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CASE | DECISION | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Kemper Community Hospital,

Petitioner,

DATE: October 15, 2001
                                          
             - v -

 

Centers for Medicare & Medicaid Services

 

Docket No.C-99-385
Decision No. CR825
DECISION
...TO TOP

 

DECISION

I find that Petitioner, Kemper Community Hospital failed to prove that on November 5, 1998 it met the statutory definition of a hospital or was in compliance with Medicare conditions of participation. Accordingly, I sustain the Centers for Medicare & Medicaid Services' (CMS)(1) termination of Petitioner's Medicare participation agreement.

I. BACKGROUND

This case is before me on Petitioner's March 16, 1999 request for a hearing contesting CMS's January 19, 1999 letter (notice letter) notifying Petitioner that CMS was terminating Petitioner's Medicare participation agreement effective February 5, 1999. CMS stated that its decision resulted from a survey by the Mississippi State survey agency (State survey agency) on November 5, 1998, in which Petitioner had been found out of compliance with nine conditions of participation, specifically: 42 C.F.R. � 482.12, Governing Body; 42 C.F.R. � 482.21, Quality Assurance; 42 C.F.R. � 482.22, Medical Staff; 42 C.F.R. � 482.23, Nursing Services; 42 C.F.R. � 482.24, Medical Record Services; 42 C.F.R. � 482.25, Pharmaceutical Services; 42 C.F.R. � 482.26, Radiological Services; 42 C.F.R. � 482.28, Food and Dietetic Services; and 42 C.F.R. � 482.42, Infection Control.

This case was originally assigned to Administrative Law Judge Steven T. Kessel, was reassigned to Administrative Law Judge Mimi Hwang Leahy, and was finally reassigned to me on April 23, 2001. On November 28, 2000, Judge Leahy convened a telephone prehearing conference. I am deciding this case pursuant to the rulings Judge Leahy made during the conference, as set forth in her briefing schedule order (prehearing order) dated November 29, 2000.

In her prehearing order, Judge Leahy indicated that her review of the case file did not show any dispute of material fact and that an in-person, testimonial hearing was thus unnecessary. She stated also that, even if there were disputes of material fact, witness credibility did not appear to be involved and that the case could be decided based on written submissions. Neither party objected to proceeding on a written record. Accordingly, during the conference, CMS stated that it would submit a motion for summary judgment or, in the alternative, a motion for decision on the written record, with documentary evidence attached.(2) CMS timely submitted a motion for summary determination (CMS Br.) accompanied by 13 exhibits (CMS Exs. 1, 3 - 7, 7A, and 8 -13). Petitioner timely submitted a response (P. Br.), accompanied by 48 exhibits (P. Exs. 1 - 48), and four attachments (consisting of testimony from a State agency administrative hearing marked as attachments (P. Atts. A, B, C, and D). CMS objects to P. Exs. 9 - 14 and 17 because they are dated after the November 5, 1998 survey and are irrelevant. CMS reply brief (CMS R. Br.) at 12. CMS objects to P. Exs. 18 and 20 - 30 because there is no testimony or other evidence suggesting that they were in existence at the time of the November 1998 survey or, if in existence, that they were in use during November 1998 or made available to the surveyors during the survey. CMS thus argues that they should not be used to meet Petitioner's burden of proof. Id. at 13. CMS also timely submitted the reply brief referred to above. In the absence of Petitioner's objection, I am admitting CMS Exs. 1 - 13. I am also admitting all of Petitioner's exhibits (P. Exs. 1 - 48 and P. Atts. A - D) into evidence. I believe CMS's objections go to the weight of the evidence submitted by Petitioner and I am able to weigh such evidence accordingly.

In its response, Petitioner now requests that I deny CMS's motion for summary determination and afford it an in-person testimonial hearing. P. Br. at 4, 12, 17 - 19. However, Petitioner specifically agreed to proceed on a written record during the prehearing conference on November 28, 2000, and its agreement is memorialized in Judge Leahy's prehearing order dated November 29, 2000, to which Petitioner did not timely object. See 42 C.F.R. � 498.50(b)(3). Moreover, my review of the case shows no material facts in dispute. Thus, I find Petitioner's request to be both untimely and without merit and I deny it. Petitioner has had its hearing - on a written record - and is not otherwise entitled to an in-person testimonial hearing.

II. GOVERNING LAW

In order to participate in the Medicare program, a hospital must: (1) meet the statutory definition of a hospital at section 1861(e) of the Social Security Act (Act); and (2) be in compliance with the applicable conditions of participation. 42 C.F.R. � 488.3(a). The conditions of participation for hospitals are set forth in the regulations at 42 C.F.R. Part 482. Each condition of participation is comprised of a number of related standards.

The Secretary of the Department of Health and Human services enters into agreements with State survey agencies to survey providers to determine whether providers, including hospitals, meet the conditions of participation in the Medicare program. Act, section 1866; 42 C.F.R. �� 482.1(b), 488.26(c)(1).

A State survey agency's findings are set forth in a standard form know as a "HCFA 2567" or "2567," which constitutes CMS's statement of deficiencies, specifically listing the deficiencies identified by the State survey agency, the regulations to which they relate, and the specific findings that support each deficiency determination. Based on these findings, the State survey agency certifies whether a provider such as a hospital is in compliance with the conditions of participation. The State survey agency will certify that a hospital is no longer in compliance with the conditions of participation where the deficiencies are of such character as to substantially limit the a hospital's capacity to furnish adequate care or where such conditions adversely affect the health and safety of patients. 42 C.F.R. � 488.24(b). CMS may terminate a hospital from participation in the Medicare program if CMS finds that the hospital is not in compliance with the provisions of the Act (Title XVIII) and the applicable regulations or if the hospital no longer meets the appropriate conditions of participation. Act, section 1866(b)(2); 42 C.F.R. � 489.53(a)(1). Where CMS determines that there is a deficiency, but that the deficiency is not so severe as to constitute a condition level deficiency, then CMS may not terminate a provider's participation in Medicare without first affording the provider the opportunity to correct the deficiency. 42 C.F.R. � 488.28(c)(1).

A hospital which is dissatisfied with CMS's determination to terminate it from participation in the Medicare program is entitled to a hearing. Act, sections 205(b), 1866(h)(1); 42 C.F.R. �� 498.5(b), 498.3(b)(7). The hearing is a de novo proceeding which is to be resolved on the evidence in the record developed before an administrative law judge. CMS is required to present a prima facie case establishing the basis for its action. CarePlex of Silver Spring, DAB No. 1683 (1999). Either at an in-person hearing or in a hearing based on a written record, CMS bears the burden of producing evidence sufficient to establish a prima facie case. CMS must set forth the basis for its determination with sufficient specificity for a petitioner to respond and come forward with evidence related to the disputed findings sufficient to establish a prima facie case that CMS had a legally sufficient basis for the termination. In order to prevail, a petitioner must then prove by a preponderance of the evidence on the record as a whole that it was in substantial compliance with the relevant statutory and regulatory provisions. Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Center v. U.S. Dept. of Health and Human Services, No. 98-3789 (D.N.J. May 13, 1999).

III. ISSUES

CMS has asserted that two issues exist in this case: (1) whether as of the date of the survey on November 5, 1998, Petitioner met the statutory definition of a hospital; and (2) whether as of the survey on November 5, 1998, Petitioner was in substantial compliance with Medicare conditions of participation. Petitioner agrees that one of the issues in this case is whether it was in substantial compliance with Medicare conditions of participation on November 5, 1998. Petitioner also raises as an issue whether, due to procedural deficiencies and irregularities surrounding the State's survey on November 5, 1998, it is entitled to a re-survey and a hearing on the matter and whether it has the right to present testimony and evidence before an administrative law judge. I have discussed the issue of Petitioner's right to an in-person hearing above, and will not discuss it again. I will also not be discussing whether or not Petitioner has a right to a re-survey and a hearing pursuant to a re-survey as I do not have the authority to decide these issues, nor do I have the authority to decide whether or not the State survey agency can or should have accepted any plan of correction Petitioner offered. I do, however, have the authority to address the two issues identified by CMS (the second of which is referenced by Petitioner). Specifically, I am authorized to determine whether or not a deficiency exists and whether CMS's choice of remedy is reasonable.

CMS's January 19, 1999 notice letter states that Petitioner was found out of compliance with nine conditions of participation, each of which I address below. However, it is not initially apparent from the notice letter that CMS specifically found that Petitioner did not meet the statutory definition of a hospital. That finding may be inferred, nevertheless, since the notice letter states "a hospital must meet all of the statutory provisions of Section 1861(e) of the Act . . ."(3) Moreover, CMS raised this issue specifically in its initial brief and Petitioner did not object to its inclusion as an issue (although it did not specifically address the issue either). Because I believe that the issue was raised sufficiently in the notice letter, and because meeting the definition of a hospital is a statutory requirement for participation in the Medicare program, I am addressing the issue of whether, as of the date of the November 5, 1998 survey, Petitioner met the statutory definition of a hospital. However, even if did not find for CMS on this issue, I would find for CMS based on the issue of Petitioner's compliance with the conditions of participation on that date. Thus, the three issues I address here are whether:

1. Petitioner met the statutory definition of a hospital as of the date of the survey, November 5, 1998;

2. Petitioner failed to meet the conditions of participation sufficient to "substantially" limit its capacity to furnish adequate care to patients as of the date of the survey, November 5, 1998; and

3. CMS is authorized to terminate Petitioner's provider agreement.

IV. 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, in italics, as a separately numbered heading. I explain each Finding in detail.

1. Petitioner did not meet the statutory definition of a hospital as of the November 5, 1998 survey.

The Act defines a hospital as an institution which:

(1) is primarily engaged in providing, by or under the supervision of physicians, to inpatients (A) diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons;

(2) maintains clinical records on all patients;

(3) has bylaws in effect with respect to its staff of physicians;

(4) has a requirement that every patient with respect to whom payment may be made under this title must be under the care of a physician except that a patient receiving qualified psychologist services (as defined in subsection (ii)) may be under the care of a clinical psychologist with respect to such services to the extent permitted under State law;

(5) provides 24-hour nursing service rendered or supervised by a registered professional nurse, and has a licensed practical nurse or registered professional nurse on duty at all times; . . .

(6)(A) has in effect a hospital utilization review plan which meets the requirements of subsection (k) and (B) has in place a discharge planning process that meets the requirements of subsection (ee);

(7) in the case of an institution in any State in which State or applicable local law provides for the licensing of hospitals, (A) is licensed pursuant to such law or (B) is approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing;

(8) has in effect an overall plan and budget that meets the requirements of subsection (z); and

(9) meets such other requirements as the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services in the institution.

Act, section 1861(e).

CMS argues that Petitioner was not operating under this statutory definition of a hospital but was operating as a "ghost hospital"; in essence attempting to operate a unit of a hospital (here a psychiatric unit(4)) without operating the hospital itself. CMS asserts that such an arrangement is not permitted by the Medicare program because a facility must meet the statutory definition of a hospital and the hospital conditions of participation as a prerequisite to being approved for a psychiatric unit. CMS Ex. 7 at 2. Petitioner essentially asserts that it is a hospital, although it is small and consists of only one acute care(5) bed (the bed available for patients needing other than psychiatric unit care) and nine psychiatric unit beds. P. Br. at 1.

Here the evidence submitted by CMS proves that Petitioner did not meet the statutory definition of a hospital. CMS asserts that a review of the 2567 shows that Petitioner was not providing the services required under the definition of a hospital, as it had no medical staff and did not provide 24-hour nursing services. Moreover, its one acute care bed was closed and the room was used for storage. CMS Ex. 1. Petitioner has presented nothing to refute that, at the time of the survey, CMS's allegations were true, and further evidence submitted by CMS amply supports this position.

CMS has introduced evidence that, on February 2, 1999, Petitioner sent CMS a letter (CMS Ex. 10) admitting that the hospital "stopped admitting medical/surgical patients some time ago . . . [the psychiatric unit] is the only hospital department that is currently operational." Id. at 1. Petitioner also admits that prior to the survey it did not "understand that we needed to staff the Med/Surg Unit when we had no patients. . . ." Id. at 2. Further, in its hearing request, Petitioner admits that "there were certain deficiencies as of the survey date, November 5, 1998." CMS Ex. 6, at 1. In an enclosure to this letter, Petitioner admits that, among other things, the lack of admissions caused the med/surg unit to be closed, there was no staffing for that unit in November 1998, and there was no organized nursing service providing 24-hour nursing care. KCH Argument, at 3; see Id. at 5 - 7 for other admissions of deficiencies as of November 5, 1998. Moreover, during a meeting with CMS personnel on February 4, 1999, Petitioner indicated that acute care services were non-existent; that Petitioner had not had an acute care patient in two years; and that, if a patient were admitted to the hospital, a nurse from either the psychiatric unit or nursing facility(6) would have to care for the patient. CMS Ex. 7, at 3; CMS Ex. 7A.

Testimony from Petitioner's employee Danny McKay, Petitioner's acting hospital administrator during the November 5 survey (which testimony was given during a State proceeding concerning the termination of Petitioner's license as a hospital) was that there was no "acute care operation" at Petitioner's facility. CMS Ex. 13, at 15, 17, 36. Mr. McKay testified that he was not aware of a hospital budget and stated that the only employees were those in the psychiatric unit. Id. at 38, 44. Further, the documentation he presented to the surveyors had to do with the psychiatric unit. Id. at 24 - 25. He testified that he understood that, in order to have a psychiatric unit, it was necessary for the facility to be certified as a hospital, and it was obvious that Petitioner was not operating an acute care facility. Id. at 36 - 37.

Finally, CMS has produced the affidavit of an employee of Petitioner, Penny Walker, who held several positions in Petitioner's operation, including that of hospital administrator from December 1998 through February 5, 1999, the date Petitioner was terminated. CMS Ex. 6, at 4; CMS Ex. 9. Ms. Walker stated that through the termination date Petitioner did not have a functioning hospital and that, in her opinion, Petitioner was operating as a ghost hospital to support the psychiatric unit. Further, Ms. Walker indicated that prior to the November 5, 1998 survey there were no hospital employees, nor did Petitioner's owner or administrative staff have any intention of admitting anyone to the one acute care bed. CMS Ex. 9.

In reviewing this evidence, and in light of the fact that Petitioner has not presented evidence to refute CMS's assertions, I can come to no conclusion other than that Petitioner was operating solely a psychiatric unit and not a hospital which met the statutory definition of a hospital as of the date of the survey

2. As of November 5, 1998, Petitioner was out of compliance with the conditions of participation such that its capacity to furnish adequate care to patients was substantially limited.

CMS determined that Petitioner was out of compliance with nine conditions of participation. I find Petitioner out of compliance with each condition, and I discuss each condition below.(7) Before beginning my discussion, I note that Petitioner has made two general arguments that are unpersuasive. One is that it had been found in compliance during previous surveys and should have been found in compliance during the November 1998 survey. The issue in this case, however, is not whether Petitioner had been in compliance in the past, but whether Petitioner was substantially complying with the Act and regulations as of November 5, 1998. A hospital must be in substantial compliance with the statutory definition of a hospital and the conditions of participation at all times, not just at some time in the past. See 42 C.F.R. � 488.20. Second, Petitioner has asserted that its compliance with the Act and regulations regarding its nursing facility should somehow operate to show that the hospital was in compliance. The requirements for nursing facilities and hospitals participating in the Medicare program are different. See 42 C.F.R. Parts 482, 483. Moreover, the nursing facility apparently was acting in conformance with the Act and regulations, while the hospital was operating as a "ghost" facility not in compliance with the conditions of participation. Finally, I note that in no instance below has Petitioner submitted sufficient evidence to overcome the prima facie case presented by CMS.

A. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.12, Governing Body.

The regulations require that:

The hospital must have an effective governing body legally responsible for the conduct of the hospital as an institution. If a hospital does not have an organized governing body, the persons legally responsible for the conduct of the hospital must carry out the functions specified in this part that pertain to the governing body.

During the survey, based on interview and record review, the State surveyors found that there was no evidence to support that the governing body or person(s) legally responsible had carried out the functions specified in this condition, specifically finding that Petitioner was not in compliance with five standards and many elements within those standards. CMS Ex. 1 at 1 - 11. Petitioner admits that it did not have a governing body, but asserts that it did have a governing authority responsible for the conduct of the hospital. Petitioner also asserts that the State of Mississippi surveyed the Kemper Community Hospital Nursing Home (nursing facility) and found that it had no major deficiencies identified regarding State licensure. It then argues that both the hospital and nursing facility operate in the same building and under the same authority.

Petitioner has failed to prove that it was in compliance with this condition. First, Petitioner cites no evidence that it had a governing authority responsible for the conduct of the hospital at the time of the survey. Second, Petitioner cites to no authority to support its assertion that the hospital and the nursing home have the same governing body/authority. Finally, it is irrelevant whether or not the nursing facility has a governing body or authority. It is Petitioner's responsibility to meet the "hospital" condition of participation for governing body here, not the nursing home condition of participation.

B. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.21, Quality Assurance.

The regulations require that:

The governing body must ensure that there is an effective, hospital-wide quality assurance program to evaluate the provision of patient care.

42 C.F.R. � 482.21.

During the survey, based on record review and interview, the State surveyors found that there was no hospital-wide quality assurance plan available for review during the survey. There were no minutes or reports from any department, including contracted services, available for review on the day of the survey. The State surveyors specifically determined that Petitioner was out of compliance with three standards and several elements of this condition. CMS Ex. 1, at 11 - 13. I note first that in Petitioner's letter to CMS dated March 16, 1999, it admitted that there was no facility-wide quality assurance program. CMS Ex. 6, at 7. Petitioner asserts that it did have various components of quality assurance taking place, in that in the past quality assurance functions had been divided into psychiatric/acute care and nursing home functions by a past administrator and consultant. Petitioner then asserts that the size of the hospital meant that many of the people participating in quality assurance activities were common to all departments. Petitioner then states that this "discrepancy" has been resolved by establishing one QA committee. Petitioner cites to P. Ex. 26 in support of this statement.

Petitioner does not specify what components of quality assurance were taking place. Petitioner only asserts that after the survey any problems were resolved by establishing a QA committee. However, the evidence referenced as P. Ex. 26 refers not to quality assurance but to Petitioner's disaster plan. Furthermore, it is irrelevant as to whether or not Petitioner was in compliance with this condition on November 5, 1998, what steps Petitioner may have taken to come back into compliance after that date.

C. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.22, Medical Staff.

The regulations require that:

The hospital must have an organized medical staff that operates under bylaws approved by the governing body and is responsible for the quality of medical care provided to patients by the hospital.

42 C.F.R. � 482.22.

During the survey, based on record review and interview, the State surveyors found Petitioner out of compliance with this condition of participation in that there had been no medical staff appointed by the governing body since 1994. The State surveyors also found that there were no medical staff bylaws approved by the governing body for review during the survey. CMS Ex. 1, at 13 - 18. The State surveyors specifically found that three standards and elements within those standards under this condition were out of compliance.

Petitioner asserts that one or two of its active staff members met and talked daily regarding all operations of the hospital and nursing facility and that the medical director of the nursing facility and the medical director of the psychiatric unit (and, to the extent necessary, the acute care hospital) interfaced with Dr. Brough (Petitioner's owner), the governing authority, and the nursing staff. However, Petitioner cites to no evidence to support its assertions. Petitioner also notes that it had successfully completed surveys in 1994, 1996, and 1997. However, as I stated above, this is irrelevant to the question as to whether Petitioner was in compliance on November 5, 1998. Finally, Petitioner asserts that it met, reviewed and approved new medical staff bylaws on February 19, 1999. This is irrelevant as to whether or not Petitioner was in compliance on November 5, 1998.

D. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.23, Nursing Services.

The regulations require that:

The hospital must have an organized nursing service that provides 24-hour nursing services. The nursing services must be furnished or supervised by a registered nurse.

42 C.F.R. � 482.23.

During the survey, based on interviews with facility staff, observations, and record review, the State surveyors determined that Petitioner failed to have an organized nursing service that is available to provide 24-hour nursing services. The State surveyors noted on the 2567 that:

* on the day of the survey no nurses were assigned responsibility for the operation of the nursing service for the hospital (including administrative authority and delineation of responsibilities for patient care) and there was neither a director of nurses or other nursing personnel available to render patient care;

* the hospital lacked a director of nurses for the hospital and there were no nurses on payroll available, which was confirmed by the lack of personnel records for the nursing department;

* when patients were admitted to the hospital in the past they were admitted to the psychiatric unit or to the nursing facility, as there were no nurses available to develop care plans or render care; and

* administrative staff were unable to provide a nursing staff schedule for the two weeks prior to the survey as there were no nurses assigned to the hospital during that time.

CMS Ex. 1, at 18 - 20.

CMS notes that Petitioner has admitted that the hospital did not have 24-hour nursing services and that only the psychiatric unit and nursing facility had such services. CMS Ex. 6, at 6. CMS also notes that Mr. McKay and Ms. Walker both confirmed that there were no hospital employees. CMS Ex. 13, at 38; CMS Ex. 9, at 2.

Petitioner asserts that while it was true there was no 24-hour nursing care for the acute care hospital, it had been told that it did not need to staff a unit that was essentially non-operational except for a few days a year. Petitioner states that the psychiatric unit and the nursing facility had the appropriate nursing service care and were operating in the same building as the hospital and, to some extent, were operating under overlapping policies and procedures. Petitioner also states that, as part of its plan of correction, it hired a nurse to be on call 24-hours a day, seven days a week.

Petitioner's admission that it did not provide the 24-hour nursing care for the hospital is sufficient alone to prove that it did not meet this condition of participation. However, I note also that Petitioner's reference to testimony of its consultant (a former surveyor) that it had been told the hospital did not have to have 24-hour nursing services for the hospital is not fully supported by the evidence it cites ( P. Ex. B, at 47; P. Ex. 5). Finally, it is irrelevant whether or not Petitioner hired a nurse to be on duty in the hospital 24-hours a day, seven days a week after November 5, 1998, as I must determine Petitioner's compliance as of the date of the survey.

E. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.24, Medical Record Services.

The regulations require that:

The hospital must have a medical record service that has administrative responsibility for medical records. A medical record must be maintained for every individual evaluated or treated in the hospital.

42 C.F.R. � 484.24.

During the survey, based on interviews, the State surveyors found that there were no hospital employees responsible for medical records services, and cited the condition and one standard out of compliance. CMS Ex. 1, at 20 - 21. Petitioner asserted that it was in compliance with this condition and that a medical record was maintained on each patient. Petitioner stated that the process was handled by an individual who was the medical record consultant for the hospital. While Petitioner has submitted a copy of a contract with this individual dated August 1, 1998, the document is barely legible, does not appear to state that the contract is for the hospital, and does not satisfy Petitioner's burden of proof. See P. Ex. 15.

F. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.25, Pharmaceutical Services.

The regulations require that:

The hospital must have pharmaceutical services that meet the needs of the patients. The institution must have a pharmacy directed by a registered pharmacist or a drug storage area under competent supervision. The medical staff is responsible for developing policies and procedures that minimize drug errors. This function may be delegated to the hospital's organized pharmaceutical service.

42 C.F.R. � 482.25.

During the survey, based on interviews and a review of documentation, the State surveyors found that the facility lacked pharmaceutical services that met the needs of the hospital's patients because: interview(s) with Petitioner's administration confirmed that the hospital lacked an organized medical staff responsible for developing policies and procedures that minimize drug errors; Petitioner lacked policies and procedures for pharmaceutical service that ensured high quality care and minimum errors; and, on the day of the survey, interviews confirmed that Petitioner was on a credit hold and that medication orders could not be obtained unless cash on delivery was approved with the owner prior to ordering, which prohibited Petitioner from being able to obtain medication timely. There was a lack of assurance that medication could be obtained when needed. Further, based on interviews with staff and lack of availability of a documented formulary to review, it was confirmed that the facility lacked an established formulary system. CMS Ex. 1, at 21 - 23.

Petitioner asserts that at the time of the survey it had a contract with a local registered pharmacist to provide pharmacy services for the nursing facility and psychiatric unit as well as the hospital, citing P. Exs. 16 and 17. Further, Petitioner asserts that it did not have a cash flow problem at the time of the survey and the hospital did not have to pay for drugs on delivery, and that all patient drugs were purchased and administered to the patients. In addition, Petitioner asserted that, through its plan of correction, its pharmacy services policies and procedures had been revised.

It is unclear from P. Ex. 16 whether it is a contract between the consultant and the nursing facility and psychiatric units alone or whether the hospital itself is included. However, I do not have to make this determination to find Petitioner out of compliance with this condition. Petitioner has admitted that at the time of the survey it did not have a set formulary(8) of drugs reviewed by Petitioner's medical staff. HCFA Ex. 6, at 6. The formulary contained in P. Ex. 17 is unsigned and undated and Petitioner has not explained its purpose. Moreover, Petitioner has not proved that it had an organized medical staff responsible for developing policies and procedures to minimize drug errors or that it had a policy and procedures to ensure high quality care and minimize drug errors. Furthermore, Petitioner has not submitted evidence to show that its financial position could assure that it could obtain medication timely if needed. Finally, it is irrelevant whether Petitioner revised its policies and procedures after the date of the survey, because, as I stated above, I must determine Petitioner's compliance as of the date of the survey.

G. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.26, Radiologic Services.

The regulations require that:

The hospital must maintain, or have available, diagnostic radiologic services. If therapeutic services are also provided, they, as well as the diagnostic services, must meet professionally approved standards for safety and personnel qualifications.

42 C.F.R. � 482.26.

During the survey, based on interview(s), the State surveyors found that there was no employee(s) available for radiological services. The person responsible for performing x-rays was the full-time administrator of the nursing facility. Moreover, the State surveyors found that there were 50 radiological studies which had not been read over a two month period. CMS Ex. 1, at 23 - 24.

Petitioner asserts that it had a contract with the nursing home administrator (who it asserts was an former x-ray technician) to perform the necessary radiology procedures and another contract with a physician to read the x-rays. Petitioner asserts it did not have a contract with a radiologist to be the medical director of radiology since it rarely had an acute care patient. Based on the deficiency noted during the survey, Petitioner made arrangements to have the radiology department supervised by a consulting radiologist.

I find Petitioner's assertions unpersuasive. Petitioner fails to cite any evidence in support of its contentions. Moreover, whether or not Petitioner made an arrangement to have the radiology department supervised at some time after the November 5, 1998 survey is irrelevant, as I must determine Petitioner's compliance as of the date of the survey.

H. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.28, Food and Dietetic Services.

The regulations require that:

The hospital must have organized dietary services that are directed and staffed by adequate qualified personnel. However, a hospital that has a contract with an outside food management company may be found to meet this Condition of participation if the company has a dietitian who serves the hospital on a full-time, part-time, or consultant basis, and if the company maintains at least the minimum standards specified in this section and provides for constant liaison with the hospital medical staff for recommendations on dietetic policies affecting patient treatment.

42 C.F.R. � 482.28.

During the survey, based on interviews and observation, the State surveyors found that Petitioner had no organized dietary services. The State surveyors found specifically that employees had to purchase food for the hospital using their own personal funds from the local grocery store due to budget constraints and that a current therapeutic diet manual had not been approved by the dietitian or medical staff, violating standards for organization and diets. CMS Ex. 1, at 24 - 27.

Petitioner asserts that it always had a full-time employee to direct dietary services and that it contracts with a dietary consultant to plan patient meals and ensure that the meals meet nutritional guidelines. Further, Petitioner asserts that at the time of the survey it did have a dietary department manual and that its plan of correction provided additional assurance about how it would achieve compliance with the alleged deficiencies from the November survey. However, in its March 16, 1999 letter to CMS, Petitioner admitted that its dietary department manual had not been approved by an organized medical staff or updated by a dietary consultant. CMS Ex. 6, at 7.

Petitioner has cited no evidence that it has always had a full-time employee directing the dietary department or to support its contention that it contracts with a dietary consultant to plan patient meals. Instead, Petitioner cites to an undated document, P. Ex. 18, to support its assertions. I cannot tell from this document, which is entitled "Dietary Services" and also contains dietary assessment and other forms, whether they were in use at the time of the survey or even if they pertain to the hospital. Moreover, Petitioner's admission alone is enough in this instance to show that it was out of compliance with participation requirements.

I. As of November 5, 1998, Petitioner was out of compliance with the condition of participation found at 42 C.F.R. � 482.42, Infection Control.

The regulations require that:

The hospital must provide a sanitary environment to avoid sources and transmission of infections and communicable diseases. There must be an active program for the prevention, control, and investigation of infections and communicable diseases.

42 C.F.R. � 482.42.

During the survey, based on observation and staff interview, the State surveyors found Petitioner out of compliance with several standards in that there was no active program for the prevention, control, and investigation of infections and communicable diseases. They found specifically that: there was no one designated as infection control officer; there was no functioning infection control committee on the day of survey; and there was no log of incidents related to infections and communicable diseases available for review.

CMS Ex. 1, at 28 - 31.

Petitioner asserts that the size of the hospital meant that the individuals who participated in the safety, infectious disease and other mandatory committee functions were common to "all departments," which I infer refers to the nursing facility and the psychiatric unit. Petitioner now states that the "discrepancy" has been resolved by the establishment of a quality assurance committee, referring to P. Ex. 26, labeled "Disaster Plan." I do not see how this document even refers to the deficiencies cited by the State surveyors here. Moreover, the actions taken by Petitioner following November 5, 1998, are irrelevant to whether it was in substantial compliance on that date.

3. CMS is authorized to terminate Petitioner's provider agreement.

CMS may terminate a hospital from the Medicare program if it finds that the hospital is not in compliance with the provisions of the Act and the applicable regulations or if the hospital no longer meets the appropriate conditions of participation. Act, section 1866(b)(2); 42 C.F.R. � 489.53(a)(1). I have found both that Petitioner did not meet the statutory definition of a hospital and that it no longer met nine conditions of participation. Accordingly, CMS is authorized to terminate Petitioner's provider agreement.
JUDGE
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Richard J. Smith

Administrative Law Judge

 

FOOTNOTES
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1. When this case was initially docketed, CMS was referred to as the Health Care Financing Administration or HCFA. When I refer to anything in the record previously submitted as the Health Care Financing Administration or HCFA I will refer to it instead as the Centers for Medicare & Medicaid Services or CMS.

2. Previous to the November 28, 2000 conference, the parties had exchanged witness and exhibit lists and proposed exhibits in preparation for an in-person hearing. However, these submissions were not in the record file, as the parties were to have brought copies of proposed exhibits to the hearing. Judge Leahy directed the parties to enclose copies of any documents they wanted her to consider, including declarations or statements of witnesses.

3. The notice letter also stated that to participate a hospital must be "free of hazards to the health and safety of the patients." CMS did not include this as an issue in its briefs and I do not address it in my decision.

4. Petitioner calls this unit a "GerioPsych" unit.

5. CMS uses the term "acute care" hospital to mean a hospital that meets the statutory definition of a hospital under federal law and meets the conditions of participation. See CMS Ex. 7 at 2 - 3. Petitioner uses the term "medical/surgical unit" or "med/surg" to refer to such an entity. I will refer to such entity either as the "hospital" or "acute care" hospital.

6. I use the term nursing facility here when referring either to the long term care facility Petitioner ran in the same building with the hospital or to either a skilled nursing facility or a nursing facility as defined in the regulations. See 42 C.F.R. � 483.5.

7. I take CMS's arguments from its brief and reply brief. I take Petitioner's arguments from its response brief. I do not refer to the page numbers of the brief regarding each argument.

8. A drug formulary is a list of drugs to which medical staff is supposed to refer and to have available for use. It's important for the prescription and dispensing of drugs. CMS Ex. 12, at 104.

CASE | DECISION | JUDGE | FOOTNOTES