GAB Decision 098
May 8, 1980 New Jersey Department of Human Services; Docket No.
78-54-NJ-HC, 79-14-NJ-HC Przybylinski, Donald; Woodruff, Robert
Dell'Acqua, Frank
The New Jersey Department of Human Services requested reconsideration
pursuant to 45 CFR Part 16, Subpart C (1978), of two disallowances of
Federal financial participation (FFP) claimed under Title XIX of the
Social Security Act for inpatient psychiatric services to individuals
under age 21 provided by Mount Carmel Guild Hospital. The two cases
have been considered jointly without objection by the parties. The sole
issue presented is whether the FFP in question, totalling $42,188, was
properly disallowed on the ground that, at the time the services were
provided, Mount Carmel Guild Hospital was not accredited by the Joint
Commission on Accreditation of Hospitals (JCAH). There are no material
facts in dispute and it does not appear as though an informal conference
would be helpful. Accordingly, we have determined to proceed to
decision based on the written record and briefs. For the reasons stated
below, we conclude that the disallowances should be upheld.
Background
The Social Security Act Amendments of 1972, Public Law 92-603,
Section 299B, authorized FFP in inpatient psychiatric services for
individuals under age 21. These amendments redefined "medical
assistance" to include payment of part or all of the cost of such
services, Section 1905(a)(16) of the Act, and further provided that --
"inpatient psychiatric hospital services for individuals under age
21" includes only-- (A) inpatient services which are provided in an
institution which is accredited as a psychiatric hospital by the Joint
Commission on Accreditation of Hospitals; . . . . Section 1905(h)(1)
The HEW regulation implementing this statutory provision provided
that FFP was available for these psychiatric services only on the
condiition that "(such) services are provided by an institution which is
a psychiatric facility accredited by the Joint Commission on
Accreditation of Hospitals." 45 CFR 249.10(b)(16)(ii)(1976); 41 FR
2198, January 14, 1976. Although this regulation did not take effect
until after the start of the first quarter in question here, the
regulation merely restates the statutory requirement of JCAH
accreditation, differing only by a liberal interpretation of the term
"hospital" to include other kinds of facilities. This regulation was
amended in 1978 to expand the interpretaton of the term "hospital"
still
further by providing that FFP is available for services "provided by a
psychiatric facility or by an inpatient program within such a facility,
either of which is accredited by the Joint Commission on Accreditation
of Hospitals." 43 FR 7986, February 27, 1978. (See, also,
recodification at 43 FR 45176, September 29, 1978, 42 CFR 441.151.)
On December 6, 1973, the State entered into an agreement with Mount
Carmel Guild Hospital for provision of inpatient and outpatient
services. Based on this agreement, the State claimed FFP for inpatient
psychiatric services provided by the hospital to individuals under age
21. An initial disallowance of $10,302 in FFP claimed for calendar year
1976 was made by the Region Commissioner, Social and Rehabilitation
Services (SRS), Regional II, reconsidered pursuant to 45 CFR 201.14, and
upheld by the Administrator, Health Care Financing Administration
(HCFA), on May 10, 1978. The State then elected, as permitted by the
transfer of functions of March 6, 1978 (43 FR 9266-67), to have the HCFA
disallowance reviewed by the Board under 45 CFR Part 16, Subpart C
(1978). (Docket No. 78-54-NJ-HC.) A subsequent disallowance on January
16, 1979, by the Director, Medicaid Bureau, HCFA, of $31,886 claimed for
services provided by the hospital during calendar years 1974, 1975, and
1977, was also appealed to the Board. (Docket No. 79-14-NJ-HC.)
The basis stated for the disallowances was that, during the time
period in question, Mount Carmel Guild Hospital did not have JCAH
accreditation. The State does not dispute this and has further stated
that the particular program providing the services was not accredited.
Apparently, in September 1977, the hospital did seek JCAH accreditation
as a Community Mental Health Center, and this was delayed since
standards had not yet been developed. There has been no showing,
however, that the hospital could not have sought accreditation as a
psychiatric hospital or for its program for inpatient psychiatric
services for individuals under age 21, either in 1977 or at an earlier
date.
During reconsideration proceedings prior to the Administrator's
decision and in the application for review in Docket No. 78-54-NJ-HC,
the State's principal argument was that the disallowance of FFP on the
basis that the Mount Carmel Guild Hospital was not JCAH accredited is a
"semantic, rigid interpretation" of the statutory requirement, in
conflict with the legislative intent. The State asserted that the
purpose of the provision was simply to insure the quality of the care
provided to eligible individuals and pointed out that the adequacy of
the care provided by Mount Carmel had not been questioned and that, in
fact, the State did receive FFP for services provided by the hospital to
individuals over age 65. An Order to Show Cause issued by the Board
Chairman stated that apparently Congress had chosen a specific method of
insuring the quality of care provided to individuals under age 21 --
JCAH accreditation. The Order further stated that the provision
appeared to be unambiguous in this respect and that, in addition, the
legislative history of the section supports the Agency's regulatory
interpretation in that the Senate Report speaks of "care . . . provided
in an accredited medical institution." S. REP. 92-1230, 92d Cong., 2d
Sess. 57 (1972).
Based on these tentative conclusions, the Order directed the State to
show cause why the disallowance should not be upheld on the ground that
the applicable statute and regulations unambiguously require that FFP is
available only for services provided in a JCAH accredited institution.
In response to the Order, the State has argued that the FFP claimed here
is allowable because delegation of authority to JCAH to approve
facilities for Federal funding would be an unconstitutional delegation
of authority to a private party and the statute should be read as
requiring JCAH accreditation "or the equivalent."
In support of its position that the delegation of authority to JCAH
is unconstitutuional, the State has submitted an elaborate brief, citing
numerous cases and law review articles. The issue appears to be
complex, with some support for the position that such delegation is not
unconstitutuional where the private party is an independent,
professional body guided not by self-interest but by extrinsic
standards. See, Freedman, Delegation of Power and Institutional
Competence, 43 U. CHI. L. REV. 307, 333 (1976). We do not, however,
reach this issue, since we have determined that, even if we were
convinced as to the merit of the State's argument, it would not afford a
proper basis for reversal of the disallowances here.
Discussion
The disallowances appealed arise from the fact that Mount Carmel
Guild Hospital did not, during the time period in question, have JCAH
accreditation nor had it sought the appropriate JCAH accreditation.
Mount Carmel does not claim that it was prejudiced by the accreditation
requirement and, to the contrary, a hospital representative has stated a
belief that, had the accreditation been sought, it would have been
obtained. (Affidavit of Dr. Nancy Monti, Exhibit 12a to State's
Response to Order.) Although the relevant provider agreement clearly
indicated that the hospital did not have JCAH accreditation, the State
has submitted no evidence that it either questioned the accreditation
status or other qualifications of the hospital or sought clarification
from HEW with respect to interpretation of the statutory requirement
before incurring the costs for which FFP is claimed. If the State is
injured through denial of FFP under these circumstances, it appears that
that injury results from the State's own failures rather than from any
prejudice it suffers because JCAH is a private body, and the State's
constitutional argument should not be allowed to obscure that fact.
The State contends that, in light of the legislative history of
sections of Public Law 92-603 relating to Medicare, the State was
reasonable in reading Section 1905(h)(1), the statutory provision with
respect to inpatient psychiatric services for individuals under age 21,
as requiring "JCAH accreditation or the equivalent." First, we find
the
legislative history of the Medicare provisions unpersuasive in light of
the unambiguous language of Section 1905(h)(1) and its specific history,
cited above, which refers to "accredited medical institution." Moreover,
the Medicare provision requires JCAH accreditation or that "requirements
equivalent to such accreditation requirements as determined by the
Secretary" be met. Section 1861(f) of the Act. The Agency,
interpreting the Medicaid section more narrowly, has never determined
any such "equivalent requirements." Thus, even if we were to agree
with
the State on the constitutional issue and interpret the statute to read
as the Medicare provision does, we would be unable to find that Mount
Carmel met applicable requirements. Mount Carmel may have met
certification requirements for provision of services to individuals over
age 65, but we are not prepared to say that those requirements are
equivalent to what the applicable requirements might have been had the
Secretary made a determination with respect to services to individuals
under age 21.
HCFA has taken the position in this appeal that "a regulation that
construed the term 'JCAH accreditation' to mean 'JCAH accreditation or
its equivalent' would be inconsistent with Section 1905(h)(1) of the
Act." (Respondent's Supplemental Motion to Affirm Determination of the
Administrator, p. 2.) Even assuming, however, that HCFA could have
adopted a broader reading, of the statute, the fact is that HCFA has not
done so, either in its regulation or in response to this appeal. HCFA's
interpretation is clearly not in conflict with the statute.
The State makes much of the point that there has been no question
raised as to the quality of care provided by Mount Carmel Guild
Hospital. FFP can not be provided on this basis, however. Requirements
such as JCAH accreditation are a substitute for the administratively
unfeasible alternative of an after-the-fact, case-by-case determination
that quality care was indeed provided.
Conclusion
For the foregoing reasons, we conclude that these disallowances
should be upheld.
OCTOBER 04, 1983