farber actually made to the state of massachusetts plaintiffs are asking for in this case is medicare reimbursement for more than the amounts of the payments have actually made if there were two different towns would your position be different no in this case it's not a question of sort of the specific account it is a question of the way that you know the state of massachusetts has chosen to impose this tax specifically to fund these payments back to the hospitals i mean it's a fallacy of the circumstance does but in this case you know the money is the tax exists t redistributed it's considered one of the general overheads of running a hospital that's the secretary has generally reimbursed this tax but why i mean you you say your brief history the secretary is not permitted to use medicare funds to america really gets my concern about the government's position it seems that you really have problems with the idea of reimbursing the tax on the first choice but are doing it through kind of a and then allowed to deduction based on the cost of living for low income individual patients there's no question that the cap the hospitals tax cost would reflect that deduction when the secretary did here was basically construe this transaction ha been functionally identical to match transaction and i think it is functionally identical to the transaction and you know there's certainly nothing in the medicare statute or regulations that requires the secretary to distinguish between that type of the deduction and the circumstances where separate program but the fact that they're doing so you know has no bearing on the secretary's ability to consider the extent to which the cost is actually incurred for a particular hospital and so the economics of this i think are interesting and you're you make good points of the functionally similar or identical point i take that point but what about the regulation kind of go to the wall side of this rather than the economic side of this the regulation speaks of three farms the guidance as i see it problems that someone put them if we sick with the regulation for a moment this is not a refund in the traditional sense life think if you look at what the board did in this case we understand the board as having applied the statute and the general statutory per the general regulatory provisions at four thirty nine as opposed to just you know strictly you are relying on the refund regulation so it was interpreted we think this fashion tory language about actually encouraged and what it means to actually o there's no way that the secretary could sort of have regulations that if yes every single possible circumstance that you know could be presented as i think the supreme court made clear in the schillinger versus guarantee case and so you know what the secretary did in this case was  yes but it was sort of looking at kind of the totality of the circumstances with these toxins i mean even if this court considers it a religious claim then your analytical framework that's what i'm trying to ask you to focus on in terms of the court are we supposed to just decide for ourselves what we think the interpretation should be more no certainly not you know we don't know when you're saying it's you know you are asking us to apply the traditional chevron frame or yes it was a no no it is your position that the language is clear or is it and it was certainly the hospital just held on to money and then provided care for and i'm sorry i misspoke there for low income patients that massachusetts provides reimbursement for you know the care for those low income patients would not be considered the sort of overhead cost that medicare provides reimbursement for as an indirect cost so you know medicare provides reimbursement for general overhead indirect costs the secretary is constrained that to fix to include you know tax expenses to the extent that they're kind so to the extent that those two hospitals both apply for medicare reimbursement one provides no here it's the full twenty dollars reimburse right so just as a factual clarification there you know we're kind of at the first step of a two step process here so the cost of all which the reimbursement would be based would be the full twenty dollars but medicare itself would only group reimburse patients may get five dollars from the the trust fund but it's actually only it's not really getting that five dollars that it's putting once general leisure it's just an offset patients if if their medicare reimbursement has to be offset by the five zero s when do they ever kind of realize the benefit so i think that this actually does go to the clarification i was trying to make just a second ago which is you know the heart of the state is going to make payment say the five dollars back to the hospitals and what medicare will reimburse hospitals for the amount  is is  just you know they give the bill that says instead of you will twenty dollars but instead of putting twenty dollars into your your trust to kill just put fifty dollars a hole in the right so the net since they don't get i think we're trying to understand this you probably understand this totally i don't this is an excess demonstration project and following up on john wilkins question is the five dollar reimbursement you i guess the secretary in terms of an incentive to provide this care for a low a low income people and that's what this massachusetts tax is all about trying to provide care for people who can't afford it so that to the extent  massachusetts has sent up the tax to provide that incentive as it were that's one way to look at it but i understand dana farmer to me making a sort of different argument that does get i was looking for the reply in your reply brief and i didn't see it totally separately allows states a huge amount of flexibility to sort of structure their tax systems and their medicaid systems and i grant same in any number of ways it imposes term acquirement it does sort of require hospitals to take into account or sorry it does require states to take into account the position of hospitals that provide a disproportionate amount of of care for low income patients and allows states to make those payments in any number of ways that's the dish payments we're talking about here  receives some money back as you said for the totally separate program of medicaid i mean that's one way to look at it and i know your point is going to be economically it all is the same but in terms of the programs ok i'm getting i'm paying a tax to massachusetts as a hospital and medicare is going to reimburse that tax i get money back for the low income patients we treat and that comes from the state now the fact that they do it in one account doesn't strike me as controlling begin your honor is not want to count is that you know this tax funds these communities it is specifically earmarked it's created in the same statute massachusetts  asset that's my question about why and why medicare pays this in the first place again you know to the extent that massachusetts wants to conduct a redistribution between hospitals that you know provide a green levels of private sector charges  yes that's kind of how the dish payments demonstration project and it's that sort of just wilkens question i had the same we action when i did it all the economics of the sun and the ripple effects are hard to hard to fathom when you're sitting here or even where you are and how this works out but it seems to me that it's penalize in hospitals that treat low income patients the hospital a doesn't treat low income patients gets the full twenty hospital b refund it doesn't seem akin to a refund in the usual sense of the term which is more tax was withheld than i actually owe at the end of the year song going to get a tax refund on tax actually paid because i overpaid this is not an overpayment in that sense well and there and then that is a separate part of this program i understand is and happened to dana farber which was there were some over payments for some years and i got a quote refund it to the extent that you do your larger point and again i would take the example of any other kind of you know refundable tax deduction if i took a deduction for my work expenses one thing you might say is that i'm being reimbursed for my work expenses but a unified system essentially redistributing funds from hospitals that relatively care far more more private patients to those that pay for more intimations and if you imagine the hospital at the median of both of those you know that you know incurs the you know incurs a ten dollars tax and would be entitled to a ten dollars to the men under the based on this the way that's the state has chosen to vet to measure these distributions you know what would be going on for that hospital is essentially it would just do nothing and it would be exactly the same as they just held on to that money and separately treated medicaid patients and medicare does not provide reimbursement for those medicare medicaid patients i would also just won one other question just hypothetical which is the state payroll taxes could medicare reduce reimbursement of the hospital state payroll taxes by the amount paid to the hospital for treating the medicaid that's very different than what we're talking about  back that if this is this statute was designed for that purpose of basically running a scam to do a revolving door get the money back it's the most poorly designed scam ever know there are no allegation i i question is whether or not board interpretation is for miscible given this demonstration program where the sole purpose massachusetts in taxes they make no contribution to the fund but they get payments from the fund because the payments are compensating them for actual care provided the actual who are uninsured patients and the largest contributors to the funder actually the insurance about the wall here and what you are doing on the law also question one do you think the guidance you offside guidance is consistent with the regulations well i think it is ye  require the word specific or that i think it does not work with the regulation or the statute and one week and then what do we do then you would have to to set it aside as we are not not subject reimburse costs that are actually incurred and says that the secretary has to regulations that are consistent with general principles of cost reimbursement but limited but your argument i don't see anywhere  injured and you provide seventy five dollars worth of here you need to and you only end up paying a check in twenty five to seventy five days income the problem though is that that either you are trying to strike down the regulation or you are saying that this particular application of a valid regulation was a bad application to you and so i really hear about this application application reasonable after fifty to the extent that i'm feeling with a bit of a moving target because sometimes the secretary said the regulations sometimes the secretary regulations call for not just any association with but a particular association it's one that's intended on the initial purchase a refund you can't have a refund unless you first had  here are you would say this is not in because it's compensating for its revenue compensating for specific patient care and if they didn't that's that's part of the problem here is in terms of the inconsistency is that the secretar leave business they've paid on all of their private care sector charges and it's not just one that falls on the hospitals alone it's a fund that is made up of source other sources cost to the extent that there was a separate payment that was received that was specifically to compensate for care him and a specific individual could could medicare or do you think say we are rethinking this and we're not going to compensate hospitals at all for the payment of this tax too in this situation because the taxes so we used for medicaid patien secretary's longstanding i understand what the lawsuit parsers could could they under the statute and do that your honor i have not studied all of those provisions but my understanding is that the provisions of th and and it is part of the ok so the next next targets because suppose massachusetts structured this as a deduction that you pay the tax but in paying the tax you get a deduction based on this very direct dependency conditionality on the past you give it back only to the extent of the that tax when you start tying it that way i think it's fair to say that it is intended to that they don't structure it as a doctor but do that the two step process like they do here i think that they think that judge rogers question about the medical shifting medicare costs right patience is actually a part of this because tonight and i like the merger example because i think it demonstrates his purpose in the merger example of the secretary knowledge is that the day before the merger the twenty million or twenty dollars or whatever it is is is recognize cost it was actually occurred eligible for reimbursement medicare pays its share and then after the merger however she says oh no actually because this other a you merge with provided all of this  know i know but my point is you come up with hypotheticals as you do and always do that make it very complicated but the issue here before the board was what it saw fit the example and i need to be clear as to your position that's why they have farmers situation of which you just complain doesn't fit that example they won't call it medicare share of the cost the pens upon medicare you who's rationed you know trying to just understand a simple example and why if in fact it does not fit your client's situation because the board listed all your arguments and said here is an example of how this actually works and indeed the way massachusetts and ministers the tax your monthly bill reflects this example and and are are is that the five million use is in the home and if we didn't declare that is income we would probably be responsible  profit hospital we were probably responsible for tax fraud but but that's what i'm trying to get at council there are all kinds of accounting and other legal questions the only thing before the board was your going to put it on your books that way but what the board with saying you know you start out with twenty dollars that you have to pay the state under the state law but this fund where this tax money is going you're actually going to get five million back so therefore only pay us but but even so might what i'm trying to get at is the example is in your view deceptively simple and i want to understand why and i don't want to hear about how accountants you know put this on your books because obviously that's something in  control i'm not the secretary's here are i i hope i'm not being i'm not certain i'm trying to be difficult or or flippant in saying that the the income has to be as is income because it's payment for actual services received and i'm you know i think that the wrong or example is easier just because if if that doctor didn't declare the seventy five dollars income there's no question the doctor would be guilty of tax fraud if the doctor went around doing sort of partnering you services all over and then declared no income for the year it would be tax fraud because it is in why is it income secretary would be forcing your client to commit tax fraud well if if if if the hospital actually had to do is focus the way the secretary is saying that would amount to and  that treating two hospitals that are similarly situated differently now just because i have merged the two hospitals i'm not entitled to the income for having provided the exact under the statute and if i don't get the fall pumpkin sation of medicare austrian first man and you know what it was and before somebody has to pick that up who would pick that up it would it have to charge their private patients more then it's it is a very clear so some states so i understand this to some states do this as a docs in rather than a separate payment acknowledge oh i'm not forcing to concede anything that's a different cases and that's a stronger case for the secretary on saying this is not a cost to actually incurred right your point here is the way the state is structured it it's two think i mean it really was a case of hospitals were the ones contributing to the on in the same hospitals were the ones getting the money back and here we have a lot of other sources in fact the biggest contributors t something that is critical to sunny's there's another question which is on the so unrelated my last question on the wall again suppose for me because i think this is where i am if the case comes down to is t under the refund regulation i think you win but if i think the bet that the source of authority here for medicare is broader than just the refund regulation that i think you have a problem and the government says that it's not just a refund regulation this is adjudication where the government can allow more aid on apply the plies general regulations to new situations what is the problem with the government's  looking at is on page fifty likewise in the third paragraph the board finds that the payments made to the c p were properly treated as a refund the regulations that talk similarly this counts here the charge backs refunds they're all similar in the sense that they all are conditioned on their first being we have here we have recipients who receive money from the fund that don't make any contributions we have the the largest recipient one hundred sixty million from the final paid four million into it and we have  regulations i think that the kind of itself is quite clear that the closest analogy is the refund radiation in the existing regulations because again the secretary you know that is a regulation that's directed to goods and services and it was just you know which is the guy isn't the reason that you did the guidance not you personally the government did the guidance rather than a new regulation was the retroactivity concern of the words that if they did a new regulation two thousand and ten to be hard to apply that