Petition for Writ of Certiorari — Advocate Christ Medical Center, et al., Petitioners v. Robert F. Kennedy, Jr., Secretary of Health and Human Services

Supreme Court briefDec 29, 2023

Ask Donna

What actually matters in this document.

Text

APPENDIX

Opinion of the United States Court of Appeals for the

D.C. Circuit, No. 22-5214 (Sept. 1, 2023) ................... 1

Opinion of the United States District Court for the

District of Columbia, No. 1:17-cv-1519

(June 8, 2022) ............................................................ 18

Decision of the Administrator, Centers for Medicare

and Medicaid Services, No. 2017-D11/2017-D12

(May 30, 2017) ........................................................... 46

Decision of the Provider Reimbursement Review

Board, No. 2017-D11 (Mar. 27, 2017) ....................... 94

Decision of the Provider Reimbursement Review

Board, No. 2017-D12 (Mar. 28, 2017) ..................... 111

Relevant Statutory and Regulatory Provisions...... 128

42 U.S.C. § 1395ww(d)(5)(F)(vi) ................... 128

42 U.S.C. § 1381a .......................................... 129

42 U.S.C. § 1382(a), (b), (c), (e)(1)(A)-(B)...... 129

42 U.S.C. § 1382d .......................................... 138

App. 1

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

----------------------------------------------

Argued April 14, 2023

Decided September 1, 2023

No. 22-5214

ADVOCATE CHRIST MEDICAL CENTER, ET AL.,

APPELLANTS

XAVIER BECERRA, SECRETARY, UNITED STATES

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

APPELLEES

----------------------------------------------

Appeal from the United States District Court

for the District of Columbia

(No. 1:17-cv-1519)

----------------------------------------------

Daniel F. Miller argued the cause for appellants.

With him on the briefs were Sara Jean MacCarthy and

Heather D. Mogden.

Stephanie R. Marcus, Attorney, U.S. Department

of Justice, argued the cause for appellees. With her

on the brief were Mark B. Stern, Attorney, and Brian

M. Boynton, Principal Deputy Assistant Attorney

General.

Before: HENDERSON, KATSAS, and PAN, Circuit Judges.

Opinion for the Court filed by Circuit Judge KATSAS.

KATSAS, Circuit Judge: Hospitals treating Medicare

beneficiaries receive greater reimbursements to the

App. 2

extent that the beneficiaries are also entitled to

supplemental security income benefits under Title XVI

of the Social Security Act. The Secretary of Health

and Human Services understands this population to

include only patients receiving cash payments during

the month in question. Various hospitals contend that

this population also includes patients receiving a

subsidy under Medicare Part D and vocational training. The district court disagreed with the hospitals, as

do we.

This case involves benefits under three different

titles of the Social Security Act. Title XVIII of that Act

establishes the Medicare program, which provides

health insurance to the elderly and disabled. Part A of

Medicare covers inpatient hospital services, and Part

D affords a prescription-drug benefit. Title XVI of the

Social Security Act provides monthly cash payments,

known as supplemental security income benefits, to

financially needy individuals who are elderly, disabled,

or blind. Title XI, among other things, provides

vocational rehabilitation services for the disabled. In

the United States Code, the Social Security Act is

codified as chapter 7 of Title 42, and its individual

titles are codified as subchapters of chapter 7. The

Department of Health and Human Services

administers Medicare, while the Social Security

Administration administers the SSI program and

the vocational rehabilitation services under Title XI.

App. 3

Hospitals receive fixed payments for services

provided to Medicare beneficiaries regardless of their

actual costs. The payment formula, which approximates the costs that a well-run hospital would incur

to provide the treatment at issue, seeks to “encourage

efficiency by rewarding cost effective hospital

practices.” Cape Cod Hosp. v. Sebelius, 630 F.3d 203,

205 (D.C. Cir. 2011) (cleaned up). One variable in

the formula is a “disproportionate share hospital”

adjustment, which provides additional compensation

to hospitals serving an “unusually high percentage of

low-income patients.” Sebelius v. Auburn Reg’l Med.

Ctr., 568 U.S. 145, 150 (2013). This adjustment

accounts for the fact that low-income patients tend to

be in worse health and therefore costlier to treat. Id.

The DSH adjustment derives from two statutory

formulas known as the Medicare fraction and the

Medicaid fraction. The Medicare fraction represents

the percentage of a hospital’s Medicare patients who

are low-income, as measured by their entitlement to

SSI benefits. The Medicaid fraction represents the

percentage of a hospital’s patients who are eligible for

Medicaid, which provides health benefits to a different

population of low-income individuals. The sum of these

fractions, which is called the hospital’s “disproportionate patient percentage,” reflects all low-income

patients served. See 42 U.S.C. § 1395ww(d)(5)(F)(vi).

This case turns on the Medicare fraction, which

consists of the following:

App. 4

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. . . .

42 U.S.C. § 1395ww(d)(5)(F)(vi)(I). In plain English,

the numerator of the Medicare fraction is the number

of patient days attributable to Medicare patients who

are entitled to SSI benefits, while the denominator is

the number of patient days attributable to all Medicare

patients.

For our purposes, the key statutory terms are

“entitled to benefits under part A” and “entitled to

supplementary security income benefits . . . under

subchapter XVI.” The Department of Health and

Human Services considers a patient “entitled to

benefits under part A” if he satisfies the threshold

requirements for Part A benefits—i.e., if he is over

65 or suffers a long-term disability—regardless of

whether Medicare pays for the specific service

rendered. See Medicare Program; Changes to the

Hospital Inpatient Prospective Payment Systems

and Fiscal Year 2005 Rates, 69 Fed. Reg. 48,916,

49,098–99, 49,246 (Aug. 11, 2004). The Supreme

App. 5

Court recently endorsed this interpretation in Becerra

v. Empire Health Foundation, 142 S. Ct. 2354 (2022).

The SSI program provides cash payments to financially needy individuals who are aged, blind, or

disabled. 42 U.S.C. § 1382(a). Individuals must apply

for this benefit. Id. § 1382(c)(7). Eligibility is determined monthly, depending on a beneficiary’s “income”

and “resources” during the month. Id. § 1382(c)(1).

Once an individual qualifies for the cash payment

during a particular month, he remains enrolled in the

SSI program until failing to qualify for the payment for

twelve consecutive months. See 20 C.F.R. § 416.1335.

At that point, the individual must reapply to receive

future payments.

Enrollees in the SSI program may receive two

further benefits beyond the cash payments. First, they

become eligible for a subsidy under Medicare Part D.

See 42 U.S.C. § 1395w-114(a)(3)(B)(v)(I). Each enrollee

receives this subsidy for at least six months regardless

of whether he continues to qualify for the monthly

payments. 42 C.F.R. § 423.773(c)(2). Second, blind or

disabled enrollees may access the Ticket to Work and

Self-Sufficiency Program, which provides vocational

rehabilitation services through state agencies or private employment networks. 42 U.S.C. § 1320b-19. In

some circumstances, SSI enrollees may use these

services even after they fail to qualify for the monthly

payments. See 20 C.F.R. §§ 411.100–660.

For purposes of the Medicare fraction, HHS

interprets the phrase “entitled to supplementary

App. 6

security income benefits . . . under subchapter XVI”

to denote only those patients who are entitled to

the cash payment during the month in question. In

administering the SSI program, SSA assigns codes to

track monthly (1) whether enrollees qualified for the

payment and (2) the reason why or why not. For

example, the code “N01” indicates that an enrollee

failed to receive a payment for a particular month (“N”)

because of excess income during that month (“01”).

After studying the various codes used by SSA, HHS

concluded that codes C01, M01, and M02 capture

the relevant universe of individuals entitled to the

monthly payment. See Medicare Program; Hospital

Inpatient Prospective Payment Systems for Acute

Care Hospitals and the Long-Term Care Hospital

Prospective Payment System Changes and FY 2011

Rates, 75 Fed. Reg. 50,042, 50,281 (Aug. 16, 2010).1 To

help HHS calculate the Medicare fraction of individual

hospitals, SSA gives HHS data in the form of “monthly

indicators,” which denote whether SSI enrollees were

coded as C01, M01, or M02 in any given month. See

id. at 50,276. HHS calculates the Medicare fraction

by comparing this data regarding who qualified for

monthly cash payments against its own data regarding

the inpatient admissions of individuals entitled to Part

A benefits. Id. at 50,278.

To provide for a check on HHS’s work, Congress

enacted section 951 of the Medicare Prescription Drug,

Code C01 indicates that an SSI enrollee receives an

automated cash payment. Codes M01 and M02 reflect enrollees

whose cash payments SSA manages manually.

App. 7

Improvement, and Modernization Act (MMA). It

requires HHS to give each hospital “the data necessary” for the hospital “to compute the number of

patient days used in computing the disproportionate

patient percentage . . . for that hospital.” Pub. L. No.

108-173 § 951, 117 Stat. 2066, 2427 (2003) (codified at

42 U.S.C. § 1395ww note). To comply with the MMA,

the agency gives hospitals data of the “matched

patient-specific Medicare Part A inpatient days/SSI

eligibility data on a month-to-month basis.” Medicare

Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2006 Rates, 70

Fed. Reg. 47,278, 47,440 (Aug. 12, 2005). This amounts

to a list of inpatient days along with a binary yes-or-no

marker indicating whether the patient for those days

was counted as being entitled to SSI benefits. HHS

neither receives from SSA, nor gives to the hospitals,

the individual codes reflecting SSA’s determination of

why specific enrollees were or were not entitled to SSI

benefits month-to-month.

The plaintiffs in this case are more than 200

different hospitals seeking additional Medicare reimbursement for fiscal years 2006 to 2009. The hospitals

dispute HHS’s calculation of their respective Medicare

fractions for those years. They contend that the phrase

“entitled to supplementary security income benefits”

includes all patients enrolled in the SSI program at

the time of hospitalization, even if they did not

then qualify for the monthly cash payment. The

App. 8

Provider Reimbursement Review Board, a tribunal

within HHS, denied relief to the hospitals. So did the

Centers for Medicare and Medicaid Services, which

administers Medicare for the Secretary. Consistent

with the Secretary’s longstanding view, CMS reasoned

that “[b]ecause SSI is a cash benefit, only a person who

is actually paid these benefits can be considered

‘entitled’ to these benefits.” J.A. 568.

The hospitals sought review of the reimbursement

decisions in the district court. They continued to

argue that HHS has misconstrued the Medicare Act.

Alternatively, they claimed that the HHS matching

process is arbitrary even under HHS’s construction.

Finally, through a claim for mandamus, the hospitals

sought an order directing HHS to provide them with

the SSI payment codes for their respective patients.

The district court rejected these claims and granted

summary judgment to HHS. Advoc. Christ Med. Ctr. v.

Azar, No. 17-cv-1519, 2022 WL 2064830 (D.D.C. June

8, 2022).

We review the grant of summary judgment de

novo. Gentiva Health Servs., Inc. v. Becerra, 31 F.4th

766, 775 (D.C. Cir. 2022). Like the district court, we

apply the arbitrary-and-capricious standard from the

Administrative Procedure Act. See 5 U.S.C. § 706(2)(A);

42 U.S.C. § 1395oo(f)(1). Under that deferential

standard, an agency decision need only be “reasonable

App. 9

and reasonably explained.” FCC v. Prometheus Radio

Project, 141 S. Ct. 1150, 1155 (2021).

We have also deferentially reviewed HHS

interpretations of the Medicare Act under Chevron

U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984). See Gentiva,

31 F.4th at 775. However, we need not apply the

Chevron framework if we conclude that the agency

has correctly construed the governing statute. See

Empire, 142 S. Ct. at 2362.

III

We begin with the dispute over the phrase “entitled

to supplementary security income benefits . . . under

subchapter XVI.” 42 U.S.C. § 1395ww(d)(5)(F)(vi)(I).

HHS reads it to cover only Medicare beneficiaries who

are entitled to SSI cash payments at the time of their

hospitalization. The hospitals read it to cover Medicare

beneficiaries who are enrolled in the SSI program at

the time of their hospitalization, regardless of whether

they receive a cash payment at that time. To justify

their position, the hospitals contend that SSI benefits

under subchapter XVI include not only cash payments

but also the Medicare Part D subsidy and vocational

rehabilitation services.

The hospitals are mistaken. At every turn,

subchapter XVI is about cash payments for needy

individuals who are aged, blind, or disabled. Its title

promises “supplemental security income” for those

individuals. 42 U.S.C. ch. 7, subch. XVI. Its statement

of purpose is “to provide supplemental security

App. 10

income” to those individuals. Id. § 1381. Its “[b]asic

entitlement to benefits” is that aged, blind, or disabled

individuals, once determined not to have income or

resources above the statutory cutoffs, “shall, in

accordance with and subject to the provisions of

this subchapter, be paid benefits.” Id. § 1381a. Section

1382 sets forth “[t]he benefit under this subchapter”—

not simply “a” benefit—in specific dollar amounts.

Id. § 1382(b). Scores of later provisions elaborate

on when and how this cash benefit is to be paid out.2

Section 1320b-19 of Title 42 confirms this point.

Housed in subchapter XI, it requires SSA to establish

the Ticket to Work program, which provides vocational

rehabilitation services to blind or disabled individuals

who are “eligible for supplemental security income

See, e.g., 42 U.S.C. § 1382(e)(1)(B) (setting forth “the benefit under this subchapter,” in dollars, for certain individuals in

treatment facilities); id. § 1382(h) (rules for “determining

eligibility for, and the amount of, benefits payable under this

section”); id. § 1382b(c)(1)(A)(iv) (rules for determining “the

amount of the maximum monthly benefit payable under section

1382(b)”); id. § 1382c(f )(1) (rules for “determining eligibility for

and the amount of benefits for” certain married individuals); id.

§ 1382d(a)(2) (treatment of minors “with respect to whom benefits

are paid under this subchapter”); id. § 1382e(d)(5)(C) (permissible

use of funds “appropriated for payment of benefits under this

subchapter”); id. §1382f (“Cost-of-living adjustments in benefits”);

id. § 1382h(b)(1)(D) (assessment whether certain “earnings”

provide a “reasonable equivalent of the benefits under this

subchapter”); id. § 1382i(b)(2) (certain “payments” qualify as

“supplemental security income benefits” for certain purposes); id.

§ 1382j(a) (rules for determining “the amount of benefits under

this subchapter” for aliens); id. § 1383 (“Procedure for payment of

benefits . . . under this subchapter”).

App. 11

benefits under subchapter XVI.” 42 U.S.C. § 1320b19(k)(4). For purposes of this program, section 1320b19 states expressly that “[t]he term ‘supplemental

security income benefit under subchapter XVI’ means

a cash benefit under section 1382 or 1382h(a) of this

title.” Id. § 1320b-19(k)(5). As noted above, section

1382 sets forth “[t]he” monthly cash benefit under

subchapter XVI, id. § 1382(b), and section 1382h(a)

sets forth a substitute monthly cash benefit for certain

individuals who qualify under section 1382 in some

months but not others, id. § 1382h(a)(1). Because

“identical words used in different parts of the same

act are intended to have the same meaning,” Gustafson

v. Alloyd Co., 513 U.S. 561, 570 (1995) (cleaned up),

the phrase “supplemental security income benefits

under subchapter XVI” (or its equivalent “supplementary security income benefits . . . under subchapter

XVI”) bears the same meaning in calculating the

Medicare fraction in subchapter XVIII that it bears

(1) throughout subchapter XVI and (2) in determining eligibility for the Ticket to Work program in

subchapter XI.

The hospitals respond that the word “benefits”

can include cash or non-cash benefits, tangible or

intangible. True enough, but the question here turns

on what counts as “income” benefits “under subchapter

XVI.” Neither of the two benefits that the hospitals

cite fits that description. Medicare Part D benefits

are housed in subchapter XVIII. So too is the provision making individuals “who are recipients of

supplemental security income benefits” also eligible

App. 12

for a prescription-drug subsidy. 42 U.S.C. § 1395w114(a)(3)(B)(v)(I). The prescription-drug subsidy is

thus a non-cash benefit provided under subchapter

XVIII, not the monthly cash benefit provided under

subchapter XVI. Likewise, the Ticket to Work benefits

cited by the hospitals are provided under subchapter

XI, which requires SSA to establish that program for

blind and disabled individuals “to obtain employment

services, vocational rehabilitation services, or other

support services from an employment network.” Id.

§ 1320b-19(a). Subchapter XI sets forth the metes and

bounds of that program, which SSA may run through

state agencies that choose to administer approved

plans, see id. § 1320b-19(c)(1), or through private

employment networks selected by SSA, see id. § 1320b19(d)(4). Subchapter XVI merely provides that, if a

state chooses to participate in the Ticket to Work

program, SSA may reimburse the state for the cost

of providing covered vocational benefits to SSI

enrollees. Id. § 1382d(d). That simply provides a

funding mechanism for a subchapter XI benefit—and

one that expressly defines the term “supplemental

security income benefits under subchapter XVI” as

“a cash benefit under section 1382 or 1382h(a).” Id.

§ 1320b-19(k)(5).

The hospitals further argue that Empire compels their construction of the phrase “entitled to

supplementary security income benefits.” Empire held

that the phrase “entitled to benefits under part A,” as

used to determine the Medicare fraction, covers

App. 13

patients who meet Part A’s requirement of being

elderly or disabled, even if Medicare does not pay for

specific treatments because of coverage limitations,

alternative insurance, or the like. 142 S. Ct. at 2364.

The hospitals reason that if the phrase “entitled to

benefits under part A” covers patients who meet basic

eligibility requirements without regard to specific

payment decisions, then so too must the adjacent

phrase “entitled to [SSI] benefits.”

This argument misses key distinctions between

the Part A and SSI schemes. First, Part A benefits

extend well beyond payment for specific services at

specific times. As Empire explained, a beneficiary who

reaches a Part A coverage limit for eye care still has

coverage for a knee replacement, so he remains

“entitled to benefits under part A” even if Medicare

does not pay for his current medical needs. 142 S. Ct.

at 2363. There is no comparable parallel in the SSI

context because, as shown above, the phrase “[SSI]

benefits . . . under subchapter XVI” means only cash

payments. Moreover, age or chronic disability makes

a person eligible for Part A benefits “without an

application or anything more,” and individuals rarely

if ever lose this eligibility over time. Id. at 2363-64.

The same does not hold true for SSI, where individuals

routinely ping-pong in and out of “eligibility” depending on fluctuations in their income or wealth from one

month to another. 42 U.S.C. § 1382(a), (c). Given this

structure, it makes little sense to say that individuals

are “entitled” to the benefit in months when they are

not even eligible for it.

App. 14

Because we agree that the Secretary offered the

correct interpretation of the Medicare fraction, we

adopt it without considering any question of Chevron

deference.

The hospitals next argue that even under HHS’s

own construction of the Medicare Act, its matching

process was arbitrary and capricious. We disagree.

First, the hospitals contend that HHS arbitrarily

excluded patients whose SSI benefits were withheld

under the so-called “cross-program recovery” scheme.

When an SSI beneficiary receives an overpayment

from another SSA program, SSA may correct the

mistake by reducing SSI benefits correspondingly. 42

U.S.C. § 1320b-17. The hospitals assert that SSA

assigns to individuals whose benefits are so withheld

the E01 code, which indicates a loss of SSI eligibility,

even though these individuals receive an SSI benefit

that cancels another monetary liability. This assertion

is mistaken. As the government explained at oral

argument, individuals whose SSI benefits are clawed

back under the cross-program recovery scheme still

are assigned the C01, M01, or M02 codes, and therefore

remain “entitled to [SSI] benefits” in the agency’s

calculation of the Medicare fraction.

Second, the hospitals contend that HHS

unreasonably focused on whether patients receive SSI

payments when hospitalized because the payments

depend on income and resource levels from earlier

App. 15

months. But “eligibility” for the SSI benefit “for a

month” depends on the individual’s income, resources,

and other characteristics “in such month.” 42 U.S.C.

§ 1382(c)(1). Thus, if an individual satisfies these

criteria during one month yet does not receive the

payment until a later month, HHS still counts the

individual as “entitled to [SSI] benefits” during the

first month.

Third, the hospitals contend that HHS unreasonably excluded from the Medicare fraction individuals assigned codes “S” and “E02.” Because the

hospitals first raised this argument in their reply

brief, we do not consider it. See Abdullah v. Obama,

753 F.3d 193, 199 (D.C. Cir. 2014).

Invoking the Mandamus Act, 28 U.S.C. § 1361,

the hospitals seek an order compelling HHS to provide them with the payment codes assigned by SSA

to their respective patients. The hospitals want this

data to verify or challenge CMS’s calculation of their

respective Medicare fractions.

Mandamus against an executive official is a

drastic remedy to be “invoked only in extraordinary

circumstances.” Fornaro v. James, 416 F.3d 63, 69 (D.C.

Cir. 2005) (cleaned up). The plaintiff must show (1) a

clear and indisputable right to the relief sought; (2) the

violation of a clear legal duty; and (3) the absence of

an adequate alternate remedy. See Am. Hosp. Ass’n v.

Burwell, 812 F.3d 183, 189 (D.C. Cir. 2016). Even if

App. 16

these requirements are met, the plaintiff must also

show “compelling equitable grounds” for relief. Id.

To establish the necessary rights and duties, the

hospitals invoke section 951 of the MMA. It requires

HHS to give each hospital the “data necessary” for the

hospital “to compute the number of patient days used

in computing [its] disproportionate patient percentage.” 117 Stat. at 2427. The hospitals have received the

matched data that HHS itself uses to calculate this

percentage. But the hospitals want more than simply

a binary code reflecting whether specific patient days

were attributed to individuals coded by SSA as C01,

M01, or M02. Instead, the hospitals want, for all

patient days attributed to SSI enrollees, the specific

codes used by SSA to track why those individuals did

or did not qualify for the monthly cash payment.

Section 951 does not unambiguously compel

release of this data. According to the hospitals, section

951 requires HHS to disclose what they describe as

“input data” to help them re-do the entire determination of the Medicare and Medicaid fractions from

start to finish. On the other hand, section 951 could

simply mean that HHS must provide wholesale data

that it uses for the actual computation. We are tempted

to say that this ambiguity alone is enough to doom the

claim, for mandamus is unavailable when the alleged

duty depends on a statutory construction that is “not

free from doubt.” Power v. Barnhart, 292 F.3d 781,

786 (D.C. Cir. 2002) (cleaned up). But there is a

simpler ground of decision: What section 951 cannot

mean is that HHS must give hospitals data that it

App. 17

never received from SSA in the first place. And SSA

does not provide HHS with the specific codes assigned

to individual patients. See 75 Fed. Reg. at 50,276.

The district court correctly granted summary

judgment to the Secretary of Health and Human

Services.

Affirmed.

App. 18

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)

Plaintiffs,

)

ALEX M. AZAR, II, Secretary, )

United States Department of )

Health and Human Services, )

)

Defendant.

)

ADVOCATE CHRIST

MEDICAL CENTER, et al.,

Civil Action No.

17-cv-1519 (TSC)

MEMORANDUM OPINION

(Filed Jun. 8, 2022)

Plaintiffs are more than 200 acute care hospitals

located across the country. They provide inpatient care

to Medicare beneficiaries, and in exchange are reimbursed for their services through the Medicare program. They challenge the Secretary of the Department

of Health and Human Services’ (HHS) interpretation

of a statutory program that compensates hospitals for

serving a disproportionately large number of lowincome patients. Plaintiffs claim the Secretary’s

interpretation is unlawful under the Administrative

Procedures Act (“APA”) and ask the court to invalidate

it and direct the Secretary to recalculate Plaintiffs’

compensation for fiscal years 2006 to 2009. They also

seek a writ of mandamus compelling the Secretary to

App. 19

furnish them with information to verify the accuracy

of their reimbursements under the statutory program.

Plaintiffs and the Secretary have cross-moved for

summary judgment. For reasons set forth below, the

court will DENY Plaintiffs’ Motion for Summary Judgment and GRANT the Secretary’s Cross-Motion for

Summary Judgment.

I. BACKGROUND

A. Statutory and Regulatory Background

Medicare is a federal program that provides

health insurance coverage to individuals who are at

least 65 years old and entitled to monthly Social Security benefits, and to disabled individuals who meet

eligibility requirements. See 42 U.S.C. § 1395. The

Medicare statute is divided into five Parts. Part A provides hospital insurance benefits, see id. §§ 1395c–

1395i-5, Part B provides coverage for outpatient and

physician services, see id. §§ 1395j–1395w-5, Part C,

known as the Medicare Advantage Program, allows

participants to choose certain health plans as an alternative to the traditional fee-for-service model available

under Parts A and B, see id. §§ 1395w-21–1395w-29,

Part D provides coverage for prescription medication,

see id. §§ 1395w-101–1395w-154, and Part E sets forth

various “Miscellaneous Provisions,” one of which is the

Inpatient Prospective Payment System that reimburses

Part A inpatient hospital services, see Northeast Hosp.

Corp. v. Sebelius, 657 F.3d 1, 3 (D.C. Cir. 2011).

App. 20

“Under the Medicare statute, the Secretary generally pays hospitals a sum for each covered inpatient

service without regard to the hospital’s actual cost.”

Adena Reg’l Med. Ctr. v. Leavitt, 527 F.3d 176, 177 (D.C.

Cir. 2008) (citing 42 U.S.C. § 1395ww(d)). Instead of

relying on a hospital’s actual costs, “Medicare reimburses a hospital for services based on prospectively

determined national and regional rates.” Northeast

Hosp. Corp., 657 F.3d at 2 (citing 42 U.S.C. § 1395ww(d)(1)–

(4)); see also Nazareth Hosp. v. Sec’y U.S. Dep’t of

Health & Human Servs., 747 F.3d 172, 175 (3d Cir.

2014) (explaining that Medicare “payments are predicated upon prevailing rates for given services”). But

the Medicare statute also “provides for certain adjustments” to those pre-determined payment rates. Nazareth Hosp., 747 F.3d at 175.

One such adjustment is the “disproportionate

share hospital” (“DSH”) adjustment, which applies to

hospitals that serve a “disproportionately large percentage of low-income patients.” Adena, 527 F.3d at

177–78. The Centers for Medicare and Medicaid Services (“CMS”) is responsible for administering the

Medicare program and calculating each qualifying

hospital’s DSH adjustment using a formula established by statute. See 42 U.S.C. § 1395ww(d)(5)(F)(vi).

The amount of any DSH adjustment depends on

the hospital’s “disproportionate patient percentage”

(“DPP”). See id. § 1395ww(d)(5)(F)(v)–(vii). CMS calculates DPP by adding (1) the Medicaid fraction, and

(2) the Medicare fraction, often referred to as the

App. 21

Supplemental Security Income (“SSI”) fraction.1 Id.

§ 1395ww(d)(5)(F)(vi)(I)–(II). The Medicaid and SSI

fractions represent two distinct and separate measures

of low income that, added together, provide a proxy for

the total low-income patient percentage. See Cath.

Health, 718 F.3d at 916. The SSI fraction is at issue in

this case.

CMS calculates the SSI fraction by dividing the

time spent caring for patients entitled to benefits

under both Medicare Part A and the SSI program by

the time spent caring for patients entitled to benefits

under only Medicare Part A. See Azar v. Allina Health

Servs., 139 S. Ct. 1804, 1809 (2019). A visual representation of the fraction is:

The SSI fraction is defined as:

[T]he 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 [Medicare] and were entitled to supplementary

security income [SSI] 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 [Medicare].

42 U.S.C. § 1395ww(d)(5)(F)(vi)(I). “This language is downright

byzantine and its meaning not easily discernible.” Cath. Health

Initiatives Iowa Corp. v. Sibelius, 718 F.3d 914, 916 (D.C. Cir.

2013).

App. 22

Medicare Inpatient days for patients entitled to

SSI Fraction = both Medicare Part A and SSI benefits

Inpatient days for patients entitled to

Medicare Part A benefits

The SSI fraction “effectively asks, out of all patient

days from Medicare beneficiaries, what percentage of

those days came from Medicare beneficiaries who also

received SSI benefits?” Cath. Health, 718 F.3d at 917

(emphasis in original). The greater the number of

patients that a hospital treats who are “entitled to

[SSI] benefits,” the larger the DPP, and thus the higher

the hospital’s reimbursement rate. Id. at 916.

The SSI program is administered by the Social

Security Administration (“SSA”), which provides monthly

cash payments to financially needy people who are

aged 65 or older, blind, or disabled.2 42 U.S.C. § 1381a.

The statute provides that individuals in these categories who are “determined . . . to be eligible on the basis

of his income and resources shall, in accordance with

and subject to the provisions of [Title XVI], be paid

benefits by the Commissioner of Social Security.” Id.

The SSA maintains SSI records, including monthly

“payment status codes” denoting whether an SSI applicant received payment during a given month and the

reason for that payment status. See Soc. Sec. Admin.,

To be eligible for SSI benefits, a person must be (1) 65 years of

age or older, blind or disabled; (2) a lawful resident of the United

States; (3) have limited income and resources; (4) not be fleeing

to avoid prosecution for a crime or violating a condition of parole;

and (5) file an application for benefits. See 42 U.S.C. § 1382; 20

C.F.R. § 416.202.

App. 23

State Verification & Exch. Sys. (SVES) & State Online

Query (SOLQ) Manual, Appx. F (April 2013), (hereinafter “SVES/SOLQ”) [AR 7016; 41,725].

To enable CMS to calculate the SSI fraction, SSA

sends CMS an annual “eligibility file” that includes

information on all SSI applicants whom SSA has coded

with one of three payment status codes: C01 (current

pay), M01 (forced pay), and M02 (forced due). Medicare

Program Rule, 75 Fed. Reg. at 50,042, 50,280 (Aug. 16,

2010). SSA does so at CMS’ request, because CMS

interprets those codes as reflecting an SSI applicant’s

“entitlement” to SSI benefits. See id. at 50,281 (stating that using SSI codes “C01, M01, and M02 accurately captures all SSI-entitled individuals during

the month(s) that they are entitled to receive SSI

benefits”); id. at 50,280 (“[W]e have requested, and

are using in the data matching process, those SSA

codes. . . .”). Specifically, those three codes reflect

“whether or not SSA made a payment of SSI benefits

to an individual who applied for SSI benefits.” Id. at

50,277. SSA does not include payment status codes in

the SSI eligibility file but does include monthly indicators denoting which month(s) each person received

SSI payments. See id. at 50,276; see also 51 Fed. Reg.

31,454, 31,459 (Sept. 3, 1986) (stating that the SSI file

“lists all SSI recipients for a 3-year period and denotes

the months during that period in which the recipient

was eligible for SSI benefits”).

CMS then computes the SSI fraction by matching

individuals appearing in the SSA’s eligibility file with

its own Medicare inpatient data to identify a patient’s

App. 24

entitlement to SSI benefits. Pomona Valley Hosp. Med.

Ctr. v. Azar, No. CV 18-2763 (ABJ), 2020 WL 5816486,

at *2 (D.D.C. Sept. 30, 2020) (citing Medicare Program

Rule, 75 Fed. Reg. at 50,281). In other words, “CMS

identifies the individuals appearing in both two data

sets to determine the number of patients, and the

inpatient days for those patients at each hospital, for

the applicable fiscal year to calculate the hospital’s SSI

numerator.” Id. (citing Cath. Health, 718 F.3d at 916).

CMS also includes in the SSI numerator “patients who

were retroactively found to be entitled to SSI benefits

in a particular month in which they were hospitalized—regardless of whether they actually came into

possession of benefits during the month of their hospitalization.” Def. Mot. at 23; see also Medicare Program

Rule at 75 Fed. Reg. 50,282 (noting CMS’ “inclusion of

retroactive SSI eligibility determinations and the lifting of SSI payment suspensions by using the best and

latest available SSI eligibility data”); Baystate Medical

Ctr. v. Leavitt, 545 F. Supp. 2d 20, 26 n.12 (D.D.C. 2008)

(explaining CMS’ process for counting “hold and suspense” cases, which occur when the SSA is looking for

a representative payee able and willing to accept

checks on behalf of an SSI recipient, when “presumptively disabled” individuals receiving benefits during

an initial period are awaiting additional state determinations, or when a state eligibility determination is

pending).

Unlike the SSI program, which is a cash benefit

program, the other entitlement relevant to the SSI

fraction—Medicare Part A—is a federal health insurance

App. 25

program. In determining which patients are “entitled

to” Medicare Part A, the Secretary counts all patients

who meet the statutory criteria for that entitlement.

See Def. Mot. at 29 (citing Medicare Program Rule at

75 Fed. Reg. at 50,280) (“We believe that Congress used

the phrase ‘entitled to benefits under part A’ in [the

DPP provision] to refer to individuals who meet the

criteria for entitlement under these sections”)); see also

42 C.F.R. § 400.202 (2012) (“Entitled means that an

individual meets all the requirements for Medicare

benefits.”). According to the Secretary, that interpretation holds true “regardless of whether the person’s stay

in a hospital is actually paid for under Medicare Part

A” and “regardless of whether the person is hospitalized at all.” Def. Mot. at 29.

B. Medicare Payment Determinations and

Judicial Review

To obtain payment for services provided under

Part A, hospitals submit cost reports at the end of

each fiscal year to contractors known during the relevant time period as fiscal intermediaries or Medicare

administrative contractors (“MACs”), which are generally private insurance companies acting on behalf of

HHS. See 42 C.F.R. §§ 405.1801(b)(1), 413.24(f ). The

intermediary determines the total payment (including

any DSH adjustment) and issues a Notice of Program

Reimbursement (“NPR”), informing the provider

how much it will be paid for the fiscal year. See

id. § 405.1803.

App. 26

A provider that meets statutory requirements

may appeal the payment determination set forth in

the NPR by requesting a hearing before the Provider

Reimbursement Review Board (the “Board” or “PRRB”).

See 42 U.S.C. § 1395oo(a)(1), (3). The PRRB’s final

decision is subject to review by the CMS Administrator pursuant to the Secretary’s delegation of authority

to the Administrator. See id. § 1395oo(f ); 42 C.F.R.

§ 405.1875. Challenges to the Secretary’s final decision may be brought in federal court. See 42 U.S.C.

§ 1395oo(f ).

C. Procedural History

In the administrative proceedings below, Plaintiffs

appealed their DPP calculations from 2006 to 2009 to

the Board pursuant to 42 C.F.R. § 405.1837. The Board

held combined hearings for these appeals on March 17,

2015 and September 15, 2015. See ECF No. 13, Pls.

Mot. at 4. Plaintiffs argued that CMS violated the Medicare statute by treating only three payment codes—

C01, M01, and M02—as indicators of SSI entitlement.

See ECF No. 31, PRRB Dec. 2017-D11 [AR 66, 70–71];

PRRB Dec. 2017-D12 [AR 39,178, 39,182–83]. They

contended that CMS should read the phrase “entitled

to [SSI] benefits” in the same way that it reads the

phrase “entitled to benefits under [Medicare] part A,”

to include both paid and unpaid SSI days. PRRB Dec.

2017-11 [AR 70]; PRRB Dec. 2017-D12 [AR 39,182].

Interpreting Plaintiffs’ claim as a challenge to the

data matching process, the Board found that it lacked

App. 27

authority to grant the relief the hospitals sought. See

PRRB Dec. 2017-D11 [AR 70–73]; PRRB Dec. 2017-D12

[AR 39,182–84].

On review, the CMS Administrator rejected Plaintiffs’ statutory interpretation challenge. See Administrator Dec. 2017-D11 [AR 2-25]. The Administrator

found that the Secretary’s interpretation “is supported

by the statutory design of the two programs,” and that

“there are meaningful statutory differences between

Medicare Part A benefits and SSI benefits.” See id. [AR

17]. He explained that the phrase “entitled to benefits

under [Medicare] part A” has a specialized meaning

under the Medicare statute, and that this entitlement

is generally understood to be a “status determination”

that, once established, does not change merely because

healthcare services are not paid for under the program.

See id. [AR 17-18]. By contrast, he explained, entitlement to SSI benefits under Title XVI tends to change

from month-to-month because it is based on income

and resources as well as other statutory criteria that

can vary over time. Id. [AR 18]. He further explained

that SSI is a “cash benefit program” and that it is thus

reasonable to distinguish it from Medicare Part A,

which is “a distinct set of health insurance benefits”

under the Act. Id. Finally, he rejected Plaintiffs’ challenge to the use of only the three payment codes as

indicators of entitlement to SSI benefits, finding that

none of the other codes indicates that a person was

entitled to receive SSI benefits in a given month. See

id. [AR 19].

App. 28

Plaintiffs then brought this action for judicial

review of the Administrator’s decision, see 42 U.S.C.

§ 1395oo(f )(1), challenging the calculation of their DPP

for the four fiscal years at issue. ECF No. 1, Compl.

They ask the court to invalidate the Secretary’s interpretation of the phrase, “entitled to [SSI] benefits” in

the DPP provision and to require recalculation of

Plaintiffs’ DPP for fiscal years 2006 to 2009 “to include

all SSI-enrolled patient days in the numerator of

[that] fraction.” See id. at 47–48 (“Request for Relief”)

¶ a & c. They also seek mandamus relief “directing the

Secretary to furnish [them] with CMS data from the

[SSA] to identify the [SSA payment codes] of all SSI

enrollees who were entitled to Part A and who received

inpatient hospital services from the Plaintiffs during

the cost report years at issue.” See id. (“Request For

Relief ”) ¶ b. The parties have cross-moved for summary judgment.

II. LEGAL STANDARD

A court typically must grant summary judgment

when the pleadings and evidence show “there is no

genuine dispute as to any material fact and [that] the

movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a). However, in cases involving challenges

to agency action under the Administrative Procedure

Act (“APA”), Rule 56 “does not apply because of the

limited role of a court in reviewing the administrative

record.” Select Specialty Hosp.-Akron, LLC v. Sebelius,

820 F. Supp. 2d 13, 21 (D.D.C. 2011) (citations omitted). In such cases, summary judgment “serves as a

App. 29

mechanism for deciding, as a matter of law, whether

the agency action is supported by the administrative

record and is otherwise consistent with the APA standard of review.” Id.

Under the APA, a court must “hold unlawful

and set aside agency action, findings, and conclusions” that are “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law,”

5 U.S.C. § 706(2)(A), in excess of statutory authority,

id. § 706(2)(C), or “without observance of procedure

required by law,” id. § 706(2)(D). Agency action is

arbitrary and capricious if the agency (i) “has relied

on factors which Congress has not intended it to consider”; (ii) “entirely failed to consider an important

aspect of the problem”; (iii) “offered an explanation for

its decision that runs counter to the evidence before

the agency”; or (iv) “is so implausible that it could not

be ascribed to a difference in view or the product of

agency expertise.” Motor Vehicle Mfrs. Ass’n of U.S.,

Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43

(1983). In short, an agency must “articulate a satisfactory explanation for its action” with a “rational

connection between the facts found and the choice

made.” Id.

That said, the scope of the court’s review is narrow,

and a court cannot “substitute its judgment for that of

the agency.” Id. at 43. Indeed, an agency’s decision is

presumed to be valid. See Am. Radio Relay League, Inc.

v. F.C.C., 617 F.2d 875, 879 (D.C. Cir. 1980). Furthermore, in Medicare cases, the “tremendous complexity

of the Medicare statute . . . adds to the deference which

App. 30

is due to the Secretary’s decision.” Dist. Hosp. Partners,

L.P. v. Burwell, 786 F.3d 46, 60 (D.C. Cir. 2015) (quoting

Methodist Hosp. of Sacramento v. Shalala, 38 F.3d

1225, 1229 (D.C. Cir. 1994)). Accordingly, the burden

rests with the plaintiff to show that an agency’s decision is inconsistent with the APA. Env’t Def. Fund, Inc.

v. Costle, 657 F.2d 275, 283 n.28 (D.C. Cir. 1981).

When reviewing an agency’s interpretation of a

law it administers, a court must apply the two-step

framework of Chevron U.S.A., Inc. v. Nat. Res. Def.

Council, Inc., 467 U.S. 837 (1984). At Chevron step one,

the court must first determine whether “the intent of

Congress is clear,” for if “Congress has directly spoken

to the precise question at issue,” then the court must

give effect to Congress’s clear intent. Id. at 842. At

this first step, the court “employ[s] traditional tools of

statutory construction,” id. at 843 n.9, to determine

whether Congress “has unambiguously foreclosed the

agency’s statutory interpretation,” Catawba Cty. v.

EPA, 571 F.3d 20, 35 (D.C. Cir. 2009). “Because at

Chevron step one [the court] alone [is] tasked with

determining Congress’s unambiguous intent,” it must

conduct its analysis “without showing the agency any

special deference.” Vill. of Barrington v. Surface Transp.

Bd., 636 F.3d 650, 659–60 (D.C. Cir. 2011). If the court

“determine[s] that statutory ambiguity has left the

agency with a range of possibilities and that the

agency’s interpretation falls within that range, then

the agency will have survived Chevron step one,” and

the court must proceed to step two. Id. at 660 (emphasis in original).

App. 31

At Chevron step two, the court must “defer to the

agency’s permissible interpretation, but only if the

agency has offered a reasoned explanation for why it

chose that interpretation.” Id. A court must “defer to

an agency’s statutory interpretations not only because

Congress has delegated law-making authority to the

agency, but also because that agency has the expertise

to produce a reasoned decision.” Id. (citing Chevron,

467 U.S. at 844–45). Where a “legislative delegation to

an agency on a particular question is implicit rather

than explicit,” Chevron, 467 U.S. at 844, a court must

uphold any “ ‘reasonable interpretation made by the

administrator’ of that agency.” Am. Paper Inst., Inc. v.

EPA, 996 F.2d 346, 356 (D.C. Cir. 1993) (quoting Chevron, 467 U.S. at 844).

III. ANALYSIS

A. The Secretary’s Interpretation of the

Phrase “Entitled to [SSI] Benefits”

As noted above, the SSI fraction is defined as the

number of patient days for individuals both “entitled

to benefits under part A” and “entitled to [SSI benefits],” divided by the total number of patient days for

patients “entitled to benefits under part A.” 42 U.S.C.

§ 1395ww(d)(5)(F)(vi)(I). Plaintiffs argue that the

statutory text and legislative history compel the

Secretary to interpret “entitled to [SSI benefits]” to

include patient days for all patients enrolled in the

SSI program, regardless of whether they receive an

SSI payment during the month of their hospitalization

App. 32

or are later found entitled to a retroactive SSI payment. Pls. Mot. at 18–19, 25–26. Plaintiffs also argue

that the Secretary’s current interpretation is arbitrary

and capricious because it is narrower than the Secretary’s interpretation of “entitled to benefits under part

A.” Id. at 26–36.

The Secretary argues that his interpretation of the

phrase “entitled to [SSI benefits]” is consistent with

statute and that the perceived inconsistency in how he

interprets the words “entitled to [SSI benefits]” and

“entitled to benefits under part A” is attributable to the

two distinct types of entitlements at issue—SSI cash

payments versus Medicare Part A insurance benefits—

and the differing methods of qualifying for each benefit. Def. Mot. at 13, 27–32. The Secretary also contends

that, even if the statute is ambiguous about the correct

interpretation, his interpretation is nonetheless reasonable. Id. at 26–32.

1. Chevron Step One

The court first considers “whether Congress has

directly spoken to the precise question at issue.”

Chevron, 567 U.S. at 842. In other words, has Congress

“unambiguously foreclosed the Secretary’s interpretation,” Northeast Hosp. Corp., 657 F.3d at 5, that persons

“entitled to [SSI] benefits” are those who received SSI

cash payments during the month of their hospitalization and those who are later determined to be entitled

to retroactive SSI payments for the month(s) of their

App. 33

hospitalization? The court concludes that Congress

has not.

The DPP provision does not define the phrase

“entitled to [SSI] benefits,” see 42 U.S.C. § 1395ww,

though its ordinary meaning is “to grant a legal right

to or qualify for,” Entitle, BLACK’S LAW DICTIONARY

(11th ed. 2019). With regard to the DPP provision,

courts have reasoned that “ ‘entitlement’ is not just

an abstract ability to sign up for” Medicare benefits;

“[r]ather, it is entitlement to have payment made.”

Northeast Hosp. Corp., 657 F.3d at 20 (emphasis in

original). Specifically, courts have distinguished between

the phrase “eligible for,” which appears in the Medicaid

fraction, and the phrase “entitled to” which appears in

the SSI fraction:

In neighboring Medicare subsections, Congress uses the two different terms—“eligible”

to refer to a patient’s status with regard to

the state Medicaid plan and “entitled” to refer

to his status with regard to the federal Medicare plan. Even within the Medicaid proxy

itself, this distinction is reinforced by the

use of the two different words when referring

to the two different programs: “patients who

(for such days) were eligible for medical assistance under a State plan approved under [the

Medicaid program], but who were not entitled

to benefits under part A of [the Medicare

program].” 42 U.S.C. § 1395ww(d)(5)(F)(vi)(II)

(emphasis added). If Congress had wanted

to use the word “entitled” throughout the

App. 34

Medicaid proxy as it had in the Medicare

proxy, it could—and would—have done so.

Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d 984,

988 (4th Cir. 1996) (emphasis in original); see also

Cath. Health, 718 F.3d at 917 (explaining that the

SSI fraction focuses on Medicare beneficiaries who

“received” SSI payments); Jewish Hosp., Inc. v. Sec’y of

Health and Hum. Serv., 19 F.3d 270, 275 (6th Cir. 1994)

(noting that “[t]o be entitled to some benefit means

that one possesses the right or title to that benefit)

(emphasis in original).

Nothing in the statutory text shows that Congress

“unambiguously foreclosed” the Secretary’s interpretation that individuals who are neither receiving SSI

benefit payments nor entitled to a retroactive payment

should be excluded from the SSI fraction’s numerator.

See Baystate, 545 F. Supp. 2d at 37 (reaching “the inescapable conclusion that Congress did not intend that

patients’ ineligible for SSI payments would be counted

in the numerator” of the SSI fraction). The Secretary’s

interpretation is also consistent with the nature of the

benefits at issue, which are specifically defined under

Title XVI as benefits that are “paid” to qualifying

aged, blind, and disabled individuals. See 42 U.S.C.A.

§ 1381a.

Plaintiffs argue that apparent inconsistencies

between the Secretary’s interpretation of the phrase

“entitled to [SSI] benefits” and a similar phrase in the

same DPP provision, “entitled to benefits under [Medicare] part A,” forecloses the Secretary’s interpretation

App. 35

of the former. Pls. Mot. at 20–24. Plaintiffs contend that

this inconsistency arose in 2004, when CMS “broadened” its interpretation of the phrase “entitled to

benefits under [Medicare] part A” to include Medicare

patient days for which healthcare services were not

paid for under Medicare part A, and that the Secretary must now similarly broaden his interpretation of

entitlement to SSI benefits to include both “paid and

unpaid” SSI days in the numerator of the SSI fraction.

Id. at 13–17.

Plaintiffs’ “inconsistency” argument is unavailing

at step one of the Chevron analysis for at least two

reasons. First, the D.C. Circuit and Sixth Circuit have

upheld the Secretary’s interpretation of the phrase,

“entitled to benefits under [Medicare] part A,” implying that there is no fatal inconsistency between that

interpretation and the Secretary’s interpretation of

“entitled to [SSI benefits].” See Cath. Health, 718

F.3d at 914 (upholding the Secretary’s interpretation

of the phrase to include days for which Medicare coverage was exhausted); Metro. Hosp. v. U.S. Dep’t of

Health and Hum. Servs., 712 F.3d 248 (6th Cir. 2013)

(same); Northeast Hosp. Corp., 657 F.3d at 13 (finding

that the Secretary’s determination that Medicare

Part C patients were “entitled to benefits under part

A” was not foreclosed under Chevron step one). Second,

to say that two interpretations are “inconsistent,” does

not say anything about which of the two interpretations is correct, and it certainly does not show that

Congress “unambiguously foreclosed” one interpretation in favor of another.

App. 36

Plaintiffs also argue that the legislative history

demonstrates that Congress intended “all SSI Enrollees” to be counted in the SSI fraction. Pls. Mot. at

25–26. The court disagrees. As an initial matter, legislative history does not factor heavily on this point

because the statute plainly uses the term “entitled,”

not “enrolled,” and because Title XVI itself creates

no legally cognizable “enrollment” status in the SSI

program. See, e.g., Ratzlaf v. United States, 510 U.S.

135, 147–48 (1994) (“[W]e do not resort to legislative

history to cloud a statutory text that is clear.”); Halverson v. Slater, 129 F.3d 180, 187 n.10 (D.C. Cir. 1997)

(“[O]rdinarily we have no need to refer to legislative

history at Chevron step one.”).

In any event, the legislative history does not support Plaintiffs’ argument. The DPP provision was

enacted as part of the Consolidated Omnibus Budget

Reconciliation Act of 1985. On December 19, 1985, the

House issued a Conference Report attempting to harmonize the House and Senate versions of the proposed

bill. See H.R. Rep. No. 99-453 (1985) [AR 6,621-27].

Plaintiffs quote from the Report’s description of the

Senate version, which used the term “enrolled in SSI”

when describing the low-income proxy. Id. at 459–60

[AR 6623-24]. The Conference agreement, however,

which combined the House and Senate versions into

a new version, did not use the term “enrolled” and

instead referred to SSI “beneficiaries.” Id. at 461 [AR

6,625].

Consequently, neither the statutory text nor legislative history show that Congress intended the SSI

App. 37

fraction to include all persons enrolled in the SSI program who did not receive SSI payments during the

month of their hospitalization or who are later found

to be entitled to receive SSI payments. And certainly,

Congress has not “unambiguously foreclosed” the Secretary’s interpretation. Rather, “it has left a statutory

gap, and it is for the Secretary, not the court, to fill that

gap.” Northeast Hosp. Corp., 657 F.3d at 13.

2. Chevron Step Two

Having found that the statute is ambiguous with

respect to the Secretary’s interpretation, the court proceeds to Chevron’s second step to determine whether

the Secretary’s interpretation “is based on a permissible construction of the statute,” Chevron, 467 U.S. at

842, and concludes that it is.

As noted, in determining if an individual is “entitled” to Medicare Part A benefits, the Secretary’s interpretation includes all patients who meet the statutory

criteria for this entitlement, even if they have opted for

a Medicare Part C plan and their hospital costs will be

paid by their Part C plan. See Def. Mot. at 29–30; Medicare Program Rule, 75 Fed. Reg. at 50,280; Northeast

Hosp. Corp., 657 F.3d at 9. In contrast, patients are

only considered to be “entitled” to SSI benefits when

they are both eligible for this entitlement and receive

an SSI payment or are later found entitled to retroactive SSI payments. See Def. Mot. at 23–24; Medicare

Program Rule, 75 Fed. Reg. at 50,041, 50,281–82;

Baystate, 545 F. Supp. 2d at 26 n.12. Plaintiffs seize

App. 38

on this purported inconsistency to argue that the Secretary’s interpretation of the DPP provision is arbitrary and capricious. See Pls. Mot. at 34–36. The court

disagrees.

The Secretary adequately explained that the perceived inconsistency arises from the two distinct types

of statutory entitlements at issue—SSI cash benefits

versus Part A insurance benefits. SSI cash benefits are

an entitlement that depends on a right to be paid,

while one’s insured status is a continuous entitlement

that is not contingent on certain payments being made

each month. See Medicare Program Rule, 75 Fed. Reg.

at 50,280–81. The Secretary also responded to arguments that its matching process improperly excludes

certain SSA payment status codes that reflect persons

who are “eligible for SSI, but not eligible for SSI payments, [and] that should be included as SSI-entitled

for purposes of the matching process.” Id. at 50,280.

With regard to the codes provided by SSA, the Secretary has explained:

[N]one of the SSI status codes that the commenter mentioned would be used to describe

an individual who was entitled to receive SSI

benefits during the month that one of those

status codes was used. SSI entitlement can

change from time to time, and we believe that

including SSI codes of C01, M01, and M02

accurately captures all SSI-entitled individuals during the month(s) that they are entitled

to receive SSI benefits.

Id. at 50,281. This interpretation is reasonable.

App. 39

Moreover, case law supports the Secretary’s position. See Fla. Health Scis. Ctr., Inc. v. Becerra, 19-cv3487-RC, 2021 WL 2823104, at *1 (D.D.C. July 7, 2021)

(rejecting similar arguments about the same “purported inconsistency”); Metro. Hosp., 712 F.3d at 268

(concluding that “the differences in the language used

in the SSI and Medicare statutory schemes explain

this apparent inconsistency”); cf Env’t Def. v. Duke

Energy Corp., 549 U.S. 561, 574 (2007) (“A given term

in the same statute may take on distinct characters

from association with distinct statutory objects calling

for different implementation strategies.”); Allina Health

Sys. v. Sebelius, 982 F. Supp. 2d 1, 11 (D.D.C. 2013)

(noting that “as the Supreme Court has observed, varying interpretations, even within the same statute, do

not irrefutably render an agency construction unreasonable”) (citation omitted).

By contrast, Plaintiffs’ interpretation would encompass numerous persons who are not eligible for SSI

benefits, let alone “entitled to” them. Of the 74 SSA

payment status codes that Plaintiffs say should be

treated as indicators that a person is “entitled” to SSI

benefits, at least fifty are used to identify persons who,

for various reasons, are not eligible for SSI benefits.

See SVES/SOLQ [AR 7016-18] (noting that the fifty

“N” codes indicate “the applicant is not eligible for

SSI/State Supplement payments or that a previously

eligible recipient is no longer eligible”). Such ineligibility can be for many reasons, the most common reason

being that a person’s income exceeds the applicable

statutory maximum. See Pls. Mot. at 2–3. For instance,

App. 40

in 2010, 671,128 individuals enrolled in the SSI program were ineligible to receive SSI benefits due to

excess income, as indicated by their payment status

code “N01.” See Soc. Sec. Admin., SSI Annual Statistical Report, 2013, Table 75 [AR 7007]; see also [AR

7013]. Counting those individuals as “entitled to [SSI]

benefits” seems squarely at odds with the statute.

In Medicare cases such as this one, the “tremendous complexity of the Medicare statute . . . adds to the

deference which is due to the Secretary’s decision.”

Dist. Hosp. Partners, L.P., 786 F.3d at 60 (quoting Methodist Hosp. of Sacramento v. Shalala, 38 F.3d 1225,

1229 (D.C. Cir. 1994)). The burden rests with the plaintiff to show that an agency’s decision is arbitrary,

Costle, 657 F.2d at 283 n.28, and Plaintiffs have failed

to meet that burden.

B. Plaintiffs’ Mandamus Act Claim

In addition to their APA claim, Plaintiffs seek a

writ of mandamus compelling the Secretary to give

them the SSA’s payment status codes for all persons

enrolled in the SSI program, whether CMS has

deemed them “entitled to [SSI] benefits” or not, so

that Plaintiffs can verify and challenge CMS’ calculation of their DSH adjustments. Pls. Mot. at 36–45.

Jurisdiction over actions “in the nature of mandamus” under § 1361 is strictly limited. In re Cheney, 406

F.3d 723, 729 (D.C. Cir. 2005). As the D.C. Circuit has

emphasized, mandamus is a “drastic” remedy available

only in “extraordinary situations,” and “is hardly ever

App. 41

granted.” Id. The minimum jurisdictional prerequisites to relief are: (1) that the plaintiff has a clear and

indisputable right to relief, (2) that the defendant has

a clear, nondiscretionary duty to act, and (3) that the

plaintiff has exhausted all other avenues of relief and

has no other adequate available remedy. Power v.

Barnhart, 292 F.3d 781, 784 (D.C. Cir. 2002); Bond v.

U.S. Dep’t of Just., 828 F. Supp. 2d 60, 75 (D.D.C. 2011).

Even if a plaintiff meets these requirements, whether

mandamus relief should issue is discretionary. In re

Cheney, 406 F.3d at 729. The party seeking mandamus

“has the burden of showing that ‘its right to issuance

of the writ is clear and indisputable.’ ” Northern States

Power Co. v. U.S. Dep’t of Energy, 128 F.3d 754, 758

(D.C. Cir. 1997) (quoting Gulfstream Aerospace Corp. v.

Mayacamas Corp., 485 U.S. 271, 289 (1998)).

As instructed by the D.C. Circuit, “[t]he court

will discuss the first two jurisdictional elements for

mandamus-type relief—clear right to relief and clear

duty to act—concurrently,” Lovitky v. Trump, 949

F.3d 753, 760 (D.C. Cir. 2020), and finds that Plaintiffs

fail to satisfy either element.

Section 951 of the Medicare Prescription Drug,

Improvement and Modernization Act requires the Secretary to “arrange to furnish . . . hospitals . . . with the

data necessary for such hospitals to compute the

number of patient days used in computing the disproportionate patient percentage . . . for that hospital for

the current cost reporting year.” Medicare Modernization Act, Pub. L. No. 108-173 § 951, 117 Stat. 2066,

2427 (2003) (codified at 42 U.S.C. § 1395ww Note). To

App. 42

accomplish this, CMS gives hospitals data “contain[ing]

the matched patient-specific Medicare Part A inpatient

days/SSI eligibility data on a month-to-month basis.”

70 Fed. Reg. 47,278, 47,440 (Aug. 12, 2005). But given

the confidentiality of information retained by the

SSA, CMS does not give hospitals the complete SSI

eligibility file that it receives from the SSA. See id.

(rejecting proposal that CMS release the data file of

SSI eligibility information that the SSA gives CMS

because CMS is prohibited from disclosing SSI eligibility information).

Plaintiffs argue that the Secretary must disclose

“assigned [payment status] codes” for all “SSI Enrollees.” Pls. Mot. at 37. As previously explained, the Secretary relies on the SSA’s payment status codes in

determining which SSI enrollees are “entitled to [SSI]

benefits.” The Secretary interprets three SSA payment

status codes—C01 (current pay), M01 (forced pay), and

M02 (forced due)—as reflecting “entitlement” to SSI

benefits for purposes of calculating the SSI fraction.

See Medicare Program Rule, 75 Fed. Reg. at 50,281.

The Secretary furnishes data on these patients to

hospitals, including indicators of the months patients

received SSI payments, but does not provide hospitals

with the SSA’s payment status codes. See Pls. Mot. at

36–37, 42; Def. Mot. at 40. CMS itself does not receive

the SSA’s payment status codes. See Medicare Program

Rule, 75 Fed. Reg. at 50,276 (“The SSI eligibility data

that CMS receives from SSA contain monthly indicators to denote which month(s) each person was eligible

for SSI benefits during a specific time period”); 51 Fed.

App. 43

Reg. at 31,459 (stating that the SSI file “lists all SSI

recipients for a 3-year period and denotes the months

during that period in which the recipient was eligible

for SSI benefits”).

Section 951 of the Act is silent as to what constitutes “data necessary for such hospitals to compute

the number of patient days” that are factored into the

DPP. Moreover, CMS’ interpreting regulations3 “would

hardly be sufficient to transform [the Act’s] silence on

the subject . . . into the ‘clear duty’ required to justify

a grant of mandamus.” Power, 292 F.3d at 786. In circumstances such as this, where an alleged “duty is not

. . . plainly prescribed, but depends on a statute or statutes the construction or application of which is not

free from doubt, it is regarded as involving the character of judgment or discretion which cannot be controlled by mandamus.” Consol. Edison Co. of N.Y. v.

Ashcroft, 286 F.3d 600, 605 (D.C. Cir. 2002) (quoting

Wilbur v. United States, 281 U.S. 206, 218–219 (1930)).

Plaintiffs’ request for payment status codes stems

from their disagreement with the Secretary on where

to draw the line between patients who are and are

not “entitled to [SSI] benefits.” Indeed, Plaintiffs

See 71 Fed. Reg. 17470, 17,473 (Apr. 6, 2006) (“Disclosure under

this routine use shall be for the purpose of assisting the hospital

to verify or challenge CMS’ determination of the hospital’s SSI

ratio. . . . Disclosure shall be limited to data concerning the total

number of patient days, the number of SSI/Medicare days, if any,

and the number of Medicare covered days, if any, associated with

each stay at the hospital’s facility.”); see also Medicare Program

Rule, 75 Fed. Reg. at 50,280 (stating that “CMS is not authorized

to share SSA data”).

App. 44

emphasize that payment status codes are necessary to

compute a “specific damages figure” in the event the

Secretary’s interpretation of “entitled to [SSI] benefits”

is unlawful. See Pls. Reply at 28. But as previously

explained, the Secretary’s interpretation of who is

“entitled to [SSI] benefits” is valid, and “cannot be

controlled by mandamus.” Consolidated Edison Co. of

N.Y., 286 F.3d at 605. The same is true for the Secretary’s interpretation that the “data necessary” for

hospitals to compute the number of inpatient days for

patients “entitled to SSI [benefits]” is data that the

Secretary already provides: patient-specific data for all

patients “entitled to [SSI] benefits.” Def. Mot. at 40. For

example, whether SSA denoted a patient with a payment status code C01, as opposed to M01, or M02,

would not impact CMS’ calculation of the SSI fraction

because patient days for patients denoted with any of

these three payment status codes are counted in the

computation and provided to hospitals. And whether

SSA denoted a patient with some other payment code,

such as codes beginning with “T” (denoting that SSI

payments were terminated), as opposed to “S” (suspended) or “N” (nonpayment), is likewise not relevant

because those patients are not counted in the computation under the Secretary’s interpretation. Medicare

Program Rule, 75 Fed. Reg. 50,280-81.

Because Plaintiffs have not shown that there is a

“clear and compelling duty under the [Act] as interpreted” for the Secretary to provide them with SSA

payment status codes, Plaintiffs’ mandamus claim

fails, and the court need not consider whether there

App. 45

are alternative remedies available or any equitable

considerations that dictate a different result. See

Lovitky, 949 F.3d at 759 (explaining that unless all

jurisdictional prerequisites are met, a court must

dismiss a mandamus claim for lack of jurisdiction).

IV. CONCLUSION

For reasons explained above, the court will DENY

Plaintiffs’ Motion for Summary Judgment and GRANT

Defendant’s Cross-Motion for Summary Judgment.

Date: June 8, 2022

/s/ Tanya S. Chutkan

TANYA S. CHUTKAN

United States District Judge

App. 46

CENTERS FOR MEDICARE AND

MEDICAID SERVICES

Decision of the Administrator

In the case of:

Claim for:

Hall Render Optional

and CIRP DSH Dual/SSI

Eligible Group Appeals Medicare Fraction &

Hall Render, Individual,

Optional and CIRP DSH

Dual/SS’ Eligible Group

Appeals-Medicare Fraction

Provider Cost

Reimbursement

Determination for

Cost Reporting Periods

Ending: Various

Review of:

PRRB Dec. No.

2017-1111

Provider

Dated: February 27,

2017 & PRRB Dec.

vs.

No. 2017-D12

Medicare Administrative Dated: February 28,

Contractors

20171

These cases are before the Administrator, Centers for

Medicare & Medicaid Services (CMS), for review of

the decision of the Provider Reimbursement Review

Board (Board). The review is during the 60-day period

in § 1878(f )(1) of the Social Security Act (Act), as

amended (42 USC 1395oo(f )). The parties were notified

of the Administrator’s intention to review the Board’s

decision. The CMS’ Center for Medicare (CM) submitted comments, requesting review and modification

The cases, PRRB Dec. No. 2017-D11 and PRRB Dec. No. 2017D12, involve multiple groups and, in the case of PRRB Dec. No.

2017-D12, also includes individual appeals.

App. 47

of the Board’s decision. The Providers’ submitted comments, requesting that the Administrator modify the

Board’s decision. All comments were timely received.

Accordingly, these cases are now before the Administrator for final agency review.

Issue and Board Decision

In these appeal, the Providers are challenging the

CMS policy of including only certain Supplemental

Security Income (SSI) categories, as reflected in specified SSI codes, in the numerator of the Medicare fraction of the disproportionate share hospital (DSH)

payment calculation. The Providers claimed that, as a

result of this methodology, their DSH payments were

understated. The Board found that the Providers’ met

the jurisdictional requirements for a hearing. In both

cases, the Board stated that it was the Board’s understanding that “the hospitals have received written notice of the recalculation through” a revised notice of

program reimbursement (RNPR) or a notice of program reimbursement (NPR) or “are slated to receive

such notice through an RNPR/NPR” and that the Providers contend: a) they are adversely impacted by the

recalculation methodology (i.e., CMS’ recognition of

only three SSI codes to denote SSI eligibility; and b)

this methodology adversely reduces their Medicare

DSH reimbursement.2

The Transcript of Oral Hearing for PRRB Dec No. 2017-D12,

indicates a disagreement or confusion concerning the issue raised

in that consolidated case. See Transcript of Oral Hearing at 1-15

App. 48

The Board held that it had jurisdiction to hold a hearing, but found that it lacked the authority to mandate

specific revisions to the challenged CMS data matching process for the Medicare fraction of the Medicare

DSH calculation for the fiscal years at issue. Based on

42 C.F.R. §405.1867, the Board determined that it was

bound by CMS Rulings 1498-R and 1498-R2. Thus, as

a result of these Rulings, the Board concluded that it

had no authority to revise the data matching process

described in great detail in the Federal Year (FY) 2011

Final Rule, including the SSI codes CMS used in the

calculating the SSI fraction to be applied to these Providers in this case. The Board held that CMS Ruling

1498-R and the FY 2011 Final rule intended to bind

the Agency and all IPPS hospitals to the specific data

matching process prescribed for the cost reporting periods covered by those issuances.

Comments

The CM submitted comments requesting that the Administrator review and modify the Board’s decision.

CM contended the Board’s decision is inconclusive as

it is neither a Board’s decision, nor an expedited judicial review (EJR) decision. If the decisions were to be

reviewed by a court, the court would remand to CMS

so that definitive, appropriate final decisions could be

issued. Therefore, in the interest of administrative and

(March 17, 2015). The Board decision subsequently noted a January 6, 2017 Post-Hearing Conference, n. 39, in referencing the

issue as framed.

App. 49

judicial economy, the Administrator should issue a definitive, appropriate final decision so that the matter

will not be remanded to CMS, but rather subject to judicial review, without the need for a remand for further

agency action.

More specifically, CM stated that the Administrator

should issue a decision consisting of three main parts.

First, the Administrator should rule that there is no

Board jurisdiction over each cost reporting period

where the Providers have merely been informed that

a DSH recalculation will be done based on the challenged CMS methodology for calculation of the SSI

fraction. Similarly, the Administrator should rule that

there is no Board jurisdiction over each cost reporting

period where the Providers were only slated to receive

its notice of program reimbursement reflecting the

DSH payment determination (or re-determination)

based on the challenged CMS methodology for calculation of the SSI fraction. The Administrator should also

rule that Board jurisdiction is limited to the specific

cost reporting periods where the MAC has actually determined (or re-determined) the Providers’ DSH payment on the basis of the challenged CMS methodology

for calculation of the SSI fraction; determined a specific DSH payment amount based on application of the

challenged SSI fraction calculation methodology; and

issued a final MAC determination that specifically accounts for the resultant DSH payment amount in an

appropriate notice of program reimbursement (NPR).

The CM contended that, Board jurisdiction cannot be

based on the mere prospect that calculation of the SSI

App. 50

fraction through the challenged CMS methodology for

calculation “will be done” or that a provider is “slated

to receive” an appropriate NPR showing that its DSH

payment would be determined (or re-determined)

based on the challenged CMS methodology for calculation of the SSI fraction. Instead, Board jurisdiction requires a final contractor determination, as set forth in

an appropriate notice of program reimbursement

(NPR).3 In order for the Board to have jurisdiction over

a hospital’s challenge, for a specific cost reporting period, to CMS’ methodology for calculation of the SSI

fraction, the MAC must have actually determined (or

redetermined) the Providers’ DSH payment amount on

the basis of the challenged calculation methodology,

and the resultant DSH payment amount must be accounted for in an appropriate NPR. A mere promise

“that a DSH recalculation will be done based on CMS’

calculation methodology,” or that a Provider is “slated

to receive” an appropriate NPR is no substitute for the

final MAC determination that is required for Board jurisdiction. Thus, CM stated that the Administrator

should order the dismissal for lack of Board jurisdiction of every cost reporting period where the Medicare

contactor had not yet: actually determined (or re-determined) the Providers’ DSH payment on the basis of the

challenged CMS methodology for calculation of the SSI

fraction; determined a DSH payment amount based on

application of the challenged SSI fraction calculation

42 C.F.R. §§ 405.1803, 405.1835(a).

App. 51

methodology; and accounted for the resultant DSH

payment amount in an appropriate NPR.4

Finally, CM stated that the Administrator should issue, for the cost reporting periods where the Board jurisdiction requirements were satisfied, a final decision

rejecting the merits of the Providers’ claims based on

the Secretary’s findings and conclusions in the 2010

notice and comment rulemaking. The Providers first

maintain that the revised data matching process is

based on an alleged statutory misinterpretation of the

SSI fraction provisions of §1886(d)(5)(F)(vi)(I) of the

Act. Under this section, the numerator of the SSI fraction consist of the number of inpatient hospital days

where the individuals “were entitled to benefits under

[Medicare] Part A of this title [XVIII of the Act] and

were entitled to supplemental security income benefits

... under title XVI of this Act,” whereas the denominator is the number of inpatient hospital days where the

individuals “were entitled to benefits under [Medicare]

Part A.” Under the revised data matching process, an

individual is entitled to SSI benefits on only those days

where the individual actually received SSI payments,

In addition to contravening the Board jurisdiction requirement

of a final contractor determination as set forth in an appropriate

NPR, CM maintained that the Providers cannot establish “standing” to challenge CMS’ methodology for calculation of the SSI

fraction, and any such challenge could not be “ripe” for review,

until the challenged SS’ fraction calculation methodology was

actually applied, reflected in a specific DSH payment amount, and

accounted for in an appropriate NPR. See generally United States

v. Windsor, 133 S. Ct. 2675, 2685-86 (2013) (discussing requirements for standing); AT&T Corp. v. FCC, 349 F.3d 692, 699-704

(D.C. Cir. 2003) (dismissing case for lack of ripeness).

App. 52

but a person is entitled to Medicare Part A benefits for

every day on and after the individual first satisfies the

statutory requirements for Medicare entitlement.5

The CM stated that the Providers erroneously maintain that the statutory term “entitled” in the numerator of the SSI fraction should be defined the same way

for purposes of both SSI benefits and Medicare Part A

benefits. However, as the Secretary explained in the

2010 published final rule, there are good reasons to define the term “entitled” differently with respect to the

two programs. If a person is entitled to social security

benefits under Title II of the Act, the individual is

thereby “automatically” entitled to Medicare Part A

benefits. Part A entitlement is a status determination

that, once established for an individual, does not

change regardless of whether the person qualifies for

particular Part A benefits.6 By contrast, under title

XVI of the Act, an individual can meet the “eligibility”

requirements for SSI program, but it is an open question whether such an eligible person is actually entitled to SSI payments on a given day. As the Secretary

explained:

[E]ligibility for SSI benefits does not automatically mean that an individual will receive SSI

See 75 Fed. Reg. at 50280-81 (Aug. 16, 2010) (final rule).

Id., For example, CM pointed out that if an individual is entitled

to Part A benefits but exhaust available coverage of hospital services, the person does not lose the status of one entitled to Part A

benefits simply because the individual has exhausted available

coverage of hospital services.

App. 53

benefits for a particular month. For example,

section 1611(c)(7) of the Act provides that an

application for SSI benefits becomes effective

on the later of either the month following the

filing of an application for SSI benefits or the

month following eligibility for SSI benefits.7

In Metropolitan Hospital v. U.S. Dep’t of Health and

Human Services, 712 F.3d 248, 268-69 (6th Cir. 2013),

the U.S. Court of Appeals for the Sixth Circuit upheld

the Secretary’s interpretation of the statutory reference in the numerator of the SSI fraction (also known

as the “Medicare fraction”) to “entitled to SSI benefits”

and “entitled to Medicare Part A benefits.” The court

concluded that “[a]lthough seemingly in tension” with

each other, the Secretary’s different interpretation of

the two references to “entitled” in the SSI fraction rest

on the “difference in the language used in the SSI and

Medicare statutory schemes [that] explain this apparent inconsistency.” Id. at 268. As explained above, entitlement to Medicare Part A benefits is a permanent

status that obtains “automatically” when one first becomes entitled to social security benefits under Title II

of the Act, and one cannot “lose” entitlement to Medicare Part A benefits due to happenstance developments such as exhaustion of the individual’s available

coverage of hospital services. By contrast, one must

apply for SSI benefits, and thus an individual who is

“eligible” for SSI is not “entitled” to SSI benefits until

the person actually submits an SSI application, the

Social Security Administration (SSA) approves the

75 Fed. Reg. at 50280-81.

App. 54

application, and the statutory delayed effective date

for SSI payments comes about. Thus, the Sixth Circuit

held that “[t]he Secretary’s nuanced interpretation of

the Medicare fraction’s numerator appropriately reflects this difference between the two benefit programs” of Medicare and SSI.8 The Administrator

should make clear that the Providers have waived any

right to raise evidence, or arguments, in this appeal before the Board that could have been raised as public

comments on the 2010 proposed rule for the SSI fraction calculation methodology at issue.

The Providers’ submitted comments, requesting that

the Administrator adopt the Providers’ arguments and

modify the Board’s decision to reverse the MAC’s adjustments and order the recalculation of the Providers’

Medicare DSH payment adjustments in accordance

with the plain dictates of the DSH statute. The Providers’ contended that the Board should have decided this

appeal on the merits and ruled that, by including only

those SSI-enrollees who received a cash payment during the month in which they are hospitalized in the

Id., at 268-269. Put simply, SSI is a cash benefit program, so a

person is entitled to SSI benefits only if the individual is actually

receiving SSI payments. By contrast, Medicare part A is an insurance program, so a person does not lose entitlement to Part A

benefits because the individual happens to not use this insurance

or because specific services are not covered or certain coverage

has been exhausted. Given the fundamental differences between

the SSI cash benefit program and the Medicare Part A insurance

program, the Secretary has reasonably interpreted the SSI fraction’s reference to “entitled” differently for purposes of SSI entitlement versus Medicare Part A entitlement. See, Metropolitan

Hospital, 712 F.3d 248, 268-69 (6th Cir. 2013).

App. 55

numerator of the Medicare fraction, CMS violated the

plain meaning and intent of the DSH statute. The Providers’ argued that the revised data matching process

used by CMS is based on a statutory misinterpretation

of the SSI fraction provisions of §1886(d)(5)(F)(vi)(I) of

the Act. The Providers maintained that the statutory

term “entitled” in the numerator of the SSI fraction

should be defined the same way for purposes of both

SSI benefits and Medicare Part A benefits. That is, as

CMS interprets entitlement to Part A to include both

paid and unpaid Part A benefits as well as Part C enrolled individuals, CMS should count individuals entitled to SSI regardless of whether these individuals

receive an SSI payment. CMS’ decision to count only

those SSI beneficiaries coded with PSC Codes C01,

M01 and M02, while all other SSI enrollees assigned

one of the other 74 PSC codes leads to absurd results.

In addition, the Providers argued that they have not

waived their right to challenge CMS’ application of the

DSH regulations in these appeals. The Providers content that the doctrines of waiver, estoppel and exhaustion (review preclusion) have no application to the

instant appeal. The Providers argued that the waiver

rule only applies to direct challenges to a rule or regulation immediately following its promulgation; it does

not apply when, as here, the rule in question is challenged after it has been applied by the agency.9 Moreover, this appeal is fundamentally different from those

to which the CM cites in which the parties have been

See, Koretoff v. Vilsack, 707 F.3d 394, 399 (D.C. Cir. 2013).

App. 56

deemed to have waived issues not presented first to the

agency. Here, the Providers did not bypass the agency.

but rather filed an administrative appeal following receipt of its NPR. Moreover, the instant appeals do not

involve a direct challenge to the policy announced by

the Secretary in the Federal Register, but rather they

involve a challenge to the Secretary’s application of

that policy to the Providers through the Medicare cost

report audit process, which as a proscribed appeal process. Furthermore, parties who did not comment at the

rulemaking may challenge an agency rule once it has

been applied to them.10

Finally, the Board did not err in finding that the Providers met the jurisdictional requirements for this appeal. The Providers’ contended that the Administrator

should reject CM’s claim that this appeal was not ripe

for review, or that those Providers without a revised

NPR, who appealed from a valid NPR, lacked standing

to challenge CMS’ methodology for calculating the

Medicare fraction. Having never raised an objection

prior to hearing and having stipulated to the Board’s

jurisdiction over these matters subsequent to the hearing, no basis now exists for the Administrator to “order

the dismissal for lack of Board jurisdiction.” Alternatively, if the Administrator concludes an as-applied

challenge to the DSH calculation methodology is lacking without an revised NPR, then it should simply

See, e.g., Koretoff, 707 F.3d at 299 (failure to submit rulemaking comments is no bar to arguments raised to an application

challenge to agency rule); Baystate Medical Center, CMS Admin.

Dec. May 11 2006.

App. 57

modify the Board’s Decisions, accordingly, and remand

those two Providers’ fiscal years to the Board and order

them stayed until the MAC issues their respective revised NPRs.

DISCUSSION

The entire record, which was furnished by the Board,

has been examined, including all correspondence, position papers, and exhibits. The Administrator has reviewed the Board’s decision. All comments received

timely are included in the record and have been considered.

While Title XIX implemented medical assistance pursuant to a cooperative program with the States for

certain low-income individuals, the Social Security

Amendments of 196511 established Title XVIII of the

Act, which authorized the establishment of the Medicare program to pay part of the costs of the health care

services furnished to entitled beneficiaries. The Medicare program provides medical services to aged and

disabled persons and originally consisted of two Parts:

Part A, which provides payment reimbursement for inpatient hospital and related post-hospital, home

health, and hospice care,12 and Part B, which is the

supplemental voluntary insurance program for

Pub. Law No. 89-97.

Section 1811-1821 of the Act, codified at 42 U.S.C. §1395f(a)42 U.S.C. §1395i-5.

App. 58

hospital outpatient services, physician services and

other services not covered under Part A.13

Section 1811 of the Social Security Act14 explains that

the insurance program, provides basic protection

against the costs of hospital, related post-hospital,

home health services, and hospice care in accordance

with this part for individuals for whom entitlement is

established by §226 and §226A of the Social Security

Act. These are: (1) individuals who are age 65 or over

and are eligible for retirement benefits under title II of

this Act (or would be eligible for such benefits if certain

government employment were covered employment

under such title) or under the railroad retirement system, (2) individuals under age 65 who have been entitled for not less than 24 months to benefits under title

II of this Act (or would have been so entitled to such

benefits if certain government employment were covered employment under such title) or under the railroad retirement system on the basis of a disability, and

(3) certain individuals who do not meet the conditions

specified in either clause (1) or (2) but who are medically determined to have end stage renal disease.

Section 226 of the Social Security Act15 defines an individual’s “entitlement” to Medicare Part A services and

provides that an individual is automatically ‘entitled’

Section 1831-1848( j) of the Act, codified at 42 U.S.C. §1395j-42

U.S.C. §1395w-4(s)

Section 811 of the Act is codified at 42 U.S.C. §1395c.

Section 226 of the Act is codified at 42 U.S.C. §426. The ESRD

provisions are set forth at section 226A of the Act.

App. 59

to benefits under Medicare Part A when the person

reaches age 65 and is entitled to Social Security benefits under § 202 of the Act, or becomes disabled and has

been entitled to disability benefits under § 223 of the

Act for 24 calendar months. Once a person becomes entitled to benefits under Medicare Part A, the individual

does not lose such entitlement simply because there

was no direct payment by the program to the hospital

of a specific inpatient stay. Entitlement to Medicare

Part A reflects an individual’s entitlement to Medicare

Part A benefits, not the provider’s entitlement or right

to receive payment for services provided to such individual.

Concerned with increasing Medicare costs, Congress

enacted Title VI of the Social Security Amendments of

1983.16 This provision added § 1886(d) of the Act17 and

established the inpatient prospective payment system

(IPPS) for reimbursement of Part A inpatient hospital

operating costs for all items and services provided to

Medicare beneficiaries, other than physician’s services,

associated with each discharge. The purpose of IPPS

was to reform the financial incentives hospitals face,

promoting efficiency by rewarding cost effective hospital practices.18 These amendments changed the

method of payment for inpatient hospital services for

most hospitals under Medicare. Under IPPS, hospitals

and other health care providers are reimbursed their

Pub. Law No. 98-21.

Section 1886(d) of the Act is codified at 42 U.S.C. § 1395ww(d).

H.R. Rep. No. 25, 98th Cong., 1st Sess. 132 (1983).

App. 60

inpatient operating costs on the basis of prospectively

determined national and regional rates for each discharge rather than reasonable operating costs. Thus,

hospitals are paid based on a predetermined amount

depending on the patient’s diagnosis at the time of discharge. Hospitals are paid a fixed amount for each patient based on diagnosis related groups (DRG) subject

to certain payment adjustments.

The IPPS provides for several add-on payments or

adjustments to the DRG payment which includes for

additional payments relating to direct graduate medical education (DGME) and indirect medical education

(IME) adjustment and an adjustment payment made

for hospitals that serve a disproportionate share of

low income patients referred to as the DSH payment.

Originally, IME and GME payments to teaching hospitals were made only related to traditional Medicare

fee-for-service (FFS). Sections 4622 and 4624 of the

Balanced Budget Act (BBA) of 1997, began providing

hospitals with additional payments for IME and

DGME costs for patients enrolled in a Medicare managed care program.

Because of the possible payment inequities for IPPS

hospitals that treat a disproportionate share of lowincome patients, Congress directed the Secretary to

provide, for discharges occurring after May 1, 1986,

“for hospitals serving a significantly disproportionate

App. 61

number of low-income patients”19 referred to as the

disproportionate share hospital adjustment or DSH

adjustment. There are two methods to determine eligibility for a Medicare DSH adjustment: the “proxy

method” and the “Pickle method.”20 To be eligible for

the DSH payment, an IPPS hospital must meet certain criteria concerning, inter alia, its disproportionate

patient percentage or DPP. Relevant to this case,

§1886(d)(5)(F)(vi) of the Act states that the terms “disproportionate patient percentage” means the sum of

two fractions which is expressed as a percentage for a

hospital’s cost reporting period. The fractions are often

referred to as the “Medicare low-income proxy” (or

Medicare/SSI fraction) and the “Medicaid low-income

proxy” (or Medicaid fraction). The Medicare/SSI fraction is defined at §1886(d)(5)(F)(vi)(I) of the Act

(Clause I) as:

(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

title and were entitled to supplemental security income benefits (excluding any State supplementation) under title XVI of this Act and

the denominator of which is the number of

such hospital’s patients day for such fiscal

year which were made up of patients who (for

Section 9105 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. No. 99-272). See also 51 Fed. Reg. 16,772,

16,773-16,776 (1986).

The Pickle method is set forth at §1886(d)(F)(i)(II) of the Act.

App. 62

such days) were entitled to benefits under

Part A of this title.

The regulations located at 42 C.F.R. §412.10621 govern

the Medicare DSH payment adjustment and specifically describes the method by which the disproportionate patient percentage is calculated as well as the

method of counting beds and patient days in determining the Medicare DSH payment adjustment. Because

the DSH payment adjustment is part of the hospital

inpatient payment, the statutory references under

§1886(d)(5)(F) of the Act to “days” apply only to hospital acute care inpatient days. The first computation,

the Medicare/SSI fraction, is set forth at 42 C.F.R.

§412.106(b)(2) and states:

(2) First computation: Federal fiscal year.

For each month of the Federal fiscal year in

which the hospital’s cost reporting period begins, [CMS]—

(i) Determines the number of covered patient days that—

(A) Are associated with discharges occurring

during each month; and

(B) Are furnished to patients who during

that month were entitled to both Medicare

Paragraph (a)(1) sets forth the “General considerations.” that

“The factors considered in determining whether a hospital qualifies for a payment adjustment include the number of beds, the

number of patient days, and the hospital’s location.”

App. 63

Part A and SSI, excluding those patients who

received only State supplementations[22]

(ii) Adds the results for the whole period; and

(iii) Divides the number determined under

paragraph (b)(2)(ii) of this section by the total

number of patient days that—

(A) Are associated with discharges that occur

during that period: and

(B) Are furnished to patients entitled to

Medicare Part A.

For the purposes of the Medicare fraction, the agency

originally found it appropriate to use the Medicare

Provider Analysis and Review (MedPAR) data as the

source for the Medicare DSH calculation. Principally,

as documented in the Federal Register, the MedPAR

system has been the Medicare Part A data source for

the Medicare DSH calculation since the implementation of the DSH adjustment. The MedPAR files contains information for all Medicare beneficiaries using

hospital inpatient services. Data is provided by State

and then by DRG for all short stay and inpatient hospitals based upon filed claims. The accumulation of

claims from a beneficiary’s date of admission to an

inpatient hospital, where the beneficiary has been

The cost years in this case include time periods during which

the regulation was amended, pursuant to the FFY 2007 technical

correction, to state: “(B) Are furnished to patients who during

that month were entitled to both Medicare Part A (or Medicare

Advantage (Part C)) and SSI, excluding those patients who received only State supplementation;”). The latter Part C days are

not at issue in these cases.

App. 64

discharged, or to a skilled nursing facility, where the

beneficiary may still be a patient, represents one stay.

A stay record may represent one claim or multiple

claims. MedPAR records represent final action claims

data in which all adjustments have been resolved.

Since the SSI/Medicare percentages are determined by

CMS on a fiscal year basis, hospitals have the option

(for settlement purposes) of determining their

SSI/Medicare percentage based upon data matching

their own cost reporting period. If a hospital avails itself of this option, it must furnish its MAC, in a manner

and format prescribed by CMS, data on its Medicare

patients for the cost reporting period. CMS will match

these data to the data supplied by SSA to determine

the patients dually entitled to Medicare Part A and SSI

for the hospital’s cost reporting period.

As the Secretary discussed in the FY 2011 IPPS/LTCH

PPS proposed rule23 and final rule, from the inception

of the Medicare DSH adjustment in 1986, CMS has calculated the SSI fraction for each acute care hospital

paid under the IPPS. This fraction, in combination

with the Medicaid fraction, is used to determine

whether the provider qualifies for a DSH payment adjustment and the amount of any such payment.24 In

See, e.g., 75 Fed. Reg. 23852, 24002 (May 4, 2010) (“Medicare

Program; Proposed Changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the LongTerm Care Hospital Prospective Payment System and Proposed

Fiscal Year 2011 Rates”) (proposed rule). See also 75 Fed. Reg.

50,041, 50275-85 (Aug 16, 2010) (final rule).

See, e.g., 51 Fed. Reg. 16772, 16777 (May 6, 1986) (“Medicare

Program; Fiscal Year 1986 Changes to the Inpatient Hospital

App. 65

determining the number of inpatient days for individuals entitled to both Medicare Part A and SSI, as required for calculation of the numerator oldie SSI

fraction, CMS matches the Medicare records and SSI

eligibility records for each hospital’s patients during

the Federal fiscal year, unless the provider requests

calculation of the SSI fraction on a cost reporting period basis (in which case the provider would receive its

SSI fraction based on its own cost reporting period).

The data underlying the match process are drawn

from: (a) MedPAR data file; and (b) SSI eligibility data

provided by the Social Security Administration (SSA).

CMS has matched Medicare and SSI eligibility records

using Title II numbers (included in the SSI records)

Prospective Payment System.”) (“The number of patient days of

those patients entitled to both Medicare Part A and SSI will be

determined by matching data from the Medicare Part A Tape Bill

(PATBILL) file with the Social Security Administration’s (SSA’s)

SSI file. This match will be done at least annually and will involve

a match of the individuals who are SSI recipients for each month

during the Federal fiscal year in which the hospital’s cost reporting period begins with the Medicare Part A beneficiaries who received inpatient hospital services during the same month. Thus,

if a Medicare beneficiary is eligible for SSI benefits (excluding

State supplementation only) during a month in which the beneficiary is a patient in the hospital, the covered Medicare Part A inpatient days of hospitalization in that month will be counted for

the purpose. of determining the hospital’s disproportionate patient percentage. The match of SSI eligibility records to Medicare inpatient hospital days for a hospital will consist of counting

the days in which Medicare inpatient hospital services are furnished during each month to patients entitled to both Medicare

Part A and SSI, summing those days, and dividing by the total

number of days for which Medicare inpatient hospital services are

furnished to all Medicare Part A beneficiaries in the hospital.”)

App. 66

and Health Insurance Claims Account Numbers

(HICANs) (contained in the MedPAR file). CMS explained the Title II number [25] and a HICAN. When a

person becomes entitled to Medicare benefits, he or she

is assigned a HICAN for purposes of processing claims

submitted on his or her behalf for Medicare services. A

beneficiary’s HICAN [26] (which may not necessarily

The Secretary explained that: “Title II Number: If a person

qualifies for retirement or disability benefits under Title II of the

Act (42 U.S.C. 401 et seq.), SSA assigns a “Title II number” to the

individual. If the Title II beneficiary’s own earnings history (or

the individual’s disability) were the basis for such benefits, the

person’s Social Security number (SSN) would constitute the ‘root’

of the individual’s Title II number. However, if the person’s Title

II benefits were based on the earnings history of another individual (for example, a spouse), that other person’s SSN would provide the root for the beneficiary’s Title II number. In addition to

a root SSN, each Title II number ends with a Beneficiary Identification Code (BIC) that identifies the basis for an individual’s entitlement to benefits. For example, a person who becomes eligible

for benefits under his or her own account would be described by

his or her SSN followed by the BIC ‘A’ whereas a wife who becomes eligible for benefits under her husband’s account would be

described by his SSN followed by the BIC ‘B.’ Children who become eligible under a parent’s account would be described by the

parent’s SSN followed by the BIC ‘C1, ‘C2, etc.’ ” 75 Fed. Reg.

23852, 24002 (May 4, 2010)

The Secretary explained that: “Each HICAN for a beneficiary

should be identical, at the same point in time, to that individual’s

Title II number. This is because HICANs and Title II numbers

are both assigned on the basis of the same data source, the SSAmaintained Master Beneficiary Record, and by using the same

rules (that is, the rules for determining which person’s SSN will

serve as the root for an individual’s HICAN and Title II number

and for determining the BIC for both types of numbers). We note

that a person’s Title II number and HICAN can change over time.

For example, if the individual’s entitlement to Title II and Medicare benefits was originally based on the earnings history of a first

App. 67

contain his or her SSN) is included on the Medicare

inpatient hospital claim.

The SSI eligibility data that CMS receives from SSA

contain monthly indicators to denote which month(s)

each person was eligible for SSI benefits during a specific time period. The current matching process uses

only one Title II number (which is included in the SSI

file) and one HICAN (found in the MedPAR file) for

each beneficiary. In the current matching process, CMS

has used the HICAN because it is the patient identifier

that is provided by hospitals on the Medicare claim.

Because SSNs are not included on Medicare inpatient

claims, CMS has not historically used SSNs in the

match process.

For a given fiscal year, CMS determines the numerator

of the hospital’s SSI fraction (that is, the number of the

hospital’s inpatient days for all of its patients who were

simultaneously entitled to Medicare Part A benefits

and SSI benefits) by calculating the sum of the number

of the hospital’s inpatient days that are associated

with all of the identical Title II numbers and HICANs

for the hospital’s claims that are found through the

data matching process. In turn, CMS determines the

denominator of the hospital’s SSI fraction by

spouse, but the beneficiary later qualified for such benefits on the

basis of a second spouse’s earnings history, the beneficiary’s

HICAN and Title II number would change accordingly. Specifically, the first spouse’s SSN would be the root of the beneficiary’s

original HICAN and Title II number; later, the second spouse’s

SSN would become the root of the beneficiary’s second HICAN

and Title II number.” 75 Fed. Reg. 23852, 24002 (May 4, 2010)

App. 68

calculating the sum of the number of the hospital’s inpatient days for patients entitled to benefits under

Medicare Part A (regardless of SSI eligibility) that are

included in the hospital’s inpatient claims for the period.

The Supplemental Security Income or SSI is Federal

program that provides cash assistance to certain lowincome people who are either aged 65 or older, blind, or

disabled. The Social Security Administration administers the SSI, which is funded from the U.S. Treasury

general funds.27 The controlling law refers to whether

an individual is “eligible for benefits.” In order to be

eligible for SSI benefits, a person must be (1) 65 years

of age or older, blind or disabled; (2) a lawful resident

of the United States; (3) have limited income and resources; (4) not be fleeing to avoid prosecution for a

crime or violating a condition of parole; and (5) file an

application for benefits.28 An individual who is currently eligible for SSI benefits may later become ineligible for SSI benefits. The SSA conducts periodic

redeterminations to ensure continued eligibility29 and

See e.g. Section 1611 of the Social Security Act. (“Part A-Determination of Benefits ELIGIBILITY FOR AND AMOUNT OF

BENEFITS”); Supplemental Security Income Home Page,

https://www.ssa.gov/ssi/ (“What Is Supplemental Security Income? Supplemental Security Income (SSI) is a Federal income

supplement program funded by general tax revenues (not Social

Security taxes): It is designed to help aged, blind, and disabled

people, who have little or no income: and it provides cash to meet

basic needs for food, clothing, and shelter.”)

20 C.F.R. §416.202.

20 C.F.R. § 416.204.

App. 69

may terminate,30 suspend,31 or stop payments to individuals who are either temporarily or permanently

ineligible for payment of SSI benefits.32 For example,

SSI eligibility may be lost if a person no longer meets

the basic requirements or because one of the reasons

set forth in §§ 416.207-416.216 applies at the time of a

redetermination.33

The SSI matching data underlying the Medicare DSH

payment adjustment was the matter in controversy in

Baystate Medical Center v. Leavitt, 545 F. Supp. 2d 20,

as amended, 587 F. Supp. 2d 37 (D.D.C. 2008), wherein

the district court concluded that, in certain respects,

CMS’ method for matching SSI data and Medicare

records for purposes of the DH payment match process

did not use the best available data in matching Medicare and SSI eligibility data (a problem in part due

to “stale” data no longer an issue). In response to

Baystate, CMS revised its data matching process for

calculating hospitals’ SSI fractions and on April 28,

2010, issued CMS Ruling 1498-R (Ruling), which addressed the SSI data matching issue and two other

issues.34

20 C.F.R. § 416.1331-1335.

20 C.F.R. § 416.1320-1330.

20 C.F.R. § 416.1320.

20 C.F.R. 416.200.

See CMS-1498-R (dated April 28, 2010).

App. 70

With respect to the SSI data matching process issue,

the Ruling requires the Medicare administrative appeals tribunal (that is, the Administrator of CMS, the

PRRB, the fiscal intermediary hearing officer, or the

CMS reviewing official) to remand each qualifying

appeal to the appropriate Medicare contractor. The

Ruling also explains how, on remand, CMS and the

contractor will recalculate the provider’s DSH payment adjustment and make any payment determined

owed. The Ruling further provides that CMS and the

Medicare contractors would apply the provisions of the

Ruling, on the data matching process issue (and two

other DSH issues, as applicable), in calculating the

DSH payment adjustment for each hospital cost reporting period where the contractor has not yet final

settled the provider’s Medicare cost report through the

issuance of an initial notice of program reimbursement

(NPR) (42 CFR 405.1801(a) and 405.1803). More specifically, the Ruling provided that, for qualifying appeals for the data matching issue and for cost reports

not yet final settled by an initial NPR, CMS would apply any new data matching process that is adopted in

the: “FY 2011 IPPS final rule for each appeal that is

subject to the Ruling. The data matching process provisions of the Ruling would apply to properly pending

appeals and open cost reports for cost reporting periods beginning prior to October 1, 2010 (that is those

preceding the effective date of the FY 2011 IPPS final

rule).”

The Ruling further stated that, if a new data matching

process is not adopted in the forthcoming FY 2011

App. 71

IPPS final rule, CMS would apply to claims subject to

the Ruling the same data matching process as the

agency used to implement the Baystate decision by recalculating that hospital’s SSI fractions. A final rule

was issued on August 16, 2010 adopting in essence the

same revised data matching process as was applied in

the Baystate case. (See 75 Fed. Reg. 50,041, 50275-85

(Aug 16, 2010) (final rule); 75 Fed. Reg. 23,852 (May 4,

2010) (proposed rule)35

CMS published the new data matching process in the

FY IPPS 2011 proposed rule published on May 4,

201036 and finalized that data matching process in the

final rule published on August 16, 2010.37 The final rule

addressed several comments submitted following the

Subsequently, CMS Ruling 1498-R2 was issued. The modification and amendment of CMS Ruling 1498-R affected a change

only with respect to Medicare-SSI fractions, and the interaction

between Medicare-SSI fractions that have been suitably revised

to address the data matching process issue and the issue of noncovered or exhausted benefit days for cost reporting periods involving patient discharges before October 1, 2004. (“In sum, the

purpose of this amendment is to make clear that in light of the

D.C. Circuit Court’s decision in Catholic Health, we are allowing

providers to elect whether to receive suitably revised MedicareSSI fractions on the basis of “covered days” or “total days” for

Federal fiscal year 2004 and earlier, or for hospital-specific cost

reporting periods, for those patient discharges occurring before

October 1, 2004. This election is available for hospital cost reporting periods where the Medicare contractor has not yet settled finally the provider’s Medicare cost report, as well as appeals

remanded to the contractor pursuant to CMS Ruling 1498-R (assuming any such hospital cost reporting period involves patient

discharges prior to October 1, 2004).”)

85 Fed. Reg. 23852, 24002-24007 (May 4, 2010).

75 Fed. Reg. 50041, 50276-50281 (August 16, 2010).

App. 72

notice and comment procedures. In particular, the Secretary recognized that:

One commenter stated that CMS uses total

(that is, “paid and unpaid”) Medicare days in

the denominator of the SSI fraction, but uses

paid SSI days in the numerator of the SSI

fraction. The commenter requested that CMS

interpret the word “entitled” to mean “paid”

for both SSI-entitled days used for the numerator and Medicare-entitled days used in the

denominator, or alternatively, that CMS include both paid and unpaid days for both SSI

entitlement and Medicare entitlement such

that there is consistency between the numerator and the denominator of the SSI fraction.

The commenter stated that there were several

SSI codes that represent individuals who

were eligible for SSI, but not eligible for SSI

payments, that should be included as SSI-entitled for purposes of the data matching process. Specifically, the commenter stated that

at least the following codes should be considered to be SSI-entitlement:

• E01 and E02

• N06, N10, N11, N18, N35, N39, N42, N43,

N46, N50, and N54

• P01

• S04, S05, S06, S07, S08, S09, S10, S20, S21,

S90, and S91

• T01, T20, T22, and T31

The Secretary responded to the concerns raised in the

comment, stating:

App. 73

In response to the comment that we are incorrectly applying a different standard in interpreting the word “entitled” with respect to SSI

entitlement versus Medicare entitlement we

disagree. The authorizing DSH statute at

section 1886(d)(5)(F)(vi)(I) of the Act limits

the numerator to individuals entitled to

Medicare benefits who are also “entitled to

supplemental security income benefits (excluding any State supplementation)” (emphasis added). Consistent with this requirement,

we have requested, and are using in the data

matching process, those SSA codes that reflect

“entitlement to” receive SSI benefits. Section

1602 of the Act provides that “[e]very aged,

blind, or disabled individual who is determined under Part A to be eligible on the basis

of his income and resources shall, in accordance with and subject to the provisions of this

title, be paid benefits by the Commissioner of

the Social Security” (emphasis added). However, eligibility for SSI benefits does not automatically mean that an individual will receive

SSI benefits for a particular month. For example, §1611(c)(7) of the Act provides that an application for SSI befits becomes effective on

the later of either the month following the filing of an application for SSI benefits or the

month following eligibility for SSI benefits.

On the other hand, §226 of the Act provides

that an individual automatically “entitle” to

Medicare Part A when the person reaches age

65 and is entitle to Social Security benefits

under §202 of the Act (42 U.S.C. 402) or becomes disabled and has been entitled to

App. 74

disability benefits under §223 of the Act (42

U.S.C. 423) for 24 calendar months. Section

226A of the Act provides that qualifying individuals with end-stage renal disease shall be

entitled to Medicare Part A. In addition,

§ 1818(a) (4) of the Act provides that, “unless

otherwise provided, any reference to an individual entitled to benefits under [Part A] includes an individual entitled to benefits under

[Part A] pursuant to enrollment under [ §1818

or § 1818A.” We believe that Congress used

the phrase “entitled to benefits under part A”

in § 1886(d)(5)(F)(vi) of the Act to refer individuals who meet the criteria for entitlement

under these sections.

Moreover, unlike the SSI program (in which

entitlement to receive SSI benefits is based on

income and resources and, therefore, can vary

from time to time), once a person becomes entitled to Medicare Part A, the individual does

not lose such entitlement simply because

there was no Medicare Part A coverage of a

specific inpatient stay. Entitlement to Medicare Part A reflects an individual’s entitlement to Medicare Part A benefits, not the

hospital’s entitlement or right to receive payment for services provided to such individual.

Such Medicare entitlement does not cease

to exist simply because Medicare payment

for an individual inpatient hospital claim

is not made. Again, we are bound by

§ 1886(d)(5)(F)(vi)(I) of the Act, which defines

the SSI fraction numerator as the number of

SSI-entitled inpatient days for persons who

were “entitled to benefits under [P]art A,” and

App. 75

the denominator as the total number of inpatient days for individuals who were “entitled”

to Medicare Part A benefits.

In response to the comment about specific SSI

status codes, SSA has provided information

regarding all of the SSI status codes mention

by the commenter to assist in the determination of whether any of these codes represent

individuals who were entitled to SSI benefits

for the purposes of calculating the SSI fraction for Medicare DSH. With respect to the

codes that begin with the letter “T”, SSA

informed us that all of the codes represent

individuals whose SSI entitlement was terminated. Code “T01” represents records that

were terminated because of the death of the

individual, but we confirmed that this code

would not be used until the first full month

after the death of the individual. That is, for

example, if a Medicare individual was entitled

to SSI during the month of October, was admitted to the hospital on October 1, and died

in the hospital on October 15, the individual

would show up as entitled to SI for the entire

month of October on the SSI file (code T01

would not be used on the SSI file until November) and 15 Medicare/SSI inpatient hospitals

days for that individual would be counted in

the numerator and the denominator of the

SSI fraction for that hospital.

Codes beginning with the letter “S” reflect records that are in a “suspended” status and, according to SSA, do not represent individuals

who are entitled to SSI benefits.

App. 76

SSA maintains that code “P01” is obsolete and

has not been used since the mid-1980s. Therefore, it would not be used on any SSI files reflecting SSI entitlement for FY 2011 and

beyond.

Codes that begin with the letter “N’’ represent

records on “nonpayment” and are not used for

individuals who are entitled to SSI benefits.

Code “E01” represents an individual who is a

resident of a medical treatment facility and is

subject to a $30 payment limit, but has countable income of $30 or more. Such an individual is not entitled to receive SSI payment.

Alternatively, an individual who is a resident

of a medical treatment facility and is subject

to a $30 payment limit, but does not have

countable income of at least $30, would be reflected on the SSI files as a “C01” (which denotes SSI entitlement) for any month in which

the requirements described in this sentence

are met. Code “E02” is used to identify a person who is not entitled to SSI payments in the

month in which that code is used pursuant to

§1611(c) (7) of the Act, which provides that an

application for SSI benefits shall be effective

on the later of (1) the first day of the month

following the date the application is filed, or

(2) the first day of the month following the

date the individual becomes eligible for SSI

based on that application. Such an individual

is not entitled to SSI benefits during the

month that his or her application is filed or is

determined to be eligible for SSI, but, for the

following month, would be coded as a “C01”

App. 77

because he or she would be entitled to SSI

benefits.

Therefore, both codes E01 and E22 represent

individuals who are not entitled to SSI benefits and are reflected accordingly on the SSI

file. If the individual’s entitlement to SSI benefits is initiated the ensuing month, that individual would then be coded as a “C01” on the

SSI file and would be included as SSI-entitled

for purposes of the data matching process.

As we have describe above, none of the SSI

status codes that the commenter mentioned

would be used to describe an individual who

was entitled to receive SSI benefits during the

month that one of those status codes was

used. SSI entitlement can change from time to

time, and we believe that including SSI codes

of C01, M01, and M02 accurately captures all

SSI-entitled individuals during the month(s)

that they are entitled to receive SSI benefits.38

After consideration of the public comments we

received, we are adopting the proposed data

matching process for FY 2011 and beyond as

final. The only modification we are making to

the proposed data matching process is adopting a policy to exclude a record from the data

matching process if we find a HICAN in the

MedPAR file that we are not able to locate in

the EDB, which is an extremely unlikely situation as noted in the prior discussion in this

final rule. We are adopting this additional

Id., at 50280-50281 (Aug. 16, 2010).

App. 78

step in our validation process in response to

public comments to provide even more assurances that our data matching process will

yield accurate SSI fractions and capture all

Medicare beneficiaries who were entitled to

SSI at the time of their inpatient hospital

stay.39

In this case, the fiscal periods at issue are governed by

CMS Ruling 1498-R, as incorporating the FFY 2011

IPPS final rule, published in 2010. The Administrator

finds the Secretary’s interpretation of the term “entitled” with respect to “patients who (for such days) were

entitled to benefits under Part A of this title” and “were

entitled to supplemental security income benefits (excluding any State supplementation) under title XVI of

this Act” is supported by the statutory design of the

two programs. In particular, there are meaningful statutory differences between Medicare Part A benefits

and SSI benefits with respect to both initial eligibility

and continued eligibility when describing that a person is “entitled” to the benefits of each respective program. With respect to Medicare Part A, a person

become eligible for benefits merely by reaching age 65

and filing an application or becoming disabled and entitled to disability benefits before reaching retirement

age.40 Part A entitlement is a status determination

that, one established for and individual, does not

change regardless of whether the person qualifies for

particular Part A benefits. For, example, if an

Id., at 50280-50281 (Aug. 16, 2010).

42 U.S.C §402.

App. 79

individual is entitled to Part A benefits but exhausts

available coverage of hospital services, the person does

not lose the status of one entitle to Part A benefits

simply because the individual has exhausted available

coverage of hospital services. By contrast, an individual must satisfy more requirements to become eligible

(and stay eligible) for SSI benefits, and the requirements are variable from month-to-month and less

easily ascertainable when compared to determining

whether an individual is entitled to Medicare Part A

benefits.41 As the Secretary explained: [E]ligibility for

SSI benefits does not automatically mean that an individual will receive SSI benefits for a particular month.

For example, § 1611(c)(7) of the Act provides that an

application for SSI benefits becomes effective on the

later of either the month following the filing of an application for SSI benefits or the month following eligibility for SSI benefits.”42

Congress uses the phrase “entitled to benefits under

part A” to consistently refer to an individual’s status

See, Metropolitan Hospital v. U.S. Dep’t of Health and Human

Services, 712 F.3d 248, 268-69 (6th Cir. 2013). In Metropolitan

Hospital, the U.S. Court of Appeals for the Sixth Circuit upheld

the Secretary’s interpretation in the 2010 final rule of the references in the numerator of the SSI fraction (also known as the

“Medicare fraction”) to “entitled to SSI benefits” and “entitled to

Medicare Part A benefits.” The court concluded that [a]lthough

seemingly in tension” with each other, the Secretary’s differential

interpretation of the two references to “entitled” in the SSI fraction rest on “differences in the language used in the SSI and

Medicare statutory schemes [that] explain this apparent inconsistency.”

75 Fed. Reg. at 50280.

App. 80

as a Medicare beneficiary. Further evidence of this use

of the term as referring to the status as a Medicare

Part A beneficiary is that the phrase “entitled to benefits under [Medicare] part A” is set forth in multiple

other sections of the Medicare statute, indicating that

the phrase has a specific, consistent technical term of

art meaning throughout the statutory scheme and not

a varying, context-specific meaning in each section and

subsection. In addition, under Medicare, “payment” for

the service is not the focus of the phrase at issue, but

rather the focus is on entitlement to the benefit in determining the proper inclusion in the DSH formula.

Section 1886(d)(5)(1)(vi)(I) of the Act specifically notes

that the numerator of the Medicare fraction must reflect patient days for patients “entitled to benefits under part A” who are also “entitled to supplementary

security income benefits (excluding any State supplementation) under title XVI of this Act.”

Entitlement to Medicare Part A is different from entitlement to SSI benefits as SSI is a cash benefit. Unlike

the permanent, unchanging status of Medicare Part A

entitlement, “entitlement to receive SSI benefits is

based on income and resources and, therefore can vary

from time to time.”43 Further, one must apply for SSI

benefits and thus an individual who is eligible for SSI

is not entitled to SSI until the person actually submits

an SSI application and the SSA approves the application and the statutorily delayed effective date for SSI

payments occurs. Further, the “entitlement” to SSI

Id.

App. 81

benefits, pursuant to § 1602 of the Act states that

“Every aged, blind, or disabled individual who is determined under part A to be eligible on the basis of his

income and resources shall, in accordance with and

subject to the provisions of this title, be paid benefits

by the Commissioner of Social Security.” Because SSI

is a cash benefit, only a person who is actually paid

these benefits can be considered “entitled” to these

benefits. This differs from entitlement to Medicare

benefits under Part A, a distinct set of health insurance

benefits described under §1812 of the Act, including

coverage of inpatient hospital, inpatient critical access

hospital, and post-acute care services as well as postinstitutional home health and hospice services under

certain conditions. As the court in Metropolitan Hospital44 concluded, given the fundamental difference between the SSI cash benefit program and the Medicare

Part A insurance program the Secretary has reasonably interpreted the SSI fraction reference to “entitled”

differently for purposes of SSI entitlement verse Part

A entitlement.

Accordingly, the Administrator finds that it is necessary to show that patients are actually eligible for SSI

benefits (i.e., receiving a cash benefit) before including

their days of care in the Medicare fraction. The Secretary reasonably decided against including the days of

care for patients for which it cannot be demonstrated

with accuracy are receiving SSI benefits. The Secretary

reasonably rejected the inclusion of other SSA codes

Metropolitan Hospital, 712 F. 3d. at 268-69.

App. 82

because “SSI entitlement can change from time to

time” and none of these codes “would be used to describe an individual who was entitled to receive SSI

benefits during the month that one of these codes was

used.”45 Thus, the Social Security Act, with respect to

Medicare beneficiaries and SSI recipients, supports

the Secretary’s interpretation of the term “entitled” as

used in the §1886(d)(5)(F)(vi)(I) of the Act. Further, the

Secretary has reasonably excluded from the revised

data match any computer codes that SSA may use to

indicate that a person is eligible for SSI but is not actually receiving SSI payments and so is not “entitled”

to SSI benefits.

While a decision on the merits is within the scope of

the Administrator’s authority, it does not negate the

fact that the appeal is a challenge to the SSI matching

methodology of the CMS Ruling 1498R as described

and adopted in the FY 2011 Final rule for the IPPS. As

such, a review on the merits here does not negate or

waive the legal principle that where “an agency issued

a rule under the APA notice and comment provision

. . . , courts ordinarily refuse to consider objections not

submitted in accordance with the agency procedures

during the rulemaking process. See Appalachian

Power v EPA, 251 F.3d 1036 (D.C. Cir. 2001).

Under § 1878(f ) of the Social Security Act,46 the Board

may determine (on own motion, or the request of a

Id.

Section 1878(f ) states in pertinent part: “Providers shall also

have the right to obtain judicial review of any action of the fiscal

App. 83

provider), with respect to a final determination of the

Medicare administrative contractor (formerly the intermediary) which involves a question of matter of law

or regulation, that it is without the authority to determine a question. The Board decision on whether to

grant or deny expedited judicial review (for which jurisdiction must first be determined) is specifically outside the scope of the Administrator’s review. The

Providers in these cases did not request expedited judicial review, nor did the Board on own motion invoke

it. Therefore, this case is in an unusually procedural

posture of having the Board determine that it is without authority to decide the legal question outside the

parameters of the expedited judicial review process.

Because of that, a matter that would usually be an expedited judicial review challenge to a rulemaking record has been positioned within the context of a decision

on the merits.

Therefore, the Secretary has effectively addressed the

statutory interpretation of the term “entitled” as used

in §1886(d)(5)(F)(vi)(I) of the Act and the application of

that term in the use of specific codes in the SSI matching process in the FY 2011 final rule. as incorporated

in the CMS Ruling 1498-R. The Administrator finds

that CMS and the MAC properly incorporated the

intermediary which involves a question of law or regulations relevant to the matters in controversy whenever the Board determines (on its own motion or at the request of a provider of services

as described in the following sentence) that it is without authority

to decide the question, by a civil action commenced within sixty

days of the date on which notification of such determination is

received.”

App. 84

methodology contained therein in issuing the recalculated SSI matching data for purposes of the Medicare

Fraction for the DSH payment.

However, these case raised jurisdictional issues as to

whether all the cost report NPPRs/ revised NPRs appealed in fact reflected the recalculated SSI matching

data for purposes of the Medicare Fraction for the DSH

payment. The Board held that it had jurisdiction to

hold a hearing, but found that it lacked the authority

to mandate specific revisions to the challenged CMS

data matching process for the Medicare fraction of the

Medicare DSH calculation for the fiscal years at issue.

The CM submitted comments that, the Administrator

should rule that there is no Board jurisdiction over

each cost reporting period where the Providers’ have

merely been informed that a DSH recalculation will be

done based on the challenged CMS methodology for

calculation of the SSI fraction. The Provider submitted

comments, that the Board did not err in finding that

the Providers met the jurisdictional requirements for

this appeal, or in the alternative, the Providers still

awaiting a final recalculation under the CMS Ruling,

should be remanded.

To address any potential jurisdictional issues that

might arise if the MAC issued a recalculation prior to

or just after the Board’s decision in this case, the Parties in PRRB Decision No. 2017-D11on February 22,

2017 stipulated to three Hospitals as not having yet

App. 85

received NPRs reflecting the recalculation.47 In PRRB

Decision No 2017-D12, there does not appear to be a

similar stipulation and all but one provider appear to

have NPRs that were issued prior to the CMS Ruling

in April 2010.

Pursuant to §1878 of the Act, a provider has a right to

a hearing before the Board, if such provider is dissatisfied with a final determination of the organization

serving as its fiscal intermediary as to the amount of

total program reimbursement due the provider for the

See also Providers’ Comments, Exhibit A, dated May 4, 2017,

in response to the Administrator’s Notice of Review, dated March

27, 2017. The stipulation provided: 1) Three Providers (52-0051,

01-0090 and 05-0093) in the Combined Appeals have yet to receive their Revised Notice of Program Reimbursement pursuant

to CMS Ruling 1498-R. 2) Providers 52-0051 and 01-0090 are

expected to receive RNPRs from their Medicare Administrative

Contractor prior to July 2017. 3) The RNPRs the MAC may issue

to Providers 52-0051 and 01-0090, will not incorporate the SSI

Eligible patients days that are at issue in the Combined Appeals

into the numerator of the Medicare fraction of the DSH calculation.4) The Board’s Decision in the Combined Appeals will be

binding on Providers 52-0051 and 01-0090. 5) The third Provider,

05-0093, currently has an appeal in the District of Columbia

District Court from PRRB Case No. 12-0522GC for its FYE

06/30/2006, and, therefore, the MAC cannot stipulate as to when

the RNPR for this Provider will be issued. 6) The Parties agree

that the Provider 05-0093 can request a transfer of its claim in

the Combined Appeals for its 2006 fiscal year to PRRB Case No.

17-0489G that is pending before the Board. For three providers

and respective cost years, in PRRB Dec. 2017-D11, the parties

stipulated that the Board’s decision would be binding on Columbia St. Mary’s Hospital, 52-0051 and Providence Hospital, 010090 and that the claim of St. Agnes Medical Center, 05-0093

would be transferred to a group appeal which is pending as PRRB

Case No. 17-0489G that is not subject to this decision.

App. 86

items and services furnished to individuals for which

payment may be made under this subchapter for the

period covered by such report. These provisions likewise apply to group appeals. According to 42 C.F.R.

§ 1801(a), an “intermediary determination” is defined

as: a determination of the amount of total reimbursement due the provider, pursuant to § 405.1803 following the close of the provider’s cost reporting period, for

items and services furnished to beneficiaries for which

reimbursement may be made on a reasonable cost basis under Medicare for the period covered by the cost

report.” This determination is reflected in notice of

amount of program reimbursement or “NPR.” Finally,

42 C.F.R. §405.1889, is applicable to revised NPRs,

which are considered separate and distinct determinations to which the appeal provisions apply.48

In addition, relevant to this case, on April 28, 2010,

CMS issued CMS Ruling CMS-1498-R. The Ruling provided notice that the Board and the other Medicare administrative appeals tribunals lacked jurisdiction over

three specific types of provider appeals regarding the

calculation of the Medicare disproportionate share

hospital (DSH) adjustment. The CMS-1498-R titled

“Medicare Program Hospital Insurance (Part A)-Jurisdiction over appeals of disproportionate share hospital

(DSH) payments and recalculations of DSH payments

On its face, 42 C.F.R. §405.1889 would appear to preclude the

application of a Bethesda analysis, that latter of which arose from

an appeal under the authority of §1878 of the Act.

App. 87

following remands from Administrative Tribunals”

provides the following:

CMS is issuing, contemporaneously with this

Ruling, a proposed rule that begins, for Federal fiscal year (FY) 2011, the annual IPPS

rulemaking through which payment rates for

inpatient hospitals are updated and new payment policies are implemented. In the FY

2011 proposed rule, CMS is proposing to

adopt the same revised data matching process, effective October 1, 2010, as the agency

used to implement the Baystate decision by

recalculating that provider’s SSI fractions. In

the forthcoming FY 2011 IPPS final rule, CMS

expects to respond to public comments on the

proposed new data matching process, make

any changes to such matching process that

seem appropriate, and adopt finally a new

data matching process. As explained below in

Section 5 of this Ruling, the outcome of the FY

2011 IPPS rulemaking will determine the

suitably revised data matching process that

CMS will use in implementing this Ruling. If

the FY 2011 IPPS final rule results in a new

data matching process, then CMS will use

that new data matching process in calculating

SSI fractions and DSH payments for specific

claims that are found to qualify for relief under this Ruling. However, if a new data matching process is not adopted in the FY 2011

IPPS final rule, then CMS will implement this

Ruling by using the same revised data matching process as the agency used to implement

the Baystate decision.

App. 88

In accordance with the foregoing history and

determination, CMS and the Medicare contractors will resolve each properly pending

DSH appeal of the SSI fraction data matching

process issue, by applying a suitably revised

data matching process (as set forth below in

Section 5.a. of this Ruling) for purposes of recalculating the hospital’s SSI fraction by

matching Medicare and SSI eligibility data,

and then recalculating the hospital’s DSH

payment adjustment for the period at issue.

CMS’ action eliminates any actual case or

controversy regarding the hospital’s previously calculated SSI fraction and DSH payment adjustment and thereby renders moot

each properly pending claim in a DSH appeal

involving the hospital’s previously calculated

SSI fraction and the process by which CMS

matches Medicare and SSI eligibility data,

provided that such claim otherwise satisfies

the applicable jurisdictional and procedural

requirements of section 1878 of the Act, the

Medicare regulations, and other agency rules

and guidelines. Accordingly, it is hereby held

that the PRRB and the other administrative

tribunals lack jurisdiction over each properly

pending claim on the SSI fraction data matching process issue, provided that such claim

otherwise satisfies the applicable jurisdictional and procedural requirements for appeal.

As explained below in Sections 4 and 5 of

this Ruling, CMS and the Medicare contractors will take the steps necessary to apply a

suitably revised data matching process in

App. 89

determining the SSI fraction, and recalculating the DSH payment adjustment, for each

properly pending claim on the SSI fraction

data matching process issue that is remanded

by an administrative appeals tribunal and is

found to qualify for relief under this Ruling.(Emphasis added.)

Specifically, CMS Ruling CMS-1498-R prohibits the

Board and the Administrator from review and removes

jurisdiction to review provider appeals regarding three

issues most notably the data matching for the calculation of the SSI fraction. The issue raised in this case at

this time involves the data matching for the calculation of the SSI fraction for cost reporting periods prior

to 2010. The Board decisions recognize that some of the

providers have not yet received NPRs showing the recalculation of Medicare fraction pursuant to the SSI

matching process pursuant to CMS Ruling 1498-R as

incorporating the 2010 published methodology..

The Administrator finds that, in light of the directives

of CMS Ruling 1498-R and the necessity of finality specifically embodied in the Social Security Act, the CMS

regulations, cost reporting rules, and, more generally,

recognized in administrative law, the Board review

cannot be based on the mere prospect that calculation

of the SSI fraction through the challenged CMS methodology “will be done” or that a Provider is “slated to

receive” an appropriate NPR showing that its DSH

payment would be determined (or redetermined) based

on the challenged CMS methodology for calculation of

the SSI fraction. The Board jurisdiction requires a final

App. 90

contractor determination, as set forth in an appropriate NPR or revised NPR and instructed by CMS 1498R. In order for the Board to have jurisdiction for review

over a hospital’s challenge, for a specific cost reporting

period involving the CMS methodology for calculation

of the SSI fraction, the MAC must have actually determined (or redetermined) the Provider’s DSH payment

amount on the basis of the challenged calculation

methodology, and the resultant DSH payment amount

must be accounted for in an appropriate NPR or revised NPR in accordance with CMS 1498-R.

Applying the applicable controlling policy and law to

the facts of these case, the Administrator finds that in

PRRB Dec. No. 2017-D11, the record shows that the

parties stipulated that three of the Providers,49 have

yet to receive their Revised NPRs pursuant to CMS

Ruling 1498-R. In addition, the record shows that certain other members of that same PRRB Group No. 131627G50 show NPRs issued prior to the CMS Ruling

hence leading one to conclude an NPR/revised NPR

showing the recalculation pursuant to the CMS ruling

has not yet occurred.51 In PRRB Dec. No. 2017-D12, a

review of the schedule of providers (both groups and

Columbia St. Mary’s Hospital, (52-0051), Providence Hospital,

(01-0090), and St. Agnes Medical Center,(05-0093).February 2017

stipulations in PRRB Dec. No 2017-D11.

Except for Seton Saint Mary’s Hospital (33-0232) for FYE

12/31/2006).

Whether a provider could argue that it had a cost year recalculated pursuant to CMS Ruling 1498, which resulted in no

change of its DSH payment and the possibility of no revised NPR,

was not a procedural posture suggested in the Board decision.

App. 91

individually) shows all but one Provider in all the consolidated cases (group and individual) were appealing

from NPRs issued prior to the April 2010 CMS Ruling

and hence leading one to conclude an NPR/revised

NPR showing the recalculation pursuant to the CMS

ruling has not yet occurred.52 The record on its face

is also not clearly defined as to the date the Providers

raised or added the SSI matching issue to their appeals with the required specificity.53

For Board jurisdiction to be properly asserted over a

cost report for purposes of a hearing on the merits (as

opposed to remand under CMS Ruling 1498-R), the MAC

must have actually determined (or re-determined) the

Providers’ DSH payment on the basis of the challenged

CMS methodology for calculation of the SSI fraction;

determined a specific DSH payment amount based on

application of the challenged SSI fraction calculation

methodology; and issued a final MAC determination

that specifically accounts for the resultant DSH payment amount in an appropriate NPR or revised NPR.

Therefore, the Administrator determines that the

Board decision is vacated, finding jurisdiction for a

hearing for those cost years in PRRB Dec. Nos. 2017D11 and 2017-D12, for which the date on the NPR

under appeal is prior to the April 28, 2010 CMS Ruling

1498-R and, therefore, would not be consistent with a

The exception appears to be University of Virginia Medical

Center for FYEs 6/30/07 through 2009.

See Transcript of Oral Hearing at 1-15 (March 17, 2015). See

also, Jurisdictional documents,. e. e.g., Volume 1 of 2, Schedule

of Providers, PRRB Case No. 07-2872G).

App. 92

conclusion that a DSH recalculation has been made

pursuant to CMS Ruling 1498-R (including those

cost years for which the Providers acknowledge no recalculation has occurred).54 The foregoing cost years

are properly remanded to the Board and, if appropriate, 1) the cost year should be remanded to the MAC

for resolution consistent with CMS-1498-R; or 2) to allow the Board to consider further documentation to

demonstrate whether a final determination has been

issued pursuant to CMS Ruling 1498-R or CMS Ruling

1498-R2;55 or 3) for the Board to consider further documentation on whether the issue was timely added with

sufficient specificity and whether the respective provider has a properly pending appeal on that issue in

accordance with CMS Ruling 1498R and the regulations.56

This initial review is based upon an assumption that NPRs

dated after the date of the CMS Ruling, reflected in the schedule

of providers, were issued pursuant to the application of the Ruling, Because of the number of providers and cost years in this

consolidation of many groups (exceeding 500 cost years in PRRB

Dec. No. 2017-D11) and individually (PRRB Dec. No. 2017-D12),

the Administrator also preserves the right to raise the lack of

finality with respect to the recalculation under CMS Ruling

1498-R should, in further proceedings, other appealed Hospital

cost reports are determined to have failed to demonstrate that

this criteria was met.

A possible issue raised in the consolidation of various groups

under one decision and as one administrative record, is that the

each Group, while entitled to file in the District of Columbia, have

a right to file in the judicial district where the greatest number

of the Providers in the individual group reside under §1878(f )(1)

of the Act, which may vary..

See, e.g., 42 CFR 405.1835(e) and the final rule at 73 Fed. Reg.

30190 (May 23, 2008) with respect to timely adding issues.

App. 93

DECISION

The decision of the Board is modified in accordance

with the foregoing opinion.

THIS CONSTITUTES THE FINAL ADMINISTRATIVE

DECISION OF THE SECRETARY OF

HEALTH AND HUMAN SERVICES

Date: 5/30/17

/s/ Demetrios L. Kouzoukas

Demetrios L. Kouzoukas

Principal Deputy Administrator

Centers for Medicare &

Medicaid Services

App. 94

PROVIDER REIMBURSEMENT REVIEW BOARD

DECISION

2017-D11

PROVIDER – Hall Render

Optional and CIRP DSH

Dual/SSI Eligible Group

Appeals – Medicare Fraction

Provider No.: Various

vs.

DATE OF HEARING –

September 15, 2015

Cost Reporting Periods

Ended: Fiscal Years

2006, 2007, 2008,

and 2009

INTERMEDIARY –

CASE NOs.:

Wisconsin Physicians

13-1862GC, et al.

Services; Palmetto GBA

c/o National Government

Services; CGS Administrators;

National Government

Services Inc.; Novitas

Solutions Inc.; Cahaba GBA

c/o National Government

Services Inc.; Noridian

Healthcare Solutions, LLC

INDEX

Page No.

Issue ....................................................................

Decision ..............................................................

Introduction ......................................................

Statement of the Facts .....................................

App. 95

Discussion, Findings of Fact, and Conclusions of Law ...................................................

Decision and Order ..........................................

Appendix A—Schedule of Providers .............

[2] ISSUE

Whether the Medicare Disproportionate Share Hospital (“DSH”) reimbursement calculations for the Providers (“Hospitals”) were understated due to the failure of

the Centers for Medicare & Medicaid Services (“CMS”)

and the relevant Medicare Administrative Contractors (“Medicare Contractors”)1 to include all supplementary security income (“SSI”) eligible patient days

in the numerator of the Medicare fraction of the

Medicare DSH percentage, as required by 42 U.S.C.

§ 1395ww(d)(5)(F)(vi).2

DECISION

After considering the Medicare law and regulations,

the parties’ contentions, and the evidence submitted,

the Provider Reimbursement Review Board (“Board”)

finds that it lacks the authority to mandate specific

revisions to CMS’ data matching process for the Medicare fraction of the Medicare DSH calculation for the

fiscal years at issue. Accordingly, the Board holds that

The lead Medicare contactor in this case is Wisconsin Physicians Services.

Transcript (“Tr.”) at 6-7.

App. 96

it does not have the authority to reverse the Medicare

Contractors’ adjustments.

INTRODUCTION

This case consolidates multiple group appeals involving numerous acute care hospitals for fiscal years

2006 to 2009.3 The Hospitals challenge CMS’ policy of

including only some of the SSI eligibility categories in

the numerator of the Medicare fraction of the DSH calculation.4 The Hospitals claim that, as a result of this

policy, they received less DSH reimbursement than

they are entitled.

Each of the Hospitals timely appealed this issue and

met the jurisdictional requirements for a hearing. Accordingly, the Board held a consolidated hearing on

these appeals on September 15, 2015. The Hospitals

were represented by Daniel F. Miller, Esq. of Hall,

Render, Killian, Heath & Lyman, P.C. The Medicare

Contractors were represented by Brendan G. Stuhan,

Esq. of the Blue Cross and Blue Shield Association.

STATEMENT OF THE FACTS

The Medicare program pays inpatient hospital services

based on predetermined, standardized amounts subject to certain payment adjustments under Medicare’s

The Schedule of Providers is attached as Appendix A and it is

organized by fiscal year and group case number.

Providers’ Combined Final Position Paper, Vol. II, at 00072.

App. 97

inpatient prospective payment system (“IPPS’’).5 One

of these adjustments, the Medicare DSH adjustment,

provides additional payments to certain qualifying

hospitals that treat a disproportionate share of low

income patients.6 The Medicare DSH adjustment is

calculated using two fractions known as the Medicare

fraction (also referred to as the SSI fraction or SSI

ratio) and the Medicaid fraction. The Medicare fraction

is calculated by using: (a) in the numerator, the “number of such hospital’s patient days ... which were made

up of patients who (for such days) were entitled to [3]

benefits under part A of the subchapter and were entitled to supplementary security income benefits ... under subchapter XVI of this chapter ... ”; and (b) in the

denominator, the number of days of care that are

furnished to patients who were entitled to Medicare

Part A.7 The dispute in these appeals involves CMS’

determination of which patients are “entitled to” both

Medicare Part A and SSI benefits for purposes of the

Medicare fraction of the DSH calculation.

The SSI program is a federal cash assistance program for low-income individuals who are aged, blind,

or disabled,8 administered by the Social Security Administration (“SSA”). The SSI statute, generally, does

42 C.F.R. Part 412.

42 U.S.C. § 1395ww(d)(5)(F)(i)(I) (copy included at Provider

Exhibit P-3).

42 U.S.C. § 1395w2(d)(5)(F)(vi)(I). See also 42 C.F.R.

§ 412.106(b)(2)(i)(B) (copy included at Provider Exhibit P-9).

42 U.S.C. § 1382 (copy included at Provider Exhibit P-8).

App. 98

not use the term “entitled” to SSI benefits. Rather, the

SSI statute typically refers to whether an individual is

“eligible for benefits.”9 In order to be “eligible” for SSI

benefits, a person must be: (1) 65 years of age or older,

blind or disabled; (2) a lawful resident of the United

States; (3) have limited income and resources; (4) not

be fleeing to avoid prosecution for a crime or violating

a condition of parole; and (5) file an application for

benefits.10

The Medicare program is an insurance program where

an individual is automatically “entitled” to Medicare

Part A when the person reaches age 65 and is entitled

to Social Security benefits or becomes disabled and

had been entitled to disability benefits for 24 calendar

months.11 In addition, the Medicare program provides

that certain qualifying individuals with end stage renal

disease are entitled to Medicare Part A.12

Unlike entitlement for Medicare Part A benefits, an

individual who is currently eligible for SSI benefits

may later become ineligible for SSI benefits. In this

regard, SSA conducts periodic redeterminations to

ensure continued eligibility13 and may terminate,14

42 U.S.C. §§ 1381a, 1382(a) (emphasis added) (copies included

at Provider Exhibits P-7, P-8 respectively).

20 C.F.R. § 416.202.

42 U.S.C. § 426.

42 U.S.C. § 426-1.

20 C.F.R. § 416.204.

20 C.F.R. §§ 416.1331-1335.

App. 99

suspend15 or stop payments to individuals who are

either temporarily or permanently ineligible for payment of SSI benefits.16 In particular, SSI eligibility may

be lost if a person no longer meets the basic requirements. For example, an individual may lose SSI eligibility if the individual is no longer disabled or the

individual meets one of the following reasons set forth

in Sections §§ 416.207-416.216:

The individual fails to give the SSA permission to contact financial institutions;17

The individual fails to apply for other

benefits to which the individual may be

entitled;18

The individual fails to participate in drug

or alcohol addiction treatment;19

[4] 4. The individuals is absent from the

United States for more than 30 days;20 or

The individual becomes a resident of a

public institutions or prison.21

Under certain circumstances, the Social Security

Administration may not pay benefits for administrative reasons, including removal of a representative

20 C.F.R. §§ 416.1320-1330.

20 C.F.R. § 1320.

20 C.F.R. § 416.207.

20 C.F.R. § 416.210.

20 C.F.R. § 416.214.

20 C.F.R. § 416.215.

20 C.F.R. § 416.211.

App. 100

payee, an unknown address for the beneficiary, or because of income from a previous month.22

After the Medicare DSH statutory provisions were

enacted in 1984, the Health Care Financing Administration (“HCFA”), the predecessor to CMS, announced

that the Secretary of Health and Human Services,

rather than hospitals, would be solely responsible for

computation of the Medicare fraction because the

data necessary to calculate the Medicare fraction is

voluminous and much of this data needed to be

obtained from another agency, the Social Security

Administration (“SSA”).23 HCFA noted that, as of 1986,

the data sources for the computation of the Medicare

fraction included approximately 11 million billing records from the Medicare inpatient discharge file and

over 5 million records from the SSI file compiled by

SSA.24 To compute the Medicare fraction, HCFA had to

match individual Medicare billing records to individual SSI records.25 Considering the administrative burdens and complexity of the data matching process,

HCFA concluded that the Secretary would be responsible for the data matching process, which she would

conduct retrospectively for every eligible Medicare

hospital on a “federal fiscal year” basis—that is, based

See Provider Exhibit P-38 (copy of SSA Program Operations

Manual (“POMS”) § SI 02301.201 (describing certain SSI posteligibility events)).

51 Fed. Reg. 31454, 31459 (Sept. 3, 1986).

Id.

App. 101

on discharges occurring in the federal fiscal year.26

HCFA/CMS notifies Medicare contractors of the SSI

ratios after they are calculated. CMS currently makes

this notification by posting the resulting SSI percentages on its website. Medicare contractors then use the

posted SSI ratios to calculate the Medicare DSH percentage to determine each qualifying hospital’s Medicare DSH payment adjustment.27

The Medicare DSH payment adjustment has been the

subject of much litigation and the following case is of

particular relevance to this appeal: Baystate v. Leavitt,

545 F. Supp. 2d 20 as amended 587 F. Supp. 2d 37, 44

(D.D.C. 2008) (“Baystate”). In Baystate, the plaintiff

alleged that the Secretary’s process to identify and

gather the data necessary to calculate each hospital’s

SSI ratio was deficient. On April 28, 2010 CMS published Ruling 1498-R to respond to a court order in

Baystate. Specifically, the Ruling stated that CMS had

implemented the court order by recalculating the

plaintiff ’s SSI fractions and Medicare DSH payment

adjustments using a revised data matching process

that used “updated and refined SSI eligibility data and

Medicare records, and by matching individuals’ records with reference to Social Security numbers (SSNs)

as well as HICANs and Title II numbers.”28 The Ruling

also stated that “in the FY 2011 proposed rule, CMS is

proposing to adopt the same revised data matching

Id. at 31459–31460; 42 C.F.R. § 412.106(b).

42 C.F.R. § 412.106(b)(5); 42 C.F.R. § 405.1803.

CMS-1498-R at 5 (copy included at Providers Exhibit P-18).

App. 102

process” for use with all hospitals and that “[i]n the

forthcoming FY 2011 IPPS final rule, CMS expects to

respond to [5] public comments filed on the proposed

new data matching process, make any changes to such

matching process that seem appropriate, and adopt

finally a new data matching process.”29 Finally, CMS

stated that it would “use that new data matching process in calculating SSI fractions and DSH payments

for specific claims that are found to qualify for relief

under this Ruling.”30

Consistent with Ruling 1498-R, CMS published the

new data matching process in the FY 2011 proposed

rule published on May 4, 201031 and finalized that data

matching process in the final rule published on August

16, 2010 (“FY 2011 Final Rule”).32 Significantly, in the

preamble to the FY 2011 Final Rule, CMS acknowledged a public comment that: (1) requested that “CMS

include both paid and unpaid days for both SSI entitlement and Medicare entitlement such that there would

be consistency between the numerator and denominator of the SSI fraction”; and (2) provided examples of

“several SSI codes that represent individuals who were

eligible for SSI but not eligible for SSI payments, that

should be included as SSI-entitled for purposes of the

data match process.”33 CMS responded in detail to this

Id.

Id. at 5-6.

85 Fed. Reg. 23852, 24002-24007 (May 4, 2010).

75 Fed. Reg. 50041, 50280-50281. (Aug. 16, 2010) (copy included at Provider Exhibit P-17).

Id. at 50280.

App. 103

comment and explained that CMS interprets SSI

entitlement to correspond with any month for which

an individual receives payment of SSI benefits. In this

regard, CMS stated that the three SSI codes denoted

as C01, M01, and M02 “accurately captures all SSIentitled individuals during the month(s) they are entitled to receive SSI benefits.”34 CMS explicitly rejected

the inclusion of other SSA codes because “SSI entitlement can change from time to time” and none of these

codes “would be used to describe an individual who was

entitled to receive SSI benefits during the month that

one of these codes was used.”35 Finally, in the preamble,

CMS confirms that “[t]he same data matching process

[used for FY 2011 and beyond] will be used to calculate

SSI fractions for cost reporting periods covered under

the Ruling [1498-R].”36

While the new data matching process established in

the FY 2011 Final Rule was effective October 1, 2010,

Ruling 1498-R directed that the Medicare Contractors

apply “the same, unitary relief ” consisting of SSI fractions that the Secretary had calculated using the new

“suitably revised” data matching process to: (1) any

Medicare cost report that had not been settled; and

(2) all properly pending Medicare DSH appeals of the

Id. at 50280-50281.

Id. This include all codes with the “S” prefix indicating a suspension of payment; codes beginning with “N” for nonpayment;

code “E01” indicating that the individual had countable income

which eliminated the SSI payment; and code “E02” indicating

that the patient was not entitled to SSI benefits during that

month but became entitled during a subsequent month.

Id. at 50285.

App. 104

SSI fraction data matching process issue.37 The Ruling

noted that hospitals dissatisfied with the initial or

revised NPR issued using the new SSI ratios in the

Medicare DSH adjustment calculation could seek

administrative and judicial review provided they met

the jurisdictional and procedural requirements of 42

U.S.C. § 1395oo, the Medicare regulations, and other

agency rules and guidelines.38

[6] Finally, on April 22, 2015, CMS published Ruling

1498-R2 modifying and amending 1498-R by allowing

providers to elect whether to use new Medicare. SSI

fractions calculated on the basis of “total days” or “covered days” for cost reports involving patient discharges

prior to October 1, 2004.39

As a result of the Rulings and new regulation, CMS

recalculated new SSI percentages for the Hospitals for

all of fiscal years at issue in this appeal. The Hospitals

either have received a written notice through a

RNPR or have been informed that a DSH recalculation

will be done based on the methodology articulated in

the preamble, i.e., use only the three SSI codes to

denote SSI eligibility.40 The Hospitals believe that this

CMS-1498-R at 6-7, 31.

Id. at 28, 31.

CMS-1498-R2 at 2, 6 (copy included Provider Exhibit P-37).

See Stipulation (Feb. 2017) (note that the Board transferred

the provider discussed in ¶¶ 5-6 to Case No. 17-0489G as agreed

to by the parties).

App. 105

methodology has, or will, adversely reduce their Medicare DSH reimbursement.41

DISCUSSION, FINDINGS OF FACT, AND CONCLUSIONS OF LAW

At the outset, the Board notes that the Hospitals are

challenging the methodology CMS uses to calculate

the SSI fraction (i.e., challenging the data matching

process) rather than CMS’ execution of that process

(i.e., whether that process was executed correctly or

accurately). Specifically, the Hospitals dispute CMS’

recognition of only three SSI codes (i.e., C01, M01, and

M02) in that process to define entitlement to SSI

benefits for purposes of the Medicare fraction for the

Medicare DSH calculation. The Hospitals argue that

federal statute at 42 U.S.C. § 1382h(b) continues noncash benefits (i.e., Medicaid benefits), and that SSA

policy allowing the resumption of SSI cash payments

without reapplying illustrates a beneficiary’s continued entitlement to SSI benefits.42 In addition, the

Hospitals assert that certain additional SSI codes

illustrate continued SSI eligibility even when the

individual’s SSI payments are suspended or placed in

See Providers’ Optional Responsive Brief, Vol. III, at 0071900721; Provider Exhibits P-41–P-56.

Providers’ Optional Responsive Brief, Vol. III at 00716–00719.

See also Provider Exhibits P-63 (copy of POMS guidance from

www.Medicare.gov on Part D low income subsidies), P-64 (copy

of POMS §§ NL 0082.010, HI 03001.005 (addressing SSI notice

of award and Medicare Part D low income subsidy respectively)).

App. 106

a stop payment status and that these individuals

continue to be “entitled to” SSI benefits.43 Accordingly,

the Hospitals conclude these additional SSI codes

should be included in the data matching process

used to determine the SSI ratio for the

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.