Opinion ID: 3033871
Heading Depth: 4
Heading Rank: 2

Heading: “Prevailing Charges” and “Comparable

Text: Circumstances” The Agency additionally objects to the State’s use of rates from a private hospital to determine the prevailing charges at tribal facilities, which currently are tied to IHS published rates. The State argues that tribal facilities are not bound to charge, nor must the State limit payment to, the IHS rates. Moreover, noting that neither “customary charges” nor “prevailing charges” is defined within the Medicaid Act or its implementing regulations, but that both are defined in Medicare regulations, it argues that its methodology for determining these charges is fully consistent with the Medicare regulations. The Agency concedes that the IHS rates are not mandatory, but argues that, in this context, “comparable circumstances” must mean other facilities that are federally funded and receive 100% FMAP reimbursement. It stresses 13046 ALASKA DEP’T OF HEALTH v. CENTERS FOR MEDICARE that tribal facilities operate under markedly different circumstances than private hospitals—namely, they are largely funded by the federal government, and their Medicaid expenses are reimbursed fully by the federal government. On this point, the Administrator’s construction is focused not on the “locality” requirement, but rather on the distinct requirement that, within each locality, prevailing charges must be tuned to “comparable circumstances.” This distinction is fully supported by the regulatory text. Thus, we decline to decide whether it is the Agency’s or the State’s interpretation that best serves the regulatory purpose; rather, under the limited scope of our appellate review, we must give the Agency’s interpretation “controlling weight.” See Thomas Jefferson Univ., 512 U.S. at 512; Anaheim Mem’l Hosp., 130 F.3d at 849-50. [11] Thus, we conclude that the State’s methodology for determining prevailing charges is inconsistent with the applicable UPL, and hold that the Administrator’s disapproval of the proposed amendment based on 42 C.F.R. § 447.325 was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. See 5 U.S.C. § 706(2)(A).