E. Tex. Med. Center-Athens v. Azar
Decision Date | 18 October 2018 |
Docket Number | Civil Action No. 17-543 (RBW) |
Citation | 337 F.Supp.3d 1 |
Parties | EAST TEXAS MEDICAL CENTER–ATHENS, Plaintiff, v. Alex M. AZAR II, in His Official Capacity as Secretary of the United States Department of Health and Human Services, Defendant. |
Court | U.S. District Court — District of Columbia |
Andrew David Ruskin, Morgan, Lewis & Bockius LLP, Washington, DC, for Plaintiff.
Melanie Dyani Hendry, U.S. Attorney's Office for the District of Columbia, Washington, DC, for Defendant.
The plaintiff, East Texas Medical Center–Athens ("East Texas"), seeks judicial review under the Medicare Act, 42 U.S.C. § 1395oo (f) (2012), and the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 – 06 (2012), of the decision by the defendant, Alex M. Azar II, in his official capacity as Secretary of the United States Department of Health and Human Services (the "Secretary"), to assign East Texas to the Tyler, Texas Core Based Statistical Area ("CBSA") rather than to the Dallas-Plano-Irving, Texas CBSA for purposes of adjusting East Texas's wage index under the Medicare Act for the 2015 fiscal year. See Complaint for Judicial Review of Final Adverse Agency Action and Declaratory Relief ("Compl.") ¶¶ 1–2, 6–7, 13, 27–28, 71–74. Currently pending before the Court are the Plaintiff's Motion for Summary Judgment ("Pl.'s Mot.") and the Defendant's Cross-Motion for Summary Judgment and Opposition to Plaintiff's Motion for Summary Judgment ("Def.'s Mot."). Upon careful consideration of the parties' submissions,1 the Court concludes that it must grant in part and deny without prejudice in part East Texas's motion, deny the Secretary's motion without prejudice, and remand this case to the Secretary for further proceedings consistent with this opinion.
Title XVIII of the Social Security Act established the Medicare program, which provides federally funded healthcare for the elderly and people with disabilities. See 42 U.S.C. §§ 1395c, 1395j, 1395k ; see also Kaiser Found. Hosps. v. Sebelius, 708 F.3d 226, 227 (D.C. Cir. 2013). Medicare Part A provides health insurance coverage to eligible beneficiaries for inpatient hospital care, home health care, and hospice services. See 42 U.S.C. § 1395c. "The Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services (HHS), administers Medicare reimbursements to eligible hospitals that provide inpatient rehabilitation services." Mercy Hosp., Inc. v. Azar, 891 F.3d 1062, 1064 (D.C. Cir. 2018) ; see also 42 U.S.C. §§ 1395h, 1395u. CMS administers Medicare Part A "through contracts with [M]edicare administrative contractors" ("MACs"). 42 U.S.C. § 1395h(a).
CMS reimburses most hospitals participating in Medicare for inpatient services on a prospective payment system. See id. § 1395ww(d). The prospective "payment rates are tied to the national average cost of treating a patient in a particular ‘diagnosis-related group,’ " Se. Ala. Med. Ctr. v. Sebelius, 572 F.3d 912, 914 (D.C. Cir. 2009) (quoting 42 U.S.C. § 1395ww(d) ), which are then adjusted for, among other factors, "different area wage levels," see 42 U.S.C. § 1395ww(d)(3)(E). Specifically, the statute requires the Secretary to adjust the wage-related portion of the standardized prospective rate (the "wage index") "for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level." Id. § 1395ww(d)(3)(E)(i) ; see also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 206, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988) ( ). "The wage index is updated annually," 42 C.F.R. § 412.64(h)(1) (2017), " ‘on the basis of a survey’ of the wage-related costs for hospitals in the United States," Anna Jacques Hosp. v. Burwell, 797 F.3d 1155, 1158 (D.C. Cir. 2015) (quoting 42 U.S.C. § 1395ww(d)(3)(E)(i) ). Each year, "[t]he Secretary publishes the proposed wage indices and solicits comments from the public[,] ... [and] then promulgates the final wage indices as part of the Inpatient Prospective Payment System rules and policies for that year." Id. at 1159.
2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas, 75 Fed. Reg. 37,246, 37,252 (June 28, 2010) ; see also id. at 37,246 (). "Metropolitan and Micropolitan Statistical Areas are the two categories of [CBSAs]." Id. at 37,251 ; see also Anna Jacques Hosp., 797 F.3d at 1160 ().3
The OMB defines a CBSA as:
Id. This Circuit has held that "HHS's longstanding policy of using [MSAs] ... to define [ ] ‘geographic areas’ is [ ] reasonable." Se. Ala. Med. Ctr., 572 F.3d at 923.
A provision of the Medicare Act known as the "Lugar Statute" instructs the Secretary to assign certain rural hospitals to neighboring MSAs for the purpose of calculating their wage indices. See JA 8. Specifically, the Lugar Statute provides:
For purposes of [calculating prospective rates for inpatient hospital service payments], the Secretary shall treat a hospital located in a rural county adjacent to one or more urban areas as being located in the urban [MSA] to which the greatest number of workers in the county commute, if the rural county would otherwise be considered part of an urban area, under the standards for designating [MSAs] ... described in clause (ii), if the commuting rates used in determining outlying counties ... were determined on the basis of the aggregate number of resident workers who commute to (and, if applicable under the standards, from) the central county or counties of all contiguous [MSAs]....
42 U.S.C. § 1395ww(d)(8)(B)(i).
The Lugar Statute was first adopted as part of the Omnibus Budget Reconciliation Act of 1987, see Pub. L. No. 100-203, § 4005, 101 Stat. 1330, 1330–47 to –48 (1987). "Congress intended that [the Lugar Statute] apply to a limited number of hospitals that, arguably, merited payment at the ... urban rate because of their location in counties adjacent to at least one MSA and their commuting patterns." Interim Final Rule regarding the Medicare Geographical Classification Review Board Procedures and Criteria, 55 Fed. Reg. 36,754, 36,755 (Sept. 6, 1990). Regarding the "standards for designating [MSAs]," 42 U.S.C. § 1395ww(d)(8)(B)(i), the Lugar Statute provides that the Secretary must employ "the standards published in the Federal Register by the Director of [OMB] based on the most recent available decennial population data," id. § 1395ww(d)(8)(B)(ii).
The CMS regulation implementing the Lugar Statute largely parrots the statute itself, providing:
For discharges occurring on or after October 1, 2004, a hospital that is located in a rural county adjacent to one or more urban areas is deemed to be located in an urban area and receives the Federal payment amount for the urban area to which the greater number of workers in the county commute if the...
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