Simply stated, I am not persuaded that petitioners have met their heavy burden of demonstrating that the recalibration regulation " 'is so lacking in reason for its promulgation that it is essentially arbitrary’ ” (New York State Assn. of Counties v Axelrod, 78 NY2d 158, 166, quoting Matter of Marburg v Cole, 286 NY 202, 212). Indeed, my review of the record leads me to conclude that the subject regulation is entirely reasonable and, therefore, I respectfully dissent.
As noted in the majority opinion, respondents identified four factors responsible for the increase in the case mix index (hereinafter CMI) from one assessment period to the next: (1) changes in the composition of patients due to new admissions, (2) changes in the composition of patients due to death or discharge, (3) changes in the conditions or care needs of patients, and (4) paper optimization. The challenged regulation essentially attempts to deduce the amount of CMI increase due to paper optimization by accounting for the remaining three factors and subtracting such amounts from the over-all CMI increase. By utilizing the "closed matched sets” of patients discussed at length in the majority opinion, respondents were able to account for the first two factors responsible for CMI increases—changes in patient mix due to (1) new *171admissions and (2) death or discharge—and the majority does not appear to have any serious quarrel with respondents’ methodology up to this point. Instead, where the majority and I part company is with respect to the rationality of the length of stay (hereinafter LOS) adjustment employed to account for increases in CMIs between 1985 and 1988 attributable to increased patient care due to aging and deterioration over time—the third factor associated with CMI increases.
The majority appears to be of the view that the regulation now before us suffers from the same infirmities as the one struck down by the Court of Appeals in New York State Assn. of Counties v Axelrod (78 NY2d 158, supra). In that case, the Department of Health (hereinafter DOH) sought to adjust each facility’s reimbursement rate by reducing the direct component of each facility’s rate by 3.035%. The Court of Appeals rejected that approach based upon (1) the arbitrariness of the percentage decrease absent documentation that there was an average or mean increase of 3.035% in CMI attributable solely to improved reporting compliance, and (2) the • "discriminatory and disparate” impact of an across-the-board reduction (supra, at 168). By way of analogy, the majority concludes here that "DOH’s failure to perform any empirical study to ascertain what portion, if any, of the 1985 to 1988 CMI increase was due to actual changes in the conditions of patients”, together with its use of State-wide LOS statistics, renders the current recalibration regulation fundamentally flawed. I disagree.
As a starting point, respondents readily concede that the relationship of LOS to patient acuity levels cannot be statistically validated due to the inability to reobserve a patient’s actual past medical condition and directly compare it to the accuracy of his or her existing medical records. The mere fact that this relationship cannot be measured with exactitude does not, however, render the LOS adjustment unsound or the over-all regulation unreasonable. The methodology underlying a particular regulation need not be perfect (see generally, Matter of Del’s Mini Deli v Commissioner of Taxation & Fin., 205 AD2d 989, 991; Matter of Scholastic Specialty Corp. v Tax Appeals Tribunal, 198 AD2d 684, 686-687, lv denied 83 NY2d 751) and, based upon my review of the record as a whole, I am satisfied that notwithstanding its admitted shortcomings, respondents have articulated a rational and reasonable basis for utilizing the LOS adjustment.
With respect to the use of State-wide averages in computing *172the LOS adjustment, the majority appears to take the position that applying 1985 State-wide figures to the closed matched set patients, i.e., those present at a particular facility in both 1985 and 1988, is the functional equivalent of comparing apples and oranges. Again, I disagree. The use of State-wide averages in computing reimbursement rates or adjustments is not impermissible per se (see, New York State Assn. of Counties v Axelrod, 78 NY2d 158, 168, supra; see also, Matter of Jewish Home & Infirmary v Commissioner of N. Y. State Dept. of Health, 84 NY2d 252, 275-276 [Levine, J., dissenting]). Moreover, the use of such statistics with respect to the LOS adjustment here seems entirely reasonable to me, particularly in view of the fact that the averages are applied to each facility’s particular number of patients in each LOS group, resulting in a facility specific adjustment. Although the majority points to certain deficiencies in the use of State-wide statistics, the mere fact that such statistics do not account for every conceivable event that could alter the CMI for a particular facility does not, in my view, render the use of such statistics invalid.
In short, the challenged regulation appears to me to be entirely reasonable, and petitioners’ remaining challenges to the rationality of the subject recalibration regulation are, in my view, without merit. Accordingly, I would reverse Supreme Court’s judgment and confirm respondents’ determination.
Casey, J. (dissenting).Despite the absence of documented empirical studies to verify the accuracy of the length of stay (hereinafter LOS) adjustment, and despite the possible statistical imperfections in the use of the LOS adjustment, the regulation at issue represents a rational application of broader judgmental considerations by respondent Commissioner of Health based upon the expertise and experience of the agency he heads (see, Matter of Jewish Home & Infirmary v Commissioner of N. Y. State Dept. of Health, 84 NY2d 252, 275-276 [Levine, J., dissenting]; see also, Matter of Consolation Nursing Home v Commissioner of N. Y. State Dept. of Health, 85 NY2d 326).
Cardona, P. J., and Yesawich Jr., J., concur with Mikoll, J.; Crew III, J., dissents in a separate opinion; Casey, J., dissents in another separate opinion.
*173Ordered that the judgment is modified, on the law, with costs to petitioners, by reversing so much thereof as directed respondents, on remand, to consider a recalibration component in recomputing petitioners’ members’ 1992 and onward Medicaid reimbursement rates, and, as so modified, affirmed.