SUBJECT:

Puget Sound Behavioral Health

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

I enter summary disposition in favor of the Centers for Medicare & Medicaid Services (CMS) and against Petitioner, Puget Sound Behavioral Health. In doing so I sustain CMS's determination to certify Petitioner as a psychiatric hospital effective April 4, 2002.

I. Background

Petitioner is a facility that is located in Tacoma, Washington. By letter dated February 1, 2002 CMS certified Petitioner to participate in the Medicare program as a general hospital effective December 20, 2001. CMS certified Petitioner to participate in Medicare as a psychiatric hospital effective April 4, 2002. On July 24, 2003 Petitioner filed a hearing request to challenge the effective date of its participation as a psychiatric hospital. In its hearing request Petitioner contended that its certification as a psychiatric hospital should be made retroactive to April 4, 2001.

The case was assigned to me for a hearing and a decision. I directed the parties to file pre-hearing briefs and to exchange proposed exhibits. CMS filed its exchange and moved for summary disposition, contending that there were no disputed issues of material fact in this case. Petitioner opposed the motion.

In its pre-hearing exchange CMS filed 57 proposed exhibits (CMS Ex. 1 - 51 and CMS Ex. 57 - 62). It cites to some of these as containing undisputed facts to support its motion. Petitioner filed the declarations of two individuals, Margaret Webster and David Dula, in connection with its opposition to CMS's motion. I am making all of CMS's proposed exhibits and the declarations of Ms. Webster and Mr. Dula part of the record of this case. For purposes of the record I am designating Ms. Webster's declaration as P. Ex. 1 and I am designating Mr. Dula's declaration as P. Ex. 2. In deciding CMS's motion, and as I make plain below, I am relying only on those facts which are material to the case and which are undisputed.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. Summary disposition is appropriate; and

2. As a matter of undisputed fact and law CMS's determination to certify Petitioner to participate in Medicare as a psychiatric hospital effective April 4, 2002 must be sustained.

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 separate heading. I discuss each Finding in detail.

1. Summary disposition is appropriate.

Summary disposition in administrative cases involving CMS is governed by the principles of summary judgment that are set forth at Rule 56 of the Federal Rules of Civil Procedure. Livingston Care Center, DAB CR906 (2002), aff'd, DAB No. 1871 (2003); Madison Health Care Inc., DAB CR1094 (2003); Lebanon Nursing and Rehabilitation Center, DAB CR1069 (2003). Summary disposition is appropriate where there are no disputed issues of material fact. A material fact is a fact which, if established, might affect the parties' dispute over a particular issue. The moving party has the obligation to aver the material facts that it is relying on and which it alleges to be undisputed. Fed. R. Civ. P. 56(c). It is appropriate to grant summary disposition where conclusions favorable to the moving party may be drawn from undisputed material facts and applicable law.

Facts are not material to the outcome of a case if they are not probative of the issue in dispute. A motion for summary disposition will not be defeated by facts that are not material to the issue that is in dispute. Moreover, the concept of material facts must not be confused with conclusions that are based on material facts. A dispute between the parties as to the correct conclusion to draw from the facts will not be an impediment to the entry of summary disposition if the material facts are not disputed.

As I explain in detail, below, there are no disputed issues of material fact in this case. There are disputes as to how applicable law operates in light of undisputed material facts. But, such disputes do not call into question the truthfulness or existence of any of the facts on which CMS relies. Petitioner also avers facts which it contends are material to the outcome of this case and which it asserts raise a dispute as to the facts that are relied on by CMS. As I explain below, the facts relied on by Petitioner - which I am assuming to be true for purposes of my decision - are not material because they have no bearing on the outcome of this case.

2. As a matter of undisputed fact and law CMS's determination to certify Petitioner to participate in Medicare as a psychiatric hospital effective April 4 2002 must be sustained.

CMS asserts the following facts to be undisputed:

• Between December 2001 and January 2002 Petitioner applied to CMS for Medicare certification as a hospital. CMS certified Petitioner to participate in Medicare as a hospital effective December 20, 2001. CMS Ex. 4; CMS Ex. 8. CMS's determination to certify Petitioner to participate as a hospital was based on Petitioner's certification by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). CMS Ex. 20.

• At the same time that Petitioner applied for certification to participate in Medicare as a hospital it also sought certification as a psychiatric hospital.

• CMS surveyed Petitioner from January 16 - 18, 2002 (January 2002 survey) in order to determine whether Petitioner satisfied all requirements for participation in Medicare as a psychiatric hospital. CMS Ex. 36; CMS Ex. 48; CMS Ex. 58.

• The surveyors determined that Petitioner was not in compliance with all of the requirements for participation in Medicare as a psychiatric hospital. CMS Ex. 58. By FAX on February 6, 2002 and by letter dated February 8, 2002, CMS provided Petitioner with the statement of deficiencies notifying Petitioner that 11 standard level deficiencies had been identified. CMS Ex. 27; CMS Ex. 58.

• CMS advised Petitioner that it would certify Petitioner to participate in Medicare as a psychiatric hospital on the date that Petitioner submitted an acceptable plan of correction which addressed the deficiencies that were identified at the January 2002 survey. CMS Ex. 27.

• Petitioner filed a plan of correction on April 4, 2002. CMS Ex. 11. CMS accepted Petitioner's plan of correction on April 11, 2002 and certified Petitioner to participate in Medicare as a psychiatric hospital effective April 4, 2002. CMS Ex. 7.

These facts, if undisputed, support a decision that is favorable to CMS. When read with applicable statutes and regulations the facts establish that the earliest date when CMS could have certified Petitioner to participate in Medicare as a psychiatric hospital was April 4, 2002.

A "hospital" and a "psychiatric hospital" are different types of entities for purposes of Medicare participation. A "hospital" is defined at section 1861(e) of the Social Security Act (Act) to be a facility where injured, disabled, or sick persons receive diagnostic, therapeutic, or rehabilitative services on an inpatient basis under the supervision of physicians. The Act establishes specific criteria which a facility must satisfy in order to qualify for certification as a hospital. Act, sections 1861(e)(2) - (9). A "psychiatric hospital" is defined at section 1861(f) of the Act to be a facility which is primarily engaged in providing, under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons. In order to qualify for Medicare participation as a psychiatric hospital a facility must satisfy the criteria of sections 1861(e)(3) - (9) and it must also satisfy special additional criteria that are set forth at sections 1861(f)(3) and (4) of the Act.

The facts offered by CMS establish that Petitioner sought certification both as a hospital and as a psychiatric hospital. By applying for two types of certification Petitioner, in effect, asked CMS to review its qualifications to participate both as a hospital and as a psychiatric hospital.

Regulations establish the process by which CMS determines whether a facility satisfies the criteria for certification to participate in Medicare. As a general rule, in order to be certified to participate in Medicare, a facility must first be surveyed by or on behalf of CMS and must be found to satisfy all applicable participation requirements. 42 C.F.R. § 489.13. However, a facility may be deemed by CMS to meet the requirements for participation and may be certified without undergoing a survey if that facility is accredited by an accrediting organization whose program has CMS approval at the time of the accreditation survey and accreditation decision. 42 C.F.R. § 489.13(a)(1)(ii).

A facility that is accredited as a hospital by JCAHO is a facility that is accredited by an approved accrediting organization and CMS will deem the facility to have satisfied the criteria for participation in Medicare as a hospital. 42 C.F.R. § 488.5. A survey is not necessary to certify a facility to participate in Medicare as a hospital where that facility is a JCAHO-accredited hospital. Petitioner was accredited as a hospital by JCAHO and, therefore, CMS deemed Petitioner to have satisfied all participation requirements for a hospital effective December 20, 2001 without first surveying Petitioner to determine whether it met those requirements.

However, CMS has not approved JCAHO accreditation of psychiatric hospitals. 42 C.F.R. § 488.5(a)(2). Consequently, Petitioner could not be deemed by CMS to have satisfied Medicare participation requirements as a psychiatric hospital and it was necessary for Petitioner first to be surveyed in order for CMS to determine whether it met those requirements. See 42 C.F.R. § 489.13.

In the case of a facility that is surveyed for compliance with participation requirements the earliest date that the facility may be certified as participating is the date of the survey - but only if that facility satisfies all Medicare participation requirements on the survey date. 42 C.F.R. § 489.13(b). If a facility does not satisfy all participation requirements on the survey date then the earliest date that the facility may be certified as participating is either: (i) the date on which it actually meets all participation requirements; or, (ii) assuming that the facility's deficiencies are "lower level" deficiencies, then the date that the surveying agency receives an acceptable plan of correction from the facility. Alternatively, where there are lower level deficiencies only, CMS may certify the facility to participate on the date that the facility submits to the surveying agency an acceptable request for a waiver or a request for a waiver coupled with an acceptable plan of correction. 42 C.F.R. § 489.13(c)(2).

The facts offered by CMS show that Petitioner was surveyed for compliance as a psychiatric hospital on January 16 - 18, 2002. Based on these facts the earliest date that Petitioner could have been certified by CMS to participate as a psychiatric hospital was January 18, 2002. However, Petitioner was found not to have complied with all participation requirements as of that date. The surveyors who completed the January 2002 survey found that Petitioner failed to comply with several lower level participation requirements, also known as standard level requirements. Petitioner was afforded the opportunity to submit a plan of correction and it availed itself of that opportunity, submitting an acceptable plan on April 4, 2002. CMS certified Petitioner to participate as a psychiatric hospital effective April 4, 2002. By law, this was the earliest date when Petitioner was eligible to participate as a psychiatric hospital.

Petitioner contends that there is a dispute as to the material facts averred by CMS. It asserts that, at the end of the January 2002 survey Ms. Webster, who is Petitioner's chief of clinical services, was told by one of the surveyors that it:

met the two special Conditions of Participation for certification as a "psychiatric hospital." In addition . . . [the surveyor] stated that, because . . . [Petitioner] met the two special Conditions of Participation, . . . [Petitioner] could immediately begin billing the Medicare program for psychiatric services . . . . [The surveyor] stated that, although the surveyors had identified certain deficiencies to be corrected by . . . [Petitioner] (which would be set forth in a written "Statement of Deficiencies"), . . . [Petitioner] satisfied the two special Conditions of Participation.

P. Ex. 1, at 2. As support for this contention Petitioner cites to CMS Ex. 14, an internal CMS memorandum, which states that Petitioner met the two conditions of participation for psychiatric hospitals as of the January 2002 survey.

For purposes of this decision I am accepting as true Ms. Webster's recollection of what was told to her at the completion of the January 2002 survey. I also find that CMS determined that, as of the completion of the January 2002 survey, Petitioner met the special conditions of participation for psychiatric hospitals.

But, these facts do not establish a dispute as to the material facts of this case. They do not provide a basis for me to deny CMS's motion for summary disposition because they establish no basis for me to find that CMS should - or even had the authority to - certify Petitioner to participate in Medicare at any date that is earlier than April 4, 2002.

Petitioner would not have been qualified to participate as of the end of the January 2002 survey even if it met the conditions of participation for psychiatric hospitals if it also manifested lower level deficiencies at that time. The undisputed facts of this case establish that Petitioner indeed manifested such lower level deficiencies.

Regulations which establish criteria for participation of psychiatric hospitals in the Medicare program establish both "conditions" and "standards" of participation as participation criteria. A "condition" of participation is a broad statement of the requirements that a psychiatric hospital must meet. A "standard" of participation is a specific, narrowly drafted criterion of participation which forms a subpart of a broader condition. For example, 42 C.F.R. § 482.61 states as an overall condition of participation that:

The medical records maintained by a psychiatric hospital must permit determination of the degree and intensity of the treatment provided to individuals who are furnished services in the institution.

This condition then enumerates standards at 42 C.F.R. §§ 482.61(a)(1) - (5), (b)(1) - (7), (c)(1) - (2), (d), and (e). These standards govern such specific requirements as, for example, documentation of the reasons for admission of a patient to a psychiatric hospital. 42 C.F.R. § 482.61(a)(3).

Failure to comply with a standard of participation is a "lower level deficiency" under the regulations which govern participation. Under the regulatory scheme a facility may be found at a certification survey to have met the broad overall conditions which govern its participation as a psychiatric hospital but also be found not to have met a particular standard or standards. In that event, the facility will be afforded the opportunity to file a plan of correction showing how it intends to comply with the specific standards as to which it has been found deficient. And, as I discuss above, CMS will certify the facility to participate as a psychiatric hospital on the date that the facility files an acceptable plan of correction. 42 C.F.R. § 489.13(c)(2). If, on the other hand, a facility is found not to have complied with an overall condition of participation, then it must prove actual compliance with that participation requirement before it will be certified.

What Petitioner alleges to have been told at the completion of the January survey is that it met the conditions of participation for a psychiatric hospital. Petitioner was also told, by its receipt of the statement of deficiencies and accompanying correspondence dated February 6 and 8, 2002, that it had 11 standard level deficiencies. It is entirely consistent with the regulatory scheme that Petitioner met conditions of participation yet at the same time manifested some lower level deficiencies. Regulations require that, in light of the presence of these lower level deficiencies, Petitioner could not be certified by CMS to participate as a psychiatric hospital until it either corrected them or until it submitted an acceptable plan of correction which showed how it would correct them. This it did on April 4, 2002. ⁽¹⁾

The presence of lower level deficiencies at the end of the January 2002 survey barred Petitioner from participating until it submitted an acceptable plan of correction even if it was told explicitly by a representative of the survey agency that the presence of such deficiencies would not bar it from participating immediately. That statement, assuming it to have been made, was erroneous. There is nothing in the regulations or the Act which obligates or enables CMS to certify a facility to participate based on the communication of erroneous information to that facility by an employee of a survey agency. It is settled that principles of estoppel do not apply here. Transitional Hospitals Corporation - Las Vegas, DAB CR350 (1995).

What Petitioner does not deny is critical to the outcome of this case. The undisputed fact is that Petitioner manifested standard level deficiencies as of January 18, 2002. This undisputed fact establishes Petitioner could not be certified to participate in Medicare as a psychiatric hospital until it submitted an acceptable plan of correction addressing those standard level deficiencies.

Petitioner argues, however, that even if there are no disputed issues of material fact it qualifies for a "retroactive date" for certification as a matter of law. Petitioner contends that its certification should be made retroactive to April 4, 2001 and cites as authority for this contention 42 C.F.R. § 489.13(d)(2):

If a provider or supplier meets the requirements of . . . [42 C.F.R. §§ 498.13(d)(1) and (d)(1)(i) or (d)(1)(ii)] . . . the effective date [of participation] may be retroactive for up to one year to encompass dates on which the provider or supplier furnished, to a Medicare beneficiary, covered services for which it has not been paid.

Petitioner has offered neither argument nor facts to explain how it would meet the requirements of 42 C.F.R. § 489.13(d)(1) or, for that matter, 42 C.F.R. §§ 489.13(d)(1)(i) or (d)(1)(ii). In its brief opposing CMS's motion for summary disposition Petitioner merely claims that it is eligible for retroactive certification pursuant to these provisions without offering any explanation as to why that is so. Petitioner's Memorandum in Opposition to CMS's Motion for Summary Judgment at 5 - 6.

But, in fact, Petitioner could not have qualified for retroactive certification. The section cited by Petitioner does provide for retroactive certification under certain circumstances. But, it is clearly not applicable to this case. As a prerequisite to being eligible for retroactive certification a provider or supplier must, at a minimum, satisfy the requirements of 42 C.F.R. § 489.13(d)(1). This section states the general rule for participation by an accredited provider:

If the provider or supplier is currently accredited by a national accrediting organization whose program had CMS approval at the time of [the] accreditation survey and accreditation decision, and on the basis of accreditation, CMS has deemed the provider or supplier to meet Federal requirements, the effective date depends on whether the provider or supplier is subject to requirements in addition to those included in the accrediting organization's approved program.

Petitioner did not satisfy the prerequisite for retroactive certification that it meet the requirements of 42 C.F.R. § 489.13(d)(1). As is established by the undisputed facts of this case, Petitioner was accredited by JCAHO as a hospital. However, it was not accredited by JCAHO as a psychiatric hospital and, in any event, CMS does not accept accreditation of a psychiatric hospital as an exception to the survey requirement for certification.

Moreover, even if Petitioner were able to show that it met the requirements of 42 C.F.R. § 489.13(d)(1) it would not be able to show that it met the requirements of either 42 C.F.R. §§ 489.13(d)(1)(i) or (d)(1)(ii). These two subsections govern certification of providers or suppliers who are subject to additional requirements (42 C.F.R. § 489.13(d)(1)(i)) or who are not subject to such requirements (42 C.F.R. § 489.13(d)(1)(ii)). In either event the effective date of certification is the date on which the provider or supplier meets all participation requirements. In this case the effective date is April 4, 2002, the date on which Petitioner was certified to participate as a psychiatric hospital. Petitioner has not contended nor offered any facts to show that it met all participation requirements at an earlier date.

Furthermore, I could not order that Petitioner be certified retroactively even if Petitioner showed that it qualifies for possible retroactive certification. The authority to grant retroactive certification pursuant to 42 C.F.R. § 489.13(d)(2) is within the discretion of CMS. The regulation states that a certification date "may be retroactive" if a provider or supplier meets the criteria for retroactive certification. It does not require CMS to grant retroactive certification. I am without authority to compel CMS to exercise its discretion.

Finally, Petitioner contends that it should be allowed reimbursement for emergency services that it provided to Medicare beneficiaries during the period when it was not certified to participate in Medicare. As support for this contention Petitioner cites to 42 C.F.R. § 424.103. This regulation provides for Medicare reimbursement to non-participating hospitals under certain enumerated circumstances.

I find Petitioner's argument to be irrelevant to this case. Foremost, it is not a contention or a claim that Petitioner made in its hearing request and it therefore does not address an issue which is before me in this case. See 42 C.F.R. § 498.40(b). Additionally, although I am not considering the merits of Petitioner's contention that it deserves reimbursement for emergency services, I note that Petitioner has not even attempted to show how it met the criteria for those services set forth at 42 C.F.R. § 424.103. Petitioner has made no showing that it even submitted emergency services claims to CMS or that CMS ever denied those claims. It has offered no unreimbursed claims and stated no facts to suggest that such (hypothetical) claims should have been reimbursed. ⁽²⁾

Steven T. Kessel

Administrative Law Judge

1. Petitioner has not contended that CMS's determination that there were 11 lower level deficiencies is in error.

2. The declaration of David Dula (P. Ex. 2) avers inpatient and outpatient psychiatric services were provided to patients by Petitioner, but does not specifically aver that Petitioner met the requirements for a non-participating provider of emergency services for which it would be eligible for payment under the regulation or submitted claims for such services.