Gab Decision 173
April 30, 1981 Ohio Department of Public Welfare; Docket Nos.
78-22-OH-HC, 80-30-OH-HC, 80-89-OH-HC Ford, Cecilia; Garrett, Donald
Settle, Norval Panel Chairman
These are three appeals by the Ohio Department of Public Welfare
(Ohio or State) from decisions of the Health Care Financing
Administration (HCFA or Agency) disallowing Federal financial
participation (FFP) in the cost of services to Medicaid recipients by
nursing homes whose provider agreements had not been renewed or had been
terminated. A total of $3,219,951 was involved in the three cases.
Inasmuch as the three appeals concern the same parties, the same issues,
and similar facts, the cases are being considered jointly for purposes
of this decision.
Some details of the appeals follow:
Docket Quarters Date of Amount Da
Number Ended Disallowance Disallowed 78-22
12-31-77 4-7-78 $617,410 5-2 80-30
3-31-77 2-6-80 $2,493,469 3 6-30-77
9-30-77 80-89 12-31-77 4-14-80
$109,072 n1 5-1 through 3-31-79
Issue
These cases concern the circumstances under which FFP is available
subsequent to the nonrenewal or termination of a provider agreement.
The primary issue is whether FFP is available when a facility appeals
the nonrenewal or termination and, pending review, payments are
continued under operation of State law, including judicial order. The
Board here decides that FFP is available to reimburse a State for
court-ordered payments during provider appeals for up to 12 months from
termination or nonrenewal of a provider agreement. The decision is
based on the appeals; HCFA's responses; the records submitted by HCFA;
copies of court orders and related papers submitted by Ohio; the Order
to Show Cause issued October 16, 1980 for these and related appeals;
responses by Ohio and HCFA to that Order; transcripts of informal
conferences held October 9, 1979 and February 11-12, 1981; and briefs
and other materials submitted by HCFA and some of the states attending
the February 1981 conference (referred to hereinafter as the
Conference). /2/
Background
Since 1965, under Title XIX of the Social Security Act (Medicaid),
Congress has made available federal matching funds to states for medical
assistance to eligible individuals. To qualify, a state must have a
plan aproved by the Secretary of the Department of Health, Education,
and Welfare (HEW), now Health and Human Services (HHS), requiring among
other things:
1) such safeguards as may be necessary to assure that care and
services will be provided in a manner consistent with simplicity of
administration and the best interests of the recipients;
2) agreements with persons and institutions providing services
(providers) that they will keep necessary records and furnish
information to the state or the Secretary upon request;
3) periodic inspections (surveys) of skilled nursing and intermediate
care facilities;
4) full and complete reports of the findings resulting from the
inspection;
5) a determination by the state agency responsible for licensing
health institutions to the single state agency administering the plan
whether an inspected facility meets the requirements for participation
in the program (certification); and
6) public disclosure of the findings by the survey agency.
The foregoing is a summary of 42 USC Sec. 1396a(19), (26), (27),
(31), (33), (36) (section 1902(a) of Title XIX).
In implementing the statutory Medicaid requirements, the Secretary
has adopted a regulatory scheme of provider agreements, surveys, and
certifications under approved state plans. For the time in question the
regulations specify that the duration of a provider agreement is
coterminous with the period of certification, and a provider agreement
could not have an effective date earlier than the date of certification.
Under regulations adopted April 29, 1970, provider agreements must be
renewed on a frequency of 12 months or less. In 1974, the regulations
were amended to permit a two month extension where there is written
notice from the state survey agency in advance of the original
expiration date that the extension would not jeopardize the patients'
health and safety and the extension is needed either 1) to prevent
irreparable harm to the facility or hardship to the recipients in the
facility; or 2) because it is impracticable to determine, before the
expiration date, whether the facility meets certification
standards.Federal financial participation would be available for another
30 days after an agreement expires or terminates where the Secretary
determines that there have been reasonable efforts to transfer patients
to another facility or to alternate care. See 42 CFR Secs. 431.107,
441.11, 442.12, 442.15, 442.16 (1978-1980) and previous codifications
generally at 45 CFR Part 249 (1973-1976) and 42 CFR Part 449 (1977). /3/
The nursing homes in these cases had at one time signed provider
agreements with Ohio but at various times prior to the quarters for
which FFP is claimed all of the provider agreements had either 1)
expired and not been renewed; or 2) been terminated or cancelled.
Some facilities sought hearings on the adverse determinations
(provider appeals); some were reinstated. The record does not show if
any were reinstated as a result of a reversal of the State decision
after review. Some withdrew from the program entirely. The State
alleges that pursuant to court orders some facilities continued to
receive payments pending appeal (see Appendix to this decision).
Ohio argues in these cases that it is entitled to FFP because in a
number of instances it was directed to continue payments to the nursing
homes by orders of state and federal courts. In those situations not
covered by court orders either because court orders were not sought or
were not issued until many months after the expiration or termination of
the provider agreement, Ohio argues that it chose not to remove the
Medicaid patients until the facility had had another opportunity to
achieve compliance. Ohio contends that this policy was vindicated by
the number of nursing homes recertified -- allegedly two-thirds of the
overall number. Ohio claims that in a number of instances it could not
find suitable alternative facilities within the 30 days allowed for
transfer or removal and points to the risk of transfer trauma to the
patients as a reason for not wanting to move the patients.
HCFA relies primarily on the absence of any regulation specifically
making FFP available during a provider appeal and contends there are
regulations which prohibit reimbursement to a state for such payments.
As for the effect of the court orders, HCFA argues that where it is not
a party to a court proceeding it is not required to pay FFP outside the
scope of the Medicaid program.
In Delaware Department of Health and Social Services, Decision No.
87, February 29, 1980, this Board dealt with the provider appeals issue.
Delaware did not involve a court order but it does afford some insight
into reasoning applicable here.
In Delaware, the issue was the availability of FFP during the
pendency of an administrative hearing process afforded by the State
under the terms of a provider agreement which had expired and not been
renewed. The Delaware Office of Health Facilities, Licensing, and
Certification determined that the nursing facility had not met
certification standards; a hearing was held some six weeks later, and
four months after that hearing a decision was issued affirming the State
agency action and refusing to renew the facility's participation in the
Medicaid program.
In sustaining the Agency's disallowance, the Board held:
There is no provision in the Social Security Act or Federal
regulations authorizing HEW to make payments to a State because it has
bound itself to make payments to a facility during a fair hearing
process that extends beyond the expiration of a valid provider
agreement. The applicable regulation states that FFP is only available
when the facility in question meets all the requirements of
certification as evidenced by a valid provider agreement; the provider
agreement in this case expired. . . and was not renewed. (Page 6.)
The purpose of the Medicaid program is to ensure that qualified
recipients receive health care in facilities which comply with Federal
and state standards. Its main tool of enforcement is to deny FFP for
facilities which are substandard, whether they are found to be so by the
state or by HEW itself. FFP is not available for a facility with an
expired agreement. (Page 9.)
See also Nebraska Department of Public Welfare, Decision No. 111,
July 16, 1980; and Maryland Department of Health and Mental Hygiene,
Decision No. 124, October 2, 1980.
Discussion
1. Facilities which did not appeal
Ohio concedes that some of the facilities to which it made Medicaid
payments after nonrenewal or termination did not appeal, contending that
the alleged eventual recertification of some of those facilities
vindicates the decision of the State not to stop payments. See initial
appeal documents in 78-22 and 80-30. Even assuming arguendo that the
State could prove that it erroneously decertified a facility, we find
that under the regulations the Agency properly disallowed FFP in
payments to facilities which did not appeal since there is no other
provision for payment of FFP except to a properly certified facility
with a current provider agreement. See 42 CFR Part 442. Ohio's
concerns about patient trauma, conserving Medicaid resources, and
simplicity of administration may be worthwhile policy and equitable
considerations for the Agency to address in an appropriate way, but
consistent with prior decisions of the Board these factors do not
overcome the clear and unequivocal thrust of the regulatory scheme for
payment of FFP. See, e.g., Delaware, supra, pp. 6, 9. Also, in
Maryland, supra, the Board upheld the Department's position that on
balance the "potential physical danger" of leaving patients in a
facility found in violation of Life Safety Code requirements "arguably
outweighs any speculative emotional injury" from transfer trauma.
Accordingly, we uphold those disallowances where the facility did not
appeal its nonrenewal or termination.
2. Provider Appeals
MSA-PRG-11 and Maxwell v. Wyman
This brings us to the main issue -- whether FFP is available pending
a provider appeal. Neither the statute nor the regulations explicitly
address the subject of the availability of FFP during the time when
providers are seeking to obtain administrative or judicial review of
decisions to terminate or not renew their participation in the Medicaid
program. On December 20, 1971, the Commissioner of the Medical Services
Administration (MSA), Social and Rehabilitation Service (predecessor to
HCFA), issued a Program Regulation Guide (PRG) setting out two
exceptions to the rule that FFP is not available where a provider
agreement has expired and not been renewed or has been terminated:
1) (If) State law provides for continued validity of the provider
agreement pending appeal (hereinafter referred to as "Part 1");
2) (If) the facility is upheld on appeal and State law provides for
retroactive reinstatement of the agreement ("Part 2").
PRG-11 (Tab F, Order to Show Cause).
The meaning of "State law" was clarified to include "judicial
action"
in a May 14, 1973 memorandum from Marie Callender, Special Assistant for
Nursing Home Affairs, to the Regional Directors for HEW). Ms. Callender
communicated a decision by the Secretary of HEW that FFP is available
"if State law or judicial action requires that a provider agreement
remain in force during the course of an appeal." Tab G, Order to Show
Cause.
There are two decisions by the United States Court of Appeals for the
Second Circuit which are key to an understanding of PRG-11. In Maxwell
v. Wyman, 458 F.2d 1146 (1972), the court reversed a district court
decision and ordered the New York Department of Social Services (DSS) to
continue reimbursing nursing home proprietors for services to Medicaid
recipients -- even though the homes had been terminated from the
Medicaid program -- until DSS had given the homes a hearing on the
question of whether DSS had properly denied requests by the homes for
Life Safety Code waivers. The court of appeals noted its assumption
that "HEW procedures will have sufficient flexibility to allow the State
to afford appellants hearings if it does so on an accelerated basis."
Id. at 1152.
Following the 1972 decision, the State and HEW entered into a
stipulation that FFP would be continued until a decision based on the
administrative hearing was rendered, but HEW later refused to reimburse
the State for payments made pursuant to the orders of a State court
pending review by that court of the administrative hearing decision. In
a subsequent decision the federal court of appeals held that HEW was
required under PRG-11 to give the same treatment pending judicial review
of an administrative proceeding as it does pending the proceeding itself
"or as it concedes that it would if a nursing home operator was able to
have the administrative determination reversed on appeal." Maxwell v.
Wyman, 478 F. 2d. 1326, 1328 (1973).
Analysis of HCFA's Position
Ohio and the other States litigating these cases before the Board
argue that FFP should be available indefinitely throughout a provider
appeal. State and federal courts have held that in some circumstances a
facility may have a due process right to a pretermination hearing and to
continued payments pending such review but, as the Board indicated in
its Delaware decision, supra, such decisions are not a basis (Page 9):
to require HEW to continue to pay FFP for an unlimited amount of time
while a facility wends its way through an administrative appeals process
that might take years to complete. . .
See also the discussion of 45 CFR Sec. 205.10(b)(3), infra.
HCFA concedes that both parts of PRG-11 continue to govern the
availability of FFP during provider appeals but maintains that under
Part 1 (provider agreement continued in effect pending appeal) FFP is
limited to the duration of 12 months from the execution of the provider
agreement which is terminated or not renewed, plus an additional two
months and/or 30 days if qualifying conditions are met. HCFA
Post-Conference Memorandum, pp. 14, 29; 42 CFR Secs. 442.15, 442.16.
On the other hand, HCFA argues that under Part 2 (facility prevails and
provider agreement retroactive to date of erroneous determination) FFP
is available for the 12 month period following the nonrenewal or
termination of the provider agreement or until there is a determination
on the findings of the next survey, whichever comes first. The
availability of FFP beyond 12 months appears to be conditioned on a
state's performing surveys and making certification decisions annually.
HCFA Post-Conference Memorandum, pp. 18-19; Conference Transcript, pp.
334-335.
For reasons stated below, we conclude that Part 1 of PRG-11 is
limited by statutory and regulatory provisions which make FFP available
for no more than a period of 12 months following nonrenewal or
termination or until the next survey/certification cycle has been
completed, whichever comes first. This limitation was in effect at the
time PRG-11 was issued and has remained in effect ever since. We
further conclude that the limitation which HCFA wishes to impose on Part
1 of PRG-11 (12 months from execution of the provider agreement) is not
a necessary interpretation of its 1974 two-month-extension regulations
and has never been expressly adopted by the Agency as a limitation
affecting FFP during provider appeals.
We find that the purpose of re-executing provider agreements on a
frequency of 12 months or less is not to give new life to a perennial
record-keeping requirement, but to reinforce the pattern of surveying
facilities at least once a year. The survey requirement predates and
necessarily limits PRG-11.As HCFA correctly observed in its
Post-Conference Memorandum (p. 18):
The point . . . is not that the state must certify, but that it must
make certification decisions annually, based on proper surveys.
(Emphasis added.)
The Marie Callender memorandum to HEW Regional Directors in May 1973,
supra, reaffirmed the Secretary's intent that FFP generally should be
available during provider appeals. The significance of this memorandum
is heightened by an unsuccessful attempt by the Commissioner of the
Medical Services Administration in September 1972 to limit Part 1 of
PRG-11 to FFP only during administrative review. This attempt was
deterred by the May 17, 1973 decision of the Second Circuit in Maxwell
v. Wyman, 478 F.2d. at 1328. Against this backdrop, we must examine the
absence of any reference to provider appeals in the July 1973 Notice of
Proposed Rulemaking or in the Preamble to the January 1974 final
regulations adding the two month extension. 38 Fed. Reg. 18616, 39 Fed.
Reg. 2254.
HCFA bases its limitation on Part 1 of PRG-11 -- that pertaining to
the availability of FFP where payments are continued pursuant to state
law -- on the 1974 regulations allowing a two month extension for
provider compliance. 39 Fed. Reg. 2254, now 42 CFR Sec. 442.16. These
amendments are sufficiently ambiguous that they may be interpreted to
apply where there is a provider appeal; but in the absence of a showing
that they were intended at least in part to apply to limit FFP during a
provider appeal, we do not find that the very specific rule of PRG-11 on
FFP during provider appeals was nullified. See also our discussion on
repeal by implication, infra.
HCFA admits in its Post-Conference Memorandum (p. 30) that the
"degree to which they perceived PRG-11 as a problem is not clear
"(referring to the persons responsible for the 1973 and 1974
regulations). Moreover, the (then) Board Chair noted in the decision in
Delaware, supra, that a Regional Attorney for HEW advised Delaware on
December 24, 1975: PRG-11 is "the present policy of the Department."
(Page 4). The Board found that PRG-11 did not apply in the Delaware
case because the State had not found any "statutory or case reference
which would provide for the continued validity of the provider agreement
pending appeal." Page 8).
Despite HCFA's insistence in these cases and in court litigation /4/
that there is the aforesaid limit of 12 months from the inception of a
provider agreement even where a provider appeal is pending, HCFA was not
able to produce a single agency issuance (external to these
disallowances) to support this position. An attempt to develop a
memorandum setting forth the Agency position in March 1980 did not get
beyond the draft stage. See February 23, 1981, Submission of Documents
by HCFA.
We also find it significant that on February 15, 1979, the
Administrator of HCFA, in a statement approved by the Secretary,
described a regulatory provision proposing to make FFP available for
some provider appeals as being intended "to clarify the point at which
Federal funding of Medicaid payments would cease for a facility that had
been terminated from the Medicaid program." 44 Fed. Reg. 9749.n5 If, as
HCFA argues in these appeals, the 1974 regulations resolved the issue by
setting an absolute outside limit, no clarification would have been
necessary. On the other hand, reference to the need for clarification
would be appropriate in the context of a still-valid PRG-11 since the
latter is only an interpretation of the statute and regulations.
Effect of other regulations on PRG-11
This brings us to the question of what effect, it any, other
regulations have on PRG-11 -- namely 45 CFR Sec. 205.10(b)(3) and 42 CFR
Sec. 442.30. In the October 16, 1980 Order to Show Cause (at p. 19)
the Board indicated that 45 CFR Sec. 205.10(b)(3) might be a basis for
holding that FFP is available during a provider appeal, where a state
has been ordered by a court to continue payments. The subsection makes
FFP available for:
Payments of assistance within the scope of Federally aided public
assistance programs made in accordance with a court order.
Both Ohio and HCFA agree that subsection 205.10(b)(3) is relevant to
this issue, but differ as to the meaning of the key phrase "within the
scope."
Ohio contends that the disputed phrase means "that when a court
orders payment in the Medicaid program it must be for a covered service
to an eligible recipient (eligible but for the matter at issue)." As a
result Ohio concludes that FFP is available indefinitely during a
provider appeal as long as the court order remains in effect. March 26,
1979 Memorandum of State in Response to HEW "Brief", in Docket No.
78-22-OH-HC, p. 3; March 6, 1980 Request for Reconsideration in Docket
No. 80-30-OH-HC, p. 5; see also submission by Ohio dated May 30, 1980
in Docket No. 80-89-OH-HC.
HCFA argues that "within the scope" means that FFP is available
only
for payments made during a period of 12 months from the execution of a
provider agreement, plus the two month extension and 30 days for removal
or transfer, where applicable. HCFA contends that by implication PRG-11
was repealed by the adoption of subsection 205.10( b)(3) in 1973 and two
other sets of regulations in 1974 -- the "look-behind" provisions
(42
CFR Sec. 442.30), and the previously discussed two month extension rule.
Post-Conference Memorandum, pp. 7, 9-13, 41.
We find persuasive elements in the arguments of both parties. To the
extent that provider appeals are involved, we agree with Ohio that
subsection 205.10(b)(3) authorizes FFP for court-ordered payments for
services to Medicaid recipients by providers who are seeking review of
the State's action refusing to renew, or terminating, their
participation in the program. We also agree with HCFA that "within the
scope" was intended to, and does set limits on the availability of FFP
pursuant to the court's order in such situations. But these limits are
drawn from regulatory requirements which are not the subject of the
court's order (as opposed to those which may be affected), as HCFA
itself observed on the occasion of a recent non-substantive
recodification of this regulation:
The provision contained in 45 CFR 205.10(b)(3) was especially
important since it restricted FFP to Medicaid services under the scope
of the Federal program. For example, even when there is a court order
against a State to provide services beyond the limits of the program,
FFP is not available when there are other regulatory provisions which
impose limitations (such as separate time limits or limitations on types
of services) upon the receipt of Federal funds. (Emphasis added.)
45 Fed. Reg. 24878 (April 11, 1980).
In the instance of a provider appeal, the State's action would have
denied the facility the provider agreement needed for participation in
the Medicaid program. The court order overcomes the limiting effect of
that action but does not overcome other limits. If the State had made a
new agreement with the facility, we assume that the new term could not
have been longer than 12 months from that date because of other
regulations calling for the annual survey/certification cycle. In
ordering continued payments under the court-revived old agreement, the
court could not give that agreement greater effect than if the State had
approved the facility and made a new agreement. The "within the scope"
language thus limits FFP in court-ordered payments to a period of 12
months or completion of the next survey certification cycle, whichever
is sooner.
For the same reasons advanced in our discussion of PRG-11, infra, we
find that the 1974 regulations are not the critical limiting factor in
determining what is within the scope of the program. Similarly, we are
not persuaded that the look-behind regulations were intended to, or do,
affect the "within the scope" rule. To the contrary, the condition
for
invoking the look-behind authority is that a state has certified or
issued a provider agreement in disregard of program requirements. Here
the State has refused those incidents of participation. The court order
is merely to preserve the status quo pending review and does not pretend
that the provider is in compliance.n6
Repeal by implication
HCFA effectively concedes that the 1973 and 1974 regulatory
provisions discussed above do not specifically nullify Part 1 of PRG-11
but argues rather that they repeal it by implication. Post-Conference
Memorandum, p. 14. HCFA's position is that there is "clear and positive
conflict" between PRG-11 and the above mentioned regulations and thus
PRG-11 must necessarily give way to them.
HCFA's reference to this rule of statutory construction may be
misguided, however. In discussing the rule, the Supreme Court has
noted:
It is not sufficient to establish that subsequent laws cover some or
even all of the cases provided for by (the prior act); for they may be
merely affirmative, or cumulative, or auxiliary.
Wood v. United States, 16 Pet. 342, 362 (1842). The Court has also
stressed that "the intention of the legislature to repeal 'must be clear
and manifest.'" Morton v. Mancari, 471 U.S. 535, 551 (1974), citing
United States v. Borden Co., 308 U.S. 188, 198 (1939).
Applying this reasoning to the regulations in question, we do not
find a "clear and manifest" intent to repeal PRG-11. We agree with
HCFA's characterization:
In this case, the problems pertaining to FFP with respect to
unqualified providers were dealt with by a progression of regulations
addressed to different aspects of the problem.
Post-Conference Memorandum, p. 30.
We think that the events of 1973 and 1974, as HCFA itself describes
them, do not meet the standard enunciated by the Supreme Court for
repealing Part 1 of PRG-11. As we understand PRG-11, there is no clear
and positive conflict between that interpretive ruling and the
regulations cited by HCFA. See our discussion of PRG-11, supra.
3. Summary of Our Holding
The following summarizes what we have decided on the issue of FFP
pending a provider appeal:
1. The interpretation of the statutory and regulatory requirements
affecting the availability of FFP expressed in PRG-11 remains in effect
and no part of it has been nullified, repealed, or amended by subsequent
regulations or official Agency guidance materials.
2. Pursuant to PRG-11 and 45 CFR Sec. 205.10(b)(3), FFP is available
in the cost of covered services to Medicaid recipients in nursing homes
with provider agreements that have been terminated or have not been
renewed, where a facility appeals the adverse determination and a state
or federal court orders the state to continue payments because of that
appeal, thereby effectively continuing the provider agreement.
3. The Agency is authorized to reimburse a state the federal
matching share if the facility is not upheld on appeal, but the period
of reimbursable services may not exceed 12 months from the termination
or nonrenewal determination; except that if within the aforesaid 12
months a state surveys the facility and makes a new determination on
certification, FFP may not be available beyond the date of that
determination if the only basis for FFP would be the pendency of the
court order and the provider appeal.
4. Application of this Decision
This brings us, then, to the application of the Board's decision.
In its October 16, 1980 Order to Show Cause the Board tentatively
found in Docket No. 78-22-OH-HC that an unspecified number of the
facilities involved appealed their loss of certification, and in some
instances courts ordered Ohio to continue payments to the facilities
pending appeal.Order, p. 8. In Docket No. 80-30-OH-HC the Board
tentatively found that an unspecified number of the facilities involved
appealed their loss of certification, and in 21 instances Ohio had been
ordered by courts to continue payments pending appeal. Ibid., pp. 8-9.
In Docket No. 80-89-OH-HC, the Board tentatively found that both
facilities involved had obtained court orders continuing payments by the
State pending review of their loss of certification. Ibid., p. 9.
In its January 16, 1981 Response to the Order, HCFA asserted that it
was reserving until after the Board's ruling on the legal issues HCFA's
statement of its position on the application of that decision to each
case. Response, p. 2. HCFA recited its "understanding that the Board
is going to rule on the legal issues and then separately apply them to
each case," suggesting that the Board issue post-decision orders to
apply its ruling to each case.
In its January 16, 1981 Response to the Order, Ohio reserved the
right to provide documentation on the outcome of the provider appeals
after the Board's ruling on the law. Response, p. 3.
In deference to the parties, we will not make findings on the
particular facts regarding each facility, nor will we invite the parties
to comment on or add to the exhibits and other documentation in the
record. Now that a decision on the legal issues has been rendered, the
parties can promptly and fairly work out between themselves the
implementation of that decision. If the parties are not able to work
out their differences or there is undue delay by the Agency, the State
may return to the Board.
By way of guidance to the parties, we have made tentative findings
about the material in the record and those are set out in an Appendix to
this decision. We have included court orders obtained before or shortly
after the nonrenewal or termination, unless the order specifically
referred to the pendency of an appeal. We have also included court
orders that either enjoined the State not to transfer or remove the
patients or directed the State to continue payments, but not orders
intended merely to give the facility more time to achieve compliance.
Ohio has submitted copies of court orders directing continued
payments to nursing homes involved in all three Board appeals. In
Docket No. 80-30-OH-HC, which Ohio alleges dealt with totals of 32, 69,
and 68 nursing homes in consecutive quarters ended March 31, and June
30, and September 30, 1977, Ohio submitted copies of court orders
pertaining to 20 facilities.n1 See letter dated May 1, 1980, and
enclosed exhibits.n2 In its May 1 letter Ohio indicated it would submit
additional court orders, but in a subsequent letter dated June 2, 1980
it withdrew that offer on the grounds that the other orders were issued
after September 30, 1977.
In Docket No. 78-22-OH-HC, where 52 nursing homes are involved in the
quarter ended December 31, 1977, Ohio submitted copies of court orders
pertaining to an additional 12 facilities and cross-referenced its May
1, 1980 submission in Docket No. 80-30-OH-HC in support of the remaining
16 facilities listed. See letter dated January 16, 1981, and enclosed
exhibits.n3
In Docket No. 80-89-OH-HC, copies of the court orders pertaining to
the two facilities involved in that case were enclosed with the Ohio
letter dated May 30, 1980, and may also be found in the administrative
record filed by HCFA on August 12, 1980.
By way of guidance and not as a mandate, then, the Board makes the
following tentative findings about the exhibits and other data furnished
by Ohio:
1) Docket No. 78-22-OH-HC and 80-30-OH-HC, we found the documentation
with respect to the following ten facilities would probably meet the
standard set out in our holding:
Docket Quarter(s) Exhibit No.
Facility No. Ended Court(s) (Co) C
1. Carson 80-30 3-31-77 1-l 77CV
Convalescent Franklin 3 Center*
2. Danridge 80-30 9-30-77 1-c 77CV
Nursing Mahoning Home 3.
Little 80-30 3-31-77 1-c 77CV
Forest 6-30-77 Mahoning Medical
Center* 4. Marshall 78-22 3-31-77 to 1-f
77CV Nursingf 80-30 12-31-77 Franklin Home 5.
Mary 78-22 3-31-77 to 1-g & Fletcher
80-30 12-31-77 Columbiana 77CI 6. Health Care Center
No. 1* & No. 2* 7. Mayfair 80-30 6-30-77 1-i
77CV Nursing Franklin Center No.
2 8. Sarah's 78-22 3-31-77 to 1-m
77CI Rest 80-30 12-31-77 Knox Haven* 9.
Sturges 78-22 3-31-77 to 1-0 7731
Conva- 80 30 12-31-77 Richland lescent* 10.
Wright 78-22 12-31-77 A-m A770
Hamilton
In the other instances we found that there was insufficient
connection between the court order and the appeal, if any, from the
nonrenewal or termination of the provider agreement -- usually accented
by the length of time between the latter and the filing of the court
action. We note that six of the ten facilities listed -- those six with
an asterisk -- we reinstated in the program.Four of these reinstatements
came less than 12 months after termination.
2) In Docket No. 80-89-OH-HC, the record indicates that Ohio
continued on its own to make payments to the Lincoln Avenue Home for the
Aged for the service period from June 1, 197m to November 30, 1977. A
temporary restraining order (TRO) issued January 9, 1978 directed Ohio
to pay for services rendered on December 1, 1978, reflects his intention
to issue a preliminary injunction. Although separated by some months
from the actual termination date, these orders are linked to the
December 27, 1977 notification by Ohio that payments were to be stopped
as of November 30.
The Tepper Nursing Home appears to be covered by both federal and
State court orders. HCFA has already withdrawn the part covered by the
federal court order after September 27, 1978, but there may be some
question that the order against HEW extends back to the coverage of the
August 14, 1978 order against Ohio. In any event, the State court
orders commencing February 6, 1978 precede termination. Also, inasmuch
as the State court orders possibly extend to September 11, 1978, they
very likely provide any overlap needed. We also note that the patients
were removed and the nursing home closed less than 12 months after
termination. /1/ At the time that Ohio filed its appeal, it complained
that HCFA had not honored a federal court order directing HEW to
reimburse Ohio for payments to Tepper Nursing Home. The Board called
this to the attention of HCFA, and HCFA withdrew $6,772 of the
disallowance, reducing it to $102,300. /2/ The Board invited to
the Conference Ohio and 11 other States -- Colorado, Georgia, Illinois,
Louisiana, Michigan, Minnesota, Missouri, Nebraska, New York,
Pennsylvania, and Wisconsin. These 12 states had 50 cases pending
before the Board with provider appeal issues common to disallowances
totalling approximately $20 million and involving over 300 facilities.
Ohio attended only the October 1979 conference (which dealt with those
same issues), but was sent transcripts of and given an opportunity to
comment on both conferences. /3/ Hereinafter when we refer to
the term of a provider agreement, we include per se the possibility of
the two month extension and the 30 days additional FFP, where
applicable, even though we may not always mention those provisions. /4/
See e.g., the Willging Affidavit, Attachment D, Order to Show
Cause issued October 16, 1980. This affidavit was executed by Paul R.
Willging, then Acting Deputy Director, Medicaid Bureau, HCFA, and filed
in federal court in July 1978 (Creasy v. HEW, Civil Action No. C-2-78-21
(S.D. Ohio)). In his affidavit Dr. Willging asserts: In tailoring its
practice to correspond to the decision in Maxwell v. Wyman, 478 F. 2d
1326 (2d Cir. 1973), HEW has followed a policy of reimbursing State
welfare agencies for Medicaid payments made to providers which the State
has decertified or failed to renew when the State agenxcy has been
ordered by a court to continue payments to the facility pending appeal
of the decertification or non-renewal. It has been HEW's policy to
continue such payments to the State agency where the effect of the
injunction against the State has been to extend the term of the provider
agreement but in no event are payments to extend beyond twelve months
past the execution of the provider agreement which is the maximum period
permitted by federal regulations without another survey and
certification. We note that Dr. Willging refers not to the 1974
regulations, but to the 1973 Maxwell v. Wyman, decision, supra, which,
as we have seen, was centered on Part 1 of PRG-11. We think that Dr.
Willging misrepresents the Maxwell ruling (by implying that limiting FFP
to a maximum of 12 months past the execution of the provider agreement
is a practice corresponding to the Maxwell decision), but the
significance of his reference to Maxwell -- and, inferentially, Part 1
of PRG-11 -- as though it were still viable further discredits the
argument that HCFA has looked elsewhere for the rule since 1974. If the
1974 regulations had indeed superseded PRG-11, Maxwell would not have
been applicable at the time of the affidavit -- a position which HCFA
continues to espouse in its responses to the appeals in each of these
cases. /5/ The provision was part of a January 1977 Notice of
Proposed Rulemaking which indicated that if the provision was adopted:
Federal financial participation will not be available as of the
effective date of a survey agency certification expiration or
cancellation or in the absence, for any other reason, of a valid
provider agreement. If the decision in either hearing and appeal
proceedings is in the provider's favor, FFP would be available
retroactively to the effective date of a valid provider agreement . . .
The basis given for the proposed regulations was the Secretary of HEW's
determination that: Federal payments should not be made in the absence
of a valid and in-force provider agreement, and that facilities are
entitled to a reasonable opportunity for review of adverse actions. 42
Fed. Reg. 3665, 3666. On February 15, 1979, the final regulation
requiring the availability of appeals proceedings was announced. Final
rules on "the Federal financial participation questions" were withheld
because "these issues were not adequately addressed in the Notice."
44
Fed. Reg. 9749. /6/ In December 1980, Congress passed and the
President signed Public Law 96-499, the Omnibus Reconciliation Act of
1980. Section 916 of this Act may be read to authorize the continuation
of FFP for up to 12 months during review of a determination that because
of deficiencies a facility no longer substantially meets the standards
for participation in Medicaid. If the deficiencies immediately
jeopardize the health and safety of the patients, FFP is not available
for new patients admitted after a specified date. HCFA attached to its
Post-Conference Memorandum the affidavit of Jeffrey Merrill, who was
Director of the Office of Legislation and Policy for HCFA during the
time that Section 916 of P. L. 96-499 was being developed. In
pertinent part, the Merrill affidavit concludes: There was definitely
no intent, nor do I believe that the legislation does change the
existing rules with respect to the availability of Federal funding
during an appeals process.We had no intention to require such funding
throughout a provider's appeal at either the administrative or judicial
level. (Emphasis added.) HCFA Post-Conference Memorandum, pp. 26-27 and
Attachment 1. Inasmuch as these disallowances precede P.L. 96-499, that
Act would not apply to them, nor do we mean to suggest here how it might
be interpreted in other cases. However, Mr. Merrill's characterization
of existing rules as not requiring FFP throughout a provider's appeal is
in apparent harmony with our holding that FFP is not available in
court-ordered payments for longer than 12 months. /1/ The
administrative record filed with the Board on April 10, 1981, contains
listings by HCFA for the quarters ended March 31 (Record, Tab 2) and
June 30 (Record, Tab 5), but not for September 30, 1977. The HCFA lists
support the Ohio figures for the two quarters, except that the June 30
list includes Annie Green's Christian Home for the Aged, which was
removed from the list prior to the Administrator's February 6, 1980
decision -- thus reducing that total to 68. Some of the same facilities
appear in listings for two or three of these quarters and for the
quarter ended December 31, 1977 involved in Docket No. 78-22-OH-HC.
/2/ The Ohio letter lists a Royal Haven which is represented as being
the subject of a court order to be found in Exhibit 1-L. No court order
or any other papers in 1-L or the other exhibits mention Royal Haven.
There was a motion for a temporary restraining order for Mary Grove
Nursing Home, but no court order in Exhibit 1-H or the other exhibits.
/3/ There was no court order for Ro-Ker in Exhibit A-j or the other
exhibits. Sturges Convalescent (Exhibit 1-o, Docket No. 80-30-OH-HC)
was on the two lists supplies by HCFA in Docket No. 80-30-OH-HC, but not
on the list attached to the April 7, 1978 decision of the Acting
Director of the Medicaid Bureau in Docket No. 78-22-OH-HC.
OCTOBER 04, 1983