MCLAREN FLINT, Plaintiff, v. ALEX M. AZAR II, Secretary, Department of Health and Human Services, Defendant.
Civil Action No. 18-2005 (RDM)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
May 31, 2020
RANDOLPH D. MOSS
Under the Medicare Statute,
Plaintiff, McLaren Flint, is a Medicare-participating hospital that joined a group appeal based on an RNPR in which the only item revised upon reopening was the hospital‘s number of
I. BACKGROUND
A. Statutory and Regulatory Background
1. The DSH Adjustment
The Medicare Act,
The DSH adjustment is used to calculate whether and how large an “adjustment” (an increased reimbursement) a provider should receive because the hospital “serves a significantly disproportionate number of low-income patients.”
The Medicare fraction (sometimes called the SSI fraction) “asks how much of the care the hospital provided to Medicare patients in a given year was provided to low-income Medicare patients.” Allina Health Servs., 139 S. Ct. at 1809; Baystate Med. Ctr. v. Leavitt, 545 F. Supp. 2d 20, 24 (D.D.C. 2008) (explaining that “the Medicare fraction . . . is often referred to as the SSI fraction“). The fraction‘s numerator is the total number of patient days “the hospital spent caring for Part-A-entitled patients who were also entitled to income support payments under the Social Security Act.” Allina Health Servs., 139 S. Ct. at 1809; (citing
The Medicaid fraction, in turn, “accounts for the number of Medicaid patients—who, by definition, are low income—[who are] not entitled to Medicare.” Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1105 (D.C. Cir. 2014). “The numerator is the number of patient days attributable to patients who (for such days) were eligible for Medicaid, but ‘not entitled to benefits under [Medicare] Part A.‘” Id. (quoting
| Medicare Fraction | Medicaid Fraction | |
|---|---|---|
| Numerator | Patient days for patients “entitled to benefits under Part A” and “entitled to SSI benefits” | Patient days for patients “eligible for [Medicaid]” but not “entitled to benefits under Part A” |
| Denominator | Patient days for patients “entitled to benefits under Part A” | “Total number of patient days” |
Since the enactment of Medicare Part C in 1997, Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 251 (codified as amended at
To obtain Medicare reimbursement payments, participating hospitals must “submit cost reports to contractors acting on behalf of HHS” known as Medical administrative contractors (“MACs“). Auburn Reg‘l Med. Ctr., 568 U.S. at 150; see also Saint Francis Med. Ctr. v. Azar, 894 F.3d 290, 291 (D.C. Cir. 2018) (noting that MACs were previously referred to as fiscal intermediaries). At year end, “the Centers for Medicare & Medicaid Services (CMS) calculates the [Medicare] fraction for each eligible hospital and submits that number to the [MAC] for that hospital.” Auburn Reg‘l Med. Ctr., 568 U.S. at 150. Using the provider‘s “cost reports” and the CMS fraction, the MAC then “determine[s] the total payment due” to the hospital and issues an NPR informing the hospital “how much it will be paid for the year.” Id. A provider that “is dissatisfied with a final determination . . . as to the amount of total . . . reimbursement due,”
In filing an appeal, providers may—and, in some cases, must—proceed as a group rather than individually. See
If a provider seeks to appeal a legal question that it believes the Board lacks authority to decide (for reasons unrelated to the “Board‘s jurisdiction to conduct a hearing on the matter“), then the provider may seek expedited judicial review. See Affinity Healthcare Servs. v. Sebelius, 746 F. Supp. 2d 106, 108 (D.D.C. 2010);
Separate and apart from the statutory appeals process, the Secretary has established a regulatory process that allows a MAC to “reopen” an NPR to adjust specific components used to calculate the reimbursement. See HCA, 27 F.3d at 618–22 (explaining that the reopening process is a regulatory process separate from the statutory appeals process). In general, an NPR is “final and binding on the party or parties to such determination unless” the party timely requests an appeal. See
B. Factual and Procedural Background
Plaintiff, McLaren Flint, is a Medicare-participating provider of hospital services. See AR 18–19; Dkt. 1 at 1 (Compl. ¶ 1). On April 9, 2013, the MAC assigned to McLaren Flint issued an NPR for the year-long cost reporting period ending on September 30, 2008. AR 704. Although the NPR advised Plaintiff that if it disagreed with the determination it could request a hearing “within 180 days following receipt of the NPR,” id., Plaintiff has not alleged, and the administrative record nowhere indicates, that it ever appealed the original NPR. See Dkt. 20-1 at 11. About five months after the original NPR was issued, the MAC notified Plaintiff of its “intent to reopen the [FY 2008] cost report settlement.” AR 709 (notice dated Sept. 5, 2013). Specifically, the MAC “intend[ed] to review additional Medicaid days to be used in the calculation of the [DSH] adjustment and Low Income Patient payment.” Id. To facilitate that review, the MAC instructed Plaintiff to “resubmit the additional Medicaid days listings with the [diagnosis related group (‘DRG‘)] listed for each patient” and directed Plaintiff to “verify that th[ose] listings . . . [did] not include any claims for Labor & Delivery days, Dual Eligible days,
On May 15, 2014, the MAC issued an RNPR that reflected an adjusted number of Medicaid days in the hospital‘s Medicaid fraction. AR 703; AR 9 (noting that the only adjustment the MAC made was “to include additional Medicaid days“). On November 4, 2014, Plaintiff filed a request to join the “McLaren Health Care 2008 DSH Medicaid Fraction Part C Days” group appeal, AR 622, an appeal in which the providers maintained that “the Medicare [Part C days] should be counted in the Medicaid Fraction rather than the Medicare Fraction,” AR 606. The request was submitted within the 180-day time limit for Plaintiff to seek an appeal of its RNPR but well outside the 180-day period for seeking review of its initial NPR. See AR 704 (initial NPR dated April 9, 2013). Consistent with that timing, Plaintiff indicated that it was appealing the RNPR. See AR 623. The next day, the request was approved, and McLaren Flint was added to the group appeal. See AR 612 (indicating that McLaren Flint joined the group on November 5, 2014).
On June 19, 2018, Plaintiff and the other providers in the group appeal submitted a “request [for] expedited judicial review” and, in support of that request, submitted “[j]urisdictional [d]ocumentation for each case.” AR 449; AR 600 (cover sheet for the
On August 27, 2018, Plaintiff initiated this action. Dkt. 1. It claims that the Board‘s decision that it lacked jurisdiction over Plaintiff‘s appeal is “arbitrary and capricious and not in accord[ance] with the law.” Id. at 6 (Compl. ¶ 26). It seeks an order “finding that the [Board] erred,” “reinstating [its] appeal with the [Board],” and an award of “all costs and attorney fees.” Id. (Prayer for Relief). The parties subsequently cross-moved for summary judgment, Dkt. 16; Dkt. 20, and, as directed by the Court, the agency filed a complete copy of the administrative record, Dkt. 24. On May 22, 2020, the Court heard oral arguments on the pending cross-motions. Minute Entry (May 22, 2020).
II. LEGAL STANDARD
The Court‘s jurisdiction is based on the Medicare statute,
III. ANALYSIS
Although this case arises from a complex statutory and regulatory regime, the dispute between the parties is narrow. The parties do not dispute that the Board could grant Plaintiff‘s EJR request only if it had jurisdiction over Plaintiff‘s appeal. See Dkt. 21 at 9 (“Before the Board can consider EJR, it must first determine its jurisdiction over each provider in the group appeal.“); Dkt. 20-1 at 10;
In the Board‘s view, Plaintiff did not have a right to participate in the group EJR request relating to the allocation of the Medicare Part C days because Plaintiff timely appealed only its RNPR and not its original NPR. See Dkt. 20-1 at 18–21. This is consistent with the reopening regulation, which provide that, if a provider appeals an NPR revised after a reopening—that is, an RNPR—then “any review by the Board must be limited solely to those matters that are specifically revised.”
The Board‘s decision to limit the scope of Plaintiff‘s appeal to only those matters (or “issues“) specifically adjusted in the reopening relies on an application of what is known as the “issue-specific” interpretation of its reopening regulations. See Empire Health Found. v. Burwell, 209 F. Supp. 3d 261, 271 (D.D.C. 2016) (“The[] appeals of revised NPRs are . . . ‘issue-specific,’ a limitation designed to ‘forestall repetitive or belated litigation of stale eligibility claims.‘” (quotation omitted)). Every circuit that has addressed the question, including the D.C. Circuit, has upheld this interpretation as not only permissible, see Emanuel Med. Ctr., Inc. v. Sebelius, 37 F. Supp. 3d 348, 357 (D.D.C. 2014) (“[T]he Secretary‘s issue-specific interpretation of the [reopening] regulations has been upheld by all other Circuits to address it.“), but also one that furthers the statutory purpose. As the D.C. Circuit explained in HCA Health Servs. of Okla., Inc. v. Shalala, 27 F.3d 614 (D.C. Cir. 1994), the Board‘s jurisdiction over an RNPR does not originate from the statutory appeals process and is, instead, a separate regulatory process that the Secretary permissibly created using his “general rulemaking authority.” See id. at 618–22. That is, the “right of a provider to seek reopening exists only by grace of the Secretary.” Your Home Visiting Nurse Servs. v. Shalala, 525 U.S. 449, 454 (1999). The fact that an NPR may be reopened, however, does not mean that a provider may use that reopening to launch a broad appeal on all matters within the original NPR. Rather, the reopening regulations limit the scope of an RNPR appeal only to “the specific issues revisited on reopening.” HCA, 27 F.3d at 620–21. As the D.C. Circuit explained, by ensuring that the appeals deadline is not ignored “solely because certain aspects of the NPR have been reopened,” the issue-specific approach furthers Congress‘s determination to limit the period to appeal an NPR to 180-days. Id.
As relevant to Plaintiff‘s argument, the “Statement of Issue” in the Group Appeal Request states that “[t]he Participating Providers assert that the Medicare [fraction] is improperly understated due to CMS‘s erroneous inclusion of inpatient days attributable to Medicare [Part C] patients in both the numerator and denominator of the fraction.” AR 665. Relatedly, the statement of issues argues that Medicare Part C days “that are also Dual Eligible (DE) [d]ays” should “be counted in the Medicaid numerator.” AR 665 (emphasis added). The Board eventually approved the providers’ request to form a group appeal and the “McLaren Health Care 2008 DSH Medicare/Medicare Advantage Days” appeals group was formed (“McLaren Group Appeal“). See AR 437. On November 4, 2014, McLaren Flint requested to join the McLaren Group Appeal, see AR 623, and it was added to the group appeal the following day, see AR 612.
At the time Plaintiff sought to join the McLaren Group Appeal, the Board was “splitting . . . appeal requests into separate groups, claiming that if both [Medicare and Medicaid] fractions were involved in the argument, that required two separate appeals, one for each fraction.” AR 689. Indeed, the Board required separate appeals for each fraction even if each appeal focused on the same legal question—the Board‘s decision to count Medicare Part C days in the Medicare fraction. Id. A “[j]urisdictional [b]rief” in the administrative record indicates, however, that the Board later decided to treat such appeals as posing one “issue,” regardless of
Around April of 2013, the Board began splitting [providers‘] appeal requests into separate groups, claiming that if both fractions were involved in the argument, that required two separate appeals, one for each fraction. Between May[] 2013 and July[] 2015, providers generally filed distinct appeals for [the] two fractions for participating hospitals but sometimes only appealed the Medicare Fraction if there was no Medicaid adjustment or similar jurisdictional reason. On July 21, 2015, the Board invited Providers to a conference call to discuss an expedient consolidation process for its 200+ cases (at that time) related to this issue. Th[e] conference call took place on August 25, 2015 with the Chairman participating.
In [the conference] call, Providers’ representatives explained the connectivity between the Medicaid and Medicare Fractions for this issue only; [in the Providers’ view,] there [could be] no Medicaid Fraction issue without resolution of the Medicare Fraction because the issue pertains to the same set of days. In other words, [according to Providers,] it really is one issue, namely the Medicare [Part C] days should be counted in [the] Medicaid Fraction rather than the Medicare Fraction. While that obviously affects the calculation of both fractions, it does so through the resolution of one legal question.
AR 689 (emphasis added). According to the brief, the “Board accepted [the Providers’ argument] and agreed to consolidate the 200+ [appeals] groups.” Id. The brief further states that the Board later issued “consolidation instructions” in a “letter dated June 14, 2016,” and directed providers to file the “brief in support of jurisdiction . . . whenever the provider list differs between the to-be consolidated Medicare and Medicaid fraction cases for a particular year.” Id. Although the June 14, 2016 letter does not appear in the administrative record, the McLaren Group attached a copy of the jurisdictional brief to its March 28, 2018 request to consolidate several pending appeals, see AR 685 (indicating that the “jurisdictional brief” was enclosed as “Exhibit P-2“); AR 689–90 (Exhibit P-2), and, in response to that request, on April 2, 2018, the Board recognized that it had “recently agreed with [the providers‘] position, that the issue of whether the Medicare [Part C] [d]ays should be counted in the Medicaid Fraction rather
The problem with this argument is that the Board did not conclude that it lacked jurisdiction simply because the Medicare fraction and Medicaid fraction are separate issues. Rather, it decided only that the RNPR did not address the proper treatment of Plaintiff‘s Part C days and, accordingly, did not reopen the only question at issue in the group appeal—that is, the Board‘s allocation of Part C patient days. See AR 9. What matters is not that Plaintiff appealed
Plaintiff rests its argument to the contrary on the fact that Medicare-eligible days and the allocation of Part C days are both sub-components of the DSH calculation. See May 22, 2020 Hrg. Tr. (Rough at 2–5, 24) (arguing that the DSH calculation “present[s] a single legal question“). This contention boils down to little more than the proposition that applying the
Plaintiff‘s fallback argument is also unavailing.9 That argument posits that, even if Plaintiff‘s appeal involved a separate issue, the Board should have “separate[ed] the Plaintiff Hospital from the CIRP group and establish[ed] it as an individual appeal on the Dual Eligible Medicaid fraction issue.” Dkt. 21 at 10. Even assuming that the Board had an obligation to establish a separate appeal, that appeal would also have been confined to those matters revised in the RNPR. That conclusion follows from the governing regulations, see
CONCLUSION
For the foregoing reasons, Plaintiff‘s motion for summary judgment, Dkt. 16 will be DENIED, and Defendant‘s cross-motion for summary judgment, Dkt. 20, will be GRANTED.
A separate order will issue.
/s/ Randolph D. Moss
RANDOLPH D. MOSS
United States District Judge
Date: May 31, 2020