Metro. Hosp., Non-Profit Corp. v. U.S. Dep't of Health & Human Servs.
| Citation | 712 F.3d 248 |
| Decision Date | 27 June 2013 |
| Docket Number | Nos. 11–2465,11–2466.,s. 11–2465 |
| Parties | METROPOLITAN HOSPITAL, a Michigan non-profit corporation, Plaintiff–Appellee/Cross–Appellant, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; Kathleen Sebelius, Secretary of the United States Department of Health and Human Services, Defendants–Appellants/Cross–Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
OPINION TEXT STARTS HERE
ARGUED:Stephanie R. Marcus, United States Department of Justice, Washington, D.C., for Appellants/Cross–Appellees. Leah E. Pogoriler, Covington & Burling LLP, Washington, D.C., for Appellee/Cross–Appellant. ON BRIEF:Stephanie R. Marcus, Anthony J. Steinmeyer, United States Department of Justice, Washington, D.C., for Appellants/Cross–Appellees. Leah E. Pogoriler, Caroline M. Brown, Covington & Burling LLP, Washington, D.C., for Appellee/Cross–Appellant. Kenneth R. Marcus, Honigman Miller Schwartz and Cohn LLP, Detroit, Michigan, Jeffrey A. Lovitky, Washington, D.C., for Amici Curiae.
Before CLAY, GILMAN, and McKEAGUE, Circuit Judges.
McKEAGUE, J. (pp. 270–75), delivered a separate dissenting opinion.
OPINION
This case involves a challenge to regulation 42 C.F.R. § 412.106(b), promulgated in 2004 by the United States Department of Health and Human Services (HHS). The regulation deals with the amount that certain hospitals are entitled to receive as enhancements to their regular reimbursement payments from the Medicare program. In connection with this program, Congress has created a statutory formula to identify hospitals that serve a disproportionate number of low-income patients and to calculate the increased payments due such hospitals.
Metropolitan Hospital (Metro) challenges the way that the Secretary of HHS (Secretary) interprets this statutory formula to exclude certain patients who are simultaneously eligible for benefits under both Medicare and Medicaid. According to the Complaint, the exclusion of such dual-eligible patients cost Metro more than $2.1 million in the 2005 fiscal year.
Addressing the parties' cross-motions for summary judgment, the district court ruled that the challenged HHS regulation is invalid because it violates the statute that it purports to implement. Metro. Hosp., Inc. v. U.S. Dep't of Health & Human Servs., 702 F.Supp.2d 808, 825–26 (W.D.Mich.2010). HHS then timely filed this appeal, and Metro timely filed a cross-appeal regarding the district court's decision to remand the case to HHS for the calculation of damages and interest due Metro. For the reasons set forth below, we REVERSE the judgment of the district court and REMAND the case with instruction to enter judgment in favor of HHS. Metro's cross-appeal is DISMISSED as moot.
The Medicare program's Prospective Payment System (PPS) reimburses a hospital a fixed dollar amount for each Medicare patient it discharges on the basis of the patient's diagnosis, regardless of the actual cost of the treatment provided. Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 406 n. 3, 113 S.Ct. 2151, 124 L.Ed.2d 368 (1993). Recognizing “the higher costs incurred by hospitals that serve a large number of low income patients,” Jewish Hosp., Inc. v. Sec'y of Health & Human Servs., 19 F.3d 270, 272 (6th Cir.1994), Congress in 1983 required the Secretary to make “exceptions and adjustments to the PPS program” that would account for these higher costs, id. at 280 (Batchelder, J., dissenting) (internal quotation marks omitted).
But the Secretary failed to establish “a system to estimate the number of poor patients served in such hospitals and [to] issue payments,” and again failed to act when subsequent legislation set a deadline of December 31, 1984 for the Secretary to define and identify the “disproportionate share hospitals” (DSHs) that would receive these adjusted payments. See id.; see also Deficit Reduction Act, Pub. L. 98–369, § 2315(h), 98 Stat. 494, 1080 (1984) (). Congress in 1985 therefore established its own measure for assessing whether a hospital “serves a significantly disproportionate number of low income patients.” See42 U.S.C. § 1395ww(d)(5)(F)(v). That measure is called the “disproportionate patient percentage” (DPP).42 U.S.C. § 1395ww(d)(5)(F)(vi).
The DPP is the sole variable in the “disproportionate share adjustment percentage” that ultimately determines the dollar amount of any enhanced payment due to a DSH. Id. § 1395ww(d)(5)(F)(vii). A higher DPP produces a higher adjustment percentage, which in turn produces a larger adjustment payment. See id. In sum, the DPP is the key figure in determining whether a hospital will receive additional Medicare dollars for serving low-income patients and, if so, in what amount.
Two separate fractions are added together to produce the DPP: the Medicare fraction and the Medicaid fraction. Id. § 1395ww(d)(5)(F)(vi). The basic unit of measurement in both fractions is a hospital's “patient days.” Id. In the numerator of the Medicare fraction is the number of patient days in a cost-reporting period that are attributable to patients who were both “entitled to benefits under [Medicare] part A” and “entitled to supplemental security income [SSI] benefits.” Id. § 1395ww(d)(5)(F)(vi)(I). The denominator is the total number of patient days in the fiscal year that are attributable to patients who were “entitled to benefits under [Medicare] part A.” Id. In other words, the Medicare fraction measures the portion of a hospital's Medicare-entitled patient population that is also entitled to SSI, a cash benefit provided to low-income elderly, blind, or disabled individuals. See id. §§ 1381–1383f. This fraction can be expressed visually as follows:
+----------------------------------------------------------------------------+
¦Medicare¦ ¦# of a hospital's patient days for people entitled to both ¦
¦ ¦ ¦Medicare and SSI ¦
+--------+--+----------------------------------------------------------------¦
¦ ¦= ¦ ¦
+--------+--+----------------------------------------------------------------¦
¦fraction¦ ¦# of a hospital's patient days for people entitled to Medicare ¦
+----------------------------------------------------------------------------+
The Medicaid fraction has both a different numerator and a different denominator. Its numerator is the number of patient days in a cost-reporting period that are attributable to patients who were “eligible for [Medicaid] ... but who were not entitled to benefits under [Medicare] part A.” Id. § 1395ww(d)(5)(F)(vi)(II). The denominator is the total number of the hospital's patient days in the same cost-reporting period for all patients. Id. This fraction measures the proportion of a hospital's total patient population that is Medicaid-eligible, with the caveat of excluding patients who are also entitled to Medicare benefits. The Medicaid program, codified at 42 U.S.C. §§ 1396–1396w, is a federal-state cooperative program that “provides financial assistance to low-income individuals seeking medical care.” Markva v. Haveman, 317 F.3d 547, 550 (6th Cir.2003). This fraction can be expressed visually as follows:
+----------------------------------------------------------------------------+
¦Medicaid¦ ¦# of a hospital's patient days for people eligible for Medicaid,¦
¦ ¦ ¦but not entitled to Medicare ¦
+--------+--+----------------------------------------------------------------¦
¦ ¦= ¦ ¦
+--------+--+----------------------------------------------------------------¦
¦fraction¦ ¦# of all the hospital's patient days ¦
+----------------------------------------------------------------------------+
The Medicare fraction and the Medicaid fraction are expressed as percentages and then added together to produce the DPP. 42 U.S.C. § 1395ww(d)(5)(F)(vi). These fractions summarize the following relevant portion of the DPP statute:
In this subparagraph, the term “disproportionate patient percentage” means, with respect to a cost reporting period of a hospital, the sum of—
(I) the fraction (expressed as a percentage), the numerator of which is the number of such hospital's patient days for such period which were made up of patients who (for such days) were entitled to benefits under part A of this subchapter and were entitled to supplementary security income benefits (excluding any State supplementation) under subchapter XVI of this chapter, and the denominator of which is the number of such hospital's patient days for such fiscal year which were made up of patients who (for such days) were entitled to benefits under part A of this subchapter, and
(II) the fraction (expressed as a percentage), the numerator of which is 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 approved under subchapter XIX of this chapter, but who were not entitled to benefits under part A of this subchapter, and the denominator of which is the total number of the hospital's patient days for such period.
Id.
The Medicaid fraction's numerator accounts for the fact that some Medicaid-eligible patients are also entitled to Medicare benefits (known as dual-eligible patients). Central to the dispute in the present case is which fraction, if any, is the appropriate place to count the patient days of dual-eligible patients who have exhausted their Medicare benefits for inpatient hospital care during a particular “spell of illness.” See id. § 1395d.
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