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New Hampshire Hospital Association v. Price

United States District Court, D. New Hampshire

April 18, 2017

New Hampshire Hospital Association, et al.
v.
Thomas E. Price[1], et al. Opinion No. 2017 DNH 077

          Anthony J. Galdieri, Esq.

          James C. Luh, Esq.

          W. Scott O'Connell, Esq.

          Nancy J. Smith, Esq.

          ORDER

          Landya McCafferty United States District Judge.

         Several New Hampshire hospitals[2] 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.[3] See doc. no. 51. Judgment was entered on March 6, 2017. See doc. no. 52.

         On April 3, 2017, plaintiffs filed an “expedited motion to alter or amend judgment” (doc. no. 53). Defendants object (doc. no. 55).[4]

         Background

         A 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.

         In 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).[5]

         In 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 correctly.

         On 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.[6] 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 ...


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