Correct. [00:15:02] Speaker 04: The secretary does not have a right to judicial review of the decision of the board. [00:15:08] Speaker 02: The secretary here is saying, don't even continue with this case. [00:15:13] Speaker 02: Wait until Alina 1, 2, or 3, whatever it is, comes before you. [00:15:19] Speaker 02: And they're without standing, as far as I can see, to even ask us to [00:15:29] Speaker 02: review the PRRB. [00:15:32] Speaker 02: I agree. [00:15:34] Speaker 04: The statute doesn't provide for the secretary to have any ability to review a decision by the Provider Reimbursement Review Board as to its own authority. [00:15:42] Speaker 05: But that would put us in a conflict with the Seventh and Ninth Circuits, right? [00:15:45] Speaker 04: It would, yes. [00:15:46] Speaker 04: But there isn't a need to make that decision here. [00:15:48] Speaker 04: This case can be decided on the propriety of the determination that the board lacked authority. [00:15:57] Speaker 04: Congress's decision to provide an expedited [00:16:01] Speaker 04: route to federal court is entirely consistent with its other decision to adopt special procedural protections regarding Medicare policies. [00:16:09] Speaker 04: There's an overall concern about hospitals' ability to plan with very limited budgets and have certainty as to the rules of the road and what's a massive Medicare program in which very minute changes can have a tremendous impact on hospitals and therefore their communities and their patients. [00:16:34] Speaker 04: If there are no further questions, I will reserve the remainder of my time for a very brief rebuttal. [00:16:41] Speaker 02: Well, we'll give you some more time. [00:16:43] Speaker 02: Thank you. [00:16:45] Speaker 02: Ms. [00:16:45] Speaker 02: Marcus? [00:16:50] Speaker 03: Thank you, Your Honor. [00:16:51] Speaker 03: I'm Stephanie Marcus from the Department of Justice, and I represent Appellee Thomas Price, Secretary of Health and Human Services. [00:16:59] Speaker 03: In this case, the district court got the case right on the merits, but it lacked jurisdiction to do so. [00:17:05] Speaker 03: And here, there is, as both the Seventh and Ninth Circuit have held, there is jurisdiction for this court to review the board's jurisdictional determination. [00:17:18] Speaker 03: And it's not a question of whether the government has standing to raise it respectfully. [00:17:24] Speaker 03: Because it's a matter of the district court's jurisdiction, it's a threshold issue that the court is required to reach. [00:17:33] Speaker 03: When the providers file for judicial review under 1395-00, they are seeking review of the board's [00:17:43] Speaker 03: Here it's determination of that this case was appropriate for expedited judicial review and it would include what normally it would include what was certified for expedited judicial review, but [00:17:59] Speaker 03: If that determination is in error, there is no final decision on the merits here for this court to review. [00:18:06] Speaker 05: We can have erroneous final decisions, even if it's erroneous. [00:18:10] Speaker 03: That happens all the time. [00:18:12] Speaker 03: The EJR does make it a final decision within OO. [00:18:16] Speaker 03: That's right. [00:18:17] Speaker 03: And that's actually what gives this court authority to review the PRRB's determination. [00:18:23] Speaker 03: Here, though I heard counsel relying on the challenge to the 2012 fractions as the basis for expedited judicial review, that's not what they were seeking below. [00:18:39] Speaker 03: If you look at their petition for expedited judicial review, they were alleging that the Secretary was still [00:18:48] Speaker 03: basically applying the 2004 regulation that had been vacated by this court in Alena 1. [00:18:55] Speaker 03: And that question, there was the board erred by saying [00:19:04] Speaker 03: it expedited judicial review was proper because it had no authority to hold the validity of that regulation. [00:19:11] Speaker 03: That regulation was already invalidated. [00:19:13] Speaker 03: So there was no binding regulation in effect on the board. [00:19:16] Speaker 05: Did the board have the authority, had it gone forward with this proceeding, to conclude [00:19:26] Speaker 05: the Medicare Part C individuals should not be included in the fraction. [00:19:32] Speaker 05: Do they have the authority to make that decision? [00:19:35] Speaker 03: The board had the authority to make that decision. [00:19:38] Speaker 03: It would have been wrong for all of the reasons we've given on the merits in our brief about what the meaning of entitled to benefits under Part A means, what [00:19:49] Speaker 05: So it could ignore the 2004 rule and the 2013 rule, which I think was ineffective at that point. [00:19:55] Speaker 03: Well, it would have to. [00:19:57] Speaker 03: This Court had vacated the 2004 rule. [00:20:01] Speaker 03: So the Secretary, as our declaration in the Joint Appendix shows, the Secretary did not rely on that rule following this Court's decision. [00:20:11] Speaker 03: Once the government didn't seek further review of this Court's decision in a line of one, [00:20:18] Speaker 05: the secretary was not relying on that rule, but this court... Could the board have said in this case, back those Part C folks out of the Medicare fraction, notwithstanding the fact that the 2013 rule was out there as well? [00:20:35] Speaker 03: Yes, because that rule is prospective only. [00:20:39] Speaker 05: So they could have adopted the statutory interpretation, notwithstanding that the secretary had adopted in 2013 the opposite statutory [00:20:47] Speaker 03: Well, I think actually your questions are showing why the court likes jurisdiction in this case and why the proper case to have this reviewed is a line of one on the remand. [00:20:59] Speaker 03: Because what would have happened in that situation is if the board had held that, the board would have ruled one way or the other and had the authority to, then that's subject to review by the administrator. [00:21:10] Speaker 03: And in this particular case, you actually have an administrative decision that you can look at [00:21:16] Speaker 03: on the exact same issue, but it wasn't in this case. [00:21:20] Speaker 03: And the Medicare exhaustion requirements are extremely important, and the reason for that is so that this court will have a record to review, and the way this came up, there isn't a decision in this case. [00:21:35] Speaker 03: However, because it's the same plaintiffs, these are the same plaintiffs as in a line of one, all of these plaintiffs in this case were also in a line of one, and it's the same time period, [00:21:47] Speaker 03: Your Honor, if the board had decided that the administrator would have issued a decision just like we have in the record here, and that would be, but the providers would have the right to seek court review of that decision. [00:22:04] Speaker 03: And that's why the district court was right on the merits about here, under this court's decision in Northeast, which actually stated that [00:22:16] Speaker 03: prior to 2004, the secretary's regulations did not address the treatment of Part C. So there was no legislative rule prior to 2004. [00:22:28] Speaker 03: And then you combine that with a line of one where the rule was vacated, but this court reversed the district court order requiring the Part C days [00:22:39] Speaker 03: to be taken out and allowing the agency to look at the issue afresh. [00:22:45] Speaker 03: And so we would submit that the administrator's decision is reasonable, the secretary is perfectly under this court's precedence. [00:22:55] Speaker 03: The secretary can proceed by adjudication, does not have to engage in notice and comment rulemaking, but this case nonetheless should be dismissed for a lack of jurisdiction. [00:23:05] Speaker 05: What is your answer to the Medicare provision [00:23:09] Speaker 05: Act provision that says when you've done a regulation, whether you had to or not, once you've done a regulation and it overshoots, it's not a logical outgrowth, then you cannot proceed until you do further notice and comment rulemaking. [00:23:25] Speaker 03: Well, I think you cannot have the kind of legislative rule without proceeding by notice and comment. [00:23:32] Speaker 05: Isn't that what it says? [00:23:32] Speaker 05: If the Secretary publishes a final regulation that includes a provision that is not a logical outgrowth, [00:23:39] Speaker 05: The provision shall be treated as proposed and not take effect until there's further opportunity of public comment. [00:23:45] Speaker 05: It doesn't have any adjectival limitations on which final regulations. [00:23:51] Speaker 03: But it doesn't preclude adjudication, and it doesn't preclude the secretary from... It does. [00:23:55] Speaker 05: It says you have to have further opportunity for public comment and a publication of the provision again in a final regulation. [00:24:01] Speaker 05: I don't know how that's consistent with adjudication. [00:24:04] Speaker 03: that's before having a legislative rule that would have the effect of a rule. [00:24:09] Speaker 03: It's certainly the secretary, and I think that this court, clearly in a line of one, agreed with that by saying that the district court there erred by requiring the secretary to take the Part C days out. [00:24:23] Speaker 05: Well, we could have put note five at the end of that decision, which raised this very provision and said that they appear to be correct, actually, about that. [00:24:34] Speaker 05: So I have that question. [00:24:35] Speaker 05: The second one is even if you can do adjudication, can you do, it's one thing to say a formal adjudication that creates a record and explanation as opposed to what here is. [00:24:47] Speaker 05: It's loosely an informal adjudication. [00:24:49] Speaker 05: It appears to be a mathematical computation. [00:24:51] Speaker 05: There's no explanation for anything. [00:24:53] Speaker 03: Your Honor, that is exactly why this Court should dismiss for lack of jurisdiction, is that the Secretary was precluded from making that very record. [00:25:02] Speaker 03: The Secretary could have done exactly the same thorough and [00:25:08] Speaker 03: discussion of the issue as it did in Alina 1, had the board properly understood that it had authority to address the plaintiff's claims. [00:25:18] Speaker 03: So when we say dismissed for lack of jurisdiction, it just means remanded to the board, and it would go through the normal administrative process. [00:25:27] Speaker 03: And plaintiffs here, in this particular case, because the plaintiffs here are all parties in Alina 1, [00:25:34] Speaker 03: They have had the opportunity to comment and to object and to submit their arguments at the agency. [00:25:43] Speaker 05: The comment isn't just for the parties, it's for the public. [00:25:45] Speaker 03: That's right. [00:25:46] Speaker 03: If it's going to be a rule of general applicability, and it's going to apply to more than just the plaintiffs. [00:25:52] Speaker 03: I mean, here, what they're challenging applies only to them and only for one year. [00:25:58] Speaker 03: And so that's not anything like a new policy or rule or it is so. [00:26:05] Speaker 05: And so your position is that you can do a substantive [00:26:11] Speaker 05: legal standard that determines the payment for services through the type of adjudication you did here, or would you agree it has to be a formal adjudication? [00:26:22] Speaker 05: The adjudication can be done. [00:26:26] Speaker 03: What was done here was not the creation of a substantive legal standard. [00:26:33] Speaker 03: But it is actually a part of an adjudication. [00:26:37] Speaker 03: The adjudication starts with the notice of payment [00:26:42] Speaker 03: determination by the contractor and the agency determines the Medicare fraction, then the contractor determines the Medicaid fraction, they then determine whether the hospital is entitled to a disproportionate share adjustment, and if so, how much? [00:26:59] Speaker 03: And then the providers have the right to appeal that, or they have the right to appeal it. [00:27:04] Speaker 05: But they want to go back to that early step where you say the secretary computed the Medicare fraction. [00:27:10] Speaker 03: And that's a substantive legal standard. [00:27:13] Speaker 03: With all due respect, Your Honor, it's not within the substantive as this court, albeit not in a holding, but in Monmouth, it indicated that there's [00:27:26] Speaker 03: There is an exception for interpretive rules in the Medicare statute as well. [00:27:36] Speaker 00: Where is that in the text of the statute, though? [00:27:38] Speaker 00: That's just not there. [00:27:40] Speaker 03: It's the words of the substantive legal standard. [00:27:44] Speaker 03: The words substantive legislative are used interchangeably, and courts have held that. [00:27:52] Speaker 00: Interpretive is usually substantive, too. [00:27:56] Speaker 00: I don't view those as being it's either substantive or interpretive. [00:28:02] Speaker 00: I don't view those as opposite. [00:28:06] Speaker 00: It can be an interpretive rule that interprets a substantive standard and therefore potentially changes the substantive legal standard. [00:28:20] Speaker 00: Where am I missing? [00:28:22] Speaker 03: I think here [00:28:25] Speaker 03: the legal standard governing the scope of benefits or payment for services is not an individual computation of one that applies only to one. [00:28:40] Speaker 00: But it's broader than that, isn't it? [00:28:42] Speaker 00: I mean, it's to say that these days will count. [00:28:47] Speaker 00: And that is a [00:28:49] Speaker 00: substantive legal standard, arguably, or an interpretation. [00:28:53] Speaker 03: It's an interpretation of the statute, which is the traditional interpretive rule. [00:28:59] Speaker 00: But I think what's happened is the courts have just assumed reading this at kind of a, not even a deep dive, not even a shallow dive, just assumed it's akin to the APA on interpretive rules, but it seems to me the wording of the statute is quite a bit different. [00:29:14] Speaker 03: But the type of interpretive rule I think, Your Honor, is contemplating is one which is intended to apply more broadly. [00:29:24] Speaker 03: It is not where you have a binary choice. [00:29:26] Speaker 03: Either you put the part C days in or you take them out in the midst of doing a calculation. [00:29:30] Speaker 00: That wasn't a one time. [00:29:32] Speaker 00: That's not going to be a one time. [00:29:33] Speaker 03: But that's what they're challenging here, Your Honor, with all due respect. [00:29:37] Speaker 03: Since the agency doesn't have to proceed by rulemaking at all, as this court has made abundantly clear in Catholic health, the court didn't even get to the issue of whether the agency was retroactively applying a rule. [00:29:52] Speaker 03: It said, hey, you had an adjudication. [00:29:54] Speaker 03: And the adjudication, by its nature, is retroactive. [00:29:58] Speaker 03: And so here, this is all part of the process that can result in an adjudication. [00:30:04] Speaker 00: And so those... What's the purpose of this provision if everything can be done by adjudication? [00:30:10] Speaker 03: If the agency wants something to apply more broadly, in the sense, for example, in the 2013 rule, that now will. [00:30:19] Speaker 03: That is the legislative rule. [00:30:20] Speaker 00: I understand, but if they did everything by adjudication, they would be setting precedent, interpreting provisions of the statute, and that precedent would therefore then carry forward setting, in essence, the substantive legal standard. [00:30:33] Speaker 00: And this provision would seem to be washed out if everything could be done by adjudication. [00:30:40] Speaker 03: But Your Honor, the agency's adjudication is also subject to judicial review, and it's also technically is only binding on the parties to that adjudication. [00:30:51] Speaker 03: So it's different from a regulation, which is... But isn't that... [00:30:56] Speaker 05: kind of just blinking away reality. [00:30:58] Speaker 05: You're not computing individualized Medicare fractions in this sense, shall we include Part C or not? [00:31:04] Speaker 05: You don't say, all right, for you, we'll put Part C folks in. [00:31:08] Speaker 05: For you, we'll take them out. [00:31:09] Speaker 05: There is, behind that step, which is what this fight is all about, a cross-cutting forward-looking and retrospective us of this decision by the Secretary. [00:31:24] Speaker 03: Is there not? [00:31:27] Speaker 03: But again, this court can review that in any case where the hospital properly goes through the steps of judicial review. [00:31:38] Speaker 05: I'm just pushing on here. [00:31:38] Speaker 05: This is sort of individualized. [00:31:40] Speaker 05: It doesn't apply to anyone else. [00:31:42] Speaker 05: It's not a bad approach. [00:31:44] Speaker 05: That doesn't seem accurate as to this predicate decision. [00:31:51] Speaker 03: Well, again, I think even [00:31:55] Speaker 03: Even assuming it were a rule, which we don't think it is, it would be the classic type. [00:32:03] Speaker 03: It is so far from the kind of legislative rule that is intended or one that would create a substantive effect. [00:32:11] Speaker 03: I mean, as we pointed out, the legislative history [00:32:15] Speaker 03: that plaintiffs rely on, on the Medicare statute rule requirements, show that Congress meant they had relied on the original bill, which didn't have this language. [00:32:25] Speaker 03: And courts have uniformly construed that substantive legal effect to, by inference, create the kind of exception for interpretive rules for notice and comment rulemaking. [00:32:38] Speaker 05: And you've been- Which we did not in my mouth. [00:32:41] Speaker 05: We just don't really need to take a deep dive. [00:32:46] Speaker 05: We see no reason to explore the possibility of the sanction here. [00:32:49] Speaker 05: We just haven't crossed that bridge yet. [00:32:51] Speaker 03: Right. [00:32:52] Speaker 03: And I don't think you do here where there is a posted calculation on a website which applies for one year, one hospital is subject to review by the board, by the administrator. [00:33:03] Speaker 03: It doesn't establish substantive legal standard within the meaning of the Medicare statute. [00:33:10] Speaker 03: It's not a legislative. [00:33:11] Speaker 05: Would you agree that once you make a decision, at least for a fiscal year, as to what's going to happen, [00:33:16] Speaker 05: with the Part C folks in the Medicare fraction, that's not one-off. [00:33:20] Speaker 05: That's going to apply to every hospital seeking a dish payment for that fiscal year at least. [00:33:26] Speaker 05: You're not going to have a different answer to the Part C question. [00:33:29] Speaker 05: Do we count them or not? [00:33:30] Speaker 05: That was a cross-cutting, consistent decision, at least for this fiscal year. [00:33:35] Speaker 03: Well, that would generally be true, Your Honor. [00:33:37] Speaker 03: But one thing that we pointed out in the brief that illustrates why these fractions aren't anything like a substantive legal standard is when the Alina plaintiffs were in litigation with the Secretary. [00:33:48] Speaker 03: The Secretary actually computed special fractions for them because of the ongoing litigation. [00:33:56] Speaker 03: And for them, they took the Part C days out and waited for the administrator to issue, when the administrator issued the decision in a line of one. [00:34:07] Speaker 03: At that point, then the Part C days were included. [00:34:12] Speaker 03: But these aren't intended to be across the board. [00:34:17] Speaker 03: But yes, I mean, generally, the secretary would have consistent interpretation for a fiscal year. [00:34:28] Speaker 02: Thank you. [00:34:31] Speaker 02: Does Miss Webster have any time left? [00:34:34] Speaker 02: Okay, why don't you take a couple minutes. [00:34:41] Speaker 04: Following up on Judge Millett's question, there is no question but that the fractions that were published on the website in 2014 apply nationwide to all DISH hospitals, and there are no exceptions. [00:34:53] Speaker 04: And under the regulation governing the DISH payment, the contractors and the agency are required to use those fractions. [00:35:01] Speaker 04: Ms. [00:35:01] Speaker 04: Mark has mentioned a special situation with respect to the Ilana hospitals for 2010 and 11, but that came up in the context of a discussion, probably a settlement, [00:35:11] Speaker 04: settlement discussion as to how we might proceed while the litigation proceeded. [00:35:17] Speaker 04: Ms. [00:35:17] Speaker 04: Marcus ignores that at the Provider Reimbursement Review Board there was a claim that the 2014 issuance itself was procedurally invalid and in the joint appendix at 57 you can see that the board granted expedient judicial review over the question of whether [00:35:38] Speaker 04: the actions subsequent to the vacator by a line of one are legal and confirming that that was in play before the provider reimbursement review board. [00:35:48] Speaker 04: It's really a mystery what would happen if the government's jurisdictional challenge were accepted because not even the government had previously asserted that the board could invalidate that issuance and those fractions for procedural invalidity and require the secretary to engage in notice and comment rulemaking. [00:36:10] Speaker 04: the board comprised of reimbursement experts, including non-lawyers, simply just doesn't have that authority. [00:36:21] Speaker 04: And this is the exact kind of situation that Congress was intending to address. [00:36:25] Speaker 04: When it adopted the expedited judicial review provision, there was concern about providers having to spend years and years and years in administrative proceedings before the board, when ultimately the board didn't even have the authority to decide the ultimate question. [00:36:40] Speaker 00: If you win, what do you envision happening from here? [00:36:47] Speaker 04: Well, my hope would be that if we prevail, the Secretary would then understand, if we prevail on the idea that notice and comment rulemaking was required. [00:36:57] Speaker 00: Correct, if you prevail on that one. [00:36:58] Speaker 04: That the agency would have to go through notice and comment rulemaking and comply with the provisions of 1395HH in doing so. [00:37:08] Speaker 05: But they've already done that in the 2013 rule, right? [00:37:12] Speaker 05: Sure. [00:37:12] Speaker 05: Is that under challenge? [00:37:13] Speaker 04: It is under challenge, yes. [00:37:15] Speaker 05: All right, but they've done... Where is it? [00:37:17] Speaker 05: Go ahead. [00:37:19] Speaker 05: For present purposes, they've done it there. [00:37:20] Speaker 05: Are you saying there's nothing they could do retroactively as to everything up until the 2013 rule takes effect? [00:37:30] Speaker 05: Would that be the consequence of a rule in your favor here that as to everything up until that rule takes effect, they've got to stick with the old practice of backing out the part C? [00:37:39] Speaker 04: Correct. [00:37:40] Speaker 04: There is a provision that allows retroactive rulemaking in very limited circumstances in the Medicare Act. [00:37:46] Speaker 04: We do not believe that the agency could meet the requirements of that section, so we don't believe that they could do this. [00:37:53] Speaker 04: They could certainly try to go through the process. [00:37:54] Speaker 00: And that's why this matters? [00:37:56] Speaker 04: Correct. [00:37:57] Speaker 04: Yes. [00:37:58] Speaker 00: How much money is involved between 2004 and 2013, roughly? [00:38:03] Speaker 04: hundreds and hundreds of millions of dollars to hospitals, and that would be one of the things that would need to be addressed in the further rulemaking. [00:38:11] Speaker 04: Judge Mulatt mentioned the 2013 rulemaking. [00:38:14] Speaker 04: A further rulemaking would actually have to grapple with the fact that a change in policy has that significant of an impact on safety net hospitals. [00:38:25] Speaker 00: Well, prospectively, you're probably going to lose, as you're aware, if they stick with the same position. [00:38:32] Speaker 00: But the point is, you at least buy yourself nine years of money, which is a lot of money, right? [00:38:39] Speaker 04: Indeed, it's a lot of money for anybody, including these hospitals. [00:38:43] Speaker 04: And for just the 50, excuse me, just the nine hospitals that are part of this case, it's $50 million for just one year. [00:38:54] Speaker 04: And the government hasn't disputed that in the context of this case. [00:38:58] Speaker 00: And on your Medicare argument, of course, would be creating a circus what, right? [00:39:05] Speaker 04: On the Medicare argument? [00:39:06] Speaker 00: On the notice and comment provision. [00:39:09] Speaker 00: HHA 2. [00:39:11] Speaker 00: I mean, you say those other courts got it wrong, would we be? [00:39:16] Speaker 04: Correct. [00:39:16] Speaker 04: Although there isn't a decision from another circuit on 1395, HHA 4. [00:39:24] Speaker 04: There are decisions on A2. [00:39:25] Speaker 00: On A2, all the decisions, or most of them, go opposite you. [00:39:31] Speaker 00: I'm trying to game this out. [00:39:32] Speaker 00: The circuit split with hundreds of millions of dollars, obviously the Supreme Court would have to likely get involved. [00:39:38] Speaker 05: Is the outcome for the hospitals affected in any way by whether the decision is grounded on A4 versus A2? [00:39:53] Speaker 05: I think that... Would that cut off some years? [00:40:03] Speaker 04: I think either way, it would help bring this never-ending, seemingly never-ending battle to at least closer to an end. [00:40:13] Speaker 00: I missed what the first part of that was. [00:40:17] Speaker 04: Well, Judge Millett asked if it mattered whether there was a decision based on HHA 2 or A4. [00:40:23] Speaker 04: And I actually think either way that that would [00:40:28] Speaker 04: at least get closer to solving the problem for the 2004 to 2013 time range that we're talking about, that 2012 is part of. [00:40:40] Speaker 04: Thank you.