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Case number 21-5246, Ascension Borges Hospital et al.

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at Balance vs. Rush Duffley Memorial Hospital, 20 CD 01957 et al.

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vs. Xavier Becerra, Secretary of the United States Department of Health and Human Services.

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Mr. Ho for the at Balance, Ms.

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Lopez for the FLE, Xavier Becerra.

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Morning, Mr. Ho.

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Can we proceed when you're ready?

[00:00:32] Speaker 03:
Good morning, Your Honor.

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Drew Howe on behalf of the Appellate House.

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May it please the floor?

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Congress expressly requires the Secretary adjust Medicare policy through rulemaking.

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That safeguard provides the public the opportunity to both understand and comment on potential changes in the law, but it also allows the public the opportunity to hold the agency accountable for deviations from the law.

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Unless Congress speaks clearly and convincingly to the contrary, courts have long presumed that Congress intended judicial review for such agency actions.

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Here, the hospitals alleged that the secretary violated that rulemaking requirement, but they've been denied the opportunity to pursue that administrative appeal on the basis of a preclusion provision.

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They asked this court to decide whether that preclusion provision insulates the secretary

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from this express rulemaking obligation under the Medicare Act.

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There was rulemaking.

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There was notice and comment rulemaking, including on the question whether the 2015 only partially audited forms could be the basis for the proportional allocation.

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So what is it, your briefs refer again to audit protocols.

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Can you be more concrete about what is it

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that you believe should have been that wasn't subjected to notice and comment?

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Yes, Your Honor.

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Prior to the proposed rulemaking in May of 2019, in the fall of 2018, the secretary issued a review protocol to the financial intermediaries that were to conduct these reviews of the S10 worksheets.

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Those are the worksheets that the secretary provided, excuse me, that the hospitals provided to the agency to account for their uncompensated care.

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The hospitals had filled out those worksheets providing what they had been told by the agency, they had been instructed by the agency where they were to put into those, the uncompensated care.

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That included any care they had provided to individuals under their charity care policies or their financial assistance policies.

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What occurred in the fall of 2018 when those were reviewed by the agency's fiscal intermediaries were many of the hospitals received

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reviews or audits as the government refers to those.

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They drastically cut that uncompensated care from the financial, or excuse me, the fiscal year 2015 cost reports.

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In fact, I believe on... I don't think you've answered my question.

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I'm sorry.

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What is it that you believe should have been subjected to notice and comment rulemaking that was not?

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The review protocol, Your Honor.

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And what is the review protocol?

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You mean the audit procedures that were given to the intermediaries?

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The review protocol, yes.

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The review protocol that were given to the intermediaries that the agency was instructing the intermediaries what uncompensated care was.

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Because prior to that, the hospitals had been given instructions from the hospital on what uncompensated care was.

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which included all care they had provided under their charity care policies or their financial assistance policies.

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But when they provided those numbers, those numbers were changed on the S10 worksheets.

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And I believe the government even acknowledged that in the proposed rulemaking that followed in May of 2019.

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At the appellant's brief on page 10, we quote the government's rulemaking in May of 2019, where the government acknowledged that the audited worksheets showed that for 10% of the audited hospitals, there was at least a $20 million difference between the fiscal year 2015.

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So it's the definition of uncompensated care?

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That's what should have been subjected to?

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We believe so, Your Honor.

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Again, it was the allegations.

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We were cut off very early in the administrative process.

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that the results of the reviews show that there was a disconnect between what the hospitals.

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I understand those facts and I understand how your clients are concerned about it.

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I'm just trying to focus on, I mean, my understanding from the government is that ordinarily audit methodology is not subjected to notice and comment rulemaking.

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And I assume that if it were, that you would have cited many cases about that.

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That's true, Your Honor.

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And the cases the government cites to about audit protocol not being normally subjected to notice and comment rulemaking are true.

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I think the distinction here in this case is we're not so sure that those those cases are really applicable because in this case we're alleging that policy was changed through the audits, not the audits.

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What policy?

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That the uncompensated care that the hospitals have been told they could report

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Prior, it had a different definition.

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The hospitals had been told they could report all of their uncompensated care.

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And then when the government instructed the fiscal intermediaries to conduct these reviews, that the changes on these S10 worksheets reveal some change in policy at the agency level about what uncompensated care was, Your Honor.

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And that distinction, I think when you look, for example, the government cited to, I believe it's the Dirksen case,

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That's out of the 9th Circuit at 1458 and 1459 in the Dirksen case.

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That case stands for the principle that audit protocol are not normally reviewable and not normally subject to challenges, procedural challenges.

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But there, the 9th Circuit commented on the fact that the claims processing rules that were trying to be subjected to notice and comment didn't change

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the public's understanding of what the law was, they didn't create any new categories of claims or services that could be submitted to the government.

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We have alleged here that what has happened is that the change underlying these reviews was a change in what uncompensated care could be claimed on the cost reports, Your Honors.

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So the claim is not, the briefing sometimes refers to the hospital's perception that it's unfair that only

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certain hospitals' data was audited and certain other hospitals' data wasn't.

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That is not the locus of your challenge.

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No, Your Honor, it is not.

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Because that decision was subjected to notice and comment.

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That's correct, Your Honor.

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It was.

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I think at the administrative level, that was certainly part of the larger claim.

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But on appeal is specifically the issue about the notice and comment challenge we've watched against the policy change

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that were before.

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We think that's really important.

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And what has changed in this court's prior case law on this is the express rulemaking.

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When you say, I mean, you're saying the words that all sound good, but I have the same question to Judge Pilder.

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What exact policy is it that you think was created or changed that should have been made subject to notice and comment rulemaking?

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Was uncompensated care, which uncompensated care could be covered?

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That's what you think was changed?

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Yes, your honor.

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Prior to the reviews, the hospitals were allowed to claim all of, they understood that all of the care in their charity care policies and their financial assistance policies was an allowable cost reportable on their cost reports.

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And after these reviews, we believe the protocol, because of the differences in the numbers on the S10 worksheets that the government audited, that adjusted that.

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That's, we believe, an indication of a change in policy at the level that should be subjected to the merits claim that we have before the board.

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Is it the case that the individual audit for an individual hospital, the hospital has the ability to appeal that?

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but not in this case, Your Honor.

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The government's position is specifically because of these individual, these reconciliation reviews.

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Not for purposes of its use in the numerator or under the statute, but don't the worksheets have other functions for the hospitals?

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I mean, that's why they were available.

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And so to the extent that

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there's audits that affect them for their immediate purposes.

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Is there no appeal available to say this was misaudited or, you know, what are you finding here?

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I wonder if there was an appeal there.

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I want to be sure I'm clear with my words, was the worksheets, my understanding is the Estyn worksheets were used specifically for this purpose, for the purpose of estimating, in this case, the uncompensated care.

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But if Your Honor is referencing the cost reports and whether or not the cost reports are generally something that can be subjected to administrative review, the general answer to that question, Your Honor, is yes, they can.

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The agency issues notices of program reimbursement.

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It's a reconciliation process.

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Normally, providers can engage in an administrative appeal of that reconciliation process.

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In fact, many of the appellants here tried to do so.

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But the administrative board responded to that by saying it lacked the jurisdiction to go through that because the cost reports had issued, the fiscal year 2015 cost reports had been reviewed and the notice of program reimbursement had only been issued for purposes of the secretary's proposed rulemaking under the factor three adjustment.

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So in this case, Your Honor, I don't want to speak for the government, but my understanding from the board level was that they dismissed those for lack of jurisdiction under this preclusion provision.

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I'm not sure I entirely follow, but are you saying the audits were performed only for purposes of factor three, not for purposes of the underlying function of worksheets S-10?

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I believe that's the government's position.

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They audited these worksheets, the S-10 worksheets, for the purposes of this rulemaking.

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What makes this case different from the cases this court has previously had before it is the Supreme Court's decision in the lineup, which specifically applied the Medicare Act's overarching requirement for express rulemaking.

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In fact, in the context of this program, the disproportionate share hospital program.

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And that matters here because what this court said in a different case, in the ACLA case,

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was that when a statute has an express rulemaking requirement, that might shift the balance in the test that this court applies to decide what congressional intent was to enforce the strong presumption of judicial review.

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And here we have the reinforcement of Section 1395 HHA 2 under the Medicare Act, where that's an express rule requirement.

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It's an express rulemaking requirement.

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And there's no language in the preclusion provision issue, Your Honors.

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that strips away that rulemaking requirement from the secretary.

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It's very specific about what is precluded, the estimates and the time periods.

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And I think it's also important to reflect on the fact that this court or that other statutes in the Medicare Act that Congress has provided is clear intent of judicial stripping

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I'm sorry, stripping of judicial review by also not only targeting the unreviewable action, but also targeting the process itself.

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I think we understand all that.

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And as a general matter, you're correct.

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If you have a right to rulemaking, you have a right to rulemaking.

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The question is, you've got to have a policy to which you're pointing and saying to the court that policy was adopted without rulemaking.

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I mean, it's the Yale New Haven Hospital analysis is, in my view,

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largely on point with respect to this, but you've got to show a policy with respect to which you think was an adoption of that policy.

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It's in place, a landl covers it, and we didn't get a chance to look at it through notice and comment.

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I think what we're struggling with is what is the policy?

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You say protocols, but protocols with respect to what?

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One of the difficulties in this case, I think it's also, it's different from Yale New Haven is because the early stages in which we were cut off at the administrative level, we weren't able to fully develop a record on appeal.

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It was quite literally cut off.

[00:13:08] Speaker 02:
No, no, no, no.

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Let me tell you the way at least it's like me would look at this.

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It's not a hard thing to see that there's a policy there that's covered by the law and then ask whether that opted by notice and comment rulemaking.

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I'm trying to find the policy to which you're pointing.

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I don't care whether you were cut off early, late.

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That's beside the point.

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You have to show us the policy that you're concerned about that was adopted and, and then say, there was never notice and comment on this policy.

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We know we can't get to the merits behind this, but we're entitled to notice it.

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But what's the policy that you're fighting about?

[00:13:48] Speaker 03:
Understood your honor.

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I said my rebuttal time, if I could also continue to answer your question.

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I think here, again, my understanding is prior to this, the instructions that the agency had provided to hospitals on what they could claim on their cost reports, what uncompensated care was, was a broader definition than what they provided in their protocol, we think.

[00:14:18] Speaker 02:
In their protocol, how can you only be at a we think stage?

[00:14:21] Speaker 02:
Why couldn't you?

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How can you only be at a we think stage?

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Why wouldn't you know that?

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What was what the hospitals were told previously and what they were told now?

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Because we only have what the hospitals were provided previously and the government will not provide its protocol.

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We don't have the protocol.

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We can't look at the protocol and the rulemaking.

[00:14:42] Speaker 02:
You don't know what the hospitals were told?

[00:14:44] Speaker 03:
No, no, we know what the hospitals were told, Your Honor.

[00:14:46] Speaker 02:
Well, if you know what they were told before and you know what they were told this time, it seems to me you would be able to discern whether or not there's a difference.

[00:14:57] Speaker 05:
Maybe I can help.

[00:14:58] Speaker 05:
It sounds like what you're saying is the hospitals were provided guidance on what counts as uncompensated care,

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and they filled out the worksheet as 10 accordingly.

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And your supposition based on the results of the audits is that the intermediaries were told something else about what counts as uncompensated care.

[00:15:21] Speaker 05:
I have to say that is not an argument that I gleaned from your briefs and not want.

[00:15:28] Speaker 02:
That's why I'm struggling with my questions because we're trying to figure out precisely what it is you're going after.

[00:15:35] Speaker 05:
So it's really, if I understand you correctly, it's the definition of uncompensated care.

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Is that right?

[00:15:43] Speaker 03:
Your Honor, I see I'm out of time.

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We believe so, yes.

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Your Honor, CMS transmittals were provided to hospitals before these.

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The instructions provided what uncompensated care could be included on the cost reports.

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But your reality, that's outside of the record in this case.

[00:16:01] Speaker 04:
Well, I want to be clear about one other thing.

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There are a number of factors that the secretary is to take into account.

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And the fact that the hospitals received instructions to submit very broad reports

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doesn't necessarily mean that if an audit were performed and indeed it was determined that all of the care reported was actually provided to the eligible class, that doesn't necessarily mean the hospitals are going to get 100% compensation.

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I mean, that's been clear throughout, hasn't it?

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So the fact that there's a difference between what the hospitals reported according to instructions and what the intermediary said was appropriate in this case could be two different things based on other factors that have to be taken into account.

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That's why it's so difficult to understand what we would be saying in accepting your argument.

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And I think that's why, at least my understanding of why the panel is pressing you so on this.

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Yes, Your Honor.

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I think that what we're seeking is only the ability to go before the board and impress that case.

[00:17:43] Speaker 03:
That's what case?

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The merits of the case, I think Judge Rogers outlined that the government may have a different idea of why the numbers are different, that it wasn't a change in policy and that it was a different reconciliation process that they were going through.

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That is a possibility for the board, but we didn't have the opportunity to do that, Your Honor.

[00:18:05] Speaker 02:
Now you're saying this is a merits claim as opposed to a procedural notice, failure of notice and due process claim?

[00:18:11] Speaker 02:
No, Your Honor.

[00:18:13] Speaker 02:
Okay, I don't know how else to ask it.

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And my colleague, Judge Pillard, tried to boost up my question, still trying to figure out what the policy is you're trying to get at.

[00:18:23] Speaker 02:
And then Judge Rogers said, well, you know, the results look iffy to you, but that doesn't tell me when I'm looking at it, what policy is it that he thinks gave rise to these iffy results, iffy in your terms.

[00:18:40] Speaker 05:
Right.

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Any questions, colleagues?

[00:18:44] Speaker 05:
We'll give you some time for rebuttal.

[00:18:47] Speaker 02:
Thank you, Your Honor.

[00:18:56] Speaker 05:
Morning, Ms.

[00:18:56] Speaker 05:
Lopez.

[00:19:02] Speaker 05:
We'll hear you more clearly if it's at the right level, so don't rush.

[00:19:12] Speaker 01:
May it please the court, Carolyn Lopez, on behalf of the secretary.

[00:19:16] Speaker 01:
I think it might be helpful to just sort of take a step back to look at the overarching review bar, which has been interpreted by this court in two cases, in Florida Health and in DCH.

[00:19:27] Speaker 01:
And there, this court made very clear that any challenge that goes to the estimate, the secretary's estimate, falls clearly within the heart of the review

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bar.

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And so, for example, in Florida Health, it goes to the data that underlies the estimate.

[00:19:44] Speaker 01:
And in DCH, which should come out after this court's case in Alina, of course, which is the same as the Supreme Court's case in relevant parts, this court held that it also barred challenges to general rulemaking challenges to the methodology that underlay the estimate.

[00:20:00] Speaker 01:
And that's actually exactly what's happening.

[00:20:02] Speaker 05:
So well, just go with us for a moment.

[00:20:06] Speaker 05:
We have Alina also saying notice and comment rulemaking is not the challenges to failure to provide it are not necessarily barred.

[00:20:15] Speaker 05:
We have the Yale New Haven case, which describes a distinction between a claim that's going after the substance of the estimate and a claim that's saying you have to fulfill the notice and comment

[00:20:29] Speaker 05:
rulemaking obligations.

[00:20:31] Speaker 05:
So if we were to make that distinction, how would you respond?

[00:20:37] Speaker 01:
No, Your Honor, I would definitely disagree with that.

[00:20:41] Speaker 01:
So first of all, on a couple of points.

[00:20:44] Speaker 01:
So first, Alaina had to do, Alaina was decided before this court's, sorry,

[00:20:52] Speaker 01:
Alina was decided before Congress set up this entirely new methodology and when Congress both said, so it used to be that dish payments were sort of this retrospective thing that looked at the hospital's actual number, no sort of estimate in the same way that it's done here.

[00:21:06] Speaker 01:
And so Alina was about sort of the merits question of whether in that system notice and comment was required.

[00:21:15] Speaker 01:
Here we have something totally different.

[00:21:17] Speaker 01:
Congress set up a new dish payment system.

[00:21:19] Speaker 01:
which Congress says the secretary has to do this estimate on this really time-compatible frame.

[00:21:24] Speaker 01:
The estimate is interdependent with, you know, one hospital share altering the other hospital share.

[00:21:31] Speaker 01:
And at the same time, Congress said there will be no review, no administrative or judicial review that challenges the secretary.

[00:21:41] Speaker 01:
secretary makes.

[00:21:42] Speaker 01:
And so that doesn't mean that the secretary doesn't have to do notice and comment rulemaking.

[00:21:46] Speaker 01:
In fact, it's undisputed that the secretary did do notice and comment rulemaking on exactly this question when deciding whether or not this was the most appropriate data.

[00:21:56] Speaker 01:
And so there were comments that said both the audit was unfair because you only selected some hospitals.

[00:22:03] Speaker 01:
There were also comments that said

[00:22:05] Speaker 01:
The audit was unfair because we think that the results sort of vary so much that the protocols must not have been right.

[00:22:11] Speaker 01:
And the secretary in establishing the estimate said, we disagree with those comments.

[00:22:17] Speaker 01:
We think that the audits actually made this data more accurate.

[00:22:21] Speaker 01:
And that's why we're picking this data as the estimate.

[00:22:24] Speaker 01:
And we know that it's not really that there

[00:22:28] Speaker 01:
sort of, and this is in their own words, in both the complaint and in the brief, that they're not concerned about something happening in a vacuum.

[00:22:36] Speaker 01:
What they're concerned about is they don't like their audit results.

[00:22:39] Speaker 01:
And they don't like the fact that the secretary chose those audit results as a basis for the estimate.

[00:22:45] Speaker 02:
Now, what they're saying is the intermediary, they're alleging the intermediary did something different

[00:22:51] Speaker 02:
than the intermediary previously had done, change in policy, and they are titled to notice and comment rulemaking.

[00:22:58] Speaker 02:
I have to be very clear with you.

[00:22:59] Speaker 02:
I don't accept your argument on notice and comment rulemaking to the extent that it's inconsistent with Yale-New Haven.

[00:23:06] Speaker 02:
If a regulated party has a right to notice and comment rulemaking, they have that right.

[00:23:12] Speaker 02:
That's separate from the merits of the claim.

[00:23:14] Speaker 02:
And you're right.

[00:23:14] Speaker 02:
You have a big argument on preclusion with respect to the merits.

[00:23:19] Speaker 02:
That's not what their brief is arguing.

[00:23:23] Speaker 02:
we would deny notice and comment rooming.

[00:23:25] Speaker 02:
I still am trying to understand with respect to what.

[00:23:29] Speaker 01:
So two things, Your Honor.

[00:23:31] Speaker 01:
First, I agree with you that I am a little bit confused as to with respect to what and that as we've been discussing today, they got full notice and comment waiting on the issue of what the estimate would be, including whether or not to use these.

[00:23:46] Speaker 01:
audit protocols.

[00:23:47] Speaker 05:
And is the definition that was given to the hospitals, is it different from the definition that was given to the intermediaries?

[00:23:55] Speaker 01:
So I cannot say anything about again, because these audit protocols are confidential, but it is H.E.

[00:24:02] Speaker 01:
Justice's position that the audit protocols are completely consistent with the

[00:24:08] Speaker 01:
with the instructions given to folks.

[00:24:11] Speaker 05:
But also- More broadly, the audit only is for purposes of factor three.

[00:24:16] Speaker 05:
These are not auditing because the worksheets are originate for a different purpose.

[00:24:22] Speaker 01:
And thank you very much for the question, Your Honor.

[00:24:24] Speaker 01:
So this is part of the general cost reports that folks have to turn in and they are used for, they were used in this case for factor

[00:24:36] Speaker 01:
And that is something that the secretary said.

[00:24:38] Speaker 01:
We think this new, so that this sort of new worksheet came into being around the same time that there was the dish payment change.

[00:24:46] Speaker 01:
So it could be used for other purposes, but the secretary has always said, we think this would be a very useful data set for the agencies.

[00:24:53] Speaker 01:
And I do want to emphasize that I think one thing, one case that's helpful also is the Clarion case that we talked about in our brief.

[00:25:02] Speaker 01:
And so the Clarion case says,

[00:25:05] Speaker 01:
that where there are certain instructions to sort of the Medicare intermediaries, they don't actually change the substantive entitlement to payment.

[00:25:17] Speaker 01:
Those aren't the type of thing that even fall within the notice and comment requirement under a line.

[00:25:23] Speaker 01:
And that's exactly what we have here, because at the moment- Why is that?

[00:25:26] Speaker 02:
Because you're not a rule?

[00:25:28] Speaker 01:
No, Your Honor, because the secretary could have chosen a different... So at the moment that the audits happen,

[00:25:35] Speaker 01:
there's actually no change to the legal entitlement to payment.

[00:25:39] Speaker 01:
At that moment, the secretary could have said, you know what?

[00:25:41] Speaker 01:
I actually don't like the audit results.

[00:25:42] Speaker 01:
I'm going to use it as a basis for the estimate for these debt payment, some other data source.

[00:25:48] Speaker 01:
So the actual decision as to what the basis for the payments would be is in the ruling.

[00:25:57] Speaker 02:
And that's what they have.

[00:25:59] Speaker 01:
is in the rulemaking that set the 2020 dish payments, not in those sort of prior audit procedures, because it's the secretary's selection of that data as the most appropriate data that makes them eligible for payment on that basis.

[00:26:12] Speaker 05:
And I take it that the choice of the 2015 allocation is not just for 2020, that CMS plans to use that going forward.

[00:26:27] Speaker 01:
Uh, one small tweet to that.

[00:26:29] Speaker 01:
Yes, or they do plan to use that worksheet as 10 data and have continued to do audits, but each year they select a new transit data.

[00:26:36] Speaker 01:
And my understanding is that they're, they've currently moved on to more recent.

[00:26:41] Speaker 05:
So, but not that, so they're not going to use the 2015.

[00:26:45] Speaker 05:
In the past, they picked a year that they used.

[00:26:48] Speaker 05:
multiple times.

[00:26:49] Speaker 05:
They gathered the data and they continued to assume that the proportion, the proportionate share for each hospital was unchanged year to year.

[00:26:59] Speaker 05:
And they're not doing that anymore?

[00:27:01] Speaker 01:
No, no.

[00:27:02] Speaker 01:
So they do sometimes use a year sort of more than once, but they, my understanding is that they're no longer using the 2015.

[00:27:11] Speaker 01:
I believe it's 2017.

[00:27:15] Speaker 01:
It might be later.

[00:27:15] Speaker 01:
And part of that is because

[00:27:18] Speaker 01:
Again, this was a new data source.

[00:27:19] Speaker 01:
It was a new type of worksheet in 20, back in 2013.

[00:27:23] Speaker 01:
And the secretary said from that very first rulemaking, we think this is going to be a great data source.

[00:27:29] Speaker 01:
Once hospitals have had a chance to become more familiar with how to submit things, we've given them lots of opportunities to resubmit and we've got to figure out how to, you know, and, and usually data is audited.

[00:27:39] Speaker 01:
And so we've got to hold that into the system.

[00:27:41] Speaker 01:
And then once that got up and running, they've sort of become more efficient at doing that.

[00:27:46] Speaker 01:
And so we've moved on to more.

[00:27:47] Speaker 01:
updated years.

[00:27:48] Speaker 02:
Are you asserting that there was no change in what compensated care could be covered?

[00:27:58] Speaker 01:
Your honor, I'm not, I mean, that wasn't the focus of their brief.

[00:28:04] Speaker 01:
I'm not sure I entirely understand.

[00:28:07] Speaker 01:
And so I just, I just want to be forthright that I don't entirely understand their point today, but

[00:28:13] Speaker 01:
HHS's position is that the audit protocols are consistent with the instructions given to the providers, but also that that's a merits question, that the conclusion of review bar absolutely bars those types of merit questions, whereas in plaintiff's briefs, they quite candidly say the problem with these audit results is that they tainted, that the use of them tainted the dish payments, that they were a component of the dish payments.

[00:28:43] Speaker 01:
And so they really are, they're under this court's functional analysis.

[00:28:48] Speaker 01:
And again, DCH is a rulemaking.

[00:28:51] Speaker 01:
DCH was a rulemaking challenge too.

[00:28:52] Speaker 01:
And DCH, they said it was a slightly different rulemaking challenge.

[00:28:56] Speaker 01:
But DCH was a rulemaking challenge that said, we as the hospital, we as the hospitals don't like the merger rule.

[00:29:04] Speaker 01:
We submitted comments about that merger rule.

[00:29:07] Speaker 01:
And you think that the secretary acted arbitrary and capriciously.

[00:29:10] Speaker 01:
in not adequately responding to those.

[00:29:13] Speaker 01:
And this court said that those are out under the review.

[00:29:16] Speaker 05:
But just to clarify, and it was helpful, your answer saying that they don't plan to reuse the 2015 audited data in factor three.

[00:29:28] Speaker 05:
But imagine that HHS did plan to use it again.

[00:29:34] Speaker 05:
And imagine that the hospitals came and said, we're taking whatever you

[00:29:40] Speaker 05:
decided based on the estimate for 2020.

[00:29:45] Speaker 05:
But because you're going to use this again, we want, prospectively, to make sure that the defunct uncompensated care, which affects what we get at the end of the day, was subjected to noticing comment.

[00:30:02] Speaker 05:
Would your position be that the preclusion provision bars that claim?

[00:30:07] Speaker 01:
Yes, because the preclusion of review provision bars litigation in the first instance.

[00:30:12] Speaker 01:
So in this court's prior decisions, drawing distinctions like that, the court has always, so in American clinical one, this court first held that what was actually being, what was actually an issue in that case was independent of the agency actually shielded from review.

[00:30:32] Speaker 01:
And it's only after having made that first

[00:30:34] Speaker 01:
decision that the court then looks to the type of relief.

[00:30:37] Speaker 01:
And in that case, the court said, yes, prospective relief, but actually the one thing we definitely know is no retroactive relief, but he did have to make that finding first.

[00:30:45] Speaker 01:
And here we don't think that there is a way to untangle it in that way.

[00:30:50] Speaker 01:
What we're talking about is the data, the secretary's choice of appropriate data, which is Florida health.

[00:30:59] Speaker 01:
And what we're talking about is the secretary's methodology of ensuring accuracy of that data.

[00:31:04] Speaker 01:
which is through the use of audit protocols that are confidential as all audit protocols.

[00:31:08] Speaker 05:
How is it a challenge to her estimate if there's no estimate even extant yet?

[00:31:15] Speaker 05:
And that's what my hypothetical is trying to separate is that there's no calculation of any amount.

[00:31:21] Speaker 05:
It's just the rule that's going to go.

[00:31:23] Speaker 01:
What is the... I think it's that what the way that this court's functional analysis has worked is that

[00:31:34] Speaker 01:
you ask whether the type of agency action.

[00:31:37] Speaker 01:
So here the type of agency action is, can you use audit results where the audit protocols haven't been published?

[00:31:45] Speaker 01:
Which again is a very normal enforcement tool to not publish the sort of secret sauce of exactly how the audit works because then you can have circumvention.

[00:31:53] Speaker 01:
And so that type of perspective relief would be saying it's invalid for the secretary to choose this type of data

[00:32:04] Speaker 01:
as the basis for their estimate.

[00:32:07] Speaker 02:
That's not the nature of their claim.

[00:32:09] Speaker 02:
The nature of their claim is whatever overarching rules or protocols you're following, we're entitled to see in notice and comment rulemaking.

[00:32:17] Speaker 02:
They're not contesting, man.

[00:32:18] Speaker 02:
I agree with you, preclusion blocks that.

[00:32:21] Speaker 02:
You're wiping away Alino, and Alino's big.

[00:32:24] Speaker 02:
I mean, it says it's not just rules, it's all kinds of policies in there.

[00:32:28] Speaker 02:
It easily fits there.

[00:32:30] Speaker 02:
If I can figure out what the policy is,

[00:32:33] Speaker 02:
that they're concerned about.

[00:32:34] Speaker 02:
But for you to say because the rule that they want to see or know that you're following will later be used to get results that they can't see doesn't mean they're not entitled to notice and comment rulemaking on the rule.

[00:32:49] Speaker 01:
No, Your Honor, just briefly to go back to Clarion.

[00:32:51] Speaker 01:
So as far as I understand it, as they're arguing it today, they are saying that something happens at these audits that they

[00:33:03] Speaker 01:
And at the moment that the audit actually happens, there's no change to their legal entitlement to payment.

[00:33:13] Speaker 01:
And when there's no change to their legal entitlement to payment, a line doesn't apply in the first place.

[00:33:19] Speaker 02:
No, I see.

[00:33:20] Speaker 02:
I just disagree on what you think they're saying.

[00:33:22] Speaker 02:
They're not saying they're saying you followed something that was different than you previously did.

[00:33:29] Speaker 02:
The results may or may not be good, but we're entitled to know what it was you followed.

[00:33:33] Speaker 02:
And that's subject to notice and comment rulemaking.

[00:33:36] Speaker 02:
They may not be right, but you're overstating what their position.

[00:33:40] Speaker 02:
They are not.

[00:33:41] Speaker 02:
I read the brief again before, just before the case, they are not saying we're entitled to challenge the merits of what you did.

[00:33:48] Speaker 02:
They are saying we're entitled to know the protocols that you followed.

[00:33:54] Speaker 02:
That's all.

[00:33:55] Speaker 01:
No, Your Honor.

[00:33:56] Speaker 01:
So first of all, as we explained in our brief, that it would be highly irregular to force an agency to make public their audit protocols.

[00:34:07] Speaker 01:
But it's highly irregular to force an agency to make public their audit protocols.

[00:34:14] Speaker 01:
And they knew that.

[00:34:16] Speaker 01:
So essentially what they're doing is forcing the agency to no longer use audits on the data.

[00:34:21] Speaker 01:
And that is the best methodology that the agency has found to ensure data accuracy as part of this estimate.

[00:34:29] Speaker 01:
And again, sort of the tenor of, they're not actually injured at the time that the audit happens.

[00:34:36] Speaker 01:
So a lot of audits, a lot of Medicare audits,

[00:34:39] Speaker 01:
They happen after payments have been made.

[00:34:42] Speaker 01:
And so they are actually asking for the payments back.

[00:34:44] Speaker 01:
And those are really different than these types of audits where nothing happens to them until the secretary says, I actually think that this is the most appropriate data.

[00:34:53] Speaker 01:
I see that I'm above my time, but if there are further questions, I'm happy to answer them.

[00:35:00] Speaker 05:
Judge Rogers?

[00:35:01] Speaker 05:
No, thank you.

[00:35:06] Speaker 05:
Do these audit

[00:35:07] Speaker 05:
protocols go through internal government review, OMB or anything?

[00:35:13] Speaker 01:
I apologize, Your Honor.

[00:35:15] Speaker 01:
I don't know.

[00:35:15] Speaker 01:
And I don't want to make any misrepresentation on exactly how the protocols are created.

[00:35:23] Speaker 01:
Thank you very much.

[00:35:29] Speaker 05:
Council had used up time, but we had used up some of it.

[00:35:33] Speaker 05:
So as I told you, we would give you some extra time.

[00:35:36] Speaker 05:
We'll give you two minutes for rebuttal.

[00:35:53] Speaker 03:
First, I think the use of the word audit just changes the character of what we've alleged

[00:35:58] Speaker 03:
What we've alleged is that the rules were changed in the course of this.

[00:36:02] Speaker 03:
So if the government is saying it has the right to talk rule changes, requirement changes, or policy changes to the substantive requirements into its audits, and thus make them protected from a lineup and make them protected from HH2's rulemaking requirement, I think that's a real

[00:36:19] Speaker 05:
I hear you, but I also have to say, to be fair, I did not understand that to be your claim before you stood up here today.

[00:36:26] Speaker 05:
Is there anywhere you would point us to in your briefing where you made clear the nature of your challenge you've just articulated in a much more useful way?

[00:36:35] Speaker 05:
But I had a really hard time understanding what you meant by audit protocol.

[00:36:44] Speaker 05:
Right.

[00:36:45] Speaker 05:
it's not going to be possible for us to reach that claim unless it's been presented.

[00:36:49] Speaker 03:
Fair enough, Your Honor.

[00:36:51] Speaker 03:
The difficulty that we have faced is I think you've heard is we face the problem of not being able to reach the merits of these claims at the early stage of being dismissed on jurisdiction.

[00:37:01] Speaker 03:
So in paragraph four of our complaint before the lower court, we mentioned that we are specifically targeting the policies of the review protocol.

[00:37:10] Speaker 03:
I believe that's on

[00:37:15] Speaker 03:
J 28 is paragraph four.

[00:37:18] Speaker 03:
We allege that the failure of the policy to go through notice and comment rulemaking is a failure under HHA 24.

[00:37:28] Speaker 03:
We don't get into the definition of uncompensated care in that paragraph.

[00:37:33] Speaker 05:
Or anywhere.

[00:37:34] Speaker 03:
I'm sorry?

[00:37:34] Speaker 05:
Or anywhere specifically.

[00:37:35] Speaker 03:
That's correct, Your Honor.

[00:37:36] Speaker 03:
It's outside the Joint Appendix.

[00:37:38] Speaker 03:
It's outside the record because we simply couldn't get into

[00:37:41] Speaker 03:
I think one of the other concerns we have about what's happened here for the providers, I see them out of time here.

[00:37:48] Speaker 05:
Thank you.