Document: 508 U.S. 402 113 S.Ct. 2151 124 L.Ed.2d 368 GOOD SAMARITAN HOSPITAL, et al., Petitioners,v.Donna E. SHALALA, Secretary of Health and Human Services. No. 91-2079. Argued March 22, 1993. Decided June 7, Syllabus * Title 42 U.S.C. § 1395f(b)(1) requires the Services to reimburse lesser "customary charges" or "reasonable cost[s]" providers health care services Medicare beneficiaries, while 1395x(v)(1)(A) empowers issue regulations setting forth methods be used in computing reasonable costs, which may include establishment appropriate cost limits. Regulations issued pursuant that authority impose such limits based on a range factors designed approximate providing general routine patient service, but permit various exceptions, exemptions, adjustments After their costs during relevant period exceeded corresponding limits, petitioner filed an administrative appeal challenging limits' validity. In ruling for petitioners expedited review, District Court adopted interpretation 1395x(v)(1)(A)(ii) (clause (ii))—which "provide making suitable retroactive corrective where, provider any fiscal period, aggregate reimbursement produced by determining proves either inadequate excessive" entitled them all they could show reasonable, regardless whether surpassed amount calculated under regulations' limit schedule. reversing, Appeals reasoned petitioners' request would change compute invalid Bowen v. Georgetown University Hospital, 488 204, 109 468, 102 493. Instead, court Secretary's clause (ii) permits only year-end book balancing reconcile actual "reasonable" with interim, advance payments statute made year provider's approximate, anticipatory estimates what its reimbursable will be. Held: Clause does not require afford opportunity establish are excess stated regulations. Pp. ____. (a) (ii)'s language itself clearly settle matter at issue, is ambiguous as parties' interpretations correct. (b) While Georgetown, supra, eliminated across-the-board rulemaking from scope (ii), it did foreclose statute. (c) Confronted statutory provision, this generally defer permissible espoused agency entrusted implementation, particularly when agency's construction contemporaneous. By more than one instance book-balancing adjustment that, view, mandated promulgated soon after Medicare's enactment support current approach. On other hand, those nowhere mentioned mechanism implementing kind substantive recalculation deviation approved suggested petitioners. Moreover, development—and continued augmentation —of difficult harmonize give right contest application particular statutorily authorized method own circumstances. Rather, consistent view definition entailed generalizations benefit some subscribers harming others, desire refine these approximations through creation exceptions exemptions. (d) The rejects argument deference position precluded fact over years, has shifted approach then back again. responds inconsistency attributable lower courts' erroneous points out returned initial following Georgetown. How much weight should given views situation depend facts individual cases. Cf. FEC Democratic Senatorial Campaign Committee, 454 27, 37, 38, 44, 70 23. (e) circumstances case, defers (ii). Her restrictive reading least plausible petitioners', closely fits design whole objects policy, exceed her authority, comports 1395x(v)(1)(A)'s broad delegation her. 952 F.2d 1017 (CA8 1991), affirmed. WHITE, J., delivered opinion Court, REHNQUIST, C.J., BLACKMUN, O'CONNOR, KENNEDY, THOMAS, JJ., joined. SOUTER, dissenting opinion, STEVENS SCALIA, Carel T. Hedlund, Baltimore, MD, Edward C. DuMont, New York City, respondent. Justice WHITE Court. 1 As means aged disabled, Congress enacted program 1965. See XVIII Social Security Act, 79 Stat. 291, amended, 1395 seq. Under program, can enter into agreements reimbursed certain associated treatment beneficiaries. To operate imposing repayment service. question before us must six petitioning hospitals 2 A. 3 A complex regulatory regime governs reimbursement, rough description necessary background case. begin, required repay cost" charg[e]." 1395f(b)(1). Rather attempt define precision, empowered costs. 1395x(v)(1)(A).1 4 Prior 1972, contemplated entirety patients unless were found "substantially line" similar institutions. See, e.g., 20 CFR 405.451(c) (1967).2 apparently fueled concern passing inefficient excessive expenses, see H.R.Rep. 92-231, pp. 82-85 (1971); S.Rep. 92-1230, 188-189 (1972), amended specify costs" meant "actually incurred, excluding therefrom part incurred cost[s] unnecessary efficient delivery needed services," 1395x(v)(1)(A), authorize Secretary—as "methods" costs—to 1395x(v)(1)(A). 5 Accordingly, regulations, updated yearly establishing type (hospi tals, skilled nursing facility, etc.), rendered, geographical location, size, mix treated. 405.460 (1975). Hospitals divided terms bed urban—i.e., located Standard Metropolitan Statistical Area (SMSA)—or rural. 1979, labor-related component was determined wage index keyed hospital's location. 46 Fed.Reg. 33637 (1981). 6 provide within also allow applied claim. classified rural hospital apply reclassification urban one. 413.30(d) (1992). An exemption applicable obtained specified situations—e.g., expenses due "extraordinary circumstances," sole community, new provider, fewer fifty beds. 413.30(e). addition, available for, inter alia, "atypical extraordinary beyond control, unusual labor essential community services. 413.30(f).3 7 Two provisions central importance litigation. First, protect providers' liquidity, contemplates system year. Specifically, "shall periodically determine paid . shall paid, time times believes (but less often monthly) amounts so determined, account previously overpayments underpayments." 1395(g)(a). These interim ones, preaudit, estimated anticipated §§ 413.64(e), (f) Second, excessive." (ii)). B 8 Petitioners Nebraska certified "providers" "rural" purposes. Between 1980 1984, Pursuant 1395oo, Provider Reimbursement Review Board (PRRB) challenged validity two grounds. claimed calculate use part-time employees. Because greater proportion employees national average, had effect artificially lowering values. claim, pointed Congress' decision 1983 ordering conduct study consider distortion employment, Medicaid Budget Reconciliation Amendments Pub.L. 98-369, 2316(a), 98 1081, followed revision 1986 accounted employees, 51 16772 (1986), directive revised discharges occurring May 1, 1986. 1985, 99-272, 9103(a), 100 156. asserted same counterparts location next forced compete offering equivalent compensation. complained conclusively rather presumptively. Invoking provides "suitable adjustments," argued even if limit.4 9 PRRB believed lacked award desired relief, granted judicial review. 1395oo (f)(1). Adhering Eighth Circuit's St. Paul-Ramsey Medical Center Bowen, 816 417 (1987), ruled petitioners, holding compelled shown schedule.5 10 United States Circuit reversed. Good Samaritan Hospital Sullivan, (1991). relied our 493 (1988), we held rulemaking. F.2d, 1023. It correct "inequalities invalid." Id., 1024. modest permitting "year-end monthly installments" Ibid. approach, establishes total extended 1395g (which merely purport costs) reconciled postaudit year's end owed allowable costs.6 We certiorari resolve conflict among Courts Appeals.7 506 ----, 319, 121 240 II 11 starting point interpreting language, "[i]f intent clear, matter." Chevron U.S.A. Inc. Natural Resources Defense Council, Inc., 467 837, 842, 104 2778, 2781, 81 694 (1984). NLRB Food & Commercial Workers, 484 112, 123, 108 413, 416, 429 (1987). instructs argue mandate clear: having been read mean nonetheless might yield "inadequate instance. Where submitted, mandates correction full 12 contrast, asserts "aggregate reimbursement" refers sum 1395g. are, course, chosen be, data available. At end, actually provided pre-audit "aggregate" compared methods. have erroneously calculated, match owed, performed two. 13 us. respects. (in view) proper Secretary's) payments, themselves derived rough, incomplete data. "inadequate" "excessive" reimbursements, without stating standard against inadequacy excessiveness measured. contend implicit referent established providers, regard methods; concludes applying 14 Each conflicting constructions each difficulty. although reimbursements lead inaccurate repayments, refers, payment governed role assign arguably already 1395g, periodic "prior audit settlement General Accounting Office counters directed ensure addresses course year; thus play surplusage.8 15 argues words "corrective" "adjustments" readily evoke simple mathematical rectifications she process revisiting comparing ill-defined called approach.9 true defines "the yardstick But proceeds explain accordance used." fashion, 1972 amendments provision "limits direct indirect overall specific items groups recognized reasonable. " (emphasis added). short, aside determination discretion, there no reasonableness form ready basis "correct[ion]" "adjustmen[t]."10 16 both parties controlling, turn attention moment 1983, struck down 1981 rule failure comply notice comment requirements. procedures, 1984 sought retroactively invalid. U.S., 206-207, S.Ct., 470-471. Drawing began recoup "overpayments" result Court's decision. precise faced permitted not. explained, "permits action [it not] provid[e] promulgation cost-limit rules." 209, 472. 17 "clause directs procedure case-by-case where prescribing computation do reach structure conclusion retroactivity applies adjudication, rulemaking." (footnote omitted). further stated, "nothing suggests changes costs; rather, expressly methods." 211, 473 original). 18 across-the-board, urged case: comparison Secretary; demonstrated provider. id., n. 472, 1. III 19 implementation. National Railroad Passenger Corp. Boston Maine Corp., 503 112 --- L.Ed. ---- (1992); Department Treasury, IRS FLRA, 494 922, 933, 110 1623, 1629, 914 (1990); K mart Cartier, 486 281, 291-292, 1811, 1817-1818, 313 (1988). Of relevance contemporaneous "we allowed carry day doubts exist bare statute." FHA Darlington, 358 84, 90, 141, 145, 132 (1958). Aluminum Co. America Central Lincoln Peoples' Utility Dist., 380, 390, 2472, 2479, 301 framework put place furtherance supports Nowhere mention occasion For instance, 405.451(b)(1) (1967) stated: 21 "These submitted statistical reports. represent difference between received accepted apportionment rendered beneficiaries year."11 22 Use adjustment," borrowed demonstrates understanding. wrote "[i]t clear intended implement (ii)." 2, 473, What more, "[t]hese contemplate adjustments." 212, From outset, then, viewed 23 aftermath adding appears ascribed namely costs—only, amendments, now includes exceeded. described, however, 405.460(f) (1975); ----. obtain "on evidence [its] classification variance criteria promulgating limits." 405.460(f)(1) Exemptions expanded 50 beds; extend atypical services, strikes floods, educational 413.30 list situations waived exemptions.12 24 unwarranted light shifting matter. years embraced variety approaches. Compare, Regents Univ. California Heckler, 771 1182 (CA9 1985) (agency contends book-balancing); Whitecliff States, 210 Ct.Cl. 53, 536 347 (1976) (same), supra allows rulemaking). response, attributes If event alleged underpayment, goes, so, face agency. However, notes earlier position. 25 estopped changing grounded upon mistaken legal interpretation. Automobile Club Michigan Commissioner, 353 180, 180-183, 77 707, 707-709, 746 (1957). Indeed, "[a]n disqualified mind; does, courts still sit review de novo understanding statutes." Iron 434 335, 351, 651, 660, 54 586 (1978). Curtin Matheson Scientific, 775, 787, 1542, 1549, 801 J. Weingarten, 420 251, 265-266, 95 959, 967-968, 43 171 consistency factor assessing due. conflicts 'entitled considerably deference' consistently view." INS Cardoza-Fonseca, 480 421, 446, 30, 107 1207, 1221, 94 (1987) (quoting Watt Alaska, 451 259, 273, 101 1673, 1681, 68 80 (1981)). situation, shifts resulted intervening possibly decisions rulings 44 C 26 competing little, any, reason construction. especially reluctant reject which, it, object policy." Crandon 152, 158, 997, 1001, (1990). 27 Section explicitly delegates develop estimation 1395x(v)(1)(A).13 sure, virtue being generalizations, necessarily fail exact numbers—to detriment times, others.14 Presumably, mode calculating depreciation, cf. Daughters Miriam Aged Mathews, 590 1250 (CA3 1978), proximity college university because distort index, Austin, Texas, Brackenridge 753 1307, 1316 (CA5 1985), high-crime zone heightened, expensive, security for. All variables, many affect factoring undoubtedly improve accuracy. "[w]here, here, entrusts responsibility regulation, limited arbitrary capricious." Heckler Campbell, 461 458, 466, 103 1952, 1956, 76 66 (1983) citations 28 Besides textually defensible, authority. saw fit empower devise estimate opted additional fine-tuning way reclassifications, allowances possible variations efficiency. supra.15 forbids wide range, ad hoc reassessments accuracy practical purposes, contention take sufficient workers centers. is, name, challenge albeit case—including adequacy gauges construed attacks, via keeping possessed, capricious Administrative Procedure 706.16 IV 29 difficulties whichever turn. Though one, manifested expressed today, "give[s] content statute's textual ambiguities." 1629. judgment 30 Affirmed. 31 whom SCALIA join, dissenting. 32 contrasting proffered equipoise slight enough tip balance way. I plainly favors 33 focuses portions says, phrase understood, does: [of costs] data." Ante, finds well mean, suggests, measured [Secretary] costs]." think precludes readings. 34 identifies subject, reimbursement," figure "produced costs." Thus, once know able discover nature by" makes pay services." first sentence together 1395hh authorizes "regulations And (i) uses (ii): "under costs," who subsidize nor nonbeneficiaries. procedures estimating make payments; figuring 35 dispute this, contends, words, "derived Government oral argument, "what you're really doing taking running eventually going run final order get result." Tr. Oral Arg. 31-32. There obvious difficulty proposed interpretation: complete lack reference "incomplete" "estimated" telling. 36 nothing Act specifies complete, detailed methodology reaching figure; indeed, suggest just opposite. "The payment," states "may related last average per diem, charges, approximating 413.60(a) purposes devising preliminary estimates, perfect sense; working detail quality raw figures mostly guesswork. divergence casts doubt strict adherence hard why choose identify series 37 assumes equations, final, audited mere projections. term understood narrowly. statute, example, unit, capita, basis"; conceives them, encompass set determinations about This relevant, reckoning should, absent contrary indication, figure. 38 indication adjective modify "reimbursement." 'Aggregate,' says "signifies 'sum total' therefore mind outcome up payments." ____, (citation find suggestion term, "aggregate," unlike, say, "cumulative," carries connotation addition time. More importantly, far better explanation "aggregate." will, year, different kinds Part benefits, cover, things, "inpatient 409.5 (1992), encompasses everything board, facilities medical social drugs, biologicals, supplies, appliances equipment, diagnostic therapeutic surgical interns residents-in-training. 409.10(a). (stating using circumstances"), indeed number "[d]epartmental method" apportioning "routine services" apportioned non-Medicare diem basis, whereas "ancillary" ratio beneficiary charges department. 413.53(a)(1) combined materials published Secretary, aptly labeled reimbursement." 39 important "reimbursement" considered whole. focus shows results understating service "retroactive adjustmen[t]" recover cost, method, another overstated (By token, always deserve cost.) text's direction look prospective accurate devising, insight hardly new; acknowledges, ante, (1988) original), 40 emphasis total, health-care sense broader goals addressing Congress's neither subsidize, subsidized by, patients. 1395x(v)(1)(A)(i). long equals goal attained; details ambiguity costs"; univocally Secretary. 41 agree "at stat[e] measured," absence explicit keep looking clues standard. strongest clue immediate neighbor (i). Together, clauses fourth Whereas third permissive, mandatory; concerns things "shall" provide. "both efficiently delivering covered individuals insurance programs subchapter borne covered, respect programs." undesired results, noted, occur inadequate, failing cover second, excessive. contain exhaustive (i); simply produce "proves 1395x(v)(1)(A)(ii). Reading together, most shorthand consequences described order, fully, virtue, my phrase, contend, ultimately (that according "methods"), refer method); relation itself. context, equivocal. Broadening context confirms located, definitional, operative, provision; 1395x(v) "[r]easonable chief operative relates 1395f(b), titled "Amount services"; (A) section title (B) customary "Payments section, That "periodically [to] 1395g(a). notes, section's "necessary underpayments" very operation advances function renders interpreted entirely superfluous. accept deals adjustments. me same. excludes adjustments" purview, draws distinction since deal subject; "adjust[ed] doubtless breadth leads concede never enacted, inferred whole, including 1395g." Brief Respondent 16. 45 fails describe year-end, periodic, "retroactive." interprets "retroactive," relating made, rejecting common, stricter word, implies upsetting prior settled expectation transaction. weak employed "retroactive" (ii); too relate "previously leaves Congress, 1965 contained passages, 297, 323), chose distinguish reasons, believe text unambiguously allowing (and Secretary) seek grounds (or higher than) respectfully dissent opposite conclusion. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber Co., 200 321, 337, 282, 287, 499. pertinent "in used, included, types classes institutions, agencies, regarding originally codified 405.401-405.454 (1967). They twice redesignated, 1977, pt. 405, 52826 (1977), 1986, 413. 34790 (1986). Unless date appropriate, designation opinion. substantially modified instituting Prospective Payment System (PPS), effective October 1983. system, fixed discharge, patient's diagnosis, cost. 1395ww(d). claims litigation involve PPS issue. home hospitals. 1395ww(d), (b); 412.22-412.23 qualify exemptions 19. hospitals' claim rural/urban classifications violation 706. employment capricious, "[b]oth objective regulations." 1025. Compare Hosp. 1991) (case below) (construing balancing); Sierra 902 388 1990) (same); Hennepin County 280 U.S.App.D.C. 13, 883 85 (1989) cert. denied, 1043, 833 1978) Mt. Diablo 963 1175 1992) limits), pending, 92-720; 839 1504 (CA11 1988) Fairfax Nursing Center, Califano, 1297 (CA4 1979) Springdale Convalescent 545 943 1977) Whitecliff, Kingsbrook Jewish Richardson, 663 (CA2 1973) (same). observes, [§ ]1395g." Also potential significance opposed "Aggregate" signifies "sum total," Webster's Collegiate Dictionary 64 (9th ed. 1983), payments. invoke legislative history, case assistance. Committee Reports explaining "presumptive" "[p]roviders would, reconsideration relief need exception." (1972). satisfied demand. Reports—sole —was 188; 413.30(e)(1) history adduced persuasive. Other comparison, appeared preaudit 405.454(e) how illustrates basic understanding: like percent non-labor group. allowance above efficiency deriving adjusting 33639 (1981) Like themselves, cannot easily notion whenever unaccounted Such Act. noted "Congress 'conferred exceptionally prescribe standards sections Act.' Schweiker Gray Panthers, 453 34, 43, 2633, 2640, 69 460 expansive prevent demanding overpayment. whose generalized rejected imposed hospital-by-hospital basis. outcome, undermining ability predict runs counter apparent motivations authorizing 188 (because prospectively, recognition act avoid reimbursable"). note amendment 1395x(v), endorsed "[t]he recognize services) operating inpatient extent hospitals, or, percentage comparable determine. limitation he deems appropriate." 1395x(v)(1)(L)(i) (1976 ed., Supp. V), repealed, 97-248, 101(a)(2), 96 335. 97-158, 326-327 remarked earlier, thrust scheme (imposing firm ceiling purportedly inaccuracies methods, waivers) dissatisfied waivers failed account. fact, invoked below, App. 13-14, APA claims, renewed

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