$05:Civil Money Penalty
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Homelife Nursing, Inc.,
Petitioner,
- v. -
Health Care Financing Administration.
DATE: March 26, 1996
Docket No. C-94-382
Decision No. CR417
DECISION
Homelife Nursing, Inc. (Petitioner), a provider of home health
agency services, requested a hearing to challenge the determination
by the Health Care Financing Administration (HCFA) that its office
located in Riverside, California (Riverside Office), be certified
for Medicare purposes as a subunit of the parent office located in
Lake Forest, California (Lake Forest Office), instead of as a
branch of the Lake Forest Office. 1/ The case was assigned to me
for hearing and decision.
HCFA filed a motion to dismiss the appeal on the grounds that
neither the governing statute nor its implementing regulations
confer jurisdiction on an administrative law judge to hear
Petitioner's appeal. The parties filed briefs on this issue, and,
on February 1, 1995, I issued a ruling denying HCFA's motion to
dismiss Petitioner's hearing request. I concluded that HCFA's
determination to certify Petitioner's Riverside Office as a subunit
of the Lake Forest Office rather than as a branch of the Lake
Forest Office is a reviewable initial determination, within the
meaning of 42 C.F.R. 498.3(b)(1). 2/
I held a hearing in San Francisco, California, on June 6, 1995
through June 8, 1995. Subsequent to the hearing, Petitioner
offered four additional exhibits (P. Ex. 34 - 37) into evidence.
HCFA offered an additional exhibit (HCFA Ex. 14) into evidence.
HCFA objected to P. Ex. 36, and Petitioner withdrew this exhibit.
In letters dated July 31, 1995 and August 11, 1995, I notified the
parties that I admitted P. Ex. 34, P. Ex. 35, P. Ex. 37, and HCFA
Ex. 14 into evidence. In addition, the parties submitted
posthearing briefs, response briefs, and reply briefs.
I have considered the evidence, the applicable law, and the
parties' arguments. I conclude that HCFA's determination to
certify Petitioner's Riverside Office as a subunit of the Lake
Forest Office, rather than a branch of the Lake Forest Office, is
supported by the facts in evidence and the applicable law.
FINDINGS OF FACT AND CONCLUSIONS OF LAW (FFCL)
1. At all times relevant to this case, Petitioner was a home
health agency whose parent office was located in Lake Forest,
California. HCFA's Proposed Findings of Fact and Conclusions of
Law at 1; Petitioner's Posthearing Response Brief at 1.
2. In October of 1991, Petitioner submitted an application packet
to the San Bernardino District Office of Licensing and
Certification of the California Department of Health Services
(DHS). The application packet included a form in which Petitioner
requested that its Riverside Office be licensed by the State of
California as a branch of the Lake Forest Office. The completed
application packet also included a form in which Petitioner
requested that the Riverside Office be certified in the Medicare
program. P. Ex. 11; Transcript [Tr.] at 394 - 395.
3. The State of California licenses facilities as either a parent
or branch. The State of California does not recognize the category
of subunit for home health agency licensing purposes. Tr. at 76.
4. DHS surveyed the Riverside Office and declined to license it as
a branch of the Lake Forest Office. Instead, on March 24, 1992,
DHS licensed the Riverside Office as a parent office. HCFA Ex. 10;
P. Ex. 17; Tr. at 161.
5. In a letter to HCFA's Survey and Certification Operations
Branch dated May 5, 1992, Petitioner requested that its Riverside
Office be designated as a branch of the Lake Forest Office for
purposes of Medicare certification. P. Ex. 17; Tr. at 649.
6. HCFA contracts with DHS to survey home health agencies and to
make recommendations on Medicare certification. HCFA makes the
final determination on whether a home health agency is eligible to
participate in the Medicare program, including whether that
facility should be certified as a subunit or branch. 42 C.F.R.
488.10, 488.24, and 489.10.
7. In June of 1992, DHS, acting as an agent for HCFA, surveyed
Petitioner's Riverside Office for Medicare certification purposes.
Tr. at 84.
8. Based on the survey results, DHS determined that it would
recommend to HCFA that it certify for Medicare purposes the
Riverside Office as a subunit of the Lake Forest Office. Tr. at
100 - 103.
9. By letter dated July 30, 1992, HCFA notified the Riverside
Office that, effective June 24, 1992, HCFA had accepted the
agreement of the Riverside Office to participate as a home health
agency in the Medicare program. HCFA Ex. 1.
10. HCFA's July 30, 1992 letter assigned the Riverside Office a
provider number (55-7199). The issuance of a new provider number
to the Riverside Office meant that HCFA designated the Riverside
Office as a subunit rather than a branch. HCFA Ex. 1; Tr. at 655.
11. After being certified by Medicare as a subunit, Petitioner
contacted HCFA by telephone to request certification as a branch
rather than a subunit. Tr. at 302, 315.
12. On September 25, 1992, Petitioner requested in writing that
HCFA certify its Riverside Office as a branch rather than a
subunit. P. Ex. 2.
13. On November 4, 1992, HCFA denied Petitioner's request to
change certification of the Riverside Office from a subunit to a
branch. HCFA Ex. 3.
14. On February 12, 1993, Petitioner again asked HCFA to
redesignate the Riverside Office as a branch. P. Ex. 4.
15. On May 5, 1993, HCFA again denied Petitioner's request to
certify the Riverside Office as a branch instead of as a subunit.
HCFA Ex. 5.
16. On January 19, 1994, Petitioner again sought to persuade HCFA
to change the designation of the Riverside Office to a branch. P.
Ex. 8.
17. On May 13, 1994, HCFA responded to this request by reaffirming
its determination to certify the Riverside Office as a subunit
rather than a branch. P. Ex. 9.
18. Regulations governing the certification of home health
agencies define the distinctions between a branch and a subunit of
a parent home health agency. 42 C.F.R. 484.2.
19. A branch office means a location or site from which a home
health agency provides services within a portion of the total
geographic area served by the parent agency. The branch office is
part of the home health agency and is located sufficiently close to
share administration, supervision, and services in a manner that
renders it unnecessary for the branch independently to meet the
conditions of participation as a home health agency. 42 C.F.R.
484.2.
20. A subunit means a semi-autonomous organization that -- (1)
serves patients in a geographic area different from that of the
parent agency; and (2) must independently meet the conditions of
participation for home health agencies because it is too far from
the parent agency to share administration, supervision, and
services on a daily basis. 42 C.F.R. 484.2.
21. In order for a nonparent office to qualify to be certified as
a branch, the regulatory standard for the frequency of sharing of
administration, supervision, and services is that the parent and
nonparent office must be capable of sharing these functions on a
daily basis. 42 C.F.R. 484.2.
22. Distance in terms of both mileage and travel time are
appropriate factors to be considered in determining whether to
designate a nonparent office as a branch or a subunit. 42 C.F.R.
484.2.
23. Depending on the route, the driving distance between the Lake
Forest Office and the Riverside Office is between 44.3 miles and
49.6 miles. P. Ex. 37; HCFA Ex. 14.
24. Depending on traffic conditions and the time of day that the
trip occurs, the driving time between the Lake Forest Office and
the Riverside Office can take between 40 minutes and two and
one-half hours. Tr. at 88, 153, 403, 565; P. Ex. 37; HCFA Ex. 14.
25. The geographic area of the patients served out of
Petitioner's Riverside Office included the communities of Chino,
Fontana, Rialto, San Bernardino, Redlands, Lake Arrowhead, and Big
Bear City. Tr. at 89, 167.
26. Driving time from Lake Forest to locations in Chino can take
between 51 minutes during off-peak travel hours and as long as one
and one-half to two hours in heavy traffic. P. Ex. 34; Tr. at 93.
27. Driving time from Lake Forest to locations in Fontana, Rialto,
San Bernardino, and Redlands can take between 65 and 77 minutes
during off-peak travel times and as long as one and one-half to two
and one-half hours in heavy traffic P. Ex. 34; Tr. at 93 - 94.
28. Driving time from Lake Forest to locations in Lake Arrowhead
can take one hour and 48 minutes during off-peak travel hours and
as long as three to three and one- half hours in heavy traffic or
under adverse weather conditions. P. Ex. 34; Tr. at 95 - 96.
29. Driving time from Lake Forest to locations in Big Bear City
can take two hours and 20 minutes during off-peak travel hours and
as long as four hours, or more, in traffic or under adverse weather
conditions. P. Ex. 34; Tr. at 96 - 97.
30. Given the distance between the Lake Forest Office and the
Riverside Office and the wide disbursement of home health care
patients residing in the Riverside geographical service area, it is
necessary to have personnel having the capability on a daily basis
to be responsible for supervising the nurses, home health aides,
and other staff, and overseeing their training, scheduling,
performance, and other necessary functions for the provision of
home health care services, to be located on-site in the Riverside
Office. Such capability would be seriously eroded if the Riverside
Office was designated as a branch of the Lake Forest Office. FFCL
23 - 29; Tr. at 114 - 121, 195 - 197, 207 - 208.
31. Given the distances between the Lake Forest Office and the
Riverside Office and that at times home health care patients living
in the remote areas of the Riverside geographical area may require
supervisory, emergent, or after hour services, designation of the
Riverside Office as a branch, rather than a subunit, would result
in the possible deterioration of services for such patients,
adversely impacting on their health and safety. FFCL 23 - 30.
32. Petitioner's Riverside Office provided services to patients
located in a geographic area different from that of the Lake Forest
Office. FFCL 23 - 31.
33. The Riverside Office must meet the conditions of participation
for home health agencies independently because it is too far from
the parent agency to share administration, supervision, and
services on a daily basis. FFCL 23 - 32.
34. The predecisional deliberations and thought processes of the
State's and HCFA's decisionmakers are not relevant to my decision
in this case.
35. Petitioner's Riverside Office is a subunit, within the meaning
of 42 C.F.R. 484.2.
ANALYSIS
At the time relevant to this proceeding, Petitioner was a home
health agency whose parent office was located in Lake Forest,
California. In October of 1991, Petitioner requested that its
office in Riverside, California, be licensed by the State of
California to provide home health services as a branch of the
parent in Lake Forest. Petitioner requested also that its office
in Riverside be certified as a Medicare provider of home health
services. FFCL 1 - 2.
Surveyors from DHS surveyed Petitioner's Riverside Office to
determine whether the Riverside Office met the State requirements
for licensing. P. Ex. 17. The State of California licenses
facilities as either a parent or branch. It does not recognize the
category of subunit for home health agency licensing purposes.
FFCL 3. DHS declined to license the Riverside Office as a branch
of the Lake Forest Office. Instead, on March 24, 1992, DHS
licensed the Riverside Office as a parent home health agency. FFCL
4.
In June of 1992, DHS, acting as an agent for HCFA, surveyed
Petitioner's Riverside Office for Medicare certification purposes.
FFCL 7. Based on the survey results, DHS determined that it would
recommend to HCFA to certify the Riverside Office as a subunit of
the Lake Forest parent. FFCL 8.
By letter dated July 30, 1992, HCFA notified the Riverside Office
that, effective June 24, 1992, it had accepted the agreement of the
Riverside Office to participate as a home health agency in the
Medicare program. FFCL 9. In that letter, HCFA assigned the
Riverside Office a provider number different from the number
already assigned to the Lake Forest Office. The issuance of a new
provider number meant that HCFA designated the Riverside Office as
a subunit rather than a branch. FFCL 10.
On three separate subsequent occasions, Petitioner requested in
writing that HCFA reconsider its prior determination and certify
its Riverside Office as a branch rather than a subunit. On all
three occasions, HCFA denied Petitioner's request. FFCL 12 - 17.
Petitioner appealed HCFA's determination, and the case was assigned
to me. The issue before me is whether Petitioner's Riverside
Office qualifies, for Medicare purposes as a home health provider,
to be certified as a branch of Petitioner's Lake Forest Office
rather than as a subunit of the Lake Forest Office. In resolving
this issue, the relevant time frame will be the period from the
date of State licensure on March 24, 1992 through the date of
notice of Medicare certification on July 30, 1992. Tr. at 52 - 60.
Petitioner contends that its Riverside Office qualified for
certification as a branch of the parent in Lake Forest. I
disagree.
I. HCFA's determination that Petitioner's Riverside Office should
be certified as a subunit of the Lake Forest parent, rather than a
branch, is supported by the facts and the applicable law.
A. The implementing regulations define the terms branch and
subunit.
Part A of the Medicare statute, at Title XVIII of the Social
Security Act (Act), provides reimbursement for specified health
care services to the elderly and disabled, including home health
services. Part A services are furnished by "providers of
services," and a home health agency, or other eligible entity, may
participate in the Medicare program by entering into a provider
agreement with the Secretary of the United States Department of
Health and Human Services (the Secretary). 42 U.S.C.
1395x(u), 1395cc.
The Act defines a "home health agency" as a public agency or
private organization, or a subdivision of such an agency or
organization which, inter alia, "is primarily engaged in providing
skilled nursing services and other therapeutic services." 42
U.S.C. 1395x(o)(1). A home health agency must meet the
conditions of participation specified in 42 U.S.C. 1395bbb(a)
and such other requirements as the Secretary may find necessary in
the interest of the health and safety of individuals who are
furnished services by the home health agency. See 42 U.S.C.
1395x(o)(6).
The regulations implementing the requirements of sections 1395x(o)
and 1395bbb(a) are set out at 42 C.F.R. Part 484. These
implementing regulations define the distinctions between a branch
and a subunit of a parent home health agency.
The regulations state that a "branch office" means:
a location or site from which a home health agency provides
services within a portion of the total geographic area served by
the parent agency. The branch office is part of the home health
agency and is located sufficiently close to share administration,
supervision, and services in a manner that renders it unnecessary
for the branch independently to meet the condition of participation
as a home health agency.
42 C.F.R. 484.2. This same section states that a "subunit"
means:
a semi-autonomous organization that -- (1) Serves patients in
a geographic area different from that of the parent agency; and (2)
Must independently meet the conditions of participation for [home
health agencies] because it is too far from the parent agency to
share administration, supervision, and services on a daily basis.
The resolution of the dispute over whether the Riverside Office
should be designated as a branch or a subunit turns on the
regulatory definition of these terms. In interpreting the
regulations, it is instructive to consider the purpose for the
distinction between branch and subunit.
The regulations at 42 C.F.R. Part 484 implement the requirements of
the Act and "also sets forth the additional requirements considered
necessary to ensure the health and safety of patients." 42 C.F.R.
484.1. Thus, the purpose for the regulatory distinction between
branch and subunit home health agencies is to ensure the health and
safety of patients served by the entities. 3/
The regulations permit parent home health agencies to have branch
offices, which are not required to separately meet the conditions
of participation for home health agencies, where such branch
offices are sufficiently close to the parent so that they share
administration, supervision, and services with the parent. On the
other hand, the regulations provide that where a home health agency
is functioning as a semi-autonomous organization which (1) serves
patients in a geographic area different from that of the parent
agency, and (2) is too far from the parent agency to share
administration, supervision, and services on a daily basis, that
office must independently meet the Medicare conditions of
participation for home health agencies and be certified to provide
Medicare services as a subunit rather than as a branch. This
requirement for independent certification is the manner in which
HCFA ensures that Medicare beneficiaries will receive adequately
supervised and timely services without having to rely on a distant
parent which is incapable of sharing administration, supervision,
and services.
The regulations contemplate that, in making the determination as to
whether a nonparent office qualifies to be certified as a branch or
a subunit of a parent office, the factfinder's overriding
consideration is ensuring the health and safety of the patients
served by the nonparent office seeking certification.
B. The Riverside Office was too far from the Lake Forest
parent to share administration, supervision, and services on a
daily basis.
1. The regulations provide a standard for
frequency of sharing.
Petitioner argues that there is no requirement that there be
evidence of daily sharing of administration, supervision, and
services with the parent office in order for an office to qualify
to be designated as a branch. In support of this argument,
Petitioner points out that the regulatory definition of a branch
requires that the branch be "sufficiently close to share
administration, supervision, and services," but that the definition
does not refer to the frequency of sharing. Petitioner's
Posthearing Brief at 16 - 17. HCFA disagrees, stating that it
"would make no logical sense" to say that branches do not have to
furnish adequate supervision and services "each and every day of
their operation." HCFA's Posthearing Response Brief at 4.
It is true that the term "daily" does not specifically appear in
the regulatory definition of a branch. The term "daily" does,
however, appear in the regulatory definition of a subunit. Reading
the regulatory definitions of branch and subunit together, I
conclude that nonparent offices, whether they be branches or
subunits, must provide adequate administration, supervision, and
services on a daily basis. In the case of a subunit, the
regulations are intended to ensure that adequate administration,
supervision, and services will be provided daily independently of
the parent. In the case of a branch, the regulations are intended
to ensure that adequate administration, supervision, and services
will be provided daily on a shared basis with the parent.
I conclude that, in order for a nonparent office to qualify to be
certified as a branch, the regulatory standard for the frequency of
sharing of administration, supervision, and services is that the
parent and branch must be capable of sharing these functions daily
so that there would not be a deterioration of the provision of such
functions on a daily basis. If it is not possible for this daily
sharing to occur so that such functions could not be provided on
any given day by the parent office, then it is necessary that the
office be certified independently as a subunit. Since the branch
is not required to independently meet the conditions of
participation as a home health agency, it is incumbent for the
protection of the health and safety of home health care patients
that the parent be capable of sharing such services with the branch
on a daily basis. If the parent office is not capable of sharing
such functions on a daily basis, then HCFA would have to ensure
that the nonparent office independently meets the conditions of
participation. In such circumstances, the nonparent office would
properly be certified as a subunit rather than a branch.
2. Mileage and time are appropriate factors to
consider on a case-by-case basis.
Petitioner argues also that mileage and time are not appropriate
factors to consider in determining whether a nonparent office
should be designated a branch or a subunit. In support of this
assertion, Petitioner cites a 1989 memorandum from the Director of
the Office of Survey and Certification, at HCFA, to an Associate
Regional Administrator, which states:
Because circumstances vary widely between regions and between
States within regions, it is not appropriate to set a criterion
such as mileage or time for purposes of determining whether or not
the parent [home health agency] is operating a branch or subunit.
Further, there is no authority within the statute or regulations to
make aggregate determinations based on an operational standard or
regional definition.
P. Ex. 29 (emphasis added).
I do not agree that the 1989 memorandum supports Petitioner's
contention that mileage and time are not appropriate factors to be
considered. I find that what is intended by the 1989 memorandum's
prohibition against any "set criterion" such as mileage or time for
purposes of determining whether an office is a branch or subunit is
that it is not appropriate for HCFA to promulgate any specific
mileage or time criteria to be applied in every case, either
regionally or nationally. This conclusion is consistent with
testimony of HCFA's witnesses. Audrey Blue, a DHS surveyor who
surveyed the Riverside Office, and Captain Donna Dymon, a career
commissioned officer of the United States Public Health Service who
works as a nurse consultant for HCFA and who testified as HCFA's
expert witness, stated that HCFA has not established specific
mileage or time guidelines that apply across-the-board in
determining whether a nonparent office should be designated a
subunit rather than a branch. Tr. at 83, 215.
Rather than setting specific mileage and travel time requirements
for determining whether an office is a subunit or a branch, the
1989 memorandum instructs that:
[t]he determination of whether [a home health agency] is
operating a `branch' or a `subunit' must be made on an individual,
case-by-case basis using the definitions contained in the Medicare
[home health agency] regulations . . .
P. Ex. 29. Indeed, the regulatory definitions explicitly use the
terms "sufficiently close" and "too far." They refer also
to the
geographic service areas of the parent and nonparent offices. This
language relates to distance, and I interpret the regulations to
mean that distance in terms of both mileage and time are factors to
be considered in determining whether to designate a nonparent
office as a branch or a subunit. While HCFA does not set specific
mileage or time requirements defining what is considered
"sufficiently close" and "too far" or defining the size
of a
geographic service area, I conclude that the regulations and the
1989 memorandum contemplate that these are appropriate factors to
be considered under the circumstances of a particular case. The
regulations and the 1989 memorandum provide a framework for a
case-by-case determination as to whether, based on the geographic
locations of the parent and nonparent office and the patients
served by the two offices, administration, supervision, and
services can be shared on a daily basis.
3. The Riverside Office was located at a
distance too far from the Lake Forest
parent to ensure that patients of the
Riverside Office could be safely and
timely treated from the Lake Forest
parent.
HCFA proved by a preponderance of the evidence that the Riverside
Office is not sufficiently close to the Lake Forest Office to
ensure safe and appropriate treatment of patients served by the
Riverside Office on a shared basis in such a manner that makes it
unnecessary for the Riverside Office to independently meet the
conditions of participation of a home health agency.
In correspondence from Petitioner to HCFA, Petitioner stated that
the distance between the parent office in Lake Forest and the
Riverside Office was approximately 50 miles. 4/ P. Ex. 2, P. Ex.
4. Judy Boccia, Petitioner's Vice President, submitted an
affidavit stating that the distance between the two offices
measured 44.3 miles on her car's odometer. P. Ex. 37. HCFA
witness Audrey Blue submitted an affidavit stating that the
distance between the two offices measured 49.6 miles on her car's
odometer. HCFA Ex. 14. The differing distances as measured by the
witnesses' odometers might be explained by the fact that Ms. Boccia
and Ms. Blue took different routes. Petitioner's Posthearing Brief
at 23. Based on the foregoing, I find that the evidence
establishes that, depending on the route, the driving distance
between the Lake Forest Office and the Riverside Office is between
44.3 miles and 49.6 miles.
Testimony at the hearing shows also that the driving time between
the two offices varies, depending on traffic conditions. Traffic
between the two offices is heaviest between the hours of
approximately 5:00 a.m. to 9:30 a.m. and between the hours of
approximately 3:00 p.m. to 7:30 p.m. Tr. at 87. In addition, the
bulk of rush hour traffic flows from Riverside to Lake Forest in
the morning and from Lake Forest to Riverside in the evening. Tr.
at 405 - 406, 152 - 153. Accidents can cause considerable delays.
In addition, roads along the route between the two offices were
under construction in 1992 and continue to be now. Tr. at 569 -
570.
During the hearing, Ms. Boccia estimated that it took her an
average of 40 minutes to drive from the Riverside Office to the
Lake Forest Office during the morning rush hour when the bulk of
traffic was flowing in the opposite direction. Tr. at 403, 565.
In support of this assertion, she submitted an affidavit in which
she stated that she drove from the Lake Forest Office to the
Riverside Office beginning at 9:08 a.m. on August 3, 1995, and that
it took her 45 minutes to drive this distance at that time of day.
P. Ex. 37.
Ms. Blue estimated that it could take between two and two and
one-half hours to drive between the two offices in heavy traffic.
At other times when traffic is not heavy, she estimated that it
would take approximately 50 to 55 minutes. Tr. at 88, 153. Ms.
Blue submitted an affidavit in which she stated that she drove from
the Riverside Office to the Lake Forest Office beginning at 9:00
a.m. on June 15, 1995 and that it took her one and one-half hours
to drive that distance at that time of day. HCFA Ex. 14. The
difference in the traveling times set forth in Ms. Boccia's and Ms.
Blue's driving affidavits could be explained by the fact that the
flow of traffic in the morning hours is heavier from Riverside to
Lake Forest.
Petitioner argues that I should not adopt the time set forth in Ms.
Blue's affidavit because the route taken by Ms. Blue is not the
most direct route. Petitioner's Posthearing Response Brief at 20.
While it appears that the route taken by Ms. Boccia is 5.3 miles
shorter, Petitioner has not shown that Ms. Boccia's route is the
better alternative in terms of traffic conditions.
It is noteworthy that Ms. Blue started her trip at 9:00 a.m.,
towards the end of the period the parties stated traffic is at its
heaviest. Therefore, one hour of the one and one-half hour period
that Ms. Blue drove (from 9:30 to 10:30) was not during rush hour.
It is reasonable to infer that had Ms. Blue started her trip at the
beginning of the morning rush hour period, it would have taken her
longer than one and one-half hours to travel from the Riverside
Office to the Lake Forest Office. In addition, the time would be
even greater if she encountered delays caused by accidents or
construction work. In view of this, I find Ms. Blue's estimate
that it can take between two and two and one-half hours to travel
the distance between the two offices when traffic is heavy to be
credible.
I find that the driving time between the Lake Forest Office and the
Riverside Office can take between 40 minutes and two and one-half
hours, depending on traffic conditions. 5/
While the mileage and travel times between the Lake Forest Office
and the Riverside Office are factors to be considered in
determining whether the Riverside Office qualifies to be certified
as a branch, rather than a subunit, these factors alone are not
determinative. In order to ascertain whether the Riverside Office
is sufficiently close to the Lake Forest Office to ensure safe and
timely treatment of patients on a shared basis in such a manner
that makes it unnecessary to require the Riverside Office to be
independently certified as a subunit, it is necessary to consider
the location of the patients served by the Riverside Office.
It is undisputed that the geographic area of the patients served
out of Petitioner's Riverside Office included the communities of
Chino, Fontana, Rialto, San Bernardino, Redlands, Lake Arrowhead,
and Big Bear City. FFCL 25. 6/ Petitioner submitted information
regarding "off-peak weekday travel times" from Lake Forest to the
various locations served by the Riverside Office. This information
was supplied by the California Department of Transportation based
on the Los Angeles Regional Transportation Study (LARTS)
transportation model. P. Ex. 34. HCFA did not submit any evidence
to rebut this evidence, and I rely on it to establish the driving
times from Lake Forest to these locations during periods when
traffic is not at its highest volume.
In addition, Ms. Blue testified concerning travel time from Lake
Forest to the various locations served by the Riverside Office
during periods when traffic is heavy. Ms. Blue stated that she is
familiar with the driving times between Lake Forest and these
locations because she has driven them under a variety of road and
weather conditions over the past 13 years. HCFA witness Captain
Dymon concurred with Ms. Blue's testimony regarding travel times.
Tr. at 197. Petitioner did not submit evidence to rebut Ms. Blue's
testimony, and I rely on it to establish the driving times from
Lake Forest to these locations during periods when traffic is
heavy. Tr. at 93 - 98.
I find that the evidence establishes that the driving time from
Lake Forest to locations in Chino is approximately 51 minutes
during off-peak travel hours and that it can take as long as one
and one-half hours to two hours in heavy traffic. Driving time
from Lake Forest to locations in Fontana, Rialto, San Bernardino,
and Redlands takes between 65 and 77 minutes during off-peak travel
hours and it can take as long as one and one-half to two and
one-half hours in heavy traffic. P. Ex. 34; Tr. at 93 - 94.
Driving time from Lake Forest to locations in Lake Arrowhead is
approximately one hour and 48 minutes during off-peak travel hours.
Ms. Blue testified that, to get to Lake Arrowhead, it is possible
to take the freeway as far as San Bernardino. The traveler must
then take Highway 18, a two-lane curving road up a mountain.
According to Ms. Blue, the trip is more time-consuming in the
winter months when there is snow on the ground. Ms. Blue testified
that the trip could take as long as three to three and one-half
hours. P. Ex. 34; Tr. at 95 - 96.
With respect to the travel time from Lake Forest to locations in
Big Bear City, the farthest geographical location served by the
Riverside Office, it takes two hours and 20 minutes to drive this
distance during off-peak travel hours and as long as four hours in
traffic. Ms. Blue testified that travel to Big Bear City requires
the traveler to drive on a curving, two-lane road. She stated
that, under winter weather conditions, the travel time could be
even longer. P. Ex. 34; Tr. at 96 - 97.
HCFA offered persuasive evidence showing that there are compelling
reasons for requiring that the Riverside Office be certified as a
semi-autonomous subunit, with its own responsibility for providing
administration, supervision, and services on a daily basis
independent of the parent in Lake Forest. I find that the evidence
adduced by HCFA establishes that the Riverside Office is too far
from the Lake Forest Office to ensure safe treatment of the
Riverside Office's patients on a shared basis with the Lake Forest
Office.
HCFA's State Operations Manual (Manual) No. 260 provides guidance
with respect to the distinctions between a branch and subunit of a
home health agency. With respect to administrative functions
pertaining to a branch office, the Manual states that the
"administration at the parent agency is aware of the staffing,
patient census and any issues/matters affecting the operation of
any given branch." HCFA Ex. 12 at 5. In order to accomplish the
administrative functions of the branch, the administrator of the
home health agency "maintains an ongoing liaison with the branch
staff and the group of professional personnel." HCFA Ex. 12 at 6.
The Manual states that the branch must be "located sufficiently
close to the parent to share administration. The administrator is
apprised of, and resolves issues affecting patients in branch(es)
as well as the service area(s) covered by the parent." Id. The
subunit, on the other hand, "maintains its own administrative
staff" because it is "located at such a distance from the parent
agency that it is incapable of sharing administration, supervision,
and services on a daily basis." HCFA Ex. 12 at 5 - 6.
Ms. Blue testified regarding HCFA's requirements as to the
appropriate designation of a home health agency as a branch or
subunit. Ms. Blue stated that staff serving a home health agency
includes licensed nurses, home health aides, physical therapists,
occupational therapists, and social workers. With respect to
administrative functions, Ms. Blue stated that both branches and
subunits must have the ability to assess and evaluate the care
provided to patients by the staff serving a home health agency.
She explained that a subunit must have its own "staff complement
administratively that would give them the ability to easily make
decisions and provide guidance and supervision to the staff working
out of that office." Tr. at 78 - 80.
Ms. Blue opined that, in this case, because of the far distances of
the Riverside Office's patients from the
parent office at Lake Forest, it was not possible for the Riverside
Office to share administrative functions with the Lake Forest
Office. Instead, Ms. Blue expressed the view that it was
imperative that the administrative functions be available on-site
in the Riverside Office in order to "ensure that patient-related
goals and objectives were met." Tr. at 114 - 115. Based on this,
Ms. Blue opined that the Riverside Office should be certified as a
subunit rather than a branch.
Captain Dymon agreed with Ms. Blue's testimony. She elaborated on
the type of activities included in the term "administration."
According to Captain Dymon, administrative functions include not
only the responsibility for the daily patient census, but "assuring
that the beneficiaries have their care needs met by the various
professional entities that are serving in the home." The home
health agency's administrative staff must ensure that services and
staff are available as needed. Tr. at 195 - 196. Captain Dymon
opined that, in view of the distances and travel times involved in
this case, it was necessary that the Riverside Office have
administrative staff on-site to ensure that these administrative
functions are performed adequately. Tr. at 197.
With respect to supervision, Ms. Blue testified that many
supervisory functions go "hand-in-hand" with administrative
functions. Tr. at 146. According to Ms. Blue, responsibilities of
supervisory personnel include: evaluating the work performance of
non-supervisory personnel; scheduling the nurses, home health
aides, and staff under contract with the home health agency,
including locating replacements when regularly scheduled personnel
are unavailable; training; and participating in routine case
conferences with staff to ensure beneficiaries are receiving
appropriate care. Tr. at 80, 117 - 121.
Captain Dymon testified that supervision is necessary to establish
"consistency in care and to assure that the care for the
beneficiary is being dedicated in a professional manner." Tr. at
196. Supervisory responsibilities identified by Captain Dymon
include reviewing personnel policies; making sure the
non-supervisory personnel are complying with the policies; managing
leave taken by staff; oversight and monitoring of home health
aides; monitoring the clinical record; monitoring therapy services;
making sure that supervisory visits are conducted according to
regulations; and assuring that durable medical equipment is
provided and in working order. Tr. at 207 - 208.
HCFA's Manual provides that, in the case of a subunit, supervisory
personnel (a supervisory physician or registered nurse) must be
available on the premises during operating hours. HCFA Ex. 12 at
6. In the case of a branch office, on the other hand, its location
must be such that supervision can be accomplished easily from the
parent office, since HCFA does not require branch offices to have
supervisory personnel on the premises. HCFA Ex. 12 at 6; Tr. at
117, 338. Thus, where the patients served by a nonparent office
are located at a geographic distance from the parent such that
supervision will be, or is likely to be, interrupted if it is
performed by the parent, then the nonparent office must be
certified as a subunit with its own supervisory personnel available
on site on a daily basis.
Petitioner repeatedly points out in its posthearing submissions
that California licensure law requires all home health agency
offices, including branches, to have an on-site nursing supervisor.
Petitioner contends that the fact that federal requirements do not
require nursing supervisors in branch offices is irrelevant because
California law requires all home health agency offices to have a
clinical supervisor. According to Petitioner, the Riverside
Office's patients will be adequately supervised even if HCFA
designates it as a branch because of the State law requirement to
have a supervisor on site. Petitioner's Posthearing Response Brief
at 16 - 17.
Petitioner's argument that California law requires the presence of
a supervisor on-site is not persuasive. It is incumbent that HCFA
certify home health agency providers according to federal
regulatory requirements. HCFA cannot certify as a branch a home
health agency office which it otherwise was required to certify as
a subunit simply because the office would satisfy some of the
subunit requirements under State law. HCFA has the responsibility
to ensure that entities are operating at the level which they have
been found qualified, regardless of any changes in State
requirements which might occur. Under Petitioner's scenario, the
Riverside Office could be certified as a branch based on State law
requirements, and then remove its on-site supervisor in the event
that State law requirements change. If that were the case, the
Riverside Office would still be certified as a branch even though
it lacked the necessary supervision. 7/
Petitioner contends that "[i]n contrast to institutional providers,
patient care personnel in a home health agency must be able to
operate without a great deal of supervision when furnishing
hands-on patient care in the home." Petitioner's Posthearing Brief
at 15. Petitioner asserts that this is recognized by the
definition of "supervision" under the conditions of participation
for home health agencies. Citing 42 C.F.R. 484.2, Petitioner
states that the regulations do not require supervision of direct
patient care at the patient's home where the individuals furnishing
that care meet the qualifications specified in 42 C.F.R. 484.4.
According to Petitioner, "the vast majority of home health
personnel" meet those qualifications. Id. 8/ Petitioner contends
that most supervision in the home health setting "is actually
conducted by telephone, in writing, through review of patient
charts, or in the office when team meetings are conducted." Id.
From this, it appears that Petitioner is arguing that, since
supervision occurs in a location other than the patient's home,
then it does not matter how far patients are from where a
supervisor is physically located. Petitioner's Posthearing Brief
at 15, 40 - 41.
This argument is not supported by the testimony of HCFA's
witnesses. Ms. Blue testified that the nature of supervisory
responsibilities contemplate that supervisory staff be available to
go into patients' homes. In order to evaluate the services
provided by staff and contract personnel, supervisors must be able
to see for themselves the interaction between the workers and the
patient. Ms. Blue stated that, in the event that a patient is not
progressing as anticipated, a supervisor should be able to go to
the site where services are being provided to be able to assess the
situation for themselves. Tr. at 80, 104, 108. 9/
In addition, Ms. Blue testified that not only do supervisors
evaluate the actions of home health care workers, but they provide
guidance and general expertise to staff. Tr. at 104. If
warranted, supervisors should "be ready to lend whatever assistance
they may need to the individual in the field," including actually
providing health care to patients where necessary. Tr. at 105 -
106.
Moreover, Captain Dymon testified that, with respect to at least
one of the services furnished by staff out of the Riverside Office,
that of nutritional guidance, HCFA's regulations require the
presence of a supervisor on the premises to supervise the
individual furnishing that service. Captain Dymon explained that
42 C.F.R. 484.4 does not specify any qualifications for the
category of personnel responsible for performing nutritional
guidance, and therefore the home health agency is required to
furnish direct supervision on the premises for those individuals
providing nutritional guidance. Tr. at 198 - 200. 10/
Captain Dymon stated that nutritional guidance can be provided by
various categories of personnel, including a professional nurse, a
dietitian, or a nutritionist. Tr. at 202. Captain Dymon explained
that nutritional guidance involves "designing a diet that may be a
therapeutic diet used in conjunction with a particular diagnosis,
in order to treat the person from a nutritional standpoint." Tr.
at 200. As an example, Captain Dymon stated that an end-stage
renal disease diet would have certain restrictions, and that this
service would be needed to provide guidance on food preparation, to
monitor consumption, and to monitor the patient's response to the
diet. Tr. at 201. According to Captain Dymon, supervision of
nutritional guidance entails assessing the patient's needs and
assessing who best on the staff can serve those needs. Also
required is the supervisory capacity to assess whether the
nutritional interventions are actually meeting the needs of the
patients. If the interventions are not effective, the supervisor
must be available to communicate the findings to the patient's
physician and possibly request an alteration of the patient's plan
of care. Tr. at 203 - 204.
Captain Dymon testified also that inadequate supervision of
nutritional guidance could have a detrimental effect on the health
and safety of patients. As an example, Captain Dymon stated that
a renal dialysis patient could have excessive fluids in the body if
the diet is not correct. Tr. at 204.
In addition, Ms. Blue and Captain Dymon testified that there may at
times be a need for supervisory personnel to go to a patient's home
in order to respond to an emergency when other staff are
unavailable. Ms. Blue and Captain Dymon distinguished between
emergencies which require hospital emergency treatment and
emergencies arising in connection with the provision of a home
health service which requires immediate in-home treatment by a home
health agency staff member. Ms. Blue and Captain Dymon explained
that, with respect to home health patients, there may be situations
which require the immediate intervention of a skilled caregiver in
the home. In these instances, it would not be appropriate or cost
effective to make a patient go to a hospital emergency room for a
service which is supposed to be provided in the home. An example
of this type of immediate need requiring in-home treatment is where
a catheter may have become dislodged in a patient with a stage 4
decubitus ulcer. In this instance, the patient would need to have
the catheter replaced quickly in order to prevent further
progression of the decubitus ulcer. Tr. at 81, 106, 116, 197 -
198, 237, 243 - 244.
Robert Gleason, Petitioner's President, testified that one of the
services furnished to patients out of the Riverside Office involved
the use of "high tech" infusion therapy. According to Mr. Gleason,
this therapy involves the infusion of a solution, such as
intravenous food, intravenous antibiotics, or intravenous pain
medication, into a patient's veins. He stated that these are
considered high tech procedures because they are infused
intravenously. In addition, he stated that these procedures
require careful monitoring and that they require somebody to be on
call in the Riverside Office on a 24-hour basis, with the ability
to get staff to a patient within an hour or two in the event that
a problem develops. 11/ Tr. at 697, 700 - 701.
Mr. Gleason gave several examples of problems with this type of
therapy which might require immediate attention. A nurse would need
to restart the therapy in the event that the intravenous line which
delivers the infusion becomes clogged or the needle which delivers
the infusion becomes dislodged. In addition, a nurse would need to
go to the patient's home to fix a broken intravenous pump. A nurse
would also be sent to a patient's home if a patient reported any
signs of infection. Tr. at 698 - 700.
In the event of a sudden need requiring a prompt, unscheduled
visit, it would be necessary for supervisory personnel to delegate
staff to attend to the patient's need. It could also become
necessary for the supervisor to personally step in and respond with
a visit to the patient's home if other staff are not available at
the time the need arose. Tr. at 81, 244.
Moreover, even if a home health agency supervisor never needed to
actually go to the homes of patients, it still must be practical
for non-supervisory personnel to travel to the office where the
supervisor is located for training, routine case conferences, and
evaluations. Mr. Gleason testified that the supervisor and home
health care personnel regularly meet to discuss patients' care.
These conferences occur either weekly or every two weeks. Tr. at
691. Thus, the location of supervision is important in order to
accomplish these supervisory activities. If such supervision was
to be offered in the Lake Forest Office rather than the Riverside
Office, then the travelling time and distance would significantly
impact on the availability and timeliness of the supervision
provided.
Ms. Blue and Captain Dymon both expressed the view that, given the
distances and travel times in this case, the Lake Forest Office was
not able to adequately share supervision with the Riverside Office.
Both Ms. Blue and Captain Dymon opined that the certification of
the Riverside Office as a subunit was necessary to protect the
health and safety of Riverside's patients. Tr. at 116, 208.
Petitioner contends that HCFA's emphasis on supervision for
unexpected patient needs is misplaced because it always had on-call
staff working near its patients. Ms. Boccia testified that it was
not necessary for the Lake Forest Office to respond to direct
patient care needs or emergencies of Riverside patients because
from "the time we saw patients in that area, we always had on-call
staff that lived in that area." Tr. at 517.
Petitioner's argument is unavailing because even local, on-call
staff need to be supervised. They need to be scheduled, trained,
and supervised by supervisory staff. In addition, in the event
that the on-call staff is unavailable, it still would be necessary
for supervisory staff to be available to meet the unanticipated
need. Tr. at 467 - 468.
Moreover, Ms. Boccia's testimony that she hired staff locally to be
available to meet patient needs supports HCFA's position that the
Lake Forest Office and the Riverside Office cannot share services
on a daily basis. Ms. Boccia testified that she hired separate
on-call nurses for the Lake Forest Office and for the Riverside
Office. She identified specific geographic territories in which
the on-call nurses had to live in order to be able to provide
timely services to patients living in those territories. 12/ Tr.
at 586 - 589.
In view of the foregoing, I find that based on the distances
between the Riverside Office and its patients from the parent in
Lake Forest, the high tech types of services being provided to
patients by Petitioner, as well as the need to promptly respond to
unexpected needs of home health patients, the weight of the
evidence establishes that the Lake Forest Office was not able to
share administration, supervision, and services with the Riverside
Office on a daily basis, within the meaning of 42 C.F.R. 484.2.
Petitioner argues that the Lake Forest Office was the centralized
focus of Petitioner's operation. According to Petitioner, many
functions originated out of the parent office and were shared with
the Riverside Office. Petitioner contends that even though the
Riverside Office independently met the conditions of participation
for a home health agency, this is not prohibitive of branch status.
Petitioner gave examples of shared activities between the two
offices, including policy-setting, billing, payroll, accounting,
support for recruiting and hiring, and upper management leadership
in terms of decision-making. Petitioner asserts that shared
activity between the two offices was facilitated by the multiple
visits to the Riverside Office by high level staff from Lake
Forest. Petitioner's Posthearing Brief at 27 - 35. Mr. Gleason
testified that it was always Petitioner's intent for the parent in
Lake Forest "to maintain central corporate administrative and
clinical policy control" over the operations in the Riverside
Office. Tr. at 725 - 726.
In reaching my decision in this case, I recognize that there are
some shared activities between the parent at Lake Forest and the
Riverside Office. The regulations do not define a subunit as an
office which is completely autonomous from the parent. On the
contrary, it describes a subunit as being semi-autonomous. I read
this to mean that the regulations envision that the parent will
retain some responsibilities to set overall company management
policies and procedures and to enforce quality of care controls in
its nonparent offices. Tr. at 191. Thus, the fact that the Lake
Forest Office may have had overall responsibility for setting
policy and may have shared some activities does not prevent me from
reaching the conclusion that the Riverside Office should be
certified as a subunit rather than a branch. Moreover, the mere
fact that high level officials in Lake Forest traveled to the
Riverside Office during the period the office was being set up for
purposes such as obtaining space, marketing, and recruiting staff
does not establish that the requisite administration, supervision,
and services can be shared on a daily basis after the Riverside
Office became fully operational. Tr. at 423.
C. The Riverside Office served patients in a geographic area
different from that of the Lake Forest Office.
HCFA asserts that the Riverside Office should be certified as a
subunit because it served patients "in a geographic area different
from that of the parent agency," in accordance with the definition
of a subunit set forth at 42 C.F.R. 484.2. Petitioner argues
that the Riverside Office should be certified as a branch because
it is a "location or site from which a home health agency provides
services within a portion of the total geographic area served by
the parent" in accordance with the definition of a branch set forth
at 42 C.F.R. 484.2.
During the hearing, Ms. Boccia referred to the geographic area
served by the Riverside Office and stated that before the Riverside
Office was licensed by the State of California, Petitioner provided
services to the patients who resided in this geographic area out of
its Lake Forest Office. She noted specifically that the Lake
Forest Office served patients as far away as Big Bear City at that
time. Ms. Boccia stated that once the Riverside Office was
licensed, these patients were admitted to the Riverside Office.
Tr. at 422, 501 - 502. Based on this, Petitioner argues that the
Riverside Office met the regulatory criteria for a branch because
it "served patients who were within the geographic area also served
by Lake Forest." Petitioner's Posthearing Brief at 21.
Petitioner attempts to establish that the geographic area of its
Lake Forest Office extended as far away as Big Bear City by relying
on Ms. Boccia's testimony that this area was served by the Lake
Forest Office prior to the licensure of the Riverside Office. I do
not agree that Petitioner's actions prior to undergoing the
scrutiny of the State licensing process establishes that Lake
Forest's geographic service area extended as far as Big Bear City.
Although the Lake Forest Office may have been providing services to
the entire geographic area now covered by the Riverside Office,
Petitioner has not adduced any evidence to show that the Lake
Forest Office did so with the approval of the appropriate State
licensing authority. Indeed, once the State agency in San
Bernardino surveyed the Riverside Office, it refused to license the
Riverside Office as a branch of the parent in Lake Forest.
Instead, the State licensed the Riverside Office as a parent home
health agency. In addition, the State recommended HCFA to certify
the Riverside Office as a Medicare provider as a subunit, rather
than as a branch, of the Lake Forest Office, and HCFA adopted this
recommendation. This shows that, once the Riverside Office
submitted to the survey process, both the State and HCFA concluded
that the Riverside Office had to meet Medicare certification
requirements independently of the Lake Forest Office in order to be
certified to provide services to patients located in the geographic
area served by the Riverside Office. I infer from this that the
State and HCFA concluded that the Lake Forest Office could not be
relied on to adequately provide services to this geographic area.
In the absence of persuasive evidence documenting that the Lake
Forest Office had the ability to administer, supervise, and serve
patients residing in the geographic area covered by the Riverside
Office, Ms. Boccia's testimony that the Lake Forest Office once
served patients in this geographic area is not sufficient for me to
conclude that the Lake Forest Office's geographic service area
encompasses the geographic area served by the Riverside Office.
Accordingly, Ms. Boccia's testimony does not establish that the
Riverside Office provides services within a part of the total
geographic area served by the Lake Forest Office.
Petitioner argues that an understanding of the operation of home
health services and supervision supports the conclusion that the
distances from the Lake Forest Office to the locations of the
Riverside Office's patients' homes has little relevance in this
case. Petitioner states that, since home health agencies furnish
services in patients' homes, patient care personnel operate with a
great deal less supervision than personnel in an institutional
setting. Petitioner asserts that the nature of home health
services is to provide supervision "from office to office," thereby
implying that the distance between the Lake Forest Office and the
Riverside Office is more relevant than the distance between the
Lake Forest Office and locations of patients in determining whether
the Riverside Office should be designated as a branch or a subunit.
Petitioner's Posthearing Brief at 15, 26 - 27.
Petitioner asserts also that a showing that the Riverside Office
serves patients which are not in the geographic area served by the
Lake Forest Office does not disqualify the Riverside Office from
being designated a branch. Petitioner argues that the reason to
open a branch office is to have increased efficiency and to provide
the opportunity to expand the geographical range of services.
Petitioner reasons that if the Riverside Office was serving the
same patient population as the Lake Forest Office, there would be
no reason to open a branch office. Petitioner argues that the
regulation requires only that a branch provide services within a
"portion" of the total geographic area served by the parent.
Petitioner takes the position that, as long as the service areas of
the Riverside Office and Lake Forest Office "overlap," then they
are not different and they would meet the requirement that a branch
provide services within a portion of the total geographic area
served by the parent. Petitioner's Posthearing Response Brief at
19; Tr. at 19 - 20.
Petitioner asserts that, in this case, the record shows that the
Lake Forest Office and the Riverside Office are in the same
geographical area. Petitioner's Proposed Findings of Fact and
Conclusions of Law at 4. Petitioner cites Mr. Gleason's testimony
that the Riverside area and the Lake Forest area are "immediately
adjacent and kind of all the same area" and that "the towns just go
through Orange County and continue on when you cross the Riverside
County border." Tr. at 663. Petitioner also points out that Ms.
Boccia testified that there are employees of Petitioner who furnish
services to patients of both the Riverside Office and the Lake
Forest Office. Tr. at 406. Based on this, Petitioner contends
that the service area of the Riverside Office overlaps with the
service area of the Lake Forest Office, and therefore the Riverside
Office provides services within a portion of the total geographic
area served by the Lake Forest Office.
I do not agree with Petitioner's interpretation of the regulations.
Petitioner appears to be arguing that there are no limits to how
far a branch office may expand its service area as long as the
branch has some service area in common with the parent. Under
Petitioner's reading of the regulations, a branch could be
permitted to serve patients all over the State of California as
long as some of its patients were drawn from the same geographic
area served by the parent. Moreover, the operative phrase in the
definition of branch is that it is a site from which a home health
agency provides services "within a portion of the total geographic
area served by the parent agency." 42 C.F.R. 484.2. If, as
here, the nonparent office is located arguably within the
geographical area of the parent but provides services to patients
outside that geographical area, then the nonparent cannot be a
branch and must be classified as a subunit. This is consistent
with the subunit definition that applies to nonparent offices that
service patients in a geographic area different from the parent.
I find that Petitioner's interpretation is contrary to the intent
of the regulations. The issue before me is not whether the Lake
Forest Office and the Riverside Office have some service area in
common, but rather whether the geographic service area of the
Riverside Office is contained within the total geographic service
area of the Lake Forest Office. This is consistent with the
testimony of HCFA's witnesses. Captain Dymon testified that a
branch is "an extension of the parent serving the identical
services as the parent area within the geographic description of
the parent." Tr. at 193. On the other hand, a subunit serves
patients in a geographic area different from that of the parent.
Ms. Blue testified that "different from the parent" would be the
areas that would be further beyond the area of what might be a
branch; an area that might cause a problem for a patient to readily
access the system or for the agency staff to reach the patient in
a timely fashion to provide care. Further, Ms. Blue stated,
"[h]owever, if, indeed, patients reside outside of the general area
that the parent serves, it's geographically different. Then,
indeed, that office would need to be a subunit." Tr. at 82 - 83.
In this case, even if I were to accept that the distances and
travel time between the Riverside Office and the Lake Forest Office
put the two offices in the same geographic area and that some of
the patients of the Riverside Office were drawn from the same
geographic area as some of the patients of the Lake Forest Office,
I would still find that the Riverside Office served other patients
who were located outside of the total geographic area served by the
Lake Forest Office. I find that the evidence establishes that the
Lake Forest Office cannot be relied on to provide safe and timely
administration, supervision, and services to patients located as
far away as Big Bear City and Lake Arrowhead. Based on this, I
find that the Riverside Office served patients in a geographic area
different from that of Lake Forest, within the meaning of the
regulatory definition of a subunit.
II. Petitioner's arguments attacking the decisionmaking process
are unavailing.
Petitioner argues also that HCFA's determination to designate the
Riverside Office as a subunit should not stand because the
underlying decisionmaking process was defective. According to
Petitioner, HCFA never engaged in openminded factfinding related to
the issue of whether the Riverside Office should be certified as a
subunit or a branch.
Petitioner asserts that, at all times, it wanted the Riverside
Office to be a branch of the parent at Lake Forest and that it
consistently communicated this desire to HCFA. Petitioner's
Posthearing Response Brief at 6 - 7. Petitioner points out that it
indicated on the State licensure application that it wanted its
Riverside Office to be a branch of the parent in Lake Forest. In
addition, Petitioner points out that it expressed its desire to
have its Riverside Office designated as a branch for purposes of
Medicare certification in a letter written to HCFA before the
Medicare survey.
Ms. Blue testified that, when she visited the Riverside Office for
the Medicare survey in June of 1992, she was informed by
Petitioner's staff that they considered the Riverside Office to be
a subunit, and she entered that information on HCFA Form 1572, Home
Health Agency Survey and Deficiencies Report. Tr. at 99 - 100;
HCFA Ex. 8. On the other hand, Ms. Boccia speculated that the
reason the question, "Is this home health agency a subunit?" was
answered "yes" on HCFA Form 1572 was that State licensing officials
had refused to license the Riverside Office as a branch. Ms.
Boccia suggested that the response to this question was not
intended to convey that Petitioner viewed the Riverside Office to
be a subunit, but instead was intended to convey that Petitioner
recognized that, for State licensure purposes, the Riverside Office
was characterized as a subunit. Tr. at 398, 513. 13/ Ms. Boccia
further testified that she told Ms. Blue during the survey that the
Riverside Office would like to be given the same provider number as
the Lake Forest Office. Tr. at 400.
Petitioner takes the position that, notwithstanding the fact that
it repeatedly expressed its desire for the Riverside Office to be
certified as a branch, HCFA did not give adequate consideration to
this request. Petitioner contends that HCFA relied on the State
licensure determination to refuse to license the Riverside Office
as a branch, and, as a result, HCFA did not conduct an adequate
survey addressing this issue.
Petitioner argues that there never would have been a Medicare
survey of the Riverside Office unless it had been predetermined
that the office should be certified as a subunit for Medicare
purposes.
According to Petitioner, the decisionmaking process was deficient
because no part of the Medicare survey which was conducted related
to reaching findings on the issue of branch status. Petitioner
states that, contrary to HCFA's own policy as set forth in its
Manual, HCFA never visited the parent to pursue the question of
Lake Forest's capability of sharing administration, supervision,
and services with the Riverside Office. Petitioner argues that, in
the absence of a factfinding survey to determine the facts relating
to the regulatory criteria, the correspondence between the parties
on this issue amounts to nothing more than post hoc rationalization
of HCFA's prior decision. Petitioner's Posthearing Brief at 8 -
14; Petitioner's Posthearing Reply Brief at 25 - 26.
Petitioner's arguments attacking the underlying decisionmaking
process are without merit. As I stated in my June 2, 1995 ruling,
this hearing is, by law, de novo. Act, section 205(b).
Accordingly, in evaluating whether the Riverside Office should be
certified as a branch, I must make an independent assessment of the
regulatory factors which define branches and subunits and apply
them to the facts of this case.
The underlying decisionmaking process is not at issue before me.
The predecisional deliberations and thought processes of the
State's and HCFA's decisionmakers are not relevant to my decision
in this case because it has nothing to do with the issue of whether
the Riverside Office meets the regulatory definition of a branch.
I must decide this case on its merits, not in terms of whether HCFA
properly followed its own internal procedures in making its
determination to certify the Riverside Office as a subunit. In
accordance with my June 2, 1995 ruling, Petitioner's criticisms of
procedures followed by the State and HCFA relating to the survey
process are not relevant to the issue at hand.
Moreover, even if Petitioner's arguments were relevant,
there is nothing in HCFA's regulations or Manual which prohibits
HCFA from conducting a direct survey of a nonparent office for the
purpose of determining whether the nonparent office qualifies to be
certified as a branch or a subunit. 14/ However, assuming arguendo
that HCFA disregarded its own guidelines by failing to make
adequate findings with respect to the issue of whether the
Riverside Office qualified to be designated as a branch, this
deficiency in the survey process is cured by this hearing.
Petitioner has had ample opportunity in this forum to come forward
with factual information to support its contention that the
Riverside Office met the regulatory definition of a branch. I find
that the preponderance of the evidence adduced by the parties at
this hearing supports HCFA's determination to certify the Riverside
Office as a subunit rather than as a branch.
CONCLUSION
I conclude that HCFA's determination to certify Petitioner's
Riverside Office as a subunit of the parent in Lake Forest was in
accordance with the applicable law at 42 C.F.R. 484.2.
Therefore, I sustain HCFA's determination.
Edward D. Steinman
Ad ministrative Law Judge
1. The difference between a subunit and a branch are set forth in
Part IA of the Analysis.
2. I incorporate the rationale of this ruling in this decision.
3. At the outset of the in-person hearing, Petitioner indicated
that its primary reason for seeking a branch designation for the
Riverside Office was financial. However, Petitioner agreed that I
need not inquire into such motivation as my focus is whether such
designation would impose an adverse impact on patient care and
contravene the regulatory definitions for providers of home health
care services. Tr. at 20 - 21.
4. In addition, Petitioner submitted an exhibit which indicated
that the distance between Lake Forest and Riverside as measured by
a map is 42.5 miles. The caption on this exhibit stated that the
distance was from "Lake Forest to Riverside." The exhibit does not
specify that the distance from Petitioner's office in Lake Forest
to Petitioner's office in Riverside is 42.5 miles. P. Ex. 35.
5. Petitioner argues that, if driving time and distance are
indicators to be considered, the driving time from the parent in
Lake Forest to the nonparent in Riverside is more relevant than the
driving time from the Riverside Office to the Lake Forest Office
since the flow of supervision, administration, and services is from
the parent to the nonparent office. However, sharing of
administration, supervision, and services may occur at any time of
the day in which the home health agency is open. Thus, personnel
from the Lake Forest Office might be required to travel from Lake
Forest to Riverside later in the day when the traffic flow is at
its heaviest. Also, it is conceivable that Petitioner would have
meetings at the Lake Forest Office that involved the Riverside
Office. In such circumstances, personnel from the Riverside Office
would have to travel to the Lake Forest Office. In view of the
fact that sharing of home health agency functions may occur at any
time of the day and could flow in either direction, I do not give
any significance to the direction of the flow of shared functions
and services.
6. Petitioner points out that the number of patients in certain
parts of the geographic region varied. Petitioner asserts that it
had only a few patients in the farthest cities, and that home
health staff was retained locally on a contract basis in these
areas. Petitioner's Posthearing Response Brief at 19. However,
this does not negate Petitioner's obligation to comply with
regulatory requirements that adequate administration, supervision,
and services be available to these patients, and any future
patients, located in these distant areas.
7. Although HCFA establishes its regulatory standards on the
basis of nationwide application, it is obviously cognizant of the
various State requirements for licensing of home health agencies.
Here, the Riverside Office under California licensing procedures
was either to be classified as a parent or branch. Using criteria
similar to the HCFA definitional standards, DHS licensed the
Riverside Office as a parent rather than a branch. Petitioner's
compliance with this designation does not automatically mean that
its Riverside Office could not be a branch under federal law.
Irrespective of the placement of supervisory personnel in
Riverside, the controlling factor is the Lake Forest Office's
ability to share functions with the Riverside Office on a daily
basis to ensure the health and safety of home health patients being
served from the Riverside Office.
8. Ms. Boccia testified that there are separate supervision
requirements for home health aides which require that supervisory
visits be made to patients' homes. However, she testified also
that these supervisory visits are made by a staff nurse assigned to
the patient, and are not performed by supervisors. Tr. at 481.
9. The conditions of participation for a home health agency
providing care through the use of home health aides specifically
mandates that such aides be "closely supervised to ensure their
competence in providing care." 42 C.F.R. 484.36. Moreover,
such conditions require that the home health aides receive
supervisory visits, at least once every 60 days, from a registered
nurse in the home of their patient when the aide is furnishing care
to such patient. Id. at 436.(d)(1). When other types of care
are furnished to a patient by someone other than a registered
nurse, such as skilled nursing or physical, speech or occupational
therapy, more frequent supervisory visits (at least every two
weeks), are required by a registered nurse or skilled therapist.
Id. at 436.(d)(2). A home health agency must provide a
supervisory structure which ensures that its personnel will receive
this level of supervision.
10. Petitioner does not dispute that personnel responsible for
providing nutritional guidance do not meet the qualifications
specified in 42 C.F.R. 484.4. However, Petitioner contends that
"dietary/nutritional guidance visits are not separately billable to
Medicare as are the visits by each category of personnel listed in
484.4." Petitioner's Posthearing Brief at 15. Dietary and
nutritional services are billable as administrative costs by a home
health agency where dieticians or nutritionists are used to provide
overall training or consultative advice to the staff of the home
health agency and incidentally provide dietetic or nutritional
services to beneficiaries in their homes. 42 C.F.R. 409.46(d).
However, visits by such personnel to a home health agency patient's
home are not separately billable under Medicare. Id. It is
conceivable that a home health care agency could provide
nutritional or dietetic advice as part of another covered service.
11. Petitioner contends that the home health agency conditions of
participation do not require a home health agency to cover its
telephone during nonbusiness hours or to furnish services during
nonbusiness hours to meet unexpected patient needs. Petitioner
stated that, at its own initiative, it has established a 24-hour
on-call service, but that this service is provided above and beyond
any regulatory requirement. I agree that the conditions of
participation do not specify the hours of operation for a home
health agency. However, it is evident from the array of medical
services provided in a patient's home that some of these services
would be provided outside the normal office hours of the agency.
In fact, it is conceivable that some seriously ill patients might
require 24-hour skilled nursing or home health aide services. In
such instances, supervisory personnel might need to respond to
problems occurring after business hours. Consequently, Petitioner
should have the capacity to respond to unexpected patient needs
both during and after business hours. Moreover, even if I found
that Petitioner was not required to respond to unexpected patient
needs during nonbusiness hours, Petitioner would still be required
to have the capacity to meet unexpected needs at least during
business hours.
12. Ms. Boccia testified that she hired on-call nurses in Big
Bear City and Lake Arrowhead which were separate from the on-call
nurses hired to serve the vicinity closer to the Riverside Office.
Petitioner points out that "HCFA does not object to the Riverside
office serving Big Bear, even though Big Bear is farther from
Riverside than Riverside is from Lake Forest." Petitioner's Reply
Brief at 4. While it is true that patients in Big Bear City and
Lake Arrowhead are geographically distant from the Riverside
Office, this does not provide justification for certifying the
Riverside Office as a branch rather than a subunit. On the
contrary, the distances between the Riverside Office and these
outlying northern areas supports HCFA's position that services to
these areas cannot be shared with the parent in Lake Forest.
13. This testimony is somewhat confusing since the California DHS
does not certify home health agencies as subunits, only parents and
branches. However, Ms. Boccia clarified her testimony by stating
that, at the time of the Medicare certification survey, Petitioner
believed that the Riverside Office was operating as a subunit. Tr.
at 511 - 513.
14. The guidelines in the Manual cited by Petitioner state:
when conducting a survey of a [home health agency] with branch
offices, ascertain from [home health agency] records whether the
branch offices are provided adequate supervision by the parent
agency and whether they are, in fact, sufficiently close to the
parent agency to be considered branch offices rather than subunits.
If this judgment cannot be made without direct observation, visit
the branch office to make this determination. When reviewing
records and conducting visits to patients' homes, select some
records and schedule some home visits to patients who are served by
a branch office. You may also conduct a standard survey of the
[home health agency] at a branch office.
P. Ex. 15 at 4. I do not read these guidelines to mean that HCFA
is required to survey the parent to determine branch or subunit
status. Instead, the guidelines endorse conducting a standard
survey of the nonparent office. While the guidelines suggest that
visiting the nonparent office might not be necessary if sufficient
information can be obtained from the parent, they do not require
that in all cases parents must be surveyed first.