[00:00:01] Speaker 00: Case number 19-5260, Bethesda Health, Inc., doing business as Bethesda Memorial Hospital et al. [00:00:08] Speaker 00: versus Alex M. Azar II, in his official capacity as Secretary of Health and Human Services Appellant. [00:00:15] Speaker 00: Ms. [00:00:16] Speaker 00: Utrecht for the appellant, Mr. Parrish for the FOE. [00:00:24] Speaker 06: Ms. [00:00:24] Speaker 06: Utrecht, please proceed when you're ready. [00:00:26] Speaker 07: Good morning, Your Honor. [00:00:27] Speaker 01: Jennifer Utrecht on behalf of the government. [00:00:31] Speaker 01: about Medicare enhanced Medicare payments, which are calculated based on the number of days at a hospital treat patients core eligible for Medicaid and the words of the statute percentage of days for eligible medical assistance under a state plan approved under sub chapter. [00:00:48] Speaker 01: X one X and. [00:00:50] Speaker 01: Congress has further provided that in calculating this, the secretary may be sentenced to the period the secretary determines appropriate include patient days of patients who are not eligible for medical assistance under a state plan, but who are regarded as such because they receive benefits under a demonstration project. [00:01:07] Speaker 01: Because this is a very technical factor, I think it's actually helpful to start here with what I think the point of agreement are. [00:01:12] Speaker 01: So zone in on the point of this agreement. [00:01:15] Speaker 01: Everyone here agrees that [00:01:17] Speaker 01: The secretary must include patients who are eligible for Medicaid under the terms of a state plan. [00:01:23] Speaker 01: Of course, you know, state Medicaid plans lay out the categories of patients who are covered by Medicaid and the types of services that will be covered by Medicaid. [00:01:30] Speaker 01: Everyone here also agrees that the secretary may but need not include in this calculation the days of patients the secretary regards as being eligible for Medicaid because they receive benefits under a demonstration project. [00:01:44] Speaker 01: There's a dispute sort of about how broadly this regarding language covers, but more critically, you know, the fact of the matter is that here the secretary has never regarded the patients at issue as being eligible for Medicaid. [00:01:59] Speaker 01: And that's really the heart of this dispute is whether, in fact, these patients have been regarded as being eligible for Medicaid for this calculation and whether the secretary has permitted hospitals to include these patients. [00:02:14] Speaker 01: The, the answer to these questions, of course, is no, the section are sorry, 42 CFR 4121064 makes explicit that when calculating this Medicaid percentage, you calculate the number of patients for quote, eligible for Medicaid. [00:02:33] Speaker 01: And that's for the purpose of this calculation. [00:02:35] Speaker 01: you are considered to be eligible for Medicaid only if you're eligible for inpatient hospital services. [00:02:40] Speaker 01: Whether this coverage is available under a state plan or a demonstration project, there's no distinction. [00:02:45] Speaker 01: You know, it's the same condition that applies in both circumstances. [00:02:49] Speaker 01: And the best reading of this, the one that is consistent with the text and the one that is consistent with the history of this regulation, is that the patient has to be eligible for Medicaid coverage, insurance coverage of inpatient hospital services. [00:03:02] Speaker 01: It's interesting. [00:03:03] Speaker 05: Can I ask you about, that's Roman at one. [00:03:06] Speaker 05: And I understand your argument Roman on one, but then there's also Roman at two and under Roman at two. [00:03:14] Speaker 05: The language speaks in terms of ranting the hospitals, the hospital, it just says hospitals may include. [00:03:22] Speaker 05: So that's the language we have on the books that we take as a given. [00:03:26] Speaker 05: I think everybody agrees or should agree, but this means that hospitals may include something. [00:03:31] Speaker 05: And then the question is, what's the something that they may include? [00:03:33] Speaker 05: And what the provision says is. [00:03:35] Speaker 05: all days attributable to populations eligible for Title XIX, maybe my Roman numeral is incorrect, I'm not sure, Title X1X matching payments. [00:03:45] Speaker 05: And is the government's argument that patients who are seen under a waiver approved, but who aren't Medicaid eligible, and who also don't have a card that gives them a substitute for Medicaid, [00:04:05] Speaker 05: So that you're not treated as a one-step move from Medicaid eligible, but still covered under a demonstration project. [00:04:13] Speaker 05: But as to which the hospital can get reimbursement from the state, the hospital can get reimbursement for the care from the state, that that person is not part of a population eligible for Title 19 matching payment for a waiver approved. [00:04:31] Speaker 01: A few responses to the question, and I want to get to the harder question. [00:04:34] Speaker 01: And so there was a lot of facts there, some of which are relevant and I think some of which are, but I think the harder question is, if the hospital is being reimbursed for a particular patient and for particular services rendered to that particular patient, is that patient considered to be eligible? [00:04:54] Speaker 01: And my answer to that question is, [00:04:58] Speaker 01: If the demonstration project promises the government will make payment to a hospital on behalf of a particular patient, then yes, that patient is eligible. [00:05:07] Speaker 01: But that's not the situation we have here. [00:05:10] Speaker 01: There's no promise to make payments on behalf of particular patients. [00:05:14] Speaker 01: Instead, what we have is a pool of money that is available to the state to be distributed to hospitals that have high uncompensated care costs. [00:05:23] Speaker 01: But this payment isn't made on behalf [00:05:26] Speaker 01: any particular patient. [00:05:27] Speaker 01: It's not made on behalf of any particular services. [00:05:30] Speaker 01: Um, the amount, you know, indeed the amount of money that is available is capped. [00:05:36] Speaker 01: Um, and so at a certain point there's diminishing returns. [00:05:39] Speaker 01: The more patients that the hospital treats, the more money per patient, the less money per patient the hospital will get. [00:05:45] Speaker 05: But there's still some money for each patient. [00:05:47] Speaker 05: I mean, you could get, just get the fraction down to, you know, one, one minute, one, one millionth or something, but there's still gonna be some money for each patient. [00:05:54] Speaker 05: As I understand the mechanics of how the state actually [00:05:56] Speaker 01: Operate to be to be clear, your honor, the money is not reimbursement for a patient. [00:06:02] Speaker 01: It's reimbursement for the hospital's cost. [00:06:05] Speaker 01: And, you know, that is a distinction that for these purposes matters because this is a statute and a regulation that focuses specifically on the patient's eligibility at the time of treatment. [00:06:16] Speaker 01: I mean, that's a distinction that has mattered in other cases as well, you know, in a data and other courts of appeals when the question is, is the patient. [00:06:24] Speaker 05: You keep saying patients out and I know that that's in Roman at one. [00:06:29] Speaker 05: Yeah, well, it's just a language is. [00:06:32] Speaker 05: It's confusing to me because it speaks in terms of populations eligible for title. [00:06:39] Speaker 05: Do I, is 19 the right, is that what it is? [00:06:42] Speaker 05: I don't even know. [00:06:43] Speaker 01: I appreciate the confusion and I think taking a step back and reminding this court about the history of how this regulation was promulgated helps understand why it breaks down this way. [00:06:56] Speaker 01: So of course, in 2000, Romanette 2 was actually the first version of this regulation. [00:07:03] Speaker 01: In 2000, Romanette 2 was promulgated by the secretary. [00:07:07] Speaker 01: And at that time, or rather prior to that time, no patient that received benefits under a demonstration project could be included in this calculation. [00:07:16] Speaker 01: And it was not until this regulation was promulgated in 2000 that the secretary assessed for the very first time if, you know, the benefit you're receiving is met by federal matching payments that that patient can be included in the calculation. [00:07:29] Speaker 01: And then in 2003, Romanet 1 was promulgated and Romanet 1 was [00:07:34] Speaker 01: You've seen a sort of a drawback from the full breadth of Romanette too, and specifically in the Federal Register publication, Secretary said, originally we said every person who has matching payments can be included, but it's come to our attention. [00:07:52] Speaker 01: but there are some demonstration projects that grant Medicaid coverage for sort of limited discrete services, things like family planning, things that aren't the full breadth that are of coverage that's traditionally available to patients. [00:08:05] Speaker 01: And it's only when there's coverage of inpatient hospital services that resembles that which is available to traditional Medicaid beneficiaries that we will regard you as being eligible for Medicaid for the purpose of this calculation. [00:08:19] Speaker 01: And so, [00:08:19] Speaker 01: you know, logically the way this breaks down is there are two questions here. [00:08:25] Speaker 01: One, are the patients regarded as eligible for Medicaid for the purposes of this calculation? [00:08:29] Speaker 01: And two, if so, has the secretary elected, because of course the secretary has discretion, has the secretary elected to include them? [00:08:37] Speaker 01: And so, Romanette one answers the first question, are they regarded as being eligible for Medicaid? [00:08:42] Speaker 01: And Romanette two answers the second question, has the secretary elected to include them? [00:08:47] Speaker 01: But to be involved, patients be included. [00:08:50] Speaker 04: So the background of this, as you say, is there's concern that some services under demonstration projects are too far disconnected from traditional Medicaid and they write this regulation to address that problem. [00:09:09] Speaker 04: But in doing so, they drew two lines, which I think birthed the government here. [00:09:18] Speaker 04: One is that [00:09:20] Speaker 04: The key question and you highlighted this language is eligible for inpatient hospital services, right? [00:09:32] Speaker 04: So inpatient hospital is one category, family planning, et cetera, is a different one. [00:09:40] Speaker 04: And this demonstration project extends to medical assistance [00:09:49] Speaker 04: as defined in Medicaid. [00:09:51] Speaker 04: And Medicaid defines medical assistance to include inpatient services. [00:09:58] Speaker 04: So you have people under this project getting inpatient services. [00:10:04] Speaker 04: And then your next point as well, but you don't know no particular patient is entitled. [00:10:11] Speaker 04: They might not get 100 cents or 80 cents on the dollar. [00:10:15] Speaker 04: It's all sort of [00:10:17] Speaker 04: generalized and amorphous. [00:10:19] Speaker 04: And as to that point, the reg says that the key is eligibility as opposed to whether particular items or services were covered or paid under the demonstration plan. [00:10:35] Speaker 04: So QED, [00:10:37] Speaker 01: Well, your honor, I think the critically everything you just said started with the assumption that these patients receive medical assistance and receive inpatient hospital services. [00:10:47] Speaker 01: And that's not true. [00:10:48] Speaker 01: And that that's the part here that like we are just today. [00:10:52] Speaker 04: Okay, walk. [00:10:52] Speaker 04: So walk me through that. [00:10:54] Speaker 04: Because though, yeah, the term is healthcare expenditures, as defined under Medicaid. [00:11:04] Speaker 01: Right. [00:11:04] Speaker 01: So the the [00:11:06] Speaker 01: Term and condition that you're referring to is for the low income case, low income pool that hospitals can receive money from the pool up to the total amount of their uncompensated costs. [00:11:21] Speaker 01: And uncompensated costs of course are defined with respect to a limited subset of healthcare expenditures, right? [00:11:26] Speaker 01: And when it says healthcare expenditures that would be medical assistance, what that means is [00:11:33] Speaker 01: you know, elective surgery, for example, is not the kind of thing that Medicare would ordinarily cover because elective surgery is not the kind of healthcare expenditure that would be medical assistance. [00:11:42] Speaker 01: And so if a hospital had uncomplicated costs related to elective surgery, that sort of thing couldn't be covered. [00:11:50] Speaker 01: But remember here, we have a well-established understanding, at least with respect to state plans, of what medical assistance means and what eligibility for medical assistance means. [00:11:59] Speaker 01: There's a long history with respect to Medicaid dish payments, where there's money available under Medicaid state plans that is distributed to hospitals and indirectly subsidizes the cost of providing treatment to uninsured patients or under-insured patients. [00:12:16] Speaker 01: And hospitals have, in Adena, in Owen-Burton, Sixth Circuit, in a long list that supports health cases, [00:12:22] Speaker 01: hospitals have tried to assert that because they're getting this Medicaid money under the state plan, and because the amount of money they get under the state plan can be tied to patients that are uninsured, we should treat these uninsured patients as if they were eligible for Medicaid. [00:12:40] Speaker 01: And that's exactly what's happening here. [00:12:42] Speaker 01: It's the same type of money. [00:12:44] Speaker 01: The only difference is that this money is made available under the terms of a demonstration project rather than a state plan. [00:12:49] Speaker 01: But that's a distinction without difference [00:12:52] Speaker 01: Because the same, you know, the regulation outline exactly who is to be included in this calculation. [00:13:00] Speaker 01: And it does not draw a distinction between who's to be included under the demonstration project. [00:13:05] Speaker 01: It doesn't draw a distinction between who's to be included under demonstration project versus the state plan. [00:13:10] Speaker 01: Inpatient hospital services have to mean the same thing with respect to a state plan. [00:13:16] Speaker 01: As it does with respect to a demonstration project, and the hospital's position here turns on their erroneous assumption that the phrase inpatient hospital services means something different when it's a demonstration project rather than a state plan. [00:13:32] Speaker 05: Why is that? [00:13:32] Speaker 05: Can you just explain that a little more? [00:13:34] Speaker 05: I didn't follow it up. [00:13:36] Speaker 01: Oh, so, your honor, so the, the regular nuance says that you are eligible for Medicaid if [00:13:42] Speaker 01: you are eligible for inpatient hospital services under either state plan or demonstration plan. [00:13:48] Speaker 04: And it gives two very specific alternatives. [00:13:52] Speaker 04: One is the approved state Medicaid plan under Title 19, and the other is a waiver authorized under Section 1115, which is the demonstration project. [00:14:07] Speaker 01: Yes, Your Honor. [00:14:08] Speaker 01: And of course, you know, the critical question here is [00:14:11] Speaker 01: Is this type of payment, by making this type of payment available, is that making someone eligible for inpatient hospital services? [00:14:19] Speaker 01: And we know that if this type of payment is available under a state plan, it does not make someone eligible for inpatient hospital services. [00:14:27] Speaker 04: Are there patients under this demonstration project who get inpatient hospital services and the hospital provides it under the lip and then gets reimbursed by the federal government? [00:14:43] Speaker 01: Your honor, there are patients who get treatment in hospitals, but treatment is not what inpatient hospital services means. [00:14:50] Speaker 01: And that's, I think, the point I'm trying to make. [00:14:53] Speaker 04: So maybe- That's what I'm not getting, right? [00:14:57] Speaker 04: Inpatient hospital services seems like it's an intuitive concept, right? [00:15:03] Speaker 04: It's what's covered in Part A of Medicare. [00:15:07] Speaker 04: It's a term that's referenced in one of these definitions. [00:15:14] Speaker 04: in Medicaid and it's the term, it's one of the key terms in this regulation, inpatient hospital services. [00:15:28] Speaker 04: And it's in the context of a statute that statutory scheme that doesn't require comprehensive [00:15:38] Speaker 01: Yes, your honor. [00:15:39] Speaker 01: It is a key term and respectfully, it is a key term that has long been understood to mean Medicaid insurance coverage of inpatient hospital services. [00:15:50] Speaker 01: And these patients did not have that, right? [00:15:52] Speaker 01: These patients, the demonstration project very clearly lays out who is eligible for Medicaid under the demonstration project. [00:15:59] Speaker 01: And it doesn't not, these patients were not included in any category of patients that is eligible for Medicaid under those terms. [00:16:06] Speaker 01: In addition, [00:16:07] Speaker 01: this money, you know, the patients have no ability to be notified when their bill is paid. [00:16:12] Speaker 01: When they get their treatment, the hospitals can still continue to try and pursue the patient for payment. [00:16:18] Speaker 01: And even if the hospital ultimately gets money from the uncompensated care pool from the lip here, you know, the hospital can still continue to pursue patients for treatment. [00:16:28] Speaker 05: So that seems to me to be the key. [00:16:30] Speaker 05: And that's why I went to Romanette too, because under Romanette one, [00:16:36] Speaker 05: I'm not sure this gets you home, but I understand your argument, which is that to me, it doesn't seem like inpatient hospital services is doing the work necessarily under your view of the world. [00:16:46] Speaker 05: It's that it's eligible is doing the work because what you mean by eligible is that the patient's actually covered by something so that the hospital can't go after the patient anymore. [00:16:56] Speaker 05: What the hospital has to do is go after the insurer, which is Medicaid or effectively Medicaid under a demonstration project. [00:17:03] Speaker 05: So the hospital is going after some other pot of money, not after the individual. [00:17:08] Speaker 05: And what you'd say is under Roman at one, when the patient is not eligible for inpatient hospital services under a demonstration project, even if they show up at the hospital, and even if they are given inpatient services, they're still not eligible under a demonstration project, unless the hospital can actually go after them for the cost of care. [00:17:29] Speaker 05: And under a demonstration project, as you can see above at the hospital camp, [00:17:32] Speaker 05: So I think I, I think I understand at least demonstration project. [00:17:37] Speaker 01: There certainly are demonstration projects that expand Medicaid eligibility. [00:17:41] Speaker 01: Uh, this one does not. [00:17:43] Speaker 05: Right. [00:17:43] Speaker 05: I get it. [00:17:44] Speaker 05: So there's two different types of demonstration projects in your old view. [00:17:46] Speaker 05: One is where it actually expands Medicaid coverage so that the person is treated as covered under Medicaid, even though they're not within the square parameters of traditional Medicaid eligibility. [00:17:56] Speaker 05: But what the demonstration project does is expand that field of individuals. [00:18:00] Speaker 05: We can call it an expanded population. [00:18:01] Speaker 05: They're covered. [00:18:02] Speaker 05: They have a card. [00:18:04] Speaker 05: They go in. [00:18:05] Speaker 05: The insurance picks up their care. [00:18:06] Speaker 05: The hospital can't go after them individually for the cost of care. [00:18:10] Speaker 05: Then there's the other type of demonstration project where the hospital gets reimbursed for giving them care in some measure. [00:18:16] Speaker 05: But the hospital can't go after the individual for the cost of the care. [00:18:20] Speaker 05: They can only try to get reimbursed. [00:18:22] Speaker 05: So I think I understand that. [00:18:23] Speaker 05: But what I don't completely follow is, and where the two parties are in disagreement is whether that distinction between those two [00:18:31] Speaker 05: categories of demonstration projects is one that's embedded in the regulation, because I think what the hospitals would say, no, both those categories qualify. [00:18:40] Speaker 05: And you would say, no, only the one category where the individuals are actually covered qualify. [00:18:44] Speaker 05: Now, as to that, under Romanet 2, it speaks in terms of hospitals. [00:18:49] Speaker 05: It gives hospitals entitlement to include all days attributable to populations eligible for Title 19 matching payments. [00:18:57] Speaker 05: And that language [00:18:59] Speaker 05: seems capacious enough to cover both types of demonstration projects. [00:19:06] Speaker 05: And maybe I'm looking in the wrong place, but that to me is in large measure where the rubber hits the road in this case. [00:19:13] Speaker 05: And it's interesting that Romanette 1 speaks in terms of the patient being eligible for hospital services, and Romanette 2 speaks in terms of the populations being eligible for matching payments. [00:19:25] Speaker 05: And they're not talking, they're not even speaking in this with the same reference point, because one's talking about being eligible for the matching payments and the other one's talking about being eligible for the service. [00:19:35] Speaker 01: I think that's a relic of how this, you know, how this regulation came to be and the fact that Romanette one was intended to be a limitation on Romanette two. [00:19:44] Speaker 01: But I think logically it, it the best way to understand this is the statute says the secretary may include patients who are regarded as eligible for Medicaid under the demonstration project. [00:19:55] Speaker 01: Roman at one helps us understand who is regarded as being eligible for Medicaid under demonstration project and Roman at two, like, if so, Roman at two says, so long as your eligibility for this type of Medicaid coverage is met with federal funds, it's not simply paid for, you know, exclusively by the state because the state could design a Medicaid program that allows, you know, paid for. [00:20:20] Speaker 01: certain types of treatment, but there was no agreement between the federal government and the state. [00:20:24] Speaker 05: Can I ask the question this way, then? [00:20:26] Speaker 05: Suppose that the way I read Romanette 2 is as follows. [00:20:29] Speaker 05: It allows hospitals to include in the numerator all grades attributable to populations as to which Title 19 matching payments are available. [00:20:41] Speaker 05: If we look at it that way, then I think what the district court thought and what the Fifth Circuit thinks and what the hospital thinks is that [00:20:50] Speaker 05: Yeah, this population is covered because as to this population title 19 matching payments are in fact available to the hospital under a demonstration project. [00:20:58] Speaker 05: The hospital is going out and as a consequence of providing care to these individuals, it's actually getting title 19 matching payments under the offices of a demonstration project. [00:21:09] Speaker 05: And therefore, Rominat 2 is satisfied, the hospitals are home. [00:21:13] Speaker 01: So the same logic as to why it under Roman at one as to why these patients aren't eligible for inpatient hospital services also applies here. [00:21:22] Speaker 01: You know, the question here is whether the patient is eligible for this matching payments. [00:21:28] Speaker 01: Traditionally understood is coverage that the coverage comes from a federal state government cooperating and providing matching payments to cover your interest. [00:21:39] Speaker 01: And so, [00:21:40] Speaker 01: Here on the structural mess too is a patient still aren't eligible. [00:21:45] Speaker 01: The patient isn't eligible because there's no coverage whatsoever. [00:21:48] Speaker 01: You know, the hospitals ultimately, there's a pool of money that's ultimately paid for by both the federal and the state government. [00:21:55] Speaker 01: And that money is available to hospitals, but the money is not tied to a particular patient or particular patient services. [00:22:02] Speaker 01: And the fact that that money isn't tied to a particular patient or a particular patient services is critical. [00:22:07] Speaker 01: when we're trying to determine whether the patient, because it's the patient, both of these problems with the regulation are patient focused, whether the patient is eligible under the terms of the demonstration project for these sorts of, for these sorts of things. [00:22:21] Speaker 05: Okay. [00:22:23] Speaker 05: Thank you. [00:22:23] Speaker 05: If my colleagues don't have further questions at this point, then we'll give Mr. Parrish a chance to go and Ms. [00:22:29] Speaker 05: C. Treff will give us some time for rebuttal. [00:22:31] Speaker 01: Thank you, Your Honor. [00:22:33] Speaker 05: Mr. Parrish. [00:22:35] Speaker 03: Thank you, your honor. [00:22:35] Speaker 03: So Ashley parish for the hospitals and please support in light of what we've heard this morning. [00:22:40] Speaker 03: What I think would be most helpful is just to clarify and confirm judge train of us and that we agree with just how you set out the statute and why that's the case. [00:22:50] Speaker 03: Then let me talk to the government's two textual arguments. [00:22:52] Speaker 03: They're one argument that there needs to be Medicaid coverage, meaning the trappings of traditional Medicaid. [00:22:57] Speaker 03: And second, their idea that there's a vested right, meaning that they read eligible to mean entitlement. [00:23:02] Speaker 03: Let me explain why both of those textual arguments are wrong. [00:23:05] Speaker 03: And then let me finish up by talking about the two cases that they cite most, the Adina case and the University of Washington. [00:23:12] Speaker 03: Because if you realize why those cases don't apply, you understand why the government doesn't interpret the statute and the regulations correctly. [00:23:20] Speaker 03: So let me just start off real quickly just three of us and you're absolutely correct that under the first part of the statute, what it says the patients are eligible for medical assistance under state plan. [00:23:31] Speaker 03: There's really two general requirements that apply there for medical assistance and Adina makes this pretty clear. [00:23:37] Speaker 03: The first requirement is that it has to have federal matching funds. [00:23:40] Speaker 03: But the whole point of it is that there is a Medicaid coverage because the federal government has agreed that the services and care that that patient population receives will be specifically matched with funds from the federal government. [00:23:52] Speaker 03: Not just that they're federal funds that might be used, but the federal government has specifically agreed to use matching funds. [00:23:58] Speaker 03: And then the second thing that often applies is that [00:24:01] Speaker 03: it's limited under the statute to eligible populations as defined in the statute. [00:24:05] Speaker 03: Now, the second part says, well, wait a second, they can also be counted if they are regarded as such because they receive benefits under a demonstration project. [00:24:15] Speaker 03: What that means is that it allows the secretary to look at new innovation programs that do different ways of charging or delivering care to new types of populations. [00:24:25] Speaker 03: That's the difference between under a state plan [00:24:28] Speaker 03: and under a demonstration project. [00:24:30] Speaker 03: So if you look through the regulations, you're absolutely right to look at both Romanet 1 and Romanet 2. [00:24:36] Speaker 03: It says, is the patient eligible for inpatient hospital services under a waiver? [00:24:40] Speaker 03: That means basically a demonstration project. [00:24:43] Speaker 03: And then Romanet 2, hospitals may include all days attributable to populations that are eligible for matching payments, i.e. [00:24:50] Speaker 03: they're eligible for medical assistance. [00:24:53] Speaker 03: Are those requirements met? [00:24:54] Speaker 03: Yes, they are. [00:24:54] Speaker 03: The secretary approved the demonstration project. [00:24:57] Speaker 03: The patients received inpatient hospital services under that project and the pace, the secretary specifically, and you can see this on appendix page thirty nine, Jay, thirty nine, paragraph one, eleven, which says that federal matching funds will be used to provide the services to this low income pool. [00:25:16] Speaker 03: This is one one eleven. [00:25:17] Speaker 03: I should say it's sub five where you go down to that. [00:25:21] Speaker 03: So, your, your honors, this gets to the government's two arguments. [00:25:24] Speaker 03: The first argument is that you can read that different than what the plain text suggests, because they must be eligible for Medicaid coverage. [00:25:31] Speaker 03: And if you look at their brief every time instead of talking about inpatient services, they substitute the phrase eligible for Medicaid coverage. [00:25:39] Speaker 03: What do they mean by that? [00:25:40] Speaker 03: I mean, these patient populations are eligible for Medicaid coverage. [00:25:43] Speaker 03: It's not traditional Medicaid coverage. [00:25:46] Speaker 03: It's experimental Medicaid coverage. [00:25:48] Speaker 03: It's medical assistance that is provided with federal matching funds. [00:25:52] Speaker 05: Can I just stop you for one second there? [00:25:55] Speaker 05: So I think everybody's on a common understanding in this respect that it's true that there are demonstration projects that expand the field of coverage. [00:26:08] Speaker 05: beyond what the Medicaid regulations and statute would otherwise allow for. [00:26:13] Speaker 05: But then there are two different types of demonstration projects. [00:26:15] Speaker 05: There's one type of demonstration project under which patients are given essentially individually standard Medicaid coverage so that then the hospital can't go after the patient. [00:26:28] Speaker 05: They still have to go after to ensure a Medicaid for payment. [00:26:32] Speaker 05: But that person, you know, they have a Medicaid card, [00:26:35] Speaker 05: It wouldn't qualify ordinarily, but the demonstration project expands the field of coverage so that they can now qualify. [00:26:40] Speaker 05: And then there's another type of demonstration project under which we're not talking about the first type, but we're talking about a hospital being able to go to the state and get payment as reimbursement for supplying care to somebody who's not part of this expanded pool, but the state, I'm sorry, the hospital can still get payment from the state as reimbursement for providing care to them. [00:27:01] Speaker 05: And the issue in this case regards [00:27:04] Speaker 05: that second category demonstration project. [00:27:06] Speaker 05: And then the question is, does everybody agree that the first category demonstration project is something that the hospitals can put in the numerator? [00:27:15] Speaker 05: The question is whether the second category of demonstration project is something that the hospitals can put in the numerator. [00:27:21] Speaker 05: And then that begs the question of where textually do you find a home for that piece of the demonstration project and where textually the government say, no, those [00:27:33] Speaker 05: Those types of payments are out. [00:27:36] Speaker 03: So your honor, let me just say this is that I agree with you. [00:27:39] Speaker 03: There are lots of types of demonstration projects with different ways of delivering care. [00:27:43] Speaker 03: But I want to be careful because your hypothetical is assuming a distinction that isn't built into the statute or the regulation. [00:27:51] Speaker 03: The point that so the government's idea of saying there must be Medicaid coverage is to suggest that there's a distinction you're saying that there are some projects with patients that have cards and everything like that. [00:28:01] Speaker 03: And what they do is they then take that [00:28:03] Speaker 03: And you'll see in their brief, they talk about it as a vested right to the individual patient. [00:28:07] Speaker 03: And you'll see that opposing council talks this morning about the particular patient receiving particular services. [00:28:14] Speaker 05: Right. [00:28:14] Speaker 05: So can I just say, I think I, I think I understand this, but I believe that actually it's true that there are different types of demonstration projects that can be divided into these two categories. [00:28:24] Speaker 05: You may be right that legally that's a distinction without a difference for purposes of this statute and these regulations, but I just want to, and the government thinks that the factual distinction is also a legal one. [00:28:33] Speaker 03: So, Your Honor, there's lots of different demonstration projects that do different types of things. [00:28:38] Speaker 03: And you could have a demonstration project in category one and in category two. [00:28:41] Speaker 03: What I'm resisting is that those categories are not, they're just made up by the government. [00:28:46] Speaker 03: Because the, so let me get to the second point. [00:28:49] Speaker 03: A lot of the argument here in the government's brief focuses on this idea. [00:28:52] Speaker 03: Look at the patient. [00:28:53] Speaker 03: Does the patient have a vested right? [00:28:54] Speaker 03: Does the patient have a card? [00:28:56] Speaker 03: Your Honor, this is basically interpreting eligible in the statute to mean an entitlement. [00:29:01] Speaker 03: But if you take a look at the cases in 1994 and 1996, the government litigated this argument five times and lost every time. [00:29:09] Speaker 03: That's the Cabell case, the Jewish Hospital case, the Legacy Hospital case, the Deaconess case, and then all the cases that are cited specifically here, where the courts are saying, no, eligible under the statute does not mean an entitlement to the patient. [00:29:23] Speaker 03: What it means is that you're eligible to receive. [00:29:29] Speaker 03: which means you're part of the population that has the federal matching funds that will pay for your care is to get that care. [00:29:35] Speaker 03: So, Judge Sreenivasan, the reason why I'm pushing back on your two categories is that in order to create those two categories to have any legal meaning, you have to first accept the government's argument that Medicaid coverage means it's got to look like traditional Medicaid with a card. [00:29:49] Speaker 03: The whole point of an experimental demonstration project is to allow a state to experiment with different ways of providing services and for the secretary to decide when he approves the demonstration project whether that's acceptable or not, which is what he did here. [00:30:03] Speaker 03: And then the second thing is that you don't look at individual patients. [00:30:06] Speaker 03: You look at patient populations. [00:30:08] Speaker 03: You don't look at vested rights, because that's not in the statute. [00:30:10] Speaker 03: It's contrary to precedent. [00:30:12] Speaker 03: What you look at is are they eligible, which is why Chief Judge Srinivasan, you're absolutely right to go focus back on Romanette 2. [00:30:19] Speaker 03: And Judge Kaptas, you're absolutely correct to take a look at the last phrase in Romanette 1, which is precisely because of those cases back in the 1990s. [00:30:29] Speaker 03: The regulations were changed to make clear that it's regardless of whether particular items or services were covered under the state plan or the authorized waiver, because the question is whether they're eligible to receive under the terms of the demonstration project. [00:30:42] Speaker 03: And RomanNet, too, answers that question, Judge Srinivasan, because it specifically says hospitals may include all days attributable populations eligible for matching payments. [00:30:52] Speaker 03: That is exactly what happens here, which is that these patients, these allied [00:30:57] Speaker 03: you know, the low income pool Florida patients, they went into the hospital. [00:31:01] Speaker 03: If they received care, that care was matched by the federal government and the federal government paid for part or portion of their care. [00:31:08] Speaker 03: And because of the demonstration project, they were eligible there for that experimental Medicaid coverage that they otherwise would not have been eligible to receive. [00:31:16] Speaker 03: And therefore they are regarded as such under the statute. [00:31:20] Speaker 05: They didn't, just to be technical, they didn't receive coverage, right? [00:31:24] Speaker 05: It's just that they received care. [00:31:26] Speaker 05: And as to that care, the hospitals got reimbursed through the demonstration project funding. [00:31:33] Speaker 03: Yes, Your Honor, but it is- That may be enough. [00:31:35] Speaker 05: I'm not necessarily suggesting that that doesn't get you home. [00:31:38] Speaker 05: I'm just trying to understand the factual context, just to make sure I get where the flow of money is going. [00:31:45] Speaker 03: Your Honor, you're absolutely correct in terms of the mechanism. [00:31:47] Speaker 03: But the point is, at the end of the day, when the hospitals get federal matching payments, which is the key point of medical assistance, you see this under ADINA. [00:31:55] Speaker 03: But your opinion lays out on an Adina, which was a key in there was that it was just charitable care that wasn't eligible for matching payments that the federal government had agreed to pay. [00:32:07] Speaker 03: What's significant about a demonstration project is that the federal government has specifically agreed that there will be federal funds [00:32:14] Speaker 03: that are matching and available for these services so that when that patient gets the services provided and it ultimately gets paid to the hospitals, it is matched by federal funds for that defined patient group and for the inpatient hospital services they receive. [00:32:28] Speaker 03: Your Honor, if I could, I think it's really helpful now to take a look at the cases, the Adena and University of Washington cases. [00:32:34] Speaker 03: You will note that the Fifth Circuit backhands those cases because they say, well, that has nothing to do with demonstration projects. [00:32:41] Speaker 03: It's only about state plans. [00:32:43] Speaker 03: Why is that significant? [00:32:44] Speaker 03: Why did the Fifth Circuit say that? [00:32:46] Speaker 03: Well, the reason the Fifth Circuit said that is to go back to the statute. [00:32:49] Speaker 03: Medical assistance under the statute, again, has two requirements in general. [00:32:53] Speaker 03: One is there has to be federal matching funds where the federal government has agreed to pay a portion or part of this care. [00:32:59] Speaker 03: And then two, it has to be an eligible patient group. [00:33:02] Speaker 03: What happens in the state plans that the government is relying on is that the states have taken some other pot of money. [00:33:09] Speaker 03: In that case, it's Medicaid ditch. [00:33:11] Speaker 03: It's not matching [00:33:12] Speaker 03: funds for medical assistance, it's just a federal pot of money and they've reallocated it for charity care. [00:33:18] Speaker 03: And what the courts say in both of those cases is one, that doesn't count because the federal government hasn't agreed a match for the medical assistance, actually pay for those services. [00:33:28] Speaker 03: And number two is that the eligible patient groups in those cases are limited by the enumerated patient groups in the statute. [00:33:36] Speaker 03: Those are the categorically and medically needed. [00:33:38] Speaker 03: So you can't [00:33:39] Speaker 03: expand the patient group under a state plan, and that's why they lose. [00:33:43] Speaker 03: The whole point is that what's not said in those cases, because it's not raised, is the states could have won those cases if, instead of expanding it themselves unilaterally under a state plan, if they had gone to the secretary and the secretary had approved a demonstration project where it waived the requirements of limiting it to those eligible patient groups and expanded the population, which is exactly what happened here. [00:34:07] Speaker 03: Your honors, seen as I'm almost at the end here, let me just close with the following thoughts because I think the court understands the different arguments. [00:34:15] Speaker 03: Every judge that has considered this issue has ruled against the government because the plain text of the regulation reads the way that we suggest. [00:34:23] Speaker 03: And what the government is trying to do is after the fact, bring in new requirements that the regulations and statutes simply don't have. [00:34:30] Speaker 03: Accepting the government's position means that you have to read eligible, not to mean eligible as it's been interpreted by courts since the 1990s, but instead to mean entitled, that there's a vested right. [00:34:41] Speaker 03: That's not in the statute. [00:34:42] Speaker 03: The statute distinguishes between entitlement and eligibility, and every one of those cases we cite on page 22 of our brief and the number of cases they cite go against the government's position. [00:34:52] Speaker 03: And finally, the government's suggestion that this is just about traditional Medicaid and patients who are eligible for traditional Medicaid [00:34:59] Speaker 03: completely ignores the whole point of an experimental demonstration project, the whole idea that the secretary is allowed to waive requirements in order for states to bring in new populations of patients and treat them and regard them as if they would be eligible for Medicaid. [00:35:16] Speaker 03: And for all those reasons, the district court's well-reasoned decision here is correct, and we would urge this court to affirm. [00:35:25] Speaker 06: Thank you, Mr. Parrish. [00:35:26] Speaker 06: Ms. [00:35:27] Speaker 06: Utrecht, [00:35:27] Speaker 06: We'll give you three minutes for rebuttal. [00:35:33] Speaker 07: Thank you, Your Honor. [00:35:33] Speaker 01: I think I'd like to begin by addressing some of the council's attempts to distinguish Adina and other cases. [00:35:40] Speaker 01: I think the critical point of those cases was missed in that distinction, which is that to be eligible for medical assistance and again, inpatient health services is a subset of medical assistance. [00:35:54] Speaker 01: To be eligible for medical assistance, there has to be a promise by the federal government to pay for particular specified services on behalf of a particular patient. [00:36:04] Speaker 01: And the reason why the Medicaid dish money that was available in Adina, University of Washington and similar cases was not, you know, the fact that that money was available to hospitals, it wasn't sufficient to make patients eligible for medical assistance is because [00:36:19] Speaker 01: you know, even though the hospital received more money for treating uninsured or underinsured patients, that money was available to hospitals specifically because those uninsured and underinsured patients were not eligible for Medicaid. [00:36:33] Speaker 01: And it was no promise to pay for those patients. [00:36:37] Speaker 01: It was simply helping to subsidize that cost, helping in supplemental income for the hospital. [00:36:43] Speaker 01: The hospital may have been eligible, but the patient was not eligible. [00:36:47] Speaker 02: the basis, I'm sorry, for the very first sentence that I'm sorry, if I recall correctly, that only payments can be made only with respect to particular patients. [00:37:00] Speaker 02: What is the basis for that statement? [00:37:05] Speaker 01: Sorry, you were a little quiet, Your Honor, I couldn't hear you. [00:37:07] Speaker 02: I'm sorry, well, the question is, what is the basis for what I think was your first sentence, that Medicaid payments can be made only with respect to individual persons? [00:37:17] Speaker 02: So, I want you to state what you meant. [00:37:21] Speaker 01: Well, so, you know, I, I'm directly quoting from, you know, this, this is this is specifically from a unit from University of Washington, in which the Medicaid dish payment was distributed exactly in the same manner as it is here or distributed by the state to the hospitals rather than through additional Medicaid payments. [00:37:39] Speaker 01: The being eligible for medical assistance means eligible for payments for part or all of the costs of certain enumerated categories of care and services for individuals. [00:37:49] Speaker 01: And here, you know, we don't have a promise by the federal government to pay for part or all of certain specified services. [00:37:56] Speaker 01: There's a pool of money that's distributed to all healthcare providers in the state. [00:38:00] Speaker 01: And the state has chosen to allocate that money, you know, based on the providers' proportionate costs. [00:38:07] Speaker 01: but there's no promise to pay. [00:38:09] Speaker 01: You know, there's no promise that a, if a patient gets treatment, the state and the federal government will collaborate to pay for that patient's treatment in part or all. [00:38:18] Speaker 01: There's only. [00:38:19] Speaker 02: Are the demonstration projects in which that is the case? [00:38:23] Speaker 01: Yes, your honor. [00:38:24] Speaker 01: There are certainly demonstration projects in which there is a promise to make payment for on behalf of patients. [00:38:31] Speaker 01: And you know, these are demonstration projects, for example, where, [00:38:34] Speaker 01: The state might say, traditionally, we cover, we provide the following services and we will pay for the following services up to patients that have a certain income level. [00:38:47] Speaker 01: But on a temporary basis, we want to expand that and cover people who are above that income level. [00:38:52] Speaker 01: And so that would be expanded coverage. [00:38:55] Speaker 01: Those patients who are included in the demonstration projects above the certain level would certainly be eligible for inpatient hospital services and would be eligible for matching payment. [00:39:04] Speaker 01: But that sort of thing isn't an issue here. [00:39:07] Speaker 01: And, you know, because the payments here aren't tied to the patients in any way, and, you know, there was no agreement in the terms of the demonstration project to make these patients eligible for payment on their behalf. [00:39:17] Speaker 01: That's exactly why these patients are not eligible for inpatient hospital services under the terms of regulation. [00:39:25] Speaker 05: Thank you, Ms. [00:39:25] Speaker 05: Newtrek. [00:39:26] Speaker 05: Thank you, Mr. Parrish. [00:39:28] Speaker 05: This case is submitted as well. [00:39:33] Speaker 00: This honorable court is now adjourned until this afternoon at 2.30 PM.