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SUPREME COURT OF THE UNITED STATES
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No. 91-2079
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GOOD SAMARITAN HOSPITAL, et al., PETITION-
ERS v. DONNA E. SHALALA, SECRETARY OF
HEALTH AND HUMAN SERVICES
on writ of certiorari to the united states court
of appeals for the eighth circuit
[June 7, 1993]

  Justice Souter, with whom Justice Stevens and
Justice Scalia join, dissenting.
  In the Court's view, the contrasting interpretations of
clause (ii) proffered by the petitioners and the Secretary
are in such equipoise that even slight deference to the
Secretary is enough to tip the balance her way.  As I read
it, however, the language of clause (ii) plainly favors the
petitioners.
  The Court focuses on two portions of clause (ii).  First,
it says, the phrase -aggregate reimbursement produced by
the methods of determining costs- may be understood, not
only as the petitioners would read it, but as the Secretary
does: -the total of the interim payments . . . derived from
application of the methods [of determining costs] to rough,
incomplete data.-  Ante, at 8.  Second, the Court finds
that -inadequate or excessive- may well mean, as the
Secretary suggests, inadequate or excessive as measured
against -the reasonable costs as determined by the [Secre-
tary] applying the methods [of determining costs].-  Ibid.
I think the language of clause (ii) precludes these read-
ings.
  Clause (ii) identifies its subject, -aggregate reimburse-
ment,- as the figure -produced by the methods of deter-
mining costs.-  Thus, once we know what -the methods
of determining costs- are, we should be able to discover
the nature of the -aggregate reimbursement- that is
-produced by- those methods.  Section 1395x(v)(1)(A)
makes it clear that -methods- refers to the regulations
implementing the statutory mandate to pay providers of
services -the cost actually incurred, excluding therefrom
any part of incurred cost found to be unnecessary in the
efficient delivery of needed health services.-  The first
sentence of 1395x(v)(1)(A), which together with 1395hh
authorizes the Secretary to issue such regulations, identi-
fies them as -regulations establishing the . . . methods to
be used . . . in determining . . . costs.-  And clause (i) of
1395x(v)(1)(A) uses the exact same phrase as clause (ii):
the regulations shall take into account both direct and
indirect costs, it says, so that -under the methods of
determining costs,- patients who are not Medicare benefi-
ciaries will not subsidize beneficiaries, nor will beneficia-
ries subsidize nonbeneficiaries.  Thus, -the methods of
determining costs- are not procedures for estimating costs
to make interim payments; rather, they are the means for
figuring the actual -reasonable cost of . . . services.-
  The Secretary appears not to dispute this, but contends,
in the Court's words, that the phrase -produced by the
methods of determining costs- actually means -derived
from application of the methods to rough, incomplete
data.-  Ante, at 8.  In other words, as the Government
asserted at oral argument, -what you're really doing is
taking estimated data but running them through the same
methods that you're eventually going to run the final data
through in order to get a result.-  Tr. of Oral Arg. 31-32.
There is, however, an obvious difficulty with this proposed
interpretation: the complete lack of any reference to
-incomplete- or -estimated- data in clause (ii).  Two less
obvious difficulties are even more telling.
  First, nothing in Title XVIII of the Social Security Act
specifies that interim payments should be calculated by
applying to estimated data the complete, detailed method-
ology for reaching a final reasonable cost figure; the
Secretary's own regulations, indeed, suggest just the
opposite.  -The interim payment,- states the relevant
regulation, -may be related to the last year's average per
diem, or to charges, or to any other ready basis of approx-
imating costs.-  42 CFR 413.60(a) (1992).  And for
purposes of devising preliminary estimates, this makes
perfect sense; working through a permissible method for
determining costs in all its detail may not improve the
quality of an estimate if the raw figures used are mostly
guesswork.  But this divergence of methods for calculating
interim payments and methods for determining reasonable
cost casts doubt on the Secretary's proffered interpretation
of -produced by the methods of determining costs.-  If
interim, estimated payments may in fact be calculated
without strict adherence to the methods of determining
costs, it is hard to see why Congress would choose to
identify a series of interim payments as -the aggregate
reimbursement produced by the methods of determining
costs.-
  Second, the Secretary's interpretation assumes that -the
methods of determining costs- are no more than a series
of equations, which can be applied as readily to final,
audited cost figures as to mere projections.  But the
statute suggests that the term -methods- is not to be
understood so narrowly.  In the words of the statute, for
example, the regulations establishing the methods may not
only -provide for determination of the costs of services on
a per diem, per unit, per capita, or other basis-; they may
also -provide for the use of estimates of costs of particular
items or services.-  1395x(v)(1)(A).  Thus, as the statute
conceives of them, the methods encompass not only a set
of equations, but a set of determinations about whether
to use actual costs or cost estimates for particular items
or services.  This set of determinations is relevant, of
course, not to reckoning interim payments, but to calculat-
ing the final reimbursement due the provider of health
services.  Accordingly, a figure that is -produced by the
methods of determining costs- should, absent some con-
trary indication, be the final figure.
  The Court asserts that a contrary indication may be
found in the use of the adjective -aggregate- to modify
-reimbursement.-  -`Aggregate,'- says the Court, -signifies
`sum total' and its use therefore might suggest that
Congress had in mind the outcome of adding up the
interim payments.-  Ante, at 9, n. 9 (citation omitted).  I
find no such suggestion in the statute's use of that term,
for -aggregate,- unlike, say, -cumulative,- carries no
necessary connotation of addition over time.  More impor-
tantly, there is a far better explanation for the use of the
term -aggregate.-  A health care provider will, over the
course of a fiscal year, provide many different kinds of
services to Medicare beneficiaries.  Part A Medicare
benefits, for example, cover, among other things, -inpatient
hospital services,- see 42 CFR 409.5 (1992), a term that
encompasses everything from bed and board, nursing
services, and use of hospital facilities to medical social
services, drugs, biologicals, supplies, appliances and
equipment, certain other diagnostic and therapeutic
services, and medical or surgical services provided by
certain interns or residents-in-training.  409.10(a).  The
statute plainly contemplates the use of different methods
to determine the costs of these various services, see 42
U. S. C. 1395x(v)(1)(A) (stating that the regulations -may
provide for using different methods in different circum-
stances-), and the Secretary has indeed provided for a
number of different methods.  For instance, under the
Secretary's -[d]epartmental method- for apportioning costs,
the provider's cost of -routine services- is apportioned
between Medicare and non-Medicare patients on an
average cost per diem basis, whereas the cost of -ancil-
lary- services is apportioned on the basis of the ratio of
Medicare beneficiary charges to total patient charges in
each department.  See 42 CFR 413.53(a)(1) (1992).  The
combined reimbursement for all of the different services
performed by a health care provider, as calculated under
all of the different methods allowed by the statute and
specified in the regulations and other materials published
by the Secretary, may aptly be labeled the -aggregate
reimbursement.-
  As I thus read the statute, the term -aggregate- is
important in making it clear not only that the -reimburse-
ment- considered in clause (ii) is the total amount re-
ceived by a provider for all of the services it has rendered
to Medicare beneficiaries, but that the amount received
should be considered only as a whole.  This focus on the
total amount received means that a provider who shows
that a method results in a understating of the reasonable
cost of a particular service will not necessarily be entitled
to a -retroactive corrective adjustmen[t]- to recover that
particular cost, for the Government may be able to show
that the same method, or another method used by the
provider, has overstated other costs.  (By the same token,
of course, the Government will not always deserve an
adjustment when it shows that a method has overstated
a particular cost.)  The text's direction to look only at the
total reimbursement also means that the provider will not
be entitled to the prospective application of a more
accurate method of its own devising, an insight into the
statute that is hardly new; as the Court acknowledges, see
ante, at 11, we recognized in Bowen v. Georgetown Univer-
sity Hospital, 488 U. S. 204, 211 (1988) (emphasis in
original), that -nothing in clause (ii) suggests that it
permits changes in the methods used to compute costs;
rather, it expressly contemplates corrective adjustments
to the aggregate amounts of reimbursement produced
pursuant to those methods.-
  This emphasis on the total, aggregate reimbursement
received by the health-care provider makes sense in light
of the broader goals of the Medicare program, addressing
as it does Congress's concern that Medicare neither
subsidize, nor be subsidized by, non-Medicare patients.
See 1395x(v)(1)(A)(i).  As long as the aggregate Medicare
reimbursement to a health-care provider equals its total
reasonable costs of providing services to Medicare benefi-
ciaries, that goal has been attained; the details of the
methods used do not matter.  Thus, I can find no ambigu-
ity in the phrase -aggregate reimbursement produced by
the methods of determining costs-; it refers univocally to
the total, final amount due to a provider for services
rendered to Medicare beneficiaries under the regulations
promulgated by the Secretary.
  The Court also finds ambiguity in the direction stated
in clause (ii) to provide for an adjustment if the reim-
bursement proves to be -inadequate or excessive.-  While
I agree with the Court that clause (ii) does not itself -at
any point stat[e] the standard against which inadequacy
or excessiveness is to be measured,- ante, at 8, the
absence of an explicit reference to a standard in clause (ii)
does not keep us from looking for other textual clues
about that standard.  In this case, the strongest textual
clue is found in the immediate neighbor of clause (ii),
clause (i).  Together, clauses (i) and (ii) form the fourth
and last sentence of 1395x(v)(1)(A).  Whereas the third
sentence of 1395x(v)(1)(A) is permissive, the fourth
sentence is mandatory; it concerns those things that the
Secretary's regulations -shall- take into account or for
which they -shall- provide.  Clause (i) requires the regula-
tions to take into account -both direct and indirect costs
of providers of services- so that -the necessary costs of
efficiently delivering covered services to individuals
covered by the insurance programs established by this
subchapter will not be borne by individuals not so covered,
and the costs with respect to individuals not so covered
will not be borne by such insurance programs.-
1395x(v)(1)(A)(i).  The first of these two undesired
results, it will be noted, would occur if the aggregate
reimbursement to the provider were inadequate, in the
sense of failing to cover all reasonable costs; the second,
if that reimbursement were excessive.
  Clause (ii) does not contain as exhaustive a description
of its goal as clause (i); it simply requires the regulations
to provide for suitable corrective adjustments where the
methods of determining costs produce a reimbursement
that -proves to be either inadequate or excessive.-
1395x(v)(1)(A)(ii).  Reading the two clauses together,
however, I think it most reasonable to take clause (ii)'s
-inadequate or excessive- as shorthand for the two conse-
quences that were just described in the same order, but
more fully, in clause (i).  This construction has the further
virtue, of course, of support in my reading of the phrase
-aggregate reimbursement produced by the methods of
determining costs.-  For if that phrase, as I contend,
refers to the amount ultimately due the provider as
calculated under the Secretary's regulations (that is,
according to the Secretary's -methods-), then the standard
against which that amount is measured as -inadequate or
excessive- must refer to some other figure (that is, a
figure produced by some different method); no amount can
be -inadequate or excessive- in relation to itself.  Thus,
in context, the phrase -inadequate or excessive- is not
equivocal.
  Broadening the context to all of Title XVIII only con-
firms the view that clause (ii) requires regulations provid-
ing for case-by-case exceptions to the methods for deter-
mining costs.  Section 1395x(v)(1)(A), where clause (ii) is
located, is a definitional, rather than an operative, provi-
sion; 1395x(v) defines -[r]easonable costs.-  The chief
operative provision to which 1395x(v) relates is
1395f(b), which is titled -Amount paid to provider of
services-; 1395f(b)(1) provides that under the Medicare
program, providers of services are generally to be paid
-the lesser of (A) the reasonable cost of such services, as
determined under section 1395x(v) of this title . . . or (B)
the customary charges with respect to such services.-
-Payments to providers of services- are covered under
another section, 1395g.  That section requires the Secre-
tary -periodically [to] determine the amount which should
be paid . . . to each provider of services,- and requires
-the provider of services [to] be paid, at such time or
times as the Secretary believes appropriate (but not less
often than monthly) . . . the amounts so determined, with
necessary adjustments on account of previously made
overpayments or underpayments.-  1395g(a).  As the
Court notes, ante, at 8, the petitioners argue that this
section's provision for -necessary adjustments on account
of previously made overpayments or underpayments-
provides for the very book-balancing operation that the
Secretary advances as the function of clause (ii), and thus
renders clause (ii), as interpreted by the Secretary,
entirely superfluous.  The Court nonetheless appears to
accept the Secretary's explanation that 1395g deals with
periodic adjustments to be made during the course of the
fiscal year, whereas clause (ii) is directed at year-end
adjustments.  Ante, at 8.  Two circumstances keep me
from doing the same.
  First, nothing in the language of 1395g excludes -year-
end adjustments- from its purview, or draws any distinc-
tion at all between periodic and year-end adjustments.
All payments to providers for services to Medicare benefi-
ciaries are made under the authority of 1395g, since it
is the only section in Title XVIII of the Social Security
Act to deal with that subject; and 1395g thus authorizes
all payments to be -adjust[ed] on account of previously
made overpayments or underpayments.-  It is doubtless
this breadth which leads the Secretary to concede that
had clause (ii) never been enacted, -the authority for some
similar year-end mechanism might have been inferred
under the Act as a whole, including 42 U. S. C. 1395g.-
Brief for Respondent 27, n. 16.
  Second, the Secretary's proposed distinction between
year-end and periodic adjustments fails to explain why
Title XVIII would describe year-end, but not periodic,
adjustments as -retroactive.-  The Secretary interprets
-retroactive,- as it appears in clause (ii), to mean only
relating to a period for which some payment has already
been made, thus rejecting the more common, stricter legal
sense of the word, which implies the upsetting of some
prior settled expectation or transaction.  In this weak
sense employed by the Secretary, however, the adjust-
ments authorized by 1395g are just as -retroactive- as
those authorized under the Secretary's interpretation of
clause (ii); they too relate to -previously made
overpayments or underpayments.-  This leaves the Secre-
tary with no way to explain why Congress, in passing the
Social Security Amendments of 1965 (which established
the Medicare program, and contained both passages, see
79 Stat. 297, 323), chose to distinguish 1395g -adjust-
ments- from 1395x(v)(1)(A)(ii) -retroactive corrective
adjustments.-
  For all of these reasons, I believe the text of the statute
unambiguously requires the promulgation of regulations
allowing providers (and the Secretary) to seek adjustments
on the grounds that, as calculated under the methods of
determining costs, the total reimbursement for a fiscal
period is lower than (or higher than) the actual reasonable
cost of providing services to Medicare beneficiaries.  I
respectfully dissent from the Court's opposite conclusion.