# Amicus Curiae Brief — Azar v. Allina Health Servs., 139 S. Ct. 51 (2018) (No. 17-1484)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2018

## Text

No. 17-1484

IN THE
Supreme Court of the United States

ALEX M. AZAR II, SECRETARY OF HEALTH AND HUMAN
SERVICES, =*
Petitioner,
Vv.

ALLINA HEALTH SERVICES, et al.,
Respondents.

On Writ of Certiorari to the
United States Court of Appeals
for the District of Columbia Circuit

BRIEF OF AMICI CURIAE
AMERICAN MEDICAL ASSOCIATION
AND MEDICAL SOCIETY OF
THE DISTRICT OF COLUMBIA
IN SUPPORT OF RESPONDENTS

TACY F. FLINT*

JACK R. BIERIG

MARLOW SVATEK

SIDLEY AUSTIN LLP

One South Dearborn Street
Chicago, IL. 60603

(312) 853-7000
tflint@sidley.com

Counsel for Amici Curiae
December 20, 2018 *Counsel of Record

L.

I.

TABLE OF CONTENTS

NOTICE-AND-COMMENT RULEMAKING
PROMOTES FAIRNESS AND PUBLIC
PARTICIPATION IN REGULATORY
ATTIC R AEE LAR PNAS SEI
A. Prospective Rulemaking Through Notice-

And-Comment Promotes Consistency

I intsitninereericncncnitinnetitatearinniinr netics

8. Notice-And-Comment Rulemaking Per-
mits Democratic Participation And Over-

THE USE OF NOTICE-AND-COMMENT
RULEMAKING IMPROVES REGULA-

1. National Coverage Determinations
Versus Local Contractor Actions .......

B. By Contrast, HHS’s Use Of Notice-And-
Comment omy - Has Improved
The Quality And Administrability Of

11

il

TABLE OF AUTHORITIES
CASES Page
Am. Fed'n of Gov't Emp., AFL-CIO v. Block,
655 F.2d 1153 (D.C. Cir. 1981).............. 8, 9, 10
Barrows v. Burwell, 777 F.3d 106 (2d Cir.
Saari icbsiesieiihinmatatnataiaiictncesininstneet ubeiiateniii deans 21
Batterton v. Marshall, 648 F.2d 694 (D.C.
EATEN Re nen ey ace 7,9
Cmty. Television of S. Cal. v. Gottfried, 459
RESPIR Ieee SE aor 8
Doe v. Rumsfeld, 341 F. Supp. 2d 1 (D.D.C.
REE EE ren ee 10

Guardian Fed. Sav. & Loan Ass’n v. Fed.
Sav. & Loan Ins. Corp., 589 F.2d 658 (D.C.

LSE Ey SASS ae 9, 10
Heckler v. Ringer, 466 U.S. 602 (1984)......... 13
Landgraf v. USI Film Prods., 511 U.S. 244

ET ESS Res SELL eae 8
Levesque v. Block, 723 F.2d 175 (ist Cir.

I an ce OD 10
Natl Nutritional Foods Ass’n v. Kennedy,

572 F.2d 377 (2d Cir. 1978) ...000000 0. 11

Natl Ass'n of Home Health Agencies v.
Schweiker, 690 F.2d 932 (D.C. Cir.

Se ee ae 8, 9, 10
Small Refiner Lead Phase-Down Task Force

v. EPA, 705 F.2d 506 (D.C. Cir. 1983)....... 8
Sprint Corp. v. FCC, 315 F.3d 369 (D.C. Cir.

EIS Eee ASR LN mR TE 6, 7, 23
Texaco, Inc. v. Fed. Power Comm'n, 412 F.2d

I 9, 10
United States v. Paulus, 894 F.3d 267 (6th

aE SEIT IS AES Renker ee ee 16

United States v. Persaud, 866 F.3d 371 (6th
I iesiaicnlnceterasicthnbiricilinkieeiaiteciteele nite 16

TABLE OF AUTHORITIES—continued
Page
U.S. ex rel. Polukoff v. St. Mark’s Hosp., 895
F.3d 730 (10th Cir. 2018)........0.0000000000000.. 16
U.S. ex rel. Ryan v. Lederman, No. 04-2483,
2014 WL 1910096 (E.D.N.Y. May 13,

aa assesnitiesitisisigntindiddehatpiibacpsiahintenitiiniediioniaeensesie 16, 17
U.S. ex rel. Youn v. Sklar, 273 F. Supp. 3d
EI TE IIIT nndetshiinenitichansintinnemeemdenhoase 16
STATUTES AND REGULATIONS
ee ee Oe I ccccseccnscecsnccccessrtsnesceese 2
ascites hidetainal 18
STII hisiiicsiietnnededinsidtiestilindabtasianitiee 18
TTT TET A eae Ca 12
Tsai cite siiatithitainbinthinabinnenn 18
dina oeeahicicnicataas iinidiaaainadi 18
TAS 12, 13, 14
inane picttemeninimeinininiatiad 13, 14
BD BD os ccccccccccocscnsscoccsesssase 4,13
ia ocincscrchsantuempecatnatiindesten 18
GD CF ie Oy I wecerictntnesiccinscsiesvcseneiintonnes 13
CE ee 19
83 Fed. Reg. 59,452 (Nov. 23, 2018) ............. 24
83 Fed. Reg. 41,144 (Aug. 17, 2018) ............. 21
83 Fed. Reg. 35,704 (July 27, 2018).............. 23
80 Fed. Reg. 70,298 (Nov. 13, 2015) ............. 22
78 Fed. Reg. 48,164 (Aug. 7, 2013) .............. 13
68 Fed. Reg. 63,692 (Nov. 7, 2003) ............... 14

67 Fed. Reg. 54,534 (Aug. 22, 2002) ............. 13

iv
TABLE OF AUTHORITIES—continued
SCHOLARLY AUTHORITIES Page

Zhanlian Feng et al., Sharp Rise in Medicare
Enrollees Being Held in Hospitals for
Observation Raises Concerns about Causes
and Consequences, 31 Health Aff. 1251
IIIa Sesisabimieniehniadienaciii nia iiiitiaialaiditeciaseaiitccerite 22

Thomas W. Merrill & Kathryn Tongue
Watts, Agency Rules with the Force of Law:

The Original Convention, 116 Harv. L.

OTHER AUTHORITIES

Council on Med. Serv., Am. Med. Ass'n,
Defining “Observation Care” H-160.944
(2014), https://policysearch.ama-assn.org/
policyfinder/detail/Defining%200bservati
on%20Care%20H- 160.944? uri=%2FAMA
Doc%2FHOD.xml-0-758.xml (last visited
Be Be i ciiretiretinirnicnteaieannstinianitentstemsiinwenes 22

Ctrs. for Medicare & Medicaid Servs., Fast
Facts, https://www.cms.gov/fastfacts/ (last
updated Aug. 1, 2018) .........................0000- 3

Ctrs. for Medicare & Medicaid Servs.,
Frequently Asked Questions: 2 Midnight
Inpatient Admission Guidance & Patient
Status Reviews for Admissions on or After
October 1, 2013, https://www.cms.gov/
Research-Statistics-Data-and-Systems/
Monitoring-Programs/Medical-Review/
Downloads/QAsforWebsite Posting 11041
3-v2-CLEAN pdf (last visited Dec. 18,
Siete icnisaniakeeatsaidlniasennicateteeduventtbaninasdiemiiabeagen 22

Vv

TABLE OF AUTHORITIES—continued

Ctrs. for Medicare & Medicaid Servs.,
MM10080, Clarifying Medical Review of
Hospital Claims for Part A Payment (May
16, 2017), https://www.cms.gov/Outreach-
and-Education/Medicare-Learning-
Network-MLN/MLNMattersArticles/
downloads/MM 10080. pdf...........................

Ctrs. for Medicare & Medicaid Servs.,
National Health Expenditures 2017
Highlights, https://www.cms.gov/Research
-Statistics- Data-and-Systems/Statistics-
Trends-and-Reports/NationalHealth
Expend Data/downloads/highlights.pdf
(last visited Dec. 18, 2018).........................

Ctrs. for Medicare & Medicaid Servs., OMB-
0938-1197, Health Insurance Claim Form,
https://www.cms.gov/Medicare/CMS-
Forms/CMS-Forms/Downloads/CMS 1500.
pdf (last revised Feb. 1, 2012)....................

Kenneth Culp Davis, Discretionary Justice
(Univ. of Ill. Press 1971) (1969).................

Kurt D. Gillis, Policy Research Perspectives:
Physicians’ Patient Mix—A Snapshot from
the 2016 Benchmark Survey and Changes
Associated with the ACA _ (2017),
https://www.ama-assn.org/sites/ama-assn.
org/files/corp/media-browser/public/health
-policy/PRP-2017-physician-benchmark-
survey-patient-mix.pdf ......................00.

Page

21

13

vi
TABLE OF AUTHORITIES—continued
Page
Letter from James L. Madara, Am. Med.
Ass’n, to Hon. Seema Verma, Adminis-
trator, Ctrs. for Medicare & Medicaid
Servs. (Sept. 10, 2018), https://searchlf.
ama-assn.org/undefined/document
Download?uri=%2F unstructured%2F bina
ry%2Fletter*2FLETTERS%2F20 18-9- 10-
2019-PFS-QPP-Comment-Letter-F INAL-
OS DTD ER re 24
Office of the Inspector Gen., Dep’t of Health
& Human Servs., OEI-01-11-00500, Local
Coverage Determinations Create
Inconsistency in Medicare Coverage
(2014), https://oig.hhs.gov/oei/reports/oei-
SN See eee 15, 18
Office of the Inspector Gen., Dep’t of Health
& Human Servs., OEKI-02-15-00020,
Vulner-abilities Remain Under Medicare's
2-Midnight Hospital Policy (2016), https://
oig.hhs.gov/oei/reports/oei-02- 15-00020.
et ALRNet SOT eae 19, 20
Robert Pearl, Healthcare is the No. 1 Issue
for Voters; A New Poll Reveals Which
Healthcare Issue Matters Most, Forbes
(Aug. 13, 2018, 7:53 AM), https://www.
forbes.com/sites/robertpear!/20 18/08/1 3/
midterms/# 1 2aa2ff73667 ........................... 11
Elliot Raphaelson, Inpatient vs. Observa-
tion Status: The Difference Can Be Costly,
Chi. Trib. (Nov. 21, 2018, 4:20 PM),
https://www.chicagotribune.com/business/
sns-201811211100--tms--savingsgctnzy-
a20181121-20181121-story.html............... 21

vii
TABLE OF AUTHORITIES—continued
Page
Andis Robeznieks, Less Documentation,
E/M Pay Changes Proposed in 2019 Fee
Schedule, Am. Med. Ass’n (Aug. 2, 2018),
https://www.ama-assn.org/practice-
management/medicare/less-
documentation-em-pay-changes-proposed-
2019-fee-schedulle............................ccccc0000.- 24
Stephanie Saul, Geography Has Role in
Medicare Cancer Coverage, N.Y. Times
(Dec. 16, 2008), https://www.nytimes.com/
2008/12/17/health/policy/17knife. html ..... 15, 16
Paula Span, Under ‘Observation,’ Some
Hospital Patients Face Big Bills, N.Y.
Times (Sept. 1, 2017), https://www.
nytimes.com/2017/09/0 l/health/medicare-
observation-hospitals. html ........................ 20
Summary: 2019 Medicare Physician Fee
Schedule and Quality Payment Program
Final Rule, Am. Med. Ass’n (2018), https://
www.ama-assn.org/system/files/20 18-1 1/
pfs-qpp-final-rule-sum 11-8.pdf.......0000....... 24

INTERESTS OF AMICI CURIAE'

Amici are private, voluntary, nonprofit
organizations of physicians dedicated to promoting the
public welfare through the maintenance of the highest
professional standards and the provision of quality
healthcare.

Amicus the American Medical Association (AMA) is
the largest professional association of physicians,
residents and medical students in the United States.
Additionally, through state and specialty medical
societies and other physician groups seated in its
House of Delegates, substantially all U.S. physicians,
residents, and medical students are represented in the
AMA’s policy-making process. The AMA was founded
in 1847 to promote the science and art of medicine and
the betterment of public health, and these remain its
core purposes. AMA members practice in every
medical specialty area and in every state.

Amicus the Medical Society of the District of
Columbia (MSDC) is part of the federation of state,
county, and specialty medical societies that constitute
the AMA. With over 2,500 members, the MSDC is the
largest medical organization representing
metropolitan Washington physicians in the District.
Since 1817, the MSDC has been supporting and
advocating for patients, physicians, the medical
profession, and the betterment of public health.

' Pursuant to Supreme Court Rule 37.6, amici curiae state that
no counsel for any party authored this brief in whole or in part
and that no entity or person, aside from amuci curiae and their
counsel, made any monetary contribution toward the preparation
and submission of this brief. Pursuant to Rule 37.3, petitioners
and respondents have consented to the filing of this amici curiae
brief.

2

The AMA and MSDC join this brief on their own
behalves and as representatives of the Litigation
Center of the American Medical Association and the
State Medical Societies. The Litigation Center is a
coalition among the AMA and the medical societies of
each state, plus the District of Columbia, whose
purpose is to represent the viewpoint of organized
medicine in the courts.

This case concerns the scope of HHS’s obligation to
engage in notice-and-comment rulemaking when
adopting rules concerning provider reimbursement in
the Medicare program. See 42 U.S.C. § 1395 et seq. As
petitioner recognizes, the HHS action at issue here has
a substantial financial impact on both hospitals and
the public fisc. See Pet. 23; Pet. App. 4a. Yet HHS took
the challenged action without prior notice to the
medical community and without any opportunity for
public comment. Through its retroactive effect, HHS’s
action created unfairness and disrupted settled
financial expectations of healthcare providers.
Moreover, because neither healthcare providers nor
any other member of the public had an opportunity to
weigh in, the rule was not informed by the practical
insights that stakeholders can provide, or the policy
concerns of all those throughout the nation who are
affected by Medicare spending.

Although the physician members of the AMA and
MSDC are not subject to this particular rule, they are
substantially affected by other HHS rules and
practices concerning Medicare reimbursements of
physicians. When HHS engages in _ notice-and-
comment processes concerning Medicare
reimbursements for physicians, amici are consistent
and active participants, who have _ successfully
prevailed on HHS to modify its regulatory policy. The
AMA and the MSDC thus have a strong interest in

3

ensuring that HHS’s rulemaking regarding Medicare
reimbursement is conducted in a fair, transparent, and
fully informed way. Moreover, the medical
associations can offer real-world knowledge of the
conditions and circumstances of providing healthcare
pursuant to Medicare regulations, and participating in
the Medicare regulatory process, that will be useful to
the Court's analysis.

SUMMARY OF ARGUMENT

Medicare pays for 20 percent of healthcare in the
United States.? Medicare benefits paid in Fiscal Year
2017 amounted to nearly $700 billion, and Medicare
payments to physicians in Calendar Year 2016
exceeded $100 billion. For physicians, Medicare
represents an important source of income: In 2016,
among physicians other than pediatricians, 96 percent
reported that they saw at least some patients who are
covered by Medicare—and 9.6 percent of all physicians
reported that more than half of their patients were
covered by Medicare.* Because of the major role that
Medicare plays in paying for American healthcare,
HHS’s actions concerning Medicare reimbursements

2 See Ctrs. for Medicare & Medicaid Servs., National Health
Expenditures 2017 Highlights 2, https://www.cms.gov/Research-
Statistics-Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpend Data/downloads/highlights.pdf (last visi-
ted Dec. 18, 2018).

3 See Ctrs. for Medicare & Medicaid Servs., Fast Facts, https://
www.cms.gov/fastfacts/ (last updated Aug. 1, 2018).

* See Kurt D. Gillis, Policy Research Perspectives: Physicians’
Patient Mix—A Snapshot from the 2016 Benchmark Survey and
Changes Associated with the ACA 3 & n.4 (2017), https://
www.ama-assn. org/sites/ama-assn. org/files/corp/media-browser/
public/health-policy/PRP-2017-physician-benchmark-survey-
patient-mix.pdf.

4

have an outsized effect on physicians and other
healthcare providers.

As this case illustrates, discrete changes in HHS’s
Medicare reimbursement actions can have enormous
effects on providers. This case concerns the method
HHS used to calculate the “Medicare fraction,” which
is used in determining the “disproportionate share
hospital” payment that hospitals receive for the
additional costs they incur in providing services to low-
income patients. See Br. for Resp’ts 8-9. According to
HHS’s own estimation, how the Medicare fraction is
calculated has a huge financial impact on both
hospitals and the government—implicating between
$3 and $4 billion in Medicare reimbursements over
nine years. Pet. 23; see also Pet. App. 23a (“The
financial impact on the hospitals of this seemingly
minor detail is in the hundreds of millions of dollars.”).

The dispute in this case centers on whether HHS
was required under the Medicare statute—
specifically, 42 U.S.C. § 1395hh(a)(2) or (a)(4)—to use
notice-and-comment rulemaking in setting forth its
method for calculating hospitals’ Medicare fraction.
The court of appeals held that notice-and-comment
rulemaking was required, because (among other
things) HHS’s calculation method is a “rule,
requirement, or other statement of policy” that
changes a “substantive legal standard” governing
“payment for services.” Pet. App. 12a-14a (quoting
§ 1395hh(a)(2)).

HHS takes the position that “the challenged action
here is not ‘a rule, requirement, or other statement of
policy,” Br. for Petr 39 (quoting 42 U.S.C.
§ 1395hh(a)(2)), because it is said not to have any
“future effect,” id. (quoting 5 U.S.C. § 551(4)). “To the
contrary,” HHS asserts, “the agency in theory would
remain free to calculate the fractions in other years

5

(between 2004 and 2013, at least, when no binding
regulation was in effect) based on a different
nonbinding interpretation of the statute, if it chose.”
Id. at 39-40. Were the law otherwise, HHS says, it
“would jeopardize the flexibility” that HHS declares to
be “essential” to its administration of Medicare. Jd. at
42. In HHS’s words, “[t]he notice-and-comment
process can be ‘long and costly and ‘often requires
many years and tens of thousands of person hours to
complete,” and requiring notice-and-comment would
accordingly have a “disruptive effect” on the Medicare
program. /d. (quoting Richard J. Pierce, Jr.,
Distinguishing Legislative Rules from Interpretative
Rules, 52 Admin. L. Rev. 547, 550-51 (2000)).

Amici do not here respond to HHS’s statutory
analysis, which is amply addressed by respondents.
Nor do amici weigh in on the proper method of
calculating the “Medicare fraction,” which does not
apply to reimbursements for physician services and
thus does not directly affect amicis member
physicians.

Instead, amici write to respond to HHS’s general
statements regarding the costs and burdens of notice-
and-comment rulemaking in the Medicare program.
What HHS’s brief does not recognize is that HHS’s
failure to adopt prospective, generally applicable
rules—and its failure to permit the public to weigh in
on how the agency administers Medicare through
notice-and-comment—can impose substantial costs
and burdens on the providers and beneficiaries who
participate in the Medicare program. Amici write to
inform the Court of the real-world implications that
follow when HHS forgoes notice-and-comment
procedures when changing its approach to Medicare
reimbursements.

6

The many physicians and patients who rely on
Medicare are entitled to clear and certain rules so they
will know which services are covered and whether
there are special requirements governing how those
services are to be performed. Generally applicable,
prescriptive regulations accomplish this—but
informal decision-making does not.

Given the immense stakes of Medicare
reimbursement, clarity and consistency are
paramount. As this case well demonstrates, even
“seemingly minor” modifications in reimbursement
determinations give rise to extreme financial
consequences for providers, and ultimately their
patients. And the effect of changes in Medicare
reimbursements does not just change the dollar
amounts to which providers are entitled. After all,
physicians can be held liable—including criminally
liable—under the False Claims Act if they fail to follow
the rules when submitting Medicare claims, so it is
imperative that they be able to ascertain what those
rules are.

Moreover, clarity and transparency in Medicare
rulemaking is equally if not more important to the
general public, including patients. The number of
healthcare dollars available for Medicare is large, but
it is not infinite. The public has a right to know and
we'sh in on how the money is spent. If HHS
determines that treatment for one medical condition
or procedure will be reimbursed, but another will not,
the agency should articulate why. Patients’ health is
at stake—and HHS must be transparent in its
decision-making process.

While HHS may find notice-and-comment
rulemaking burdensome, the notice-and-comment

process is not an “arbitrary hoop|] through which
federal agencies must jump without reason.” Sprint

7

Corp. v. FCC, 315 F.3d 369, 373 (D.C. Cir. 2003).
Instead, “[t]he essential purpose of according ...
notice and comment opportunities is to reintroduce
public participation and fairness to affected parties
after governmental authority has been delegated to
unrepresentative agencies.” Batterton v. Marshall, 648
F.2d 694, 703 (D.C. Cir. 1980). Notice-and-comment
rulemaking facilitates public input into agency
decision-making, as well as greater transparency and
clarity on the part of the agency—and in this way
provides an important check against unbridled
administrative power. Because the administration of
Medicare implicates the health of millions of
Americans, fulsome opportunities for public input are
essential.

ARGUMENT

Il. NOTICE-AND-COMMENT RULEMAKING
PROMOTES FAIRNESS AND PUBLIC
PARTICIPATION IN REGULATORY OVER-
SIGHT.

A. Prospective Rulemaking Through Notice-
And-Comment Promotes Consistency
And Clarity.

The benefits of prospective, notice-and-comment
rulemaking are well recognized. The promulgation of
prospective rules through notice-and-comment
rulemaking “ensures fairness to affected parties” in
two important ways. Sprint Corp., 315 F.3d at 373
(quoting Small Refiner Lead Phase-Down Task Force
v. EPA, 705 F.2d 506, 547 (D.C. Cir. 1983)). First,
prospective rulemaking gives parties advance notice so
they can conform their conduct according to settled
expectations. “Elementary considerations of fairness
dictate that individuals should have an opportunity to
know what the law is and to conform their conduct

8

accordingly.” Landgrajf v. USI Film Prods., 511 U.S.
244, 265 (1994). The notice-and-comment process
promotes such fairness by “informing affected parties
and affording them a reasonable time to adjust to the
new regulation.” Am. Fed’n of Gov't Emps., AFL-CIO
v. Block, 655 F.2d 1153, 1156 (D.C. Cir. 1981).

The comment procedures also promote another
“essential component” of fairness: They give affected
parties “the opportunity to be heard” regarding the
rules they will be subject to. Small Refiner Lead
Phase-Down Task Force, 705 F.2d at 547 (citing Nat’
Ass'n of Home Health Agencies v. Schweiker, 690 F.2d
932, 949 (D.C. Cir. 1982)). To the extent agency action
threatens the rights and interests of a regulated party,
basic fairness dictates that the party “be given a
chance to present their case to the [agency] before [it]
acts.” Schweiker, 690 F.2d at 949 (describing this as
“the fairness element” of the Administrative Procedure
Act’s notice-and-comment procedures).

For these reasons, prospective rulemaking via
notice-and-comment “is generally a ‘better, fairer, and
more effective’ method of implementing a new
industry-wide policy than is the uneven application of
conditions in isolated” adjudications. Cmty. Television
of S. Cal. v. Gottfried, 459 U.S. 498, 511 (1983).
“Making policy through adjudication can lead to
inconsistent outcomes and frustrates expectations
when policy changes retroactively. Making policy
through rulemaking is much more likely to result in

standards that apply prospectively, providing clear
notice of the law’s requirements to all concerned.”

Thomas W. Merrill & Kathryn Tongue Watts, Agency
Rules with the Force of Law: The Original Convention,
116 Harv. L. Rev. 467, 546 (2002); see also Kenneth
Culp Davis, Discretionary Justice 66 (Univ. of Ill. Press
1971) (1969) (due to the “unfair[ness]” of retroactive

9

application, “prospective rules often should be
preferred to retroactive law-making through
adjudication”).
B. Notice-And-Comment Rulemaking Permits
Democratic Participation And Oversight
Of The Agency.

Prospective rulemaking also achieves the important
purpose of giving affected parties and the public the
opportunity to weigh in on important policy debates.
Schweiker, 690 F.2d at 950. Congress enacted the
notice-and-comment procedures in the Administrative
Procedure Act (APA) for precisely that reason: “to give
the public an opportunity to participate in the rule-
making process.” Texaco, Inc. v. Fed. Power Comm'n,
412 F.2d 740, 744 (3d Cir. 1969); Am. Fed’n of Gov't
Emps., 655 F.2d at 1157-58 (noting the
“congressionally-mandated policy of affording public
participation that is embodied in [the APA’s notice-
and-comment procedures]”). Congress believed that,
“due to the unrepresentative nature of an
administrative agency, ‘public participation . . . in the
rulemaking process is essential in order to permit
administrative agencies to inform themselves, and to
afford safeguards to private interests.” Batterton, 648
F.2d at 703 n.47 (quoting S. Doc. No. 248, 79th Cong.,
2d Sess. 19-20 (1946)).

Public participation in rulemaking is essential for
several reasons. First and foremost, “public
participation assures that the agency will have before
it the facts and information relevant to a particular
administrative problem, as well as suggestions for
alternative solutions.” Guardian Fed. Sav. & Loan
Ass'n v. Fed. Sav. & Loan Ins. Corp., 589 F.2d 658, 662
(D.C. Cir. 1978). Specifically, “[njotice and comment
gives interested parties an opportunity to participate
through the submission of data, views and

10

arguments.” Doe v. Rumsfeld, 341 F. Supp. 2d 1, 12-
13 (D.D.C. 2004). This exchange of information
“enables the agency promulgating the rule to educate
itself before establishing rules and procedures which
have a substantial impact on those regulated.” Texaco,
412 F.2d at 744.

Second, and _ relatedly, public rulemaking
“increase[s} the likelihood of administrative
responsiveness to the needs and concerns of those
affected.” Guardian, 589 F.2d at 662. After ail,
regulated entities and stakeholders are particularly
likely to have “valuable information” regarding a
proposed rule. Schweiker, 690 F.2d at 950 (noting that
home health agencies would likely have valuable
information and insight regarding a proposed rule
because they “had been dealing with the various
intermediaries and working with the Medicare system
for years”). By requiring the agency to consider their
viewpoints, public rulemaking ensures that agencies
do not promulgate rules that “substantially affect
private parties and resolve important issues without
the beneficial input that those parties could provide.”
Id. And even if regulated entities and stakeholders
ultimately disagree with the final rule, notice-and-
comment procedures “tend[] to promote acquiescence
in the result.” Guardian, 589 F.2d at 662.

Of course, “[t]he more expansive the regulatory
reach of the[] rule[j, ... the greater the necessity for
public comment.” Am. Fed’n of Gov't Emps., 655 F.2d
at 1156. And public rulemaking is_ especially
important where, as here, “one can expect real interest
from the public in the content of the proposed
regulation.” Levesque v. Block, 723 F.2d 175, 185 (ist
Cir. 1983) (holding that notice-and-comment was
required where “plaintiffs show[ed] interest in the
content of the regulation, [jand] many commentators

11

participated in the final rulemaking when given an
opportunity”). See also, e.g., Nat'l Nutritional Foods
Ass'n v. Kennedy, 572 F.2d 377, 385 (2d Cir. 1978)
(holding that agency was required to use public
rulemaking procedures because the agency’s rule had
extensive regulatory reach and the legislative history
suggested that the public would be interested in the
rule). Given the indisputable importance of the
Medicare program, there can be no doubt that the
public will want a say in how the nation’s healthcare
budget is directed. See Robert Pearl, Healthcare is the
No. 1 Issue for Voters; A New Poll Reveals Which
Healthcare Issue Matters Most, Forbes (Aug. 13, 2018,
7:53 AM), https://www.forbes.com/sites/robertpear!/
20 18/08/13/midterms/# | 2aa2ff73667.

ll. THE USE OF NOTICE-AND-COMMENT
RULEMAKING IMPROVES REGULATORY
OUTCOMES.

These well-recognized benefits of notice-and-
comment rulemaking processes apply with particular
force in the context of Medicare reimbursement
regulations. Prospective rulemaking via notice-and-
comment is critical where, as here, the affected parties
face the risk of civil penalties and even criminal
liability if they fail to comply with an agency’s rules.
Moreover, in light of the signal importance of
healthcare and Medicare coverage to the American
economy, preserving opportunities for public oversight
of the Medicare program is critical.

With its single-minded focus on the burdens of
notice-and-comment rulemaking, HHS all but ignores
the other side—both the costs that are imposed on
Medicare providers and beneficiaries when Medicare
policy is conducted without opportunity for public
comment, and the important benefits that accrue

12

when the public participates in the development of
regulatory policy.

A. When HHS Has Failed To Use Notice-
And-Comment Rulemaking, Unfairness
And Confusion Have Resulted.

To demonstrate the real-world stakes of HHS’s
regulatory practices, amici describe below two
examples where HHS’s failure to engage in notice-and-
comment rulemaking, and its failure to provide clear
and generally applicable rules, have led to
inconsistency and unfairness for providers and
beneficiaries.

1. National Coverage Determinations
Versus Local Contractor Actions.

A. The Medicare Act provides that no Medicare
payment may be made to a physician under Medicare
Part B if items or services are not “reasonable and
necessary for the diagnosis or treatment of illness or
injury or to improve the functioning of a malformed
body member.” 42 U.S.C. § 1395y(a)(1)(A). Thus, in
order to obtain Medicare reimbursement, providers
must make certifications relating to the services they
have provided to patients— including a certification of
medical necessity. See 42 U.S.C. § 1395f(a)(2)-(3)
(Medicare payment “may be made only ... if,” inter
alia, “a physician certifies that such services are
required to be given”). In practical terms, when
submitting Form CMS-1500 for payment under the
Medicare program, a physician must certify via
signature that, among other things, “the services on
this form were medically necessary,” and “I [the

13

provider| have familiarized myself with all applicable
laws, regulations, and program instructions.”®

HHS decides “whether a particular medical service
is ‘reasonable and necessary .. . by promulgating a
generally applicable rule or by allowing individual
adjudication.” Heckler v. Ringer, 466 U.S. 602, 617
(1984). The former course involves a National
Coverage Determination (NCD). Through NCDs, HHS
announces “whether or not a particular item or service
is covered nationally.” 42 U.S.C. § 1395ff(H(1)(B). As
relevant here, NCDs are “nationwide, prospective,
population-based policies that apply to clinical subsets
or classes of Medicare beneficiaries and describe the
clinical circumstances and settings under which
particular services are reasonable and necessary (or
are not reasonable and necessary).” 67 Fed. Reg.
54,534, 54,535 (Aug. 22, 2002). Under the current
statute, HHS is required to use notice-and-comment
procedures to promulgate NCDs—allowing at least 30
days for public comment before a final decision is
made. 42 U.S.C. § 1395y(1)(3); see also 78 Fed. Reg.
48,164 (Aug. 7, 2013). NCDs are binding and have the
force of law. See 42 C.F.R. § 405.1060.°

© The form can be seen at https://www.cms.gov/Medicare/CMS-
Forms/CMS-Forms/Downloads/CMS1500.pdf Ctrs. for Medicare
& Medicaid Servs., OMB-0938-1197, Health Insurance Claim
Form, https:/Awww.cms.gov/Medicare/CMS-Forms/CMS-Forms/
Downloads/CMS1500.pdf (last revised Feb. 1, 2012).

® As respondents explain, at the time that the statute at issue
here, 42 U.S.C. § 1395hh(a)(2), was enacted, NCDs were adopted
without notice-and-comment—and NCDs were explicitly carved
out of that section's notice-and-comment requirement. Br. for
Resp'ts at 39-40. Given the importance of NCDs to provider
reimbursement, however, Congress later adopted a separate
notice-and-comment requirement for NCDs. See 42 U.S.C.

§ 1395y(1)(3).

14

In the absence of an NCD, whether services are
reasonable and necessary is determined by local
Medicare Administrative Contractors—i.e., private
entities with which HHS contracts to administer
Medicare. A contractor may issue a Local Coverage
Determination (LCD), which announces “whether or
not a particular item or service is covered” by that
particular contractor. 42 U.S.C. § 1395ff(f)(2)(B). By
statute, LCDs are subject to a form of notice-and-
comment, in that they must be published on the
contractor's website for a minimum of 45 days before
they become effective. 42 U.S.C. § 1395y(1)(5)(D).
Otherwise, however, LCDs are different from NCDs
because (a) they do not apply at all beyond the
individual contractor that has adopted them, and
(b) they are not binding on the agency. See 68 Fed. Reg.
63,692, 63,693 (Nov. 7, 2003) (administrative law
judge reviewing a contractors claim denial “may
consider, but [is] not bound by” the LCD in
determining whether care is reasonable and
necessary). If no NCD or LCD applies, contractors may
also “make individual claim determinations, even in
the absence of [a national or local coverage
determination], ... [Bjased on the individual’s
particular factual situation.” /d.

B. In practice, LCDs are neither generally
applicable regulations nor individual adjudications.
Instead, they operate as uniform coverage decisions by
the private insurers that serve as Medicare
contractors. I,CDs outline whether a particular private
insurer will consent to allow Medicare reimbursement
for treatments based on a collection of symptoms and
indications taken out of the context of the individual
patient's needs.

The reliance on these informal, regional, privately
determined policies gives rise to adverse effects for

15

both physicians and patients. For one thing, it creates
patchwork and inconsistent coverage that varies from
region to region for Medicare beneficiaries. As the
HHS Inspector General wrote, the use of LCDs means
that Medicare “beneficiaries’ access to items and
services can depend on geography as much as their
clinical indications.” Office of the Inspector Gen., Dep’t
of Health & Human Servs., OEI-01-11-00500, Local
Coverage Determinations Create Inconsistency in
Medicare Coverage 9 (2014), https://oig.hhs.gov/oei/
reports/oei-01-11-00500.pdf. “[Bjeneficiaries in some
States did not have access to items and services that
had significant use among beneficiaries in other
States,” and “the likelihood that beneficiaries’ items
and services had coverage restrictions placed on them
by LCDs varied widely by State.” /d. at 9, 11.
Moreover, these problems of inconsistency were not
isolated to a handful of discrete procedures: to the
contrary, “lojut of the 540 clinical topics addressed by
LCDs, none were addressed by an LCD in every
State—meaning that every clinical topic was
addressed in some States but not others.” Id. at 11
(emphasis added).

By way of example, in 2008, Medicare patients with
prostate cancer were eligible for a surgical treatment
called CyberKnife if they lived in one of 33 states, but
not if they lived in the other 17. See, e.g., Stephanie
Saul, Geography Has Role in Medicare Cancer
Coverage, N.Y. Times (Dec. 16, 2008), https://www.
nytimes.com/2008/12/17/health/policy/17knife.htm!.
Thus, “Medicare will pay for a man’s CyberKnife
treatments in New Hampshire, but not across the
border in Vermont”; “[y]ou can live on one side of the
street and get a procedure, but on the other side of the
street you can’t.” Jd. CyberKnife is in this way

16

“emblematic of the inconsistent way that the federal
Medicare budget . . . is spent, region to region.” /d.

Another adverse effect of reliance on LCDs is that—
even though LCDs are deemed by HHS to be non-
binding—physicians face grave risks by departing
from LCDs. Recently, the government and/or qui tam
relators have brought False Claims Act challenges
against physicians arguing that billing Medicare for a
service that is not medically necessary amounts to a
fraudulent claim, and therefore subjects the physician
to civil and/or criminal liability under the act. See
United States v. Paulus, 894 F.3d 267 (6th Cir. 2018);
United States v. Persaud, 866 F.3d 371 (6th Cir. 2017);
U.S. ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730,
743 (10th Cir. 2018). Some courts have treated LCDs
as legally binding for purposes of liability under the
False Claims Act: where a physician’s treatment
deviated from the LCD, the physician was found to
have fraudulently billed Medicare. U.S. ex rel. Ryan v.
Lederman, No. 04-2483, 2014 WL 1910096, at *4
(E.D.N.Y. May 13, 2014); U.S. ex rel. Youn v. Sklar,
273 F. Supp. 3d 889, 896 (N.D. IL. 2017).

The case United States ex rel. Ryan v. Lederman is
illustrative. The defendant, Dr. Lederman, performed
radiation treatment and stereotactic radiosurgery to
treat cancer. 2014 WL 1910096, at *1. The local
contractor for his jurisdiction issued two LCDs (then
called LMRPs) that defined “stereotactic radiosurgery”
and listed eight conditions that would trigger
coverage. Id. at *2. One of the LCDs noted that
“treatment of below the neck of diseases such as lung
carcinoma with stereotactic radiosurgery [was]
considered investigational at [that] time.” Jd. The
government alleged that Dr. Lederman had submitted
claims for reimbursement for below-the-neck
stereotactic radiosurgery claims—and argued that

17

because the local contractor's LCDs excluded below-
the-neck stereotactic radiosurgery from coverage, Dr.
Lederman’s claims for reimbursement for such
procedures were false as a matter of law.

In his defense, Dr. Lederman argued that HHS’s
own regulations establish that LCDs are not
controlling and provide only “guidance” on procedure
coverage. Id. at *4. The court rejected Dr. Lederman’s
argument, stating: “I do not believe . . . that LCDs are
advisory or not authoritative. ... (Put another way,
‘guidance’ can be mandatory.)” /d. In a confusing twist,
the government offered another HHS guidance
document that described the general role of LCDs in
support of its view that LCDs are binding for
reimbursement determinations. /d. at *4-5. (citing
Medicare Program, Procedures for Making National
Coverage Determinations, 64 Fed. Reg. 22,619, 22,621
(Apr. 27, 1999)). Accepting the government’s
argument, the court concluded that “[t]he passage
[cited by the government] makes clear that LCDs are
mandatory for areas they cover.” /d. at *5.

C. This example underscores the need for clarity in
the form of generally applicable notice-and-comment
rulemaking where the government makes
consequential policy determinations governing
physicians. The issuance of an NCD provides
unambiguous, consistent authority on which
physicians and patients can _ rely. Moreover,
proceeding through centralized notice-and-comment
rulemaking facilitates the participation of groups that
have useful insights to offer. Notice-and-comment
rulemaking on national coverage for CyberKnife, for
example, would allow the AMA, the American
Urological Association, the Mayo Clinic, the private
insurance industry, and the general public to weigh in

18

on whether this is an appropriate use of Medicare
funds.

Without such authoritative regulatory action,
physicians struggle to know when they are providing
treatment in compliance with Medicare policies versus
when they could be subject to a criminal charge. And
coverage determinations lose the benefit of
commentary from interested parties who can offer
evidence of clinical effectiveness. See Office of the
Inspector Gen., Dep’t of Health & Human Servs., Local
Coverage Determinations, supra, at 13 (“the State-by-
State differences in coverage created by LCDs are
contrary to the growing practice of evidence-based
medicine”). This creates an unfair system for
physicians and regulatory scheme that lacks public
input.

2. The Two-Midnight Rule.

A. The definition of “inpatient” services offers
another example where’ generally applicable
rulemaking through notice-and-comment would
provide much-needed clarity for providers and
patients. The Medicare Act provides for payment of the
costs of “inpatient” hospital stays under Medicare Part
A. See 42 U.S.C. §§ 1395d, 1395ww. By contrast,
outpatient treatment is covered under Medicare Part
B. See 42 U.S.C. § 1395k. The difference is financially
significant for patients. Among other things, if care is
billed under Part A, Medicare pays the total qualifying
cost after a patient deductible. For care under Part B,
Medicare generally pays 80 percent of costs and the
patient is responsible for the remaining 20 percent. 42
U.S.C. §§ 1395e, 13951.

However, what qualifies as “inpatient” versus
outpatient care is ambiguous. The term “inpatient” is
not defined in the statute. Nor, for many years, was

19

“inpatient” defined by regulation; instead, HHS issued
a variety of guidance documents purporting to clarify
which patients qualify to be billed under Part A for
inpatient hospital services as opposed to Part B for
outpatient service. In 2013, HHS at last promulgated
via notice-and-comment a rule addressing “inpatient”
care: a patient’s hospital stay is to be reimbursed as
“inpatient” care under Part A if the patient is “formally
admitted as an inpatient pursuant to an order for
inpatient admission by a physician or other qualified
practitioner” 42 C.F_R. § 412.3(a). The regulation goes
on to explain the circumstances in which a physician
should admit a patient for inpatient care: “an inpatient
admission is generally appropriate for payment under
Medicare Part A when the admitting physician expects
the patient to require hospital care that crosses two
midnights.” Id. § 412.3(d)(1). This has come to be
known as the “two-midnight rule.”

B. Unfortunately, the two-midnight rule created a
host of questions and confusion. Many hospital stays
that extend beyond two midnights are not reimbursed
as “inpatient” admissions. The HHS Inspector General
determined that in Fiscal Year 2014, nearly 750,000
hospital stays for Medicare beneficiaries that extended
beyond two midnights were billed as outpatient stays.
See Office of the Inspector Gen., Dep’t of Health &
Human Servs., OEI-02-15-00020, Vulnerabilities
Remain Under Medicare’s 2-Midnight Hospital Policy
12 (2016), https://oig.hhs.gov/oei/reports/oei-02-15-
00. 20.pdf. As the Inspector General explained, this
appeared to be the result of confusion generated by the
two-midnight rule and HHS’s other policies:

A large number of long outpatient stays is
somewhat unexpected because these stays likely
met the 2-midnight policy’s expected-length-of-
stay requirement for inpatient admission, and

20

providers have a financial incentive to admit
beneficiaries as inpatients when possible. That
providers did not admit these beneficiaries may
indicate that other factors caused them to
continue to bill for a large number of long
outpatient stays. These factors may include an
inability to safely discharge beneficiaries, delays
in care, or confusion about the 2-midnight policy.

Id.

As the Inspector General also explained, the high
number of long outpatient stays is troubling because it
imposes significant financial burdens on patients.
Beneficiaries in more than 350,000 outpatient stays
incurred costs in excess of the inpatient deductible —
i.e., the most they would have paid if they had been
deemed inpatients—because care billed under
Medicare Part B is billed at “20 percent of Medicare's
rate for each service, and there is no cap on the total
amount [these beneficiaries] can be responsible for
paying.” Jd. at 13. Beneficiaries in outpatient stays
also incurred charges for self-administered drugs that
would be covered for an inpatient stay. Jd. And many
beneficiaries in outpatient stays “fac[ed] substantial
charges after they le/ft] the hospital,” because
Medicare pays for a skilled nursing facility (such as a
rehabilitation facility) “only if a beneficiary had a
hospital stay that included at least 3 nights as an
inpatient.” /d.

In short, the lack of regulatory clarity surrounding
the two-midnight rule has given rise to “one of the
brutal truths of Medicare policy: Patients can be
hospitalized for days, can undergo exams and tests,
can receive drugs—without ever officially being
admitted to the hospital,” which means they “can face
higher payments for drugs and coinsurance, but the
big-ticket item is nursing home care.” Paula Span,

21

Under ‘Observation,’ Some Hospital Patients Face Big
Bills, N.Y. Times (Sept. 1, 2017), https://www.nytimes.
com/2017/09/01/health/medicare-observation-
hospitals. html; see also Elliot Raphaelson, Inpatient
vs. Observation Status: The Difference Can Be Costly,
Chi. Trib. (Nov. 21, 2018, 4:20 PM), https://www.
chicagotribune.com/business/sns-201811211100--tms-
-savingsgctnzy-a20181121-20181121-story. htm!

(“Unfortunately, Medicare policies and hospital
policies in this area are ambiguous. ... The current
practices don’t protect patients at all.”); Barrows v.
Burwell, 777 F.3d 106 (2d Cir. 2015) (putative class
action on behalf of Medicare beneficiaries, challenging
Medicare reimbursement practices for hospital stays).
Patients face financial risks that are outside their
control. And physicians face risks as well, for if they
“incorrectly” bill for inpatient services, they can be
subject to False Claims Act liability.

C. Despite the well-recognized problems with the
two-midnight rule, HHS has not engaged in any
further notice-and-comment regulation on the topic of
“inpatient” status since the adoption of its 2013 rule.
Although the agency allowed for public comment then,
it has not engaged in a fulsome notice-and-comment
process since that time to allow stakeholders an
opportunity to identify and propose solutions for the
unintended consequences and remaining problems
following the agencys regulation. Instead of
addressing inpatient admissions through notice-and-
comment rulemaking, HHS has limited its response to
informal guidance documents and FAQ answers.’

’ See 83 Fed. Reg. 41,144, 41,506-10 (Aug. 17, 2018); Ctrs. for
Medicare & Medicaid Servs. MM10080, Clarifying Medical
Review of Hospital Claims for Part A Payment (May 16, 2017),
https:/Awww.cms.gov/Outreach-and-Education/Medicare-Learning-
Network-MLN/MLNMattersArticles/downloads/MM 10080. pdf.

22

Moreover, other HHS policies—including increasing
scrutiny of inpatient admissions through audits, as
well as penalties for readmissions, which apply only to
patients who were originally admitted as inpatients—
have favored cost savings over objective patient care,
and thereby exacerbated this problem. See Zhanlian
Feng et al., Sharp Rise in Medicare Enrollees Being
Held in Hospitals for Observation Raises Concerns
about Causes and Consequences, 31 Health Aff. 1251,
1256-57 (2012). In light of HHS’s failure to provide a
clear resolution of the issue through notice-and-
comment rulemaking, the AMA has pledged to “work
with third party payers to establish a uniform
definition of ‘observation care,” based on patient-
focused factors. See Council on Med. Serv., Am. Med.
Ass'n, Defining “Observation Care” H-160.944 (2014),
https://policysearch.ama-assn.org/policyfinder/detail/
Defining%20Observation%20Care%20H- 160.944?uri=
%2FAMADoc%2FHOD.xml-0-758.xml! (last visited
Dec. 18, 2018).

In order to avoid further financial burdens for
beneficiaries and risk for providers, a clear rule—
adopted with notice and opportunity for public
comment from both beneficiaries and providers—is
called for. To be sure, notice-and-comment was
undertaken prior to the 2013 rule, but that rule did not
resolve the issue of inpatient admissions. Further
opportunity for comment by stakeholders and the
public—informed by the experiences of providers and
beneficiaries in recent years—would make for stronger

80 Fed. Reg. 70,298, 70,305 (Nov. 13, 2015); Ctrs. for Medicare &
Medicaid Servs., Frequently Asked Questions: 2 Midnight
Inpatient Admission Guidance & Patient Status Reviews for
Admissions on or After October 1, 2013, https://www.cms.gov/
Research-Statistics- Data-and-Systems/Monitoring-Programs/

Medical-Review/Downloads/QAsforW ebsitePosting_110413-v2-

CLEAN _pdf (last visited Dec. 18, 2018).

23

regulatory policy. By engaging the public, HHS could
benefit from the input of physicians and hospitals as
to the pitfalls of the two-midnight rule and HHS’s
subsequent guidance, and obtain practical suggestions
for a better course. Moreover, Medicare beneficiaries
could bring their experiences to bear, so that the
agency would have a better-informed approach going
forward.

B. By Contrast, HHS’s Use Of Notice-And-

Comment Rulemaking Has Improved
The Quality And Administrability Of

Regulations.

On the other hand, where HHS has used formal,
notice-and-comment rulemaking, public participation
has led to better outcomes. Indeed, it can be no
surprise that more information leads to better
rulemaking. See Sprint, 315 F.3d at 373 (“[T]he notice
requirement improves the quality of agency
rulemaking by exposing regulations to diverse public
comment.”) (quoting Small Refiner, 705 F.2d at 547).

This is well exemplified by the important role the
AMA plays in shaping Medicare reimbursement rules
each year. Each summer, HHS publishes a proposed
rule regarding the Medicare fee schedule for the
following calendar year. See, e.g., Medicare Program;
Revisions to Payment Policies under the Physician Fee
Schedule, 83 Fed. Reg. 35,704 (July 27, 2018). Among
other things, the proposed rule revises payment
policies and amounts for all physicians’ services paid
under the Medicare Physician Fee Schedule (PFS). /d.
at 35,704-05. The goal of the proposed rule is to
“ensure that ... payment systems are updated to
reflect changes in medical practice and the relative
value of services.” Jd. at 35,705.

24

After publication, the AMA analyzes the proposed
rule and solicits feedback from specialty and regional
medical societies throughout the nation. See, e.g.,
Andis Robeznieks, Less Documentation, E/M Pay
Changes Proposed in 2019 Fee Schedule, Am. Med.
Ass’n (Aug. 2, 2018), https://www.ama-assn.org/
practice-management/medicare/less-documentation-
em-pay-changes-proposed-2019-fee-schedule. Based
on that feedback, the AMA submits a substantial set
of comments, designed to identify unintended
consequences, explain where pricing is inconsistent
with physician experience, and also to laud positive
policy changes. See, e.g., Letter from James L. Madara,
Am. Med. Ass’n, to Hon. Seema Verma, Administrator,
Ctrs. for Medicare & Medicaid Servs. (Sept. 10, 2018),
https://searchlf.ama-assn.org/undefined/document
Download?uri=%2F unstructured%2F binary%2F letter
%2FLETTERS%2F2018-9-10-2019-PFS-QPP-
Comment-Letter-FINAL-2.pdf.

When drafting the final rule, HHS considers and
incorporates the AMA’s comments. See, e.g.,
Summary: 2019 Medicare Physician Fee Schedule and
Quality Payment Program Final Rule 2—3, Am. Med.
Ass’n (2018), https://)www.ama-assn.org/system/files/
2018-1 1/pfs-qpp-final-rule-sum11-8.pdf (noting that
CMS did not adopt certain aspects of the proposed rule
that the AMA opposed). Sometimes, HHS even delays
implementation of a proposed policy to give the AMA
the opportunity to experiment or conduct further
research and share its findings with the HHS. See, e.z.,
Medicare Program; Revisions to Payment Policies
under the Physician Fee Schedule, 83 Fed. Reg. 59,452,
59,638 (Nov. 23, 2018) (noting that a two-year delay in
implementation for certain coding and payment
related-changes would “provide the opportunity for

25

{CMS] to respond to the work done by the AMA” in that
area).

This process permits efficient and centralized dialog
between HHS, major stakeholders, and the public—
and is accomplished within a matter of months. See Br.
in Opp’n 35-36 & Addendum. Through this back and
forth between the agency, the AMA, and in turn the
regional and specialty groups, the final rules are better
informed and more effective. Moreover, the public has
a fulsome opportunity to weigh in on how Medicare’s
large and growing budget is directed. More rather than
less formal rulemaking for Medicare is warranted.

26
CONCLUSION

Amici share respondents’ concern with HHS’s
attempt to skip notice-and-comment rulemaking
“when altering a substantive legal standard that
reduces payments to nospitals—to the tune of billions
of dollars.” Br. for Resp’ts 2-3. In weighing HHS’s
stated concerns with inflexibility in its regulatory
practices, the Court should also bear in mind the
important benefits of generally applicable rules
adopted through the notice-and-comment process.

Respectfully submitted,

TACY F. FLINT*
JACK R. BIERIG
MARLOW SVATEK
SIDLEY AUSTIN LLP
One South Dearborn Street
Chicago, IL 60603
(312) 853-7000
tflint@sidley.com
Counsel for Amici Curiae
December 20, 2018 *Counsel of Record

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0826%3A11. Public record. Not legal advice.