payments that virginia made to two state hospitals this payments are unusual in the medicaid framework and that most state medicaid expenditures are humans to healthcare providers st specific services that they compliance with its state playing the amount it paid that timing of the payments the association of humans with years all of that was consistent with the state of play and with federal law and a change as has premise we believe online essentially three fallacies three invalid assumption it's that and when those are clarified there's nothing left of the disallowance and the st one is that there virginia was required to design its dish payments as reimbursement of costs incurred by hospitals that is simply flatly contradicted by the statutes of the social security act it section medicaid patients or low income patients that's a real discretion and states use it and congress intended that discretion to exist region or used it to design a dish methodology where payments are  computed in advance of the year to which they have pride using medicaid utilization or low income utilization as the primary factor so if the proportion are based dish payment it's not intended as a reimbursement of for services in the particular year in the costs are related to the services costs incurred for services just like the language of the statute talks about cost volume several sort of services  beans relate to services in that they relate to the proportion of services furnished to medicaid patients in the year that the pain is applied to so for a year one virginia has in advance of year one use medicaid utilization data from a prior period they take the hospitals into he's an operating range combined that together in for year one they've developed a dish king that it's related to services in the sense that it's intended patients that's a rate that's a real relationship to services a quarter of the services they provided were to medicaid patients and by the way that's the way that it carries i dish for a long time it's it was proportional base not based on payment for c payments relate to services in that they relate to the intensity of the care furnished to specific more intensive need and poor you know poorly reimburses populations medicate him and i'm patient commonwealth university will be likely to treat in that year the payments are only there to the proportion of services that are provided to medicaid or low income patients but that it's very clear on the face of virginia's state plan which as you're familiar with i'm sure is the critical document and how states administrate their medicaid programs that these are these are not cost there's a payment and virginia can choose whether to allocate it for year one or year to they have a choice virginia even though we're talking about weather so it relates to services rendered in a particular year it turns out it actually relates it can relate to services rendered in year one or it can relate to services and rendered in your to aurukun related services it rendered in year three it's up to you to decide well that's the way you're looking what i would say is there are three relevant hospital and still when a state plan amount for the university of virginia is established in advance of your one it's twenty million dollars their tenure has determined that that's how much they're entitled to on the basis of their intensity of service to it's paid up to the state wide allotment or to the hospital specific cap so those that those backstops really do for serve to limit what what the hospital receives under the state are but what about as the state gets from the federal government i thought the question is you're seeking reimbursement and the way you're saying you're entitled to reimbursement is that you're saying even if we couldn't get reimbursement for your one because the state why cap have been exhausted we still have room under the cap in your four yes no that's that's not that's not an accurate statement there is there is a state plan amount that is calculated for a respectively determined demand and then permanently and disbursements are made so that and you know frankly this state plan methodology was designed really in order to enable virginia to make payments  methodology did allow virginia to make generous payments to these two state hospitals that were dispersed over the course of numerous years but the original entitlement under the state plan was determined specific limits we want to be really clear c m s did not cite any of them out of violation of the hospital specific limits they didn't refer to any of the regulations or materials that they would normally console relating to that limit and it's a saying oh we understand that you're allowed to design dish methodology is that aren't based on cost but when you're associating your payments with years make sure you associate them with the years that the hospitals are hurt the time in which the costs are incurred it relates to a particular year isn't that right regardless of whether he remembers for the cost or not it's a marker of the year in which the services were provide rendered during that particular year so costs and services relate to the year in which the services are furnished great rate under the hospital specific limit yes there it there came into the hospital as payment to a hospital statewide allotment and the possible specific limit speak in terms of for the fiscal year or during the year of furnishing but only g speaks in terms of services furnished  state wide cap park is not talking about it's not saying that it's inconsistent with the way you're looking at it but it doesn't seem compelled by f either because f just doesn't talk about the furnishing of services she does when he says painted is per the school year cost year and if you look at the week the agencies reading is the better reading of the statute as you need to take into account all of these subsections i think on its  though this the state wide allotment still talks in terms of having a statewide limit for at the school year and then you look at what but this is a very even the way they're looking at it it still has a st indisputably they need to have some kind of accounting system that would not allow them to circumvent gee it's true that and we are the agency wasn't trying to hide a real concern or anything they did  just didn't exist if you just had f and they would still have the same program in effect where they say we're still under the cap for say two thousand and sixty minute we're talking about services that were rendered in two thousand and four we're going to fight a two thousand enhanced dish payment for fiscal year two thousand and eight this is an enhanced pavement that the department wants to make to cover st of all things to cover state defined indigent care costs and i do think there is some confusion in what virginia is arguing about their regular dish payments and can't strain that's what what's at issue here isn't their regular methodology for doing their prospective payments and these are these enhanced payments that are only that we think i'd space violates a state wide allotment which is talking about one year and i don't think whatever states of flexibility to do it's not the i don't think congress would have written the statute this way i mean we have gee if you need it but i think even looking at the waves of the language just phrases it doesn't contemplate a state just going back and saying well i think we have some room here and some room there they could just keep doing this on  to that federal fiscal year and our interpretation which if you do not think it's reflected by the clear language of the statutes certainly is entitle to deference is applicable to the federal fiscal year has to get to the parts that intersect with federal law and that's kind of the back quarter maybe of the analysis and on that there's two prongs one of which is entitled b which starts on a forty and goes to forty three dollars and it says the disallowance is consistent with vs this d s h statutes and regulations and it is a little bit odd for an agency to say we have an interpretation that we think is the best one and it's the one to wish you would you should defer when all the agency is saying is the disallowed as consistent with the regulations is not saying that this is the way we read the regulation and the regulation  is best read to support the disallowance it's saying there's a disallowance because the state reached its own way of doing things and that this allowance isn't inconsistent with the regulation that's how i  actually the board actually said that that we therefore agree with c m s that for purposes of determining whether dish payments are within limitations story really from i'm sorry if that this is i and j a forty one and you are necessarily allocated to the time periods in which dish eligible costs were incurred by the hospitals in providing certain services and so this may be the subheading throws it off a little but they've they're actually the board and you know there was a full briefing this was a formal education and they wrote a very thorough and and as set forth in our brief we also think it could be affirmed on the alternative grounds that virginia the dish that shouldn't regulations do not allow these payments to be disconnected from the period in which the hospitals in kurdish eligible costs in providing certain services so we agree that it's when the services were there that that's where the board makes the point that if we were to allow what virginia wants to do better without it would enable a circumvention of both the state of law and the hospital specific that limitation because if you're not tracking it if you see if there is no connection to when the services were performed then they could allocate that money to a year in which the  hospital didn't perform as many services and say oh well we didn't reach its hospital specific limit and that year but for the year in which in service if it actually had any and again on page one if you see the way that they actually allocated the payments that becomes clear because they but i using in one fiscal year and allocating to a number of different years and they also said that there are that the standard process is to create the payments the oldest year that there is a hospital specific to some and state why dish allotment but that if the services were performed in a different year it may end up you know that just the hospital of the fiscal year but for as virginia itself explained and it's briefing in the prior appeal but just because of the way the system works there are different you know numbers that are coming in and out and they have they do need even if you have perspective system they acknowledge they need it in this settlement or verification process and they also acknowledged and again referring to pages one hundred and fifty and one hundred and fifty one of the t at well it would still be subject to the as well it's allowed so long as they have a system in place as so long as states have a system in place where they can make sure honor as long as they comply with the federal limits and i and as long as they have a methodology that can face let's see what we're as we said here is the court doesn't need to figure out what methodology is would satisfy this what we're saying here is britain is does not and that's what the board decided here and it's hard to think of all the possible ways the state could do it but i was a r and then if it turns out that how do you determine for example whether the hospital specific out then is exceeded because you're only talking about a projection right there and you're looking forward and but then the way you understand hospital specific out it turns on the services that are in fact rendered in a particular year but you don't know yet what the services are going to be for that year because it's a forward looking projection that's right you don't actually that's what we have quoted virginia is brief saying that's why they had to look at when they were making some of these i think some of the regular payments are with are they don't have a that they just know from projections or what's happening in real time that it's not exceeding the limits but these inherent enhanced payments they have a very large multiplier of the regular payments which are more which they they have big not with the state acknowledged never paid up to that amount that the state plan would authorize sixteen or seventeen times the regular payments so for the for this particular set of payments for those payments there's a real chance that those payments could and do see the limits so for those they do it and i'm i and then if they do see the limits then the federal government more reimburse right right and so so so it means that in theory they can use a project for yes but in fact and they can use force that yes they think they can use perspective like an estimate of perspective estimate but in fact what turns out happening is you can't rely on that perspective estimate because it has to actually comply with the the cost that in fact are incurred for services rendered during that year so that basically that allows the use of prospective method is at the state's own risk because it can use that as an estimate but then if it turns out that it's making it making payments that turn out to exceed the hospital pacific caps in the federal government's not going to and then it but that's why it may do assist heard has a combination where it's of it's sure about a certain you know baseline of payments but i but i don't think there's any need to speculate about you know possible payment methods that a state could use because the one we have before us now does violate the state wide allotment and does apply payments that but there that's more of a nail j decision where there is a hearing on the record then to the farm the case that was cited that that relates to review of state plant material which is a different standard as well so  i couldn't find any d c circuit case where where you had held that chevron deference is due to the decision reviewing a medicaid disallowance for but that's where i also wanted to know with with respect to the criteria that are part of state policy but he also took care to say the documentation supports state indigent care policy and is therefore not relevant to determining compliance with the state plan for ginia set it motivation of virginia for making any given payment of the dish to which the hospital will untitled under the methodology it's not relevant under the state plan and we do feel that a j just decision here it just completely ignores this language in the state plan which you know i would like to commend to you to read join appendage page sixty four dollars of the payment shall be perspectively determine in advance of the state which they apply their final not subject to settlement except when necessary due to the relevant federal limits it's only when you get to them the hospital specifically that the concept of implement it and audit protocol for the st states to determine if payments exceeded the hospital specific limit and c m s explicitly said we recognize states have discretion in their methodology is we're not meaning to constrain this audit mechanism serves as a separate guardrail where after the fact the question should have us in your harassment there's no you can you can make these payments prospect of holy mother any manner of methodology and as long as there's a separate bar guard regulations was promulgated they directed states how to enforce and monitor their hospital specific limit so a lot of the specific statements here about how virginia kept track of its compliance with the hospital specific limits in that year it's not st necessarily a retrospective exercise and this process described by mr fields where this state would ascertain when it makes the payment that it didn't