Opinion ID: 810135
Heading Depth: 3
Heading Rank: 2

Heading: Whether the Tax Assessment costs were “actu-

Text: ally incurred” The Hospitals also argue that they incurred the full cost of the Tax Assessment, as they were billed by the State of Illinois for the Tax Assessment and they wrote checks to the State to pay for the Tax Assessment. Therefore, they contend, the Administrator’s Decision that they did not actually incur the cost of the Tax Assessment is incorrect, as the statutory language requires that they be reimbursed for the reasonable costs they actually incurred.7 (...continued) taxes that are paid into a State’s general revenue fund and used to fund Medicaid payments. According to them, CMS has previously determined that health care related taxes “may be considered an allowable cost for purposes of developing Medicaid reimbursement rates’ for hospitals, without any requirement that the Medicaid payments received be offset against the amount of the tax.” The problem with this argument, however, is that we are concerned here with Medicare reimbursement and not with whether taxes should be offset for purposes of determining Medicaid reimbursement. 7 The Hospitals contend that the word “incurred’ does not involve a highly technical Medicare regulation requiring (continued...) 30 No. 11-2809 While the Hospitals are correct that the Secretary must assess the costs “actually incurred,” their argument does not recognize that the Secretary’s regulations require that reimbursable costs must necessarily take into account any amounts that defray a health care provider’s costs. 42 C.F.R. §§ 413.5(c), 413.98. In determining allowable costs, the Secretary should not look at costs in a vacuum, but must look at the totality of the circumstances. The Hospitals’ argument ignores the real net economic impact of the Access Payments. The Hospitals also assert that CMS’s position that the Hospitals did not “actually incur” the costs of the Tax Assessment within the meaning of 42 U.S.C. § 1395x(v)(1)(A) “runs counter to the intent of Congress, reflected in 42 U.S.C. § 1396b(w)(4), that permissible provider tax arrangements, such as the one at issue in this case, shall not be a basis to deny reimbursement.” The fundamental error with the Hospitals’ argument, however, is that the Hospitals cite to the Medicaid statute to show Congress’s intent as it relates to reimbursable expenses under Medicare. While the Medicaid provision the Hospitals rely upon ensures that States are properly reimbursed for patient care costs under Medicaid, it does not address whether a health care (...continued) CMS’s expertise, and therefore the Decision is not entitled to any deference. Under Chevron, however, we must give effect to an agency’s regulation containing a reasonable interpretation of an ambiguous statutory term. 467 U.S. at 843, 104 S.Ct. 2778. No. 11-2809 31 provider incurs an allowable cost under Medicare. The Hospitals’ reliance on HHS’s position that permissible tax arrangements under § 1396b(w)—a Medicaid provision—somehow demonstrates that “the funds received by the providers are ‘protected reimbursement for cost of Medicaid services,’ ” Medicaid Program; Health CareRelated Taxes, 73 Fed. Reg. 9685, 9690-91 (Feb. 22, 2008) (emphasis added), also suffers from the same error. In short, the Hospitals’ arguments fail to address the key differences between Medicaid and Medicare. C. Significance of CMS’s determination that the Access Payments were not a hold harmless arrange- ment The Hospitals’ third contention on appeal is that the Decision must be set aside in light of CMS’s approval of the SPAs. The Hospitals argue that CMS’s approval of the SPAs demonstrates that CMS previously determined that the Access Payments and Tax Assessment did not constitute a hold harmless arrangement. According to the Hospitals, “[t]he nature of the Medicaid payments to the Hospitals—already determined by CMS not to be a repayment of the provider tax but, rather, needed payments for services to Medicaid patients—does not change when the Medicare program confronts those facts.” In support, the Hospitals rely on Michael Reese Physicians and Services, S.C. v. Quern, 606 F.2d 732, 73637 (7th Cir. 2002). There, however, we stated that in approving the Illinois Medicaid plan, HHS had determined that the State plan was in compliance with Medicaid’s 32 No. 11-2809 statutory and regulatory requirements. Nowhere in Michael Reese Physicians and Services did we note that HHS’s determinations as they pertained to Medicaid, were controlling on HHS’s Medicare determinations. The Hospitals also fail to point to any statutory language in the Medicare Act suggesting that an interpretation of the Medicaid Act is controlling when interpreting provisions of the Medicare Act. While both Medicare and Medicaid are federally sponsored programs, they are two entirely distinct programs with fundamentally different rules governing eligibility for federal funds. Univ. of Wash. Med. Ctr. v. Sebelius, 634 F.3d 1029, 1031 (9th Cir. 2011) (explaining the different funding mechanisms). Most notably, Medicare is a federally funded program whereas Medicaid is jointly financed by the States and the Federal Government with precise rules for determining the amount of federal matching funds a participating State will receive. Because the two programs are independent of one another, CMS’s decisions with respect to a State’s Medicaid program are not controlling on how CMS interprets the application of Medicare provisions. See Cmty. Health Ctr. v. Wilson-Coker, 311 F.3d 132, 137 (2d Cir. 2002) (finding that Secretary’s definition of “ ‘reasonable’ or ‘reasonably related’ under Medicare” need not have the same meaning that those terms have for Medicaid purposes); Roe v. Norton, 522 F.3d 928, 933 n.5 (2d Cir. 1975) (assuming that Medicare has a “medical necessity” requirement, courts should not infer that Medicaid has an analogous requirement). No. 11-2809 33 The Hospitals further argue that the purpose of the hold harmless provision in the Medicaid statute is the same as the purpose of the reasonable cost provision in the Medicare statute, which is to ensure that CMS only reimburses an entity for the costs it has actually incurred and therefore the two provisions should not be interpreted inconsistently. According to them, by prohibiting, in the Medicaid context, the payment of federal matching funds in those circumstances where a State refunds taxes back to the providers that originally paid them, the Medicaid Act was essentially employing the same payment restriction as found in the Medicare regulations and Manual provisions pertaining to refunds. The Hospitals contend that by disregarding the fact that CMS approved the SPAs, thereby concluding that the Access Payments did not constitute a refund of the Tax Assessment, the Decision interpreted the Medicaid and Medicare Acts inconsistently. In support, the Hospitals rely on Adena Regional Medical Center v. Leavitt, 527 F.3d 176, 180 (D.C. Cir. 2008) [hereinafter Adena]. The Hospitals’ reliance on Adena is misplaced. There, the District of Columbia Circuit reviewed a provision in the Medicare Act that expressly refers to the Medicaid statute, 42 U.S.C. § 1395ww(d)(5)(F)(vi)(II), and also uses the phrase “medical assistance.” 527 F.3d at 180. In applying the principle that courts should presume that “identical words used in different parts of the same act are intended to have the same meaning,” the Adena court held that the phrase “medical assistance” in the Medicare Act should have the same meaning as that applied in the Medicaid Act. Id. Here, however, the 34 No. 11-2809 Hospitals point to no such language appearing in both the Medicare and Medicaid Acts that should be subject to this canon. Accordingly, Adena is inapplicable. In sum, because Medicare and Medicaid are two separate and independent programs, we cannot conclude that CMS’s decisions under Medicaid necessarily control her decisions under Medicare, such that the Decision at issue here was arbitrary, capricious or contrary to law. D. The Decision that the Access Payments were re- funds was not an arbitrary and capricious reversal of long-standing policy The Hospitals’ fourth contention on appeal is that the Decision should be set aside as arbitrary and capricious because it constitutes a reversal of long-standing policy. In support, the Hospitals rely on United States v. Mead Corp., for the proposition that courts consider a host of factors in assessing the weight that a final agency decision is due. 533 U.S. 218, 228, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) [hereinafter Mead]. Without further elaboration, the Hospitals assert that consistency is one of the most important factors and that where an agency’s interpretation of a relevant provision is inconsistent with the agency’s earlier interpretation, it must be set aside as arbitrary and capricious. The Hospitals’ reliance on Mead merits discussion. There, the Supreme Court merely expanded upon its prior decision in Chirstensen v. Harris County, 529 U.S. 576, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000), and held that tariff classification rulings issued by the United States Customs No. 11-2809 35 Service, while not deserving of Chevron deference, deserved respect proportional to their “power to persuade” under Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944). In Christensen, the Supreme Court clarified that agency interpretations contained in formats such as opinion letters, policy statements, agency manuals, and enforcement guidelines (as opposed to an interpretation arrived at after a formal adjudication or notice-and-comment rulemaking) were entitled to respect under Skidmore, but only to the extent that those interpretations had the power to persuade. 529 U.S. at 587, 120 S.Ct. 1655. In Christensen, the Supreme Court continued to recognize that under Chevron courts “must give effect to an agency’s regulation containing a reasonable interpretation of an ambiguous statute.” Id. (citing Chevron, 467 U.S. at 842-44, 104 S.Ct. 2778). Under Skidmore, the Supreme Court declared that the weight of an administrative ruling “will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” 323 U.S. at 140, 65 S.Ct. 161. Mead discussed the Skidmore factors, such as an agency’s consistency, in the context of denying Chevron deference to the tariff classification ruling therein at issue because such rulings are more akin to policy statements and agency manuals. 533 U.S. at 228-231, 121 S.Ct. 2164. The interpretation at issue here, however, was arrived at after a formal adjudication and therefore the Skidmore factors are inapplicable. The more appropriate standard to apply is the standard enunciated in Thomas Jefferson 36 No. 11-2809 University, requiring substantial deference of an agency’s interpretation of its regulations such that the agency’s interpretation is controlling unless plainly erroneous or inconsistent with the regulation. 512 U.S. at 512, 114 S.Ct. 2381; see also Christensen, 529 U.S. at 588, 120 S.Ct. 1655 (noting that an agency’s interpretation of its own regulation is entitled to deference where the language of the regulation is ambiguous). While we need not look at the Skidmore factors here, where an agency has changed course it is “obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first place.” Motor Vehicles Mfrs. Ass’n, 463 US. at 42, 103 S.Ct. 2856. Were HHS to have abandoned a long- standing policy and taken a new direction, we would require a reasoned analysis of its reasons for doing so. The Administrator’s Decision, however, does not constitute such a change in course. Prior to this case, HHS had not issued any construction of the statute or applicable regulations that was in tension with the application here of the regulatory provisions at issue. 1. Whether the Administrator’s actions are inconsistent with long-standing policy According to the Hospitals, CMS has not previously taken the position that taxes paid by hospitals must be offset by Medicaid or other State funds received for services that were funded by the taxes. Rather, the Hospitals assert that CMS has allowed Medicare reimbursement of these taxes consistent with Manual Section 2122 No. 11-2809 37 without any offset for a provider’s receipt of such funds. On reply, and as discussed at oral argument, however, the Hospitals concede that “CMS has not previously promulgated a regulation that expressly stated provider taxes were not to be offset by Medicaid payments.” The Hospitals nonetheless attempt to point to prior Board decisions that demonstrate an implicit policy. As evidence of the alleged past policy, the Hospitals cite to five prior Board decisions involving the reimbursement of taxes, two CMS decisions (Kindred Hosp. v. Wisconsin Physician Servs., 2009 WL 6049415, at  (H.C.F.A. Sept. 29, 2009); Florida Group Appeal-Indigent Tax v. Blue Cross and Blue Shield Ass’n, Inc., PRRB Dec. Nos. 90-D61 and 90-D62, CCH Medicare and Medicaid Guide ¶ 38,934 (Sept. 20, 1990), aff’d, HCFA Admr. Dec. (CCH) ¶ 38,935 (Nov. 20, 1990)), and an Office of Inspector General report regarding the Missouri provider tax program. According to the Hospitals, these cases demonstrate that “ ‘refunds’ do not include Medicaid payments to the Hospitals for patient services in situations where there is also present a provider tax that is used to fund the payments.” The handful of prior Board decisions the Hospitals rely upon to purportedly show HHS’s long-standing policy are not determinative. Our precedent instructs that Board decisions are not the decisions of the Secretary or her Administrator and are not authoritative. Cmty. Care Found. v. Thompson, 318 F.3d 219, 227 (7th Cir. 2003) (“There is no authority for the proposition that a lower component of a government agency may bind the decision making of the highest level.”). While such decisions may offer 38 No. 11-2809 guidance to providers, they “carr[y] no more weight on review by the Secretary than any other interim decision made along the way in an agency where the ultimate decision of the agency is controlling.” St. Francis Hosp. Ctr., 714 F.2d at 874 (quoting Homan & Crimen, Inc. v. Harris, 626 F.2d 1201, 1205 (5th Cir. 1980)). “Final responsibility for rendering a decision lies in the agency itself, not with subordinate hearing officers . . . .” Id. Furthermore, the Board decisions relied upon by the Hospitals did not directly address the issue of offsets. In Florida Group Appeal, the Administrator affirmed a Board decision addressing the question of the appropriate fiscal year in which Florida hospitals could claim an indigent care tax assessment as a reimburseable expense. PRRB Dec. Nos. 90-D61 and 90-D62, CCH Medicare and Medicaid Guide ¶ 38,934 (Sept. 20, 1990), aff’d, HCFA Admr. Dec. CCH Medicare and Medicaid Guide ¶ 38,935 (Nov. 20, 1990). Florida Group Appeal did not involve a question as to the amount of costs the Florida hospitals actually incurred. The line of cases discussing the Minnesota provider taxes are also distinguishable in that the Minnesota statute therein at issue did not involve payments of any kind to offset the amount of taxes paid by the hospitals. Because none of the cases involve the precise issue that was before the Administrator in this case, the Administrator’s Decision was not inconsistent. The Hospitals’ reliance on Kindred Hospitals is similarly unhelpful. The issue in Kindred Hospital involved the proper treatment of payments providers received from a privately-administered pooling arrangement in which certain Missouri hospitals participated. 2009 WL 6049415, No. 11-2809 39 at . The providers in Kindred Hospitals were Medicarecertified providers in Missouri that were subject to a State tax and were also participants in the pooling arrangement. Id. at . On their Medicare cost reports, the providers reported their tax payments, listed the pool payments they received as Medicaid revenue, and claimed the amount of the tax as an allowable expense. Id. The Administrator concluded that the pool payments must be used to offset the tax, and that the actual costs incurred were properly determined with respect to the tax payment once the related pool payment was recognized and offset. Id. at . On appeal to the district court, the Western District of Missouri affirmed the Administrator’s decision. Kindred Hospitals East, LLC v. Sebelius, No. 10-00073-CV-W-HFS, 2011 WL 4729735, at  (W.D.Mo. Oct. 5, 2011). In affirming the Administrator’s decision, the district court relied on Sta-Home Health Agency, Inc., 34 F.3d at 305-09, and explained that contrary to the provider’s suggestion, “actual cost cannot be computed by merely ‘following the money’ or isolating the accounting events. Instead, the courts have allowed the Administrator to scrutinize the substance of the transaction to determine cost actually incurred.” 2011 WL 4729735, at .8 Nonetheless, 8 The Eighth Circuit recently affirmed the district court’s conclusion and held that the Administrator had acted within her “statutory authority to scrutinize the substance of the relationship between the [State] tax and the pool payments to determine whether there was a Medicare reimbursable cost.” (continued...) 40 No. 11-2809 the Hospitals argue that Kindred Hospitals helps their case because although the intermediary did offset the pool payments the hospitals received, it did not offset Medicaid payments that the hospitals received directly from the State against any amount of the provider tax. This amounts to an argument that because HHS might have also challenged other aspects of the Missouri tax program, but did not, HHS’s decision not to chal- lenge those aspects amounts to an agency policy that the unchallenged aspects of the Missouri tax program comply with Medicare. A federal agency does not establish policy by not taking administrative action, however. See Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 170, 125 S.Ct. 577, 160 L.Ed.2d 548 (2004) (“Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to con- stitute precedents.”). In sum, the Administrator’s decision here was not inconsistent with a prior policy statement. Even if it were arguably inconsistent, the Administrator was not required to explain a departure from previous interpretations. See Pre-Fab Transit Co. v. United States, 595 F.2d 384, 387 (7th Cir. 1979) (noting that “[a]dministrative agencies are not bound by the doctrine of stare decisis” and that courts may not reverse an agency determina- 8 (...continued) Kindred Hosps. East, LLC v. Sebelius, No. 11-3555, 2012 WL 2012 WL 3965925, at  (8th Cir. Sept. 12, 2012). No. 11-2809 41 tion simply because the agency determination may arguably be inconsistent with prior agency decisions) (citing Sawyer Transport, Inc. v. United States, 565 F.2d 474, 477 (7th Cir. 1977)). 2. Whether CMS’s policy clarification fails to refute its “prior position” that provider taxes are allowable without offset In May 2010, shortly after the Administrator’s Decision was issued, CMS published a “Proposed Clarification of Payment Policy for Provider Taxes” in the Federal Register, 65 Fed. Reg. 23,852, 24,018-19 (May 4, 2010), which was adopted as final without change in August 2010. 75 Fed. Reg. 50,042, 50,362-64 (Aug. 16, 2010). The Hospitals assert that CMS’s policy clarification was intended to bolster CMS’s litigating position in this case and is an effort to gloss over changes in Medicare reimbursement policy, and therefore it is deserving of no deference. In the Final Rule, CMS noted that there was confusion relating to the determination of whether a tax is an allowable tax, and that much of the confusion had arisen because it was possible to read sections 2122.1 and 2122.2 of the Manual “as permitting all taxes assessed on a provider by a State that are not specifically listed in Section 2122.2 to be treated as allowable costs.” 75 Fed. Reg. at 50,362-63. CMS proposed to amend the Manual “[i]n situations in which payments that are associated with [an] assessed tax are made to providers specifically to make the provider whole or partly whole for the 42 No. 11-2809 tax expenses,” so that Medicare only recognized the net expense incurred by the provider. Id. at 50,363. While it is clear that “[d]eference to what appears to be nothing more than an agency’s convenient litigating position would be entirely inappropriate,” Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 213, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988), here, the Secretary has not taken such a position. The Secretary has not relied on the policy clarification to justify its denial of the Hospitals’ claims. See Gonzales v. Reno, 325 F.3d 1228, 1350 (11th Cir. 2003) (noting that “[a]n after-the-fact rationalization of agency action—an explanation developed for the sole purpose of defending in court the agency’s acts—is usually entitled to no deference from the courts,” but concluding that the agency’s position, developed in the course of administrative proceedings before litigation commenced is not such a justification). Importantly, while the policy clarification was issued a few months after the Administrator’s Decision, HHS issued the proposed clarification before the Hospitals filed this action in district court. Accordingly, the Secretary’s position is in no sense “a post hoc rationalization[ ]” advanced by an agency seeking to defend its actions against attack. Georgetown Univ. Hosp., 488 U.S. at 212. E. The Decision did not establish a new rule that fails to comply with the APA The Hospitals’ final contention on appeal is that the Decision must be set aside because it establishes a new substantive legal standard for Medicare reimbursement No. 11-2809 43 that is invalid because it was not adopted in compliance with the APA’s notice and comment requirements, and because it cannot be retroactively applied.9 As an initial matter, and as discussed above, the Decision did not constitute a departure from a previous position. See Homemakers North Shore, Inc. v. Bowen, 832 F.2d 408, 413 (7th Cir. 1987) (court’s conclusion that Secretary had not changed positions necessarily disposed of providers’ contention that Secretary’s change to regulatory language required Secretary to follow APA’s notice and comment requirements prior to making change). Even if it had, however, we find that the Decision properly qualifies as an adjudication and therefore the Secretary was not required to follow the APA’s notice and opportunity for comment requirements. Under the APA, an administrative agency must publish in the Federal Register “substantive rules of general applicability . . . and statements of general policy or interpretations of general applicability formulated and adopted by the agency” as well as “each amend- 9 In support of their argument that the Decision creates a substantive change in Medicare reimbursement law, the Hospitals rely on the testimony of an expert witness, Sheree Kanner. Ms. Kanner testified that she was not aware of any prior case where hospitals were required to offset Medicaid revenues received from States against provider tax assessments for purposes of claiming Medicare allowable costs. As the Secretary points out however, Ms. Kanner only claimed expert status on Medicaid and not on Medicare reimbursements, the focus of this appeal. Accordingly, we discount her testimony. 44 No. 11-2809 ment, revision, or repeal of the foregoing.” 5 U.S.C. § 552(a)(1)(D)-(E); 5 U.S.C. § 553(b) (requiring agencies to publish “[g]eneral notice of proposed rule making”); see also Bd. of Trs. of Knox Cnty. Hosp. v. Shalala, 135 F.3d 493, 500 (7th Cir. 1998). A rule is defined as “the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency . . . .” 5 U.S.C. § 554(4). An adjudication, in contrast to rulemaking, “means agency process for the formulation of an order[.]” 5 U.S.C. § 554(7). Under the APA, all interested parties in an adjudication must have the opportunity for “the submission and consideration of facts, arguments, offers of settlement, or proposals of adjustment[.]” 5 U.S.C. § 554(c)(1). “Adjudications typically ‘resolve disputes among specific individuals in specific cases, whereas rulemaking affects the rights of broad classes of unspecified individuals.’ ” City of Arlington, Tex. v. F.C.C., 668 F.3d 229, 242 (5th Cir. 2012) (quoting Yesler Terrace Cmty. Counsel v. Cisneros, 37 F.3d 442, 448 (9th Cir. 1994)). “[B]ecause adjudications involve concrete disputes, they have an immediate effect on specific individuals (those involved in the dispute). Rulemaking, in contrast, is prospective, and has a definitive effect on individuals only after the rule subsequently applied.” Yesler Terrace Cmty. Counsel, 37 F.3d at 448. Here, the Decision has the hallmarks of an adjudication. The Medicare Act provides that providers of services No. 11-2809 45 contesting the amount of reimbursement due as determined by an intermediary may request a hearing before the Board, and it further instructs that a Board decision “shall be based upon the record made at such hearing.” 42 U.S.C. §§ 1395oo(a), (d). The Decision utilized the hearing procedures outlined in the Medicare Act, it involved a concrete dispute between the parties and had an immediate, concrete effect on the parties to the dispute. Furthermore, the Decision did not affect a broad class of unspecified individuals. See Yesler Terrace Cmty. Counsel, 37 F.3d at 448. We therefore conclude that the Decision was an adjudication. Furthermore, it is well-established that “[a]n agency is not precluded from announcing new principles in an adjudicative proceeding rather than through notice-andcomment rule-making.” Negrete-Rodriguez v. Mukasey, 518 F.3d 497, 503 (7th Cir. 2008); see also City of Arlington, Tex., 668 F.3d at 240. “Nor is there any basis for suggesting that the Secretary has a statutory duty to promulgate regulations that, either by default rule or by specification, address every conceivable question in the process of determining equitable reimbursement.” Guernsey Mem’l Hosp., 514 U.S. at 96, 115 S.Ct. 1232. As the Supreme Court has noted, the Secretary has issued a set of comprehensive and detailed regulations, which consume hundreds of pages of the Code of Federal Regulations. Id. “As to particular reimbursement details not addressed by her regulations, the Secretary relies upon an elaborate adjudicative structure which includes the right to review by the [Board], and, in some instances, the Secretary, as well as judicial review in 46 No. 11-2809 federal district court of agency action.” Id. “The APA does not require that all the specific applications of a rule evolve by further, more precise rules rather than by adjudication.” Id. In our view, the Secretary’s method of determining that the Tax Assessments must be offset by the Access Payments via an adjudication is a proper exercise of her statutory mandate. See id. The Hospitals’ reliance on American Federation of Government Employees, AFL-CIO, Local 3090 v. Federal Labor Relations Authority, 777 F.2d 751, 752 (D.C. Cir. 1985), is not on point. There, the Federal Labor Relations Authority (“FLRA”) dismissed a complaint and ignored the plain language in regulations pertaining to when the filing of exceptions stayed an arbitration award. American Federation of Government Employees, AFL-CIO, Local 3090, 777 F.2d at 752-53. In vacating the FLRA’s order, the District of Columbia Circuit reasoned that “[w]ere the Authority’s approach proper, administrative agencies could effectively repeal legislative rules and abandon longstanding interpretations of statutes indirectly, by adjudication, without providing affected parties any opportunity to comment on the proposed changes, and without providing any significant explanation for their departure from established views.” Id. at 759. This is simply not what happened here. The Hospitals also rely on Alaska Professional Hunters Association, Inc. v. Federal Aviation Administration, where the District of Columbia Circuit held that although an agency may give its regulation an interpretive rule without offering the opportunity for notice and comment, No. 11-2809 47 “ ‘[o]nce an agency gives its regulation an interpretation, it can only change that interpretation as it would formally modify the regulation itself: through the process of notice and comment rulemaking.’ ” 177 F.3d 1030, 1033-34 (D.C. Cir. 1999) (quoting Paralyzed Veterans of Am. v. D.C. Arena, 117 F.3d 579, 586 (D.C. Cir. 1997)). But, Alaska Professional Hunters Association, Inc. conflicts with the APA’s rulemaking provisions, which exempt all interpretive rules from notice and comment, and with our own precedent and is therefore not persuasive. 5 U.S.C. § 553(b)(3)(A); Metro. Sch. Dist. of Wayne Twp, Marion Cnty., Ind. v. Davila, 969 F.2d 485, 488-89 (7th Cir. 1992) (noting that an interpretive rule “does not trigger the APA’s notice and comment requirement”); Bd. of Trs. of Knox Cnty. Hosp., 135 F.3d at 501 (noting that “an agency is not bound by the APA’s procedural requirements when announcing ‘interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice’ ”); cf. Paragon Health Network, Inc., 251 F.3d at 1147 n.4 (declining to consider the District of Columbia Circuit’s position expressed in Alaska Professional Hunters Association, Inc., 177 F.3d at 1033-34, that an agency must follow notice and comment procedures to change a previous interpretation of a regulation). The Hospitals also argue that even if CMS’s change in position were considered a non-substantive change in interpretation, it is still arbitrary, and rely on Continental Web Press, Inc. v. National Labor Relations Board, 742 F.2d 1087, 1093 (7th Cir. 1984). In Continental Web Press, the Board had succeeded in developing a clear policy through a course of adjudications “and to discard the 48 No. 11-2809 policy without explanation was arbitrary.” Id. at 1094. Unlike Continental Web Press, however, here, a clearly developed policy had not been created through a series of Board opinions and therefore it is inapplicable. Indeed, as we noted in Continental Web Press, where the Board applies the common law technique to its adjudications, “[f]inding distinctions is not reversing course; it is not like first deciding that cars must be equipped with airbags and then that they need not be; it calls for no special explanation.” 742 F.2d at 1093. The Hospitals’ final argument is that the rule announced cannot be retroactively applied. Because we find that no such new rule was announced, however, we decline to address this argument.