Opinion
Case No. 3:95-CV-0851-R.
March 12, 1997
MEMORANDUM OPINION AND ORDER
Introduction
Before the Court are Plaintiffs' Motion for Entry of Amended Order and Judgment, filed October 28, 1996, Defendant's Opposition to the Motion, Plaintiffs' Reply, and Plaintiffs' updated Proposed Order after the Health Care Financing Administration ("HCFA") Administrator declined to review the jurisdictional decision of the Provider Reimbursement Review Board ("PRRB") with respect to 45 of the cost reporting years at issue in this case. Plaintiffs argue that, having already declared the Defendant's interpretation of 42 U.S.C. § 1395ww(d)(5)(F)(vi) invalid in an Order filed October 10, 1996, the Court should now order Defendant to include four categories of days spent in the hospital by patients certified by the state Medicaid agency as Medicaid-eligible individuals in its calculation of the Medicaid proxy. For the following reasons, Plaintiffs' Motion is DENIED and the matter is REMANDED to the Secretary for further proceedings consistent with the October 10 Order and with this Order.
Background
This case involves the interpretation by the Secretary of Health and Human Services (the "Secretary") of a provision of the Medicare statute, 42 U.S.C. § 1395(d)(5)(F)(vi). That provision requires the Secretary to adjust upward Medicare prospective payment system ("PPS") reimbursement for hospitals that provide inpatient services to a disproportionate share ("DSH") of low income patients. Under that provision, a hospital's qualification for, and amount of, Medicare DSH payments depends in part on the number of days spent in a hospital by patients who are eligible for medical assistance under a state program approved under Title XIX of the Social Security Act ("Medicaid").Under the Secretary's interpretation of the statute, the Medicare DSH calculation included only those inpatient days attributable to Medicaid-eligible patients that were actually paid for by state Medicaid programs. After the parties presented oral argument on their cross-motions for summary judgment on October 2, 1996, this Court ruled on October 10 that the Secretary's interpretation of the statute was invalid because Congress clearly intended that the Medicaid low-income proxy should be calculated using all inpatient hospital days attributable to patients certified as eligible for Medicaid by the state Medicaid programs, not only those days for which state Medicaid programs actually reimbursed the hospitals. As stated in Jewish Hospital, Inc. v. Secretary of Health and Human Services, 19 F.3d 270, 275 (6th Cir. 1994), "[a] Medicaid eligible individual is no less `eligible for medical assistance' on some days simply because his or her state Medicaid program only pays for a fixed number of days."
This Court, in reaching its conclusion, looked for guidance to several other courts' decisions, each of which determined that the Secretary's interpretation was contrary to congressional intent and invalid. See Jewish Hospital; Deaconess Health Services Corp. v. Shalala, 912 F. Supp. 438 (E.D. Mo. 1995), aff'd and adopted, 83 F.3d 1041 (8th Cir. 1996); Cabell Huntington Hospital v. Shalala, No. 2:94-0345, Medicare Medical Guide (CCH), ¶ 44,000 (S.D. W. Va. Sept. 29, 1995). Also, subsequent to oral argument, the Ninth Circuit reached the same conclusion in Legacy Emanuel Hosp. and Health Center v. Shalala, No. 95-35622 (9th Cir. Oct. 9, 1996).
As a result of this Court's ruling on the issue of statutory interpretation, Plaintiffs have requested that the Court require the Secretary to include four general categories of inpatient days in its DSH calculation:
1. True Uncovered Days. These days appear on a claim for service where the patient enters the hospital having already exhausted his or her spell-of-illness limitation. These claims are denied by states with such limitations. The Secretary treated these days as not includable in the DSH calculation because, even though the patient was Medicaid eligible, the state Medicaid systems did not provide any reimbursement for the hospital stays in question.
2. Texas Patient Spell-of-Illness Days ("PS Days") Prior to September 1, 1989. In Texas prior to September 1, 1989, Texas Medicaid prorated its DRG payment (that is, its payment based on the diagnostic-related group code ("DRG") associated with the procedure provided to a patient in a hospital) based on the number of days a patient spent in the hospital beyond the annual day limit. For example, if a patient was admitted to a hospital with ten days remaining in his or her limit of days per spell-of-illness, but stayed in the hospital 20 days, Texas Medicaid prorated its payment based on fifty percent (10/20) of the applicable DRG payment amount for the procedure. Because of the prorated payment, the hospitals' intermediaries, pursuant to the Secretary's policy, did not count ten of the days in the hospitals' DSH calculation.
3. Zero Paid Medicare Secondary Days. This category of appeal days appears on claims where a Medicaid beneficiary has other insurance payments and Medicaid paid nothing on the claim. For these patient claims, other insurance paid an amount equal to or in excess of the state Medicaid payment. In Texas, the state's fiscal agent, National Heritage Insurance Company ("NHIC") classifies these claims as paid claims in its history file and treats the claim like any other paid claim. Allowed days are classified as covered under Medicaid, and NHIC decreases the beneficiary's thirty-day spell-of-illness limitation by the allowed days. In addition, NHIC applies the same patient spell-of-illness criteria to these claims as other paid claims, thereby classifying part of the days allowed and part of the days disallowed, even though the hospital received payment equivalent to, and in instances greater than, the full state DRG payment applicable to the claim. Because Medicaid paid nothing on the claim, HCFA refused to include these days in hospitals' DSH calculations, despite the fact that many of these days count against patients' thirty-day covered-day limit.
4. Days Not Paid for Reasons Other than Eligibility. Each of the state Medicaid programs at issue in this case deny payment for certain claims even after confirming that the patient was in fact Medicaid-eligible on the dates of service. In such instances, the state Medicaid programs refuse to pay the hospital claim for a variety of reasons other than Medicaid patient eligibility in addition to those reasons described above. Even though the Medicaid eligibility of such patients was confirmed by the state Medicaid programs, the Secretary refused to include these inpatient days in hospitals' DSH calculations because Medicaid did not pay for the hospital service in question.
Discussion
Plaintiffs argue that the Court should require the inclusion of these four categories of days because 1) it has the authority to do so, 2) the October 10 ruling on summary judgment necessarily requires their inclusion, and 3) convenience and justice would be served. After careful consideration of these arguments, the Court nevertheless remains of the opinion that it should not order such a requirement.
A. Authority to Require Inclusion
This Court clearly had jurisdiction to determine the issue of whether the Secretary's policies were inconsistent with the plain and unambiguous wording of the governing Medicare statute. However, whether it has the power to require the Secretary to adopt a certain policy henceforth is a more difficult question. The relevant statute governing jurisdiction reads, in part:
Providers shall have the right to obtain judicial review of any final decision of the Board [PRRB], or of any reversal, affirmance, or modification by the Secretary, by a civil action commenced within 60 days of the date on which notice of any final decision by the Board or of any reversal, affirmance, or modification by the Secretary is received. Providers shall also have the right to obtain judicial review 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 (on its own motion or at the request of a provider of services . . .) 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.42 U.S.C. § 1395oo(f)(1). In its October 10 Order granting summary judgment for the Plaintiffs, the Court determined a "question of law or regulations relevant to the matters in controversy" that the PRRB had declared was beyond its authority to decide. However, the PRRB has not had the opportunity to review the actions of the Secretary in response to the Court's invalidation of the Secretary's prior interpretation of the Medicare statute.
While a broad interpretation of the jurisdictional statute might permit this Court to issue a more specific order mandating that certain categories of days be included in the Secretary's calculations, see Hospital Association of Rhode Island v. Secretary of Health and Human Services, 820 F.2d 533, 537-38 (1st Cir. 1987), the more prudent approach is to allow the administrative process to run its course and to wait for a final decision regarding which categories of days the Secretary agrees to include in light of this Court's October 10 ruling. See Association of American Medical Colleges v. Califano, 569 F.2d 101, 109-10 (D.C. Cir. 1977). The nation's complex administrative scheme, though laborious at times, is complex for a reason, and it represents a careful balance between the powers of the executive and judicial branches of the federal government. This Court has no reservations in declaring the Secretary to be wrong when her interpretation of Congressional mandate is clearly incorrect, but it does have reservations about mandating the specifics of her new interpretation. The Secretary should be perfectly capable of formulating a valid interpretation of the statute without the Court's assistance. If the Secretary proves to be unable to follow the law, the Court does retain the power to hold her in contempt of its order and will not hesitate to do so.
B. Effect of Order Granting Summary Judgment
This Court also remains unconvinced that its granting of summary judgment for the Plaintiffs necessarily means that certain categories of days must be included in the Secretary's Medicare calculations. The Court was asked to rule only on the validity of the Secretary's interpretation of the statute, and the Court issued a simple ruling: Congress clearly intended that the Medicaid low-income proxy should be calculated using all inpatient hospital days attributable to patients certified as eligible for Medicaid by the state Medicaid programs, not only those days for which state Medicaid programs actually reimbursed the hospitals. If this ruling "necessarily means" certain days must be included, then the Secretary will be forced to include such days or face a contempt order. However, it is the Secretary's decision as to how she will proceed in light of the Court's ruling.
It is notable that the other courts faced with the issue of the Secretary's interpretation of 42 U.S.C. § 1395ww(d)(5)(F)(vi) have not required the counting of certain categories of days in the DSH calculations (with the exception of True Uncovered Days, which the Secretary agrees should be included in future calculations). See Jewish Hospital; Deaconess; Cabell Huntington; Legacy Emanuel. The courts in these cases simply remanded to the Secretary for proceedings consistent with their opinions invalidating the prior interpretation.
C. Convenience
Though this decision may mean that this Court will be faced again with some of the same issues in the future as a result of an appeal from a PRRB final decision or possibly even a contempt proceeding, that is a result that is dictated by the administrative scheme. If convenience were the only consideration in these matters, courts would simply decide every aspect of every case in one proceeding, with no deference to administrative agencies. However, other concerns do weigh in such decisions, and the decision to refrain from over-reaching in this case might result in some inconvenience to the parties, who must relitigate the same issues in another forum.D. Plaintiffs' Request for Time Limit
The same concerns as those outlined throughout this opinion lead the Court to deny Plaintiffs' request for imposition of a time limit for the Secretary to pay Plaintiffs. Plaintiffs may follow the procedures outlined in 42 U.S.C. § 1395oo to obtain their payment, and the statute includes time limits and a provision for the payment of interest.
Conclusion
Therefore, Plaintiffs' Motion for Entry of Amended Order is DENIED and this action is REMANDED to the Secretary for proceedings consistent with the Orders of this Court. Specifically, Defendant and her agents are hereby ORDERED promptly to recompute Medicare disproportionate share patient percentages for Plaintiffs and to make payment to plaintiffs for the fiscal years at issue in this action, plus interest in accordance with 42 U.S.C. § 1395oo(f)(2), provided, however, that if Defendant timely appeals this Court's Judgment, the Judgment shall be stayed until the Court of Appeals for the Fifth Circuit rules on the appeal.