CMS’s definitions of “primary roads” and “secondary roads,” as used to determine what constitutes a critical access hospital, withstood another court challenge last week.

The U.S. Court of Appeals for the Fifth Circuit upheld CMS’s critical access hospital (CAH) guidelines, concluding that CMS’s interpretation of “primary roads” and “secondary roads” is persuasive and entitled to judicial deference. Baylor County Hospital District v. Price, No. 16-10310, 2017 WL 908222 (5th Cir. Mar. 7, 2017).

Medicare provides special reimbursement for certain rural facilities that meet the definition of a CAH.  CAHs receive cost-based reimbursement from Medicare, as well as additional Medicare payment.

To qualify as a CAH, and facility must satisfy several criteria, including sitting more than thirty-five miles from another hospital (or fifteen miles if only secondary roads are available). 42 U.S.C. § 1395i-4(c)(2)(B)(i)(I). Neither the statute nor the implementing regulation defined “secondary roads,” so CMS defined “primary roads” in Section 2256A of its State Operations Manual as:

• A numbered federal highway, including interstates, intrastates, expressways or any other numbered federal highway;
• A numbered state highway with two or more lanes each way; or
• A road shown on a map prepared in accordance with the U.S. Geological Survey’s Federal Geographic Data Committee (FGDC) Digital Cartographic Standard for Geologic Map Symbolization as a “primary highway, divided by median strip.”

Seymour Hospital (“Seymour”) in Seymour, Texas, is 31.8 miles away from the nearest hospital, and U.S. Highway 183/283 – which Seymour characterized as a two-lane rural road with no shoulders and conditions akin to a poor quality farm road – accounts for 28.4 of those miles. When CMS determined, based on its definition of primary and secondary roads, that Seymour was not a CAH, Seymour challenged those definitions as unreasonable, arbitrary and capricious. After an ALJ, an HHS Appeals Board, and a federal district court all sided with CMS, Seymour appealed to the Fifth Circuit.

The Fifth Circuit found that CMS’s determination that federal highways (like U.S. Highway 183/283) “are likely to be bigger, better-maintained, and more well-traveled than state highways” was neither arbitrary nor unreasoned and noted that, although bright line rules will inevitably treat some similar cases differently, CMS’s differentiation between primary and secondary roads “is valid in the vast majority of cases.” Id. at *6.

Please click here for a copy of the Fifth Circuit’s decision.