The Fifth Circuit found that:

1.) The US Department of Labor may use a minimum salary requirement as part of its test for determining whether or not an employee qualifies as an executive, administrative, or professional employee exempt from Fair Labor Standard Act’s (FLSA) overtime pay requirements, 

2.) BUT only to the extent that the threshold is a reasonable proxy for who is and who is not an executive, administrative, or professional (EAP) employee. 

Mayfield challenged the Trump administration’s 2019 rule, which set the minimum salary for the EAP exemption requirement at $684 per week or $35,568 per year. Mayfield argued that the FLSA did not grant DOL the power to set a salary threshold. DOL argued that the FLSA requires the agency to "define and delimit" the terms "executive, administrative, or professional employee" and in doing so implicitly gives it power to set a minimum salary. 

The Fifth Circuit found the terms executive, administrative, or professional “connote a particular status or level for which salary may be a reasonable proxy.” The court warned, however, that DOL’s power to rely on a proxy is not “unbounded” and the agency “cannot enact rules that replace or swallow the meaning” of the statutory terms they seek to define.

The decision seems consistent with the US District Court's decision in State of Nevada, et al. v. United States Department of Labor, which found “Nothing in Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a “bona fide executive, administrative, or professional capacity” employee should be exempt from overtime pay.”  

Issue: DC Circuit Post-Chevron Ruling Reverses Hospital Payment Denial

A federal appeals court reversed a lower court determination that a rural Minnesota hospital was ineligible for volume-based compensation, using post-Chevron doctrine precedent to decide that the method the HHS used to calculate payments didn’t fully compensate the hospital for its fixed costs.

In a Tuesday opinion, the US Court of Appeals for the District of Columbia Circuit sided with Lake Region Hospital in its battle to win a “volume decrease adjustment” payment of $1.9 million after patient volume decreased by more than 5% in 2013.

The Medicare statute allows rural hospitals access to volume-based payments if a hospital’s annual Medicare revenue does not exceed its unreimbursed fixed costs. According to the opinion authored by Judge Gregory G. Katsas, the Centers for Medicare & Medicaid Services historically has used three different methods to calculate eligibility for VDA, two of which would have allowed the hospital group to meet the threshold for eligibility. Lake Region Hospital alleges the agency adopted a method to calculate its VDA that made the hospital ineligible for reimbursement.

The US District Court for the District of Columbia in 2022—partially citing the since-overturned Chevron doctrine where courts deferred to reasonable agency interpretations of ambiguous statutes—rejected the hospital’s claims and relied on the HHS’s reading of the Medicare statute for how it should reasonably determine methods for calculating the payments.

“But Chevron has now been overruled, so we must ‘exercise independent judgment’ in construing the Medicare statute,” Katsas wrote in his opinion, citing the US Supreme Court’s recent ruling in Loper Bright Enterprises v. Raimondo. Upon review, the DC Circuit’s three-judge panel found the method that HHS used to determine Lake Region Hospital’s volume decrease adjustment was inconsistent with the statutory requirements to “fully compensate” qualifying hospitals for their “fixed costs.”

“We recognize, as other courts have emphasized, that the statute does not specify exactly how HHS should calculate the VDA. But it does require attention to unreimbursed fixed costs—those a hospital has actually incurred minus those for which it has already been reimbursed,” Katsas wrote. “We recognize that no method for calculating the VDA is perfect. Nonetheless, a method that ignores all compensation for variable costs is not one that reasonably approximates full compensation for fixed costs,” Katsas wrote.

“Regardless, all we hold today is that the fixed-total method used by CMS did not ‘fully compensate’ Lake Region for its ‘fixed costs’ in 2013,” wrote Katsas. 

The court reversed the summary judgment granted to the HHS and reversed the denial of summary judgment to Lake Region Hospital. The court directed the district court to set aside the CMS’s decision denying the hospital’s VDA and remand it back to the agency to re-evaluate the hospitals request consistent with the court’s opinion. 

The case is Lake Region Healthcare Corp. v. Becerra, D.C. Cir., No. 22-5318, opinion 9/3/24.

So far, 21 states — including Florida, Ohio, and Washington — reported considerable coverage losses for children since Medicaid eligibility checks were allowed to resume, according to data compiled by the Georgetown Center for Children and Families. Florida saw the steepest drop, with data showing 128,500 fewer kids with insurance since May.

The early data put pressure on federal regulators and state programs to tackle systemic issues contributing to high numbers of coverage terminations. KFF estimates over 70% of youth lost their Medicaid coverage due to procedural mishaps by parents submitting forms and the state agencies processing them.

Concern about the termination of otherwise eligible beneficiaries pushed the Centers for Medicare & Medicaid Services into action.

“Where we have identified problems, we have worked with states to pause coverage terminations, reinstate coverage for people, and implement systems changes immediately,” Daniel Tsai, CMS deputy administrator and director of the Center for Medicaid and CHIP Services, told Bloomberg Law. Ganny Belloni has more.

Groups including the American Medical Association, the country’s leading lobbying organization for doctors, made boosting what Medicare pays doctors a top priority. The AMA this summer publicly criticized Medicare’s latest proposed pay schedule for not keeping up with inflation and used its annual meeting to focus members on issues of Medicare pay reform.

The AMA long lobbied for better pay for doctors and this year the group and its allies say they’re making inroads amid the debate over tackling hospital billing. A House health committee advanced several bills this year to lower some Medicare payments to hospitals and beef up price transparency rules. Sen. Bernie Sanders (I-Vt.), chair of a key Senate health committee, proposed banning some hospital facility fees.

Rep. Larry Bucshon (R-Ind.), a cardiothoracic surgeon before joining Congress, said these kinds of proposals are sparking conversations more generally on Capitol Hill about how Medicare reimburses doctors and hospitals.

“You’re hearing on both sides of the Capitol people questioning these coverage decisions by Medicare,” he said. “Why are we paying for this and not that?” Bucshon added he expects a “lot of health care bills” to reach the House floor this fall. Bucshon and 100 other House members sent a letter to leaders of both parties calling for Medicare pay reforms.

Unlike payments to hospitals, physician payments by Medicare aren’t tied to inflation, according to a recent Medicare Trustees’ report, which looks at the overall financial state of the program. That means costs for running practices are rising faster than Medicare payments, creating a disincentive for doctors to participate in the program.

Lawmakers Probe Nonprofit Hospitals: Also on the Hill, a bipartisan Senate group wants the IRS and the Treasury Department to investigate whether nonprofit hospitals are abusing their tax-exempt status. The lawmakers pointed to cases of nonprofit hospitals charging full price for services that should have been free or at least discounted. The lawmakers also said some institutions pursued indigent patients for medical debt.

https://www.cdc.gov/coronavirus/2019-ncov/your-health/end-of-phe.html

https://www.hhs.gov/about/news/2023/05/09/fact-sheet-end-of-the-covid-19-public-health-emergency.html