MARGARET M. HECKLER, SECRETARY OF HEALTH AND HUMAN SERVICES, APPLICANT V. REDBUD HOSPITAL DISTRICT, ETC. No. 85-32 In the Supreme Court of the United States October Term, 1985 The Acting Solicitor General, on behalf of the Secretary of Health and Human Services, applies for a stay, pending appeal to the United States Court of Appeals for the Ninth Circuit, of a June 14, 1985 order entered by the United States District Court for the Northern District of California. This application is made pursuant to Rules 43 and 44 of the Rules of this Court and the All Writs Act, 28 U.S.C. 1651. Application for a Stay Pending Appeal to the United States Court of Appeals for the Ninth Circuit The district court entered the order in a case concerning a single hospital's challenge to its Medicare reimbursement rate. The order, which the court characterized as a modification of a previously entered "preliminary injunction," required the Secretary to promulgate, by July 1, 1985, nationwide regulations providing the hospital with rights to immediate administrative review and enhanced reimbursement for inpatient services. The district court (Patel, J.) and the court of appeals (Schroeder, J. and Fletcher, J.,) denied the Secretary's request for a stay pending appeal. On July 1, 1985, the Secretary published regulations under protest, noting that they would be withdrawn if the Secretary secured a stay, vacation or reversal of the district court's order. Absent a stay, these regulations will become effective on August 1, 1985, and will dramatically alter the Secretary's present program for Medicare hospital reimbursement. The Secretary has filed a notice of appeal in this case. No. 85-2196 (9th Cir.). The district court's order will be challenged on the grounds, inter alia, that (1) the court exceeded its jurisdiction; (2) the court ordered inappropriate preliminary relief; and (3) the decision is based on an erroneous interpretation of Medicare's reimbursement provisions. The Secretary's request for a stay from this Court is based on the high probability that the district court's order will be overturned on appeal and the irreparable injury that will occur in the absence of a stay. See Heckler v. Lopez, 463 U.S. 1328 (1983) (Rehnquist, Circuit Justice). /1/ STATEMENT 1. In 1983, Congress worked a major change in the Medicare hospital reimbursement program. See Social Security Amendments of 1983, Pub. L. 98-21, 97 Stat. 65, 149-172. Prior to 1983, hospitals generally received reimbursement for inpatient services based on their actual cost of providing medical treatment to Medicare beneficiaries. The 1983 legislation replaced that practice with a Prospective Payment System (PPS). Under the PPS program, hospital inpatient operating costs are reimbursed according to nationwide "per discharge" rates, based on the patient's diagnosis and adjusted to reflect geographic location and wage levels. See 42 U.S.C. 1395ww. Congress instructed that the PPS program would be instituted gradually over a three year transition period beginning in the 1984 fiscal year. See 42 U.S.C. 1395ww(d). During that period, most hospitals are reimbursed under a formula reflecting both the nationwide rates and a "hospital-specific" factor that is based on the hospital's actual operating costs during the FY 1982 "base year." See 42 U.S.C. ww(d)(1). The formula places diminishing reliance on the "hospital-specific" factor over the three year period. See ibid. Thus, in the fourth year, hospital reimbursement, in most cases, will be controlled by the nationwide rates. However, the reimbursement of "sole community hospitals" will be controlled, indefinitely, by the first year transition formula. See 42 U.S.C. 1395ww(d)(5)(C)(ii). Approximately 5500 hospitals participate in the Medicare program. The Department of Health and Human Services (HHS) has delegated the calculation of hospital-specific rates for each of these participants to "fiscal intermediaries" (typically insurance companies). See 42 U.S.C. 1395h. HHS interprets the Medicare provisions to postpone administrative review of the fiscal intermediaries' calculation of hospital-specific rates until the end of the hospital's first full year of participation in the PPS program. See HCFA Ruling 84-1, 49 Fed. Reg. 22413 (May 29, 1984). This interpretation is consistent with the language of the relevant statutory review provisions, see 42 U.S.C. 1395oo, and advances the important agency policy of preventing piecemeal financial review. 2.a. Redbud Hospital District (Redbud), the operator of a sole community hospital in Clearlake, California, brought suit against the Secretary in the United States District Court for the Northern District of California, challenging the fiscal intermediary's determination of Redbud's hospital-specific rate. Redbud filed its complaint on June 26, 1984, shortly after the Secretary notified Redbud of the fiscal intermediary's determination and four days before the beginning of Redbud's first PPS year. Redbud alleged that it would suffer losses of approximately $20,000 per month unless its hospital-specific rate was upwardly adjusted to reflect recent capital improvements to its hospital completed after the close of the 1982 base year. /2/ Redbud asserted, among other claims, that the Medicare statute entitles it to adjustment of the hospital-specific rate on account of "extraordinary circumstances" that occurred after its base year (citing 42 U.S.C. 1395ww(b)(4)(A)), because it serves a "disproportionate number" of low-income and Medicare patients (citing 42 U.S.C. 1395ww(d)(5)(C)(i), as added by the Social Security Amendments of 1983, supra, Sec. 601(e)), and because it is a "sole community hospital" (citing 42 U.S.C. 1395ww(d)(5)(C)(ii), as added by the Social Security Amendments of 1983, supra, Sec. 601(e)). See App. F. Redbud's prayer for relief requested a declaratory judgment that HHS must allow the fiscal intermediary to adjust Redbud's hospital-specific rate, a preliminary and permanent injunction barring the Secretary "from implementing Medicare reimbursement to Redbud under PPS unless such reimbursement accounts for the costs of the ICU/CCU and Pharmacy," and an order requiring the Secretary to "instruct the intermediary to account for the costs of the ICU/CCU and Pharmacy." App. F at 22-23. The district court immediately entered a temporary restraining order, which subsequently was extended to July 30, 1984, barring application of the PPS program to Redbud. b. The Secretary moved to dismiss Redbud's complaint on the ground that Redbud had not obtained a final agency payment determination that was properly subject to either judicial or administrative review, and that the court therefore had no jurisdiction over the claim. See 42 U.S.C. 1395oo(f). See also Heckler v. Ringer, No. 82-1772 (May 14, 1984). Redbud, in response, requested review of its claim by HHS's Provider Reimbursement Review Board (the Board). On July 17, 1984, the Board held that it was "unable to accept" Redbud's request for a hearing because the request was premature (see App. B at 7). The Board relied upon a ruling by HHS's Health Care Financing Administration (HCFA), 49 Fed. Reg. 22413 (May 29, 1984), that the Board's jurisdiction is contingent upon the issuance of a Notice of Amount of Program Reimbursement (NPR), which occurs at the end of a hospital's PPS year, following an audit of the hospital's yearly cost reports. The Board concluded that "since an NPR has not been issued for the applicable PPS cost year," it was "precluded from conducting a hearing" (see App. B at 7). c. On July 30, 1984, the district court denied the Secretary's motion to dismiss, holding that it had "jurisdiction under 42 U.S.C. 1395oo to review the Board's decision of July 17, 1984," and "also * * * under the All Writs Act to issue an injunction maintaining the status quo in this case pending agency action" (App. B at 14, 17-18). Relying on this jurisdictional finding, the court then entered a "preliminary injunction" that "remanded" the case to the Secretary with instructions to "promulgate regulations or written policies" that "take into account" the needs of hospitals that incur "extraordinary" costs outside of their base year, serve a "disproportionate" number of Medicare patients, or are "sole community hospitals." Id. at 24. In addition, the court instructed the Secretary to promulgate regulations or written policies that "provide for timely and reasonable review" of intermediary estimates of hospital-specific rates under the PPS program and ordered Redbud's intermediary to "reconsider" its estimate for Redbud "in light of regulations promulgated in accordance with the foregoing." Id. at 24-25. Notably, the preliminary injunction's references to promulgation of "regulations or written policies" was a product of the district court's own initiative; Redbud had not requested nationwide regulatory reform (see App. F). Additionally, the district court did not establish any deadlines for promulgating regulations or reconsidering Redbud's claims. Instead, it ordered that "(p)ending compliance with this order and until further order of the court, defendant is enjoined from imposing (PPS reimbursement determinations) upon plaintiff or otherwise reducing plaintiff's current level of reimbursement." App. B at 25. Following the district court's order, the Secretary and Redbud initiated settlement negotiations based on the understanding that Redbud was willing to dismiss its complaint for a one-of-a-kind adjustment in its hospital-specific PPS rate. /3/ Despite several months of negotiations, the parties could not agree on a settlement figure. They informed the court at a March 18, 1985 status conference that negotiations had broken down. 3. Shortly thereafter, the parties filed a number of motions in the district court, all of which were heard on May 20, 1985. Redbud asked, among other requests, that the court modify the "preliminary injunction" by requiring the Secretary to publish, by July 1, 1985, the "regulations or written policies" described in the court's original order. The Secretary moved to dissolve the "preliminary injunction," renewing her argument that the district court lacked jurisdiction. The Secretary also argued that the district court had substantively misconstrued the Medicare laws and that, in all events, Redbud's claim of irreparable injury had proven meritless because the PPS program would actually increase Redbud's Medicare reimbursement by more than $10,000 per month over what it had received under the prior program, even without the adjustments sought. At the May 20 hearing, the district court announced that it would grant Redbud's motion to modify the "preliminary injunction" and would "continue" the Secretary's motion to dissolve until after she has promulgated new regulations. /4/ On June 14, 1985, the district court entered an order implementing its announced ruling. It "modif(ied) the preliminary injunction" oroginally entered in this case by adding the following paragraph (App. A at 6-7): The Secretary shall publish these implementing regulations in the Federal Register as an interim final rule by no later than July 1, 1985, effective August 1, 1985. A 45-day comment period shall follow publication of the interim final rule. The regulations shall be published in the Federal Register as a final rule no later than October 1, 1985. The Secretary immediately sought a hearing to request a stay of the June 14, 1985 order pending appeal. The district court orally informed government counsel that it would not entertain a motion for a stay. Accordingly, on June 24, 1985, the Secretary requested a stay from the court of appeals. On June 28, 1985, the court of appeals (Schroeder, J. and Fletcher, J.) denied the motion, citing Lopez v. Heckler, 713 F.2d 1432 (9th Cir.), stay granted, 463 U.S. 1328 (1983) (Rehnquist, Circuit Justice). The court of appeals summarily stated that the Secretary "has not shown that the balance of hardship tips sharply in its favor (and) has not shown that it is likely to succeed on the merits of the appeal." App. C. 4. Faced with the district court's June 14 order and threatened with contempt proceedings, the Secretary elected to publish the court-ordered regulations under protest. The regulations appeared in the Federal Register on July 1, 1985 as interim final rules effective on August 1, 1985. See 50 Fed. Reg. 27208 (attached as App. E.). /5/ The preamble states that the Secretary "strongly disagrees with the appropriateness of these regulations and believes that they may significantly impair the Medicare prospective payment systems." Id. at 27209. It also states that the Secretary intends to challenge the district court's order, and provides that, "(i)n the event that (a) stay is granted or the court's order is otherwise vacated, these regulations no longer will be effective." Ibid. Finally, the regulations provide that, if the district court's order is vacated or reversed, "any actions that have been taken under these regulations will be void, and affected providers will be restored to their status prior to the actions." Id. at 27211. See, e.g., Arkadelphia Milling Co. v. St. Louis Southwestern Ry. Co., 249 U.S. 134 (1919). ARGUMENT This Court, or an individual Justice thereof, may stay a district court order pending appeal to the court of appeals. See Heckler v. Lopez, 463 U.S. 1328 (1983) (Rehnquist, Circuit Justice); Republican State Central Committee v. Ripon Society, 409 U.S. 1222, 1227 (1972) (Rehnquist, Circuit Justice); see also Coleman v. PACCAR, Inc., 424 U.S. 1301 (1976) (Rehnquist, Circuit Justice). In considering an application for a stay, the relevant factors include (1) the probability that the order at issue will be overturned; and (2) the "stay equities," including whether irreparable injury will occur in the absence of a stay and what, if any, harm others will suffer should a stay be granted. Lopez, 463 U.S. at 1330; Republican State Central Committee, 409 U.S. at 1224. The application of the standards to the present case compels the entry of a stay. 1. There is a strong probability that the Secretary will prevail on three separate challenges to the district court's order. First, the Board's ruling that Redbud's administrative claim was premature was the only administrative decision before the court even arguably reviewable under 42 U.S.C. 1395oo(f). Assuming that the court could have reviewed that ruling, it clearly had no jurisdiction to proceed further and reach the merits of the administrative claim. Second, the court's use of a "preliminary injunction" to compel immediate publication of nationwide regulations is unprecedented, unwarranted, and a clear abuse of the court's power to fashion preliminary relief. And third, the Court's order itself clearly misconstrued the relevant provisions of the Medicare statute. a. The district court plainly exceeded its jurisdiction in reaching the merits of Redbud's claim for additional reimbursement. The district court, in its July 30, 1984 order, acknowledged that judicial review of Medicare claims is circumscribed by 42 U.S.C. 1395oo, which requires that payment disputes be reviewed, in the first instance, by the Provider Reimbursement Review Board. Cf. Heckler v. Ringer, No. 82-1772 (May 14, 1984). The court premised its jurisdiction on the Board's July 17, 1984 ruling that Redbud's administrative claim was premature (App. B at 14). But even assuming that the Board's ruling is a judicially reviewable final decision under 42 U.S.C. 1395oo(f), the scope of the district court's review was limited to the Board's own jurisdictional determination. The district court's determination that the Board erred is doubtful. /6/ But in all events, it is simply beyond dispute that the court's jurisdiction could extend no further than reversing the Board ruling and remanding for additional administrative action. E.g., Saline Community Hospital Association v. Secretary of Health and Human Services, 744 F.2d 517, 520 (6th Cir. 1984) ("the district court's scope of review could not extend beyond the Board's conclusion that it lacked jurisdiction"); see also Athens Community Hospital v. Schweiker, 686 F.2d 989, 993-994 (D.C. Cir. 1982); Cleveland Memorial Hospital, Inc. v. Califano, 594 F.2d 993 (4th Cir. 1979); Hopewell Nursing Home, Inc. v. Department of Health and Human Services, Medicare and Medicaid Guide (CCH) Paragraph 33,023 at 9966 (D.S.C. July 7, 1983). Moreover, if the court wished to reverse the Board, it should have entered a final appealable order to that effect. The court simply had no authority to reverse the Board as a "preliminary" matter, retaining jurisdiction by entering a "preliminary injunction" and then expanding its power by modifying the terms of its "preliminary" relief. b. Even if the district court possessed jurisdiction to entertain the merits of Redbud's claim, it could not, under the guise of a "preliminary injunction," order the Secretary to immediately promulgate nationwide regulations that would work a radical restructuring of the Medicare reimbursement plan. "The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held." University of Texas v. Camenisch, 451 U.S. 390, 395 (1981). Thus, "by its very nature," a preliminary injunction is an interim remedy that "serves as an equitable policing measure to prevent the parties from harming one another during the litigation." Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 742 (2d Cir. 1953). In contrast, the district court's July 30, 1984 and June 14, 1985 orders, in combination, produce a result far removed from "the usual 'prohibitory' injunction which merely freezes the positions of the parties until the court can hear the case on the merits." Heckler v. Lopez, 463 U.S. at 1333. The district court's "preliminary injunction" imposed a sweeping requirement on the Secretary immediately to promulgate new nationwide regulations providing Redbud with rights to relief where none would otherwise exist. This unprecedented action cannot be justified as necessary to preserve the status quo. Plainly, the district court has used its "preliminary injunction" as a vehicle for final relief and has thus "committed serious error." Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 316 (1940). See also, e.g., Camenisch, 451 U.S. at 395; Withrow v. Larkin, 421 U.S. 35, 43 (1975); Brown v. Chote, 411 U.S. 452, 456 (1973); Industrial Bank of Washington v. Tobriner, 405 F.2d 1321, 1324 (D.C. Cir. 1968) (per curiam). Moreover, the district court's order impermissibly interferes "with the distribution between administrative and judicial responsibility for enforcement of the Social Security Act which Congress has established." Lopez, 463 U.S. at 1331. /7/ c. The Secretary also is likely to prevail on appeal because the district court plainly misconstrued the Medicare laws when it reached out to address the substantive issues raised by Redbud's claim. First, the district court erred in requiring the Secretary to publish regulations governing "extraordinary costs." The district court seemingly recognized (App. A at 3) in its June 14, 1985 order that the statutory provisions concerning "extraordinary costs" cited by Redbud, see 42 U.S.C. 1395ww(b)(4)(A), could not support the issuance of the required regulations. See note 5, supra. Neither Redbud nor the court cited any other basis for requiring these regulations. Second, the district court erred in interpreting statutory provisions that require the Secretary to consider the special needs of hospitals serving a disproportionate number of Medicare and low-income patients, 42 U.S.C. 1395ww(d)(5)(C)(i), as requiring the promulgation of regulations adjusting reimbursement rates. The statute simply directs that the "Secretary shall provide for such exceptions and adjustments * * * as the Secretary deems appropriate" with regard to so-called disproportionate share hospitals. Ibid. (emphasis added). The Secretary has carefully considered these "special needs" and has concluded that "current data do not show that an adjustment is warranted." 49 Fed. Reg. 276 (Jan 3, 1984). See also App. D at 3-7. The district court apparently believed (see App. B at 20) that the Secretary must make some adjustment regardless of whether the data warrant it. This conclusion is inconsistent with sound regulatory practices and the statute's clear delegation of discretion. The legislative history of Section 1395ww(d)(5)(C)(i) confirms that the promulgation of regulations is discretionary, explaining that "(i)f upon review the Secretary determines that such exemptions, exceptions or adjustments are appropriate, the Secretary would then be authorized to make such exemptions, exceptions or adjustments." H.R. Rep. 98-25, Part 1, 98th Cong., 1st Sess. 142 (1983) (emphasis added). Finally, the district court erred in requiring special regulations for sole community hospitals. The district court reasoned that certain provisions of the Medicare statute, see 42 U.S.C. 1395ww(d)(5)(C)(ii), evidenced Congress's "special concern" for sole community hospitals and thus required regulations that "take into account" their special needs (App. B at 21, 24). However, the statutory provisions already specified in great detail how these hospitals should be reimbursed and the Secretary had fully implemented the provisions before this case was filed. See 42 C.F.R. 419.92 (formerly codified at 42 C.F.R. 405.476). The district court suggested no reason why anything more than what Congress has specified should be done. In sum, the district court's order reflects a basic misunderstanding of the Medicare provisions and unjustifiably upsets "the distribution between administrative and judicial responsibility for enforcement of the Social Security Act * * * ." Heckler v. Lopez, 463 U.S. at 1331. There exists an extremely strong probability that the district court's order will be reversed on appeal. 2. Not only does the Secretary have a strong likelihood of ultimate success on appeal, the "stay equities" balance decisively in her favor. a. As discussed above, preliminary relief is intended to preserve the status quo until the merits of the litigation can be adjudicated. See, e.g., Camenisch, 451 U.S. at 395. In contrast, the "preliminary injunction" entered by the district court required, as a preliminary remedy, the promulgation of final nationwide regulations. This relief cannot be justified as necessary to protect Redbud's position during the litigation. This case is not a class action and Redbud's complaint did not ask for nationwide rulemaking. Redbud's simply claims that it will lose money if its hospital-specific rate is left unadjusted. The only permanent injunctive relief Redbud sought was an order directing recalculation of Redbud's PPS hospital-specific rate, and the only preliminary relief it sought was an injunction preventing imposition of the unadjusted rate. The court's requirement that the Secretary promulgate new nationwide regulations is unnecessary to preserve the status quo and goes far beyond the issues and the parties before the court. See Walters v. Nat. Assn. of Radiation Survivors, No. 84-571 (June 28, 1985), slip op. 10. /8/ Indeed, the district court, prior to its June 14, 1985 order, had already granted Redbud all of the preliminary relief that it had sought. As a result of the temporary restraining order issued when Redbud first filed its complaint, and the court's July 30, 1984 order, the Secretary was barred from imposing the PPS calculated rates on Redbud. That bar remains in effect during the course of the litigation and fully responds to Redbud's claims of potential injury. /9/ The district court's requirement that the Secretary immediately promulgate new regulations goes far beyond the protection of Redbud; instead, it gratuitously transforms a single hospital's discrete and individual claim for greater Medicare reimbursement into a vehicle for nationwide restructuring of the Medicare system. No harm will befall Redbud if the district court's sweeping order is stayed pending appeal. b. The Secretary, faced with the district court's order and threatened with contempt proceedings, has already been forced to publish regulations. If the district court's order is not stayed, those regulations will become effective August 1, 1985, even though the Secretary "strongly disagrees with the(ir) appropriateness * * * and believes that they may significantly impair the Medicare prospective payment systems." 50 Fed. Reg. at 27209. While the Secretary believes that the regulations she has been forced to publish are a reasonable implementation of the order, they "la(y) the ground work for engendering widespread confusion throughout the (Medicare) program that will be impossible to undo at a later stage." App. D at 12. For example, the district court ordered the Secretary to promulgate regulations addressing the supposedly "special needs of hospitals serving a disproportionate number of Medicare and low-income patients." App. B at 24. However, over two years of research has failed to develop sufficient data to justify, let alone design, a rule that would adjust the reimbursement rates for hospitals claiming to serve a disproportionate number of Medicare and low-income patients (see App. D at 3-7). The Secretary, quite reasonably, declined to establish an arbitrary rule that would "result in expenditures of Medicare Trust Fund dollars that are not justified based on analysis completed to date" and that cannot "be justified in light of all the facts and figures" (id. at 7). Nonetheless, the Secretary was compelled by the lower court's order to publish a rule that, if it becomes effective, simply invites any hospital to submit a claim for adjustment of its rates on the ground that it is a "disproportionate share" hospital. See 50 Fed. Reg. 27211. The regulations governing "sole community hospitals" /10/ and hospitals with "extraordinary" costs outside their base year /11/ likewise extend invitations to case-by-case applications for adjustments. Absent a stay, these expansive changes to governing PPS principles will become effective on August 1, 1985. Although these three new categories of Medicare rules may not inexorably lead to substantial readjustments in Medicare reimbursement rates, see 50 Fed. Reg. at 27210, they will increase the cost and greatly confuse and complicate the administration of the Medicare system. That administrative burden will be compounded further by the fourth category of rules ordered by the district court -- regulations that will permit interlocutory administrative review of payment determinations. The district court's order required publication of a regulation that will permit any hospital to challenge its hospital-specific PPS rate immediately upon the rendering of an intermediary's estimate. See 50 Fed. Reg. at 27210, 27212. Because there are approximately 5500 hospitals subject to PPS, all of which would be entitled to file immediate administrative actions under this regulation, the "practical effects of complying with this aspect of the order could be disastrous" (App. D at 11). The regulations will result in a major upheaval of the administrative system and will demand "thousands upon thousands of hours on the parts of attorneys, HCFA officials, and hospital representatives" (ibid.). Therefore, unless the district court's order is stayed, "massive confusion" (App. D at 2) is sure to result as hospitals attempt to take advantage of the new and widely heralded regulations. And if, as we expect, the "preliminary injunction" ultimately is reversed, "thousands of hours, not to mention scarce administrative funds, will have been invested in a totally wasted and legally void administrative proceedings" (id. at 11). Because these new rules are not needed to safeguard the interests of the only plaintiff in this case, the balance of equities clearly supports granting a stay pending appeal. See Schweiker v. McClure, 452 U.S. 1301, 1303 (1981) (Rehnquist, Circuit Justice) (granting stay to prevent "a drastic restructuring of the (Social Security) appeals procedure carefully designed by Congress"); Heckler v. Blankenship, No. A-589 (Jan. 26, 1984) (O'Connor, Circuit Justice) (granting stay to prevent "a substantial restructuring of the existing (Social Security) claims adjudication and appeals process" caused by a district court order requiring the promulgation of nationwide regulations); Houchins v. KQED, Inc., 429 U.S. 1341, 1345 (1977) (Rehnquist, Circuit Justice) (granting stay to prevent "forcing the applicant to develop new procedures which might be required only for a short period of time"). This Court should act to prevent a single district judge from creating nationwide confusion and wasteful commitment of administrative resources under the aegis of "preliminary" relief. Cf. Walters v. Nat. Assn. of Radiation Survivors, No. 84-571 (June 28, 1985). CONCLUSION A stay of the district court's order of June 14, 1985, should be granted pending appeal. Respectfully submitted. CHARLES FRIED Acting Solicitor General JULY 1985 /1/ Attached to this motion are copies of the district court's June 14, 1985 order (App. A); the district court's June 30, 1984 "preliminary injunction" (App. B.); the court of appeals' June 28, 1985 order denying a stay pending appeal (App. C); the Declaration of Charles R. Booth, which was submitted to the court of appeals in support of the motion for a stay (App. D); the regulations that have been published at 50 Fed. Reg. 27208 pursuant to the district court's order (App. E); and the plaintiff's second amended complaint (App. F). /2/ During the 1982 base year, Redbud's facilities consisted of twenty-seven "routine-care" beds. In 1983, Redbud added a four-bed ICU/CCU unit, nine new "routine-care" beds, and a pharmacy. /3/ During this period, the Secretary filed, but later withdrew, a notice of appeal. /4/ At the May 20 hearing, the district court also announced that it would (1) deny Redbud's motion to "enforce" the original injunction by having the court itself set a reimbursement rate; (2) leave in effect an order barring discovery; and (3) permit several hospital associations to intervene as parties plaintiff if they amended their complaints within thirty days of the issuance of an order. All of these rulings were incorporated in the June 14, 1985 order filed by the court, save the ruling concerning intervention. To date, the district court has not filed an order concerning intervention and the would-be intervenors have not filed amended complaints. /5/ The regulations cover all of the subjects specified in the original preliminary injunction. It is unclear, however, whether the June 14, 1985 order required promulgation of regulations addressing "extraordinary" costs. The district court acknowledged in its June 14 order (App. A at 3) that the statutory provisions that Redbud relied upon to seek "extraordinary costs" lapsed, as to Redbud, on June 30, 1984. See Social Security Amendments of 1983, supra, Sec. 601(b)(2) (making 42 U.S.C. 1395ww(b) inapplicable to "subsection (d)" hospitals (i.e., hospitals subject to PPS) in cost reporting periods beginning on or after October 1, 1983). The district court therefore "stay(ed) that aspect of its order" (App. A at 3). However, the court then suggested that other unidentified sections of the statute also required the Secretary to promulgate regulations governing "extraordinary" costs (id. at 4). Redbud's claim that it should be compensated for teh "extraordinary" costs of its new four-bed ICU/CCU unit and pharmacy forms the very basis for its complaint in this case. Accordingly, "out of an abundance of caution" the regulations published on July 1 addressed so-called "extraordinary" costs. See 50 Fed. Reg. at 27209. /6/ The 1983 amendments to Section 1395 permit administrative review of payments made under Section 1395ww(d) (which implements the PPS program) "upon a final determination of the amount of the payment * * * ." 42 U.S.C. 1395oo(a)(1)(A)(ii). They do not provide for review of intermediate PPS determinations, such as hospital specific rates, no matter how "final" those intermediate determinations might be. Thus, HHS quite reasonably interpreted Section 1395oo to postpone review of hospital-specific rates until after issuance of the Notice of Program Reimbursement. The hospital could then request review of its hospital-specific rate as a component of its final payment. See 42 C.F.R. 405.1801(a)(2). HHS's interpretation is consistent with past Medicare reimbursement review practices, which Congress clearly intended to preserve. See H.R. 98-25, 98th Cong. 1st Sess. 57 (1983). The interpretation also promotes efficient administration by consolidating all of a hospital's challenges to reimbursement and preventing piecemeal review. See 49 Fed. Reg. 22413, 22414 (May 29, 1984). /7/ In opposing our request for a stay below, Redbud contended that the Secretary waived her opportunity to challenge the breadth of the "preliminary injunction" because she did not appeal its original entry on July 30, 1984. However, the June 30, 1984 order ambiguously referred to the Secretary's obligation to promulgate "regulations or written policies." The Secretary's obligations, stated in the context of preliminary relief and in the absence of a date certain for implementation, appeared merely tentative. The district court's abuse of its preliminary relief powers did not fully crystallize until the entry of its June 14, 1985 order. Thus, the two interdependent orders cannot be neatly segmented for purposes of appeal. In all events, Redbud's concerns are misplaced. As the Seventh Circuit recently concluded, when an interlocutory order is modified, the entire order is reviewable on appeal. Godinez v. Lane, 733 F.2d 1250, 1257 (7th Cir. 1984). /8/ In opposing the motion for a stay that we filed in the court of appeals, Redbud cited the interests of the intervenors as justifying an interlocutory remedy that exceeds the relief Redbud itself sought. However, as we have noted (note 4, supra), no intervention yet has occurred in this case. Moreover, the district court's order does not purport to consider or be based on the possibility that potential intervenors may have different interests than Redbud. /9/ In fact, as mentioned above, it appears that Redbud's claim of "irreparable harm" was overstated since imposition of the PPS rate would actually increase its reimbursement over that provided under the pre-PPS program. /10/ Prior to the June 14 order, the Secretary independently had decided to publish a notice of proposed rulemaking on a regulation that would allow "sole community hospitals" to apply for adjustments. See 50 Fed. Reg. 27209-27210. Thus the June 14 order deprives the Secretary of the benefits of notice and comment rulemaking by requiring the immediate publication of an "interim final rule." See App. D at 7-8. /11/ As previously noted (note 5, supra), it is unclear whether the district court intended to compel the Secretary to publish regulations on the subject of hospitals claiming "extraordinary" costs outside their base year. The Secretary believes that regulations providing an adjustment in rates for such hospitals actually would be contrary to the present statutory scheme and, prior to the entry of the June 14 order, she was in the process of preparing an interpretative ruling to that effect (see App. D at 9-10).