Bridgeport Hospital, Doing Business As Yale New Haven Health v. Xavier Becerra, Secretary, United States Department of Health and Human Services

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 27, 2023 Decided July 23, 2024
No. 22-5249
B RIDGEPORT HOSPITAL, DOING BUSINESS AS YALE NEW
HAVEN HEALTH, ET AL.,
APPELLEES
v.
XAVIER B ECERRA, S ECRETARY, UNITED S TATES D EPARTMENT
OF HEALTH AND HUMAN S ERVICES ,
APPELLANT
Consolidated with 22-5269
Appeals from the United States District Court
for the District of Columbia
(No. 1:20-cv-01574)
David L. Peters, Attorney, U.S. Department of Justice,
argued the cause for appellant/cross-appellee. With him on the
briefs were Brian M. Boynton, Principal Deputy Assistant
Attorney General, Abby C. Wright, Attorney, Samuel R.
Bagenstos, General Counsel, U.S. Department of Health and
Human Services, Janice L. Hoffman, Associate General

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Counsel, and Susan Maxson Lyons, Deputy Associate General
Counsel.
Katrina A. Pagonis argued the cause for appellees/cross-
appellants. With her on the briefs was Kelly A. Carroll.
Before: R AO and W ALKER , Circuit Judges, and
R ANDOLPH , Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge WALKER .
WALKER , Circuit Judge: Parts of the United States Code
are notoriously short on details. When should the FCC license
a radio station? When “public interest, convenience, and
necessity” require it. 47 U.S.C. § 309(a). What can FERC
allow companies to charge for electricity transmission? Rates
that are “just and reasonable.” 16 U.S.C. § 824d(a). What
primary standards for particle pollution should the EPA set?
Standards that are “requisite to protect the public health,” while
allowing for “an adequate margin of safety.” 42 U.S.C.
§ 7409(b)(1).
But sometimes Congress speaks precisely. And it did so
in the section of the Medicare Act at issue in today’s case. See
id. § 1395ww. With remarkable specificity, this statutory
section prescribes intricate formulas to reimburse hospitals for
inpatient care.
The Department of Health and Human Services does not
like the result of those formulas. So it categorically inflated
reimbursements for 25 percent of hospitals — at a cost of $245
million more than Congress prescribed. Then, to balance the
budget, HHS reduced reimbursements for all other hospitals.

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The district court held that HHS cannot deviate in that way
from Congress’s directive. Without vacating HHS’s action, the
district court remanded the rule with instructions to recalculate
the reimbursements.
Like the district court, we hold that HHS exceeded its
authority. Unlike the district court, we conclude that HHS’s
unlawful action must be vacated.
I. Background
A. Medicare’s Reimbursement System
Medicare covers the health care of elderly and disabled
Americans. Its coverage includes inpatient care. When
hospitals provide that care, they receive Medicare
reimbursements. See 42 U.S.C. § 1395d(a); see also Becerra
v. Empire Health Foundation, 597 U.S. 424, 428-29 (2022).
The Department of Health and Human Services calculates
inpatient reimbursements according to formulas chosen by
Congress. See Empire Health Foundation, 597 U.S. at 428-29.
The formulas include predetermined fixed rates. The rates
approximate the amount of money “an efficiently run hospital,
in the same region, would expend to treat a patient with the
same diagnosis.” See id. at 429; see also 42 U.S.C.
§ 1395ww(d).
To fully understand how all the Medicare formulas work,
you would have to read the tens of thousands of words in 42
U.S.C. § 1395ww. But the basics of the inpatient
reimbursement system go something like this. Begin with a
fixed rate for wages — the first component. See Cape Cod
Hospital v. Sebelius, 630 F.3d 203, 206 (D.C. Cir. 2011). Then,
add a fixed rate for nonlabor costs — the second component.

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See id. Finally, multiply that sum by a fixed rate assigned to
each patient’s diagnosis — the third component. See id.; see
also 42 U.S.C. § 1395ww(d)(2), (4).
Unlike the other components, the wages component
depends on the hospital’s location. That’s because hospitals in
different regions pay different wages. See Southeast Alabama
Medical Center v. Sebelius, 572 F.3d 912, 915 (D.C. Cir.
2009); Bridgeport Hospital v. Becerra, 589 F. Supp. 3d 1, 4
(D.D.C. 2022); see also 42 U.S.C. § 1395ww(d)(3)(E)(i).
To account for those differences, Congress added the
wage-index provision. See 42 U.S.C. § 1395ww(d)(3)(E)(i). It
instructs HHS to adjust reimbursement rates according to a set
wage index. That index compares a region’s average wages to
the nation’s average wages and assigns each hospital a set value
reflecting the wage-related expenses of hospitals in its area as
compared against the national average. Id.; see also Robert
Wood Johnson University Hospital v. Thompson, 297 F.3d 273,
276 (3d Cir. 2002).
The wage index tags the national “wage index value” at
1.0. See Bridgeport Hospital, 589 F. Supp. 3d at 6; id. at 5 n.3.
A region with higher-than-average wages is assigned a value
greater than 1.0 — and a hospital there gets a higher-than-
average rate. See id. at 5 n.3. Likewise, a low-wage region is
assigned a value less than 1.0 — and a hospital there gets a
lower-than-average rate. See id.
In addition to prescribing all that, Congress passed two
other provisions relevant to this case. First, it provided that
annual fluctuations in the wage index must be budget neutral.
42 U.S.C. § 1395ww(d)(3)(E)(i); see also Baystate Franklin
Medical Center v. Azar, 950 F.3d 84, 87 (D.C. Cir. 2020). So
anytime HHS increases reimbursements in one region, it must

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decrease reimbursements in other regions. Baystate Franklin
Medical Center, 950 F.3d at 90. Second, in an adjustments
provision, Congress said HHS can make “adjustments” to
inpatient reimbursements. 42 U.S.C. § 1395ww(d)(5)(I)(i).
B. The Wage-Index Redistribution Policy
In 2018, HHS decided that wage disparities among
hospitals were too great. 84 Fed. Reg. 19,158, 19,394 (May 3,
2019). It reasoned that high reimbursements for high-wage
hospitals make it easy for them to maintain high wages. See id.
Meanwhile, low reimbursements for low-wage hospitals
prevent them from paying higher wages, which keeps them at
the low end of the wage index. See id.; see also Bridgeport
Hospital, 589 F. Supp. 3d at 6. HHS calls that a “downward
spiral.” 84 Fed. Reg. at 19,394.
In response, HHS in 2019 “proposed inflating the wage
index value of the hospitals in the lowest quartile.” Bridgeport
Hospital, 589 F. Supp. 3d at 6; see also 84 Fed. Reg. at 19,394-
96. To be precise, HHS decided to raise each of these low-
wage hospitals’ “wage index value” by half the difference
between (1) their congressionally prescribed value and (2) the
value of a hospital at the 25th percentile line for wages.
Bridgeport Hospital, 589 F. Supp. 3d at 6. So if a hospital had
a congressionally prescribed value of 0.5, and if the 25th
percentile of all hospitals had a value of 0.8, then HHS would
now give that hospital a value of 0.65 instead of 0.5. See id.
To balance the budget, HHS also proposed “applying a
budget neutrality factor” for all other hospitals. 84 Fed. Reg.
at 19,672. So while the lowest quartile of hospitals would be
over-paid by $245 million, all other hospitals will be under-
paid by $245 million.

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Later that year, HHS promulgated a final rule adopting its
wage-index adjustment for fiscal years 2020 to at least 2023.
See Final Rule, 84 Fed. Reg. 42,044, 42,048 (Aug. 16, 2019).
A coalition of hospitals administratively challenged the rule.
See Bridgeport Hospital, 589 F. Supp. 3d at 7. HHS certified
the Hospitals to bring their challenge in federal court, which
they did. See 42 C.F.R. § 405.1842(f); cf. Allina Health
Services v. Price, 863 F.3d 937, 940 (D.C. Cir. 2017).
The district court held that HHS lacks authority to create
its redistribution policy and so granted summary judgment to
the Hospitals. See Bridgeport Hospital, 589 F. Supp. 3d at 10-
15. But rather than vacating HHS’s rule, the district court
remanded it to HHS with instructions to recalculate the
challenged reimbursements. See Bridgeport Hospital v.
Becerra, 2022 WL 4487114, at *3-4 (D.D.C. July 27, 2022).
HHS appealed the merits. The Hospitals cross-appealed
the remedy.1
II. The Statute Does Not Authorize HHS’s Wage-Index
Redistribution Policy
The Department of Health and Human Services lacks the
power to inflate reimbursement rates beyond the
1 Because HHS’s appeal of the district court’s remand order puts the
order properly before us, see North Carolina Fisheries Association,
Inc. v. Gutierrez, 550 F.3d 16, 19 (D.C. Cir. 2008) (“a limited
exception” allows federal agencies to appeal remand orders), “we
may also consider the Hospitals’ cross-appeal,” County of Los
Angeles v. Shalala, 192 F.3d 1005, 1012 (D.C. Cir. 1999); see also
NAACP v. U.S. Sugar Corp., 84 F.3d 1432, 1436 (D.C. Cir. 1996)
(“what matters for the purposes of our appellate jurisdiction is
whether the district court’s decision — and not any particular party
challenging it — is properly before us”).

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congressionally prescribed wage-index values for an entire
quartile of hospitals. The wage-index provision does not
authorize it. See 42 U.S.C. § 1395ww(d)(3)(E)(i). Neither
does the adjustments provision. See id. § 1395ww(d)(5)(I)(i).
A. The Wage-Index Provision
The wage-index provision does not authorize HHS to
depart from Congress’s established formula for a favored
quartile of hospitals simply because HHS wants those favored
hospitals to be able to pay their employees higher wages in the
future.
We begin by examining the text of the wage-index
provision:
[T]he Secretary shall adjust the proportion, (as
estimated by the Secretary from time to time) of
hospitals’ costs which are attributable to wages and
wage-related costs, of the [diagnosis-related group]
prospective payment rates computed under
subparagraph (D) for area differences in hospital wage
levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the
geographic area of the hospital compared to the
national average hospital wage level. Not later than
October 1, 1990, and October 1, 1993 (and at least
every 12 months thereafter), the Secretary shall update
the factor under the preceding sentence on the basis
of a survey conducted by the Secretary (and updated
as appropriate) of the wages and wage-related costs of
subsection (d) hospitals in the United States.
42 U.S.C. § 1395ww(d)(3)(E)(i) (emphases added).

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As we have said before, the wage-index provision “is
hardly a paragon of clarity.” Southeast Alabama Medical
Center v. Sebelius, 572 F.3d 912, 915 (D.C. Cir. 2009).
Nevertheless, the provision includes four textual clues relevant
to our inquiry. Together, they persuade us that the wage-index
provision does not authorize HHS’s wage-index redistribution
policy.
1. “shall”
We begin with the unremarkable observation that
Congress gave HHS a mandatory duty. It said HHS “shall
adjust” wage-based reimbursements. 42 U.S.C.
§ 1395ww(d)(3)(E)(i). While the word “may” is permissive
and signals discretion, the word “shall” generally signals a
mandatory duty. Kingdomware Technologies, Inc. v. United
States, 579 U.S. 162, 171-72 (2016); see also Antonin Scalia
& Bryan A. Garner, Reading Law: The Interpretation of Legal
Texts, 112-13 (2012). And where a statute uses “shall” in some
provisions and “may” in others, as § 1395ww does here,
Congress likely used “shall” to “impose[ ] a mandatory duty”
that is “impervious to discretion.” Maine Community Health
Options v. United States, 590 U.S. 296, 310-11 (2020) (cleaned
up). In other words, HHS does not possess unlimited and
directionless discretion.
2. “by a factor”
Congress further restrained HHS by specifying that it must
make the annual wage-based adjustment “by a factor.” 42
U.S.C. § 1395ww(d)(3)(E)(i). Consider that Congress could
have told HHS to adjust reimbursements without specifying
how to calculate the adjustment. Or Congress could have
allowed HHS to calculate the adjustment however HHS
thought “reasonable and necessary” — a phrase used

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elsewhere in this statute. See id. § 1395ww(b)(4)(A)(i). Either
of those options might well have conferred the broad discretion
HHS claims. But instead, Congress authorized HHS to adjust
the reimbursement rate only according to a specific, calculated
“factor.”
3. “the”
That factor must “reflect[ ] the relative hospital wage level
in the geographic area of the hospital compared to the national
average hospital wage level.” Id. § 1395ww(d)(3)(E)(i)
(emphases added). By using the definite article “the” before
“relative hospital wage level” and “national average hospital
wage level,” Congress specified that each of these metrics has
a single, definite, discernable value. Id.; see Nielsen v. Preap,
586 U.S. 392, 407-08 (2019); United States v. Little, 78 F.4th
453, 457 (D.C. Cir. 2023). So the wage-index factor must
“reflect” the calculated difference in two objective, discernable
numbers.
4. “on the basis of”
In addition, the factor must be updated “on the basis of a
survey” of each hospital’s “wages and wage-related costs.” 42
U.S.C. § 1395ww(d)(3)(E)(i). While terms such as “‘based on’
do not necessarily mean ‘rest solely on,’” they do prohibit a
governmental actor from taking actions that “abandon” or
“supplant” the authorized scheme or decisional criteria.
Nuclear Energy Institute, Inc. v. EPA, 373 F.3d 1251, 1269
(D.C. Cir. 2004) (cleaned up). So the annual adjustment to the
wage-index factor must be anchored to the survey of wages,
and not to other policy factors that would abandon or supplant
the data-driven metric prescribed by Congress.

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5. Putting the Four Textual Clues Together
Based on those four textual clues, we conclude that the
wage-index provision imposes (1) a mandatory duty on HHS
to make the annual wage adjustment, (2) based on a uniform
factor (3) comprised of definite, objective data, (4) drawn from
a survey of each hospital’s wages and reflecting the disparities
between regional and national wages. And that simply is not
what HHS has done here. Its proposed policy distorts the
uniform factor, jettisons the definite, objective data, and
departs from the actual disparities between regional and
national wages. And it does so in spite of a mandatory duty to
follow the formula Congress chose.
Of course, HHS has some discretion in how it conducts the
survey or compiles the data for calculation. See Anna Jacques
Hospital v. Burwell, 797 F.3d 1155, 1164-65 (D.C. Cir. 2015).
But the wage-index provision requires “that the wage index
must be uniformly determined and applied.” Atrium Medical
Center v. HHS, 766 F.3d 560, 569 (6th Cir. 2014). It also must
“encompass only wages and wage-related costs and must
reasonably reflect the relative hospital wage level in a given
area.” Id. (cleaned up); see also Anna Jacques Hospital, 797
F.3d at 1158; Methodist Hospital of Sacramento v. Shalala, 38
F.3d 1225, 1230 (D.C. Cir. 1994). Once that uniform
calculation of the comparative wage rates has been calculated,
nothing in the wage-index provision permits HHS to change
those rates simply because it would rather give preferred
hospitals more money and disfavored hospitals less.

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B. The Adjustments Provision
HHS offers a back-up argument. It points to an
adjustments provision that applies to inpatient reimbursements:
HHS “shall provide by regulation for such other
exceptions and adjustments to such payment
amounts under this subsection as the Secretary deems
appropriate.”
42 U.S.C. § 1395ww(d)(5)(I)(i) (emphasis added).
To be sure, this adjustments provision does some real
work. It allows HHS to “fill[ ] ” the “space that the specific
provisions do not occupy.” Adirondack Medical Center v.
Sebelius, 740 F.3d 692, 699 (D.C. Cir. 2014) (interpreting
“adjustment” in § 1395ww(d)(5)(I)(i)). So, whereas “all else
equal, silence indicates a lack of authority,” Loper Bright
Enterprises v. Raimondo, 45 F.4th 359, 374 (D.C. Cir. 2022)
(Walker, J., dissenting), majority op. rev’d, 144 S. Ct. 2244,
2273 (2024), the adjustments provision here specifically
authorizes regulatory “adjustments.”2
But the adjustments provision has limits, beginning with
the limits of the word “adjustments.” We have said that
“similar limits inhere in the term ‘adjustments’ to those the
Supreme Court found in the word ‘modify.’” Amgen, Inc. v.
2 Section 1395ww(d)(5)(I)(i) contemplates both an “exceptions”
authority and an “adjustments” authority. An exception is a special
case that departs from a generally applicable rule. That, according
to HHS, is not this case. Here, HHS called its redistribution plan an
“adjustment” and invoked only its “adjustments” authority. See HHS
Br. 14-24; see also 84 Fed. Reg. 42,044, 42,048, 42,328 (Aug. 16,
2019). We therefore analyze the redistribution policy only as an
“adjustment.”

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Smith, 357 F.3d 103, 117 (D.C. Cir. 2004) (emphases added);
see also Biden v. Nebraska, 143 S. Ct. 2355, 2368-69 (2023)
(“modify”); MCI Telecommunications Corp. v. AT&T, 512
U.S. 218, 225 (1994) (“modify”).
Those cases teach that the terms “modify” and “adjust”
mean “to change moderately or in minor fashion.” MCI, 512
U.S. at 225. Each term connotes “increment or limitation.” Id.
So the adjustments provision in § 1395ww(d)(5)(I)(i) is a
“subtle device” with “limits,” Nebraska, 143 S. Ct. at 2368,
2370-71 (cleaned up), that can’t be used for a “severe
restructuring of the statutory scheme” or a “substantial
departure from the default amounts,” Amgen, 357 F.3d at 117.
HHS’s wage-index adjustment exceeds those limits.
To begin with, the wage-index adjustment does not fill a
gap left by statutory silence. Far from it. The statute already
instructs how to account for geographic differences in wages.
See 42 U.S.C. § 1395ww(d)(3)(E)(i).
Indeed, the Medicare Act prescribes formulas for inpatient
reimbursements in excruciating detail. For a flavor of that
detail, read the 1,300-word formula for extra inpatient
reimbursements to hospitals with “indirect costs of medical
education.” Id. at § 1395ww(d)(5)(B). Or the 500-word
formula for extra inpatient reimbursements to “small rural
hospital[s].” Id. at § 1395ww(d)(5)(G). Or the 1,900-word
formula for extra inpatient reimbursements to hospitals with a

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“disproportionate number of low-income patients.” Id. at
§ 1395ww(d)(5)(F).
We could go on and on, because § 1395ww(d) itself goes
on and on.3 Our point, however, is not nearly as complicated
as the statute. It is simply this — in § 1395ww(d), Congress
did not paint with broad strokes while delegating all the hard
decisions to an agency. Section 1395ww(d) is instead a regime
of highly specific formulas. And HHS does not “complement”
§ 1395ww(d) when it jettisons one of those formulas.
Adirondack, 740 F.3d at 699. Rather, HHS “supplant[s]” it
“with a new regime entirely.” Nebraska, 143 S. Ct. at 2369.
Furthermore, HHS’s use of the adjustments provision
“does not remotely resemble” any use of that provision held
valid by this or any other court in a case identified by HHS. Id.
at 2370. To the contrary, HHS has identified no time when it
has relied on the adjustments provision to override a statutory
command as specific as the congressionally required formula
in the wage-index provision. Cf. Shands Jacksonville Medical
Center v. Burwell, 139 F. Supp. 3d 240, 260 (D.D.C. 2015) (the
adjustments “provision does not give the Secretary carte
blanche to override the rest of the Act”).
In addition, the redistribution policy is neither low in cost
nor narrow in scope. Rather, it redistributes $245 million in
Medicare funding to 25 percent of reimbursed hospitals. And
so far as we can tell, the supposed need for a redistribution
might continue as long as there are geographical differences in
wages — differences that are not going away any time soon.
Those three factors — expense, scope, and longevity — add up
3 So does the rest of the section on inpatient reimbursement formulas.
At nearly 60,000 words, § 1395ww is longer than many books. See,
e.g., F. Scott Fitzgerald, The Great Gatsby (1925).

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to a “substantial departure from the default amounts” required
by the (original) wage-index provision. Id.; see also Nebraska,
143 S. Ct. at 2368-69.
In HHS’s defense of its (unprecedented, expensive, broad,
and possibly never-ending) change to congressional policy,
HHS says this case is like Adirondack Medical Center v.
Sebelius, 740 F.3d 692 (D.C. Cir. 2014). There, Congress
expressly authorized a specific adjustment for a group of
hospitals that operated under what’s called the “federal rate” of
reimbursements. Id. at 694. We held that HHS could give a
similar bump in funding to a different group of hospitals, which
were classified under the “hospital-specific rate” of
reimbursements. Id. at 695. That’s because HHS could “fill[ ] ”
the silence in the statute about whether or not to provide an
adjustment to the “hospital-specific rate” hospitals. Id. at 699.
So the congressionally ordered adjustment and the HHS-
created adjustment complemented each other, and the latter
filled a space that the former did not occupy. See id.
Here, in contrast, there is no silence. Instead, Congress
created a detailed reimbursement scheme that reflects actual
wages in different regions. HHS then swept aside the scheme’s
congressionally required formula because HHS determined
that the scheme should serve a different policy goal
altogether — namely, increasing wages at the lowest-wage
hospitals. That is not in any sense a reimbursement
“adjustment,” but an entirely different policy.
Adirondack did not uphold that kind of change to an
express congressional policy, nor can we do so today.4 We
4 Also, Adirondack “rest[ed] on Chevron deference.” 740 F.3d at
696. But even before the Supreme Court overruled Chevron, see

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hold instead that the adjustments provision in
§ 1395ww(d)(5)(I)(i) does not authorize HHS to set aside the
congressionally required formula in the wage-index provision,
§ 1395ww(d)(3)(E)(i). See Nebraska, 143 S Ct. at 2368-71;
see also American Hospital Association v. Becerra, 596 U.S.
724, 737 (2022) (rejecting HHS’s expansive interpretation of
its “adjustment authority” because that “interpretation . . .
would eviscerate such significant aspects of the statutory
text”).
III. The Rule Should Be Vacated
When an agency’s action is unlawful, “vacatur is the
normal remedy.” Allina Health Services v. Sebelius, 746 F.3d
1102, 1110 (D.C. Cir. 2014). That’s because Congress directed
us to “hold unlawful and set aside agency action” that is “not
in accordance with law[.]” 5 U.S.C. § 706(2)(A). “[T]o ‘set
aside’ a rule is to vacate it.” Corner Post, Inc. v. Board of
Governors, No. 22-1008, slip op. at 6 (2024) (Kavanaugh, J.
concurring); see also id. at 5 (“The APA prescribes the same
‘set aside’ remedy for all categories of ‘agency action’ . . . .”).
Nevertheless, our court has sometimes remanded without
vacating the agency’s action. That is an “exceptional remedy.”
American Great Lakes Ports Association v. Schultz, 962 F.3d
510, 519 (D.C. Cir. 2020). And our precedents allow it only if
an agency’s error is “curable.” U.S. Sugar Corp. v. EPA, 844
Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244, 2273 (2024),
Chevron would not have applied to this case. Here, HHS has neither
sought Chevron deference nor identified any ambiguity that it used
the adjustments provision to fill. Shands Jacksonville Medical
Center v. Burwell — a district court precedent cited by HHS — is
distinguishable for the same reason. See 139 F. Supp. 3d 240, 251
(D.D.C. 2015) (proceeding under “the two-step framework set forth
in” Chevron).

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F.3d 268, 270 (D.C. Cir. 2016); see also Allied-Signal, Inc. v.
U.S. Nuclear Regulatory Commission, 988 F.2d 146, 151 (D.C.
Cir. 1993) (allowing the remedy when “there is at least a
serious possibility that the [agency] will be able to substantiate
its decision on remand”).5
Because an agency can’t “cure” the fact that it lacks
authority to take a certain action, remand-without-vacatur is
unavailable here. HHS was powerless to adopt this wage-index
adjustment, which means HHS will not be able to justify its
decision on other grounds. Therefore, the district court should
have vacated the rule rather than ordering remand without
vacatur.6
IV. The Hospitals Should Receive an Award of Interest
The Medicare statute provides that when hospitals seek
judicial review of HHS’s decisions, “the amount in controversy
shall be subject to annual interest,” which is then “to be
5 The conflict between 5 U.S.C. § 706(2)(A)’s command and our
creation of remand without vacatur has been noted in more than one
separate opinion. See Checkosky v. SEC, 23 F.3d 452, 491 (D.C. Cir.
1994) (Randolph, J., separate opinion) (“Setting aside means
vacating; no other meaning is apparent.”); see also Comcast Corp. v.
FCC, 579 F.3d 1, 10-12 (D.C. Cir. 2009) (Randolph, J., concurring);
Milk Train, Inc. v. Veneman, 310 F.3d 747, 757-58 (D.C. Cir. 2002)
(Sentelle, J., dissenting).
6 The Hospitals took a confusing tack when arguing vacatur before
the district court. They sought vacatur of the budget-neutrality
adjustment (which reduced their respective reimbursements) without
seeking vacatur of the wage-index adjustment. See Bridgeport
Hospital v. Becerra, 2022 WL 4487114, at *3 (D.D.C. July 27,
2022). But because the budget-neutrality adjustment existed only as
a subsidiary component of the wage-index redistribution policy, the
two adjustments are inextricably intertwined.

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awarded by the reviewing court in favor of the prevailing
party.” 42 U.S.C. § 1395oo(f)(2). The Hospitals claim that the
district court should have ordered an award of interest because
they were the prevailing parties below.
For its part, HHS does not dispute that the Hospitals were
the “prevailing parties.” Instead, it argues that an award of
interest is premature until the precise back-payments have been
calculated.
Because the Medicare statute requires a “reviewing court”
(not the agency) to “award[]” interest, we agree with the
Hospitals. Id. § 1395oo(f)(2); see also Tucson Medical Center
v. Sullivan, 947 F.2d 971, 980-83 (D.C. Cir. 1991). It does not
matter whether back-payments have been calculated. The
statute requires a judicial order directing the future award of
interest whenever such calculations have been finalized. So on
remand, the district court should add an award of interest to its
order.7
V. Conclusion
Because HHS cannot manipulate wage-index rates up and
down in a way that picks winners and losers by sweeping aside
the congressionally required formula, HHS’s wage-index
redistribution policy is unlawful. And because the unlawful
policy is not curable on remand, HHS’s action must be vacated.
7 The order need not calculate the exact interest. It is enough to
simply state that on the remand to HHS, HHS must pay the prevailing
parties interest on increased reimbursements in accordance with 42
U.S.C. § 1395oo(f)(2). See, e.g., Alegent Health-Immanuel Medical
Center v. Sebelius, 917 F. Supp. 2d 1, 3-4 (D.D.C. 2012).

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We therefore affirm in part, reverse in part, and remand to
the district court for further proceedings consistent with this
opinion.
So ordered.

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