On February 26, 2008, the U.S. District Court for the District of Columbia ruled that the Secretary of Health and Human Services' decision to exclude certain prospective payment system ("PPS") hospitals that later converted to critical access hospitals ("CAHs") from the wage index calculation was contrary to Congressional mandate and arbitrary and capricious. Anna Jacques Hospital, et al. v. Leavitt, CA No. 05-625(GK). In 2003, through the formal rule-making process, the Secretary (via the Centers for Medicare & Medicaid Services ("CMS")) adopted changes to the manner in which it calculated the wage index beginning in fiscal year 2004 based on its determination (and the comments from certain providers) that the "wage data for CAHs, in general, are significantly different from other short-term hospitals." Therefore, effective for wage index calculations beginning in FY 2004, CMS excluded wage data from CAHs even for periods prior to which the hospitals had converted to CAH status. The impact on the Massachusetts plaintiff hospitals was significant, as the rural floor for that state was determined by a single rural hospital that had made the conversion to CAH status, and resulted in a change to the wage index floor from 1.2919 to 1.0438 (a $200 million effect). The Court found that the plain language of the statute at issue required a survey of all PPS hospitals' wage data and did not permit CMS discretion to exclude certain classes of hospitals regardless of the agency's stated rationale. Prior to conversion, the CAH hospitals at issue were PPS hospitals, and by statute were therefore required to be included in the wage index calculation. In addition, the Court found that CMS's decision was arbitrary and capricious because it considered factors that Congress had not intended it to consider. Thus, even though CMS submitted the wage index rule change for public comment and issued the rule formally, the rule was invalid because it exceeded the statutory authority granted to the agency by Congress.