Snowden at Fredericksburg and Mary Washington Hospital, DAB CR486 (1997)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: Snowden at Fredericksburg and Mary Washington Hospital, Petitioners,
- v. -
Health Care Financing Administration.

Date: August 5, 1997

Docket No. C-95-183
Decision No. CR486

DECISION

I decide that the Health Care Financing Administration (HCFA) properly certified
Petitioner, Snowden at Fredericksburg (Petitioner Snowden) to participate in the
Medicare program as a psychiatric hospital, effective December 28, 1992. I decide
additionally that HCFA properly determined that Petitioner Snowden could not be
considered to be a component of Petitioner Mary Washington Hospital (Petitioner
MWH), for Medicare reimbursement purposes, beginning June 1, 1992 and thereafter.

As I discuss in greater detail below, Petitioner MWH is an acute care hospital that is
located in Fredericksburg, Virginia. Petitioner MWH has been certified to participate
in Medicare as an acute care hospital for many years. Prior to the inception of
Petitioner Snowden, Petitioner MWH offered limited psychiatric hospital care.
Petitioner Snowden is a psychiatric hospital which opened in 1992 that also is located
in Fredericksburg, Virginia. Petitioners MWH and Snowden are tied closely to each
other, in physical proximity, and in their ownership and management. The purposes of
creating Petitioner Snowden included offering more comprehensive, and more visible,
psychiatric hospital care than that which had been offered previously by Petitioner
MWH. HCFA certified Petitioner Snowden to participate in Medicare as a psychiatric
hospital, effective December 28, 1992.

On September 26, 1995, Petitioners requested a hearing. In their request, Petitioners
asserted that HCFA should be directed to certify Petitioner Snowden to participate in
Medicare as a psychiatric hospital earlier than December 28, 1992. Petitioners
asserted, additionally, that Petitioner Snowden was a component of Petitioner MWH
during the period from the inception of Petitioner Snowden's operation in June, 1992
until December 28, 1992. Petitioners contended that Petitioner MWH is entitled to
claim reimbursement from Medicare for the psychiatric services that Petitioner
Snowden provided to Medicare beneficiaries during this period.

HCFA moved to dismiss Petitioners' hearing requests on the ground that Petitioners
had no right to a hearing. On April 9, 1996, I issued a ruling denying HCFA's
motion. Ruling on Motion to Dismiss Request for Hearing (Ruling).

On January 28, 1997, I issued an order assigning to Petitioners the burdens of coming
forward with evidence and proving that HCFA incorrectly determined the certification
date of Petitioner Snowden, and that HCFA incorrectly determined that Petitioner
Snowden was not a component of Petitioner MWH. On February 25, 1997, I held an
in-person hearing in Washington D.C. At that hearing, Petitioners presented the
testimony of three witnesses. Additionally, Petitioners offered as evidence, and I
received from them, 23 exhibits (P. Ex. 1 - 15, 17 - 24). HCFA offered as evidence,
and I received from it, 40 exhibits (HCFA Ex. 1 - 40).

I afforded the parties the opportunity to submit post-hearing briefs and reply briefs.
HCFA submitted a post-hearing brief and a reply brief. Petitioners jointly submitted a
post-hearing brief and a reply brief.

Petitioners submitted 10 attachments with their post-hearing brief (Attachments "A"
through "J"). Attachments "A", "B", and "C" appear to be documents of an
evidentiary nature which Petitioners could have offered, but did not offer, at the
February 25, 1997 hearing. I conclude that I should not receive into evidence
Attachments "A", "B", and "C" inasmuch as Petitioners have made no showing as to
why they are offering them untimely. Attachments "D" through "J" are copies of
administrative decisions or opinions which Petitioners and HCFA have discussed in
their post-hearing arguments. I conclude that Petitioners supplied attachments "D"
through "J" for my convenience and not as evidence. Therefore, it is unnecessary for
me to rule as to their admissibility. Petitioners submitted also some additional pages
to P. Ex. 1. which had been missing. During the hearing, I indicated that I received
these additional pages into evidence.

The preliminary issues which I addressed in my Ruling were: whether Petitioner
Snowden or Petitioner MWH had a right to a hearing; whether Petitioner Snowden
or Petitioner MWH made timely requests for hearings; and, if not, whether Petitioner
Snowden or Petitioner MWH had demonstrated good cause for not making timely
requests for hearings and, therefore, ought to be given hearings. I made seven specific
rulings which address these issues. Ruling at 8. I hereby adopt as findings of fact and
conclusions of law (Findings) my rulings 1 - 5, and 7. I state them here as Findings 1
- 6. Additionally, I incorporate into this decision the background facts and rationale
of my Ruling. Ruling at 2 - 7, 8 - 19. In the interest of efficiency, I do not repeat
these background facts or rationale here.

My Findings 1 - 6 are as follows:

1. HCFA's determination of the date when Petitioner Snowden first
became eligible to participate in Medicare is an initial determination by
HCFA from which Petitioner Snowden would have had a right to seek
review. (ruling 1).

2. Petitioners did not timely request review of HCFA's initial
determination of the date when Petitioner Snowden first became eligible to
participate in Medicare. (ruling 2).

3. Petitioners have established good cause for their failure to timely request
review of HCFA's initial determination of the date when Petitioner
Snowden first became eligible to participate in Medicare. (ruling 3).

4. HCFA's determination that, between June 1, 1992 and December 28,
1992, the 40 beds which Petitioner MWH assigned to Petitioner Snowden
were not a component of Petitioner MWH is an initial determination by
HCFA from which Petitioners may request review. (ruling 4).

5. Petitioners timely requested a hearing from HCFA's determination that,
between June 1, 1992 and December 28, 1992, the 40 beds which Petitioner
MWH assigned to Petitioner Snowden were not a component of Petitioner
MWH. (ruling 5).

6. The request for a hearing of Petitioners Snowden and MWH from
HCFA's determination that, between June 1, 1992 and December 28, 1992,
the beds which Petitioner MWH assigned to Petitioner Snowden were not a
component of Petitioner MWH, does not rest on facts that are
administratively final and is not moot. (ruling 7).

I do not adopt as a Finding my ruling 6. That ruling stated:

If the 40 beds were a component of Petitioner MWH between June 1, 1992
and December 28, 1992, they would not have to meet the special
requirements for participation of a psychiatric hospital.

I am not adopting ruling 6 as a Finding because, although it is literally correct, it is
confusing as it is stated. As I explain below, a facility whose primary purpose is to
provide psychiatric hospital care must be certified to participate in Medicare as a
psychiatric hospital in order to participate in Medicare. Petitioner Snowden could be
classified as a component of Petitioner MWH during the period from June 1, 1992
until December 28, 1992, and would not have to meet the special requirements for
participation of a psychiatric hospital only if its primary purpose was not to provide
psychiatric hospital care.

There are two substantive issues in these cases. They are: (1) whether HCFA
properly certified Petitioner Snowden to participate in Medicare as a psychiatric
hospital, effective December 28, 1992; and (2) whether HCFA properly determined
that, effective June 1, 1992 and thereafter, Petitioner Snowden was not a component
of Petitioner MWH for Medicare reimbursement purposes.

My Findings which address these substantive issues begin with Finding 7. I set forth
each of my Findings below, as a separately numbered heading. I discuss each Finding
in detail.

7. In order to be certified to participate in Medicare, a provider must apply
to HCFA to participate, and then must be surveyed in order to determine
whether it complies with applicable Medicare participation requirements.

A provider may participate in Medicare if it enters into a participation agreement with
the Secretary of the United States Department of Health and Human Services
(Secretary). Social Security Act (Act), section 1866(a)(1). The Secretary is not
required to enter into a participation agreement with a provider if the Secretary
determines that the provider is not complying substantially with Medicare
participation requirements. Act, section 1866(b)(2).

The requirements for participation are stated in both the Act and in implementing
regulations published by the Secretary. For providers such as hospitals and
psychiatric hospitals, the regulations state broad conditions of participation and,
within those conditions, standards of participation. See, e.g., 42 C.F.R. §§ 482.1 -
482.62. As an example of a condition of participation, 42 C.F.R. § 482.61, which
governs medical records that are maintained by a psychiatric hospital, states that a
psychiatric hospital must maintain medical records which permit determination of the
degree and intensity of the treatment provided to psychiatric patients. As an example
of a standard of participation that is stated within a condition, 42 C.F.R. § 482.61(a)
states that a patient's medical record that is maintained by a psychiatric hospital must
stress the psychiatric component of a patient's record, including the history of findings
and treatment provided for the psychiatric condition for which the patient is
hospitalized.

The Secretary has published regulations which establish a process by which HCFA,
acting on behalf of the Secretary, determines whether an applicant for participation in
Medicare is complying with Medicare participation requirements. An entity which
desires to participate in Medicare must apply to HCFA to be certified to participate.
42 C.F.R. § 489.10(a). Generally, as a prerequisite to certification, an applicant for
participation first must be surveyed by or on behalf of HCFA in order that HCFA may
determine whether that applicant meets all Medicare participation requirements,
including conditions and standards of participation. 42 C.F.R. §§ 488.10, 489.10(d).
HCFA has delegated to State survey agencies the authority to conduct surveys on
behalf of HCFA. Id.

An exception to the survey requirement exists in the case of a hospital that is
accredited by the Joint Commission on Accreditation of Healthcare Organizations
(JCAHO) or by the American Osteopathic Association (AOA). Where such an
accredited hospital applies for participation in Medicare, HCFA will deem the hospital
to meet all Medicare participation requirements without conducting a pre-certification
survey, except for: the requirements for utilization review as specified in section
1861(e)(6) of the Act, and in 42 C.F.R. § 482.30; the additional special staffing and
medical records requirements that apply in the case of a psychiatric hospital that seeks
to be certified to participate in Medicare; and any requirements under the Act or
regulations that HCFA, after consultation with JCAHO and AOA, determines to be
more stringent than are the requirements for JCAHO or AOA accreditation. 42
C.F.R. § 488.5(a)(1) - (3).

8. A provider will be certified to participate in Medicare as of the date of
completion of a pre-certification survey if the provider is found to have met
all Medicare participation requirements as of that date. Where a provider is
found to have met all Medicare conditions of participation as of the date of
completion of an initial survey of that provider, but where the provider is
found not to have complied with other requirements of participation, such
as a standard of participation, then the provider will be certified to
participate on the earlier of the following dates:

a. The date on which the provider actually meets all participation
requirements; or

b. The date on which the provider submits a plan of correction that
HCFA finds to be acceptable.

HCFA will accept an applicant's participation agreement and certify that applicant to
participate in Medicare on the date that a survey of that applicant is completed,
assuming that the applicant meets all participation requirements on that date. 42
C.F.R. § 489.13(a). Where, as a result of a survey, an applicant for participation
(other than a skilled nursing facility) is found to meet all conditions of participation,
but where that applicant is found not to meet other participation requirements, such as
a standard of participation, then the applicant will be certified to participate on the
earlier of the following dates: the date when the applicant actually meets all of the
participation requirements; or, the date on which the applicant submits a plan of
correction which HCFA finds to be acceptable. 42 C.F.R. § 489.13(b).

9. I am without authority to direct HCFA to certify a provider to participate
on a date earlier than the date when that provider satisfies all applicable
participation requirements or submits a plan of correction that is acceptable
to HCFA.

The regulations which govern the survey and certification process state categorically
the circumstances under which a provider may be certified to participate in Medicare.
I do not have the authority to order HCFA to certify a provider to participate on a
date earlier than the date when the provider satisfies all participation requirements, as
is prescribed in 42 C.F.R. § 489.13.

I have no authority to find that HCFA must certify a provider to participate on a date
earlier than that which is allowed by 42 C.F.R. § 489.13, even where HCFA has
contributed to a delay in the certification process and where the provider might be
able to prove that, but for the delays, it would have met participation requirements at
the earlier date. GranCare Home Health Service & Hospice, DAB CR464 at 7
(1997). Nor, generally, do I have the authority to direct HCFA to accept, in lieu of a
survey, some other proof that a provider meets certification requirements, such as
proof that a provider meets State licensing requirements. Id. at 8.

10. The Act defines a "psychiatric hospital" differently than it defines a
"hospital" for purposes of participation in Medicare. In order to
participate in Medicare, a psychiatric hospital must comply with
participation requirements that are in addition to those which apply to a
hospital.

The Act establishes that, for purposes of Medicare participation, a hospital and a
psychiatric hospital are different types of institutions that are organized to provide
different types of services. Act, sections 1861(e), 1861(f). And, both the Act and
implementing regulations provide that there are certification requirements that apply
to a psychiatric hospital in addition to those which apply to a hospital. Act, sections
1861(e), 1861(f); 42 C.F.R. §§ 482.1 - 482.62.

The statutory definition of a hospital includes the criterion that it be engaged primarily
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; . . . .

Act, section 1861(e)(1).

By contrast, the statutory definition of a psychiatric hospital includes the criterion that
it be engaged primarily in providing:

by or under the supervision of a physician, psychiatric services for the
diagnosis and treatment of mentally ill persons; . . . .

Act, section 1861(f)(1) (emphasis added). The Act authorizes the Secretary to
establish clinical record-keeping and staff requirements which apply only to psychiatric
hospitals, and not to other hospitals. Act, sections 1861(f)(3),(4). The Secretary has
implemented these special participation requirements by regulations, at 42 C.F.R. §§
482.61 - 482.62. Section 1861(f) of the Act and 42 C.F.R. § 482.1(a)(2) provide
additionally that, where an institution maintains a distinct part that satisfies the
statutory definition of a psychiatric hospital, then that distinct part shall, in and of
itself, be considered to be a psychiatric hospital for Medicare purposes. However,
that distinct part must comply with the participation requirements which govern a
psychiatric hospital. Id.

11. In order to participate in Medicare, a facility whose primary purpose is
to provide psychiatric care to hospital patients must be surveyed for, and be
found in compliance with, the Medicare participation requirements which
govern a psychiatric hospital.

Where a facility is organized primarily for providing psychiatric services to hospital
patients, that facility must be surveyed for, and must satisfy, the special participation
requirements that apply to a psychiatric hospital, in order to be certified to participate
in Medicare. Act, section 1861(f); 42 C.F.R. §§ 482.61, 482.62. Accreditation of a
hospital by JCAHO or AOA will not suffice as a basis for certification of that hospital
as a psychiatric hospital, in lieu of a survey to determine whether that hospital meets
the participation requirements that apply only to psychiatric hospitals. See 42 C.F.R.
§ 488.5(a)(1) - (3).

12. A distinct facility whose primary purpose is to provide psychiatric
hospital care may not participate in Medicare as a component of a hospital
if the facility is not complying with all Medicare participation requirements
that govern a psychiatric hospital.

Neither the Act nor regulations permit a distinct facility whose primary purpose is to
provide psychiatric services to hospital patients to be classified as a component of a
hospital without the psychiatric facility satisfying all of the Medicare participation
requirements that govern a psychiatric hospital. See Act, sections 1861(e), 1861(f);
42 C.F.R. §§ 482.1 - 482.62. I am not persuaded by Petitioners' arguments that
Petitioner Snowden might be classified as a component of Petitioner MWH without
considering Petitioner Snowden's primary purpose, and without regard to whether
Petitioner Snowden met the participation requirements that govern a psychiatric
hospital, assuming that its primary purpose was to function as a psychiatric hospital.

Petitioners assert that, between June 1, 1992 and December 28, 1992, Petitioner
MWH could claim reimbursement from Medicare for the Medicare services that
Petitioner Snowden provided, as a component of Petitioner MWH. In effect,
Petitioners are asserting that Petitioner MWH's certification by HCFA to participate
in Medicare as an acute care hospital, for the period from June 1, 1992 until
December 28, 1992, includes a certification of all of the psychiatric hospital services
that were provided by Petitioner Snowden during that period. Under Petitioners'
theory, reimbursement for Petitioner Snowden's services could be claimed by
Petitioner MWH, despite the fact that Petitioner Snowden did not satisfy all Medicare
participation requirements that govern a psychiatric hospital between June 1, 1992 and
December 28, 1992.

Petitioners predicate their component status argument on a section of the State
Operations Manual (SOM), SOM § 2024, which, they contend, contains the sole and
exclusive criteria for determining whether a facility is a component of a hospital.
HCFA Ex. 20. I take notice that the SOM is a document published by HCFA which
instructs surveyors how to conduct Medicare certification and compliance surveys.
SOM § 2024 advises surveyors of the circumstances when two or more hospitals may
be considered to be part of a single hospital and, therefore, subject only to a single
certification or compliance survey. It provides that:

When two or more hospitals merge, you must ascertain whether to
continue to certify these hospitals separately or whether to certify the
complex as a single hospital. Also, when a hospital establishes an
additional hospital facility, geographically separated but in the same
metropolitan area, ascertain whether the added facility is a separate
hospital or a component of a single hospital. A hospital may establish
an additional facility so organizationally or . . . geographically separate
as to make it impossible to operate as a component of [a] single
hospital.

HCFA Ex. 20. It provides that surveyors are to certify two or more facilities as part
of a single hospital, if all of the following tests are satisfied:

A. Ownership. ¾ All components included are subject to the control
and direction of one common owner (i.e., governing body) responsible
for the operational decisions of the entire hospital enterprise.

B. Chief Medical Officer. ¾ There is a single Chief Medical Officer
who reports directly to the governing body and who is responsible for
all medical staff activities of all components.

C. Totally Integrated Medical Staff. ¾ There is total integration of the
organized medical staff as evidenced by these factors:

m All medical staff members have privileges at all
components.

m All medical staff committees are responsible for their
respective areas of responsibility in all components of the
hospital. (This factor does not preclude the establishment of
subcommittees in other components which are under the
authority of and must report back to the primary committees).

D. Chief Executive Officer. ¾ There is a single Chief Executive
Officer through whom all administrative authority flows and who
exercises control and surveillance over all administrative activities of all
components. (This criterion does not preclude the establishment of
deputy or assistant executive officer positions in any component as
long as the individuals are under the authority of and report to the
single Chief Executive Officer.)

HCFA Ex. 20.

Implicit in Petitioners' argument about the alleged component status of Petitioner
Snowden is an assertion that the primary purpose of Petitioner Snowden, and hence,
its compliance or noncompliance with Medicare participation requirements which
govern a psychiatric hospital, is irrelevant to deciding Petitioner Snowden's status.
Petitioners argue, in effect, that the issue of Petitioner Snowden's component status
must be decided based solely on whether the ownership, management, and staff of
Petitioners Snowden and MWH are combined, in accord with SOM § 2024, without
regard to the primary purpose of Petitioner Snowden, and without regard to whether
or not Petitioner Snowden was complying with the participation requirements which
govern a psychiatric hospital, assuming its primary purpose was to function as a
distinct psychiatric hospital.

The unique certification requirements which apply to a psychiatric hospital are
intended to assure that the facility maintain staffing and records that protect the
welfare of beneficiaries who suffer from mental illnesses. Act, section 1861(f)(3), (4);
42 C.F.R. §§ 482.61, 482.62. However, under Petitioner's component theory, a
facility having the primary purpose to provide psychiatric care to hospital patients that
satisfies the integrated ownership, management and staff test of SOM § 2024 would
not have to satisfy the participation requirements which apply to a psychiatric hospital
as a prerequisite for the hospital to claim reimbursement from Medicare for the
psychiatric services that the component facility provides. Indeed, Petitioner Snowden
did not comply with the special certification requirements for a psychiatric hospital
prior to December 28, 1992.
Petitioners' reliance on SOM § 2024 as establishing the exclusive test for deciding
whether Petitioner Snowden is a component of Petitioner MWH is misplaced.
Contrary to Petitioners' assertions, if Petitioner Snowden's primary purpose is to
provide psychiatric hospital care, then Petitioner Snowden may not be classified as a
component of Petitioner MWH without first having complied with the participation
requirements which govern a psychiatric hospital. The special participation
requirements which govern psychiatric hospitals apply not just to independent
psychiatric hospitals, but to psychiatric facilities that are adjuncts of acute care
hospitals. Both the Act and regulations specify that, where a hospital operates a
psychiatric facility as a distinct part (which, arguably, could be a component of the
hospital) that distinct part must satisfy the participation requirements which govern a
psychiatric hospital. Act, section 1861(f); 42 C.F.R. § 482.1(a)(2)

Congress and the Secretary did not intend that Medicare beneficiaries who suffer from
mental illnesses should lose the special guarantees of protection embodied in the Act
and regulations in the circumstance where a facility that provides the care provided by
a psychiatric hospital is merged administratively with a hospital. The special
certification requirements which govern the participation in Medicare of a psychiatric
hospital would be eviscerated if a hospital could evade these requirements by
operating as a component, and claiming Medicare reimbursement for the services of
an uncertified and noncompliant psychiatric facility. See Act, section 1861(f); 42
C.F.R. § 482.1(a)(2).

The SOM does not contain regulations, nor does it rise to the level of regulations. It
consists of interpretive guidelines that are published by HCFA to assist surveyors in
conducting surveys of facilities. The SOM has not been published pursuant to the
notice and comment requirements of the Administrative Procedures Act. In order to
make sense of the SOM, I must interpret and apply it in a manner that is consistent
with the Act and regulations. And, to the extent that I find that the SOM conflicts
with the Act or with regulations that are published by the Secretary, then the Act and
regulations must prevail.

However, I do not find SOM § 2024 to conflict with the Act or with the regulations
which govern hospitals and psychiatric hospitals. There is no language in SOM §
2024 which either states or suggests that an uncertified facility which provides the
care that is provided by a psychiatric hospital may be classified as a component of a
hospital in a way that would allow the uncertified psychiatric facility to avoid having
to prove that it satisfies the certification requirements which govern a psychiatric
hospital.

SOM § 2024 does not, on its face, even apply to the circumstance where a hospital
merges with or operates an uncertified psychiatric facility. SOM § 2024 addresses the
circumstance where two hospitals ¾ and not a hospital and an uncertified psychiatric
facility ¾ are operated as a single entity.

Every reference to a facility in SOM § 2024 is to a "hospital." HCFA Ex. 20. HCFA
must be presumed to have understood the difference between a hospital and an
uncertified psychiatric facility when it drafted and circulated SOM § 2024. The failure
of SOM § 2024 even to mention an uncertified psychiatric facility means that SOM §
2024 is intended only to address a union of hospitals, and is not intended to address a
union between a hospital and an uncertified psychiatric facility. At the very least, the
language of SOM § 2024 which refers only to a "hospital" suggests that HCFA did
not contemplate that a hospital could merge with or operate an uncertified psychiatric
facility in a way that would avoid the uncertified psychiatric facility having to satisfy
the special certification requirements that apply to psychiatric hospitals.

I am not suggesting that, necessarily, it would be inappropriate for HCFA to classify a
psychiatric facility that complies with Medicare participation requirements which
govern a psychiatric hospital as a component of an acute care hospital. Indeed, the
Act implies that a psychiatric facility may operate as a component of an acute care
hospital, so long as it complies with the special participation requirements which
govern a psychiatric hospital. Act, section 1861(f). However, it is evident that SOM
§ 2024 does not specifically address such a classification, even where both the hospital
and the psychiatric hospital satisfy Medicare participation requirements. And, under
no circumstances does SOM § 2024 suggest that an uncertified psychiatric facility
may be classified as a component of a hospital where the psychiatric facility has not
first satisfied all Medicare participation requirements that apply to a psychiatric
hospital.

Petitioners assert that HCFA interpreted the Act, regulations, and SOM § 2024,
consistent with Petitioners' argument that SOM § 2024 establishes the exclusive
criteria for deciding whether Petitioner Snowden is a component of Petitioner MWH.
Petitioners observe that HCFA, in fact, invited Petitioner MWH to attempt to prove
that Petitioner Snowden was a component of it, pursuant only to the criteria of SOM
§ 2024, and without regard to Petitioner Snowden's primary purpose.

There is no question that HCFA's regional office staff invited Petitioners to assert that
Petitioner Snowden was a component of Petitioner MWH. HCFA Ex. 19; Ruling at 3
- 4. The staff told Petitioners that HCFA would employ the criteria in SOM § 2024 to
determine whether Petitioner Snowden was a component of Petitioner MWH during
the period from June 1, 1992 through December 28, 1992, even though Petitioner
Snowden had not satisfied all Medicare participation requirements during this period.
Id. As a consequence, Petitioners strenuously attempted to prove that Petitioner
Snowden was a component of Petitioner MWH, based on the criteria contained in
SOM § 2024. HCFA Ex. 6, 23, 35, 37; P. Ex. 1, 4; Ruling at 4 - 7. But, this history
proves only that HCFA's regional office staff may have misinterpreted the Act,
regulations, and SOM § 2024, and in so doing, might have misled Petitioners into
believing that Petitioner Snowden might be classified as a component of Petitioner
MWH based solely on the criteria of SOM § 2024. See HCFA Ex. 19.

In any event, I do not find that HCFA's regional office staff had the authority to
interpret the law on behalf of HCFA or the Secretary. There is nothing of record to
establish that the Secretary or HCFA delegated to HCFA's regional office staff the
authority to make such an interpretation.

Petitioners argue that SOM § 2024 has been interpreted on behalf of the Secretary in
other contexts which supports their advocated interpretation of SOM § 2024. I have
reviewed the authorities relied on by Petitioners. I am not persuaded that they
support Petitioners' argument concerning the meaning and application of SOM §
2024.

Petitioners first cite two Departmental Appeals Board (Board) decisions ¾ New
York State Department of Social Services, DAB No. 1313 (1992) (Attachment "D"
to Petitioners' posthearing brief), and New York State Department of Social Services,
DAB No. 1528 (1995) (Attachment "E" to Petitioners' posthearing brief) ¾ and
assert that these decisions each are decisions in which the Board "applied the criteria
in SOM § 2024" to decide whether psychiatric hospitals were components of
hospitals. Petitioners' posthearing brief at 22. In fact, in neither of these cases did the
Board rely strictly on the provisions of SOM § 2024 to decide that the psychiatric
hospitals at issue were not components of other hospitals. Furthermore, each of these
cases is distinguishable in a critical respect from this case.

In both DAB No. 1313 and DAB No. 1528, the Board concluded that the psychiatric
hospitals at issue were not components of other hospitals, largely because they were
organized and operated to provide psychiatric care that was separate from that which
was being provided by the hospitals of which they allegedly were components. In
each of these cases, the Board placed great weight on the fact that the State had
certified the alleged component hospitals as psychiatric hospitals and had regarded
them as free-standing facilities. The Board found that such evidence outweighed any
evidence of integration of management and staff that was offered by the State to
prove that the psychiatric hospitals were "components" within the meaning of SOM §
2024.

Both DAB No. 1313 and DAB No. 1529 are plainly distinguishable from this case in
that each of the psychiatric hospitals at issue in those cases was certified to participate
in Medicare as a psychiatric hospital. Thus, there was no question in either case that
the psychiatric hospitals that were alleged to be components satisfied all Medicare
participation requirements. In neither DAB No. 1313 nor in DAB No. 1528 did the
State argue that a psychiatric facility could avoid complying with the special
participation requirements which govern a psychiatric hospital by being classified as a
component of a hospital.

Petitioners cite to another Board decision, Oklahoma Department of Human Services,
DAB No. 799 (1986) (Attachment "F" to Petitioners' posthearing brief) as additional
support for their argument that SOM § 2024 establishes the exclusive criteria for
deciding whether Petitioner Snowden was a component of Petitioner MWH. I find
this decision not to offer meaningful support for Petitioner's argument.

In DAB No. 799, the Board held that HCFA had determined incorrectly that a
juvenile treatment facility was not a component of a hospital, for Medicaid
reimbursement purposes. In part, the Board relied on provisions of the SOM to
decide the case. However, the Board does not address the issue of whether a juvenile
treatment facility could avoid complying with participation requirements by being
classified as a component of a hospital.

Petitioners cite to a 1993 advisory opinion issued by the Attorney Office of the
General Counsel, Inspector General Division, as support for their argument
concerning SOM 2024 (Attachment "G" to Petitioners' posthearing brief). It dealt
with the issue of whether a State might lawfully issue more than one Medicaid
provider number to skilled nursing facilities which functioned as institutions for mental
diseases, as well as skilled nursing facilities. The opinion was not conclusive, but it
suggested that SOM § 2024 might serve as appropriate guidance for determining
whether components of nursing homes might be reimbursed separately.

I do not find this opinion to be persuasive authority. The opinion does not provide
any basis for deciding the issue of whether an uncertified facility providing psychiatric
hospital care can operate as a component of a hospital.

Petitioners argue additionally that, even if SOM § 2024 does not contain the exclusive
criteria for determining whether a psychiatric facility may be classified as a component
of a hospital, there exist other, analogous criteria in regulations which govern the
Medicare program that suggest that the criteria in SOM § 2024 describe HCFA's
general policy as to when to classify a facility as a component of another facility.
Petitioners point to the provisions of 42 C.F.R. § 412.23, which identifies
circumstances under which hospitals may be excluded from the prospective payment
Medicare reimbursement system (PPS). I do not find that this regulation provides any
meaningful guidance. What is at issue here is whether a psychiatric facility may avoid
Medicare certification requirements by being classified as a component of a hospital.
The PPS exclusion provisions are not intended to address issues of certification. For
this reason, it is unnecessary for me to address the specific provisions of 42 C.F.R. §
412.23.

13. During the period between June 1, 1992 and December 28, 1992,
Petitioners MWH and Snowden had overlapping ownership and had a
close management and operating relationship.

Petitioner MWH is a 340-bed Medicare-certified acute care hospital that is located in
Fredericksburg, Virginia. HCFA Ex. 2; HCFA Ex. 25. Petitioner Snowden is a 40-
bed facility, also located in Fredericksburg, Virginia, in close proximity to Petitioner
MWH. Petitioner Snowden opened in the spring of 1992 and became certified to
participate in Medicare as a psychiatric hospital effective December 28, 1992. HCFA
Ex. 3, HCFA Ex. 9. Prior to the inception of Petitioner Snowden, Petitioner MWH
operated a 15-bed psychiatric unit and a separate chemical dependency unit. See
HCFA Ex. 5; Transcript (Tr.) at 38 - 39. However, Petitioner MWH was not certified
to participate in Medicare as a psychiatric hospital.

There was overlapping, but not identical, ownership of Petitioners Snowden and
MWH. During the period beginning June, 1, 1992 and ending December, 28, 1992,
Petitioner Snowden was owned jointly by two entities, MWH Medicorp, and
Diamond Health Care of Fredericksburg. HCFA Ex. 1; Tr. at 36 - 37. MWH
Medicorp owned 55 percent of Petitioner Snowden, and Diamond Health Care of
Fredericksburg owned the remaining 45 percent. HCFA Ex. 5; Tr. at 36 - 37. MWH
Medicorp was the sole owner of Petitioner MWH. HCFA Ex. 1.

During the period between June 1, 1992 and December 28, 1992, there was a close
management and operating relationship between Petitioner Snowden and Petitioner
MWH. The chairman of Petitioner Snowden reported to the chairman of Petitioner
MWH's department of medicine. P. Ex. 2. The chairman of Petitioner MWH's
department of medicine reported to the president of Petitioner MWH's medical staff.
Id. The president of Petitioner MWH's medical staff reported to the board of
directors of Petitioner MWH. Id.

The close operating relationship between Petitioner Snowden and Petitioner MWH is
established by facts which include the following. Petitioner Snowden's initial patients
included patients who were transferred to it from Petitioner MWH. See HCFA Ex.
5. Members of the medical staff of Petitioner Snowden had privileges to practice at
Petitioner MWH, and members of the medical staff of Petitioner MWH had privileges
to practice at Petitioner Snowden. HCFA Ex. 6 at 2.

14. The overlapping ownership of Petitioners Snowden and MWH, and the
close management and operating relationship between Petitioner Snowden
and Petitioner MWH does not detract from my Findings that, during the
period between June 1, 1992 and December 28, 1992, Petitioner Snowden's
primary purpose was to offer psychiatric care to hospital patients.

Evidence as to shared ownership, management, and staff privileges begs the question
of a facility's primary purpose. There may be complete integration of ownership,
management, staff privileges, and ancillary services between two facilities and,
notwithstanding, one of them may have as its primary purpose the delivery of
psychiatric hospital care.

As I discuss below, the evidence plainly establishes that Petitioner Snowden had as its
primary purpose the offering of psychiatric hospital care that was distinct and separate
from the acute hospital care that was offered by Petitioner MWH. The evidence
offered by Petitioners concerning the integration of Petitioners Snowden and MWH
does not detract from the fact that Petitioner Snowden's primary purpose was to offer
the care that is provided by a psychiatric hospital.

15. During the period between June 1, 1992 and December 28, 1992,
Petitioner Snowden's primary purpose was to offer psychiatric care to
hospital patients.

Petitioner Snowden's primary purpose was to offer psychiatric care to hospital
patients that was distinct from the acute care offered by Petitioner MWH. Thus,
Petitioner Snowden's primary purpose was that of a psychiatric hospital. Act, section
1861(f). Petitioner Snowden's primary purpose is proved by evidence that I discuss in
Findings 16 - 22 which establishes: the purpose of creating Petitioner Snowden; the
types of services that Petitioner Snowden offered; the staffing of Petitioner Snowden;
the license and certification that Petitioner Snowden applied for and was granted; and
the reasons why Petitioners now assert that Petitioner Snowden was a component of
Petitioner MWH as compared with Petitioners' original characterization of the
purpose of Petitioner Snowden.

16. The purpose of creating Petitioner Snowden was to develop and operate
a psychiatric hospital which offered more distinct services than had been
offered by Petitioner MWH and which the community would identify as a
distinct psychiatric hospital.

Petitioner Snowden's owners discerned a need to develop a mental health service that
was separate from that which had been offered by Petitioner MWH so that it could be
better identified for marketing and promotion. Tr. at 38 - 39. The psychiatric and
chemical dependency services that Petitioner MWH offered were not well known. Id.
Patients in the Fredericksburg area who needed psychiatric hospitalization were going
elsewhere for care. Tr. at 39. Petitioner Snowden's owners concluded, additionally,
that there was a need to attract psychiatrists to the Fredericksburg area in order to
care for local patients who were in need of psychiatric care. Id.

17. Petitioner Snowden was designed and created to specialize in providing
psychiatric hospital care to patients.

From the outset, Petitioner Snowden specialized in providing psychiatric hospital care,
and not acute hospital care. P. Ex. 21 at 3; HCFA Ex. 4 at 2.

18. Petitioner Snowden was created with a capacity to care for psychiatric
hospital patients which exceeded that of Petitioner MWH.

From the outset, Petitioner Snowden's capacity to provide psychiatric hospital care
was substantially greater than that which was offered by Petitioner MWH. Petitioner
Snowden's owners conceived of a psychiatric hospital having a total of 40 beds, as
compared to the 15 psychiatric beds operated by Petitioner MWH. Tr. at 127 - 128.

Originally, Petitioner Snowden's 40 beds were comprised in part of 31 beds that were
donated to it by Petitioner MWH. Tr. at 127 - 128. 15 of these donated beds had
been psychiatric beds at Petitioner MWH, and 16 of these beds had been used to
provide chemical dependency services at Petitioner MWH. P. Ex. 1 at 279, 281, P.
Ex. 19; Tr. at 127, 128, 148. Petitioner Snowden was granted authority by the State
of Virginia to operate an additional nine psychiatric beds, thereby bringing the total
authorized beds at Petitioner Snowden to 40 beds. Tr. at 128. These additional nine
beds were all of the beds remaining in the inventory that the State of Virginia had
determined was needed to serve the psychiatric hospital needs of the population in the
Fredericksburg area. Id.

19. Petitioner Snowden started operations with a staff that had more
mental health care professionals affiliated with it than had been affiliated
with Petitioner MWH.

Just prior to the opening of Petitioner Snowden, in May, 1992, Petitioners Snowden
and MWH recruited a child psychiatrist to provide child and adolescent services at
Petitioner Snowden. Tr. at 71 - 72. Also prior to the opening of Petitioner Snowden,
Petitioner Snowden hired a Master's level nursing director. Id.

20. One of the reasons that Petitioner Snowden was located in a facility
that was separate from that which was occupied by Petitioner MWH was to
attract the public's attention to the psychiatric hospital services offered by
Petitioner Snowden .

From its inception, Petitioner Snowden was located in a separate building from
Petitioner MWH. A reason for physically separating Petitioner Snowden from
Petitioner MWH was to bring to the public's attention the psychiatric hospital services
that were being offered by Petitioner Snowden. See Tr. at 38 - 40. Another reason
for locating Petitioner Snowden in a building that was separate from that which was
occupied by Petitioner MWH was that building and fire and safety codes were less
strict for a psychiatric hospital than for an acute care hospital. Tr. at 132 - 133.

21. Petitioner Snowden's owners intended that Petitioner Snowden be
licensed, accredited, and certified separately from Petitioner MWH as a
psychiatric hospital.

Petitioner Snowden's owners intended that Petitioner Snowden be licensed,
accredited, and certified to participate in Medicare as a psychiatric hospital that was
separate from Petitioner MWH. On March 12, 1992, Diamond Healthcare
Corporation, acting on Petitioner Snowden's behalf, notified the Virginia Department
of Health, Department of Licensure and Certification, that Petitioner Snowden sought
approval to participate in Medicare. HCFA Ex. 7. On April 3, 1992, the Virginia
Department of Health responded to the March 12, 1992 letter. HCFA Ex. 8. In its
response, the Virginia Department of Health advised Diamond Healthcare
Corporation of the requirements that had to be met by Petitioner Snowden prior to it
being certified. Id. The response made it plain that the pre-certification requirements
depended in some measure on the type of certification that Petitioner Snowden sought
to attain. Id. The implicit premise of the response, however, was that Petitioner
Snowden would be seeking to be certified to participate in Medicare as a psychiatric
hospital. That is apparent from a paragraph which, in relevant part stated:

[P]lease submit evidence of the hospital's licensure by the Department
of Mental Health, Mental Retardation and Substance Abuse Services
once the facility is licensed. I would also encourage you to obtain a
copy of the [C]ode of Federal [Regulations] (42 C.F.R., Part 400 to
429) which contains the regulations that govern psychiatric hospital
certification.

Id. at 2. The intent to certify Petitioner Snowden as a psychiatric hospital is also
apparent from the attachments that were supplied with the letter, which contain
excerpts from the SOM governing the certification of psychiatric hospitals. Id. at 3 -
5.

On June 15, 1992, Petitioner Snowden wrote directly to the Virginia Division of
Licensure and Certification. HCFA Ex. 9. In this letter, Petitioner Snowden advised
the Division of Licensure and Certification that it had opened on June 1, 1992 as a "40
bed psychiatric and chemical dependency facility, . . ." Id. It averred that it planned
to obtain JCAHO certification "and, subsequently, Medicare certification." Id.

On August 10, 1992, the Virginia Department of Mental Health, Mental Retardation
and Substance Abuse Services provided Petitioner Snowden with a conditional license
to operate. HCFA Ex. 10. The license was effective from June 1, 1992 until August
29, 1992. Id.

The Virginia Division of Licensure and Certification corresponded with Petitioner
Snowden on August 21, 1992. HCFA Ex. 11. It advised Petitioner Snowden that its
request to participate in Medicare "as a psychiatric hospital" had been forwarded to
HCFA's Region III office. Id. In addition, it requested Petitioner to forward to it a
copy of its permanent license to operate, as well as proof of accreditation by JCAHO.
The Virginia Division of Licensure and Certification advised Petitioner Snowden that,
once it received these items, then it would request, through HCFA, that Petitioner
Snowden be surveyed in order to determine whether Petitioner Snowden satisfied the
special conditions of participation governing psychiatric hospitals. Id.

On August 24, 1992, JCAHO advised Petitioner Snowden that Petitioner Snowden
was accredited. HCFA Ex. 12. The JCAHO survey report of Petitioner Snowden
referred to the "type of hospital . . . that most accurately describes" Petitioner
Snowden as being a psychiatric unit and a alcohol/drug unit. P. Ex. 21 at 3.

Effective August 30, 1992, Petitioner Snowden received a permanent State license to
operate as a psychiatric hospital. HCFA Ex. 14 at 2. The license described Petitioner
Snowden as:

A FORTY (40) BED PSYCHIATRIC HOSPITAL PROVIDING
CARE AND TREATMENT TO MENTALLY ILL AND
SUBSTANCE ABUSING PATIENTS.

HCFA Ex. 14 (capitalization in original).

Petitioners now assert that the Commonwealth of Virginia failed to advise Petitioner
Snowden that it might have been classified as a component of Petitioner MWH.
Petitioners' reply brief at 5. Petitioners imply that Petitioner Snowden would not have
applied to be certified as a psychiatric hospital, had the Commonwealth of Virginia
told Petitioners that Petitioner Snowden could have been classified as a component of
Petitioner MWH. I am not persuaded by this argument. It is evident that Petitioner
Snowden's owners correctly and accurately conceived of Petitioner Snowden as being
a distinct psychiatric hospital until HCFA's regional office staff suggested to them that
Petitioner MWH might be able to claim reimbursement for Petitioner Snowden's
Medicare services, if Petitioner Snowden was a component of Petitioner MWH. Had
the Commonwealth of Virginia suggested to Petitioners that Petitioner Snowden
might be considered to be a component of Petitioner MWH, for Medicare
participation purposes, without first complying with the participation requirements
which govern psychiatric hospitals, then the Commonwealth of Virginia would have
interpreted the law incorrectly in the case of Petitioner Snowden.

22. Petitioners asserted that Petitioner Snowden was a component of
Petitioner MWH, and not a separate psychiatric hospital, only after
HCFA's regional office staff suggested that Petitioner MWH would be able
to claim reimbursement for the Medicare services that Petitioner Snowden
provided, if Petitioner Snowden was a component of Petitioner MWH.

It was not until HCFA's regional office staff suggested to Petitioners, on January 15,
1993, that Petitioner MWH might claim reimbursement for the psychiatric services
provided by Petitioner Snowden, if Petitioner Snowden was a component of Petitioner
MWH, that Petitioners changed their description of Petitioner Snowden's purpose and
status. See HCFA Ex. 19; HCFA Ex. 6. Up until that date, every submission from
Petitioners to HCFA, and to other authorities as well, described Petitioner Snowden
as a free-standing psychiatric hospital. Finding 21. After January 15, 1993,
Petitioners persistently described Petitioner Snowden as being, essentially, a division
of Petitioner MWH that offers psychiatric services.

Petitioner's changing characterization of Petitioner Snowden is understandable, if not
accurate. HCFA invited Petitioners to argue that Petitioner Snowden was something
other than what Petitioners originally conceived it to be. HCFA Ex. 19. Evidently, a
large amount of Medicare reimbursement dollars hinges on whether Petitioner
Snowden is decided to be a component of Petitioner MWH. But, changing the
characterization of Petitioner Snowden from a distinct psychiatric hospital to a
component of Petitioner MWH does not derogate or detract from the strong evidence
of Petitioner Snowden's primary purpose, or from the characterization of its primary
purpose made by its owners when Medicare reimbursement for Petitioner Snowden's
services did not appear to hinge on characterizing it as a component of Petitioner
MWH.

23. Petitioner Snowden became certified to participate in Medicare
effective with the date that it submitted to HCFA a plan of correction which
addressed deficiencies which had been identified in the pre-certification
survey of Petitioner Snowden.

On October 29 and 30, 1992, a pre-certification survey of Petitioner Snowden was
conducted in order to determine whether Petitioner Snowden met all Medicare
participation requirements which govern a psychiatric hospital. HCFA Ex. 16. The
surveyors determined that Petitioner Snowden satisfied all conditions of participation.
However, they determined as well that Petitioner Snowden had failed to comply with
some Medicare requirements, of less than a condition-level, which state special
record-keeping obligations for psychiatric hospitals. HCFA Ex. 17 at 2 - 11; 42
C.F.R. § 482.61(a)(4), (5); (b)(6); (b)(7); (c)(1); (c)(1)(ii); (c)(1)(iii). On December
11, 1992, HCFA advised Petitioner Snowden that it must submit a plan of correction
explaining how it would correct the deficiencies that the surveyors had identified.
HCFA Ex. 16.

Petitioner Snowden submitted its plan of correction to HCFA on December 28, 1992.
HCFA Ex. 17. On December 30, 1992, HCFA advised Petitioner Snowden that it
had been certified to participate in Medicare, effective December 28, 1992. HCFA
Ex. 3.

24. HCFA correctly determined to certify Petitioner Snowden to participate
in Medicare as a psychiatric hospital effective December 28, 1992.

HCFA correctly determined that the earliest date when Petitioner Snowden could be
certified to participate as a psychiatric hospital was December 28, 1992. 42 C.F.R. §
489.13. Deficiencies of less than a condition level were identified at the October 29 -
30, 1992 survey of Petitioner Snowden. The date of Petitioner Snowden's plan of
correction, which HCFA accepted, was December 28, 1992. Petitioner Snowden has
not challenged the accuracy of the pre-certification survey that was conducted of it.
Ruling at 15 - 16. There is nothing of record in this case to suggest that the
surveyors' findings were erroneous, or that Petitioner Snowden corrected the
deficiencies identified by the surveyors at any date prior to December 28, 1992, the
date when Petitioner Snowden submitted its plan of correction to HCFA.

As I discuss at Finding 8, where deficiencies of less than a condition level are
identified at a pre-certification survey of a provider, HCFA will certify that provider to
participate in Medicare on the earlier of the following dates: the date when the
provider actually corrects all of the deficiencies; or, the date on which the provider
submits a plan of correction that is acceptable to HCFA. 42 C.F.R. § 489.13. The
regulations do not state any exceptions to this rule.

Petitioner Snowden makes several arguments to assert that it should have been
certified to participate in Medicare as a psychiatric hospital prior to December 28,
1992. I find these arguments to be without merit.

Petitioners assert that HCFA delayed unreasonably in having the pre-certification
survey of Petitioner Snowden conducted. Petitioners' posthearing brief at 40 - 41.
This argument is in the nature of an estoppel argument. Petitioners assert, in effect,
that certification delays were HCFA's fault, and that Petitioner Snowden should not
be made to suffer as a consequence. As I hold at Finding 9, I do not have authority to
order HCFA to certify a provider to participate on the date that is before the date
when the provider complies with participation requirements, as stated in 42 C.F.R. §
489.13. I would not order HCFA to certify Petitioner to participate in Medicare at a
date earlier than December 28, 1992, even were I to find that HCFA had caused the
survey and certification of Petitioner Snowden to be delayed unreasonably.

Moreover, I am not persuaded that the December 28, 1992 certification date is due
entirely to the way in which HCFA processed Petitioner Snowden's application for
participation. Although, arguably, HCFA might have been more expeditious in having
Petitioner Snowden surveyed, there is no escaping the fact that Petitioner Snowden
was not complying with all Medicare participation requirements as of the date of the
survey. Thus, Petitioner Snowden bears at least some responsibility for the amount of
time it took for it to be certified to participate in Medicare.

Petitioners assert that, in one other instance which they claim is analogous to this case,
HCFA changed a certification date of a facility to a date earlier than the date when the
provider was found to be in compliance with all Medicare participation requirements.
Petitioners' posthearing brief at 36 - 39; See P. Ex. 14. Petitioners argue that this
instance proves that HCFA has interpreted its authority to establish a date of
certification to permit certification of a provider at a date that is before the date when
the provider is in compliance with all participation requirements. Petitioners argue
that it would be inconsistent with this alleged official interpretation not to afford the
same treatment to Petitioner Snowden.

The evidence which Petitioners offer to support this argument does not explain why
HCFA changed the certification date in the instance at issue. See P. Ex. 14. It is
unnecessary to speculate as to HCFA's reasons for doing so. The instance cited by
Petitioners is not an authoritative interpretation of the law. However, assuming for
argument's sake that, in one or more instances, HCFA may not have followed strictly
the requirements of regulations, it does not follow that these acts or omissions by
HCFA are an official "interpretation" of those regulations. Evidence of such an act
or omission suggests only the possibility that HCFA's staff may have erred in the way
that it applied the regulations in a given case. Incorrect application of regulations by
HCFA's staff is not a basis for me to conclude that the regulations should be read to
mean anything other than what they plainly state.

Petitioners have not argued specifically that HCFA must accept Petitioner Snowden's
license to operate a psychiatric hospital or its JCAHO accreditation as a sufficient
basis to certify Petitioner Snowden to participate in Medicare. However, I have
considered this possible argument, and I conclude that neither proof of a license nor
proof of JCAHO certification would be a basis for compelling HCFA to certify
Petitioner Snowden at any date before December 28, 1992. In GranCare, I held that
HCFA may not be compelled to accept proof of a State operating license in lieu of
survey results. DAB CR464 at 7 - 9. Furthermore, the regulations which govern
certification provide that, in the case of a psychiatric hospital, HCFA may not accept
JCAHO certification in lieu of conducting a pre-certification survey and establishing
compliance with all participation requirements. 42 C.F.R. § 488.5(a)(2).

25. Petitioner Snowden was not a component of Petitioner MWH for
Medicare reimbursement purposes between June 1, 1992 and December 28,
1992.

A facility whose primary purpose is to provide psychiatric hospital care may not
participate in Medicare unless it has first been certified to participate in Medicare as a
psychiatric hospital. Finding 11. The special certification requirements that apply to a
psychiatric hospital would have no meaning if a facility which provides psychiatric
hospital care could find a way to participate in Medicare without having to comply
with those requirements. Thus, a facility that provides psychiatric hospital care may
not be classified as a component of a hospital for Medicare reimbursement if the
facility is not certified to participate in Medicare as a psychiatric hospital. Finding 12.

Petitioner Snowden was not a component of Petitioner MWH for Medicare
reimbursement purposes between June 1, 1992 and December 28, 1992. Petitioner
Snowden's primary purpose was to provide psychiatric hospital care. Petitioner
Snowden was not certified to participate in Medicare as a psychiatric hospital at any
time prior to December 28, 1992.

________________________
Steven T. Kessel
Administrative Law Judge