Rush University Medical Center appeals a decision from the U.S. District Court for the Northern District of Illinois regarding Medicare payments for fiscal year 1991, claiming it has not received the full amount owed. The Secretary of Health and Human Services ruled against the Medical Center on several contested issues following a lengthy administrative process. The district court's judgment, while mostly favorable to the Secretary, is unclear in its specifics, stating that both parties' motions for summary judgment were granted in part and denied in part, leaving ambiguity about the actual relief awarded. The Chief Judge emphasizes that a clear judgment is necessary, particularly in complex cases, and criticizes the practice of deputy clerks drafting judgments without adequate judicial oversight. The judgment fails to specify which issues were resolved in favor of either party, further complicating the appeal process. Additionally, the district judge noted that full resolution of the disputes would require remand to the agency, which had previously denied compensation for costs associated with resident physicians in certain fellowship programs.
The court expressed concerns regarding the Medical Center's documentation for certain programs, directing the relevant agency to allow the Medical Center to complete Worksheet D-2 for specific participants and programs. However, the court did not specify which participants or programs were involved, leading to a more informative subsequent judgment that required the agency to accept documentation for costs related to services provided by residents in up to thirteen non-approved fellowship programs. Although the judgment lacked detail, it was deemed final, as it allowed for clarity regarding the agency's obligations, despite potential vagueness that might complicate contempt motions.
The remand raises issues of appellate jurisdiction, as it typically indicates a non-final decision. However, precedents such as Forney v. Apfel and Sullivan v. Finkelstein establish that a remand can be considered final if it may conclude without further litigation, thus allowing for appeal. The district judge's decision is effectively final, as the agency’s actions on remand could limit the possibility of judicial review.
The appeal also involves issues related to additional Medicare payments for hospitals serving a disproportionately high number of low-income patients under 42 U.S.C. 1395ww(d)(5)(F)(i)(I). Confusion arose about the classification of patients covered by state general-assistance programs, with differing interpretations among hospitals and fiscal intermediaries. A regulation effective January 1, 2000, clarified that general-assistance patients are not categorized as low-income patients for this program, although a prior Program Memorandum is treated as regulatory in nature. A grandfather clause allows hospitals that classified general-assistance patients with Medicaid patients in cost reports before October 15, 1999, to continue benefiting from that classification, while others do not.
Fiscal intermediaries are instructed to reopen settled cost reports for hospitals that filed a jurisdictionally proper appeal to the Provider Reimbursement Review Board (PRRB) regarding the exclusion of certain days from the Medicare Disproportionate Share Hospital (DSH) formula, but only if the appeal was made before October 15, 1999, and if the hospital had previously appealed the denial of payment for those days in earlier cost reporting periods. Appeals filed on or after October 15, 1999, that added this issue to existing claims do not qualify for reopening. Fiscal intermediaries must continue to pay Medicare DSH adjustments for general assistance, state-only health program, charity care, and Medicaid DSH days for any hospital that made a proper appeal on this issue before the cutoff date.
The Medical Center's 1991 cost report appeal, which was pending before the PRRB on October 15, 1999, did not assert that general assistance patients should be treated as Medicaid patients, leading to the conclusion that the Medical Center could not benefit from the grandfather clause established on that date. The district court affirmed that the Secretary's findings were supported by substantial evidence. While the Medical Center received grandfather treatment for 1989 and 1990, it did not equate general assistance with Medicaid in its 1991 report or propose this treatment before the deadline. The Medical Center's reliance on a 1998 position paper challenging the fiscal intermediary's payment practices did not adequately assert its claim regarding the treatment of general assistance patients for DSH payments, as it lacked specific language to support its argument. The debate centered around the differing treatment of costs between the earlier reports and the 1991 report.
The legal document evaluates the sufficiency of evidence supporting the agency’s conclusion that the Medical Center's "pay what you owe" language does not adequately address the disproportionate-share claim for general-assistance patients. While the Medical Center suggests the Secretary could have interpreted the demand more favorably, agencies are not obliged to be generous with public funds, especially when the claim lacks substantive correctness and relies solely on a grandfather clause. The Secretary's position is backed by substantial evidence and is not deemed arbitrary or capricious.
Additionally, the document addresses the Medical Center's eligibility for payments related to its graduate medical education program. Key requirements include that interns and residents must be working toward certification in specified specialties and providing medical services on a designated census day. Reimbursement claims depend on the interns being part of an American Medical Association-approved program. The Secretary has allowed broader criteria for counting residents in programs aimed at certification in specialties listed in the Graduate Medical Education Directory, even if not formally recognized.
During fiscal year 1991, the Medical Center had residents in specialties not recognized at that time. Although one program received approval shortly after the fiscal year, and the others eventually gained approval from organizations not initially listed, the Secretary is not obligated to make exceptions. Enforcing the existing regulations is not arbitrary, as Medicare’s complexity necessitates adherence to established rules without subjective interpretations. The amendment to the list of approving organizations shortly before the fiscal year does not alter the regulations' effective date.
Rules are established with specific beginning dates, and while it is possible to argue for postponing these dates, the Administrative Procedure Act mandates the notice requirements for rule changes, which the Medical Center did not contest regarding the adequacy of notice. The Secretary had the authority to enforce an amplifying regulation. The Secretary determined that three residents, while enrolled in approved programs, were not receiving training at the Hospital on September 4, 1990. The Medical Center was responsible for demonstrating that these residents were present at the required locations and times, but failed to do so. The Secretary’s burden is not to prove their absence; rather, the onus is on the claimant to establish entitlement by a preponderance of evidence. The practice of assessing residents' activities on a specific date is intended to simplify tracking their assignments over a year. However, the Medical Center did not provide rotation schedules for two residents, and while they claimed those residents were assigned to maternal/fetal medicine, the documentation did not confirm their presence or duties on that particular day. A letter from a later administrator, submitted as evidence, was deemed insufficient and unreliable due to its hearsay nature and lack of firsthand knowledge. The third resident had a rotation schedule indicating presence, but this schedule did not clarify the eligible area of work, leading the Secretary to question its validity. The Secretary could reject the claim based on the vagueness of the schedule, and there is no need to determine if suspicions about this resident's actual location were substantiated. The excerpt concludes with a mention of an ongoing dispute regarding the Medical Center’s capital costs.
The compensation formula for the hospital includes the hospital's value and interest costs on debt incurred for constructing facilities in the rate base, but excludes costs related to other facilities, such as a hotel for patient visitors. In 1987, the Medical Center developed the 'Inn at University Village,' which includes amenities and was financed through $10 million in bonds secured by the hospital, not the Inn. The Medical Center argues that the interest on these bonds should be considered an operating cost of the hospital, although it cannot directly charge this interest to federal reimbursements. Instead, it can offset interest expenses against investment income. Despite the Inn operating at a loss, the Medical Center seeks to deduct the interest from the profits of other investments to increase federal reimbursement, contingent on demonstrating that the interest pertains to the hospital. The Secretary determined it did not, based on three reasons: the timing of the bond issuance coinciding with the Inn's construction, the bond amount closely matching the Inn's construction cost, and the Medical Center's accountant initially attributing the interest to the Inn. While the Medical Center contends that this accounting has been corrected and that the bond proceeds were allocated to the hospital's general operating account, the Secretary maintains that the fungibility of money makes it irrelevant whether the debt was incurred for the hotel or other hospital needs. The Secretary concluded that the hotel represents a marginal expense that should bear the interest cost, a view supported by the Medical Center's accountants. The decision was AFFIRMED.
