Summary
The United States Court of Appeals for the District of Columbia Circuit affirmed the dismissal of Ardelyx, Inc.’s challenge to the Centers for Medicare & Medicaid Services’ inclusion of oral-only drugs, including XPHOZAH, in Medicare’s bundled payment for renal dialysis services. The court held that the statutory bar on judicial review covers the agency’s identification of renal dialysis services, including categorical determinations made through regulation, after considering whether the agency acted within its statutory authority.
Topics
Practice areas
Questions Presented
- Whether 42 U.S.C. § 1395rr(b)(14)(G) bars judicial review of CMS's promulgation of a regulation categorically including oral-only drugs in the bundled definition of renal dialysis services.
- Whether 42 U.S.C. § 1395rr(b)(14)(B)(iii) authorizes CMS to include oral-only drugs furnished for the treatment of end-stage renal disease and previously reimbursed separately under Medicare.
- Whether CMS's identification of XPHOZAH as a renal dialysis service was authorized because the drug treats hyperphosphatemia, a condition closely associated with and commonly caused by end-stage renal disease.
- Whether the court could review the agency's assertedly arbitrary or inadequately explained reasoning after determining that the challenged actions fell within the statutory review bar.
Holdings
- A jurisdiction-stripping provision covering the Secretary's identification of renal dialysis services applies only after the court determines that the challenged agency action is the type of action authorized by the statutory definition of renal dialysis services. The court must review the agency's authority to that limited extent, but may not review whether an authorized identification was arbitrary, capricious, unreasonable, or procedurally defective.
- 42 U.S.C. § 1395rr(b)(14)(B)(iii) authorizes CMS to include oral-only drugs in the bundled payment when they are furnished for the treatment of end-stage renal disease and payment for them was previously made separately under the Medicare subchapter.
- XPHOZAH qualifies as a renal dialysis service because a drug furnished to treat a condition commonly caused by and closely associated with end-stage renal disease falls within the statutory phrase 'for the treatment of' end-stage renal disease.
Key quotations
“a “bald assertion of power by an agency cannot legitimize it.”” (15)
“That bar “still forecloses inquiry into whether the challenged agency decision is arbitrary, capricious, or procedurally defective.”” (16)
“The Congress did not exclude oral-only drugs from the first clause of subpart (iii), and we may not read that limitation into the statute.” (21)
“This argument goes to the quality of the CMS’s reasoning rather than the scope of its authority.” (29)
Factual background
Congress directed the Secretary of Health and Human Services to implement a Medicare bundled payment system for renal dialysis services. CMS interpreted the governing statute and regulation to include oral-only drugs furnished for the treatment of end-stage renal disease, and later identified Ardelyx's oral-only drug XPHOZAH as a covered renal dialysis service beginning January 1, 2025. Ardelyx challenged both the regulation and the drug-specific identification, asserting that CMS acted beyond its statutory authority and violated the APA.
Procedural history
Ardelyx and the other appellants challenged the CMS regulation defining renal dialysis services to include oral-only drugs and the CMS's identification of XPHOZAH as a renal dialysis service included in the Medicare bundled payment. The district court held that the challenged actions fell within the statutory bar on administrative and judicial review and dismissed the complaint. The district court denied reconsideration and an injunction pending appeal; the D.C. Circuit denied an injunction pending appeal, and the challenged rule took effect on January 1, 2025.