Billings Clinic v. Azar

Hospitals challenged the methodology that the Department used to calculate the "outlier payment" component of their Medicare reimbursements for 2008, 2009, 2010, and 2011. At issue was whether the Department's decision to continue with its methodology after the 2007 fiscal year was arbitrary in light of accumulating data about the methodology's generally sub-par performance. The DC Circuit held in Banner Health v. Price, 867 F.3d 1323 (D.C. Cir. 2017) (per curiam), that the Department's decision to wait a bit longer before reevaluating its complex predictive model was reasonable, because the Department had, at best, only limited additional data for 2008 and 2009 and because the 2009 data suggested that hospitals were paid more than expected.In this appeal, the court held that Banner Health foreclosed the hospitals' challenges to the Department's failure to publish a proposed draft rule during the 2003 rulemaking process and the Department's failure to account for the possibility of reconciliation claw-backs in setting the 2008, 2009, 2010, and 2011 thresholds. Finally, the court held that, while the hospitals' frustration with the Department's frequently off-target calculations was understandable, the methodology had not sunk to the level of arbitrary or capricious agency action. View "Billings Clinic v. Azar" on Justia Law