SUBJECT: T.L.C. Mental Health Center

Petitioner,

Health Care Financing Administration

I sustain the determination of the Health Care Financing Administration (HCFA) not to certify Petitioner, T.L.C. Mental Health Center, Inc., to participate in the Medicare program. I premise this decision on my conclusion that Petitioner did not meet the criteria for certification as a community mental health center providing partial hospitalization services.

I. Introduction

Petitioner is a corporation that is located in Miami, Florida. Petitioner applied to be certified to participate in the Medicare program as a community mental health center which provides partial hospitalization services. HCFA denied Petitioner's application. Petitioner requested a hearing and the case was assigned to me for a hearing and a decision. I held a prehearing conference at which Petitioner and HCFA agreed that the case could be decided based on written submissions. HCFA filed a brief and eight proposed supporting exhibits (HCFA Ex. 1 - HCFA Ex. 8). Petitioner filed a brief and six proposed supporting exhibits (P. Ex. 1 - P. Ex. 6). Additionally, HCFA filed a response to Petitioner's brief. I hereby admit into evidence all of the parties' proposed exhibits.

II. Governing law

A. Federal law

"Partial hospitalization services" are services which are reimbursed by the Medicare program pursuant to section 1861(ff) of the Social Security Act (Act). "Partial hospitalization services" consist of services that are prescribed by a physician and are provided pursuant to specified statutory criteria, which include: individual and group therapy with physicians or psychologists; occupational therapy requiring the skills of a qualified occupational therapist; services of social workers, trained psychiatric nurses, and other staff trained to work with psychiatric patients; drugs and biologicals furnished for therapeutic purposes; individualized activity therapies; family counseling; patient training and education; diagnostic services; and such other items and services as the Secretary of this Department may determine to be reasonable and necessary. Act, sections 1861(ff)(1); 1861(ff)(2)(A) - (I).

The Medicare program will reimburse for partial hospitalization services that are provided by either a certified hospital or by a community mental health center. Act, section 1861(ff)(3)(A). A "community mental health center" is defined by the Act to mean an entity:

(i) providing the services described in section 1916(c)(4) of the Public Health Service Act; and

(ii) meeting applicable licensing or certification requirements for community mental health centers in the State in which it is located.

Act, section 1861(ff)(3)(B)(i), (ii). Although the Act refers to section 1916 of the Public Health Service Act, the section was recodified as section 1913(c)(1) of the Public Health Service Act. Under this section, the services that a community mental health center must provide include the following:

(i) outpatient services, including specialized outpatient services for children, the elderly, the seriously mentally ill, and residents of the . . . [community mental health center's] service area discharged from inpatient treatment at a mental health facility;

(ii) 24-hour-a-day emergency care services;

(iii) day treatment or other partial hospitalization services or psychosocial rehabilitation services; and

(iv) screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admission.

HCFA has published policy guidelines which describe a community mental health center's obligations under section 1913(c)(1) of the Public Health Service Act. In a document that is entitled "All States Letter 76-95" (All States Letter), HCFA stated that a community mental health center must provide all of the services that are listed in the Public Health Service Act, either directly or under arrangements with others. HCFA Ex. 1. The term "under arrangements" is defined in the All States Letter to mean that a community mental health center may arrange for those services described at section 1913(c)(1) of the Public Health Service Act and partial hospitalization services:

under a written arrangement, agreement or contract with other agencies, organizations, or individuals who are not . . . [community mental health center] employees, and for which the . . . [community mental health center] maintains overall management responsibility. The written agreement includes at least the identification of the services to be provided and the manner in which the contracted services are coordinated, supervised, and evaluated by the . . . [community mental health center].

Id. (emphasis added).

HCFA has elected to defer to the laws of the States in order to determine what constitutes adequate screening for patients being considered for admission to State mental health facilities pursuant to section 1913(c)(1)(iv) of the Public Health Service Act. HCFA Ex. 3. HCFA defines "screening" to be:

the performance of at least one of the steps in a process by which an individual is clinically evaluated, pursuant to State law, for the appropriateness of admission to a State mental health facility by an entity that has both the appropriate clinical personnel and the authorization under State law to perform all of the steps in the clinical evaluation process except those required to be performed by a 24-hour facility.

HCFA Ex. 3 at 1 (emphasis in original).

B. Florida State law

Florida State law defines the entities that are authorized to perform the procedures which are necessary prerequisites to admission of individuals for treatment at a Florida State mental health facility. Under the Florida Mental Health Act (Florida State Act), F.S.A. � 394.451, et seq., only certain types of entities are authorized to perform the necessary procedures. Specifically, these entities are limited to those entities which are authorized to perform "transfer evaluations." F.S.A. � 394.461(2). A "transfer evaluation" is defined under Florida State law as being:

the process, as approved by the appropriate district office of the . . . [Florida Department of Children and Families], whereby a person who is being considered for placement in a state treatment facility is first evaluated for appropriateness of admission to the facility by a community-based public receiving facility or by a community mental health center or clinic if the public receiving facility is not a community mental health center or clinic.

F.S.A. � 394.455(29).

The Florida Department of Children and Families has interpreted the aforesaid statute as providing that only a community mental health center or clinic is authorized to perform transfer evaluations under Florida State law. HCFA Ex. 4. Under Florida State law, a "community mental health center or clinic" is a:

publicly-funded, not-for-profit center which contracts with . . . [the Florida Department of Children and Families] for the provision of inpatient, outpatient, day treatment, or emergency services.

F.S.A. � 394.455(6).

III. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. HCFA properly determined not to certify Petitioner to participate in Medicare as a community mental health center providing partial hospitalization services; and

2. I have the authority to hear and decide Petitioner's affirmative arguments, including Petitioner's assertions that: HCFA's policies with respect to community mental health centers are ultra vires the Administrative Procedure Act; and, that HCFA should be estopped from denying certification to Petitioner.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separately numbered heading. I discuss each Finding in detail.

1. Petitioner did not satisfy participation criteria for a community mental health center providing partial hospitalization services because it did not provide requisite screening services for patients who are candidates for admission to State mental facilities.

In order to be certified to provide partial hospitalization services - indeed, in order to fall within the statutory definition of a community mental health center contained at section 1913(c)(1) of the Public Health Service Act - an entity must meet the following criteria which govern screening of patients being considered for admission to State mental health facilities:

1. It must provide all of the services that are listed in section 1913(c)(1) of the Public Health Service Act. Act, section 1861(ff)(3)(A). Those services must include screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admission.

2. It must provide screening for patients either directly or under arrangement with others. All States Letter. If it elects to provide screening under arrangement with others, that arrangement must be via a written agreement which vests overall management responsibility in the community mental health center. Public Health Service Act, section 1913(c)(1). Furthermore, the agreement must specify the services to be provided and the manner in which the contracted services are coordinated, supervised, and evaluated by the community mental health center. Id.

The record of this case shows that Petitioner did not provide requisite screening services, either directly, or under arrangement with others.

a. Petitioner was not authorized under Florida State law to provide screening directly and, therefore, did not provide screening directly to others within the meaning of applicable participation criteria.

Under Florida State law Petitioner was not authorized to provide screening for patients being considered for admission to Florida State mental health facilities. Consequently, Petitioner was not able to provide screening directly as an alternative to having screening performed by others.

As I discuss above, at Parts II.A. and II.B. of this decision, HCFA has elected to defer to the States to determine what constitutes appropriate screening for admission of patients to State mental health facilities. HCFA Ex. 3 at 1. Florida State law discusses screening as "transfer evaluations." F.S.A. � 394.455(29). Under Florida State law, a transfer evaluation for purpose of determining whether a patient may be transferred to a State mental health facility may only be performed by a publicly-funded, not-for-profit center which contracts with the Florida Department of Children and Families for the provision of inpatient, outpatient, day treatment, or emergency services. F.S.A. � 394.455(6).

In order to be able to perform directly the screening services that are required under section 1861(ff)(3)(A) of the Act and section 1913(c)(1)(iv) of the Public Health Service Act, Petitioner must be authorized to perform transfer evaluations pursuant to Florida State law. And, in order to be authorized to perform transfer evaluations, Petitioner must satisfy Florida's requirement that it be a publicly-funded, not-for-profit center which contracts with the Florida Department of Children and Families for the provision of inpatient, outpatient, day treatment, or emergency services. Petitioner has not offered evidence which shows that it met this requirement.

b. Petitioner did not provide screening through arrangements with others because it did not enter into a contract with another entity to have screening performed within the meaning of federal requirements.

Petitioner avers that, if it did not provide screening directly, it did so through a contract with another entity. Therefore, according to Petitioner, it provided the requisite screening in a way which satisfies federal participation criteria.

As support for this argument, Petitioner has offered a contract that it executed with Columbia Cedars Medical Center (Columbia Center contract). P. Ex. 4. I have examined the Columbia Center contract closely. It fails to satisfy the criteria for providing screening through arrangements with others. It is unclear from the terms of the Columbia Center contract whether Columbia Center actually contracted to provide screening or transfer evaluations. Moreover, the contract plainly does not satisfy the requirement that all screening be performed pursuant to Petitioner's management and control.

On its face, the Columbia Center contract is a contract to provide 24-hour standby emergency medical service. Id. at 1. Among other things, it provides that Columbia Center's staff will "assess the mental condition of any patient presented for care . . . ." It also provides that Columbia Center will, as may be necessary, "participate in patient assessment and assist with post-emergency advise/transfer." Id. at 2.

It is not clear from the face of the Columbia Center contract whether Columbia Center actually agreed to perform screening of Petitioner's patients for transfer to State mental health facilities. Aside from the general statements about screening and assessment which I have recited, the Columbia Center contract says nothing about performing screening or transfer evaluations for transfer of patients to State mental health facilities.

Petitioner acknowledges that the Columbia Center agreement is vague as to whether Columbia Center would perform screening or transfer evaluations on behalf of Petitioner. Petitioner avers, through the declaration of its administrator, that it was the intent of the parties to the Columbia Center agreement that such services would be performed for Petitioner by Columbia Center. P. Ex. 2 at 6; Petitioner's brief at 3. I am not satisfied by this declaration that the Columbia Center agreement in fact provides for the screening or transfer evaluations that are a prerequisite for participation. The administrator's declaration is, at best, a self-serving assertion of what the agreement means from the perspective of Petitioner. It does not clarify the obvious ambiguity of the Columbia Center contract.

One thing is clear about the terms of the Columbia Center contract. It does not satisfy the requirement that any screening done by arrangement with others will be done under the overall management authority of Petitioner. Indeed, the Columbia Center contract plainly states that services performed for Petitioner will remain under the management authority of Columbia Center:

It is expressly acknowledged by the Parties hereto that . . . [Petitioner] and . . . [Columbia Center] are independent contracting parties and the relationship between them is that of independent business entities. Nothing in this Agreement shall be construed to create an employer/employee, master/servant, partnership, or joint venture relationship. No party shall have the right to, or exercise any control or direction over, the performance of services by any Party to this Agreement.

Id. at 3 - 4 (emphasis added).

c. Petitioner may not satisfy the criteria for participation as a community mental health center by admitting its patients to a "receiving facility."

Petitioner argues that, under Florida State law, an entity known as a "receiving facility" is permitted to perform transfer evaluations. According to Petitioner:

Florida law does not preclude a for-profit . . . [community mental health center] form having an individual taken involuntarily to a Receiving Facility, where the individual receives a transfer evaluation that will result in admission or nonadmission to a State mental health facility.

Petitioner's brief at 5. Petitioner's argument, evidently, is that it may satisfy the screening requirement by transferring its patients involuntarily to a receiving facility which will then perform the requisite screening.

For purposes of this decision I am assuming Petitioner's interpretation of Florida State law to be correct. However, Petitioner's interpretation is no basis for me to conclude that Petitioner satisfies Medicare participation criteria.

Petitioner's transfer of a patient to a receiving facility for purposes of having screening or a transfer evaluation performed does not satisfy the participation criteria. As is described by Petitioner, a receiving facility is a third party that exists independently of Petitioner. A transfer of a patient from Petitioner to a receiving facility constitutes neither a screening of the patient by Petitioner nor does it constitute a screening through an arrangement with another entity. Such a transfer for screening is not equivalent to a screening by Petitioner's staff because, under such an arrangement, Petitioner's staff would have nothing to do with the screening process. Nor is it a screening through an arrangement with others because Petitioner would retain no management control over the screening process.

2. I do not have the authority to hear and decide Petitioner's additional affirmative arguments.

Petitioner makes two additional affirmative arguments. These are that: (1) HCFA's interpretation of the screening requirement is ultra vires because it was not published via a notice and comment rulemaking consistent with the requirements of the Administrative Procedure Act; and, (2) that HCFA is estopped from denying certification to Petitioner because Petitioner was led to believe that certification would be approved.

I do not have the authority to hear and decide these arguments. My authority in cases involving HCFA is limited to hearing and deciding those issues which the Secretary of this Department has delegated authority for me to hear and decide. That authority is specified at 42 C.F.R. �� 498.3; 498.5. The regulations authorize me only to hear and decide cases involving specified initial determinations by HCFA.

The regulations give me the authority to hear and decide whether HCFA's determination that an entity fails to qualify as a provider was made correctly. 42 C.F.R. �� 498.3(b)(1); 498.5(a)(2). In such a case I may decide whether HCFA applied correctly to the facts of a case applicable regulations or interpretations of the law. I may also decide whether HCFA's interpretation of a regulation is correct or incorrect. However, I lack the authority to decide whether HCFA or the Secretary published an interpretation of law in violation of the Administrative Procedure Act.

Nor do I have the authority to hear and decide claims of estoppel against HCFA or the Secretary. On several previous occasions I have decided that I lack the authority to hear and decide estoppel arguments in cases involving alleged dilatory processing of applications for provider or supplier certification. GranCare Home Health Service & Hospice, DAB CR464 (1997); The Rivers HealthCare Resources, Inc., DAB CR446 (1996); SRA, Inc. D/B/A St. Mary Parish Dialysis Center, DAB CR341 (1994). Petitioner has offered no argument here which would give me reason to revisit my previous decisions that I lack the authority to hear and decide estoppel arguments.

Steven T. Kessel Administrative Law Judge