The appellant, Blue Shield of California ("Blue Shield"), has asked the Medicare Appeals Council to review an Administrative Law Judge's (ALJ's) decision dated November 26, 2001. The decision concerns services provided at Friendship Manor, a skilled nursing facility (SNF), to the beneficiary, C. J. G., from July 14, 2000 to August 1, 2000.

The Medicare Appeals Council grants the request for review, because the Administrative Law Judge's decision contains an error of law. See 20 CFR §§ 404.967 and 404.970, incorporated by reference in 42 CFR § 422.608. The Council hereby vacates the ALJ's decision and remands this case to the ALJ for further proceedings, including a new decision. See 20 CFR § 404.977, incorporated by reference in 42 CFR § 422.608.

The ALJ found that Blue Shield, a Medicare + Choice Organization (M+CO), was obligated to cover and pay for the SNF services provided to the beneficiary during the period at issue. The ALJ's decision is legally insufficient because it does not cite nor reflect the relevant legal standards. On remand, the ALJ shall consider the law relevant to the M+CO's obligation to cover emergency and post-stabilization services furnished to its enrollee, and evaluate all the evidence of record in reaching a decision. The central legal issue to be resolved is whether the M+CO must cover SNF care furnished to the enrollee following receipt of out-of-plan emergency hospital services.

The salient facts are not in dispute. On July 11, 2000, the beneficiary was transported by his son from the Los Angeles/Orange County area to the San Diego area. The beneficiary was admitted to Villa Bonita, an assisted living facility in Chula Vista. (Tape of Hearing) The service area for the beneficiary's M+CO (Blue Shield) at that point in time was Los Angeles and Orange Counties. (Exhibit 18-1, 18-2) On July 14, 2000, the beneficiary became urinary incontinent. Nurses at Villa Bonita sent the beneficiary to the emergency room (ER) at Grossmont Hospital in La Mesa (San Diego County). (Tape of Hearing; Exhibits 18-2, 21-F1) Testing at Grossmont Hospital showed a 3+ blood level in the beneficiary's urine. (Tape of Hearing) A physician at Grossmont Hospital ordered the insertion of a Foley catheter. (Exhibit 1-19)

The ER doctor also recommended that the beneficiary receive follow-up care at a facility able to accommodate a Foley-catheter patient. (Exhibit 1-19, 1-20) The same day, July 14, 2000, the beneficiary was discharged from the hospital, and transported via ambulance to Friendship Manor, a SNF in San Diego County. (Exhibit 1-21) Based on these facts and the other evidence of record, the ALJ found that the beneficiary was in need of SNF services, and that the beneficiary's M+CO was required to cover the cost of those services. (ALJ Dec. at 8)

The parties do not dispute that Grossmont Hospital and Friendship Manor were outside of the M+CO's service area during the period at issue. The parties also do not dispute that the services provided at Grossmont Hospital on July 14, 2000 were emergent. ⁽¹⁾ (Request for Review dated 01/22/02, Exhibits 18, 4-1) Moreover, the M+CO's obligation to cover these emergency services is also not in dispute.

Under the regulations governing the M+C Program, M+COs must cover the cost of services immediately following emergency care if certain requirements are met. See 42 CFR § 422.100(b)(B)(1998) (effective until July 31, 2000). The services provided after emergency care are known as "post-stabilization care services." Id. See also 42 CFR 422.113(c)(effective July 31, 2000);

§ 1852(d)(2) of the Social Security Act. The Health Care Financing Administration (HCFA) ⁽²⁾ indicates that the purpose of the post-stabilization care services provision is to ensure continuity of care after a patient's emergency condition has been stabilized. See Comments and Responses to Final Rule, 42 CFR 417 and 422, June 29, 2000, Post-Stabilization Care Services.

When first promulgated, the regulations defined "post-stabilization care services" as "services that were...not pre-approved by the organization because the organization did not respond to the provider of post-stabilization care services' request for pre-approval within 1 hour after being requested to approve such care, or could not be contacted for pre-approval." Id. That provision was effective until July 31, 2000. See Summary to Final Rule 42 CFR Parts 417 and 422 dated June 29, 2000 (indicating the revised regulation's effective date as July 31, 2000).

Beginning on July 31, 2000, the definition of post-stabilization care services changed to: "covered services, related to an emergency medical condition, that are provided after an enrollee is stabilized in order to maintain the stabilized condition, or, under the circumstances described in paragraph (c)(2)(iii) of this section, to improve or resolve the enrollee's condition." See 42 CFR § 422.113(c)(1)(2000). The revised regulation also provided additional guidance for determining the circumstances under which a MCO could be held liable for the cost of post-stabilization care:

The M+C organization--

(i) Is financially responsible (consistent with § 422.214) for post-stabilization care services obtained within or outside the M+C organization that are pre-approved by a plan provider or other M+C organization representative;

(ii) Is financially responsible for post-stabilization care services obtained within or outside the M+C organization that are not pre-approved by a plan provider or other M+C organization representative, but administered to maintain the enrollee's stabilized condition within 1 hour of a request to the M+C organization for pre-approval of further post-stabilization care services;

(iii) Is financially responsible for post-stabilization care services obtained within or outside the M+C organization that are not pre-approved by a plan provider or other M+C organization representative, but administered to maintain, improve, or resolve the enrollee's stabilized condition if--

(A) The M+C organization does not respond to a request for pre-approval within 1 hour;

(B) The M+C organization cannot be contacted; or

(C) The M+C organization representative and the treating physician cannot reach an agreement concerning the enrollee's care and a plan physician is not available for consultation. In this situation,the M+C organization must give the treating physician the opportunity to consult with a plan physician and the treating physician may continue with care of the patient until a plan physician is reached or one of the criteria in § 422.113(c)(3) is met; and

(iv) Must limit charges to enrollees for post-stabilization care services to an amount no greater than what the organization would charge the enrollee if he or she had obtained the services through the M+C organization.

§ 422.113(c)(2)(2000). The regulation published in July 2000, also delineates when the M+CO's obligation to cover post-stabilization care services terminates

The M+C organization's financial responsibility...
ends when--

(i) A plan physician with privileges at the treating hospital assumes responsibility for the enrollee's care;

(ii) A plan physician assumes responsibility for the enrollee's care through transfer;

(iii) An M+C organization and the treating physician reach an agreement concerning the enrollee's care; or

(iv) The enrollee is discharged.

42 CFR § 422.113(c)(3)(2000).

The ALJ erred in not considering whether the services provided by Friendship Manor from July 14, 2000 to August 1, 2000 constitute "post-stabilization care services" within the meaning of the M+C Program regulation. On remand, the ALJ shall make such a finding, as well as determine whether the M+CO was obligated to cover and pay for such services. The ALJ shall determine the M+CO's obligation to cover the services furnished from July 14, 2000 to July 30, 2000, under the regulations then in effect, and also determine the M+CO's obligation to cover the services rendered on July 31, 2000, under the revised regulations, to the extent applicable.

If the ALJ finds that the M+CO contests its obligation to cover the cost of services provided on August 1, 2000, the ALJ should also analyze the M+CO's obligation to cover services furnished on that date under the revised regulations, to the extent applicable. The ALJ assumed that the August 1, 2000 services were disputed. However, the testimony of the beneficiary's son, Sheldon Gordon, indicates that the M+CO had agreed to provide full coverage beginning on August 1, 2000. Also, the M+CO suggests that it was willing to provide SNF coverage as of August 1, 2000.(Exhibit 4-1) In its letter brief before the ALJ, the M+CO ambiguously states that it is denying coverage "through August 1, 2000." (Exhibit 18-1) Again, whether the cost of services for August 1, 2000 is in dispute is an issue which must be determined by the ALJ.

On remand, the ALJ shall provide notice to the parties and provide them with an opportunity for a hearing. The Council notes that at the hearing of October 22, 2001, the ALJ interrupted the parties, stating that he was "pressed for time" or otherwise had limited time. The ALJ certainly may control his docket and similar administrative matters, the order of presentations, decorum at the hearing, and decline to entertain certain evidence within the confines of due process. However, due process also requires that the parties be provided with a full opportunity to present their case. This is particularly important when parties are not experts in the field and acting pro se.

The ALJ shall issue a new decision containing an evaluation of all the evidence under the relevant legal criteria. The ALJ may take any further action not inconsistent with this remand order.

Thomas E. Herrmann
Administrative Appeals Judge

M. Susan Wiley
Administrative Appeals Judge

Date: August 4, 2003

1. The medical expert who testified at the hearing, Thomas Campbell, M.D., opined that the services at Grossmont Hospital were emergency or urgent. Dr. Campbell further testified that subsequent SNF services were required because the Foley catheter made the beneficiary totally dependent.

2. Effective July 1, 2001, HCFA became known as the Centers for Medicare & Medicaid Services (CMS).