Thank You For Submiting Feedback!
The statute requires the government to provide public notice and a 60-day comment period (twice the APA minimum of 30 days) for any rule, requirement, or other statement of policy, other than a national coverage determination, that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits under Medicare.
The Medicare program offered additional payments to institutions that served a “disproportionate number” of low-income patients. These payments were calculated in part using what was called a hospital's “Medicare fraction.” The fraction's denominator was the time the hospital spent caring for patients who were “entitled to benefits under” Medicare Part A, while the numerator was the time the hospital spent caring for Part-A-entitled patients who were also entitled to income support payments under the Social Security Act. Congress created Medicare Part C in 1997, leading to the question whether Part C enrollees should be counted as “entitled to benefits under” Part A when calculating a hospital's Medicare fraction. Respondents claimed that, because Part C enrollees tend to be wealthier than Part A enrollees, counting them would make the fraction smaller and would reduce hospitals' payments considerably. In 2004, the agency overseeing Medicare issued a final rule declaring that it would count Part C patients, but that rule was later vacated after hospitals filed legal challenges. In 2013, it issued a new rule prospectively readopting the policy of counting Part C patients. In 2014, unable to rely on either the vacated 2004 rule or the prospective 2013 rule, the agency posted on its website the Medicare fractions for fiscal year 2012, noting that they included Part C patients. Respondent hospitals sued, claiming, among other things, that the government had violated the Medicare Act’s requirement to provide public notice and a 60-day comment period for any rule, requirement, or other statement of policy that established or changed a substantive legal standard governing the payment for services,” §1395hh(a)(2). The court of appeals ultimately sided with the respondents.
Did the government violate the Medicare Act’s requirement to provide public notice and 60-day comment period under the circumstances?
The Court held that the government violated the 42 U.S.C.S. § 1395hh(a)(2) Medicare Act requirement to provide public notice and a 60-day comment period for any rule, requirement, or other statement of policy that established or changed a substantive legal standard governing services payment because it posted on its website the Medicare fractions for fiscal year 2014, which included Part C patients, that retroactively reduced payments to hospitals serving low-income patients. According to the court, there was no advance warning and no chance to comment prior to the effective date of this new policy, and the government did not identify any lawful excuse for neglecting its statutory notice and comment obligations. The court averred that the website announcement changed a substantive legal standard and the government's interpretation of § 1395hh(a)(2) as not requiring notice and comment would produce an incoherence in the statute.