GAB Decision 237
December 8, 1981 Eastern Massachusetts Professional Standards Review
Organization, Inc.; Docket No. 81-105 Ford, Cecilia; Settle, Norval
Teitz, Alexander
I. Introduction
Eastern Massachusetts Professional Standards Review Organization,
Inc., (EMPSRO, appellant) appealed the determination of the Health Care
Financing Administration of the Department of Health and Human Services
(Agency) that its Grant No. 97-P-99672/1 be terminated September 30,
1981. The determination provided that the grant be extended, if
necessary, to permit this Board to make a final decision. In its appeal
letter dated July 16, 1981, EMPSRO requested a formal hearing pursuant
to Section 1152(d)(2) of the Social Security Act (42 U.S.C.
1320c-1(d)(2)). A hearing was held before the Presiding Board Member in
Boston on September 16 and 17, 1981. This decision is based on the
Record in this case, which includes all the written submissions of the
parties and the evidence presented at the hearing, as recorded in the
transcript (Tr.) of the hearing, and the prepared statements of EMPSRO's
witnesses. For convenience, the combined appeal and Memorandum of
EMPSRO dated July 16, 1981, together with the clarification letter of
August 21, 1981, is referred to as Appellant's Brief. The "Response of
the Health Care Financing Administration" of August 21, 1981 is referred
to as the Agency Response.
II. General Background
A. Information on the Professional Standards Review Organization
(PSRO) Program
The 1972 Amendments to the Social Security Act provide for the
creation of PSROs, administrated and controlled by local physicians and
designed to involve local practicing physicians in the review and
evaluation of health care services covered under Medicare, Medicaid, and
the Maternal and Child Health programs. (Title XI, Part B, of the Act,
42 U.S.C. 1320c). PSROs are responsible, in specifically designated
georgraphic areas, for assuring that the health care paid for under
these programs is medically necessary and consistent with professionally
recognized standards of care. The PSROs also review whether the health
services are provided at the level of care which is most economical,
consistent with the patient's medical care needs. The major focus of
the PSRO program has been on review of inpatient hospital services.
While PSRO are also charged with review responsibilities in other health
care settings, budget restrictions have limited review outside the
hospital setting. (2) The Act, and regulations governing the program,
provide that a PSRO is "conditionally designated" for a period of
time,
and that there will be an agreement between the Secretary and the PSRO
"fully designating" the PSRO after it has satisfactorily performed
PSRO
functions during its trial period as a conditional PSRO. After a
maximum of six years, a conditonal PSRO must be fully designated or it
can no longer participate in the program. (Section 1154(b) and (c), 42
U.S.C. 1320c-3(b) and (c).) A fully designated PSRO may be terminated
only after an opportunity for a hearing, upon a finding by the Secretary
that the PSRO "is not substantially complying with or effectively
carrying out the provisions of such agreement." (Section 1152(d), 42 U.
S.C. 1320c-1(d).)
B. The Nationwide Evaluation of PSROs
The Agency stated that it implemented a nationwide evaluation of the
performance of PSROs in response to proposals by the President, in
February and March, 1981, to phase out the PSRO program within three
years, and to reduce funding for fiscal year 1981. In June 1981
Congress approved a rescission of $28,701,000 from the PSRO program.
(Pub. L. No. 97-12, Title I, Chapter VIII; 94 Stat. 3166.) The Agency
maintained that the legislative history of the rescission bill indicates
that the Agency was to accomplish the rescission by terminating
ineffective PSROs. (Agency Response, pp. 3-4.)
The Agency stated that in order to identify ineffective PSROs, it
developed evaluation criteria to measure performance, and asserted:
These criteria were based on the requirements for PSROs imposed by
the PSRO statute and regulations, and further interpreted through the
PSRO Program Manual and Transmittals. Many of the criteria were based
on those used to convert PSROs from conditional to fully designated
status . . . . Because of the Presidential and Congressional mandates to
terminate ineffective PSROs, however, more emphasis was placed in this
most recent evaluation on the effectiveness and the actual impact of a
PSRO's activities. Although the weight attached to certain areas
changed, these criteria imposed no new responsibilities on the PSROs.
The proposed criteria were sent to all PSROs for review and comment
on March 20, 1981, and, after considering the comments and implementing
some of the suggestions, the final version of the criteria was
distributed to all PSROs on April 15, 1981. The critiera were not
promulgated as a regulation nor published in the Federal Register.
The final version of the criteria was sent to the Agency's regional
offices to be completed for each PSRO, along with instructions for
marking the evaluation. The instructions included the following:
Performance described in the indicators must be sustained throughout
calendar year 1980 or the most recent grant period (period should cover
12 months). If another time period is to be considered, it is specified
in the instructions for that item within the criteria set.
(3) III. The Rescission Act and the Impoundment Control Act
The Agency pointed out that the authority for the action by the
President in proposing rescission of substantial funding for the PSRO
program was the Impoundment Control Act of 1974 (ICA), Pub. L. 93-344.
(Agency Response, p. 2.) EMPSRO attacked this basis in its Post-Hearing
Brief, pp. 64-65, citing the exclusion clause in 31 U.S.C. Sec. 1400(
4), which provides that nothing contained in the Impoundment Control Act
should be construed as "superseding any provision of law which requires
the obligation of budget authority or the making of outlays thereunder."
EMPSRO cites as such a statutory provision 42 U.S.C Sec. 1320c-4(f)(2),
which states that any agreement entered into by the Secretary with a
PSRO --
. . . shall provide that the Secretary make payments to such
orgnization equal to the amount of expenses reasonably and necessarily
incurred, as determined by the Secretary, by such organization in
carrying out or preparing to carry out the duties and functions required
by such agreement.
This statutory provision does not actually require or mandate that
the Secretary expend any particular sum of money on the PSRO program.
All it does is provide that a PSRO shall be paid for expenses incurred
by it in carrying out (or preparing to carry out) its proper functions.
Appellant in this argument is losing sight of what the Agency in fact
did in its national evaluation. The Agency did not say to EMPSRO that
it would simply cut off appellant's funding in midstream and not permit
it to spend funds already provided for in its grant. /1/ The Agency in
fact said that since the Rescission (4) Act means the Agency has less
funds to go around this fiscal year, the Agency would terminate EMPSRO's
grant and the grants of other PSROs that were not performing
effectively. After a PSRO is properly terminated it can of course not
spend any more of its grant money.
IV. The Evaulation of EMPSRO
A. Background Information on EMPSRO
EMPSRO is the designated PSRO for Massachusetts Region IV, which
covers part of Eastern Massachusetts, including the Boston Metropolitan
area. It is responsible for review of health care in about 60 acute
care hospitals in Region IV. EMPSRO was formely named Bay State
Professional Standards Review Organization, but all reference to it in
this decision will be to EMPSRO.
EMPSRO began as a PSRO in 1974. Its history was uneventful until
November 1978 when it received an unfavorable assessment from the
Agency. After a lengthy dispute, the Agency issued a termination notice
on March 25, 1980. Eventually an arrangement was worked out whereby the
termination notice was withdrawn, but EMPSRO was required to make
drastic changes in its structure as well as in its performance. This
arrangement was set out in detail in a written agreement, known as the
May 30 agreement, which will be referred to at some length in the
analysis below.
The PSRO was able to achieve compliance with all the provisions of
the May 30, 1980 agreement and in April 1981 this agreement was deleted
from the Special Conditions on EMPSRO's grant. On May 23, 1981, EMPSRO
became a fully designated PSRO.The Agency contended (Agency Resonse, p.
20) that achievement of full designation status was due partly to the
use of false or misleading data submitted by EMPSRO. The testimony at
the hearing was that it was possibly "inadvertent error" (Tr. p. 266),
but in any case that Agency conceded that there was no deliberate
falsification of data by the PSRO. (Tr. p. 268.) The pendency of the
national evaluation led the Agency to do nothing about a possible recall
of the full designation.
B. The Scoring of EMPSRO on the Nationwide Evaluation
EMPSRO was evaluated based in its performance during calendar year
1980. EMPSRO received a score of 159 points on Part I of the national
evaluation, out of a total possible score of 300; on Part II it
received 440 out of a possible 850; and on Part III it received 175 out
of a possible 1,200 points. Overall its total score was therefore 774
out of a possible 2,350.
Its 440 on Part II met the minimum 400. However, on Part I, its 159
did not meet the minimum of 190; its 175 on Part III did not meet the
minimum of 515; and its total base score of 774 did not attain the
minimum of 1,105. It therefore failed to pass the evaluation, which
required a PSRO to attain a total score of 1,105, as well as meeting the
minimum requirements for two out of the three parts. (5) V. The
Assessment Period
A. Introduction
The hearing of two full days was devoted almost entirely to
evidentiary matters pertaining directly to the various criteria of the
national evaluation. The Board, however, believes that the underlying
legal objections by EMPSRO should be considered first. For reasons
given below, we agree with the appellant that the time period the Agency
used for the assessment of EMPSRO's performance was not the correct one.
The assessment must therefore be declared invalid, and the matter
remanded to the Agency for a new evaluation of EMPSRO for a different
period. For this reason it would be an exercise in futility for the
Board to review the scoring of the PSRO's performance on each criterion.
B. The Use of 1980 Performance Data to Terminate a 1981 Grant
EMPSRO was operating under a grant for the calendar year 1981 at the
time of the national assessment in April 1981. The assessment was based
on EMPSRO's performance in the calendar year 1980. The Agency conceded
that EMPSRO was carrying out the terms and conditions of its 1981 grant
at the time of the assessment. (Tr. p. 7.) Therefore, the appellant
argued, this grant could not properly be terminated. The grant year of
1980 is over. If the PSRO did not perform well in that year, it makes
no difference, as long as it performed satisfactorily in 1981.
EMPSRO bolstered this argument by reference to the underlying statute
and a regulation. /2/ As a fully designated PSRO any agreement between
it and the Secretary of HHS could by statute be terminated prior to the
expiration of the term:
by the Secretary . . . but only after the Secretary has determined
(after providing such organization with an opportunity for a formal
hearing on the matter) that such organization is not substantially
complying (6) with or effectively carrying out the provisions of such
agreement. (Sec. 1152(d)(2), Social Security Act, 42 U.S.C. Sec.
1320c-1(d)(2).)
The termination notice from the Agency does not use the statutory
language. It states that the current grant for calendar 1981 should be
terminated because EMPSRO "is not substantially complying with and
effectively carrying out its duties and functions as a PSRO" (Attachment
1 to EMPSRO Appeal).
The Board concludes that the difference in language between the
statue and the termination notice is not significant under the
circumstances here. The two are substantially the same. If a PSRO "is
not substantially complying with and effectively carrying out its duties
and functions as a PSRO," it can hardly be said that it is
"substantially complying with or effectively carrying out" the
provisions of its agreement or grant /3/ The reverse should be equally
as true.
The only reason a problem arises here is that the grant term (1981)
and the term used for the assessment (1980) are not the same. It is
conceded that during the period of the current (1981) grant this
particular PSRO did not do anything that could be termed a violation of
that grant itself. On September 2, 1981, counsel for EMPSRO submitted
written interrogatories and asked the Board to obtain responses to them
from the Agency. The second question was:
State the manner in which Eastern Massachusetts PSRO, Inc., has
breached the terms of its Grant Award No. 97-P-99672/1-02 dated December
9, 1980.
In the preliminary discussions at the hearing the Agency stated that,
in answer to this interrogatory, it "is willing to stipulate that the
PSRO did not breach the terms of that Grant Award." (Tr. p. 7.)
Therefore, argued EMPSRO, that grant could not be terminated, no matter
what score it received on the national assessment.
This argument by the PSRO could be a plausible basis for overturning
the termination if the Agency had on its own initiative conducted an
evaluation of EMPSRO for calendar 1980, found it wanting, and taken
steps to terminate the 1981 grant. But that is not what happened at
all. The evaulation was for all PSROs in the country, not just this
one. The Agency decided that, to judge sustained performance, a full 12
month period was to be used for (7) the evaluation. It was, for most
criteria, to be either calendar year 1980 or the most recent grant
period. As the Agency stated in its Response, this was done "because
grant funding cycles vary, and in order to evaluate for a 12 months
period" (p. 5). The Board concludes that it was reasonable for the
Agency to judge performance of all PSROs for a full 12 month period, to
find out which PSROs performed consistently well over such a period, as
distinguished from those PSROs which rushed to improve when they knew an
evaluation was approaching. Using the current grant period would for
this PSRO have covered only from January 1, 1981, to the end of April
1981, when the assessment documentation was requested. This four month
period could not possibly be used for criteria which called for data on
performance for a whole year, so 1980 data had to be considered in
evaluating this PSRO.
The Board therefore finds that the stipulation by the Agency that
EMPSRO is not violating the terms and conditions of its current grant
does not in and of itself bar the Agency from terminating that grant,
using 1980 performance data gathered as part of a national assessment.
VI. The Assessment Period and the May 30 Agreement
Under normal circumstances the calendar year 1980 would, as indicated
in the criteria, be the proper time period to use for assessing the
performance of EMPSRO. This year was, however, not one of normal
circumstances for this particular PSRO. It is undisputed that EMPSRO's
performance for the first part of 1980 left something to be desired. In
late November 1978, the Agency gave EMPSRO an "unfavorable assessment
report." From then until March 25, 1980 the PSRO and the Regional Office
of the Agency engaged in a "lengthy dispute" over the 1978
assessment.Finally, on March 25, 1980, the Agency sent the termination
notice which is Attachment 5 to EMPSRO's appeal. (See Post-Hearing
Brief, pp. 5-6.) This identified "continuing deficiencies" at that
time
and "for at least the past several years," which indicated that the
PSRO
had failed to carry out properly several specific statutory
requirements.
The PSRO blamed this action on there being a new Regional PSRO
Director in January 1979. Appellant did not accuse her of outright bias
against this PSRO, but stated that her efforts and those of her staff
"had not been contructive," and that there had been considerable
friction between Regional Office Staff and EMPSRO prior to the issuance
of the termination notice.(Post-Hearing Brief, pp. 6-7). However, even
EMPSRO acknowledged "that problems existed which the PSRO wished to
remedy." (Id., p. 6.)
In any event, after extended negotiations, appellant was able to work
out an agreement with the Agency to permit it to continue, which
resulted in the Agency withdrawing the termination notice. This is
referred to as the May 30 agreement. (Attachment 6 to the Appeal).
This required substantial changes on the part of the PSRO to avoid
termination. The Medical Director and the Executive Director were both
removed. Dr Baker, a Director of EMPSRO and head of its negotiating
team, testified that the agreement involved "gutting" the administrative
offices. Even the name of the PSRO was changed, although (8) it claimed
that this was done only to avoid confusion with another organization.
Appellant also agreed to waive almost all its rights to any
administrative or judicial review of nonrenewal or termination if it
failed to perform as agreed. Compliance with this agreement was written
in as a condition of the PSRO's grant. (Tr. 34-49; Appellant's
Exhibit 1.)
The dispute on the period to be covered by the assessment hinges on
one sentence in this agreement:
The Regional Director, HSQB, agrees that upon the execution of this
Agreement, the HSQB termination notice is withdrawn, and that the
adoption of this Agreement resolves all issues raised in said notice.
Appellant argued that this language precludes the Agency from now
using any evidence of EMPSRO's activities through March 21, 1980, which
was the closing date considered in the March 25th termination notice.
The reason given by Appellant is that:
. . . whatever deficiencies in EMPSRO's performance of its work which
existed through March 21, 1980, have already been the subject of a
termination action . . . (Appeal Brief, p. 5.)
Appellant's legal conclusion is therefore that:
(by) entering into the May 30, 1980, Agreement, DHHS expressly waived
any rights which it may have had to terminate the existence of EMPSRO
based on acts or omissions which occurred prior to that date. (Appeal
Brief, p. 7.)
It should be noted that the above two contentions are not the same.
The first is to exclude from the assessment period all deficiencies
through March 21, 1980, the last date considered in the termination
notice of March 25. The second is to exclude any deficiencies which
occurred prior to May 30, 1980, the date of the agreement which caused
the termination notice to be withdrawn.
The Board agrees with the PSRO that its performance from January 1,
1980 through March 21, 1980 should not have been used in the assessment.
The three cases from the Armed Services Board of Contract Appeals cited
by Appellant on page 8 of its Appeal Brief are analogous, even if not
directly in point. /4/ They support the general proposition that once a
breach has been waived in a new agreement, that same breach cannot be
used to claim a subsequent default if the new agreement has thereafter
otherwise been performed.
(9) The response of the Agency to this issue, when raised by
questions of the Board, has been merely in conclusory statements:
From the Agency's action, it follows that the Agency would not
consider withdrawal of a prior termination proposal as having the effect
of foreclosing the re-use of deficiencies cited in the prior proposal at
a later date. It would appear that the Agency's national evaluation
methodology precludes consideration of whether or not any of the results
ever appeared elsewhere. (Agency Response, p. 16.)
The Agency recognized that there is a problem:
It is true that be stating grounds for termination or non-renewal,
the (May 30) agreement raises the question of whether such language
embodies an implied agreement not to terminate for other reasons.
(Agency Response, p. 17.)
Its answer was that:
(the) language was intended to make clear that there were grounds for
summary termination and not to limit the Agency's ground for termination
overall. (Agency Response, p. 17.)
The Agency in its Reponse did not attempt to refute any of the
authorities submitted by EMPSRO in its Appeal Brief. /5/ In the absence
of anything to the contrary except conclusions, the Board finds that the
position of the PSRO on this issue whould be sustained. To be specific,
the Board finds that the performance of the PSRO through March 21, 1980
was improperly considered in assessing its performance.
EMPSRO is not satisfied with merely eliminating this period. It asks
the Board to exclude consideration of its performance prior to May 30,
1980, the day of the agreement. Not even satisfied with this, it wants
the period for its evaluation to begin July 1, 1980, primarily for
purpose of convenience:
In order to cure this defect in the assessment process, EMPSRO
recommends that the 12-month period from July 1, 1980, through June 30,
1981 be considered. (Appeal Brief, pp. 8-9.)
The reasons given by EMPSRO for using the May 30, or even July 1,
date are that the PSRO was using all its efforts from the time it
received the termination notice of March 25 until the agreement of May
30 to have the termination notice withdrawn. It claimed that its
changes in management required by the May 30 agreement were such that it
was not fully functioning until about the first of July.
The difficulty with this argument is that it is not what the
agreement says. The language of Section 12 is that:
(10) (this) agreement resolves all issues raised in said notice.
The "issues raised in said notice" must refer to deficiencies before
the date referred to in the notice, which was March 21, or at the
latest, before March 25, the date of the notice itself.
The language of the agreement seems clear, and therefore, as the
Presiding Board Member indicated at the hearing, the agreement should
speak for itself and not be interpreted by the parties. (Tr. pp.
45-46.) Nevertheless, almost a full single-spaced page of the
Post-Hearing Brief (p.55) is taken up with Dr. Baker's prepared written
statement, leading up to his conclusion that he thought it was the
intent of the parties that if EMPSRO performed the agreement, it would
not be terminated "on account of anything that happened prior to the
signing of the agreement (May 30)."
Dr. Baker's testimony in response to a Board question was quite
different on what he thought was intended:
(ii) was our understanding and I certainly thought it was the
Government's understanding that with the signing of this May 30th
agreement, the deficiencies which the Government claimed in our
operations up to their termination notice would essentially be moot from
that point on; that we would not be faced with having to justify
differences that we had with the Regional Office . . . until the time
that the termination notice came at the end of the month. (emphasis
supplied). (Tr. p. 42.)
It therefore appears clear from the language of the agreement, and
what EMPSRO said it thought it meant, that it was to exclude
deficiencies only prior to the date of the termination notice. This was
recognized to some extent in the Post-Hearing Brief, at pp. 54-55, where
it is argued that by the language of the agreement --
(the) Agency gave up its right to take a subsequent action against
EMPSRO due to any failure of the PSRO to substantially comply with and
effectively carry out its responsibilities which occurred prior to the
adoption of the Agreement (or, at the very least, prior to the issuance
of the notice).
VII. The Relief to be Granted
The Board having found that the period before March 21, 1980 was
improperly included in the evaluation of EMPSRO, there remains the
question of what to do about it. The first problem is to determine
whether the assessment for calendar year 1980 can still be valid by
excluding the first three months. /6/
(11) This would contradict the underlying basis for the national
assessment, that certain factors, particularly impact, can be measured
only over a complete 12 month period. Therefore to take only the last
nine months of calendar year 1980 is not carrying out the purpose of the
assessment.
The next question is whether to void the termination notice
completely, because of the invalid 1980 assessment, or take some other
period. The PSRO of course contends, as discussed in Section V. above,
that no other assessment is called for since the Agency stipulated that
it did not violate the conditions of its current (1981) grant. This has
alrady been answered by the Board.
The PSRO has based much of its presentation, primarily in its written
submissions, on an alternative scoring for the period from July 1, 1980
through June 30, 1981. (See Part II of the Appeal, Attachment 10.) It
is the Board's position that another 12 month period should be used, but
based upon the analysis in Section VI. aboove, this would be for the
period from April 1, 1980 through March 31, 1981.
There is clearly not available to the Board the necessary data for
evaluating the PSRO for this particular time frame. Even for the July
1, 1980 to July 1, 1981 period, where the PSRO submitted documentation
for scoring (Attachment 10), there was considerable discussion about
remand to the Agency under a stipulation. (Tr. pp. 14-22.) /7/ It seems
to the Board that evaluation is peculiarly a matter suited for Agency
expertise.
The Board would therefore ordinarily order that the matter be
remanded to the Agency, with instructions to evaluate the performance of
EMPSRO, using the same criteria, for the 12 months period from April 1,
1980 through March 31, 1981. That is the only period for which the
Board believes it can properly direct an alternative evaluation. The
Board will, however, urge the Agency to consider that at least the
months of April and May of 1981 were difficult ones for the PSRO, while
it fought to avoid termination. The Agency may, if it wishes to do so,
use the twelve month period from June 1, 1980, through May 31, 1981 as
the alternative evaluation period. It may even believe that the PSRO's
claim for excluding all performance before July 1, 1980 is a meritorious
one. If so, it may, if it sees fit, use the July 1, 1980 through June
30, 1981 period for assessing EMPSRO's performance. The PSRO has
already addressed this period in its alternative evaluation (Attachment
10), which may make it more practical to use this period. /8/
(12) It is ordered that this matter be remanded to the Agency to make
an assessment of EMPSRO's performance for a twelve month period which
shall exclude any time prior to April 1, 1980. The same critieria shall
be used as were used in the assessment under appeal, and the PSRO shall
have a reasonable opportunity to supplement the data now in the Agency's
possession for the alternate period selected. The PSRO shall supply any
such data within a time fixed by the Agency. Since the statute permits
the Secretary to terminate a PSRO only "after providing such
organization with an opportunity for a formal hearing on the matter,"
the grant to EMPSRO will continue in effect pending the new evaluation.
If that evaluation results in a termination of the grant, the PSRO shall
have the right to appeal that termination as provided by statute. /1/ A
recent District Court case has in fact upheld defunding of part
of a PSRO's functions without any fault of the PSRO. In Region X Peer
Review Systems, Inc., v. Schweiker, (S.D. Ohio) No. C-2-81-1067, decided
October 1, 1981, the Court upheld HCFA's action in discontinuing funding
of plaintiff's long term care (LTC) review program after September 30,
1981, although the funding for such review under its grant was to extend
through December 31, 1981. (LTC review is a part of the activities
conducted by a PSRO) This PSRO, being conditionally designated, did not
come under the provision for termination only for cause in the Social
Security Act. It claimed, however, that its funding could not be
terminated during its grant except for cause, under the general grants
provisions of 45 CFR Part 74. The Court said that the approval by
Congress of the Supplemental Appropriations and Rescission Act of 1981,
Pub. L. 97-12, "provides superceding authority for the defunding of LTC
programs." It also went on to say that: In the absence of detailed
legislative history . . . it is both reasonable and desirable to
construe the Act as a ratification of the presidential and departmental
proposals for eliminating ineffective PSROs and LTC review . . . .
(p.11) It is not necessary to go this far to uphold the termination
action here, since no attempt has been made to defund EMPSRO until after
it has been terminated for cause. /2/ In its post-hearing brief
EMPSRO contended (at p. 64) that: Applicable regulations of the Agency
provide that grants may be terminated for cause only if the grantee has
committed a material breach of the grant. As authority for this argument
it set out 45 CFR Sec. 74.115(a). Part 74 contains general principles
for the administration of HHS grants, and is specifically not applicable
where "inconsistent with Federal statutes, regulations, or other terms
of a grant." 45 CFR Sec. 74.4(a). Therefore the language of Sec.
74.115(a) requiring a material breach of the grant for termination for
cause cannot apply to this appeal since it is inconsistent with the PSRO
statute. The Board will therefore refer only to the statute in
considering the requirements for termination or the grant. /3/
The word "agreement", as used in the statute, includes grants.
Originally PSROs were funded under contracts. With the passage of Pub.
L 95-142, the Social Security Act provided that an agreement between the
government and a PSRO "may be in the form of a grant or an assistance
agreement." 42 U.S.C. Sec. 1320c-4(f)(3). See PSRO Transmittal No. 70,
p. 2, which provided for the changeover for all PSRO funding from
contracts to grants. /4/ Shephard Division/ Vogue Instrument
Corporation, 74-1 BCA para. 10,498 at p. 49,723; Nanofast, Inc., 69-1
BCA para. 7,566 at p. 35,049; and C.T.M. Co., Inc., 65-1 BCA para.
4,757 at pp. 22,606-7. /5/ The Agency elected not to file a
Post-Hearing Brief. /6/ It appears that whether March 21 or
March 25, 1980 is taken as the end of the exclusionary period, it should
as a practical matter be extended through March 31, in order to involve
a complete calendar quarter. (See Tr. p. 26.) /7/ The parties
were unable to come to any agreement on a stipulation by the end of the
hearing (Tr. p. 413), and nothing further has been presented to the
Board on this possibility. /8/ The PSRO seems to be going too far when
it assumes "that no points granted on account of the January 1 -
December 31, 1980 period would be lost as a result of the change in the
time period of the assessment." It must take the bitter with the sweet,
and must face the risk of loss of points, as well as gain, in a new
evalution for a different period.
OCTOBER 22, 1983