`
`
`United States Court of Appeals
`FOR THE DISTRICT OF COLUMBIA CIRCUIT
`
`
`
`Decided November 13, 2020
`
`Argued September 11, 2020
`
`
`No. 19-5260
`
`BETHESDA HEALTH, INC., DOING BUSINESS AS BETHESDA
`MEMORIAL HOSPITAL, ET AL.,
`APPELLEES
`
`v.
`
`ALEX M. AZAR, II, IN HIS OFFICIAL CAPACITY AS SECRETARY
`OF HEALTH AND HUMAN SERVICES,
`APPELLANT
`
`
`Appeal from the United States District Court
`for the District of Columbia
`(No. 1:18-cv-00875)
`
`
`Jennifer L. Utrecht, Attorney, U.S. Department of Justice,
`argued the cause for appellant. With her on the briefs were
`Mark B. Stern, Attorney, Robert P. Charrow, General Counsel,
`U.S. Department of Health & Human Services, Janice L.
`Hoffman, Associate General Counsel, Susan Maxson Lyons,
`Deputy Associate General Counsel for Litigation, and Debra
`M. Laboschin, Attorney.
`
`Ashley C. Parrish argued the cause for appellees. With
`him on the brief were Mark D. Polston, Christopher P. Kenny,
`and Gabriel Krimm.
`
`
`
`
`
`
`USCA Case #19-5260 Document #1871008 Filed: 11/13/2020 Page 2 of 4
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`2
`Before: SRINIVASAN, Chief Judge, KATSAS, Circuit Judge,
`and GINSBURG, Senior Circuit Judge.
`
`Opinion for the Court filed by Senior Circuit Judge
`
`GINSBURG.
`
`GINSBURG, Senior Circuit Judge: The Social Security Act
`
`provides hospitals treating a disproportionate number of
`patients under Medicaid with a higher rate of reimbursement
`under Medicare. 42 U.S.C. § 1395ww(d)(5)(F). In calculating
`the proportion of treatment a hospital provided to Medicaid
`patients (the Medicaid fraction), the statute and relevant
`regulations permit the hospital to include not just patients
`covered under traditional Medicaid plans, but also patients
`eligible
`for
`treatment under
`experimental Medicaid
`“demonstration projects” approved by the Secretary of Health
`and Human Services. See id.; 42 C.F.R. § 412.106(b)(4).
`
`In calculating their Medicaid fractions, the plaintiff
`
`hospitals sought to include days of care funded by Florida’s
`Low Income Pool, an approved Medicaid demonstration
`project. Through the Low Income Pool, the State of Florida
`and the federal government jointly reimbursed hospitals for
`care provided to uninsured and underinsured patients. The
`Secretary, however, refused to allow the hospitals to include
`these patients in their Medicaid fraction, on the ground that the
`patients were treated out of charity rather than as designated
`beneficiaries of a demonstration project.
`
`The district court disagreed with the Secretary’s analysis.
`
`Bethesda Health, Inc. v. Azar, 389 F. Supp. 3d 32 (2019). As
`the court explained, the Secretary’s own regulation states that,
`for the purposes of calculating the Medicaid fraction,
`“hospitals may include all days attributable to populations
`eligible for [Medicaid] matching payments
`through a
`
`
`
`
`
`USCA Case #19-5260 Document #1871008 Filed: 11/13/2020 Page 3 of 4
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`3
`[demonstration project]” so long as the services provided under
`the demonstration project include “inpatient hospital services.”
`42 C.F.R. § 412.106(b)(4)(i)-(ii). It was “obvious to the [c]ourt
`that uninsured and underinsured patients received inpatient
`hospital services” through the Low Income Pool, because (1)
`the Secretary authorized federal matching funds to reimburse
`hospitals for these services, and (2) the hospitals rigorously
`documented the services provided using funds from the Pool.
`Bethesda, 389 F. Supp. 3d at 45.
`
`The district court found the Secretary’s arguments to the
`
`contrary unpersuasive. The Secretary argued the text of the
`regulation allows hospitals to include days of care provided
`under a demonstration project only if the project entitles
`specific patients to specific benefit packages. Id. at 47-48. As
`the court noted, however, this is not what the regulation says.
`Rather, a patient must have been “eligible for inpatient
`services,” meaning the demonstration project enabled the
`patient to receive inpatient services, regardless whether the
`project gave the patient a right to these services or allowed the
`patient to enroll in an insurance plan that provided the services.
`Id. at 43-44, 47-48. Here, it is not disputed the patients who
`received inpatient care were eligible to do so because each was
`either uninsured or underinsured. Id. at 48. The court also
`rejected the Secretary’s reliance upon Adena Reg’l Med. Ctr. v.
`Leavitt, 527 F.3d 176 (D.C. Cir. 2008), as that case did not
`involve a demonstration project. Bethesda, 389 F. Supp. 3d at
`51-52.
`
`Just last year, the Fifth Circuit considered the same issues
`
`in another case in which the Secretary tried to exclude from the
`Medicaid
`fraction days of care
`funded
`through an
`“uncompensated care pool” created by a demonstration project.
`Forrest Gen. Hosp. v. Azar, 926 F.3d 221 (2019). The pool
`reimbursed hospitals in Mississippi for services provided to
`
`
`
`
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`USCA Case #19-5260 Document #1871008 Filed: 11/13/2020 Page 4 of 4
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`4
`uninsured patients affected by Hurricane Katrina, but did not
`entitle specific patients to specific services. Id. at 226. The
`Secretary made arguments nearly identical to those he presents
`here, but the Fifth Circuit held the “plain regulatory text
`demands that such days be included — period.” Id. at 234
`(citing HealthAlliance Hosps., Inc. v. Azar, 346 F. Supp. 3d 43,
`60 (D.D.C. 2018)). The district court here reached the same
`well-reasoned conclusion.
`
` We see no flaw in Judge Collyer’s analysis and therefore
`embrace the district court’s opinion as the law of this circuit.
`The judgment of the district court is, accordingly,
`
`
`Affirmed.
`
`
`
`