Children's Hospital Association of Texas v. Azar, No. 18-5135 (D.C. Cir. 2019)Annotate this Case
A group of children's hospitals that receive Disproportionate Share Hospital (DSH) payments under the Medicaid Act filed suit challenging the Secretary's promulgation of a regulation defining "costs incurred" in furnishing hospital services to low income patients (the 2017 Rule).
The DC Circuit reversed the district court's decision vacating the 2017 Rule and reinstated it, holding that the rule did not exceed the Secretary's statutory authority under the Medicaid Act and rejecting plaintiffs' reasons for why the statute did not grant the Secretary authority to require that payments by Medicare and private insurers be considered in calculating a hospital's "costs incurred;" the 2017 Rule is consistent with the statute's context and purpose, both of which suggest DSH payments are meant to assist those hospitals that need them most by covering only those costs for which DSH hospitals are in fact uncompensated; and the 2017 Rule was not a product of arbitrary and capricious reasoning.