Shalala

Appellant hospitals appeal from a decision of the Secretary of Health and Human Services (“the Secretary”) declining to reimburse the hospitals for stock options granted to certain employees. The hospitals participate in the Medicare program and seek reimbursement from the Secretary under that program. The Secretary refused reimbursement for the stock options, finding that under generally accepted accounting principles (“GAAP”), 1 the hospitals had not incurred *834 any costs. 2 The district court affirmed the Secretary’s decision, granting the secretary’s motion for summary judgment. We review the Secretary’s final decision to determine “whether the agency action was ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ ” 3 We have jurisdiction under 28 U.S.C. § 1291 , and we affirm.

In the fiscal years 1980 through 1984, appellant hospitals granted stock options to certain top managerial employees. 4 The stock options were “fixed” options; they gave recipients the right to purchase a specific number of shares at a fixed price. The fixed price for a given employee’s option was the market price of the stock on the date that the option was…