OAKES, Circuit Judge:
This appeal concerns a change in the HEW regulations affecting the method by which hospitals are reimbursed for the furnishing of services to Medicare beneficiaries. Appellants sued for declaratory and injunctive relief seeking to review the administrative regulation 20 C.F.R. § 405.454(j),
When Medicare first became operational in 1966, the interim payment system adopted was simply the conventional method by which health care facilities had always been reimbursed by health insurance programs. The hospitals, or "providers," submitted a billing form on which the services and charges to the patient were itemized, to a Medicare intermediary, such as Blue Cross/Blue Shield of New York,
The new PIP system in the regulation under challenge evidently was proposed after a determination that the old PIP method was resulting in overly generous treatment of the hospitals or at least an unnecessarily "liberal" use of the Federal Hospital Insurance Trust Fund, 42 U.S.C. § 1395i, resulting in the loss of interest on the trust fund. Under the old PIP system there was only
In November, 1975, appellants Greater New York Hospital Association and Peninsula Hospital Center, on behalf of themselves and members of the Association on the old PIP system, together with 25 intervenor hospitals, sued to enjoin the new PIP regulation as arbitrary, capricious, and an abuse of discretion. At the consolidated hearing on the preliminary injunction and the trial on the merits, appellants presented evidence that the required conversion from old PIP to new PIP will result in a big cash flow problem for them, especially since they are located in a large urban center which necessitates a lot of work on a charity basis. Because some of the appellant hospitals already have large loans outstanding and lack additional collateral, they urge that they will be unable to borrow more money and will either have to delay payment of bills to their vendors and thereby have to pay higher prices for their goods or, if they are so fortunate as to be able to borrow to make up for the lost cash flow, will have to incur additional interest expenses. These effects seem to follow necessarily from the time lag under the new PIP system and they are the mirror reflection of the interest earnings that the Federal Hospital Insurance Trust Fund will be able to make by virtue of the time lag.
We agree with the district court, however, that in stating that each "provider of services shall be paid, at such time or times as the Secretary believes appropriate (but not less often than monthly)," the statute, 42 U.S.C. § 1395g, note 2 supra, commits the timing of Medicare payment dates to agency discretion by law within the meaning of 5 U.S.C. § 701(a)(2).
The holding of the district court is further supported by East Oakland-Fruitvale Planning Council v. Rumsfeld, 471 F.2d 524 (9th Cir. 1972), and our own Kletschka v. Driver, 411 F.2d 436 (2d Cir. 1969). In East Oakland-Fruitvale the decision of the Director of the Office of Economic Opportunity in determining whether a program vetoed by a state governor was "fully consistent with the provisions and in furtherance of the purposes" of the Economic Opportunity Act, 42 U.S.C. § 2834, was held nonreviewable. East Oakland-Fruitvale, supra, 471 F.2d at 528, 533. There in effect the Director simply had to determine in evaluating the program whether the particular project was wise or desirable as a means to further the act, a standard so general that a court could not practicably make any evaluation of the propriety of the determination.
Kingsbrook Jewish Medical Center v. Richardson, 486 F.2d 663 (2d Cir. 1973), and Aquavella v. Richardson, 437 F.2d 397 (2d Cir. 1971), relied on by intervenor appellants, are inapposite, in that the former involved substantive determinations as to whether a specific reimbursement under the Medicare program was correct and the latter whether the Secretary could suspend Medicare payments pending an audit to determine whether payments sought were proper or overpayments had been made. Neither case involves the timing of interim Medicare payments under 42 U.S.C. § 1395g. Kingsbrook, moreover dealt expressly with the question whether judicial review was precluded by another statute in the Medicare Act, 42 U.S.C. § 405(h), and thus was only concerned on appeal with reviewability under § 701(a)(1) of the APA, not § 701(a)(2) as we are here.
It is true that there is dictum in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 156-57, 90 S.Ct. 827, 831, 25 L.Ed.2d 184, 189-190 (1970), that indicates that both clauses (1) and (2) of 5 U.S.C. § 701(a) should be read restrictively to require that a statute give "clear and convincing evidence of an intent to withhold" judicial review. Data Processing, supra, 397 U.S. at 156, 90 S.Ct. at 831, 25 L.Ed.2d at 190. But as Professor Davis has pointed out, supra, there are a number of decisions, including Kletschka v. Driver, supra, in which agency action has been held unreviewable in the absence of a clear and convincing showing of legislative intent. K. Davis, supra, § 28.08, at 946-47 (1970 Supp.). He states with his customary authoritativeness that "[a] flat assertion that the dictum in Data Processing
No different result in this case is dictated by Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970), where rulemaking authority of the Secretary of Agriculture under 16 U.S.C. § 590d(3) was held reviewable under § 701(a)(2) since there the charge was made that the Secretary's definition of the phrase "making a crop" was in conflict with the definition of the statutory term as set forth in the legislative history of the Food and Agriculture Act.
Appellants contend that there is "law to apply" in this case in that the validity of the regulation must be evaluated in the light of provisions of the Medicare Act and the regulations promulgated under it requiring that hospitals be reimbursed the reasonable cost of providing services and prohibiting the shifting of the costs of Medicare beneficiaries to non-Medicare patients. See 42 U.S.C. §§ 1395f(b), 1395x(v)(1)(A).
On the question of violation of the statutory requirements appellants' argument is that providers must be reimbursed the "reasonable cost" of services to Medicare beneficiaries and that working capital must be considered an element of "reasonable cost"; the new PIP system by introducing a time lag between the delivery of service and reimbursement allegedly fails to provide for working capital. As we read § 1395x(v)(1)(A), note 9 supra, which defines reasonable cost so as to provide the principles for determining the amount of reimbursement, see 20 C.F.R. § 405.402(b),
Appellants also argue that the new PIP system violates the statutory prohibition against imposing the necessary costs of efficiently delivering coverage services from individuals covered by Medicare to individuals not so covered, 42 U.S.C. § 1395x(b)(1)(A).
Having held that to the extent that the timing of reimbursement payments is committed to agency discretion, it is nonreviewable, there is no need and no power for us to determine whether the Secretary arbitrarily and capriciously used his discretion. Judge Metzner correctly applied § 701(a)(1), finding that there was no clear and convincing evidence of legislative intent to preclude review and properly went on to hold that the timing of interim payments was committed to agency discretion within the meaning of § 701(a)(2) because there was "no law to apply." We cannot improve upon his holding and adopt it as our own.
42 U.S.C. § 1395x(v)(1)(A) provides in part: