[00:00:00] Speaker 00: Case number 23-5310, Battle Creek Health System et al versus Xavier Becerra, Secretary of the United States Department of Health and Human Services balance. [00:00:12] Speaker 00: Mr. Kennedy for the balance, Mr. Haug for the appellees. [00:00:17] Speaker 04: Good morning, Council. [00:00:19] Speaker 04: Mr. Kennedy, please proceed when you're ready. [00:00:23] Speaker 03: Kevin Kennedy for the government. [00:00:26] Speaker 03: The Provider Reimbursement Review Board has jurisdiction over challenges to determinations of the amount of the payment that hospitals will receive under Medicare. [00:00:35] Speaker 03: Under the Medicare Act and its implementing regulations, CMS makes such challengeable payment determinations at two points. [00:00:42] Speaker 03: First, where payment amounts can be determined prospectively, it does so in its annual rulemaking. [00:00:47] Speaker 03: Second, where payment amounts can only be determined retrospectively because they involve costier data, it does so in notices of program reimbursement. [00:00:55] Speaker 03: That scheme makes sense. [00:00:56] Speaker 03: It consolidates review so that once hospitals know precisely how much they'll be paid, they have one opportunity to challenge any feature of their prospectively set payment amounts and one opportunity to challenge any feature of their retroactively determined payment amounts. [00:01:09] Speaker 03: Plaintiffs desired approach in which they could challenge one component of a payment amount and the district court's holding below would upend that scheme. [00:01:19] Speaker 03: It would create uncertainty over which determinations sufficiently relate to payment warrant review [00:01:24] Speaker 03: and bog down the PRRB in piecemeal litigation over interim determinations that may or may not bear on the ultimate payment amount. [00:01:31] Speaker 03: This court should reverse the decision below. [00:01:33] Speaker 03: I welcome the court's questions. [00:01:36] Speaker 04: Well, I have a question that wasn't really brief, but it's about redressability in these circumstances. [00:01:42] Speaker 04: So what would happen if we ruled in favor of the challengers, given that, as I understand it, the payments for that year [00:01:53] Speaker 04: have already been made based on whatever ratio ultimately was deemed to be the appropriate one for FY2007. [00:02:02] Speaker 04: And so what's at stake here in concrete terms with respect to that year? [00:02:12] Speaker 04: And it could be done with respect to that. [00:02:15] Speaker 03: So if the PRB had jurisdiction over the challenge, [00:02:19] Speaker 03: then I believe they could obtain a recalculation of the amounts in their notice as a program reimbursement according to, you know, if in fact the part C days. [00:02:32] Speaker 03: So the idea would be it was wrong to include the part C. Days issue in the Medicare fraction. [00:02:38] Speaker 03: And there would be some question about how then the amounts of the dispayment should be calculated if that was incorrect, but they might obtain a different payment amount if so. [00:02:48] Speaker 04: Okay, so the government doesn't have any issue with the fact that if I know you have a lot of issues with whether the PRB had jurisdiction, but if the PRB did have jurisdiction, then the government has no problem with. [00:03:01] Speaker 04: We go forward. [00:03:02] Speaker 03: We haven't. [00:03:03] Speaker 03: We haven't raised a standing argument here, Your Honor. [00:03:05] Speaker 03: And I think, you know, we think that the PRB's dismissal, I guess it would be or a mootness argument. [00:03:11] Speaker 03: I do think it's, you know, [00:03:13] Speaker 03: It is odd that they have challenged fractions that were not ultimately used to make their determination as the amount of payment, which we raise in our finality argument. [00:03:23] Speaker 03: But we haven't raised a standing or mootness argument here, Your Honor. [00:03:29] Speaker 05: The CMS never reconsidered or revised its choice to count Part C patients toward the Part A populations. [00:03:39] Speaker 05: Is that correct? [00:03:42] Speaker 03: Between the time that these fractions came out, I think that's right after the fractions came out and between the time that the program reimbursement was ultimately issued. [00:03:56] Speaker 03: But again, the issue of the Part C days itself does not determine an amount of the payment. [00:04:04] Speaker 05: Yes. [00:04:04] Speaker 05: And then one of the reasons that you say it's not final, that the statute requires [00:04:12] Speaker 05: final determination, secretariously amount of payment under. [00:04:14] Speaker 05: But you say, well, it's not final because it could have been revised. [00:04:18] Speaker 05: And of course, there were things that were revised after 2009, of course. [00:04:25] Speaker 05: But as you just said, the decision to count Part C patients toward the Part A population, that was not revised. [00:04:33] Speaker 05: So under your theory that it's not final if it merely could have been revised, does that mean that no publication of Medicare fractions [00:04:42] Speaker 05: could ever be final? [00:04:45] Speaker 03: No, Your Honor. [00:04:47] Speaker 03: Our argument on finality is that the disproportionate share adjustment, you look to whether it represents the culmination of the agency's process on something. [00:04:57] Speaker 03: And the culmination, according to the regulations, occurs at the final determination of payment, which is in the notice of program numbers. [00:05:04] Speaker 03: But even that could be revised, right? [00:05:06] Speaker 03: It could have been revised. [00:05:07] Speaker 05: So it can't be the case that the test is [00:05:10] Speaker 05: It's only final if it cannot be revised. [00:05:15] Speaker 03: I agree with that, Your Honor. [00:05:16] Speaker 03: And I think that's black letter law. [00:05:20] Speaker 03: The question is not whether some final action could have been revised, but whether the action in question was final. [00:05:26] Speaker 05: And that action in question did reduce hospitals' dish payments, correct? [00:05:32] Speaker 03: No, Your Honor. [00:05:35] Speaker 03: The Part C days, I mean, [00:05:37] Speaker 03: So for the hospitals here, they don't know at the time that they receive their Medicare fractions, whether they will or will not receive a disproportionate share adjustment. [00:05:45] Speaker 03: The CMS issues Medicare fractions for every hospital, but it doesn't go on to issue dish payments for every hospital because only those hospitals that, based on the later computations that the secretary still needed to compute, qualify. [00:05:59] Speaker 05: Did it either reduce [00:06:02] Speaker 05: It seems like it had to have either reduced the dish payments or for some hospitals completely eliminated the dish payments, right? [00:06:10] Speaker 03: I think there are some hospitals who might have felt fallen below the line no matter what. [00:06:15] Speaker 03: So there's no direct link. [00:06:17] Speaker 03: But again, that's not the question under the statute. [00:06:21] Speaker 05: There's no hospital. [00:06:22] Speaker 05: Well, A, there's no hospital that got an increase in dish payments as a result of the choice to include part Cs in the part A population, correct? [00:06:32] Speaker 03: I think it's conceivable, but I'm not sure, Your Honor. [00:06:36] Speaker 03: But again, I think that, again, the statutory question is whether the challenge determination settled the amount of payment, meaning, in this court's terms, the per patient amount. [00:06:48] Speaker 03: And the Part C days, the resolution of the Part C days issue, certainly did not. [00:06:53] Speaker 05: Were there any remaining variables for the government to, in its expertise and discretion, make a decision about? [00:07:01] Speaker 03: Absolutely. [00:07:02] Speaker 03: So in addition to the Medicare fraction, the disproportionate share adjustment requires the agency to compute the Medicaid fraction. [00:07:10] Speaker 05: Right, but I thought all the numbers that go into the Medicaid fraction, the hospitals already have. [00:07:15] Speaker 03: So they have the cost report data, but it's not just math that goes between cost report data and the ultimate Medicaid fraction. [00:07:22] Speaker 03: There are interpretive choices that the agency needs to make. [00:07:25] Speaker 03: They need to decide, for example, how to determine who is eligible under a Medicaid plan and how to count patients participating in demonstration projects. [00:07:34] Speaker 03: So both of those interpretive choices are sort of a major variable between the cost report data and the ultimate disproportionate share adjustment that is per patient amount that they can challenge. [00:07:44] Speaker 05: And was that not the case in Washington Hospital? [00:07:49] Speaker 03: So no, Your Honor. [00:07:50] Speaker 03: There, as this court recognized, [00:07:53] Speaker 03: the secretary had acted in a final manner as to both of, both, there were only two variables and it acted in a final manner as to both of them. [00:08:00] Speaker 03: So they knew precisely how much they would pay. [00:08:02] Speaker 01: In Washington Hospital? [00:08:04] Speaker 01: In Washington Hospital. [00:08:05] Speaker 01: Washington Hospital said there were things that could be varied later. [00:08:08] Speaker 01: This was just an aspect of the final payment. [00:08:11] Speaker 01: That's why I don't understand how this case is not controlled by, why, I'm just reading it right now. [00:08:16] Speaker 01: They were very clear that this was just an aspect of, and I don't see how you're conflating a little i [00:08:23] Speaker 01: a double little i so a double i is not the same language as a single i and you just jumped right over and i was stunned by your opening we have precedent at least this judge appears to be directly on point and judge wall addressed all of your points and the fact that it is merely an aspect of the final payment [00:08:48] Speaker 01: does not mean that it's not a final determination, she said. [00:08:52] Speaker 01: And that's exactly what went on here. [00:08:54] Speaker 01: And she acknowledged that it could change later, that the final determination could change later, even though this aspect could be challenged now. [00:09:03] Speaker 01: And you're just ignoring all of that. [00:09:04] Speaker 03: Respectfully, Your Honor, I disagree. [00:09:06] Speaker 03: If I can address Washington Hospital first. [00:09:07] Speaker 01: No, no, you can't disagree, because your opening was one minute. [00:09:12] Speaker 01: And you never mentioned Washington Hospital. [00:09:14] Speaker 01: You never attempted to deal with the precedent in the circuit. [00:09:17] Speaker 01: It's directly on point. [00:09:19] Speaker 03: Well, if you'd allow me, I'd like to address it now. [00:09:21] Speaker 03: I would like for you to. [00:09:22] Speaker 03: OK. [00:09:22] Speaker 03: So in Washington Hospital, that language, some aspect of the payment calculation is describing the challenges that the providers there brought, not the determination that triggered the jurisdiction in that case. [00:09:34] Speaker 03: And if you look at the determination that triggered the dermatitis [00:09:37] Speaker 03: the jurisdiction in that case, the court is very clear that it settled the final variable factor and thus produced a per patient amount. [00:09:45] Speaker 03: And it was the availability of that precise per patient amount that hospitals could challenge under Romanet 2. [00:09:53] Speaker 03: Now, I agree that Romanet 2 and Romanet 1 are different provisions that have different scope. [00:09:59] Speaker 03: And where, for example, in the federal base rates of payment, [00:10:05] Speaker 03: its annual rulemaking, the agency determines, prospectively, the amount that hospitals will be paid under their base rate. [00:10:11] Speaker 03: It settles all the variable factors in that calculation. [00:10:15] Speaker 03: Providers can and do challenge under Romanet 2. [00:10:19] Speaker 03: It's simply the case where it hasn't reached a determination as to all of those variable factors that they cannot. [00:10:24] Speaker 03: And this one's retrospective. [00:10:26] Speaker 03: This one is retrospective. [00:10:28] Speaker 03: So you don't know until later. [00:10:30] Speaker 03: That is right. [00:10:31] Speaker 03: You don't know until later. [00:10:34] Speaker 03: Just taking a step back, hospitals regularly challenge their disproportionate share adjustments through their notices of program reimbursement or where there's an untimely reimbursement. [00:10:44] Speaker 03: This court has heard cases about disproportionate share adjustment, the agency's position on Part C days, because hospitals regularly raise those challenges [00:10:55] Speaker 03: against the notice of program reimbursement, or in the case of an untimely reimbursement. [00:10:59] Speaker 04: I guess the question is, do they have to? [00:11:01] Speaker 04: They might well do that regularly. [00:11:02] Speaker 04: And the question is, do they have to wait until then? [00:11:04] Speaker 04: And on that, can I just ask you, just as a practical matter in the way the world really works, you get the Medicare fraction. [00:11:12] Speaker 04: And then it's true that you don't know to a moral certainty what the final amount is necessarily because there's also other inputs. [00:11:17] Speaker 04: There's the Medicaid fraction. [00:11:19] Speaker 04: But there's also a bunch of information that the hospital actually has. [00:11:23] Speaker 04: And so I assume that what's happening when the hospital gets the data that was gotten here before the claim was filed was that they're then projecting what their dish payment is going to be. [00:11:32] Speaker 04: And because they have a lot of information that would give them that. [00:11:35] Speaker 04: And I guess my practical question is, [00:11:38] Speaker 04: Is it true that there are instances and a fair number of instances, or at least a non-trivial number of instances, in which what a hospital would forecast at that time actually turns out not to be the amount that they get? [00:11:50] Speaker 03: Absolutely. [00:11:51] Speaker 03: I think projection is the key word here. [00:11:53] Speaker 03: I mean, in addition to, and I will address your honor's question, it's not only sort of the delta between the amount in practice. [00:12:01] Speaker 03: It's also the fact that the statute [00:12:03] Speaker 03: describes the component calculations and assigns those to the secretary. [00:12:06] Speaker 03: So I think it's very odd that providers could get ahead of the secretary under the language of the statute. [00:12:11] Speaker 03: But addressing the amounts. [00:12:13] Speaker 04: Before you go on, because I want you to bracket about the amounts too, but was that different in Washington Hospital? [00:12:19] Speaker 03: That was different. [00:12:20] Speaker 03: On the way the statute talks about. [00:12:21] Speaker 03: If you read this court's decision, it says the determination as the per patient amount had two component variables. [00:12:27] Speaker 03: And it looked to see whether the agency had acted in a final manner with respect to both component variables. [00:12:32] Speaker 03: And so there, once the agency acted with respect to the second variable, it triggered the jurisdiction to review. [00:12:38] Speaker 03: So the agency had, by its own regulations, acted in a final manner on both of the things that mattered. [00:12:43] Speaker 03: Here, there are at least, I mean, there are multiple variables, but at least the Medicare and the Medicaid fraction. [00:12:51] Speaker 03: And if you look at the statutory language, it says an additional payment amount for the disproportionate share adjustment. [00:12:57] Speaker 03: I'm paraphrasing there. [00:12:58] Speaker 03: But then it says, you need to calculate at least the Medicare fraction, or you need to calculate the Medicare fraction and the Medicaid fraction. [00:13:05] Speaker 03: So just according to the statute, there hasn't been a final action on this second component. [00:13:10] Speaker 03: And I think that it's not only a statutory point. [00:13:15] Speaker 03: It is also a point about, in practice, how different the hospital's estimation is going to be from the actual numbers that come out in the disproportionate share adjustment. [00:13:25] Speaker 03: So on that point, [00:13:26] Speaker 03: There you can imagine a situation where the the agency's position on how to treat patients eligible for Medicaid or patients under a demonstration project. [00:13:39] Speaker 03: I believe your honor had a case about this recently. [00:13:41] Speaker 03: They didn't have a position on the books at the time the Medicare fraction comes out. [00:13:46] Speaker 03: And so they need to put, they have rulemaking and they determine their position on how to do those things in between when the Medicare fraction comes out and when the Medicaid fraction comes out. [00:13:55] Speaker 03: So that's going to put a huge wedge between, you know, a provider can't know exactly how those rules are going to come out. [00:14:01] Speaker 03: So there's a big interpretive question that could [00:14:03] Speaker 03: or come between when the providers think they can know how much they're going to get and when they actually know how much they're going to get. [00:14:09] Speaker 03: And then in every case, in addition to that sort of interpretive question, in every case, the Medicare contractors audit the numbers of the cost reports that the hospitals submit. [00:14:19] Speaker 03: So if you look at the cost report is what they used to estimate their dish payments. [00:14:25] Speaker 03: But the Medicare contractors audit them, and they often remove Medicaid days from the count. [00:14:32] Speaker 03: And so we point to a couple places in the administrative record, I believe at 109 and 110 of the administrative record, where in this case, as to some of the hospitals, the contractors remove days so that that's putting another wedge between the amount that they're estimating and the actual amount. [00:14:49] Speaker 04: So in terms of those two examples of wedges, what happens if that kind of wedge situation arises after [00:14:57] Speaker 04: what you even concede would be final, where is it the NPM? [00:15:02] Speaker 03: I'm forgetting the acronym. [00:15:04] Speaker 03: Notice the program reimbursement. [00:15:05] Speaker 03: NPR. [00:15:07] Speaker 04: So at that point, it's become final under your estimation, too. [00:15:12] Speaker 04: And then you could still have a scenario in which you could still have an audit and something could get re-configured, or is it too late to do it that way? [00:15:19] Speaker 03: So I'm not sure of the total extent of whether there could be an audit. [00:15:24] Speaker 03: But I think in that case, you would absolutely [00:15:26] Speaker 03: At the end, PR definitely triggers jurisdiction to challenge before the PRRB. [00:15:31] Speaker 03: So whether or not there might be a reopening or some other audit, whether or not there could be some other change that happens to the disproportionate share adjustment, you absolutely can bring your challenge before the PRRB once you have a notice of program reimbursement. [00:15:44] Speaker 03: I should also say that sometimes it takes a long time to issue these notices of program reimbursement. [00:15:48] Speaker 03: And my friends on the other side are very concerned about the delay. [00:15:51] Speaker 03: But there's also a backstop. [00:15:52] Speaker 03: If the notice of program reimbursement does not come, [00:15:56] Speaker 03: If you've submitted your cost report and 12 months elapsed, you can then bring a challenge before the PRRB. [00:16:01] Speaker 03: So I think that the concerns about delay here are substantially overstated. [00:16:09] Speaker 05: Do you think that there's a difference in the meaning of the text in the statute and the text I'm about to [00:16:22] Speaker 05: Contrast with that. [00:16:23] Speaker 05: So the statute says final determination of the secretary as to the amount of the payment versus. [00:16:30] Speaker 05: Imagine it said final determination of secretary of the amount of the payment. [00:16:35] Speaker 05: Do you think that as two versus of? [00:16:40] Speaker 05: Should matter. [00:16:42] Speaker 03: I think both of those would require a determination that sets the actual amount of the payment. [00:16:49] Speaker 05: So I get why that would be the case for [00:16:52] Speaker 05: You know, something S2 sounds like kind of related to or about, and, you know, a hypothetical off the top of my head, but, you know, a missed free throw can, you know, relate to the final score of the game, but it's not the final score. [00:17:14] Speaker 03: So I think if the statute said related to the amount of the payment, that would be a very different case. [00:17:19] Speaker 03: And that's sort of the interpretation that the other side is positing. [00:17:22] Speaker 03: But I do think ASTU draws quite a clear connection between the determination and the amount of the payment. [00:17:29] Speaker 03: But even if Your Honor disagrees about ASTU, which I think is sort of necessary, you have to interpret it in context, because it's this sort of connector word. [00:17:37] Speaker 03: If you look elsewhere, just at the language immediately proceeding, [00:17:40] Speaker 03: this in A, it says for those hospitals receive payments in the amount calculated under sections B and D, and then it refers to such payments, they can challenge such payments. [00:17:53] Speaker 03: And so I take it to be the whole scheme is referring to the actual determination of payment, an amount of payment. [00:18:00] Speaker 03: And just to make sort of a more policy oriented point here, [00:18:05] Speaker 03: If my friends on the other side were right that it meant something related to, then they could challenge their Medicare fractions. [00:18:12] Speaker 03: They could separately challenge a rule about how the agency was going to consider eligible days under Medicaid. [00:18:20] Speaker 03: It could separately challenge a rule about demonstration projects, all before they have received any of those had gone into an actual payment amount. [00:18:28] Speaker 03: So it's hard for me to see how that would actually expedite review and ultimate determination of the payment amounts. [00:18:35] Speaker 05: I even that helpful I did I do think of a better hypothetical though I think it's me all right. [00:18:42] Speaker 05: So imagine it's the first half of basketball game and the referee makes a final determination about a foul and that foul leads to 2 free throws that are made. [00:18:50] Speaker 05: It seems like it will be a final determination as to you know what became the final score, but it's not the final score. [00:18:58] Speaker 05: And it seems like [00:19:01] Speaker 05: It seems like that's sort of what's going on here. [00:19:02] Speaker 05: The secretary has made a determination as to the amount of the payment because the secretary has made a final determination that is going to reduce at least some hospitals dish payments, even though it's not an actual final payment. [00:19:19] Speaker 03: I don't know that I think in the basketball example, which I appreciate, there would be a, you would say that would be a determination as to the final score. [00:19:30] Speaker 03: I think it's a determination that affects the final score, but a determination as to the final score would be, you know, if they had to [00:19:38] Speaker 03: you know, figure out if a shot went in at the buzzer. [00:19:41] Speaker 03: And, and it did, they, you know, it did in fact go in and then they went to the score table and they said, okay, the final score is 103 to 100. [00:19:49] Speaker 03: That's the determination as to the final score. [00:19:52] Speaker 03: All the prior determinations, I think might affect the final score, but they're not determinations as to the final score. [00:19:57] Speaker 01: To follow up my colleague's example, it's like instant replay. [00:20:02] Speaker 01: You're entitled to instant replay, even though it may not affect the final score, but it has an impact on the entire process. [00:20:10] Speaker 01: And you say, no, that call was wrong. [00:20:13] Speaker 01: I want you to stop now. [00:20:17] Speaker 01: We want a determination now as to what the correct call should be. [00:20:22] Speaker 03: As much as I enjoy the basketball analogy, I am going to steer us back to the statutory text and say, the question is whether it determines [00:20:30] Speaker 03: amount of the payment and because it did not because many of the hospitals that receive the Medicare fractions will never go on to receive disproportionate share adjustments and none of them know precisely how much they would be paid. [00:20:41] Speaker 03: It doesn't satisfy the statute. [00:20:42] Speaker 04: What kind of if it really meant related to and it was the outer perimeter related to as in bearing on as in could potentially affect how many claims would the PRR be then [00:20:54] Speaker 04: get from hospitals? [00:20:55] Speaker 04: Because how many I mean, you know this team better than I do. [00:20:59] Speaker 04: How many determinations are there that could affect the final payment amount? [00:21:04] Speaker 03: I mean, I think there are myriad. [00:21:05] Speaker 03: I can't put a number on it. [00:21:06] Speaker 03: But I agree with Your Honor's point that this would bog down the PRRB in many, many determinations that only might bear on determination. [00:21:15] Speaker 03: And I'd point the court to this court's decision in Monmouth, where it said some procedural decision that might bear on the ultimate payment amount is not one that establishes or alters the actual payment amount. [00:21:27] Speaker 05: This seems more like a substantive decision than a procedural decision, a substantive rule versus a procedural one. [00:21:33] Speaker 03: I agree, but I think it's just as far away from, it bears just as indirect a connection to the actual amount of payment in that it does not set an amount of payment and it doesn't sort of in every case affect the amount of payment. [00:21:49] Speaker 03: But again, to Judge Cronovaston's point, [00:21:55] Speaker 03: The scheme that plaintiffs propose in the district court's decision with countenance is one that would really bog down the PRRB in many determinations. [00:22:06] Speaker 03: It makes sense to consolidate review at one point. [00:22:10] Speaker 03: That's a familiar scheme from the law. [00:22:11] Speaker 03: I think you have one point to challenge the rates that the agency sets prospectively after the IPPS rule. [00:22:17] Speaker 03: And this court sees many of those cases. [00:22:19] Speaker 03: And you have one chance to challenge after the notice of program reimbursement. [00:22:23] Speaker 03: And this court sees many of those cases as well. [00:22:25] Speaker 03: And that scheme works. [00:22:26] Speaker 03: And it allows plaintiff hospitals to challenge all of the methodological choices that went into their payment amount determinations. [00:22:33] Speaker 05: I'm not going to ask hypothetical. [00:22:39] Speaker 05: One of the amicus briefs has some dictionary definitions of as to. [00:22:43] Speaker 05: And those definitions include with respect to and concerning. [00:22:49] Speaker 05: Now, I think what you'll probably say is context matters. [00:22:53] Speaker 05: Context always matters. [00:22:55] Speaker 05: And I agree. [00:22:56] Speaker 05: I thought one of the takeaways from Washington Hospital is that the context here is that Congress made a choice that things like this would get decided earlier rather than later. [00:23:05] Speaker 05: Once Congress shifted from the [00:23:10] Speaker 05: and a retrospective regime to a more prospective regime. [00:23:14] Speaker 03: So I agree context matters. [00:23:16] Speaker 03: And that is my broad point. [00:23:17] Speaker 03: I think the context of this payment is that it is retroactive. [00:23:21] Speaker 03: You necessarily need the cost of your data to figure out the per patient amount. [00:23:25] Speaker 03: And so in that context, it makes good sense that you would challenge it at the end of the cost year when the total per patient amount has been determined. [00:23:34] Speaker 03: So Washington Hospital concerned a prospective payment, which is different than [00:23:39] Speaker 03: A prospective payment. [00:23:40] Speaker 03: A prospective payment. [00:23:41] Speaker 05: Yeah, sorry. [00:23:41] Speaker 05: Are there ever any times when a determination does not resolve every remaining variable that would affect the payment, and yet the determination can be challenged under A1, A2? [00:24:05] Speaker 03: So I don't think so, Your Honor, that's our test that they have to, that those determinations that trigger the PRB's jurisdiction under Romanet 2 are those that resolve the last remaining variable such that all of them have been resolved and you know precisely the per patient amount. [00:24:20] Speaker 05: What about, and I don't recall the details of Shands Jacksonville off the top of my head, but does Shands Jacksonville pass that test? [00:24:29] Speaker 03: So I believe that's a challenge to the annual rulemaking. [00:24:32] Speaker 03: And in that case, the federal base rates [00:24:35] Speaker 03: There has been a determination as to the amount of the payment with respect to the federal base rates, which are, you know, they include the wage index. [00:24:43] Speaker 03: They include the standardized amount. [00:24:45] Speaker 03: They include labor-related share. [00:24:47] Speaker 03: But the annual rulemaking determines all of those variables. [00:24:50] Speaker 03: And so once the annual rulemaking comes out, there has been a final determination as to the amount of payment because it determined all the variables in the formula. [00:24:58] Speaker 03: And hospitals know precisely how much they'd be paid per patient for any hypothetical patient. [00:25:02] Speaker 05: One of the brief says, Shands Jacksonville presupposed that A1, A2 authorizes review of the individual components of the base per patient calculation. [00:25:15] Speaker 05: And that base calculation consists of at least five components. [00:25:19] Speaker 05: Do you agree with that description of Shands Jacksonville? [00:25:22] Speaker 03: Yes. [00:25:23] Speaker 03: That, though I think that description sort of conflates the determination that triggers PRRB review with the methodological choices that a provider can get review of upon challenging such a determination. [00:25:37] Speaker 03: So there, there was a final determination as the amount of payment. [00:25:40] Speaker 03: The IPPS rule, for the reasons that I've explained, it settled all of those five variables. [00:25:45] Speaker 03: And then once you have a final determination as the amount of payment, you can get review of the agency's choice of how to resolve any of those variables. [00:25:52] Speaker 05: But your point is that you can only get that after all of the components have been decided. [00:25:57] Speaker 04: That's precisely right, yeah. [00:25:59] Speaker 04: Thank you, Your Honors. [00:26:00] Speaker 04: Thank you, Counsel. [00:26:00] Speaker 04: I'll give you a little bit of time for rebuttal. [00:26:13] Speaker 02: Mr. Hauk. [00:26:16] Speaker 02: Good morning, Your Honors. [00:26:18] Speaker 02: Drew Hauk for the Appalooe hospitals. [00:26:19] Speaker 02: May it please the court? [00:26:22] Speaker 02: This case does not require this court to break new ground. [00:26:25] Speaker 02: Rather, the hospitals ask it to reaffirm nearly 40 years of settled law regarding the plain language of subsection A, romenet two. [00:26:33] Speaker 02: At stake is judicial review of agency actions that directly affect the rights of hospitals to review of fair payment for treating vulnerable patients. [00:26:42] Speaker 02: You should affirm for three reasons. [00:26:45] Speaker 02: First, the secretary's publication of the Medicare fraction meets every test for finality. [00:26:50] Speaker 02: It marked the end of the agency's [00:26:52] Speaker 02: decision-making process and impose direct consequences on the providers. [00:26:56] Speaker 02: Second, the text of A Romanet 2 plainly permits this kind of pre-MPR appeal. [00:27:02] Speaker 02: It lets hospitals challenge determinations affecting dish payments or rates without waiting for an MPR. [00:27:08] Speaker 02: Requiring otherwise simply collapses A Romanet 2 into the preceding section, erasing Congress's protections for providers. [00:27:15] Speaker 02: Such a reading undermines these safeguards and worsens the harms Congress sought to prevent. [00:27:20] Speaker 02: Finally, delaying review when the outcome is a fait accompli allows errors in critical payments to persist, compounding financial harm to hospitals potentially for years and jeopardizing access to essential programs. [00:27:33] Speaker 02: Nothing could be further from what Congress intended with the faster predictable process that was baked into a Roman at two. [00:27:41] Speaker 02: Therefore, the hospitals ask this court to affirm the district court's decision, finding that the board has jurisdiction to hear this appeal. [00:27:47] Speaker 02: With that, I welcome the court's questions. [00:27:50] Speaker 04: So why isn't a lot of what you say countered by the fact that this particular payment differs from a law that otherwise occurs under the statute? [00:28:02] Speaker 04: Because this particular one is retrospective. [00:28:04] Speaker 04: And so with respect to this particular one, you need more information before you actually know the amount. [00:28:11] Speaker 02: Well, Your Honor, for two reasons, Your Honor. [00:28:14] Speaker 02: First, the idea that it's solely retrospective is factually inaccurate about how DISH payments [00:28:20] Speaker 02: It is adjusted retrospectively. [00:28:22] Speaker 02: That is accurate. [00:28:23] Speaker 02: When the NPR is received by the hospital, there is an adjustment to the payments that have already been made. [00:28:28] Speaker 02: But it does, the DISH adjustment sets a rate that is... What do you mean when you say the payments have already been made? [00:28:34] Speaker 02: There are interim payments that are made. [00:28:37] Speaker 02: So hospitals receive over the course of a year, prepayments on an estimate of what their DISH payments will be throughout the year. [00:28:44] Speaker 02: Those are made based on an estimate by the agency of their former cost reports of previous years. [00:28:51] Speaker 02: So for example, that's exactly why the June 2009 decision is so important. [00:28:57] Speaker 02: You'll see in the record, [00:28:58] Speaker 02: There was a transmittal issued in 2010. [00:29:01] Speaker 02: The agency noted that the June 2009 data was going to be used by the agency to make payments to the hospitals prospectively. [00:29:11] Speaker 02: They were going to get these dish adjustments prospectively. [00:29:14] Speaker 02: Those will be trued up at the end of a cost year. [00:29:17] Speaker 02: So it is true that there's a retrospective adjustment, but that's to make accurate the payments that had been made in real time over the course of a year, Your Honor. [00:29:26] Speaker 02: It is both prospective and retrospective. [00:29:29] Speaker 02: The second reason, and you'll find this rationale noted in Washington Hospital when this court was first addressing how do we understand prospective payments. [00:29:39] Speaker 02: They're not necessarily just prospectively paid. [00:29:42] Speaker 02: They're prospectively set. [00:29:44] Speaker 02: It's not accurate to think of them as prepayments entirely. [00:29:48] Speaker 02: And that's exactly how the DISH statute or how the DPP, the disproportionate patient percentage here works. [00:29:55] Speaker 02: It sets a percentage ahead of time and the hospitals get advanced knowledge of what that percentage is going to be and how it's going to impact them. [00:30:03] Speaker 02: It impacts them as the Supreme Court said by putting the Medicare Part C days here in the denominator of the Medicare fraction. [00:30:10] Speaker 02: Makes the fraction smaller and quote reduces hospitals payments considerably. [00:30:15] Speaker 02: That's not really rejected by the government. [00:30:18] Speaker 02: That's the known outcome of putting the Medicare Part C days in the fraction. [00:30:22] Speaker 02: By doing so, it certainly has a negative impact on the hospitals. [00:30:27] Speaker 02: And that's all the statute requires. [00:30:28] Speaker 02: It requires dissatisfaction by the providers by a determination made by the secretary that impacts their payments in certain sections of the Medicare Act and those certain sections include the dissection section and that's exactly where you'll find this calculation that's made by the secretary that includes these payments. [00:30:48] Speaker 04: So if they if the secretary if there's a [00:30:51] Speaker 04: similar thing that happens here, but in the very item that's at issue, that's under review, the secretary says, by the way, don't bank on this because we're still looking into this and you shouldn't take this as the definitive word because we're, you know, whatever they did the second time around with this payment, you think that that would still be final and it should give rise to the ability to go to the PRV? [00:31:18] Speaker 02: Yes, Your Honor. [00:31:20] Speaker 02: And that's because if we take the facts here, we should measure finality at the moment that the Secretary first publishes this data to the website. [00:31:29] Speaker 02: It was the final determination of the agency about where to put these Part C days, even when there was some indication given that they may not use this data to calculate reimbursements for these cost years in this sense retrospectively, that they wouldn't readjust the DISH payments for 2007 and 2008 cost years [00:31:48] Speaker 02: Subsequently, the agency said in 2010, actually, we will use that very data. [00:31:54] Speaker 02: That June 2009 data, we will use to give your interim payments for 2010. [00:32:00] Speaker 02: It's not as though this was some temporary or proposed information they were going to use. [00:32:06] Speaker 02: It was the very data they did use. [00:32:08] Speaker 02: And it's still this agency's policy. [00:32:10] Speaker 02: The Part C days still remain in the denominator of the Medicare fraction. [00:32:14] Speaker 02: Nothing has changed. [00:32:15] Speaker 02: And just as importantly here, there was some discussion of alternative methods for how hospitals might otherwise be able to appeal. [00:32:22] Speaker 02: These hospitals during the course of their administrative appeal, they took what Congress gave them as the first chance. [00:32:28] Speaker 02: They had the first opportunity to appeal this, to quickly resolve this, and the agency during that course of that process, their intermediary, indicated that there were no jurisdictional defects with the appeal. [00:32:39] Speaker 02: And when another determination came around that they could have appealed from, they did not appeal from them. [00:32:45] Speaker 02: That's true. [00:32:46] Speaker 02: But they didn't need to. [00:32:47] Speaker 02: They had no indication that what they had was a faulty appeal at all. [00:32:50] Speaker 02: And that door closed on them. [00:32:51] Speaker 02: And now they're left with this being. [00:32:53] Speaker 02: Well, the PRRB said it was not properly brought before the board, right? [00:32:57] Speaker 02: Seven years later, Your Honor. [00:32:58] Speaker 02: And there were no other alternative appeals for them to file at that point. [00:33:02] Speaker 02: I think it's also important. [00:33:03] Speaker 02: We've talked a little bit about hospitals that might receive NPRs that will have dish adjustments because they are actually receiving these payments. [00:33:10] Speaker 02: My friends on the other side noted, one key factor of the DISH structure here, the secretary's determination, it's also a threshold determination. [00:33:18] Speaker 02: Some hospitals won't receive a DISH payment. [00:33:21] Speaker 02: They won't receive interim payments. [00:33:23] Speaker 02: They won't receive a DISH payment on their NPR to be adjusted. [00:33:27] Speaker 02: That means they won't have anything to appeal via an NPR. [00:33:30] Speaker 02: They won't have an A romenet 1 appeal. [00:33:32] Speaker 02: They won't have an appeal to be made for not having received an NPR that they could have appealed from for their DISH adjustment. [00:33:38] Speaker 02: This is the prime avenue for them to appeal. [00:33:40] Speaker 02: So it's a very important method, which is exactly why Congress would have placed this appeal in this part of the statute to make sure that these sorts of determinations, which have an impact on thousands of hospitals, could be handled quickly and efficiently. [00:33:58] Speaker 05: Can I just kind of shift a little bit? [00:33:59] Speaker 05: Yeah, go ahead. [00:34:00] Speaker 05: I feel like you've always let me go first today. [00:34:05] Speaker 05: I feel bad. [00:34:07] Speaker 05: Mr. Kennedy said he thought it might be conceivable, at least, that a dish payment could increase as a result of counting the Part C patients toward the Part A populations. [00:34:21] Speaker 05: Do you agree with that? [00:34:24] Speaker 02: Yes and no, Your Honor. [00:34:26] Speaker 02: No, I don't think it's conceivable that counting the Part C patients in the Medicare fraction can increase a dish payment. [00:34:32] Speaker 02: I understood something slightly different to have happened, and I think [00:34:37] Speaker 02: Adding the, it's very technical, so I apologize. [00:34:41] Speaker 02: Adding the part C days into the Medicare fraction is going to always lower the dish ratio, or the SSI ratio, the Medicare side of that fraction. [00:34:50] Speaker 02: But it's only one half of the DPP, the larger, correct. [00:34:54] Speaker 02: The Medicare fraction, or I'm sorry, the Medicaid fraction could conceivably go off. [00:34:58] Speaker 02: There could be days that are added into that, or patient days that are added into that, and a provider could see that side of the fraction increase. [00:35:06] Speaker 02: In total, the payment that a provider could receive at the end of the day could be a larger payment. [00:35:11] Speaker 02: That's what I understood that discussion to mean. [00:35:13] Speaker 02: The provider's position though would still be that because the Medicare Part C days are included in the Medicare fraction, they would have always expected to still have been larger. [00:35:21] Speaker 02: That if you would have taken those Medicare Part C days out, it still would have been larger. [00:35:26] Speaker 02: So in layman's terms, if it were [00:35:28] Speaker 02: 10% plus 10% at the end of the day. [00:35:32] Speaker 02: So you had a 20% fraction. [00:35:34] Speaker 02: But if you took the Medicare Part C days out of the Medicare fraction, it would have been 11% plus 10%. [00:35:39] Speaker 02: You would have had a 20% DPP. [00:35:42] Speaker 02: That's the difference. [00:35:43] Speaker 02: The delta would be the 1% difference that the hospitals would view as their damages in this case for including the Medicare Part C days in the denominator. [00:35:50] Speaker 02: Does that make sense? [00:35:52] Speaker 02: Maybe. [00:35:53] Speaker 05: I mean, I'm guessing that if, at the end of the day, [00:35:57] Speaker 05: you ended up with more money, you would not be here standing on principle and saying, oh, no, no, we deserve less money because the fraction should be higher and one fraction should be lower. [00:36:08] Speaker 02: Well, under that example, you'd end up with more money still if the Part C days were further out because both fractions would be going up, not one fraction going down and one fraction going up for the end ratio. [00:36:20] Speaker 05: So now I am a little confused. [00:36:22] Speaker 05: It sounds like now you're saying it will always be the case that under the government's decision that's being challenged here. [00:36:30] Speaker 05: Yes. [00:36:31] Speaker 05: It will always be the case. [00:36:33] Speaker 05: It will never be the case that you get more money. [00:36:37] Speaker 02: It will always be the case under the challenge decision that the inclusion of the Medicare Part C days in the denominator of the Medicare fraction will deflate the Medicare fraction, which is one half of the larger ratio. [00:36:50] Speaker 05: But it could inflate the Medicaid fraction so much. [00:36:53] Speaker 02: No. [00:36:55] Speaker 02: I understood the discussion earlier that they were talking about an adjustment that could later happen with inputs into the Medicaid fraction, which is separate. [00:37:03] Speaker 02: Oh, I apologize. [00:37:04] Speaker 02: I misunderstood your question. [00:37:05] Speaker 05: My question is, [00:37:06] Speaker 05: Deflating the Medicare fraction by itself means you get less money, right? [00:37:11] Speaker 05: Always. [00:37:12] Speaker 05: Okay. [00:37:12] Speaker 05: And is it ever the case that because you have deflated the Medicare fraction, you are inflating the Medicaid fraction so much that you're going to get more money at the end of the day? [00:37:23] Speaker 02: If I haven't demonstrated, I'm bad at math already, but no, my answer to that is no, that should not be the case. [00:37:30] Speaker 02: No. [00:37:30] Speaker 05: Okay. [00:37:33] Speaker 02: one other piece that was pointed out there. [00:37:36] Speaker 02: I see I'm out of time. [00:37:37] Speaker 02: Your honor. [00:37:37] Speaker 02: Are there any other questions? [00:37:39] Speaker 04: I don't believe so. [00:37:41] Speaker 05: I asked Mr Kennedy about whether the government would ever kind of flunk its own test. [00:37:49] Speaker 05: Um, it's testing. [00:37:52] Speaker 05: Um, a pronouncement is not a determination as to the amount of the payment. [00:37:56] Speaker 05: If it [00:37:57] Speaker 05: fails to resolve every remaining variable. [00:38:00] Speaker 05: And Mr. Kennedy said no, the government will never flunk that test. [00:38:05] Speaker 05: The government would never say something is reviewable unless it satisfies that that standard. [00:38:12] Speaker 05: Do you agree with Mr. Kennedy when he says the government would never flunk its own test? [00:38:21] Speaker 02: The test, there are no variables. [00:38:23] Speaker 02: No, I don't. [00:38:24] Speaker 02: I agree with the other cases that have been cited. [00:38:27] Speaker 05: What's an example of a time when the government allows an A1, A2 challenge, even though the CMS determination has not resolved every remaining variable? [00:38:46] Speaker 05: Where the government allows that? [00:38:48] Speaker 05: Yeah, where the government concedes that the challenge is right. [00:38:53] Speaker 02: This court has found in these final rules, for example, I think you look to wage index cases, for example, or Cape Cod, where there was a rate setting challenge. [00:39:03] Speaker 02: I think those are prospectively setting, as the amici pointed out, [00:39:06] Speaker 02: They're prospectively setting rates and adjusting rates that will be paid. [00:39:12] Speaker 02: But there are other variables that are not yet set in what the final payment amount is going to be in an NPR. [00:39:18] Speaker 02: That final payment amount in an NPR is going to include many variables that are estimated rates. [00:39:23] Speaker 02: That includes DISH. [00:39:24] Speaker 02: It includes outlier payments. [00:39:25] Speaker 02: It'll be at the end of the year. [00:39:26] Speaker 02: And those are estimates throughout the year. [00:39:29] Speaker 02: So I don't think that meets that same standard. [00:39:31] Speaker 05: I'd go to Cape Cod and find the [00:39:35] Speaker 05: Is that a case you're talking? [00:39:36] Speaker 05: Yeah, I'm sorry. [00:39:36] Speaker 05: Go to the Cape Cod case and I'd see all here. [00:39:39] Speaker 05: The government is basically. [00:39:41] Speaker 02: I don't think the government says that. [00:39:43] Speaker 02: I think that's what Cape Cod is. [00:39:44] Speaker 02: It's a it points to it's an IPPS final rule appeal and final rule appeals by nature include lots of different variables that are in them. [00:39:51] Speaker 02: I don't think they stand for the principle that all variables have been set in advance and we know what the actual amount that a hospital is going to receive at the end of the year is. [00:40:01] Speaker 02: which is what I understand the government's position to be. [00:40:03] Speaker 02: It's a rule that's going to set rates. [00:40:07] Speaker 02: Thank you, Your Honors. [00:40:08] Speaker 04: Thank you, Council. [00:40:10] Speaker 04: Mr. Kennedy will give you two minutes for a rebuttal. [00:40:14] Speaker 03: Great. [00:40:15] Speaker 03: I'd just like to address two things that my friend on the other side said. [00:40:19] Speaker 03: First, on that last point, with respect to the IPPS rule, when the IPPS rule comes out, hospitals know precisely the per patient amount. [00:40:27] Speaker 03: that they're going to be paid. [00:40:28] Speaker 03: And that's why they can bring a challenge under Romanette 2, because there's been a final determination as the amount of the payment that they will be paid under the perspective payment system. [00:40:36] Speaker 03: They don't know the total reimbursement that they're going to receive, because that total reimbursement depends on cost to your data. [00:40:43] Speaker 03: They couldn't bring a challenge under 1. [00:40:44] Speaker 03: That occurs only in the notice of program reimbursement. [00:40:47] Speaker 03: That's very different from the case here, where they don't know the per patient amount, because the very per patient amount is determined retroactively and determined based on cost to your data. [00:40:56] Speaker 03: So in one case, the cost of your data comes after the per patient amount in the federal base rates. [00:41:00] Speaker 03: In the other, the cost of your data comes before the termination of the per patient amount. [00:41:05] Speaker 03: And that's what separates them. [00:41:06] Speaker 03: Second, the idea that interim payments somehow makes the disproportionate share adjustment perspective is wrong. [00:41:13] Speaker 03: The final payment determination, those are just placeholder payments that can be revised. [00:41:19] Speaker 03: Yeah, they're advances. [00:41:19] Speaker 03: The hospitals have no statutory right to them. [00:41:23] Speaker 03: They can be revised up or down. [00:41:25] Speaker 03: They're expressly non-final determinations as the amount of pain. [00:41:29] Speaker 03: They're just advances. [00:41:30] Speaker 03: So if the court has no further questions, I urge the court to reverse. [00:41:35] Speaker 04: Thank you, counsel. [00:41:36] Speaker 04: Thank you to both counsel. [00:41:37] Speaker 04: We'll take this case under submission.