ALEX M. AZAR II v. ALLINA HEALTH SERVICES, ET AL.

Whether Section 1395hh(a)(2) requires HHS to conduct notice-and-comment rulemaking before providing instructions to a Medicare Administrative Contractor that makes initial determinations of payments due under Medicare, when those instructions rest on a non legally-binding interpretation of a relevant statutory provision.

Petitioners are responsible for calculating annual reimbursements (known as the Medicare-fraction provision) to hospitals providing inpatient care to Medicare beneficiaries under the Medicare Act 42 U.S.C. 1395ww(d). Hospitals serving a disproportionate number of inpatient Medicare beneficiaries are also eligible for additional payments. 42 U.S.C. 1395ww(d)(5)(F)(vi)(I). In 1997, the Medicare Act was amended to add the Medicare Part C program, which allowed individuals to elect to receive benefits available under the act through enrollment in a private healthcare plan. In 2014, calculations for the 2012 fiscal year were released by Centers for Medicare & Medicaid Services and Respondents challenged the calculations, arguing that the “Medicare Act’s rulemaking provision in 42 U.S.C. 1395hh required” the agency to allow for notice and comment opportunities for the public before it could base calculations of Medicare fractions upon the agency’s interpretation of the act. The lower court held the Petitioner violated the Medicare Act by initiating a reimbursement formula without providing opportunity for notice and comment by the public. Allina Health Servs. v. Price, 863 F.3d 937, 938 (D.C. Cir. 2017). Petitioner argues that the decision of the lower court has created a circuit split from First and Ninth Circuits decisions regarding the notice and comment requirement, and argues that such a decision would impose significant administrative burdens and financial costs upon the government in administering reimbursements.