GAB Decision 388
February 28, 1983 Ohio Department of Public Welfare; Docket No.
82-133-OH-HC Ford, Cecilia; Garrett, Donald Teitz, Alexander
The Ohio Department of Public Welfare (ODPW, State) appealed a
disallowance of $46,497 by the Health Care Financing Administration
(HCFA, Agency). The $46,497 represented federal financial participation
(FFP), claimed under Title XIX of the Social Security Act, in payments
to the New London Hospital for services to Medicaid recipients from
March 18, 1980 through July 22, 1980.
Background
Title XIX of the Social Security Act and implementing regulations
authorizes FFP in payments for inpatient and outpatient hospital
services to Medicaid recipients by an approved hospital provider. 42
U.S.C. 1396d(a)(1), (2), (3); 42 CFR Part 440 (1979). To be approved,
a hosital not only has to be "licensed or formally approved as a
hospital by an officially designated authority for State
standardsetting," but also has to meet the requirements for
participation in Medicare. 41 CFR 440.10, 440.20. Medicare is a
program of federal health insurance for the aged and disabled under
Title XVIII of the Social Security Act.
On January 11, 1980, HCFA notified the New London Hospital that the
facility no longer met the requirements as a hospital provider in the
Medicare program and would be terminated February 15, 1980. HCFA also
notified ODPW, and on February 7, 1980, ODPW notified the facility that
it would be terminated from the Medicaid program. Under 42 CFR 441.11,
FFP in payment for services to Medicaid recipients may be continued for
no more than 30 days from the termination of the facility from the
Medicare program.
The New London Hospital obtained a federal court order (February 1,
1980) against the Secretary of the Department of Health, Education, and
Welfare (HEW) (now Health and Human (2) Services) and a State court
order (February 12, 1980) against the State directing the continuation
of payments to the facility. The federal court dismissed the facility's
complaint on March 17, 1980, terminating the order against HEW. /1/
The State Court dissolved its order on March 24, 1980, but
immediately the Court of Appeals for Franklin County, Ohio, issued an
injunction pending appeal. The Court of Appeals affirmed the lower
court's decision in favor of the State, and on July 22, 1980, ODPW
terminated the facility as a Medicaid provider.
As Provided by the Medicare regulations, the facility's termination
was reviewed by an administrative law judge (ALJ). 42 CFR 489.53(c).
On November 13, 1980, the ALJ upheld the termination.
The issue is whether the State was entitled to FFP in payments made
pursuant to the State court orders obtained by a hospital seeking
judicial review of its termination as a Medicaid provider, where the
hospital was also terminated as a Medicare provider and that action
mandated the Medicaid termination. We find that the State was entitled
to FFP and reverse the disallowance.
Discussion
The State argued that the Board's decision in New York Department of
Social Services, Decision No. 181, May 29, 1981, is a precedent under
which the State was entitled to FFP here. In New York, the Kings Harbor
Care Center (Kings Care), a skilled nursing facility (SNF), was
terminated from the Medicare and Medicaid programs. As here,
termination of the facility from the Medicare program mandated
termination from the Medicaid program. Kings Care brought court actions
in both federal and state courts to obtain review of its termination and
New York was ordered to continue Medicaid (3) payments pending that
review (provider appeal). The Board held that New York was entitled to
FFP in those payments, pursuant to PRG-11 and 45 CFR 205.10(b)(3). /2/
In the instant appeal, HCFA contended that the State was not entitled
to FFP under 45 CFR 205.10(b)(3) because the services were not "within
the scope" of the Medicaid program. HCFA noted that in Ohio Department
of Public Welfare, Decision No. 173, April 30, 1981 (Ohio), the Board
held that the limits on court-ordered payments implicit in the phrase
"within the scope" were drawn from regulatory requirements which were
not the subject of the court's order. Ohio, p. 11. HCFA argued that
the court order here could not and did not address the regulations which
required that hospital services be furnished in an institution that
meets the requirements for Medicare participation and thus the services
(and the court-ordered payments for those services) were not "within the
scope" of the Medicaid program and were not eligible for FFP.
HCFA pointed out that in New York, Kings Care obtained a court order
to continue payments pending the outcome of a state administrative
hearing and here Ohio law does not provide a hearing.
HCFA also relied on a preamble to an amendment (42 Fed. Reg. 4125
(January 24, 1977)) permitting FFP for an additional 30 days after
termination of a hospital Medicaid provider, to allow a state an
opportunity to make other arrangements for (4) the care of the Medicaid
recipients using the hospital. 42 CFR 441.11(b)(1) (1980). The
preamble noted that a suggestion was made that "when a hospital appeals
a determination of disqualification, FFP should continue until an
administrative decision is reached." The suggestion was not accepted
because "when an institution or facility is disqualified, the health and
safety of the patients can no longer be assured . . . (in) essence, the
facility or institution has received a final determination of
disqualification."
We find that the court order did overcome the limiting effect of the
State's action terminating the hospital as a Medicaid provider and thus
here, as in New York and Ohio, the State is entitled to FFP in payments
made pursuant to the court order. The basis of the State's action (i.
e. HCFA's termination of the hospital from the Medicare proram) and the
ministerial nature of the State's action do not change the essential
fact that but for the termination by the State, Medicaid payments would
have continued and no court order would have been required. Whether the
"provider appeal" is by virtue of an administrative proceeding (as
in
New York) or judicial review (as here) is not relevant. The situation
of New London Hospital is the same as that of Kings Care SNF and we are
not persuaded that the outcome should be any different. As the Board
held in New York, the application of 45 CFR 205.10(b)(3) does not depend
on whether a court order is tied directly to a Medicaid termination, but
whether the result is that Medicaid reimbursement to the facility would
otherwise cease. Nor is the application barred because the facility is
ultimately unsuccessful in its litigation. New York, p. 6.
HCFA's reliance on the 1977 preamble to the amendment to the hospital
regulations is also misplaced. We find that the express allowance in 45
CFR 205.10(b)(3) of FFP in payments made pursuant to a court order was
not set aside by a discussion in the preamble of an unrelated regulation
dealing with extending FFP throughout administrative review of
decertification. Even if we were to find that the preamble had some
meaning in a situation where the "provider appeal" is by an
administrative proceeding, it would not necessarily apply to a provider
appeal by judicial review, as here.
(5) Based on the foregoing discussion, we reverse the disallowance.
/3/
/1/ The District Court's action was subsequently affirmed by the
United States Court of Appeals for the Sixth Circuit on November 17,
1980. HCFA Exhibit O. /2/ PRG-11 is a 1970 Program Regulation
guide which interpreted the Social Security Act and implementing
regulations to entitle a state to FFP during a provider appeal where
state law (later clarified to include judicial action) provides for
continued validity of the provider agreement pending the appeal. The
Board has applied PRG-11 in previous cases involving SNF and ICF
provider appeals, but this is the first hospital provider appeal case.
The State did not rely on PRG-11 here. 45 CFR 205.10(b)( 3) allowed FFP
in payments for services provided within the scope of the Medicaid
program and made under a court order. The latter provision was
recodified as 42 CFR 431.250(b)(2). 45 Fed. Reg. 24878 (April 11,
1980). /3/ We note that HCFA described the agreements under
which hospitals participate in the Medicare program as "open-ended".
Response, p. 4. If this is also true for hospitals under the Medicaid
program, than an issue may arise about whether FFP in payments pursuant
to a court order must also be open-ended. In Ohio, because of the
12-month survey-certification cycle for SNF's and ICF's, the Board found
that FFP was limited to 12 momths. Here the State made court-ordered
payments for approximately four months, so the parties did not brief the
issue of whether FFP was time-limited and we make no holding on this
issue.
OCTOBER 22, 1983