U.S. Supreme Court Sides with WHA, State Hospital Association Amicus Brief

June 04, 2019

On June 3, the United States Supreme Court held in a 7-1 decision that the U.S. Department of Health & Human Services (HHS) illegally changed a 2012 Medicare reimbursement formula when it failed to utilize public notice and comment procedures prior to making the change.

In December, WHA joined several other state hospital associations in submitting a joint amicus brief to the Court. The brief argued that notice and comment procedures are an essential component of administration of the Medicare program and that the change was material, substantive, and had nationwide impact.

“Without notice-and-comment, [HHS] may fail to fully understand the range of consequences that a rule change will have on hospitals,” wrote Attorney Chad Golder, Munger, Tolles & Olson LLP, in the joint hospital association brief.

Justice Gorsuch delivered the opinion of the Court and was highly critical of HHS’ decision to substantively change Medicare payment policy through its website rather than utilizing the notice and comment procedures Congress had specified.

“In 2014, the government revealed a new policy on its website that dramatically—and retroactively—reduced payments to hospitals serving low-income patients,” wrote Justice Gorsuch. “Because affected members of the public received no advance warning and no chance to comment first, and because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, we agree with the court of appeals that the new policy cannot stand.”

Justice Gorsuch was also critical of the Government’s argument that notice-and-comment processes are onerous and would stymy administration of the Medicare program.

“The government warns that providing the public with notice and a chance to comment on all Medicare interpretive rules, like those in its roughly 6,000-page ‘Provider Reimbursement Manual,’ would take ‘many years’ to complete,” wrote Justice Gorsuch. “Not only has the government failed to document any draconian costs associated with notice and comment, it also has neglected to acknowledge the potential countervailing benefits. Notice and comment gives affected parties fair warning of potential changes in the law and an opportunity to be heard on those changes—and it affords the agency a chance to avoid errors and make a more informed decision.”

Contact WHA General Counsel Matthew Stanford at 608-274-1820 for more information about the decision.

This story originally appeared in the June 04, 2019 edition of WHA Newsletter