Deference to the Agency Is the Best Policy: The D.C. Circuit Applies Chevron in Denying Additional Medicare Reimbursements to Provider Hospitals in Washington Regional Medicorp

Abstract

On December 29, 2015, in Washington Regional Medicorp v. Burwell, the U.S. Court of Appeals for the District of Columbia Circuit held that the Secretary of Health and Human Services (“HHS”) correctly interpreted the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) in calculating Medicare reimbursements for a provider hospital based on the capped target amount from the previous year. In agreeing with the Secretary, the D.C. Circuit joined the U.S. Courts of Appeals for the Third and Sixth Circuits in holding that the statute and its implementing regulations supported the Secretary. The U.S. Court of Appeals for the Fifth Circuit, in contrast, has held that the regulations unambiguously compel the contrary conclusion, namely, that the Secretary should base her calculation on a hospital-specific target amount. This Comment argues that the D.C. Circuit’s interpretation of TEFRA is the right one. It correctly applies the Chevron analysis, deferring to HHS, while also noting that HHS’s reading is the best one. In doing so, the D.C. Circuit also fulfills the congressional intent to transfer hospitals from a system of hospital-specific reimbursements to a decidedly more objective system of reimbursements.