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Akron General Medical Center v. Azar

United States District Court, District of Columbia

September 30, 2019

AKRON GENERAL MEDICAL CENTER, Plaintiff,
v.
ALEX M. AZAR, in his official capacity as Secretary of Health and Human Services, Defendant.

          MEMORANDUM OPINION

          JOHN D. BATES UNITED STATES DISTRICT JUDGE

         Akron General Medical Center (“Akron General”) is an acute care provider in Akron, Ohio, that challenges the decision of the Provider Reimbursement Review Board (“PRRB” or “Board”) with respect to Medicare reimbursement claims. See Pl.’s Renewed Mot. for Summ. J. (“Pl.’s Mot.”) [ECF No. 42]. Akron General and the Secretary of Health and Human Services (the “Secretary”) each move for summary judgment, arguing that the Board’s decision should be reversed and affirmed, respectively. See id.; Def.’s Cross-Mot. for Summ. J. & Opp’n to Pl.’s Mot. (“Def.’s Mot.”) [ECF No. 43]. For the reasons that follow, Akron General’s motion for summary judgment is denied, and the Secretary’s cross-motion is granted.

         BACKGROUND

         At the end of each fiscal year, healthcare providers seeking Medicare reimbursement file cost reports with entities called fiscal intermediaries, which analyze and audit these cost reports. Healthcare providers may also qualify for a Medicare Disproportionate Share (“DSH”) adjustment, which is an additional reimbursement to account for the costs of serving a disproportionate share of low-income patients. See 42 C.F.R. § 412.106. The calculation of the DSH adjustment is based, in part, on the provider’s “disproportionate patient percentage, ” defined as the sum of two fractions: the “SSI fraction, ” which accounts for the number of patients also eligible for supplemental security income benefits, and the “Medicaid fraction, ” which accounts for the number of patients also eligible for Medicaid. See 42 U.S.C. § 1395ww(d)(5)(F)(vi). Fiscal intermediaries determine the final reimbursement amount owed to the provider, including any DSH adjustment, and report this information to the provider in a Notice of Program Reimbursement (“NPR”). A provider may appeal the determination in the NPR to the Board “whenever there is a final fiscal-intermediary determination, a certain amount-in-controversy is met, and the provider appeals in a set timeframe.” Empire Health Found. v. Burwell, 209 F.Supp.3d 261, 268 (D.D.C. 2016) (citing 42 C.F.R. §§ 405.1835(a), 405.1840(b)).

         Akron General received an NPR from its fiscal intermediary for fiscal year 2001 in December 2004 and filed an appeal with the Board early in 2005 identifying four issues with the NPR. May 14, 2015, PRRB Decision Letter (“5/14/15 Decision”) [ECF No. 49-1] at 1 (J.A. 3). The two disputes relevant here[1] are: (1) a dispute with regard to the calculation of Medicaid eligible patient days used in calculating the Medicaid fraction (“Medicaid Eligible Patient Days issue”); and (2) a dispute with regard to the calculation of the SSI fraction (“SSI fraction issue”). Id.; Def.’s Mot. at 8.

         Akron General’s appeal was held in abeyance for several years. During this period, new Board regulations set a time limit for adding issues to appeals. 42 C.F.R. § 405.1835(c)(3); 2008 PRRB Rules, pt. I, r. 11.1; id., Model Form C; see also PRRB Alert 3: Added Issue Deadlines (Oct. 3, 2008). For new cases going forward, providers were required to add issues within 60 days of the deadline for filing an appeal. 42 C.F.R. § 405.1835(e)(3); see also id. § 405.1835(a)(3). For appeals-like Akron General’s-that were already pending before the Board when the regulation went into effect, providers had until October 20, 2008, to add any new issues. PRRB Alert 3: Added Issue Deadlines (Oct. 3, 2008). Akron General did not add any new issues before this deadline.

         In January 2014, the Board sent Akron General and its fiscal intermediary a Notice of Hearing, which set a May 2014 due date for Akron General’s final position paper. 5/14/15 Decision at 4 n.8 (J.A. 6). The Notice of Hearing warned Akron General that “[o]nly issues addressed in final position papers will be decided at the hearing.” Id.; Final Notice of Hr’g [ECF No. 49-1] at 1 (J.A. 694).

         Akron General submitted a timely final position paper, but the fiscal intermediary argued that the provider had omitted the Medicaid Eligible Patient Days issue and had substituted it with entirely different claims. 5/14/15 Decision at 1–2 (J.A. 2–3). The fiscal intermediary argued that the omitted Medicaid Eligible Patient Days issue therefore had been abandoned and that Akron General had “not properly appealed [the] additional issues, as they were not part of the appeal request . . . nor were they included in [Akron General’s] preliminary position paper.” 5/27/14 MAC’s Jurisdictional Challenge [ECF No. 49-1] at 2 (J.A. 222). The fiscal intermediary requested that the Board “not claim jurisdiction for” the newly argued additional issues because they “were not properly appealed, added, or briefed and should not be considered as properly appealed before the Board.” Id. at 3 (J.A. 223). Akron General countered that it had “appealed a very broad DSH/Medicaid Eligible Days issue seeking to include all eligible days, ” including the alleged sub-issues described in the final position paper. Provider Akron General’s Resp. to MAC’s Jurisdictional Challenge [ECF No. 49-1] at 13–14 (J.A. 69–70).

         In a May 2015 decision, the Board concluded that the fiscal intermediary was correct; the Board found that Akron General had “failed to brief” the Medicaid Eligible Patient Days issue and had not properly and timely added the “additional sub-issues” (hereinafter “DSH sub-issues”) and hence both issues were dismissed from the appeal. 5/14/15 Decision at 7–8 (J.A. 7–8). As for the SSI fraction issue, the Board determined in its May 2015 decision that the issue was properly briefed but that it was subject to CMS Ruling 1498-R-a CMS ruling that sought to correct a systematic SSI percentage error identified in a 2008 Medicare reimbursement district court case.[2]The Board’s May 14, 2015, decision remanded the SSI fraction issue “under separate cover” to the fiscal intermediary to be recalculated pursuant to CMS Ruling 1498-R. 5/14/15 Decision at 5 (J.A. 7).

         The Board’s May 2015 decision was nonfinal because it did not resolve all of the issues Akron General raised in its original appeal. The May 2015 decision noted this fact and explained that judicial review would be available only “upon final disposition of the case.” Id. at 6 (J.A. 8); Pl.’s Mot. at 6–7 (characterizing first decision as nonfinal and second decision as final); Def.’s Mot. at 14–15 (same). A few months later, a final issue was resolved, and the Board issued a final letter noting that Akron General’s appeal had been closed and that “[r]eview of the jurisdictional determination”-i.e., the dismissal of the Medicaid Eligible Patient Days issue and DSH sub-issues-was then “available under the provisions of 42 U.S.C. § 1395oo(f) and 42 C.F.R. §[]405.1875.” Oct. 15, 2015, PRRB Withdrawal Letter (“10/15/15 Letter”) [ECF No. 49-1] at 1 (J.A. 1). Akron General then filed the complaint in this case.

         Akron General seeks judicial review of the Board’s decisions on the Medicaid Eligible Patient Days issue and DSH sub-issues, as well as on its decision to remand the SSI issue pursuant to CMS Ruling 1498-R. See Am. Compl. [ECF No. 12]. Each side moves for summary judgment in its favor.[3] The parties also have submitted position papers on whether the Supreme Court’s decision in Azar v. Allina Health Services, 139 S.Ct. 1804 (2019), would affect the determination of this case.[4] The Court has considered the parties’ positions on these issues, and this case is now ripe for resolution.

         LEGAL STANDARD

         The Medicare statute serves as an exclusive source of federal court jurisdiction over Medicare provider reimbursement disputes. Jordan Hosp. v. Leavitt, 571 F.Supp.2d 108, 118 (D.D.C. 2008) (citing 42 U.S.C. §§ 405(h), 1395ii, 1395oo(f)). Under the Medicare statute, a healthcare provider has “the right to obtain judicial review of any final decision of the Board” or “of any action of the fiscal intermediary which involves a question of law or regulations relevant to the matters in controversy whenever the Board determines . . . that it is without authority to decide the question.” 42 U.S.C. § 1395oo(f)(1).

         The Medicare statute directs that the Administrative Procedure Act (“APA”) applies to judicial review of Board decisions. 42 U.S.C. § 1395oo(f)(1). Agency action is unlawful under the APA if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, ” “in excess of statutory . . . authority, ...


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