Court Opinion

ID: 4506404
Source: CourtListenerOpinion
Date Created: 2020-02-11 16:00:59.02273+00
Date Added: 2024-06-11T13:42:21.503624
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 25, 2019           Decided February 11, 2020

                        No. 18-5264

       BAYSTATE FRANKLIN MEDICAL CENTER, ET AL.,
                     APPELLANTS

                             v.

      ALEX MICHAEL AZAR, II, AS SECRETARY OF THE
      DEPARTMENT OF HEALTH AND HUMAN SERVICES,
                      APPELLEE

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:17-cv-00819)

     Rachel M. Wertheimer argued the cause and filed the
briefs for appellants.

     Edward Himmelfarb, Attorney, U.S. Department of
Justice, argued the cause for appellee. With him on the brief
was Alisa B. Klein, Attorney.

   Before: MILLETT and KATSAS, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
                               2
   Opinion for the Court filed by Senior Circuit Judge
SENTELLE.

     SENTELLE, Senior Circuit Judge: Appellants, Baystate
Franklin Medical Center, Baystate Medical Center, Baystate
Noble Hospital, and Baystate Wing Hospital (collectively,
“Baystate”), brought suit against the Secretary of the
Department of Health and Human Services (“HHS”) related to
his promulgation of a final rule calculating the wage index for
hospital reimbursements in 2017. Baystate claimed that the
final rule was unreasonable and arbitrary and capricious
because the Secretary failed to comply with the statutory
requirement to calculate a wage index that reflected the actual
wage levels in Massachusetts, relied on data that he knew to be
false, and entirely failed to consider an important aspect of the
problem. Both parties moved for summary judgment. The
district court held that the final rule reflected a permissible
construction of the Medicare statute, and the decision was not
arbitrary and capricious. Accordingly, the district court
granted summary judgment in favor of the Secretary. Baystate
filed the present appeal.

     For the following reasons, we affirm the decision of the
district court.

   I.      BACKGROUND

        A. Statutory and Regulatory Background

    Medicare is a federally funded health insurance program
available to the elderly and individuals with disabilities. See
42 U.S.C. § 1395 et seq. Under the current Medicare program,
the Secretary uses a Prospective Payment System (“PPS”) to
reimburse certain hospitals for treating Medicare beneficiaries.
See Medicare Program; Hospital Inpatient Prospective
                                3
Payment Systems for Acute Care Hospitals and the Long-Term
Care Hospital Prospective Payment System and Policy
Changes and Fiscal Year 2017 Rates, 81 Fed. Reg. 56,762,
56,776 (Aug. 22, 2016) (“FY2017 PPS Final Rule”). The PPS
requires the Secretary to reimburse hospitals at a
“predetermined, specific rate[] for each hospital discharge,”
id., rather than assessing the actual costs incurred by the
provider for each patient, see Anna Jacques Hosp. v. Burwell,
797 F.3d 1155, 1158 (D.C. Cir. 2015).

     The PPS payments are broken down into two components:
a labor-related share and a nonlabor-related share. See FY2017
PPS Final Rule, 81 Fed. Reg. at 56,776. The statute requires
the Secretary to adjust the labor-related share of the payments
to account for geographic variations in hospital wage expenses.
See 42 U.S.C. § 1395ww(d)(3)(E)(i); see also Anna Jacques
Hosp., 797 F.3d at 1158. To do so, the Secretary must calculate
a “factor . . . reflecting the relative hospital wage level in the
geographic area of the hospital compared to the national
average       hospital     wage       level.”       42     U.S.C.
§ 1395ww(d)(3)(E)(i). This factor is known as the “wage
index,” and it must be updated annually. Anna Jacques Hosp.,
797 F.3d at 1158.

     For purposes of calculating the wage index, the geographic
area of a hospital is determined by reference to the
“Metropolitan Statistical Area[s]” defined by the Office of
Management and Budget. 42 U.S.C. § 1395ww(d)(2)(D). Any
hospital not within a Metropolitan Statistical Area is designated
as in a “rural area.” Id. The wage index for any given hospital
in a state cannot be lower than the wage index applicable to the
rural hospitals in that state. Balanced Budget Act of 1997, Pub.
L. No. 105-33, § 4410(a), 111 Stat. 251, 402 (42 U.S.C.
§ 1395ww note). This is referred to as the “rural floor.”
                               4
     The Centers for Medicare and Medicaid Services (“CMS”)
is the component of HHS that is responsible for calculating the
wage index each year. To start the process, CMS requires
hospitals to submit cost reports to Medicare administrative
contractors (“MACs”). 42 C.F.R. § 413.20(b). The MACs and
the hospitals then review and revise the data through an
iterative process, which is outlined in a timetable published by
CMS. App. at 49–53; see also Medicare Program; Hospital
Inpatient Prospective Payment Systems for Acute Care
Hospitals and the Long-Term Care Hospital Prospective
Payment System and Proposed Policy Changes and Fiscal Year
2017 Rates, 81 Fed. Reg. 24,946, 25,073 (proposed Apr. 27,
2016) (“FY2017 PPS Proposed Rule”) (“We created the
processes previously described to resolve all substantive wage
index data correction disputes before we finalize the wage and
occupational mix data for the FY 2017 payment rates.”). CMS
uses this data to calculate an average hourly wage rate for every
geographic area. Anna Jacques Hosp., 797 F.3d at 1159. Then,
it calculates the national average hourly wage rate and divides
each geographic area’s wage rate by the national average wage
rate to determine each geographic area’s wage index. Id.

     By design, “each hospital’s wage data affects the ultimate
wage index for all hospitals in the area, and thus data errors or
omissions by one hospital can [decrease] (or increase) PPS
rates for other hospitals in its area.” Dignity Health v. Price,
243 F. Supp. 3d 43, 46 (D.D.C. 2017). Similarly, because CMS
must calculate a national average wage rate to develop the
wage index, and because changes in the wage index must be
budget neutral, 42 U.S.C. § 1395ww(d)(3)(E)(i), “a change in
any single wage index can affect the reimbursement rate of
each hospital in the country.” Methodist Hosp. of Sacramento
v. Shalala, 38 F.3d 1225, 1228 (D.C. Cir. 1994).
                              5
     For the 2017 wage index, CMS released its preliminary
wage data files on May 15, 2015. CMS expected to use the
data in those files to develop the 2017 wage index. Hospitals
were required to notify MACs of any “revisions to the wage
index data as reflected in the preliminary files” by September
2, 2015. App. at 49. The wage index development process
provided no opportunity for third-party hospitals to review or
contest any other hospital’s wage data. Following several
rounds of review and revision between the hospitals and the
MACs, the proposed rule was expected to be published for
notice and comment in April or May 2016. The final rule was
then expected to be published on August 1, 2016.

       B. Factual and Procedural History

     The Baystate hospitals are located in Massachusetts. The
only rural hospital in Massachusetts is Nantucket Cottage
Hospital (“Nantucket”). Nantucket accordingly sets the rural
floor for all hospitals in the state. The data that Nantucket
submitted to CMS to calculate the 2017 wage index allegedly
contained several errors that deflated Nantucket’s hourly wage
rate. On April 4, 2016, nearly seven months after the deadline
to request revisions to the preliminary wage data had passed,
Nantucket notified CMS by letter of the errors and sought to
correct them. App. at 40–46. The hospital estimated that the
corrections would “increase [its] average hourly wage from
$43.78 to $60.50.” App. at 45.

     On April 27, 2016, the Secretary published the proposed
2017 wage index in the Federal Register before responding to
Nantucket’s letter. See FY2017 PPS Proposed Rule, 81 Fed.
Reg. 24,946. The Secretary stated that “[i]f a hospital wished
to request a change to its data as shown in May 15, 2015 wage
data files and May 15, 2015 occupational mix data files, the
hospital was to submit corrections along with complete,
                                6
detailed supporting documentation to its MAC by September
2, 2015.” Id. at 25,072. The Secretary also emphasized that
“[h]ospitals were notified of this deadline and of all other
deadlines and requirements, including the requirement to
review and verify their data as posted in the preliminary wage
index data files.” Id.

     During the notice-and-comment period, many
Massachusetts hospitals submitted comments to the Secretary
urging him to accept Nantucket’s corrected wage data because
failure to do so would result in a major reduction in
reimbursements for hospitals across the state. This precise
problem is acute in Massachusetts because, unlike most states,
Nantucket’s wage index, which alone sets the rural floor in
Massachusetts, is typically significantly higher than the wage
index for other geographic areas in the state. See, e.g., Baystate
Franklin Med. Ctr. v. Azar, 319 F. Supp. 3d 514, 522 (D.D.C.
2018). For example, Baystate Health’s public comment
estimated that “the impact of the data errors alone is a loss of
$115 million in Medicare inpatient and outpatient
reimbursement to 39 Massachusetts hospitals in 2017.” App.
at 99. Conversely, other commenters suggested that if the
Secretary modified the rule based on Nantucket’s late filing, it
“would establish a ‘troubling’ precedent by disregarding CMS
rules and regulations, which provide ample opportunity to
correct wage data through the agency’s normal review process
and deadlines.” FY2017 PPS Final Rule, 81 Fed. Reg. at
56,920.

     Ultimately, the Secretary enforced the deadline and
refused to accept Nantucket’s proposed revisions in calculating
the final wage index. Id. The Secretary explained, “It is our
intent to ensure that the wage index is calculated from the best
available data, consistent with our wage index policies and
development timeline.” Id. He emphasized that the deadlines
                                7
“play[] an important role in maintaining the integrity and
fairness of the wage index calculation.” Id. He further noted
that CMS has “consistently stated in annual [In-Patient] PPS
rulemaking that hospitals that do not meet the procedural
deadlines set forth in the [In-Patient] PPS rule will not be
afforded a later opportunity to submit wage index data
corrections or to dispute the MAC’s decision with respect to
requested changes.” Id.; see also FY2017 PPS Proposed Rule,
81 Fed. Reg. at 25,073 (noting that a hospital cannot later seek
“to revise another hospital’s data that may be affecting the
requesting hospital’s wage index”).

     After exhausting the administrative appeals process,
Baystate filed a complaint in the district court alleging that the
wage index as calculated would cost Baystate approximately
$19,907,000 in Medicare reimbursements. Baystate argued
that relying on flawed data prevented CMS from calculating a
wage index that actually reflected the wage level for Nantucket,
contravening the Medicare statute and rendering the action
arbitrary and capricious. Further, Baystate claimed that the
final rule was also arbitrary and capricious because the
Secretary failed to consider an important aspect of the problem:
one hospital’s erroneous data affected the wage index for every
other hospital in the state, but those third-party hospitals had
no opportunity to review or contest the flawed data until after
the deadline to request revisions had already passed.

     Both parties moved for summary judgment, which the
district court granted in favor of the Secretary. The district
court determined that the statute grants the Secretary “broad
discretion” in administering the PPS program and held that
“[t]he Secretary’s decision to enforce longstanding PPS
program deadlines and use Nantucket’s uncorrected data was
reasonable and based on a permissible reading of the Medicare
statute.” Baystate Franklin Med. Ctr., 319 F. Supp. 3d at 521.
                                8
Additionally, the district court held that the Secretary’s action
was not arbitrary and capricious. Because Nantucket missed
the relevant deadline to request revisions, the most reliable
evidence available to the Secretary was the data that the MACs
had already reviewed, not the revised data presented in April
2016. See id. at 523. Accordingly, the Secretary’s decision to
reject the requested revisions was reasonable. Further, the
district court held that the Secretary sufficiently considered the
effect of his decision on third-party hospitals. Id. Baystate
objects to each of these conclusions on appeal.

   II.     DISCUSSION

     We review the district court’s grant of summary judgment
de novo. Anna Jacques Hosp., 797 F.3d at 1163. First, we
address Baystate’s arguments that the Secretary failed to
calculate a wage index that accurately reflected the wage level
in Massachusetts and ignored an important aspect of the
problem when he enforced the deadline against third-party
hospitals, rendering his action arbitrary and capricious. Then
we turn to Baystate’s argument that the Secretary’s
interpretation of his authority to ignore the revised data
contravened the Medicare statute’s command to calculate a
wage index that reflects the wage level in Massachusetts.
Although Baystate does not cite Chevron, U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),
and argues almost entirely in terms of Administrative
Procedure Act (“APA”) review, the gist of its argument
challenges the Secretary’s interpretation of his authority under
the Medicare statute, which, as discussed below, triggers a
Chevron analysis. We hold that the Secretary’s interpretation
of his authority under the statute was lawful and his action was
not arbitrary and capricious. Accordingly, we affirm the
district court’s grant of summary judgment.
                                9
       A. Arbitrary and Capricious Review

     Under the familiar standards of the APA, we must “set
aside agency action” that is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A). We will uphold the agency’s action if the agency
“examine[d] the relevant data and articulate[d] a satisfactory
explanation for its action including a ‘rational connection
between the facts found and the choice made.’” Motor Vehicle
Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29, 43 (1983) (quoting Burlington Truck Lines v. United
States, 371 U.S. 156, 168 (1962)). An agency’s action is
arbitrary and capricious “if the agency has relied on factors
which Congress has not intended it to consider, entirely failed
to consider an important aspect of the problem, offered an
explanation for its decision that runs counter to the evidence
before [it], or is so implausible that it could not be ascribed to
a difference in view or the product of agency expertise.” Id.
“The scope of review under the ‘arbitrary and capricious’
standard is narrow and a court is not to substitute its judgment
for that of the agency.” Id.

           i.      Secretary’s Decision to Enforce the
                   Deadline

     Baystate argues that the Secretary’s decision to enforce the
deadline and reject Nantucket’s revised data was arbitrary and
capricious because the Secretary relied on facts that he knew to
be false when calculating the final wage index. However,
instead of demonstrating that the Secretary’s decision to reject
the revised data was an unreasonable one, Baystate offers
examples of different ways to structure the wage index
development process to produce a more accurate wage index.
See Appellants’ Reply Br. at 9–10.
                                10
     To start, it is difficult to divine exactly how the Secretary’s
decision to enforce a deadline that is established well in
advance through rulemaking is arbitrary and capricious. More
importantly, however, under the narrow standard of arbitrary
and capricious review, the court accepts the Secretary’s
decision as long as he has provided a reasonable explanation.
State Farm Mut. Auto Ins. Co., 463 U.S. at 43. It would defy
that standard of review to invalidate the Secretary’s decision
simply because there are alternate methods by which to
calculate the wage index, even if those alternatives might
ultimately produce a more accurate wage index.

     In any event, the Secretary provided an entirely reasonable
explanation for his decision to reject the revised data. As
previously noted, the Secretary explained that CMS’s intent is
to calculate the wage index “from the best available data,
consistent with [the] wage index policies and development
timeline.” FY2017 PPS Final Rule, 81 Fed. Reg. at 56,920. He
emphasized that the deadlines are critical “in maintaining the
integrity and fairness of the wage index calculation.” Id. That
was reasonable because the wage index must be computed on
a nationwide basis that is budget neutral, so that an increase for
hospitals in one area would necessitate a decrease in the wage
index for other hospitals in other areas. See Bellevue Hosp.
Ctr. v. Leavitt, 443 F.3d 163, 169 (2d Cir. 2006) (“These
adjustments must be cost neutral, so that any increase in one
hospital’s wage factor must be offset by a decrease in
another’s.”). He also pointed to prior statements that indicated
“that hospitals that do not meet the procedural deadlines . . .
will not be afforded a later opportunity to submit wage index
data corrections.” FY2017 PPS Final Rule, 81 Fed. Reg. at
56,920. Accordingly, the Secretary offered a reasonable
explanation for his decision that is sufficient to survive
arbitrary and capricious review.
                              11
     Moreover, this is not a situation in which the Secretary
previously granted relief from this deadline and is now
changing his policy without a reasoned explanation. See, e.g.,
Children’s Hosp. Ass’n of Tex. v. Azar, 933 F.3d 764, 773
(D.C. Cir. 2019) (“An ‘unexplained inconsistency’ with an
earlier position renders a changed policy arbitrary and
capricious.” (quoting Encino Motorcars, LLC v. Navarro, 136
S. Ct. 2117, 2126 (2016))); Centra Health, Inc. v. Shalala, 102
F. Supp. 2d 654, 660 (W.D. Va. 2000) (finding that it was
arbitrary and capricious for the Secretary to claim that
excluding data was infeasible because the Secretary had
excluded that same data in the past and had not “adequately
explained” the difference in treatment.).

     In fact, Baystate has not pointed to any examples in which
the Secretary granted relief from a deadline in similar
situations. At oral argument, Baystate’s counsel pointed to the
Secretary’s inclusion of “improved data” from eleven hospitals
in the final rule. FY2017 PPS Final Rule, 81 Fed. Reg. at
56,915. But that revision did not involve errors that a hospital
discovered in its preliminary data after the deadline to request
revisions had passed. Rather, those errors were identified
during the review conducted by the MACs. Id. (“Since the
development of the FY 2017 proposed wage index, as a result
of further review by the MACs and the April and May appeals
processes, we received improved data for 11 hospitals.”). The
2017 wage index development timetable anticipated exactly
that type of revision, unlike the revisions that Baystate now
seeks. Additionally, Baystate’s counsel suggested that the
revisions in Methodist Hospital of Sacramento v. Shalala, 38
F.3d 1225 (D.C. Cir. 1994), were similar to the revisions
sought in this case. Although Methodist Hospital did involve
the PPS, the specific errors in that case “occurred prior to the
creation of the PPS.” Id. at 1228.
                                12
     Nor has Baystate shown that the Secretary’s decision was
otherwise arbitrary and capricious. Baystate cites a concurring
opinion in this Court to argue that “it would seem to be the very
definition of arbitrary and capricious for HHS to knowingly use
false facts when calculating hospital reimbursements.” St.
Francis Med. Ctr. v. Azar, 894 F.3d 290, 298 (D.C. Cir. 2018)
(Kavanaugh, J., concurring). The majority in that case,
however, did not address whether the Secretary’s action was
arbitrary and capricious. See id. at 297 (majority opinion).
Moreover, that case involved the Secretary’s refusal to
consider challenges to statistics from 1981 that the Secretary
was continuing to use for “ongoing calculations of
reimbursements for open cost years.” Id. at 298 (Kavanaugh,
J., concurring). The concurrence suggested that it would have
been reasonable for the Secretary to decline to “reopen closed
cost years” given “the agency’s interest in finality,” but argued
that the finality interests fell away for ongoing calculations. Id.
The Secretary’s decision to enforce his deadline here is akin to
declining to reopen a closed cost year to consider new data.
Baystate’s reliance on the concurrence in Saint Francis
Medical Center is thus misplaced.

     For similar reasons, we disagree with Baystate’s assertion
that the Secretary ignored the “most reliable evidence
available” in the first place. Appellants’ Br. at 15. Because the
Secretary retained discretion to set and enforce a deadline, the
availability of evidence is measured from the date of the
deadline, not the promulgation of the final rule. Nantucket did
not present new evidence until seven months after the deadline
had passed. In order to ensure the accuracy of this data, CMS
would be required to return to the beginning of the wage index
development process to vet the hospital’s new data. Indeed,
the Secretary never conceded that Nantucket’s revised data was
the most reliable data available, emphasizing that the
information had not yet been vetted by CMS or its contractors.
                               13
Accordingly, the most reliable evidence available was the
evidence that the Secretary used to calculate the final wage
index, and the Secretary’s decision was not arbitrary and
capricious.

           ii.     Secretary’s Consideration of Important
                   Aspects of the Problem

     Baystate further contends that the Secretary’s decision was
arbitrary and capricious because he failed to consider an
important aspect of the problem—namely, that other hospitals
in Massachusetts had no opportunity to review or revise faulty
data that adversely affected their wage indexes. Again, we
disagree.

     In summarizing the comments to the proposed rule, the
Secretary noted that several commenters “believed it would be
‘sound public policy’ for CMS to use the most accurate data
available in order to prevent one hospital’s data errors from
having a negative effect on Medicare payments of other
hospitals.” FY2017 PPS Final Rule, 81 Fed. Reg. at 56,920.
He also highlighted that some commenters suggested that “the
effects of not correcting the data error would be significant for
hospitals in Massachusetts.” Id. Those summaries reflect the
Secretary’s awareness that his decision to enforce the deadline
necessarily affected all hospitals in Massachusetts. Even
though he did not address the effects to Nantucket and third-
party hospitals separately, the summary is sufficient to
illustrate his consideration of that aspect of the problem.
Therefore, we conclude that the decision to enforce the
deadline against third-party hospitals was not arbitrary or
capricious.
                              14
       B. Chevron Analysis

     As mentioned above, although Baystate does not cite
Chevron, U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984), and frames its arguments in terms of
APA review, see Appellants’ Br. at ii (“The Secretary’s
decision to base the FY 2017 Wage Index on data he knew to
be inaccurate was arbitrary and capricious.”); Appellants’
Reply Br. at i (“The Secretary’s calculation of the FY 2017
Wage Index and application of the rural floor were arbitrary
and capricious.”), much of its argument focuses on the
Secretary’s statutory authority to enforce the deadline and
reject the revised data under the Medicare statute.

     Specifically, Baystate argues that “the Secretary ignored
Congress’s clear mandate to calculate a wage index that
‘reflect[s] the relative hospital wage level in the geographic
area of the hospital compared to the national average.’”
Appellants’      Br.     at    15     (quoting     42     U.S.C.
§ 1395ww(d)(3)(E)(i)). Further, Baystate asserts that, “[w]hile
the Secretary undoubtedly has discretion in developing the
process for calculating the wage index, that discretion does not
permit him to disregard the requirements of the Wage Index
Statute.” Id. at 18. Arguments related to an agency’s
interpretation of its authority to act under a statute are the
principal concern of Chevron. See Arent v. Shalala, 70 F.3d
610, 615 (D.C. Cir. 1995). To be sure, “[w]e recognize that, in
some respects, Chevron review and arbitrary and capricious
review overlap at the margins.” Id. But it is under Chevron,
not the APA arbitrary and capricious standard, that a court
considers “whether the agency’s construction of the statute is
faithful to its plain meaning, or, if the statute has no plain
meaning, whether the agency’s interpretation ‘is based on a
permissible construction of the statute.’” Id. (quoting Chevron,
467 U.S. at 843).
                                15

      Under the Chevron two-step framework, we first consider
“whether Congress has directly spoken to the precise question
at issue.” Chevron, U.S.A., Inc., 467 U.S. at 842. If Congress’s
intent is clear, “the court, as well as the agency, must give effect
to the unambiguously expressed intent of Congress.” Id. at
842–43. If “Congress has not directly addressed the precise
question at issue,” however, we proceed to step two and will
uphold the Secretary’s interpretation if it is “based on a
permissible construction of the statute.” Id. at 843.

    The Medicare statute requires the Secretary to compute a
wage index that “reflect[s] the relative hospital wage level in
the geographic area of the hospital compared to the national
average     hospital     wage      level.”        42     U.S.C.
§ 1395ww(d)(3)(E)(i).        We have previously rejected
constructions of the statute that would require the Secretary to
calculate the wage index with “scientific exactitude.” Anna
Jacques Hosp., 797 F.3d at 1165; see Methodist Hosp., 38 F.3d
at 1230 (allowing the Secretary to make “reasonable
approximations” based on the “most reliable data available”).
Those decisions emphasize that the Secretary may balance
accuracy against “finality and administrative efficiency.”
Methodist Hosp., 38 F.3d at 1235; see also Anna Jacques
Hosp., 797 F.3d at 1169.

     Baystate contends that the wage index statute requires the
Secretary to calculate a wage index that reflects the actual,
relative wage levels around the country. Likewise, Baystate
argues that the rural floor statute requires the Secretary “to give
hospitals like the Appellants the benefit of a wage index
reflective of the relative wage levels in the state’s rural labor
market.” Appellants’ Br. at 17. Baystate asserts that, because
the Secretary relied on faulty data to calculate Nantucket’s
wage index, it necessarily did not reflect the actual wage level
                                16
in rural Massachusetts. Thus, Baystate argues, the Secretary’s
refusal to accept Nantucket’s untimely request exceeded his
authority under the Medicare statute, depriving the
Massachusetts hospitals of the wage index to which they were
statutorily entitled. Baystate concedes that the Secretary is
entitled to great discretion in calculating the wage index, and
we agree. Accordingly, we will uphold the agency’s
interpretation as long as it is a permissible construction of the
statute.

     In this case, the Secretary exercised his statutory discretion
to enforce a deadline and reject new data submitted by a
hospital seven months after the deadline to request revisions to
that data passed. As noted previously, had the Secretary
accepted the revised data to calculate the final wage index, he
would have been required to return to the beginning of the wage
index development process to ensure the accuracy of the
hospital’s data. Allowing the Secretary to enforce the deadline
for revising data is thus consistent with our decisions
permitting the Secretary to balance accuracy against finality
and efficiency. To hold otherwise would effectively render the
Secretary’s deadline a nullity because he would be required to
waive compliance with the deadline anytime a hospital
submitted revised data, even well after the relevant deadline
passed.

     While we agree with Baystate that the Secretary’s
discretion must be bound by some outer limits, we conclude
that, whatever those outer limits may be, the Secretary’s
interpretation of his authority to enforce a deadline in
calculating the wage index falls squarely within them.
Accordingly, we hold that the Secretary’s interpretation was a
permissible construction of the statute.
                             17
   III.   CONCLUSION

    For the foregoing reasons, we affirm the district court’s
grant of summary judgment in favor of the Secretary.