Case 1:22-cv-00219 Document 1 Filed 01/27/22 Page 1 of 33
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
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`Case No. ____________________
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`COMPLAINT
`FOR JUDICIAL REVIEW,
`DECLARATORY JUDGMENT,
`AND MANDAMUS RELIEF
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`ANDERSON HOSPITAL
`6800 State Route 162
`Maryville, IL 62062
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`ASPIRUS RIVERVIEW HOSPITAL
`410 Dewey Street
`Wisconsin Rapids, WI 54494
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`AULTMAN HOSPITAL
`2600 Sixth Street Southwest
`Canton, OH 44710
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`BRYAN MEDICAL CENTER
`1600 South 48th Street
`Lincoln, NE 68506
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`CALDWELL MEMORIAL HOSPITAL
`321 Mulberry Street, Southwest
`Lenoir, NC 28645
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`CARLE FOUNDATION HOSPITAL
`611 West Park Street
`Urbana, IL 61801
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`ELKHART GENERAL HOSPITAL
`600 East Boulevard
`Elkhart, IN 46514
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`ESKENAZI HEALTH
`720 Eskenazi Avenue
`Indianapolis, IN 46202
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`FRANCISCAN HEALTH INDIANAPOLIS
`8111 South Emerson Avenue
`Indianapolis, IN 46237
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`GOOD SAMARITAN HOSPITAL
`520 South Seventh Street
`Vincennes, IN 47591
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`GREAT RIVER MEDICAL CENTER
`1221 South Gear Avenue
`West Burlington, IA 52655
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`Case 1:22-cv-00219 Document 1 Filed 01/27/22 Page 2 of 33
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`HANCOCK REGIONAL HOSPITAL
`801 North State Street
`Greenfield, IN 46140
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`HENRY COMMUNITY HEALTH
`1000 North 16th Street
`New Castle, IN 47362
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`INDIANA UNIVERSITY HEALTH
`1701 North Senate Blvd
`Indianapolis, IN 46202
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`MARION GENERAL HOSPITAL
`441 North Wabash Avenue
`Marion, IN 46952
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`MAYO CLINIC HEALTH SYSTEM
`IN EAU CLAIRE
`1221 Whipple Street
`Eau Claire, WI 54703
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`MAYO CLINIC HEALTH SYSTEM -
`FRANCISCAN HEALTHCARE IN LA CROSSE
`700 West Avenue South
`La Crosse, WI 54601
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`MEMORIAL HEALTHCARE
`826 West King Street
`Owosso, MI 48867
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`MEMORIAL HOSPITAL
`615 North Michigan Street
`South Bend, IN 46601
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`METHODIST HOSPITAL
`1305 North Elm Street
`Henderson, KY 42420
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`MHP MEDICAL CENTER
`2451 Intelliplex Drive
`Shelbyville, IN 46176
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`NORTHSIDE HOSPITAL GWINNETT
`1000 Medical Center Boulevard
`Lawrenceville, GA 30046
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`Case 1:22-cv-00219 Document 1 Filed 01/27/22 Page 3 of 33
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`NORTON HOSPITALS, INC.
`200 East Chestnut Street
`Louisville, KY 40202
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`PARKLAND HOSPITAL
`5200 Harry Hines Boulevard
`Dallas, TX 75235
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`PIH HEALTH GOOD SAMARITAN HOSPITAL
`1225 Wilshire Boulevard
`Los Angeles, CA 90017
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`PRISMA HEALTH BAPTIST HOSPITAL
`Taylor at Marion Streets
`Columbia, SC 29220
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`RMC ANNISTON
`400 East Tenth Street
`Anniston, AL 36202
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`SAINT TAMMANY PARISH HOSPITAL
`1202 South Tyler Street
`Covington, LA 70433
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`ST. BERNARDS MEDICAL CENTER
`225 East Jackson
`Jonesboro, AR 72401
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`STONEWALL JACKSON MEMORIAL
`HOSPITAL
`230 Hospital Plaza
`Weston, WV 26452
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`UNION HOSPITAL
`1606 North Seventh Street
`Terre Haute, IN 47804
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`UNIVERSITY HEALTH
`LAKEWOOD MEDICAL CENTER
`7900 Lee's Summit Road
`Kansas City, MO 64139
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`UNIVERSITY HEALTH
`TRUMAN MEDICAL CENTER
`2301 Holmes Street
`Kansas City, MO 64108
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`Case 1:22-cv-00219 Document 1 Filed 01/27/22 Page 4 of 33
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`UNIVERSITY OF IOWA
`HOSPITALS & CLINICS
`200 Hawkins Drive
`Iowa City, IA 52242
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`UNIVERSITY OF TOLEDO MEDICAL CENTER
`3000 Arlington Avenue
`Toledo, OH 43614
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`WEIRTON MEDICAL CENTER
`601 Colliers Way
`Weirton, WV 26062
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`WOOSTER COMMUNITY HOSPITAL
`1761 Beall Avenue
`Wooster, OH 44691
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`Plaintiffs,
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`v.
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`XAVIER BECERRA, Secretary of the United States
`Department of Health and Human Services
`Room 700-E
`200 Independence Avenue, S.W.
`Washington, D.C. 20201
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`
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`Defendant.
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`COMPLAINT FOR JUDICIAL REVIEW,
`DECLARATORY JUDGMENT, AND MANDAMUS RELIEF
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`1.
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`The above-captioned 37 Plaintiff hospitals
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`(hereinafter “Plaintiffs” or
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`“Providers”), by and through their undersigned counsel, bring this action against Defendant
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`Xavier Becerra in his official capacity as the Secretary (“Secretary”) of the United States
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`Department of Health and Human Services (“HHS”), and state as follows:
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`NATURE OF ACTION
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`2.
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`This is an action for judicial review, pursuant to 42 U.S.C. § 1395oo(f)(1), of a
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`final decision of the Secretary finding that the Provider Reimbursement Review Board (“PRRB”
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`or “Board”) is without authority to review the Plaintiffs’ challenges to the calculation of their
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`Case 1:22-cv-00219 Document 1 Filed 01/27/22 Page 5 of 33
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`Medicare disproportionate share hospital (“DSH”) adjustments for the services they furnished to
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`low-income patients in fiscal years 2009 through 2017. The final administrative decisions in
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`response to the Plaintiffs’ requests for expedited judicial review (“EJR Determinations”) are
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`attached hereto as Exhibits 1, 2, and 3, and are incorporated herein by reference. The EJR
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`Determinations acknowledged the Plaintiffs’ right to seek judicial review in this matter.
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`3.
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`The Plaintiffs maintain that their DSH reimbursement calculations were
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`understated due to the failure of the Centers for Medicare and Medicaid Services (“CMS”) and
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`the relevant Medicare Administrative Contractors (“MAC” or “contractor”) to include in the
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`numerator of the Medicare fraction of the Medicare DSH calculation all patient days for patients
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`who were eligible for and enrolled in the SSI program but may not have received an SSI
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`payment for the month in which they received services (hereinafter “SSI Enrollees”), as required
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`by 42 U.S.C. § 1395ww(d)(5)(F) (the “DSH statute”).
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`4.
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`In enacting the statute, Congress intended the Medicare DSH payment to
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`compensate hospitals, like the Plaintiffs in the instant case, that shoulder the financial burden of
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`providing care to a disproportionate number of low-income patients. It is based on a proxy
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`measure for a hospital’s low-income patient utilization which is the sum of two fractions
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`expressed as a percentage. See 42 U.S.C. § 1395ww(d)(5)(F)(vi); 42 C.F.R. § 412.106(b).
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`5.
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`In filings submitted to the PRRB, the Secretary’s administrative tribunal, the
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`Plaintiffs established that the Secretary used a legally flawed method to count the patient days
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`included in the numerator of the Providers’ respective Medicare fractions (hereinafter “SSI
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`Days”).
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`6.
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`As the DSH statute is currently construed by the Secretary, a hospital patient is
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`“entitled” to Medicare Part A benefits so long as they are enrolled in Part A and regardless of
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`whether Medicare covers or pays for his or her hospitalization, but that same patient is “entitled”
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`to SSI benefits, and thus included in the Secretary’s count of SSI Days, only if he or she actually
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`receives an SSI payment from the Social Security Administration (“SSA”) during the month of
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`his or her hospitalization.
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`7.
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`As explained below, the Secretary’s dissimilar construction of the terms “entitled”
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`in the DSH statute violates the Medicare Act, because it contravenes the statute’s plain meaning
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`and intent. It is also arbitrary and capricious, not in accordance with law, and in excess of
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`statutory authority.
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`8.
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`As a result of the Secretary’s erroneous construction of the statute which
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`undercounts SSI Days, the Plaintiffs have been denied Medicare DSH payments to which they
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`are lawfully entitled. The Plaintiffs therefore seek declaratory and injunctive relief against the
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`Secretary, and an order setting aside the MACs’ invalid payment determinations and directing
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`the recalculation of the Plaintiffs’ DSH adjustments in accordance with the plain meaning of the
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`statute.
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`JURISDICTION AND VENUE
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`9.
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`This case arises under Title XVIII of the Social Security Act, as amended, 42
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`U.S.C. § 1395, et seq. (the “Medicare Act”); the Administrative Procedure Act, 5 U.S.C. § 551,
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`et seq.; and the Declaratory Judgment Act, 28 U.S.C. § 2201, to obtain judicial review of actions
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`of the Secretary and his agents, the Medicare Administrative Contractors (“MACs”), which
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`resulted in the Plaintiffs receiving reduced Medicare reimbursement for their fiscal years at issue.
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`10.
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`11.
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`Jurisdiction is proper under 42 U.S.C. § 1395oo(f)(1) and 28 U.S.C. § 1331.
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`Jurisdiction also lies pursuant to 28 U.S.C. § 1361 because the Plaintiffs are
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`entitled to a writ of mandamus requiring the Secretary to ensure that the Providers’ DSH
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`adjustments are calculated in accordance with the law from the best available data and to
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`produce the same to the Plaintiffs for review.
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`12.
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`Venue is proper in this judicial district pursuant to 42 U.S.C. § 1395oo(f)(1) and
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`28 U.S.C. § 1391(e).
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`PARTIES
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`13.
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`During the cost reporting periods at issue herein, all Plaintiffs were participating
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`providers of hospital services under the federal Medicare program pursuant to Title XVIII of the
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`Social Security Act, 42 U.S.C. § 1395, et seq. All of the Plaintiffs are identified in the “schedules
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`of providers” appended to the EJR Determinations issued in this matter (attached hereto as
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`Exhibits 1–3), which pertain to PRRB Cases Nos. 19-2599G (Exhibit 1), 20-1341GC (Exhibit
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`2), and 17-1408G, 17-1600G, 17-1771G, 18-0133G, 18-0329G, 18-0334G, 18-1466G, and 18-
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`1471GC (Exhibit 3). The EJR Determinations and the schedules of providers enumerate every
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`claim the Plaintiffs appealed to the PRRB as part of a group, and all Plaintiffs are therein
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`identified by their Medicare provider numbers, names and applicable fiscal years subject to this
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`appeal.
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`14.
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`At all times relevant to these proceedings, all Plaintiffs had a Medicare provider
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`agreement with the Secretary, and each was eligible to participate in the Medicare program. At
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`all times relevant hereto, each Plaintiff was an acute-care, inpatient hospital that served a
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`disproportionate share of low-income patients.
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`15.
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`The Defendant is Xavier Becerra, in his official capacity as Secretary of the
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`United States Department of Health and Human Services (“HHS”), the federal agency that
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`administers the Medicare program. References to the Secretary herein are meant to refer to him,
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`to his subordinates and agents, and to his official predecessors or successor as the context
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`requires.
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`16.
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`The Centers for Medicare and Medicaid Services (“CMS”) is a component of
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`HHS with responsibility for day-to-day operation and administration of the Medicare program.
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`CMS was formerly known as the Health Care Financing Administration. References to CMS
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`herein are meant to refer to the agency and its agents and predecessors.
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`THE MEDICARE PROGRAM
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`17. Medicare is a federal program that provides health insurance for the aged,
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`disabled and certain individuals with end-stage renal disease. 42 U.S.C. § 1395, et seq. The
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`Medicare program is federally funded and is administered by the Secretary through CMS and its
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`contractors, the MACs. 42 U.S.C. §§ 1395kk and 1395kk-1.
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`18.
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`19.
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`The Medicare Act is composed of five parts. See 42 U.S.C. § 1395, et seq.
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`Part A of the Medicare Act covers “inpatient hospital services.” See 42 U.S.C.
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`§§ 426(c), 1395c, et seq.
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`20.
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`Part B is an optional program that covers physician services and certain other
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`outpatient medical services that are not covered under Part A, if a premium is paid. See 42
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`U.S.C. §§ 1395j—1395w-6.
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`21.
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`Part C, known as the Medicare Advantage Program, allows participants to choose
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`certain health plans as an alternative to the traditional fee-for-service model available under
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`Parts A and B. 42 U.S.C. § 1395w-21(a).
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`22.
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`Part D, known as the Medicare Prescription Drug Benefit Program, was enacted
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`as part of the Medicare Modernization Act of 2003 (“MMA”), Pub. L. No. 108-173, 117 Stat.
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`2066, which was signed into law on December 8, 2003. As relevant here, Medicare Part D
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`provides, inter alia, fully subsidized drug benefits for SSI Enrollees. 42 U.S.C. §§ 1395w-101,
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`1395w-114; 42 C.F.R. § 423.773, 20 C.F.R. § 418.3105. Part D coverage first began on January
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`1, 2006. 42 U.S.C. § 1395w-101(a)(2).
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`23.
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`Part E sets forth various miscellaneous provisions, including the Medicare
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`Secondary Payer (“MSP”) requirements for coordinating benefits and the Prospective Payment
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`System (“PPS”) for reimbursing Part A inpatient hospital services. 42 U.S.C. § 1395x, et seq.
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`24.
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`The Medicare Part A benefit consists of the right to have Medicare payment made
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`on a beneficiary’s behalf for a limited number of days of inpatient hospital care during a spell of
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`illness. See 42 U.S.C. §§ 426(a), 1395d(a)(1). Specifically, the Part A benefit entitles an
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`individual to have payment made on his or her behalf for up to 90 days of inpatient hospital
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`services in a spell of illness, with a lifetime reserve of 60 additional days that a beneficiary may
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`elect to use. 42 U.S.C. § 1395d(a)(1); 42 C.F.R. § 409.61(a).
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`MEDICARE DSH PAYMENT
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`25.
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`Since 1983, the Medicare program has paid most hospitals under a prospective
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`payment system (“PPS”) for inpatient hospital services furnished to an individual who is entitled
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`to benefits under Medicare Part A. 42 U.S.C. §§ 1395ww(d)(1)-(5); 42 C.F.R. Part 412.
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`26.
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`Under the PPS, hospitals are reimbursed for providing inpatient services to
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`Medicare beneficiaries at a predetermined rate based on the diagnosis-related grouping (“DRG”)
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`to which a patient is assigned. Each DRG represents the average resources that are required to
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`provide the inpatient services described by the particular DRG category relative to the national
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`per case average for inpatient hospital services. 42 U.S.C. § 1395ww(d)(4) & (5).
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`27. Medicare pays these predetermined, standardized amounts per hospital discharge,
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`subject to certain upward payment adjustments for certain qualifying hospitals. Id.
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`28.
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`The standard rate paid under the PPS is based on a national average amount of
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`operating costs incurred to treat a Medicare patient with the assigned DRG. See id. The
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`payment per discharge is subject to further adjustments to account for additional hospital-specific
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`factors that may cause a hospital to incur greater than average operating costs to treat each
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`Medicare Part A patient. See 42 U.S.C. § 1395ww(d)(5).
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`29.
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`One of the PPS payment adjustments is the DSH payment. 42 U.S.C.
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`§ 1395ww(d)(5)(F); 42 C.F.R. § 412.106. A hospital that serves a disproportionate share of low-
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`income patients is entitled to an upward percentage adjustment to the standard payment rate per
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`discharge under the PPS. Id.
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`30.
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`The DSH adjustment is a percentage add-on to the standard payment rate per
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`hospital discharge under the Part A prospective payment system. It is intended to compensate a
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`hospital for the higher-than-average costs of treating low-income Medicare beneficiaries whose
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`care is paid under the Part A PPS. See H.R. Rep. No. 99-241, at 15 (1985), reprinted in 1986
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`U.S.C.C.A.N. 579, 593-94. When it created the DSH adjustment, Congress identified two
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`reasons why hospitals treating a disproportionate share of low-income patients have higher-than-
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`average costs. One reason is that low-income Medicare patients are more costly than average to
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`treat; the other is that hospitals that treat a large proportion of low-income patients overall tend to
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`incur higher costs per case for all patients, due in part to the specialized services they provide
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`and other structural characteristics of these hospitals. Id.
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`THE DSH PAYMENT CALCULATION
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`31.
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`Calculation of the DSH Payment add-on turns on a hospital’s “disproportionate
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`patient percentage” (“DPP”), which is the sum of two fractions expressed as percentages.
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`See 42 U.S.C. § 1395ww(d)(5)(F)(vi); 42 C.F.R. §§ 412.106 (b)-(d).
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`32.
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`Generally, the greater the two percentages, the greater the DSH payment to a
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`hospital.
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`33.
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`One of the two fractions used to calculate a hospital’s DSH payment is commonly
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`called the “Medicare fraction.” The statute defines the Medicare fraction as:
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`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 [P]art A of [Title XVIII] and were
`entitled to supplementary security income benefits (excluding any State
`supplementation) under subchapter XVI of this chapter [“SSI Days”], 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 [P]art A of [Title XVIII.]
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`42 U.S.C. § 1395ww(d)(5)(F)(vi)(I) (emphasis added). As the italicized language indicates, the
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`Medicare fraction consists solely of days for patients who were “entitled to benefits under Part
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`A” of Medicare and/or “entitled to [SSI] benefits.” Id. The denominator includes all patient
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`days for which patients were “entitled to” Part A benefits; whereas the numerator includes only
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`those Part A days for patients who were also “entitled to” supplemental security income benefits
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`under Title XVI during the month in which they were hospitalized.
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`34.
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`The second of the two fractions used to compute a hospital’s DSH payment is
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`referred to as the “Medicaid fraction.” The statute defines the Medicaid fraction as:
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`the fraction (expressed as a percentage), the numerator of which is the number of
`the hospital’s patient days for such period which consists of patients who (for
`such days) were eligible for medical assistance under a State plan approved
`under [Title XIX], but who were not entitled to benefits under [P]art A of [Title
`XVIII], and the denominator of which is the total number of the hospital’s patient
`days for such period. 1
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`42 U.S.C. § 1395ww(d)(5)(F)(vi)(II) (emphasis added). As emphasized above, the numerator of
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`the Medicaid fraction consists of days for patients who both were eligible for medical assistance
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`under Title XIX, or Medicaid, and were “not entitled to benefits under [P]art A” of Title XVIII,
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`or Medicare, for their “patient days” in the hospital.
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`35.
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`The SSI program is a federal program that provides benefits to low-income
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`individuals who are either aged 65 or older, or are blind or disabled. The SSI program is
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`1 This statute refers to “this subchapter,” which means subchapter XVIII of Chapter 7 of Title 42
`of the United States Code, also known as Title XVIII of the Social Security Act.
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`administered by the Social Security Administration (“SSA”) under Title XVI, and provides
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`financial and other benefits—including registering SSI Enrollees for fully subsidized Medicare
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`Part D prescription drug benefits through the Extra Help program. See 42 U.S.C. § 1381, et seq.;
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`42 U.S.C. § 1395w-114; 42 C.F.R. § 423.773 and 20 C.F.R. § 418.3105; see also CMS Manual
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`100-18, Chapter 13, Premium and Cost-Sharing Subsidies for Low-Income Individuals, at
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`§§ 40.2.2, 40.2.5, 70.5.2.
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`36.
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`To implement the DSH legislation, CMS determines the number of SSI Days for
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`those patients entitled to both Medicare Part A and SSI by matching data from the Medicare
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`Provider Analysis and Review (“MedPAR”) file, which is Medicare’s database of Provider
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`inpatients, and the Medicare Enrollment Database (EDB), with a file created for CMS by SSA to
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`identify SSI-“entitled” individuals. 75 Fed. Reg. 50,041, 50,277-81 (Aug. 16, 2010).
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`37.
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`The MACs are private insurance companies that perform certain Medicare audit
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`and payment functions under contracts with CMS. As is relevant here, the MACs determine
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`payment amounts due the hospitals under Medicare law and regulations. 42 U.S.C. § 1395h, 42
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`C.F.R. § 413.20. The MACs review the cost report, determine the total amount of Medicare
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`reimbursement due the provider and issue the provider a Notice of Program Reimbursement
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`(“NPR”). See 42 C.F.R. § 405.1803.
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`38.
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`A provider dissatisfied with
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`the MAC’s
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`final determination of
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`total
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`reimbursement may file an appeal with the Board within 180 days of the issuance of the NPR (or
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`a revised NPR (“RNPR”)). 42 U.S.C. § 1395oo(a); 42 C.F.R. § 405.1835.
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`39.
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`The Board is required to apply all statutes, regulations, and orders applicable to
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`the Medicare program. 42 U.S.C § 1395oo. When a provider challenges the validity of a statute,
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`regulation, or order through a jurisdictionally proper appeal, the Board is required to grant
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`expedited judicial review (“EJR”) of the matter, permitting the provider to raise their claims in
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`federal court without the need for an administrative hearing. 42 U.S.C. § 1395oo(f)(1).
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`SECRETARY’S CONSTRUCTION OF THE DSH STATUTE
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`40.
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`The composition of the numerator and denominator of both the Medicare and
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`Medicaid fractions is determined by the meaning and intent of the terms “entitled” and “eligible”
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`in the DSH statute.
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`41.
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`Over the last three decades, the Secretary has vacillated in his approach to
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`construing the DSH statute, resulting in a litany of litigation and agency policy changes.
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`42.
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`Due to the significant impact of the meaning ascribed to the terms “entitled” and
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`“eligible” in the DSH statute, the Secretary’s construction of their meaning and their application
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`to Providers’ program reimbursement has been repeatedly challenged.
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`43.
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`On review, federal courts have effectively concluded that Congress used the terms
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`“entitled” and “eligible” interchangeably and without meaningful distinction. See Northeast
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`Hosp. Corp. v. Sebelius, 657 F.3d 1, 12-13 (D.C. Cir. 2011) (noting that “the usual rule that
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`Congress intends different meanings when it uses different words has little weight here …. [I]t
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`would be a mistake to read too much into the difference in nomenclature”) (collecting cases).
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`44.
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`Prior to October 1, 2004, the Secretary construed the term “entitled” in the DSH
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`statute to mean that a patient was “entitled to benefits under Part A” of Medicare when Medicare
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`Part A covered and paid for the patient’s hospitalization. For instance, if the patient’s spell of
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`illness exceeded 90 days such that his Part A benefits were exhausted, the patient was deemed
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`not to be “entitled to” Part A Medicare benefits for purposes of the DSH calculation. See 42
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`C.F.R. § 412.106(b)(2)(1)(2003); see also 51 Fed. Reg. 16,772, 16,788 (May 6, 1986); 51 Fed.
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`Reg. 31,454, 31,460-61 (Sept. 3, 1986). Thus, hospital days for which dual-eligible patients—
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`patients eligible for both Medicare and Medicaid—had exhausted their Medicare Part A benefits
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`were therefore excluded from the numerator and denominator of the Medicare fraction because
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`such days were not “covered” by Medicare. In accordance with this construction, the Secretary
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`held that days attributable to patients who had exhausted their Medicare Part A benefits should
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`be counted in the numerator of the Medicaid fraction if the person was eligible for Medicaid.
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`See Presbyterian Med. Ctr. of Philadelphia v. Aetna Life Ins. Co., CMS Adm’r Dec., 96-D75,
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`MEDICARE & MEDICAID GUIDE (CCH) ¶45,032 (Nov. 29, 1996).
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`45.
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`In 2003, however, the Secretary proposed to change the interpretation of the DSH
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`statute in 68 Fed. Reg. 27,154, 27,201-08 (May 19, 2003), despite there having been no change
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`in the underlying statute. In that notice of proposed rulemaking, the Secretary erroneously stated
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`that the then-current policy required all dual-eligible days to be counted in the Medicare fraction
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`even after a Medicare beneficiary exhausted his or her Part A benefits.
`
`46.
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`The Secretary did not act upon this proposal in the final PPS rule for federal fiscal
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`year 2004. 68 Fed. Reg. 45,346, 45,422 (Aug. 1, 2003).
`
`47.
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`A year later, however, in 2004, the Secretary reversed course and adopted what he
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`then acknowledged was a new policy: to include Medicare Advantage (Part C) days and
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`Medicare Exhaust days in the Medicare fraction. 69 Fed. Reg. 48,916, 49,098-99 (Aug. 11,
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`2004) (acknowledging that the Secretary had never before counted Part A exhaust days in the
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`Medicare fraction and explaining the misstatement he had made in the proposed rulemaking of
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`May 19, 2003).
`
`48.
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`The Secretary effected this change by striking the word “covered” from the
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`existing Medicare fraction regulation, reflecting a fundamental change to the construction of the
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`term “entitled” to benefits. Compare 42 C.F.R. § 412.106(b)(2)(i) (2003) with 42 C.F.R.
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`§ 412.106(b)(2)(i) (2005); see also 69 Fed. Reg. 48,916, 49,246 (Aug. 11, 2004).
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`49.
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`In the summer of 2007, without providing notice or the opportunity to comment,
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`the Secretary issued a technical correction to the regulation regarding CMS’ policy on Medicare
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`Advantage days. Specifically, the Secretary amended the DSH regulation to conform the text to
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`effectuate the “policy change” announced in the 2004 rulemaking, 72 Fed. Reg. 47,130, 47,384
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`(Aug. 22, 2007), to provide that the Medicare fraction included all patient days for “patients
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`entitled to Medicare Part A (or Medicare Advantage (Part C)).” 42 C.F.R. §§ 412.106(b)(2)(i)(B)
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`and (iii)(B). The stated effective date for the 2007 rule was October 1, 2007. 72 Fed. Reg. at
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`47,130.
`
`50.
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`As with Medicare Advantage days, the Secretary’s 2003 and 2004 rules did not
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`expressly address the Agency’s treatment of days attributable to Medicare Part A beneficiaries
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`whose Part A benefits were subject to Medicare Secondary Payer limitations, i.e., whose
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`healthcare services are not paid by Medicare because Medicare is secondary to a group health
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`insurer or a third-party payer. However, in its final IPPS rule for Fiscal Year 2006, the Agency
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`noted it had “updated . . . [42 C.F.R.] § 412.106(b) to reflect the inclusion [in the Medicare Part
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`A fraction] of days for which Medicare was not the primary payer.” 70 Fed. Reg. 47,287, 47,441
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`(Aug. 12, 2005).
`
`51.
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`None of these amendments discussed the broader impact of the changing
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`definition of “entitled,” or, in particular, its application to SSI Enrollees.
`
`52.
`
`In 2008, this Court issued its memorandum opinion and order in Baystate Medical
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`Center v. Leavitt, 545 F. Supp. 2d 20, amended by 587 F. Supp. 2d 37 (D.D.C. 2008), which
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`required the Secretary to correct several systemic errors in his calculation of the Medicare
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`fraction that uniformly deflated the numerator of the fraction (SSI Days), and inflated the
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`Case 1:22-cv-00219 Document 1 Filed 01/27/22 Page 16 of 33
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`
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`denominator, thus reducing the fraction overall and, as a result, reducing the DSH payments
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`made to hospitals.
`
`53.
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`In April 2010, the Secretary issued CMS Ruling 1498-R directing MACs and
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`advising hospitals that the interpretation of the DSH statute embodied in 42 C.F.R. § 412.106(b)
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`applied to cost reporting periods preceding the October 1, 2004 effective date of the amendment
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`and all pending appeals before the PRRB. See CMS Ruling No. CMS-1498-R (April 28, 2010).
`
`54.
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`CMS Ruling 1498-R applied to three categories of appeals: (1) challenges to
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`CMS’ data matching process for matching Medicare and SSI entitlement data in determining the
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`Medicare fraction; (2) challenges to the exclusion from the Medicaid fraction of the DPP of non-
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`covered inpatient hospital days; and (3) challenges to the exclusion from the DPP of
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`labor/delivery room (LDR) inpatient days.
`
`55.
`
`Pursuant to CMS Ruling 1498-R, any appeal involving any of the above three
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`categories had to be remanded by the Board to the MAC. The Ruling further required the MAC
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`to include certain inpatient provider days, i.e., MSP and exhausted benefit days, in the Medicare
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`fraction when it revised the Medicare fraction following remand.
`
`56.
`
`CMS Ruling 1498-R also required CMS to re-compute the Medicare fraction
`
`using the revised SSI-data matching process mandated by the district court in Baystate, 587 F.
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`Supp. 2d at 44.
`
`57.
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`CMS Ruling 1498-R was issued without advance notice to the public and without
`
`affording hospitals an opportunity for comment.
`
`58.
`
`One month later, on May 4, 2010, the Secretary announced yet another proposed
`
`amendment to the DSH regulation to obviate any confusion made by the prior changes. “In order
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`to further clarify our policy that patient days associated with [Medicare Advantage Plan]
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`beneficiaries are to be included in the [Medicare] fraction because they are still entitled to
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`benefits under Medicare Part A, we are proposing to replace the word ‘or’ with the word
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`‘including’ in [42 C.F.R.] § 412.106(b)(2)(i)(B) and § 412.106(b)(2)(iii)(B).” See 75 Fed. Reg.
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`24,000, 24,006-07.
`
`59.
`
`The amendment to the regulation was adopted in the 2011 IPPS Final Rule dated
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`August 16, 2010, without modification, see 75 Fed. Reg. 50,275, 50,286 (Aug. 16, 2010),
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`resulting in multiple challenges to the amendment and its retroactive application. See, e.g.,
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`Catholic Health Initiatives—Iowa Corp v. Sebelius, 841 F. Supp. 2d 270 (D.D.C. 2012), rev’d,
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`718 F.3d 914 (D.C. Cir. 2014); Metropolitan Hosp. v. United States Dep’t of Health & Human
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`Servs., 702 F. Supp. 2d 808 (W.D. Mich. 2010), rev’d, 712 F.3d 248 (D.C. Cir. 2013).
`
`60.
`
`Ultimately, the courts upheld the Secretary’s new, expansive interpretation of the
`
`term “entitled” in the phrase “entitled to benefits under [P]art A” as meaning the patient met the
`
`“qualifying Medicare statutory criteria.” See, e.g., Catholic Health, 718 F.3d at 919–20; see also
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`CMS Ruling No. CMS-1498-R2 at 1–10 (Apr. 22, 2015). In Stringfellow Memorial Hosp. v.
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`Azar, No. 17-309 (D.D.C. June 29, 2018), Chief Judge Howell decided that the Secretary’s 2004
`
`rulemaking was not arbitrary and capricious. That decision relies heavily on the Secretary’s
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`acknowledgement that Part A beneficiaries who exhausted their benefits “may still be entitled to
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`other Part A benefits.” Id. at 35 (citing 69 Fed. Reg. at 49,098).
`
`61.
`
`Despite the Secretary’s wholesale expansion of the meaning of “entitled to
`
`benefits under Medicare [P]art A” to include covered and non-covered inpatient days, the
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`Secretary continues to construe the term “entitled to supplemental security income benefits”
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`narrowly, to require a cash benefit payment from the Social Security Administration for the
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`month of hospitalization. The Secretary has continued to exclude from its count of SSI Days
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`
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`those SSI Enrollees who did not receive a cash SSI stipend from SSA during the month of their
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`inpatient hospitalizations. 75 Fed. Reg. 50,275-286 (Aug. 16, 2010); see Metropolitan Hosp.,
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`712 F.3d at 263–65.
`
`62.
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`The Secretary construes two uses of the term “entitled” that appear in the same
`
`sentence of the Medicare fraction of the DSH statute differently, in contravention of well-
`
`established statutory principles. See Sorenson v. Secretary of Treasury, 475 U.S. 851, 860 (1986)
`
`(identical words in same statute have same meaning).
`
`63.
`
`The Secretary takes the view that patients for whom Medicare Part A neither
`
`covers nor pays their inpatient hospitalizations are nevertheless entitled to Medicare Part A if
`
`they meet the qualifying statutory criteria for and are enrolled in the Medicare program.
`
`64.
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`At the same time, the Secretary maintains that SSI Enrollees, that is, patients who
`
`qualify for and are enrolled in the SSI program, are not entitled to SSI benefits absent their
`
`receipt of a cash payment from the SSA during the month in which they are hospitalized, even
`
`when the SSI Enrollee should have received a cash payment but did not for various
`
`administrative reasons.
`
`65.
`
`Under the SSI statute, however, every aged, blind or disabled individual whose
`
`income and resources meet the statutory criteria are SSI-qualified and entitled to SSI program
`
`benefits. See 42 U.S.C. §§ 1381a & 1382.
`
`66.
`
`One of the benefits of SSI enrollment for beneficiaries who also have Medicare i