SUBJECT:

Wesley Long Nursing Center, Inc.,

Petitioner,

Center for Medicare & Medicaid Services

DECISION

The request for hearing by Petitioner, Wesley Long Nursing Center, Inc., is dismissed pursuant to 42 C.F.R. § 498.70(b), as Petitioner has no right to a hearing under statute or regulation, and I have no jurisdiction to hear and decide this case.

I. Background

Prior to September 30, 1998, Wesley Long Community Hospital, and Moses H. Cone Memorial Hospital, were two separate hospital providers, each with its own hospital based skilled nursing facility. Wesley Long Nursing Center was a hospital based skilled nursing facility at Wesley Long Community Hospital, and Moses H. Cone Extended Care Center was a hospital based skilled nursing facility at Moses H. Cone Memorial Hospital. Effective October 1, 1998, the two hospitals merged into a single institution. As a result of the merger of the two hospitals, the two skilled nursing facilities, Wesley Long Nursing Center and Moses H. Cone Extended Care Center were also merged. The surviving entity, Wesley Long Nursing Center, Inc., then became a provider-based skilled nursing facility with Moses H. Cone Memorial Hospital.

By a letter dated, February 29, 2000, the Centers for Medicare & Medicaid Services (CMS) ⁽¹⁾ notified Petitioner (Wesley Long Nursing Center, Inc.) that it met the requirements for a provider-based designation at Moses H. Cone Memorial Hospital. In a letter dated, April 14, 2000, Petitioner requested reconsideration of CMS's determination that it met the requirements for provider-based designation as part of Moses H. Cone Memorial Hospital. On September 28, 2001, CMS denied Petitioner's request for reconsideration indicating that Petitioner was not entitled to reconsideration pursuant to 42 C.F.R. Part 498. Petitioner then filed a request for hearing before an Administrative Law Judge (ALJ) on November 20, 2001, challenging CMS's determination as to its provider-based designation. The case was assigned to me for hearing and a decision.

CMS subsequently filed a motion to dismiss to which it attached three exhibits (CMS Exs. 1 - 3). Petitioner filed a motion in opposition to CMS's motion to dismiss, to which it attached five exhibits (P. Exs. 1 - 5). Neither party filed an objection to the admission of the exhibits. I, therefore, accept into evidence CMS's Exs. 1 - 3 and P. Exs. 1 - 5.

II. Governing Law

The Social Security Act (Act), section 1866(h)(1) (42 U.S.C. § 1395cc(h)(1)) provides a right to a hearing for an institution or agency dissatisfied with a determination by the Secretary of the Department of Health & Human Services (Secretary) that it is not a provider of services. Section 1866(h) of the Act also provides for a hearing in the case of adverse determinations under section 1866(b)(2) (42 U.S.C. § 1395cc(b)(2)), which include determinations by the Secretary not to enter into an agreement with a provider or supplier, not to renew an agreement with provider or supplier, or to terminate an agreement with a provider or supplier.

The Secretary promulgated regulations at 42 C.F.R. Part 498 effectuating the provisions of section 1866(h)(1) of the Act. Appeal rights are set forth in the regulation by status as a prospective provider or supplier or as a current provider or supplier. A prospective provider is entitled to a hearing before an ALJ only after receiving an unfavorable reconsidered determination or unfavorable revised reconsideration determination that it does not qualify as a provider. 42 C.F.R. § 498.5(a). Providers are entitled to a hearing by an ALJ after receiving "an initial determination to terminate" the provider's provider agreement. 42 C.F.R. § 498.5(b)

III. Issue

The threshold issue in this case is:

Whether CMS's determination that Petitioner met the requirements for provider-based status as part of the Moses H. Cone Memorial Hospital and not a free-standing facility is reviewable by an ALJ.

Based on my review of the applicable law, and the briefs filed by the parties, I find that I do not have jurisdiction to review the issue presented in this case.

IV. The Parties' Contentions

A. Petitioner's Argument

Although Petitioner was designated with provider-based status, Petitioner argues that its intent was to be given free-standing reimbursement classification. CMS, however, did not accord Petitioner the free-standing status. CMS determined that Petitioner was a provider-based facility. Therefore, Petitioner initially argued in its request for hearing that the issue on appeal was whether CMS's determination that Petitioner met the requirements for provider-based status as part of the Moses H. Cone Memorial Hospital was correct.

However, in its response to CMS's motion to dismiss, Petitioner asserted that the case before me is one of first impression as it represents the intersection between the CMS policy regarding provider-based status (Program Memorandum A-96-7) and the policy that a hospital can only have one hospital-based skilled nursing facility (FKA-51 and Letter 52-96). The substance of Petitioner's argument is that the CMS designation of Wesley Long Nursing Center as "provider-based" facility to the Moses H. Cone Memorial Hospital, was a determination that it was no longer able to participate in Medicare as a separate provider.

Thus, Petitioner contends, the CMS determination amounted to a determination that Petitioner was no longer a provider. Petitioner asserts that the Medicare regulations provide that a provider is entitled to a hearing in the event it is dissatisfied with a determination that it is not a provider of services. 42 C.F.R. § 498.1(a). Petitioner further argues that CMS's determination that Petitioner was provider-based resulted in a determination that Petitioner could no longer participate in Medicare as a separate skilled nursing facility provider amounted to a termination of its provider status as an existing separate skilled nursing facility provider. Thus, Petitioner reasons that because CMS's actions are tantamount to an exclusion, that action should be considered an "initial determination" under 42 C.F.R. § 498.3(b)(8)(2001), and Petitioner should be entitled to a hearing. In addition, Petitioner argues that "it fails to meet nearly all of the criteria for provider-based status" and, therefore, the determination which imposed provider-based status should be reversed or reconsidered.

B. CMS's Argument

CMS argues that the regulations in effect in 2000, and the case law clearly establish that this forum lacks jurisdiction to review a provider-based determination in this case. CMS argues that Petitioner is trying to frame the issue to make it appear that the action taken by CMS was a termination of Petitioner from participation in Medicare which entitles Petitioner a right to appeal. In addition, CMS maintains that, assuming arguendo, Petitioner does have a right to a hearing, the hearing request must be dismissed because Petitioner's hearing request was untimely.

V. Findings of Fact and Conclusions of Law

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

1. I do not have authority to hear and decide this case.

Petitioner, at all time relevant to this case, was certified as a skilled nursing facility qualified to participate in the Medicare program. When Wesley Long Community Hospital merged with Moses H. Cone Memorial Hospital, effective October 1, 1998, the provider number for Wesley Long Community Hospital was terminated from the Medicare program. Therefore, Wesley Long Nursing Center could no longer be a provider-based skilled nursing facility with Wesley Long Hospital. Wesley Long Nursing Center was then accorded provider-based status as part of the Moses H. Cone Memorial Hospital.

Under the Medicare program, a "provider-based" reimbursement status may have important reimbursement implications for a participating facility. Essentially, a provider-based facility is one which has been found to be an integral part of another provider so that the other provider may claim reimbursement for those services that are provided by the integrated facility as if those services were given by the provider itself. HCFA Program Memorandum A-96-7. If a facility is accorded provider-based reimbursement status, it may mean that the provider with which the facility is integrated may be able to claim reimbursement from Medicare for certain amount of the integrated facilities costs. Such costs may not be reimbursable, either to the facility or to the provider with which it asserts to be integrated, if the facility is not accorded provider-based status. Thus, in some circumstances, Medicare may effectively pay more for the services of a provider-based facility than it would pay if facility were determined to be a free-standing facility.

The only real dispute in this case, then, is how Medicare reimburses Petitioner for the services that it provides. Under the regulations which governed this case, a determination by CMS concerning classification of a provider for purposes of reimbursement is not a determination which gives a dissatisfied party hearing and appeal rights. ⁽²⁾ Similarly, under those same regulations, I do no have authority to hear and decide a case in which the issue is reimbursement classification status.

Petitioner has no right to hearing because they are challenging their reimbursement classification and not their certification status. CMS never determined that Petitioner failed to qualify as a provider of services nor had it determined to terminate Petitioner's status as a provider of services. Therefore, Petitioner's argument that the CMS action was tantamount to a denial of an agreement, renewal of an agreement, or that Petitioner had been denied participation in the Medicare program is without merit.

In this case, Congress provided for no right to a hearing or appeal and the regulations created no such right at the time of the CMS action, thus I have no jurisdiction. My result is consistent with prior decision by the Departmental Appeals Board (DAB). See Comprehensive Mental Health of Baton Rouge, DAB No. 1774 (2001); Mira Vista Care Center, Inc., DAB No. 1789 (2001); See also, Ventura County Medical Center, DAB CR888 (2002).

2. The remaining issues raised by the parties are moot.

Because I find that I do not have authority to hear and decide this case, I decline to address other issues that the parties have raised. These issues are: whether Petitioner filed a timely hearing request; assuming Petitioner did not file a timely hearing request, whether Petitioner established good cause for not having done so and whether Petitioner failed to meet nearly all of the criteria for provider-based status. I decline to decide the other issues because those issues are made moot by the absence of authority for me to hear and decide this case.

VI. CONCLUSION

For the foregoing reasons, Petitioner's request for hearing must be dismissed.

Alfonso J. Montano

Administrative Law Judge

1. Effective July 5, 2001, the Health Care Finance Administration (HCFA) was renamed the Centers for Medicare & Medicaid Services (CMS). 66 Fed. Reg. 35437.

2. Effective January 10, 2001, relevant sections of Title 42 of the Code of Federal Regulations were revised. The amended regulations transferred authority to review provider-based decisions to the Departmental Appeals Board (DAB). However, all of the determinations made by HCFA in this case were made prior to the effective date of the amended regulations. The amended regulations do not provide for retroactive application to matters initiated prior to January 10, 2001.