called the dish adjustment but it raises an enormous practical consequence consequences on the secretary's ability to prospectively fill gaps left by congress in a federal program and administers in a manner that is actually more beneficial to medicare providers like the plaintiffs in this case the hospitals here in oregon the secretary wouldn't was faced with the situation that congress clearly had not envisioned the demonstration projects which create expansion populations who are not eligible for medicaid but which are are receiving benefits under a demonstration progress program is paid for with federal matching payments from the medicaid program the secretary as s d s demonstration projects and programs which a more prevalent initially had a policy of since they weren't eligible the most natural reading of the statute which is keyed on eligibility did not include those in the medicare dish calculation but in two thousand and at a cost of nearly two billion dollars over five years the secretary issued a new rule that was going to include those individuals now this new rule is benefiting the plaintiffs here these hospitals in oregon which has an expansion waiver demonstration program but the hospitals that are plaintiffs here would like to benefit from this rule for past two years years prior to two is not clear and therefore therefore very strong reasons why it's not clear first the language of the statute reads it counts people who are quote eligible for medical assistance under a state plan  approved under subchapter nineteen now the first reason is that they do not talk there about expansion populations or demonstration projects at all why aren't the people of that participate in the expansion population the it's true that the medicaid i mean the whole point of the demonstration project is allow medicaid matching funds to be used to pay for these benefits but in focusing on the term medical assistance which the district court and the plaintiffs do know that's actually not the way it works the way for process allows the costs of the care to be deemed to be put into the medicaid program but it does not make those people eligible for medicaid in fact they're not eligible they don't section excuse me subsection eleven of the social security act they said they would not they do they are not eligible for medicaid that's true so that we have a separate source of authority that allows these people to receive medical then the federal government to match the cost of that care but it doesn't make them eligible for medicaid it allows their care to be covered by the by the federal medicaid program so there's no medicaid patient goes a long way to answering the question of whether congress directly spoke to the issue and simply did not face up to the issue of how this demonstration project provision would interact with the dish and with the medicaid statute and it didn't answer that does it functions that function as part of the state medicaid point i mean i think demonstration projects can can function in different ways and the record  administered it's my understanding that the i mean the method of of reimbursement to the states the matching payments to go from the federal government to the states are managed pursuant to the medicaid act that's what the demonstration project statute allows but at the same time the terms used in the dish statute say eligible for medical assistance under state plan approved under so chapter nineteen and it's like putting a round peg into a square hole to say that that specifically refers to people who get benefits under a demonstration project they're not eligible this court in legacy emanuel said we have to eligible eligibility is the key here we and other courts said we look at this congress as resource income and status limitations because that's what congress was looking at when they created the dish adjustment and here if you look at those these people are do not satisfy to provide different types of care more comprehensive care and one problem with the other side's interpretation is it's going to make that provision it's going to squelch innovation in demonstration projects like this and it's one what is the way  these project did not exist at the time so it's hard to say they directly answer the question they really left a gap for that still and if we're talking about policy the policy concerns really lean in favor of allowing secretary deference here the secretary approves innovative medicaid projects for a variety of reasons these are the best ways to try and provide care to low income people but if these carry along with that this unexpected expense that is not uniform from state to state it will discourage the approval of these projects it will in oregon is a good example their program is great they increase the people who got benefits with federal cost sharing by sixty six percent in  five now that increased sixty six percent is mostly single people who are performed below the poverty line those people are not covered by medicaid but in doing so that sixty six percent increase in what they would like their dish payment to represent is not in uniform with any other state because other states have to provide care to those people on with their own dollars and there's no increased interest payments based on it so you have a state like california they they don't have a they might not have a demonstration project that covers single people below the poverty line so but that i mean the states will find their own ways to pay for that care and then you won't get uniformity eligibility for medicaid is a proxy for poverty absolutely right now these people that are included in the expansion population are poor people not necessarily as poor as not as poor as  i don't think that's quite correct because this is the medicare d s h and it's designed to help reimburse hospitals for greater cost of care in the medicare program here we're talking about medicaid people in the medicaid  used to kind of come up with a rough estimate of the hospital's ratio of poor of poor patients that it treats now the estimate is roughly congress we hospitals treat all kinds of low income people outside of the medicaid program many state the states has their own state program so it doesn't go into this calculation many hospitals treat people on their own dollar many poor people manage to pay for care themselves because they're not covered by medicaid none of these people are included but now that we're in but that doesn't mean since we have a demonstration project here in oregon that they cover some of these people now the medicare dish payment is  of money this money is coming out somewhere else and and that's yet another reason certainly that the secretary should have discretion to terminate to weigh these factors you have the fact that you have suggested well look these hospitals in oregon are now they do they might be treating more single people below the poverty line they might actually not they might have treated them before under a program we don't know but they might be training more and they weigh that against that now they're really whether the poor people are in california are i don't think it matters but what i'm expressing is that in matters under their interpretation of this provision in matters greatly if a state like oregon happens to have an expansion population it changes what they get compared to what's other states against them and that's my question what difference does it make in oregon proportionally more money for serving poor people if the goal is to include more poor people throughout the  eligibility and this court in legacy emanuel said that's the key term and when congress an act of the statute there was an obvious place to look for that it was congress's own eligibility limitations which the demonstration project statute allows to be waived allows there coming down the pipeline they try and provide a limited benefit a prescription drug benefit or a or a family planning benefit to a group of people is much higher than the poverty line a very broad group of people will think you're limit make that argument industry mark i'm not sure that the regulations have been promulgated at that time were but we do feel it's our obligation to raise i mean this is another change to the same regulation and that a decision in this case could impact that argument is the status not clear and in further support of that we're saying well look these demonstration projects can can change can distort the disc adjustment in many ways many unexpected ways and it's just another reason why it's cover those gaps they could not predict now if we throw those those gaps in as as the plaintiffs would like here now are increasing at that ratio even more some ho respect they were throwing all care that was state covered because medicare is essentially a state program into this calculation medicaid here i don't know i understand they were for for the data they were providing for this calculation included all of the state programs medicaid demonstration projects and state only programs and a change and honored interpretation it did based on their reliance interests but it's important to understand the plaintiffs in this case they say in their affidavit they understood that the policy in oregon was different the the eighth circuit in a decision i sent in yesterday that was decided in september upheld the policy this essentially a hold harmless policy it so i think i think if we look at the legacy emanuel case they said it working at the eligibility and it's certainly not clear what congress was thinking of at the time where they think you know their own eligibility factors which makes perfect sense or where they envision this issue making briefs arguments facts that the secretary is trying to bring to the court's attention on appeal for the first time should not be allowed in fact in all these sorts of arguments that have been concocted in the appellate briefs were raised to the court below and really should be considered way to be quite honest i believe all of them are not trimming and don't really speak to the issue here anyway but we believe that the court should not consider that the second opening comment i'd like to make is i i find it kind of ironic that were paid for by the state medicaid program it's ironic that here we are today and the secretary is arguing that days paid for by the state medicaid program aren't to be included in the calculation i just find that we've come sort of full circle here every one of these days that we're talking about is paid for by oregon medicaid every one of these days is paid for in part with a little nine thousand medical assistan dollars and the arguments that are being in place by the secretary really are for the most part manufactured for the purposes of trying to support an interpretation that had aim and what aim only which was to separate the demonstration projects from the state party and so the secretary could say we don't have to include the days and to stare curation and in fact you can't separate that takes years for the most part many of these years almost all of these years the revive the notice of program reimbursement wasn't issued until after the secretary's new regulation and so they couldn't be challenged in those we could only challenge them pursuant to the regulations that set forth how these things that we've done in medicare it takes years to wait for the program reimbursement notice to be issued it takes  years to get before the p r b it takes years to get court and so the fact is your honor there are other reasons for that which we have not placed in the record because we don't want  to cause any problems for the people in the state government but in fact if that was an important issue we could provide information to your honor's that would show why it is the hospitals didn't appeal at the beginning there was no there was no regulation there was no there wasn't a single published statement anywhere by the secretary and you any time that well there are hypothetical eligibles under a waiver demonstration project and expansion notables and even though the hypothetical we just aren't eligible inheres you for medical assistance under state because they're under the demonstration project they could have been eligible right under the old state point so we're going to count them in the past we wouldn't count expansions but now we're going to count them in the future nothing changed your honor between january nineteenth and january twentieth the statute didn't change the regulations didn't change nothing changed these people are eligible for medical assistance under  any plan and let me show you why if you look your honor judge joke and judge jones below very clearly understood that the waiver the demonstration project separate from the state plan doesn't allow the secretary to waive parts of the state that allows the secretary only to waive federal requirements and section one thousand zero two and substitute them with new requirements at the next page you'll see that the secretary for the oregon health plan waved a legend of ninety four of the eleven the only poverty the federal poverty level right for the demonstration eligibles and to waive the requirements that a medically needy program be available to pregnant women and children that means that's less of a benefit is ok we're going to let you try to do something a little different here we're going to let you waive these requirements new eligibility requirements right and still require you to meet all the other state plan requirements the demonstration project is not separate from the state point it can't be you can't provide title nineteen money unless it's under the state plan that's why the statute remember the waiver statute applies to numerous programs under the social security act the waiver statute applies to any and other programs each of those programs has a state plan requirement statu n fifteen says you can waive these requirements substitute your requirements and you can consider the expenditures to the extended period of time that you decide is under the state ear below that there's two different kinds of title nineteen there's title nineteen under the state point and then there's medical assistance under title a law that is not the case to run the state plan is very clearly the governing body of the entire medicaid program in oregon another point eight decisions for example anyone who was eligible for a f d c aid to families with dependent children or is succeeding program turned right they become what america is eligible for medicaid but who the poverty level people have to meet in order to be eligible the state the richer states that hire the poorest states that at lower consequently and congress knew all of this if you look at the legislative history there was testimony there was information to congress about this whole proxy but they knew would vary from state to state because the richest states could provide about people with higher poverty incomes to be eligible and of course states clinton not only that in the statute there are optional programs people optional eligibles and in one thousand no to certain pregnant women and children if the state opts to include those under nineteen no two then they'll be many more days in the medicaid proxy some states can afford to do that some states can't the whole notion that it's fair because oregon would do this you should see the am organ only allowed a certain number of paid days while richest states allowed it is now only days if you're in the hospital that's the whole point of the of the situation we have here there is no difference  substituted new ones in addition congress has repeatedly over the years if you go to  do offer this to show that congress understands the relationship between state plan and demonstration project and that relationship is not totally divorced one from the other paris thought that the waiver statute somehow created a different kind of eligibility it doesn't it's part of the state point it is by its terms part of the state plan and all this operating under the statewide demonstration that means the waived and requirements of nineteen zero two and the new ones adopted by the secretary write govern the entire state plan along with all the other waived requirements there isn't anything separate between the two you can take a look at every single one of these references every one of these references show the congress understand have to put it under the state when the fact is that that's because the statute title nineteen says you cannot hate medical assistance to anyone unless they're eligible under the  the demonstration project a demonstration project doesn't even have to touch eligibility it could be waiting for example as you all probably know or you may be familiar with the real demonstration part of o p wasn't the eligibility it was ranking services and putting them in a priority and deciding how to spend medicaid money based on a priority or prioritization of services so you i would like to take one more stab at explaining why the demonstration project statute does not render people eligible for medicaid under the state plan statute in section thirteen fifteen a to a does not  say that a patient is made eligible but it says that the cost of care which would not be covered by medicaid to the extent the secretary prescribe shall be regarded as expenditures under the state plan so the  not make these people eligible for medicaid under the state plan it allows those costs to be thrown into the medicaid cost reimbursement program and then i'd like to just say to practical consequences of the court if the court rules that statute clearly covers demonstration projects the first speaks in terms of how to treat the cost of caring for those people and it allows matching payments by regarding the costs as being spent under medicaid it does not make those individuals eligible under the title nineteen plan they qualify under a demonstration project which has different standards which has no connection to the eligible might have no close connection to the eligibility requirements of the congress and acted in the medicaid act and the consequences of ruling that the statute clearly includes demonstration projects are twofold the first is that demonstration projects will be strongly discouraged it is a very expensive to include them in the dish adjustments five billion dollars over the period of five years that the agency expanded its rule in two thousand in two thousand and two billion dollars this is very expensive it's a hidden cost an authorized and innovative demonstration project and will discourage them the second is that we will have further distortions of the dish adjustment will have situations where states are both serving low income people but one state because they've changed the eligibility criteria is getting far more dish money than the other state neither of these questions to congress  answer congress did not face these questions that the and it would be very damaging to hold that they did win when there's never been a program at the time congress did not specifically refer to demonstration projects in the statute and