The U.S. Supreme Court yesterday heard oral argument in Azar v. Allina Health Services, an important case about when the Department of Health and Human Services must give public notice and accept and respond to comments on its proposed policies. Although oral argument is an imperfect barometer, the justices’ comments suggest that the hospitals seeking more public participation in HHS policymaking may prevail.
 
At issue in Allina is the seemingly technical question of whether HHS’s determination that certain figures should be included in the “Medicare fraction” used to calculate hospitals’ Disproportionate Share Hospital payments had to go through notice-and-comment rulemaking. But the issue is important because public participation ensures hospitals’ voices are heard and leads to better-thought-out policies. The D.C. Circuit, in an opinion by then-Judge Kavanaugh held that HHS’s determination did have to go through notice and comment, because the Medicare Act requires notice and comment for any “rule, requirement, or other statement of policy” that “changes a substantive legal standard governing” payments for Medicare services. AHA, with several other national hospital groups, filed an amicus brief in support of the D.C. Circuit’s ruling.
 
HHS argued that the Medicare Act incorporated the Administrative Procedure Act’s exception to notice-and-comment rulemaking for “interpretive rules.” But Justices Sotomayor, Gorsuch, and Kagan all questioned why Congress would have simply restated the Administrative Procedure Act’s exception in the Medicare Act. Congress usually does not enact laws that restate existing laws. 
 
The hospitals’ counsel faced aggressive questioning from Justice Breyer, who suggested that overlap between the Administrative Procedure Act and Medicare Act might make sense in light of the Medicare Act’s legislative history. Chief Justice Roberts also wondered why HHS’s determination was not an “adjudication” that need not go through the notice-and-comment process. But the hospitals’ counsel spoke at length without interruption, which is usually a positive sign.
 
Justice Thomas, as is his practice, did not ask any questions. Justice Ginsburg is recuperating from surgery to treat lung cancer, but will participate in the case based on the briefs and oral-argument recording.
 
A decision is expected by the end of June.
 
Marotta is a Partner at Hogan Lovells and AHA outside counsel. 
 

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