Opinion ID: 767907
Heading Depth: 4
Heading Rank: 3

Heading: St. Francis's APA Argument

Text: 49 Finally, we can not agree with St. Francis's argument that PRM § 2534.5 isinvalid because it was not adopted pursuant to the notice and comment procedures set forth in the APA, 5 U.S.C. § 553(b). In Guernsey, the Court sustained another of the Secretary's PRMs concerning reimbursement. In doing so, the Court stated that the PRM at issue was not subject to the notice and comment requirement of the APA because it was a prototypical example of an interpretive rule. 514 U.S. at 99. See 5 U.S.C. § 553(b)(A) (establishing that notice and comment are not required for interpretive rules, general statements of policy, or rules of agency organization, procedure or practice). Specifically, the Court defined interpretive rules as those issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers. Guernsey, 514 U.S. at 99. (citation omitted). Such rules do not have the force and effect of law and are not accorded that weight in the adjudicatory process, and do not effect a substantive change which is inconsistent with existing regulations. Id. See also Friedrich v. Secretary of HHS, 894 F.2d 829 (6th Cir. 1990) (holding that a national coverage determination by the Secretary was an interpretive rule). Lower court decisions looking at PRMs have been consistent with Guernsey, concluding that they are interpretive rules and do not require notice and comment rulemaking. See, e.g., St. Mary's Hosp. v. Blue Cross & Blue Shield Ass'n/Blue Cross & Blue Shield, 788 F.2d 888, 891 (2d Cir. 1986)(stating that PRM rules have consistently been held to be 'interpretive rules,' and thus exempt from the notice and comment requirements); Columbus Community Hosp., Inc. v. Califano, 614 F.2d 181, 187 (8th Cir. 1980) (stating that PRMs are agency interpretive rules). 50 Even beyond the simple fact that PRMs are generally categorized as interpretive, the work done by PRM § 2534.5 places it within the Guernsey Court's definition of an interpretive rule. The rule does not effect new substantive reimbursement standards inconsistent with prior regulations--the central characteristic of a substantive rule. See Guernsey, 514 U.S. at 99; Warder v. Shalala, 149 F.3d 73, 80 (1st Cir. 1998). Rather, as explained above, the PRM reasonably interprets a statute and regulation which placed the determination of general terms such as the reasonableness of costs and the typicality of services in the hands of the Secretary. We agree with the Secretary that the PRM partially performs this role by providing the means by which HB-SNFs' systemic unreasonable costs are accounted for in determining exceptions. Thus, just as in Friedrich, the PRM creates no new law. 894 F.2d at 837. Rather, it interprets the statutory language... as applied to a particular medical service or method of treatment. Id.; see also Warder, 149 F.3d at 80 (finding an administrative ruling to be interpretive because it addresse[d] an area of ambiguity and did not stake out any ground the basic tenor of which [was] not already outlined in the law itself) (internal quotations and citation omitted). St. Francis's arguments to the contrary are anchored in its prior argument that PRM § 2534.5 contradicts the plain language of the applicable regulation that it purports to interpret, St. Francis's Br. at 35, a contention with which we disagree. Similarly, the dissenting opinion's APA argument also emerges from its underlying view that the PRM cannot be considered an interpretation of 42 C.F.R. § 413.30 because it confuses the key terms of that regulation and is unrelated to the reasonableness of atypical service costs. Again, based on our discussion supra and in light of the deference owed to an agency interpreting its own regulations, we simply disagree with this conclusion. Thus, the Secretary was not required to comply with the APA's notice and comment procedures in issuing PRM § 2534.5. 11