Shalala

One hundred and sixty-three hospitals (the “Hospitals”) seek payment for alleged shortfalls in -Medicare reimbursements for fiscal years 1985 (FY 1985) and 1986 (FY 1986). *1119 The Hospitals, which provided care for patients whose hospital stays were unusually lengthy or costly, contend that they were not properly reimbursed under the Medicare program at a time when the method of payment was in transition. They assert, more particularly, that the total amounts paid to them failed to meet a minimum figure required by statute and that the payments were determined in a manner that violated the Administrative Procedures Act (“APA”). STATUTORY AND REGULATORY FRAMEWORK

The Secretary of the United States Department of Health and Human Services (the “Secretary”) reimburses health-care providers for medical services provided to Medicare patients under the Health Insurance for the Aged Act (“the Act”). 42 U.S.C. § 1395f(b)(l). Before October 1,1983, hospitals were reimbursed the lesser of their “customary charges” or the “reasonable costs” of their services. In an attempt to lower Medicare expenditures, Congress created the Prospective Payment System (“PPS”). Under PPS, the Secretary…