Cabell Huntington Hospital, Inc. v. ShalalaCabell Huntington Hospital, Inc. v. Shalala
Lead Opinion
Affirmed by published opinion. Chief Judge WILKINSON wrote the majority opinion, in which Judge SMITH joined. Judge LUTTIG wrote a dissenting opinion.
OPINION
Four West Virginia hospitals challenge Medicare reimbursement calculations made by the Secretary of Health and Human Services. The hospitals argue that “disproportionate share” (DSH) payments, which are made to hospitals that serve a disproportionate number of low-income patients, were calculated by the Secretary based on an incorrect reading of the Medicare statute. The district court agreed with the hospitals and granted summary judgment in their favor. We affirm the judgment of the district court.
I.
When Congress enacted an overhaul of the Medicare payment system in 1983, it noted that low-income Medicare patients have generally poorer health and are costlier to treat than high-income Medicare patients. See Rye Psychiatric Hospital Center, Inc. v. Shalala, 52 F.3d 1163, 1164 (2d Cir.1995). To compensate for this disparity, Congress authorized the Secretary to disburse. extra Medicare funds — DSH payments — to hospitals that treated a disproportionate share of
The four plaintiff hospitals in this case serve a disproportionate number of low-income Medicare recipients, аnd are therefore entitled to DSH payments. They sought judicial review, under
n.
Our task in this appeal is to interpret the statutory formula for Mediсare DSH payments to health care providers. The goal of statutory interpretation is to implement congressional intent. Where the statute speaks clearly to the issue at hand, the inquiry ends. Chevron U.S.A. v. Natural Res. Def. Council,
The DSH formula is composed of the sum of two fractions. Both fractions are designed to count the number of low-income patients served by a hospital, but each fraction counts a different group of those patients. The first, called the “Medicare fractiоn” or the “Medicare proxy” counts Medicare recipients who are entitled to supplemental security income (SSI), a federal low-income supplement.
The second fraction of the calculation is called the “Medicaid fraction” or “Medicaid proxy.” It counts patients who are not entitled to Medicare benefits, but who qualify for Medicaid, a joint federal-state program serving indigent persons. This second fraction, the Medicaid proxy, is the one at issue in this case. This fraction reads:
the fraction (expressed as a percentage), the numerator of which is the numbеr of the hospital’s patient days for such period which consist of patients who (for such days) were eligible for medical assistance under a State plan approved under [the Medicaid program], but who were not entitled to benefits under part A of [the Medicare program], and the denominator of which is the total number of the hospital’s patient days for such period.
Because Medicaid is a joint federal-state program, states vary, within the broad federal requirements, on eligibility rules and coverage. Some states, like West Virginia, limit the number of days that patients are covered for inpatient hospital care under Medicaid. 3 Medicare and Medicaid Guide (CCH) ¶ 15,-656 at 6615. This court must decide whether the emphasized language in the above Medicaid proxy means DSH payments should take account of only those inpatient hospital days which are actually paid by West Virginia’s Medicaid program (as the Secretary maintains), or whether the calculation should in-
The question is of some practical importance. If the Secretary’s interpretation prevails, hospitals serving large numbers of Medicaid recipients who outstay their state-imposed day limit will receive neither Medicaid reimbursement nor Medicare DSH payments for these additional hospital days. If the hospitals’ interpretation prevails, these hospitals will receive significantly greater DSH payments to offset the cost of serving poorer patients. To determine which interpretation is correct, we must carefully examine the phrase “eligible for medical assistance under a State [Medicaid] plan.” We first аddress the choice of the word “eligible” and then analyze how it fits with the rest of the language of the proxy.
A. Eligible
According to federal statute, certain patients must be covered under a state Medicaid plan for certain specified services. These mandatory categorically needy people are both low income and are either aged, blind, disabled, pregnant, or members of families with dependent children.
West Virginia’s Medicaid plan itself reinfоrces this distinction. The first section of the plan, entitled “Eligibility,1*’ lists the income, status and resource requirements of all the people that the plan covers. 3 Medicare and Medicaid Guide (CCH) ¶ 15,656 at 6613. The second section, entitled “Scope of Medical Care Provided,” describes the services covered, including limitations on that coverage. Id. at 6615. This is the section which provides for a maximum of twenty-five paid hospital days under Medicaid, in West Virginia.
Thus, there is a clear difference between eligibility for Medicaid payments under state plans and entitlement to them. This difference is reflected in the languаge of the two proxies. One — the Medicare proxy — is keyed to the concept of entitlement. It speaks of “patients who (for such days) were entitled to benefits under part A of [the Medicare program] and were entitled to supplementary security income benefits.”
Notwithstanding this difference between the two proxies, the Secretary would have us read the word “еligible” in the Medicaid proxy to mean exactly the same thing as the word “entitled.” Indeed, she uses the two
The fiscal intermediary determines, for the hospital’s cost reporting period, the number of patient days furnished to patients entitled to Medicaid but not to Medicare Part A, and divides that number by the total number of patient days in that same period.
We cannot endorse the Secretary’s reading. To do so, we would have to violate both a clear canon of statutory construction, and the plain meaning of the two terms. “Where Congress has chosen different language in proximate subsections of the same statute, courts are obligated to give that choice effect.” United States v. Barial,
[h]ad Congress intended to include in the Medicaid Proxy numerator only those patient days for which Medicaid benefits were actually paid by the state, it could have written the statute to read “which consists of patients who (for such days) were [paid] medical assistance under a state plan approved under [Medicaid].” Congress having chosen the word “eligible,” rather than “paid,” the Secretary is not at liberty to give the statutory language an entirely different and more restrictive meaning.
That the terms “eligible” and “entitled” are not interchangeable becomes eminently clear with everyday examples of the words’ eommon meanings. In a football game, wide receivers are eligible to receive the ball from thе quarterback, but none of them is entitled to receive it. Similarly, one who receives a letter informing him that he is eligible to win ten million dollars in the Publishers Clearing House Sweepstakes is sadly mistaken if he thinks he is entitled to the money. In the same vein, a patient who is “eligible” for Medicaid becomes “entitled” to payment only after using one of the covered medical services. Congress chose the word entitled for the Medicare proxy and the word eligible for the Medicaid proxy. Congress’ use of separate words demonstrates it intended for each to have a separate meaning.
B. Medical assistance under a State plan
“Medical assistance” is defined in the Medicaid statute as “payment of part or all of the cost” of twenty-five listed types of medical
The Secretary argues that “eligible for medical assistance” cannot include hospital days which are unpaid by the state Medicaid plan because the Medicaid statute defines “medical assistance” as “payment.”
Our good dissenting cоlleague reads this statute as though it were written “eligible for payment of inpatient hospital care.” However, this is not the wording Congress chose. Congress instead wrote “eligible for medical assistance,” and prescribed a specific definition for “medical assistance.” We must respect that choice.
The phrase “under a State plan approved under [the Medicaid program]” does no more than reference the particular Medicaid plan covering the patient in question; Such Medicaid plans are formulated by each state (“a State plan”) but must comply with the fеderal Medicaid statute in order to receive federal funds (“approved under subchapter XIX of this chapter”). See
It is apparent that “eligible for medical assistance under a State plan” refers to patients who meet the income, resource, and status qualifications specified by a particular state’s Medicaid plan, whether or not they are actually receiving payment for a particular type of service or for a particular duration of coverage. A patient could be no longer entitled to Medicaid payment for inpatient hospital services because he had exhausted his coverage, but remain eligible for Medicaid payment for a host of other services, should he need them. Thus, by a plain reading of the statute, hospital days need not be paid by a particular state Medicaid plan to be counted in the Medicaid proxy for the DSH calculation.
C. For such days
Both the Secretary and the hospitals look to the parenthetical “for such days” in the Medicaid proxy to bolster their interpretation. The statute reads: “the number of the hospital’s patient days for such period which consist of patients who (for such days) were eligible for medical assistance under a State plan ...” •
We believe that “for such days” modifies the phrase in which it is embedded: “patients who (for such days) were eligible.” Read with an eye to grammatical proximity, “for such days” clarifies that a patient should be counted only for the days on which he meets the income and resource qualifications; if he acquires resources part wаy through his hospital stay such that he no longer is eligible for Medicaid, then his days beyond that point are not to be counted in the fraction. Similarly, if a patient is ineligible for Medicaid when he enters the hospital, but depletes his resources such that he becomes eligible part way through his stay, his hospital days prior to eligibility should not be counted in the DSH calculation. See Legacy Emanuel Hosp. & Health Center v. Shalala,
The Secretary argues that the rest of the sentence, if interpreted in this manner, renders “for such days” essentially reрetitive and meaningless. We disagree. To the contrary, “for such days” is necessary to specify that patients who met the Medicaid eligibility requirements during only part of their stay are counted only on their eligible days. Without “for such days,” the statute might be interpreted to include all the days a patient was in the hospital, as long as he was eligible for Medicaid at some point during the stay.
III.
Both parties urge this court to look to the legislative history of the statute for clarification of its meaning. The statute is the product of the usual complex courtship between a House bill (H.R. 3128) and a Senate bill (S. 1606). Each bill is acсompanied by its own retinue of reports, comments, amendments, and debates. If the statute is complex, the legislative history is more so. Drawing from it would necessarily be an exercise in selectivity, which we decline to undertake.
We are mindful of the expertise of ' agencies charged with implementing statutory directives. Chevron,
[t]he judiciary is the final authority on issues of statutory construction and must reject administrative constructions which arе contrary to clear congressional intent. If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect. Chevron,467 U.S. at 843 n. 9,104 S.Ct. at 2782 n. 9 (citations omitted). Here, Congress had an inténtion: to make DSH payment calculations based on the number of patients eligible for state Medicaid. The agency had a contrary intention: to make such calculations based on the number of patients entitled to Medicaid payment for inpatient hospital care. In the case of conflict, it is clear whosе interpretation shall prevail.
Three sister circuits agree with us. The Ninth, Eighth and Sixth Circuits all hold that the Secretary’s interpretation of the Medicaid proxy does not comply with congressional intent as expressed in the statute and is therefore impermissible. Legacy Emanuel Hosp. & Health Center v. Shalala,
IV.
For the foregoing reasons, we affirm the judgment of the district court.
AFFIRMED.
Notes
. Although the provision in dispute in this сase is part of the Medicare statute, we must look to the Medicaid statute for guidance on the meaning of terms used in the Medicaid proxy.
. In the preamble to the promulgation of her regulation, 51 Fed.Reg. 16777, the Secretary uses the word "eligible,” but defines the fraction to include only paid days:
Medicaid covered days will include only those days for which benefits are payable under Title XIX. Any day of the Medicaid patient's hospital stay that is not payable by the Medicaid program will not be counted as a Medicaid patient day since the patient is not considered eligible for Medicaid сoverage on those days. For example, if a patient is hospitalized for 15 days and is eligible for Medicaid benefits for 10 of those days, only the 10 covered days will be considered Medicaid patient days for purposes of determining a hospital’s disproportionate patient percentage.
Dissenting Opinion
dissenting:
We have previously observed that the Medicare and Medicaid provisions “are among the most completely impenetrable texts within the human experience.” Rehabilitation Ass’n. of Virginia v. Kozlowski,
According the statute’s parenthetical phrase “for such days” its natural meaning as a cross-reference to the “hospital patient days,” or “inpatient days,” referenced earlier in the same sentence — the only “days” to which the parenthetical could possibly refer —the plain meaning of the statute is that a hospital may include in its “hospital patient days” only those days for which a patient was eligible to receive payment for his inpatient .hospital care. Cf. 51 Fed.Reg. 31460 (Sept. 3, 1986) (Medicaid fraction includes “patient days for which the Medicaid patient was eligible to have his or her [hospital] care paid for by the Medicaid program”). Thus the statute’s title: “Payments to hospitals for inpatient hospital services,” see
In the course of rejecting the Secretary’s plain meaning interpretation of
So understood, however, the parenthetical is, as the Secretary notes, superfluous, for the provision would have precisely the same meaning- absent the parenthetical: “Hospital patient days” would still comprise only those days for which patients were “eligible” for medical assistance under the various state laws governing Medicaid qualification. Indeed, if the parenthetical is understood as
Nor is the parenthetical necessary, as the majority suggests, in order to ensure that all of the days that a patient is in the hospital are not included in the proxy simply because the patient was eligible for Medicaid on some of the days during his hospital stay. See id. Because the statutory unit of measure is “patient days,” it would have been clear even without the parenthetical that a hospital could not include in the proxy those days as to which a patient was ineligible for any form of medical assistance.
The majority also concludes that according the parenthetical clause its plain meaning would render
The majority believes that the plain-meaning interpretation of the statute requires that “an otherwise Medicaid-eligible patient who has exhausted his coverage for inpatient hospital care is no longer ‘eligible for medical assistance’ because he can no longer receive payment for inpatient services,” that the term “medical assistance” dоes not always include all of the twenty-five services listed in
The majority, of course, ultimately rejects the Secretary’s plain meaning interpretation of the statute as a whole solely on the ground that Congress used the word “entitled” in the Medicare proxy, see
In sum, I am convinced that Congress did, as the Secretary argues, plainly allow hospitals, in this provision governing “Payments to hospitals for inpatient hospital services,” to include in their “hospital patient days” only those days for which patients were eligible to receive payment for their inpatient hospital care. But I have no doubt whatsoever that, at the very most, the statute is ambiguous for the combined reasons set forth in the two opinions for our court. In either event, reversal of the district court’s judgment is required. Accordingly, I dissent.