University Medical Center of Southern Nevada v. Tommy G. Thompson, Secretary United States Department of Health and Human Services

University Medical Center of Southern Nevada (“UMC”) appeals a decision of the district court rejecting its interpretation of the qualifications for a “disproportionate share adjustment” under that portion of the Medicare statute authorizing additional payments to hospitals serving disproportionate numbers of low-income patients.

I. Facts and Procedural History

Medicare provides health insurance benefits to participating individuals over the age of sixty-five, qualifying disabled individuals and those suffering from end-stage renal disease. 42 U.S.C. § 1395c. Until 1983, Medicare reimbursed health care providers for the reasonable cost of their services — which, in most instances, meant their actual cost so long as it did not exceed certain limits. . Id. §§ 1395f(b)(1), 1395x(v). Beginning in 1983, Medicare began reimbursing hospitals according to predetermined rates based on diagnosis and geographic location. Id. § 1395ww(d). Although Congress intended this change to promote efficiency and cost-effectiveness, Congress recognized that certain adjustments might be required for those hospitals with actual costs that regularly exceeded the new rates. H.R. REP. NO. 98-25, at 132…