United States District Court, District of Columbia
ROSEMARY M. COLLYER, UNITED STATES DISTRICT JUDGE
Court has held that the Centers for Medicare & Medicaid
Services (CMS) exceeded its statutory authority when it
selectively reduced by Final Rule reimbursement rates for
2019 under the Outpatient Prospective Payment System (OPPS)
to off-campus provider-based departments for certain
outpatient department (OPD) services. See Am. Hosp.
Ass'n v. Azar, No. 18-2841, 2019 WL 4451984, at *1
(D.D.C. Sept. 17, 2019) (AHA I); 83 Fed. Reg. 58,
818 (Nov. 21, 2018) (2019 Final Rule). Specifically, the
Court determined that the addition of a non-budget-neutral
rate reduction for Evaluation and Management (E&M)
services at such facilities-separate from the normal OPPS
reimbursement schedule-conflicted with the overall statute.
AHA I, 2019 WL 4451984, at *8-12. Accordingly, the
Court vacated the relevant portions of the 2019 Final Rule,
left intact the rest of the OPPS reimbursement schedule for
2019, and remanded the matter back to the agency for
proceedings consistent with its decision. Id. at
*12; Order [Dkt. 32].
short period thereafter, the Court left open whether this
should be the final remedy. Indeed, CMS asked the Court to
modify its order and remand the matter to the agency without
vacatur so that the agency could develop a remedy in the
first instance. Alternatively, CMS asked the Court to stay
its order pending the agency's decision to appeal. After
careful consideration of the parties' briefs, however,
the Court determined that vacatur was appropriate and that a
stay was not. See Am. Hosp. Ass'n v. Azar, No.
18-2841, 2019 WL 5328814 (D.D.C. Oct. 21, 2019) (AHA
II). The Court entered final judgment on October 21,
2019, and the government had until December 20, 2019, to
appeal. See Fed. R. App. P. 4(a).
the Court's decisions, on November 12, 2019, CMS
finalized new OPPS reimbursement rates for 2020 which again
reduced payments to off-campus provider-based departments for
the same OPD services on the same ultra vires basis.
84 Fed. Reg. 61, 142 (Nov. 12, 2019) (2020 Final Rule);
see also 84 Fed. Reg. 39, 398 (Aug. 9, 2019) (2020
Proposed Rule). Whereas the 2019 Final Rule explained at
length the reasoning and mechanism by which CMS planned to
cut reimbursement rates, see 2019 Final Rule at 59,
004-15, the 2020 Final Rule was short, largely referring to
the 2019 Final Rule for justification. See 2020
Final Rule at 61, 365-69. Indeed, the 2020 Final Rule stated
that it was a continuation of the “policy adopted in
2019” and that the rate cuts implemented “the
second year of the 2-year phase-in” started by the 2019
Final Rule. Id. at 61, 365. Given the
timing, the 2020 Final Rule acknowledged the Court's
decisions in its response to comments but nevertheless
persisted, stating merely that the government continued to
believe in the merits of its legal position and that
“the government has appeal rights, and is still
evaluating the rulings and considering . . . whether to
appeal.” Id. at 61, 368.
now move to enforce the Court's September 17, 2019 Order
against the 2020 Final Rule and strike it down before it is
implemented. The government argues the Court lacks
jurisdiction. The matter is ripe for review.
review of Medicare claims is tightly restricted by the
statute. “First, 42 U.S.C. § 405(h) divests the
district courts of federal-question jurisdiction ‘on
any claim arising under' Title II of the Social Security
Act, and it bars any ‘decision of the Commissioner of
Social Security' from being judicially reviewed,
‘except as herein provided' in other Title II
provisions.” Am. Hosp. Ass'n v. Azar, 895
F.3d 822, 825 (D.C. Cir. 2018). Second, 42 U.S.C. §
405(g) provides an exception to this divestment of
jurisdiction by permitting “any person to file a civil
action, ‘after any final decision of the Commissioner
of Social Security made after a hearing to which he was a
party,' to ‘obtain a review of such decision'
in federal district court.” Id. Third, 42
U.S.C. § 1395ii incorporates these channeling provisions
against claims brought under Title XVIII of the Social
Security Act, i.e., against Medicare claims.
Id.; see also Shalala v. Ill. Council on Long
Term Care, Inc., 529 U.S. 1, 7-9 (2000).
interpreted by the Supreme Court, a plaintiff must thus
satisfy two requirements before seeking judicial review under
§ 405(g). First, a plaintiff must “present”
their claim to the Secretary for a decision in the first
instance. Am. Hosp. Ass'n, 895 F.3d at 825.
“[T]his requirement is not waivable, because without
presentment ‘there can be no ‘decision' of
any type,' which § 405(g) clearly requires.”
Id. (quoting Mathews v. Eldridge, 424 U.S.
319, 328 (1976)). Second, a plaintiff must exhaust all
available administrative remedies. Id. at 826.
Although this requirement is more demanding, it is also
AHA I, Plaintiffs properly presented their claims
challenging the 2019 Final Rule to the Secretary, who
rejected them. AHA I, 2019 WL 4451984, at *7.
Plaintiffs did not exhaust their administrative remedies, but
that requirement was waived by the Court. Id. at *8.
This time, the government argues that Plaintiffs have not yet
presented a claim challenging the 2020 Final Rule to the
Secretary and that the Court lacks jurisdiction absent
satisfaction of this nonwaivable requirement. Plaintiffs
concede that they have not separately presented a claim
challenging the 2020 Final Rule but argue that the 2020 Final
Rule is merely a continuation of the 2019 Final Rule, such
that a properly presented challenge to the latter is a
challenge to the former. Disposition of this motion thus
turns on the relationship between the 2019 Final Rule and the
2020 Final Rule. If CMS' decisions made in the 2019 Final
Rule lay necessary groundwork for the establishment of
reimbursement rates in 2020, without which the 2020 Final
Rule cannot function, then a challenge to the 2019 Final Rule
may impact those rates. But if the 2020 Final Rule
independently set reimbursement rates for 2020, then
Plaintiffs must challenge the 2020 Final Rule in addition to
the 2019 Final Rule.
the 2020 Final Rule repeatedly refers to and relies on the
reasoning of the 2019 Final Rule, the statutory scheme under
which the 2020 Final Rule was promulgated makes clear that it
alone, and not the 2019 Final Rule, sets reimbursement rates
for 2020. As described in AHA I, the reimbursement
rate for a given service is the product of its adjusted
relative payment weight and the OPPS conversion factor for
that year, both of which must be set by CMS. AHA I,
2019 WL 4451984, at *1; 42 U.S.C. §
1395l(t)(3)(D). The 2020 Final Rule states that
section 1833(t)(9)(A) of the Act requires the Secretary to
review certain components of the OPPS not less often than
annually, and to revise the groups, the relative
payments, weights, and the wage and other adjustments that
take into account changes in medical practices, change in
technologies, and the addition of new services, new cost
data, and other relevant information and factors.
2020 Final Rule at 61, 144 (emphasis added); see
also 42 U.S.C. § 1395l(t)(9)(A) (same).
The 2020 Final Rule also states that
Section 1833(t)(3)(C)(ii) of the Act requires the Secretary
to update the conversion factor used to determine the payment
rates under the OPPS on an annual basis by applying
the OPD fee schedule increase factor.
2020 Final Rule at 61, 182 (emphasis added); see
also 42 U.S.C. § 1395l(t)(3)(C)(ii). In
line with these directives, each year CMS reviews the OPPS
system groups, relative payments weights, and adjustments;
explains its thinking in a final rule for that year; and
publishes addenda together with the final rule which include
updated relative payment weights and OPPS payment rates for
that year. See 2020 Final Rule at 61, 154; see
generally CMS, Addendum A and Addendum B Updates,
https://tinyurl.com/qvgwd8o (last accessed Dec. 9, 2019). In
short, regardless of the reimbursement rates CMS may have set