Phoenix Children's Hospital Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, Feb. 10 -- Robert L. Meyer, president and CEO of Phoenix Children's Hospital, Arizona, has issued a public comment on the Centers for Medicare and Medicaid Services' proposed rule entitled "Medicaid Program: Medicaid Fiscal Accountability Regulation". The comment was written on Jan. 31, 2020, and posted on Feb. 6, 2020:

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Phoenix Children's Hospital (PCH) appreciates the opportunity to comment on the proposed Medicaid Fiscal Accountability Regulation (MFAR).

PCH is Arizona's only licensed free-standing children's hospital and a leading safety net provider in the state and the larger southwest region. PCH is the only Arizona hospital fully equipped to receive children at the highest level of acuity and complexity, with the state's only Level 1 Pediatric Trauma Center, a Level iii freestanding neonatal intensive care unit, and care delivery in more than 75 pediatric specialties. In addition, PCH is one of only a handful of teaching hospitals in the state of Arizona, training nearly 200 graduate students in PCH-sponsored programs and hosting over 1,000 additional graduate and undergraduate pediatric-focused rotations from other programs. PCH also has a strong and growing research enterprise, with 528 active institutional Review Board approved studies and a research institute and research laboratories at the University of Arizona dedicated to translating research into improved clinical care for children.

Children, and the providers like PCH who serve them, depend on Medicaid (the Arizona Health Care Cost Containment System (AHCCCS)). in cooperation with the Centers for Medicare & Medicaid Services (CMS) over the years, AHCCCS has developed a Medicaid funding and payment structure that is designed to promote efficient, quality, and accessible care for children in the state. PCH is deeply concerned that the MFAR's sweeping yet vague restrictions on intergovernmental transfers (IGTs), provider taxes, and certified public expenditures (CPEs) will result in substantial cuts to critical AHCCCS payments, disrupt ongoing value-based payment initiatives, and ultimately jeopardize patient access, undermine the efficiency of the AHCCCS program, and diminish the quality of care furnished to AHCCCS beneficiaries. For the reasons detailed below, PCH urges CMS to withdraw the rule in its entirety, including the preamble commentary.

1. The MFAR could have a devastating impact on children in Arizona.

Nationwide, Medicaid is the primary source of health care coverage for children, and Arizona is no exception. As of January 2020, Arizona Medicaid included 752,139 low-income children, which represents 41% of the total Arizona Medicaid population./1

Not surprisingly, then, payment cuts and other significant changes to the Medicaid program have a disproportionate impact on children's access to care.

PCH devotes more than half of its care (60.8% of inpatient days and 62.0% of outpatient visits) to children covered by AHCCCS. Without PCH, many children and their families would have to leave the state for advanced health care, or go without. Unlike most hospitals, as the state's only free-standing children's hospital, PCH receives almost no reimbursement from Medicare, and so cannot rely on the Medicare program's higher and more predictable rates to strengthen and stabilize its finances. PCH also has "limited ability to cost shift to commercial payers."/2

Significant cuts to AHCCCS payments are thus uniquely devastating to PCH and the children who rely on PCH for care.

While the exact impact of the MFAR is unknown, due to the breadth and vagueness of its provisions, it could potentially place all forms of local financing in Arizona--and hundreds of millions of dollars of AHCCCS payments annually--at risk. PCH is deeply concerned that the MFAR would force payment reductions, benefit cuts, or eligibility restrictions--or a combination thereof--that would greatly diminish access to care for Arizona children. While timely access to care is important for all patients, it is especially critical for children, for whom early intervention is key to ensuring proper growth and development and to prevent the onset of lifelong chronic health conditions. Timely access also reduces costs to families and to the larger health care system.

CMS should not move forward with the MFAR when it has the potential to cause severe harm to children.

2. Local financing and supplemental payments are critical and longstanding components of the AHCCCS program and serve important policy objectives.

Arizona's current AHCCCS funding mechanisms and payment programs have been developed thoughtfully over the course of more than a decade, evolving to adapt to CMS and state priorities and requirements. They are designed to ensure adequate financial support for the providers who are critical to serving low-income populations and to better serve and improve access for AHCCCS beneficiaries. As Congress envisioned when it established the Medicaid program as a state-federal partnership and explicitly authorized local financing,/3 Arizona has relied on the flexibility built into the federal Medicaid statute to tailor its AHCCCS program to the particular needs of the state, its providers, and its citizens, while collaborating with CMS to ensure appropriate federal oversight and compliance with federal requirements. The non-federal share of the AHCCCS program, like many state Medicaid programs, has for many years been funded with a mix of state general revenues, IGTs from governmental entities, provider assessments, and CPEs.

Beginning in 2008, as a result of the national recession and related state fiscal crisis, Arizona was forced to impose statewide budget cuts, implement significant AHCCCS rate cuts, and eliminate most or all disproportionate share hospital (DSH) and graduate medical education (GME) funding. In response, the Arizona legislature authorized "[I]ocal, county and tribal governments and any university under the jurisdiction of the Arizona board of regents" to provide the local share of Medicaid funding for DSH and GME payments to designated providers./4

Under these provisions, local governmental entities began providing IGTs to AHCCCS, allowing for the restoration of GME and DSH payments to providers across the state, as well as the establishment of a new indirect medical education (IME) pool. PCH receives GME and IME payments to support its medical education costs and the substantially higher indirect costs it incurs as a teaching hospital.

Even with the restoration and expansion of DSH and GME payments, PCH and other safety net providers still were struggling as a result of the rate reductions necessitated by the economic downturn. The Arizona legislature therefore moved to authorize the use of IGTs to fund other newly established AHCCCS payments, including Safety Net Care Pool (SNCP) payments under the state's 1115 waiver and, more recently, managed care directed payments, including through the Access to Physician Services Initiative (APSI) and the Pediatric Services initiative (1351). PCH received SNCP payments for many years (including several years as the sole recipient) to reimburse its substantial uncompensated care costs, in accordance with cost methodologies negotiated by AHCCCS and CMS and reflected in the state's 1115 waiver. At CMS request, AHCCCS transitioned away from SNCP payments at the end of 2017, and now, through APSI, PCH and certain other designated teaching hospitals receive a uniform managed care rate increase for professional services. The APSI program is designed to ensure that AHCCCS beneficiaries have access to essential services, and to support the state's professionals who are critical to medical education and training. At the end of 2019, PCH also began receiving a managed care rate increase for hospital services through the P51, which is intended to improve children's access to medical and behavioral health services and to ensure the continued financial viability of PCH as the state's sole freestanding children's hospital and a critical component of the state's Medicaid delivery system. AHCCCS established all of these payments through a very transparent and compliant process, and has aligned them with overall program goals and priorities. As described in further detail in Section 4 below, these payment streams have been, and will continue to be, vital to PCH's financial health and necessary to preserve access to quality care for children across the state.

Beyond IGTs, Arizona has authorized the use of provider assessments to fund aspects of the AHCCCS program, including the expansion of coverage to childless adults. In addition, the state has for many years certified public hospital expenditures. Although PCH does not benefit directly from payments funded by the provider assessment or CPEs, these financing mechanisms are key to the stability of the AHCCCS program as a whole. If the state is no longer able to rely on provider assessments or CPEs, massive cuts to the AHCCCS program would be required and would certainly have a downstream impact on PCH given its disproportionately high Medicaid volumes.

3. The MFAR would place all forms of local financing used by Arizona at risk, with severe impacts on the AHCCCS program and its beneficiaries.

The MFAR would impose drastic new restrictions on all forms of non-federal share funding except state general revenues. Instead of targeting particular financing practices of specific concern to CMS, the MFAR, with its use of broad, vague, and subjective new regulatory terms, would give CMS effectively unlimited discretion to decide at any point in time, without advance notice, that any given local funding mechanism is impermissible. The MFAR replaces state flexibility with federal mandates (even if ill-defined in many cases), allowing CMS to interfere in the operations of Arizona's state and local governments and to act in excess of its statutory authority. While PCH supports the goals of improving the transparency and accountability of supplemental payments, we do not support the MFAR's approach of imposing carelessly constructed, broad, across-the-board federal mandates. Arizona's own experiences in collaborating with CMS to develop supplemental payment programs demonstrate that CMS can ensure the accountability and integrity of Medicaid payments without eliminating state flexibility or upending the federal-state partnership designed and intended by Congress.

In particular, PCH objects to the proposed provisions below.

* Restrictions on the sources of the non-federal share: The MFAR would take the unprecedented step of restricting the "[s]tate or local funds that may be considered as the State's share" to (1) "State General Fund dollars appropriated by the State legislature directly to the State or local Medicaid agency"; (2) IGTs "derived from State or local taxes (or funds appropriated to State university teaching hospitals)"; and (3) qualified CPEs./5

If finalized, state and local governmental entities and providers in Arizona would no longer be permitted to use non-tax or non-appropriated revenues, such as patient care revenues, university tuition revenues, issued bonds, or civil settlement funds (e.g., tobacco settlements), to support the AHCCCS program. These provisions would upend longstanding financing arrangements authorized by state law and expressly permitted by CMS,/6 placing a substantial amount of AHCCCS funding at risk, including GME, IME, APSI, and PSI payments.

* Proposed "net effece" and other vague standards restricting the use of IGTs and health care-related taxes: Instead of defining objective new standards for Medicaid financing, the MFAR proposes numerous vague new criteria that would allow CMS to consider when evaluating whether a financing arrangement is permissible the "net effecr or "overall impact" of an arrangement, the "totality of the circumstances," the "reasonable expectations" of the parties, the "actions of all of the entities participating," "all relevant financial transactions or transfers of value," "associated transactions," and whether taxes with a waiver impose an "undue burden"./7

Most of these new terms and concepts are completely undefined; the only one with a definition--"net effect"--creates more questions than it answers./8

If these regulatory provisions are finalized, states, local governments, and providers will have no way to know what financing arrangements CMS will or will not permit, now or in the future. In addition, these provisions would allow CMS to enforce its rules arbitrarily, applying different standards in similar circumstances. Not only are vague and arbitrary regulatory standards of this type unlawful,/9 they are unreasonable. The MFAR would result in widespread uncertainty and substantial legal and financial risk for the state and providers, requiring Arizona to fundamentally restructure the AHCCCS program and jeopardizing the state's ability to maintain its AHCCCS delivery system and benefits.

* Proposed "undue burden" standard for health care-related taxes: The MFAR proposes to eliminate the certainty and predictability associated with the longstanding statistical tests used by CMS to evaluate whether a provider tax with a waiver is nonetheless generally redistributive. In its place, the proposed rule would impose an additional requirement that taxes not impose an "undue burden" on Medicaid services or providers. Once again, the "undue burden" standard allows CMS to consider the "totality of the circumstances" and is drafted sufficiently broadly-- permitting CMS to scrutinize "any commonality" that could serve as a "proxy" for Medicaid activity--that CMS could conceivably find an "undue burden" in any scenario, even if the tax meets the objective statistical redistributive test./10

Arizona's current provider assessments exclude certain providers; PCH, for example, is excluded from the hospital assessment, an exemption which contributes to the redistributive nature of the tax (since PCH is a high Medicaid provider). Yet there is no way for the state legislature or AHCCCS to know whether the state's current assessments would survive scrutiny under the new "undue burden" standard. Changes to the fundamental structure of the current assessments would impact every provider in the state and could threaten the political viability of the assessments, resulting in an unsustainable reduction in state funding available for AHCCCS.

* Proposed retention standard for CPEs: The MFAR proposes to require that entities that certify public expenditures "receive and retain the full amount of Federal financial participation" associated with their certified expenditures./11

It is PCH's understanding that, with CMS' knowledge and consent, AHCCCS has for many years certified public hospital expenditures, and that CMS has never before imposed this retention requirement. In fact, CMS has taken the position in the past that the retention requirement should not apply to CPEs because "[f]ederal matching funds [for CPEs] are effectively repayment of the Federal share of the total computable expenditure initially satisfied at a State or local government level," and that requiring retention would interfere in "decisions between States, local governments and/or governmentally-operated health care providers."/12

There is no reason that a federal mandate is any more necessary today. The loss of federal matching funds associated with CPEs would leave a significant hole in the AHCCCS budget, causing significant disruption to the AHCCCS program as a whole. PCH is concerned that the loss of funds ultimately would impede beneficiary access.

4. The supplemental payments that PCH has received from AHCCCS, which are threatened by the MFAR, have enabled PCH to undertake a variety of initiatives that have improved the efficiency, quality, and accessibility of health care for children in Arizona.

PCH relies on predictable, stable funding from AHCCCS to achieve its clinical, academic, and research missions and to maintain high-quality services for AHCCCS beneficiaries. Without adequate funding from AHCCCS, PCH would be forced to divert what limited funding it receives from other payers to cover the costs of serving its predominantly low-income, highly complex patient population, or to limit its services. Even with supplemental AHCCCS payments, PCH continues to incur substantial uncompensated costs. Supplemental payments are necessary to ensure PCH can maintain its level of services to children in Arizona, and have enabled PCH to undertake important initiatives to improve the efficiency, quality, and accessibility of care delivered in the state, including those detailed below. The MFAR would threaten all forms of supplemental payments that PCH currently receives--GME, IME, APSI, and PSI--as well as the important initiatives these funds support.

* Investments in Value-Based Payment: In 2013, PCH created Phoenix Children's Care Network (PCCN) to facilitate future growth in population health management, effectively bringing together physicians and other pediatric providers, including PCH's employed physicians, community-based physicians, nurse practitioners, physician assistants, and perfusionists, into a clinically integrated network of pediatricians designed to improve quality of care and health outcomes while managing health care costs using evidence-based clinical care guidelines and value-based contracting. Since 2013, PCCN has grown to include over 1,100 providers in Maricopa County. PCCN received certification as a clinically integrated organization (CIO) from the Utilization Review Accreditation Commission in 2017, becoming the first accredited pediatric CIO in the nation. PCCN providers now cover pediatric care for more than 700,000 Arizona children and manage the healthcare for over 170,000 pediatric lives under value-based contracting agreements. PCCN providers, in partnership with our state Medicaid program payers, created robust pediatric-focused quality metrics to assess safety, quality, and transparency in care provided. PCCN's reimbursement is tied to performance in these quality measures as well as managing cost of care.

PCCN is Arizona's only pediatric clinically integrated network. Since its inception, PCCN has been engaged in value-based contracts aimed at improving the health and wellbeing of children and youth while appropriately optimizing the total cost of care.

Accomplishments include:

* Surpassing state minimum performance standards in:

* Well visit rates

* Asthma medication ratio

* Access to pediatric primary care

* Annual dental visits;

* Leading the Mountain Region in well visit rates;

* Standardizing the approach to care for common conditions such as constipation and asthma in order to reduce unnecessary spend and utilize specialty care appropriately;

* Integrating behavioral and physical health into the primary care setting;

* Generating approximately $26 million in savings as measured against contractual targets with Medicaid plans from 2015-2018;

* Launching the first care management program for children with special health care needs with the nation's largest payer; and

* Providing comprehensive care management services to over 1,000 patients annually.

Establishing PCCN required PCH to make significant investments in data collection, information technology, care coordination, and network integration and alignment. It also has required PCH providers to take on the financial risks associated with value-based contracting. PCH and its providers could not have pursued this initiative if they were saddled with the uncompensated costs that supplemental payments support. Stable and consistent revenues from the AHCCCS program over several years have been critical to sustaining this investment.

* Expansion of Graduate Medical Education: To maintain an adequate workforce to serve AHCCCS beneficiaries, there must be robust medical education and training opportunities in the state of Arizona. Residents are more likely to practice medicine in the state where they complete their training./13

Yet training residents and fellows is costly. The average annual cost per resident for a residency program is $140,000 - $175,000./14

With training that may last up to nine years depending on the specialty, the total cost of training a single resident/fellow can exceed $1.5 million. Hospitals cannot make funding commitments at this level without stable and certain funding over the long-term. GME, IME, and APSI payments all have enabled PCH to make significant investments in medical education.

In particular, PCH and other providers receiving APSI payments have committed to use a portion of the funding to invest in new GME residencies and fellowships in specific high-need specialties and locations, including rural areas. PCH has been able to invest in Child Psychiatry Residency and Endocrinology Fellowship programs as a result of APSI funding. These investments are expected to improve the retention of physicians in Arizona and to improve access to physician services for Arizona's Medicaid population.

* Workforce and Service Line investments: As a result of stable AHCCCS funding, PCH has been able to invest significantly in the recruitment of physicians in high-need specialties and the development of new service lines, expanding the state's capacity for serving children, particularly those with complex care needs. In recent years, for example, PCH has expanded capacity in genetic testing and treatment, congenital heart disease (for both children and adults), and heart, liver, and kidney transplant. For many children, these new services have eliminated the need to travel out of state to receive specialized care.

* Quality Improvement Initiatives: AHCCCS funding has enabled PCH to invest in numerous quality initiatives in recent years, and the results have been impressive. PCH received U.S. News & World Report national rankings each of the last several years. In 2018, 10 specialties were recognized within the top 50 hospitals nationally. In addition, PCH has routinely been recognized by Solutions for Patient Safety (SPS) for its quality work. In June 2019, for the sixth consecutive year, Phoenix Children's received a top "three stars" rating from STS for its higher-than-expected survival rates in pediatric cardiac surgery. SPS also named Phoenix Children's as "Hospital of the Month" in May 2019 for its outstanding work in pediatric patient safety and low rates of hospital-acquired conditions. In addition, PCH has received top recognition from The Leapfrog Group. At the end of 2018, PCH was one of only 13 children's hospitals to earn The Leapfrog Group's ``Top Children's Hospital" designation for its achievements in patient safety and quality.

In both the APSI and PSI payment programs, PCH is tracking quality performance in a variety of areas, including readmissions, childhood flu vaccinations, education of diabetes patients, antibiotic stewardship, and adverse drug events, and is setting increasingly ambitious improvement targets each year. PCH, AHCCCS, and CMS worked collaboratively to develop these metrics to improve patient care and to assure that PCH's AHCCCS payments contribute to the underlying objectives of the Medicaid program.

5. The need for, and value of, supplemental payments to PCH has been recognized repeatedly by independent evaluators.

The WAR appears to be premised on the notion that supplemental payments are inherently suspect and less likely to advance the objectives of the Medicaid program./15

In PCH's experience, this could not be further from the truth. Independent evaluators have consistently recognized that supplemental payments--even when targeted solely to PCH, like the SNCP program was for several years--serve a critical need and promote value, access, and other objectives of the AHCCCS program.

In 2014, for example, the Public Consulting Group (PCG) contracted with AHCCCS to evaluate PCH's use of SNCP payments. In examining the necessity of SNCP funding, PCG took into account PCH's unique role in the AHCCCS delivery system--its population with a high rate of Medicaid coverage and a low proportion of uninsured patients as compared to other safety net providers, its higher patient acuity, its high cost delivery system, and its "ambitious organizational growth and its aspirations to be a national leader in high quality pediatric care, equipped with cutting-edge medical technology, attracting top physician talent, and producing highly-respected research./16

PCG concluded that due to PCH's "high levels of Medicaid shortfall ... SNCP payments remain necessary to offset the costs of the hospital's heavy burden of uncompensated care./17

PCG recognized the critical role SNCP payments played in enabling PCH to undertake value-based initiatives, reporting that "SNCP funding has not adversely affected the hospital's capability or willingness to achieve greater efficiencies. Rather than insulating PCH from the budget pressures that tend to drive the development of value-based health, SNCP payments appear in fact to have facilitated the hospital's ongoing movement in this direction, allowing PCH the budgetary room to implement additional efficiencies, including value-based delivery system and payment reforms, without substantially disruptive effects on the hospital's level of quality./18

Importantly, PCG cautioned that the alternative of addressing PCH's Medicaid shortfall through a direct rate increase, instead of through supplemental payments, could have unintended consequences, with "uneven effects within Arizona's Medicaid network" and a "cumulative effect of inadvertently pricing PCH out of the market and lowering its competitiveness against regional providers."/19

Similarly, in 2018, Navigant contracted with AHCCCS to provide a final evaluation of PCH's SNCP funding after the SNCP was phased out at the end of 2017. Examining PCH's Medicaid and uninsured utilization, Navigant indicated its belief that the data "demonstrates that the SNCP funding helped incentivize PCH to provide services for these populations," improving access to care for Arizona's low-income children./20

Navigant cautioned that with the transition away from SNCP funding, AHCCCS should "continue to closely monitor the financial health of PCH.... [S]hould AHCCCS determine there remain significant uncompensated costs at PCH that impact access to care, we recommend AHCCCS consider additional Medicaid policy changes to direct funding to PCH and the recipients it serves."/21

Independent evaluations also have demonstrated that PCH has been a responsible steward of the AHCCCS funding it has received, maintaining below average costs compared to its peer hospitals in other states. In 2015, Navigant Consulting compared PCH's cost per inpatient discharge to other children's hospitals in select states, and found that PCH's average cost per discharge, $17,416, was slightly below the average of $17,536./22

Likewise, a study conducted by the Children's Hospital Association comparing the costs of 32 children's hospitals across the country indicated that PCH's cost of delivering care was 15% below the nationwide mean./23

Despite all the independent evidence demonstrating the value of PCH's supplemental payments to children and the state, the MFAR would threaten AHCCCS ability to continue these payment streams in the future.

6. CMS does not have sufficient data or information on impact to proceed in finalizing the MFAR.

In justifying new reporting and data collection requirements, CMS repeatedly explains in the proposed rule that it lacks critical information and data to properly evaluate supplemental payments and local financing arrangements. CMS also explicitly acknowledges that "[t]he fiscal impact on the Medicaid program from the implementation of the policies in the proposed rule is unknown."/24

By CMS own admission, it lacks the information necessary to articulate a reasoned basis for the MFAR's policies and cannot lawfully move forward in finalizing the MFAR."/25

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in conclusion, given the harmful impacts the MFAR would have--not just to PCH and the children it serves, but to the AHCCCS program and Arizona's health care delivery system as a whole--PCH requests that CMS withdraw the rule in its entirety.

Thank you for the opportunity to share our comments on the proposed rule. If you have any questions or concerns regarding our comments, please contact me at [email protected].

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Footnotes:

1/ A HCCCS Population Demographics (Jan. 2020), httios://www.azahcccs.gov/Resources/Downloads/PopulationStatistics/2020/Jan/AHCCCS Demographics.pdf.

2/ Navigant, Evaluation of Safety Net Care Pool (SNCP) Payments for Phoenix Children's Hospital at 3 (Mar. 2018), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/az/Health- Care-Cost-Containment-System/az-hccc-sno-eval-rpt-03302018.pdf.

3/ See 42 U.S.C. Sec. 1396a(a)(2) (authorizing states to use "funds frorn local sources" as the non-federal share); 42 U.S.C. Sec. 1396b(w)(6)(A) (expressly prohibiting CMS from restricting the use of certain local funding sources).

4/ ARIZ. REV. STAT. Sec. 36-2903.01.

5/ Proposed 42 C.F.R. Sec. 433.51.

6/ 73 Fed. Reg. 29,748, 29,766 (May 29, 2007) ("CMS recognizes that units of government that are not health care providers may collect revenue from a variety of sources (including fees, grants, earned interest, fines, sale or lease of public resources, legal settlements and judgments, revenue frorn bond issuances, tobacco settlement funds) that are ultimately deposited into the government's general fund, which is used to finance the government's operations. We find such general fund revenues to be acceptable sources of financing the non-Federal share of Medicaid payments Governmentally-operated health care providers may rnaintain accounts separate from the general fund to finance the operations of the governmentally-operated health care provider. The governmentallyoperated health care providers account may include patient care revenues from other third party payers and other revenues similar to those listed above. Such revenues would also be acceptable sources of financing the non- Federal share of Medicaid payments ....").

7/ See proposed 42 C.F.R. Sec.Sec. 433.51, 433,52, 433.54, 433.55, 433.68, 447.207 (each of which uses one or more of the terms described above).

8/ "N et effect" is defined in proposed 42 C.F.R. Sec. 433.52 as "the overall impact of an arrangement, considering the actions of all the entities participating in the arrangement, including all relevant financial transactions or transfers of value, in cash or in kind, among participating entities. The net effect of an arrangement is determined in consideration of the totality of the circumstances, including the reasonable expectations of the participating entities, and may include consideration of reciprocal actions without regard to whether the arrangement or a component of the arrangement is reduced to writing or is legally enforceable by any entity." The level of vagueness and subjectivity in this "definition" is staggering.

9/ See Grayned v. City of Rockford, 408 U.S. 104, 108 (1972) (striking down an ordinance on the grounds that it was "void for vagueness," explaining that "laws must provide explicit standards for those who apply them"); General Electric Co. v. EPA, 53 F.3d 1324 (D.C. Cir. 1995) (requiring that regulations give regulated parties "ascertainable certainty" of legal standards); Oglala Sioux Tribe of Indians v. Andrus, 603 F.2d 707, 718 (8th Cir. 1979) ("A court need not accept an agency's interpretation of its own regulations if that interpretation ... deprives affected parties of fair notice of the agency's intentions."); Phelps Dodge Corp. v. Fed. Mine Safety & Health Review Comm'n, 681 F.2d 1189, 1192 (9th Cir. 1982) ("[The application of a regulation in a particular situation may be challenged on the ground that it does not give fair warning that the a]legedly violative conduct was prohibited.").

10/ Proposed 42 C.F.R. Sec. 433.68(e)(3).

11/ Proposed 42 C.F.R. Sec. 433.447.206.

12/ 72 Fed. Reg. 29,748, 29,799 (May 29, 2007).

13/ See, e.g., Ernest Blake Fagan et al., Family Medicine Graduate Proximity to Their Site of Training: Policy Options for Improving the Distribution of Primary Care Access (2015), https://www.stfm.org/FamilyMedicine/Vol47Issue2/Fagan124; Tracy J. Koehler et al., Physician Retention in the Same State as Residency Training, 8 J. GRADUATE MED. EDUC. 518 (Oct. 2016), httos://www.ncbi.nlm.nih.gov/pmc/articles/PMC5058583/.

14/ These numbers were developed based on estimates of a reasonable range of GME program costs, collected through a survey of the teaching hospitals participating in APS1. This appears to be in line with national averages, based on a study of 2008 Medicare cost reports, which indicated that the median GME cost per full-time equivalent resident across teaching hospitals was $134,803. Barbara O. Wynn et al., Does It Cost More to Train Residents or to Replace Them?: A Look at the Costs and Benefits of Operating Graduate Medical Education Programs (2013).

15/ See, e.g. 84 Fed. Reg. 63,722, 63,724 (Nov. 18, 2019) ("It often appears to us that most of these [supplemental] payment methodologies do not result in an equitable distribution of payments to improve adequacy of rates across providers within the service class or ownership group, or otherwise improve the Medicaid program in some measurable, value-added way.").

16/ Public Consulting Group, Arizona Health Care Cost Containment System: independent Evaluation for Safety Net Care Pool for Phoenix Children's Hospital at 4 (Aug. 2014), https://www.medicaid.gov/Medicaid-CHIP-Program- Information/Bv-Topics/Waivers/1115/downloadslaz/Health-Care-Cost-Containment-Systenn/az-hccc-pa-safetvnet- care-bool-09252014.pdf.

17/ Id. at 19.

18/ 1d.

19/ Id. at 18.

20/ Navigant, Evaluation of Safety Net Care Pool (SNCP) Payments for Phoenix Children's Hospital at 23 (Mar. 2018), https://www.medicaid.gov/Medicaid-CH I P-Progra m-lnformation/By-Topics/Waivers/1115/downloads/az/Health- Care-Cost-Containment-Systern/az-hccc-sncp-eval-rpt-03302018.pdf.

21/ Id. at 29.

22/ AHCCCS, Phoenix Children's Hospital safety Net Care Pool Tronsition Report (July 2015), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloadsfaziNealth- Care-Cost-Containment-System/az-hccc-pa-safetv-net-care-pool-trnstn-rpt-10062015.pdf.

23/ Id.

24/ 84 Fed. Reg. 63,722, 63,774 (Nov. 18, 2019).

25/ See 5 U.S.C. Sec. 706(2)(A) (requiring that agencies not act arbitrarily or unreasonably in promulgating rules); Motor Vehicle Mfr. Ass'n v. State Farm Mut. Auto. ins. Co., 463 U.S. 29, 48 (1983) (requiring agencies to provide a reasoned explanation for their policies, and to consider all relevant factors and important aspects of the problem).

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The proposed rule can be viewed at: https://www.regulations.gov/document?D=CMS-2019-0169-0001

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