United States District Court, D. New Hampshire
New Hampshire Hospital Association, et al.
Thomas E. Price, et al. Opinion No. 2017 DNH 077
Anthony J. Galdieri, Esq.
C. Luh, Esq.
Scott O'Connell, Esq.
J. Smith, Esq.
McCafferty United States District Judge.
New Hampshire hospitals and the New Hampshire Hospital
Association, a non-profit trade association, brought this
suit against the Secretary of Health and Human Services (the
“Secretary”), the Centers for Medicare and
Medicaid Services (“CMS”), and the Administrator
of CMS, alleging that defendants have set forth certain
“policy clarifications” that contradict the plain
language of the Medicaid Act and violate the Administrative
Procedure Act (“APA”). The court granted
plaintiffs' motion for a preliminary injunction barring
defendants from enforcing the policy clarifications during
the pendency of the litigation. See doc. no. 31. The
parties cross-moved for summary judgment. In an order dated
March 2, 2017, the court granted plaintiffs' motion for
summary judgment as to Counts I and II of their complaint,
and granted defendants' motion for summary judgment as to
Count III of the complaint. See doc. no. 51.
Judgment was entered on March 6, 2017. See doc. no.
April 3, 2017, plaintiffs filed an “expedited motion to
alter or amend judgment” (doc. no. 53).
Defendants object (doc. no. 55).
detailed background of this case is provided in the
court's order on plaintiffs' motion for a preliminary
injunction, see doc. no. 31, and its order on the
parties' cross motions for summary judgment, see doc. no.
51. The court provides only a brief background of
the case here.
addition to providing financial support to states that
implement the Medicaid program, the Medicaid Act provides for
additional payments to be made to “hospitals which
serve a disproportionate number of low-income patients with
special needs.” 42 U.S.C. § 1396a(a)(13)(A)(iv).
Such increased payments are available to any hospital that
treats a disproportionate share of Medicaid patients (a
“disproportionate-share hospital” or
“DSH”). § 1396r-4(b).
2003, to monitor DSH payments, Congress enacted into law a
requirement that each state provide to the Secretary an
annual report and audit on its DSH program. See 42 U.S.C.
§ 1396r-4(j). On December 19, 2008, CMS promulgated a
final rule implementing the statutory reporting and auditing
requirement (the “2008 Rule”). See
Disproportionate Share Hospital Payments, 73 Fed. Reg. 77904
(Dec. 19, 2008). The 2008 Rule requires that states annually
submit information “for each DSH hospital to which the
State made a DSH payment.” 42 C.F.R. § 447.299(c).
One such piece of required information is the hospital's
“total annual uncompensated care costs, ” which
is defined as follows:
The total annual uncompensated care cost equals the total
cost of care for furnishing inpatient hospital and outpatient
hospital services to Medicaid eligible individuals and to
individuals with no source of third party coverage for the
hospital services they receive less the sum of regular
Medicaid [fee-for-service] rate payments, Medicaid managed
care organization payments, supplemental/enhanced Medicaid
payments, uninsured revenues, and Section 1011 payments . . .
§ 447.299(c)(16). This section establishes a formula for
a state to determine whether the hospital-specific DSH limit,
as set forth in § 1396r-4(g)(1)(A), was calculated
January 10, 2010, CMS posted answers on its website to
“frequently asked questions” regarding the audit
and reporting requirements of the 2008 Rule. Two of the
frequently asked questions, FAQ 33 and FAQ 34, and CMS's
responses to those questions are at issue in this
case. In short, FAQs 33 and 34 provide that in
calculating the hospital-specific DSH limit, a state must
subtract payments received from private health insurance (FAQ
33) and ...