I decide that the Green Spring Oncology Center (Oncology Center) of Johns Hopkins Hospital (the Hospital) is part of the Hospital for Medicare reimbursement purposes, effective October 10, 1998. I do not decide the specific manner in which Medicare costs or charges incurred by the Oncology Center are to be reimbursed, nor do I decide whether any specific costs or charges are reimbursable.

I. BACKGROUND

The facts which I discuss in this section are not disputed. Petitioner, Johns Hopkins Health Systems, operates the Hospital. The Hospital is a general, acute-care, Medicare certified, 1,025-bed hospital located in East Baltimore, Maryland. The Hospital has an oncology department which provides both inpatient and outpatient services. Outpatient oncology services are furnished by the Hospital's oncology department at oncology centers which are situated at two sites. Four oncology centers are located on the Hospital's East Baltimore campus. An additional center, the Oncology Center, is located off-campus, at Green Spring Station in Baltimore County. The Oncology Center is situated approximately 11 miles from the Hospital's East Baltimore campus. The Hospital opened the Oncology Center in February, 1996.

On August 29, 1997, the Maryland Medicare Part A Fiscal Intermediary (Intermediary) recommended to the Health Care Financing Administration (HCFA) that the Oncology Center be classified for Medicare reimbursement purposes as a separate entity from the Hospital. HCFA Exhibit (Ex.) 1. On September 22, 1997, HCFA notified the Intermediary that it had accepted the Intermediary's recommendation. HCFA Ex. 3. On October 6, 1997, the Intermediary notified Petitioner that HCFA had accepted the Intermediary's recommendation that the Oncology Center be classified as a separate entity. HCFA Ex. 4. The Intermediary told the Hospital that, effective November 1, 1997, it must cease billing for the services of the Oncology Center as if they were services provided by the Hospital. Id.

Petitioner filed a request for reconsideration and/or an appeal with the Intermediary on October 21, 1997, contesting the Intermediary's October 6, 1997 letter transmitting HCFA's determination that the Oncology Center is not part of the Hospital. HCFA Ex. 5. On November 17, 1997, the Intermediary issued a letter affirming the determination set forth in the October 6, 1997 letter. HCFA Ex. 6. On April 6, 1998, Petitioner appealed this determination to the Provider Reimbursement Review Board (PRRB). HCFA Ex. 7. On May 18, 1998, Petitioner also filed an appeal of this determination with HCFA in which it requested a hearing under 42 C.F.R. Part 498. HCFA Ex. 9. Petitioner filed its appeal with HCFA while the appeal to the PRRB was still pending.

On May 20, 1998, the PRRB dismissed Petitioner's PRRB appeal. HCFA Ex. 8. The PRRB concluded that it was without authority to decide the issues that were the basis for Petitioner's appeal, and suggested that one avenue of appeal may be the Departmental Appeals Board. Id.

On July 17, 1998, Petitioner filed a notice of appeal with the Departmental Appeals Board. On August 4, 1998, HCFA issued a notice to Petitioner which HCFA characterized as a "reconsideration" determination as to the issue of whether the Oncology Center was part of the hospital. P. Ex. 6. HCFA concluded in this determination that the Oncology Center was not part of the hospital. Id. HCFA specifically noted that Petitioner's appeal rights with the Departmental Appeals Board were preserved "subject to its determination of jurisdiction in this matter." Id. at 2.

The case was assigned to me for a hearing and a decision. I requested the parties to brief the issue of whether I had authority to hear and decide the case. Both parties advised me that I had the authority to hear and decide the case. On October 20, 1998, I issued an order in which I ruled that I had the authority to hear and decide the case inasmuch as it involved an issue of provider certification status. I then conducted a prehearing conference at which the parties advised me that they believed that the case could be heard and decided without an in-person hearing. I established a schedule for the parties to submit briefs and proposed exhibits.

Each party submitted a brief and a reply brief. HCFA submitted 25 proposed exhibits. Petitioner submitted 24 proposed exhibits. Neither party has objected to my receiving any of these exhibits into evidence. Additionally, Petitioner submitted 28 attachments with its briefs (Attachment A - Attachment BB). The attachments are documents, including statutes, policy statements, and judicial decisions, which Petitioner cites in support of its legal arguments. I receive into evidence HCFA Ex. 1 - HCFA Ex. 25 and P. Ex. 1 - P. Ex. 24. I do not receive any of Petitioner's attachments into evidence, although I have considered them as reference materials. I base my decision in this case on the exhibits which I have received into evidence, the applicable law, and the parties' arguments.

The issue in this case is whether the Oncology Center is part of the Hospital for purposes of claiming Medicare reimbursement for services provided by the Oncology Center.

I make findings of fact and conclusions of law (Findings) to support my decision that the Oncology Center is part of the Hospital for purposes of claiming Medicare reimbursement for services provided by the Oncology Center. I set forth each Finding below as a separately numbered heading. I discuss each of my Findings in detail.

1. I have authority to hear and decide the issue of whether the Oncology Center is part of the Hospital.

HCFA argues that: "Unless [P]etitioner can point to some statutory provision or regulation that HCFA's freestanding determination for . . . [the Oncology Center] violates, and which requires HCFA to grant [P]etitioner the relief it seeks, the administrative law judge is without authority to reverse HCFA's decision." HCFA's Brief at 16. It is not clear to me what HCFA is arguing, but it appears that HCFA might be asserting that I lack authority to hear and decide this case.

I am perplexed by this argument. At the inception of this case, I questioned the parties as to whether I had the authority to hear and decide it. Both parties filed briefs in which they argued that I did have such authority. I cannot comprehend why HCFA might now be asserting that I lack authority to hear and decide this case after it told Petitioner that it had a right to a hearing and after it urged - in response to the concerns that I expressed - that I do have the authority to hear and decide it. HCFA has not explained why it is changing its position if, indeed, that is what it is doing. It has offered no explanation why the arguments it offered previously are no longer valid.

But, in any event, I conclude that I have the authority to hear and decide this case. My authority arises from Petitioner's right to a hearing. This case involves the issue of whether the Oncology Center qualifies to participate in Medicare as part of the Hospital. That is an issue of provider certification. Under 42 C.F.R. § 498.5(a)(1) and (2), a prospective provider that is dissatisfied with a determination that it does not qualify as a provider is entitled to a hearing. Here, the determination that the Oncology Center is not part of the Hospital is, in effect, a determination that the Oncology Center does not qualify as a provider (a hospital). Petitioner plainly is entitled to a hearing as to that issue.

2. The Oncology Center satisfies HCFA's criteria for determining whether it is part of the Hospital for Medicare reimbursement purposes.

HCFA recognizes that a provider may own and operate a facility that is part of that provider even though that facility is not physically located at the same site as is the provider's principal facility. 63 Fed. Reg. 47,552, 47,587 (September 8, 1998). There are times when it is in the self-interest of a provider that HCFA acknowledge an off-campus facility to be part of that provider. Recognition by HCFA of a provider's off-campus facility as being part of a provider is significant because such recognition may affect how the services provided and costs claimed by the off-campus facility are reimbursed under the Medicare program. Such a classification may serve effectively to increase the amount of Medicare reimbursement that may be claimed for the services provided or the costs incurred by the off-campus facility.

There is no language in the Social Security Act (Act) which addresses directly the issue of when an off-campus facility should be recognized to be part of a provider for the purpose of claiming Medicare reimbursement for the services and costs claimed by the off-campus facility. Nor do regulations published by the Secretary of the United States Department of Health and Human Services (Secretary) presently address that issue. HCFA has published a proposed regulation which would establish criteria for determining when a facility is part of a provider. 63 Fed. Reg. 47,552 et seq. (September 8, 1998). However, that proposed regulation has not yet become final and, therefore, it is not applicable to this case.

HCFA has published policy statements which contain criteria that govern HCFA's determinations of when an off-campus facility may be considered to be part of a provider for Medicare reimbursement purposes. I consider these statements to be influential statements of applicable criteria in the absence of controlling language in the Act or regulations. The most recent - and most directly applicable - statement of criteria is set forth in a program memorandum from HCFA to Medicare Intermediaries. This document is entitled "PMI A-96-7 Policy Clarification: Provider Based Designation" (PMI A-96-7). Attachment A to Petitioner's Brief.

HCFA issued PMI A-96-7 in August, 1996. The document contains a sentence which states that: "This PM may be discarded after JULY 31, 1997." (Emphasis in original). This sentence suggests that the policy contained in the document might not be operative after July 31, 1997. However, in its Federal Register publication of the proposed new regulation, HCFA stated that it would continue to apply the principles stated in PMI A-96-7 until 30 days after the final regulation is published. 63 Fed. Reg. at 47,589. The final regulation has not been published. I conclude that, at this time, the operative criteria which govern when a facility will be considered to be part of a provider for Medicare reimbursement purposes remain those that are stated in PMI A-96-7.

PMI A-96-7 contains eight criteria which must be met in order for an off-campus facility to qualify as being part of a provider. Attachment A to Petitioner's Brief at 2 - 3. It is evident from a review of the eight criteria that are stated in PMI A-96-7 that HCFA intends to find an off-campus facility to be part of a provider only where that facility is fully integrated into the operations of the provider. The eight criteria are designed to identify those facilities that are fully integrated and to distinguish them from off-campus facilities which may be owned or operated by a provider but which are not fully integrated into the operations of the provider.

a. The Oncology Center is physically located in close proximity to the Hospital, and the Hospital and the Oncology Center serve the same patient population.

The first criterion in PMI A-96-7 states:

1. The . . . [off-campus facility] is physically located in close proximity of the provider where it is based, and both facilities serve the same patient population (e.g. from the same service, or catchment, area);

Attachment A to Petitioner's Brief at 2.

i. The Oncology Center and the Hospital are located in close proximity to each other.

HCFA argues that the Oncology Center is not physically located in close proximity to the Hospital. According to HCFA the distance between the two entities - 11 miles - is such to establish that they are not in close proximity. HCFA's Brief at 15. Petitioner disputes this argument. It avers that the driving time between the Oncology Center and the Hospital is only 15 - 30 minutes. P. Ex. 1 at 2. Moreover, Petitioner notes that HCFA has found that another entity operated by the hospital which is situated at the same location as the Oncology Center is part of the hospital. Petitioner's Brief at 12; P. Ex. 2. Petitioner reasons that, if the other entity is in close proximity to the hospital, then the Oncology Center, which is located at the same site as is the other entity, must also be in close proximity to the hospital.

The term "close proximity" is not defined in PMI A-96-7. However, the term plainly contemplates that there may be some physical separation between entities that are nonetheless fully integrated. HCFA could have used the terms "adjacent to" or "co-located with" in lieu of "close proximity" if it intended that there could not be any physical separation between entities that are integrated. That it did not use such terms but opted, instead, to use the term "close proximity" establishes that HCFA recognized that entities could be separated physically and yet be integrated.

The Oncology Center is located in close proximity to the Hospital if the term "close proximity" is used consistent with common parlance. The undisputed evidence offered by Petitioner is that the Oncology Center is within a few minutes' drive of the Hospital. A drive of only 15 - 30 minutes is not a sufficiently long enough period of driving time between the Oncology Center and the Hospital to be a bar to the full integration of the operations of the Oncology Center into the operations of the Hospital. Accordingly, I conclude that a drive of only 15 - 30 minutes encompasses so short a period of time as to prove that the Oncology Center is in close proximity to the Hospital. Moreover, it is apparent that HCFA has applied the proximity criterion in another case in the same way that I apply it here. The fact that HCFA has found another facility that is situated at the same location as the Oncology Center to be part of the Hospital supports my conclusion that the Oncology Center is in close proximity to the Hospital.

ii. The Oncology Center and the Hospital serve the same patient population.

HCFA argues that the Oncology Center does not serve the same patient population as does the Hospital. It asserts that, in fact, the Oncology Center serves a substantially different patient base than does the Hospital. HCFA's Brief at 15. To support this assertion, HCFA avers that only 65 percent of the Oncology Center's patients share a common residential zip code with patients from the Hospital. In reaching this conclusion, HCFA relied on a zip code test using 75 percent of patients of the Hospital. Id.; HCFA Ex. 1.

Petitioner disagrees with HCFA's argument. Petitioner argues first, that the 65 percent overlap of zip codes between Hospital and Oncology Center patients relied on by HCFA is more than adequate to prove that the Hospital and the Oncology Center treat the same patient base. Petitioner's Reply Brief at 16.

Second, Petitioner avers that HCFA's statistics in fact understate the true extent of the overlap of patient populations between the two facilities. Petitioner asserts that it conducted its own review of the 1996 zip codes used by HCFA in making its determination that the Oncology Center did not serve the same patient population as the Hospital. According to Petitioner, using the 75 percent sample of zip codes of patients discharged from the Hospital and a complete listing of the zip codes of patients of the Oncology Center (i.e., the same methodology as that used by HCFA), there was a 67 percent overlap of zip codes in 1996. However, Petitioner asserts that a more accurate measure of the overlap of zip codes can be obtained by comparing the zip codes of 100 percent of the patients of the Oncology Center with the zip codes of 100 percent of the patients of the Hospital. Using this methodology, the overlap of the zip codes increases to 94 percent.

Petitioner also analyzed the zip codes of patients discharged from the two facilities in calendar year 1998. Using the same methodology as that used by HCFA, the overlap increased from 67 percent to 75 percent between 1996 and 1998. Moreover, comparing the zip codes of 100 percent of the patients of the Oncology Center with the zip codes of 100 percent of the patients of the Hospital, there was a 97 percent overlap in 1998.

As with the term "close proximity" there is no definition of the phrase "same patient population" in PMI A-96-7. There is some explanation of the meaning of the term in that it is accompanied by a parenthetical phrase "(e.g. from the same service, or catchment, area)." Attachment A to Petitioner's Brief at 2. The parenthetical phrase suggests that one - but, not necessarily, the only - way to determine whether two facilities serve the same patient population is to determine whether the patients of the two facilities are drawn from the same service or catchment areas.

Here, the evidence establishes that the Hospital and the Oncology Center do serve the same patient population. I do not read PMI A-96-7 as requiring complete congruity of patients served by an off-campus facility and a hospital in order for an off-campus facility to be found to be part of the hospital. The question is not whether the Hospital and the Oncology Center serve exactly the same individuals but whether there is a high degree of overlap between the population served by the Hospital and the population served by the Oncology Center.

There plainly is a very high degree of overlap between the population served by the Hospital and the population served by the Oncology Center. Petitioner has provided persuasive evidence that the methodology used by HCFA to determine the overlap of zip codes between Hospital and Oncology Center patients understates the true extent of the overlap of patient populations between the two facilities. However, even if I were to rely on HCFA's methodology for determining the degree of overlap of zip codes, I would conclude that both facilities serve the same patient population. A showing that the Hospital's and the Oncology Center's patient populations come from communities which show a zip code congruity of between 65 and 75 percent is sufficient to prove that the Hospital and the Oncology Center serve the same patient population. Moreover, Petitioner's methodology for measuring the degree of overlap of zip codes is reasonable, and I find that Petitioner has persuasively shown that there is a zip code congruity of between 94 and 97 percent. This is more than adequate to prove that the Oncology Center and the Hospital serve the same patient population.

b. The Oncology Center is operated with other departments of the Hospital under common licensure.

The second criterion of PMI A-96-7 states:

2. The . . . [off-campus facility] is an integral and subordinate part of the provider where it is based, and as such, is operated with other departments of that provider under common licensure (except in situations where the State separately licenses the provider-based entity);

Attachment A to Petitioner's Brief at 2.

HCFA argues that the Hospital and the Oncology Center are not operated under "common" licensure. The undisputed facts on which HCFA bases this argument are that: the Hospital's license does not specifically refer to the Oncology Center nor does it specifically authorize the Hospital to operate the Oncology Center; and, the Oncology Center is not separately licensed. The premise of HCFA's argument that the two facilities are not operated under a common license is its assertion that, in order for an off-campus facility to be operated under "common licensure" with a provider within the meaning of PMI A-96-7, a provider's State license must specifically authorize that provider to operate the off-campus facility.

What HCFA does not factor into its argument is that, under Maryland law, the Hospital is permitted to operate the Oncology Center without a specific authorization to do so in the Hospital's State license. Rather than being an "unlicensed facility," the Oncology Center is a facility that is assumed under Maryland law to be a part of the Hospital. Under Maryland law, the Hospital's license is sufficient to enable it to operate the Oncology Center as a facility that is integrated with the Hospital. Indeed, the Hospital could not have its license specifically authorize it to operate the Oncology Center as a part of the Hospital even if it sought such a license from the State because Maryland law does not!provide for such a license.

In an opinion, the Maryland Attorney General states:

[T]he State's hospital statutes and regulations do not encompass or cover licensure of . . . [off-campus outpatient facilities that are operated by a hospital] as part of the hospital license. Furthermore, there are no other laws or regulations which would cover or require licensure of these types of facilities unless the facility would qualify as a freestanding ambulatory care facility . . . .

P. Ex. 8 at 1.

If I were to accept HCFA's asserted interpretation of PMI A-96-7, then I would conclude that the Oncology Center is not part of the Hospital because the Hospital's State license does not specifically authorize the Hospital to operate the Oncology Center. I would make that conclusion even though Maryland law does not require the Hospital to obtain a license which authorizes it to operate the Oncology Center and even though it is not possible for the Hospital to obtain such a license under Maryland law. Under HCFA's asserted interpretation, it would never be possible for a hospital in Maryland to operate an integrated off-campus facility as part of that hospital for Medicare reimbursement purposes because it would never be possible for that hospital to obtain a license from the State which specifically authorized operation of the facility.

HCFA's asserted interpretation of PMI A-96-7 is inconsistent with the Act's principle that the Medicare program will defer to the decisions of State and local governments on issues of licensure. The Act does not impose on a provider a duty to obtain a license which goes beyond the requirements of applicable State and local law. The Act defers to the States on the issue of what license must be required for a provider to be eligible for participation in Medicare. For example, the Act, at section 1861(e)(7), includes the following criteria in the statutory definition of a "hospital":

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

I do not accept HCFA's asserted interpretation of PMI A-96-7. I do not find PMI A-96-7 to be inconsistent with the Act's deference to State law on licensure questions. PMI A-96-7 does not require a provider to obtain a State license which gives that provider specific authority to operate an off-campus facility if a provider is not required to do so under State licensing law. As I read PMI A-96-7, it draws a clear distinction between the circumstance where a provider is authorized to operate an off-campus facility under its own State license and the situation where the off-campus facility would require a separate license from a State in order to comply with State requirements.

The Hospital is operating the Oncology Center under "common licensure" within the meaning of PMI A-96-7. The Hospital is authorized to operate the Oncology Center under the authority that the Hospital has received by way of its Maryland license. The Hospital is not required to obtain specific authority from Maryland to operate the Oncology Center.

c. Effective October 10, 1998, the Oncology Center is included under the Joint Commission on Accreditation of Health Care Organizations (JCAHO) accreditation of the Hospital and the Oncology Center is recognized by JCAHO to be part of the Hospital.

The third criterion of PMI A-96-7 states:

3. The . . . [off-campus facility] is included under the accreditation of the provider where it is based (if the provider is accredited by a national accrediting body), and the accrediting body recognizes the . . . [off-campus facility] as part of the provider.

Attachment A to Petitioner's Brief at 2.

HCFA contends that the Oncology Center is not included under the Hospital's JCAHO accreditation. While this assertion may have been true in February, 1996, it is no longer the case. The Oncology Center currently is included under the Hospital's JCAHO accreditation. In October, 1998, the Hospital included the Oncology Center in its reaccreditation application to JCAHO. P. Ex. 5. In December, 1998, JCAHO surveyed the Oncology Center and accredited it as part of the Hospital, effective October 10, 1998. Id. at 5.

The question that remains to be answered is whether the Oncology Center should be deemed to have been accredited as of February, 1996, when the Oncology Center opened. The JCAHO survey of the Hospital, which predated the 1998 survey, took place in 1995. The Hospital's 1995 JCAHO accreditation did not refer specifically to the Oncology Center inasmuch as the Oncology Center was not opened until February, 1996.

JCAHO requires a hospital to be resurveyed and reaccredited once every three years unless there is a significant change in the nature of the hospital's operation that occurs within the three year accreditation period. Attachment F to Petitioner's Brief. A "significant change" may include, among other things, any of the following changes in a hospital's operation:

• Institution of a new service or program for which JCAHO has standards;

• Offering at least 25 percent of its services at a new location;

• Expanding its capacity to provide services by 25 percent or more;

• Providing a more intensive level of service;

• Merging with, consolidating with, or acquiring an unaccredited site, service, or program for which there are applicable JCAHO standards.

Attachment F to Petitioner's Brief at 3 - 4.

The opening of the Oncology Center in 1996 did not constitute a "significant change" in the Hospital's operations. The Hospital was not obligated to ask JCAHO to recertify it prior to the scheduled recertification survey of 1998. The Hospital's accreditation was unaffected by its opening of the Oncology Center. The Oncology Center is an extension of services offered by the Hospital at its East Baltimore site. It did not represent an institution of a new program by the Hospital, a significant shift in the locale at which it offered services, a major increase in the Hospital's capacity, a more intensive level of care offered by the Hospital, or a merger, consolidation, or acquisition by the Hospital.

But, while the Hospital was not obligated to be resurveyed for accreditation prior to 1998, that is not to say that the Oncology Center was automatically included in the Hospital's accreditation when it was opened in February, 1996. JCAHO's accreditation policies do not provide for an implied certification of a facility that is opened by a hospital in between certification surveys. See Attachment Z to Petitioner's Reply Brief. Moreover, there is nothing of record in this case which would allow me to infer that the Oncology Center would have been accredited prior to the October 10, 1998 effective date of accreditation that JCAHO established. For these reasons, I do not find that the Oncology Center may be deemed to have been accredited prior to October 10, 1998.

d. The Oncology Center is held out to the public as being part of the Hospital.

The seventh criterion of PMI A-96-7 states:

7. The . . . [off-campus facility] is held out to the public as part of the provider where it is based (e.g., patients know they are entering the provider and will be billed accordingly);

Attachment A to Petitioner's Brief at 3.

HCFA argues that copies of bills which the Oncology Center sent to patients for services that it provided to those patients do not recite that the bills are being sent to the patients from the Hospital. HCFA Ex. 14; HCFA's Reply Brief at 6. Rather, these bills refer to "Johns Hopkins at Green Spring Station." Id. Furthermore, the bills instruct patients to make payment to "Johns Hopkins at Greenspring" and not to the Hospital. Id. From this, HCFA asserts that a patient of the Oncology Center would not reasonably assume that the Oncology Center was part of the Hospital but, rather, would assume that the Oncology Center was an entity separate and apart from the Hospital.

Although the billing documents do not specifically refer to the Oncology Center as being part of the Hospital, neither do they state or suggest that the Oncology Center is an entity that is run separate and apart from the Hospital. The bills sent to the patients refer to the Oncology Center by its name as "Johns Hopkins at Green Spring Station." A reasonable patient could easily infer from this designation that he or she was being treated by a facility of the Hospital because both the Oncology Center and the Hospital are identified in the public mind with the prefix "Johns Hopkins."

Any ambiguity that might be present in billing documents is more than cleared up by additional information which the Oncology Center and the Hospital communicate to patients. This additional information makes it plain to patients that the care that they receive at the Oncology Center is integrated with that which is supplied at the Hospital. A reasonable patient would conclude that the Oncology Center is being held out to the public as a part of the Hospital. A patient brochure that is supplied by the Oncology Center states:

At the Oncology Center . . . , you'll see the same faculty doctors and have access to the same high-quality outpatient cancer services available at the Johns Hopkins medical campus in East Baltimore.

P. Ex. 1 at 47. The same brochure advises patients that:

And you have the comfort of knowing that, should you need specialized tests or treatment, you have access to the full range of services that has made Johns Hopkins a world leader in cancer care.

Id. Furthermore, the manner in which the Hospital and the Oncology Center treat its patients provides the patients with a clear indication that the two entities are wholly integrated. Patients who are seen at the Oncology Center are registered as patients of the Hospital. P. Ex. 1 at 3. Patients who receive care at the Oncology Center are given a Hospital identification number. Id. at 4. Patients are given a choice between receiving care at the Oncology Center or at the Hospital. Id. at 3. Patients may treat the two facilities as interchangeable points of care. Thus, a patient may receive care at the Hospital on one day and at the Oncology Center on another day during the same week. Id.

HCFA argues, additionally, that the Maryland Health Services Cost Review Commission (HSCRC) has determined that off-campus facilities in Maryland, such as the Oncology Center, may not lawfully hold themselves out to the public as being part of a hospital. From this, HCFA contends that the Oncology Center may not be found to be holding itself out as part of the Hospital.

As I discuss below, at Finding 2, the HSCRC is a State agency in Maryland that has been authorized under federal law to establish rates that providers may charge for services provided under Part A of Medicare. It has a rule prohibiting non-regulated on-campus facilities from holding themselves out to the public as being part of hospitals. Attachment Y to Petitioner's Brief. But, the HSCRC has not established a similar rule governing what off-campus facilities may or may not do. P. Ex. 15. Thus, contrary to HCFA's assertion, the HSCRC has not made any determination that directly or indirectly would serve to prohibit the Oncology Center from holding itself out to the public as being part of the Hospital.

e. The Oncology Center satisfies the fourth, fifth, sixth, and eighth criteria of PMI A-96-7.

The fourth, fifth, sixth, and eighth criteria of PMI A-96-7 state:

4. The . . . [off-campus facility] is operated under common ownership and control (i.e., common governance) by the provider where it is based, as evidenced by the following:

• The . . . [off-campus facility] is subject to common bylaws and operating decisions of the governing body of the provider where it is based;

• The provider has final responsibility for administrative decisions, final approval for personnel actions, and final approval for medical staff appointments in the provider-based entity; and

• The . . . [off-campus facility] functions as a department of the provider where it is based with significant common resource usage of buildings, equipment and service personnel on a daily basis.

5. The . . . [off-campus facility] director is under the direct day-to-day supervision of the provider where it is located, as evidenced by the following;

• The . . . [off-campus facility] director or individual responsible for day-to-day operations at the . . . [off-campus facility] maintains a daily reporting relationship and is accountable to the Chief Executive Officer of the provider and reports through that individual to the governing body of the provider where the entity is based; and

• Administrative functions of the . . . [off-campus facility], e.g., records, billing, laundry, housekeeping and purchasing, are integrated with those of the provider where the entity is based.

6. Clinical services of the . . . [off-campus facility] and the provider where it is located are integrated as evidenced by the following:

• Professional staff of the provider-based . . . [off-campus facility] have clinical privileges in the provider where it is based;

• The medical director of the . . . [off-campus facility] (if the . . . [off-campus facility] has a medical director) maintains a day-to-day reporting relationship to the Chief Medical Officer or other similar official of the provider where it is based;

• All medical staff committees or other professional committees at the provider where the . . . [off-campus facility] is based are responsible for all medical activities in the provider-based . . . [off-campus facility];

• Medical records for patients treated in the provider-based . . . [off-campus facility] are integrated into the unified record system of the provider where the . . . [off-campus facility] is based;

• Patients treated at the provider-based . . . [off-campus facility] are considered patients of the provider and have full access to all provider services; and

• Patient services provided in the . . . [off-campus facility] are integrated into corresponding inpatient and/or outpatient services, as appropriate, by the provider where it is based . . . .

8. The . . . [off-campus facility] and the provider where it is based are financially integrated as evidenced by the following:

• The . . . [off-campus facility] and the provider where it is based have an agreement for the sharing of income and expenses; and

• The . . . [off-campus facility] reports its cost in the cost report of the provider where it is based using the same accounting system for the same cost reporting period as the provider where it is based.

Attachment A to Petitioner's Brief at 2 -3.

Petitioner has offered evidence, in the form of an affidavit from Martin D. Abeloff, M.D., the Hospital's Director of Oncology, to prove that all of these additional criteria are met by the Oncology Center. P. Ex. 1. HCFA has not disputed the credibility of Dr. Abeloff's attestations nor has it denied that the Oncology Center meets the additional criteria. I find from the unrebutted evidence offered by Petitioner that the Oncology Center meets the additional criteria of PMI A-96-7. This unrebutted evidence establishes that the Oncology Center and the Hospital are closely integrated entities. In fact, the degree of integration between the two facilities is so comprehensive as to render insignificant any disputes about the nature of the Hospital's license or the manner in which the Oncology Center is advertised to the public.

The Oncology Center was opened in February, 1996, as an outpatient department of the Hospital and has been operated as an outpatient department of the Hospital since then. P. Ex. 1 at 1 - 2. The medical director of the Oncology Center reports directly to the Hospital's Director of Oncology. Id. at 2. The Hospital has final control over all of the administrative decisions of the Oncology Center. Id. There is significant common resource usage between the Oncology Center and the Hospital. Id. at 3. All of the medical personnel who render care at the Oncology Center are subject to the Hospital's bylaws. Id. at 3. The Oncology Center and the Hospital are fully integrated financially. Id. at 4 - 5. The Oncology Center is considered to be a cost center of the Hospital. Id. at 5. All of the revenue generated at the Oncology Center and all of the expense incurred by the Oncology Center are reflected in the Hospital's profit and loss statements. Id.

3. The failure of the HSCRC to regulate the rates for services charged by the Oncology Center is not a basis for concluding that the Oncology Center is not part of the Hospital.

HCFA argues that the Oncology Center is not part of the Hospital because the rates for services that are provided by the Oncology Center are not regulated as hospital reimbursement rates by HSCRC, a body which is authorized under federal law to establish rates for providers in Maryland who charge for services provided to beneficiaries under Part A of the Medicare program. It is undisputed that the HSCRC has not determined to regulate the rates for services charged by the Oncology Center. HCFA argues, that by not regulating the rates for services provided by the Oncology Center, the HSCRC has made a tacit determination that the Oncology Center is not part of the Hospital. Further, according to HCFA, inasmuch as the HSCRC has not determined to regulate the rates for services charged by the Oncology Center, HCFA has no authority to find that the Oncology Center is part of the Hospital. HCFA's Brief at 4, 7; HCFA's Reply Brief at 2 - 4.

I do not conclude from the fact that the HSCRC has not regulated the Oncology Center's reimbursement rates that the HSCRC has found the Oncology Center not to be part of the Hospital. I am not persuaded that the HSCRC made a tacit determination that the Oncology Center is not part of the Hospital. There is no evidence in this case to explain why the HSCRC decided not to regulate the Medicare reimbursement rates that are charged by the Oncology Center. There is nothing to suggest that the HSCRC made an independent determination that the Oncology Center is a free-standing entity that is not integrated into the Hospital. A possible reason for the HSCRC's failure to regulate the Oncology Center's rates is that the HSCRC did not determine to regulate the Oncology Center's rates because the services that the Oncology Center provides do not fall within the HSCRC's rate-setting authority. As Petitioner argues, the HSCRC's authority is limited to regulating rates for reimbursement that is claimed under Part A of Medicare. The Oncology Center claims reimbursement under Part B of Medicare. If, in fact, the HSCRC made a jurisdictional determination not to regulate the Oncology Center's rates then it would never have considered the issue of whether the Oncology Center was fully integrated with the Hospital.

Furthermore, the determinations that the HSCRC may make about reimbursement rates are not relevant to deciding the issue of whether the Oncology Center meets HCFA's criteria for participation as part of a hospital. There is nothing in governing law or regulations to suggest that, in authorizing a waiver from Medicare reimbursement requirements in Maryland, Congress ceded to the HSCRC the authority to determine which entities qualified as providers or to determine how providers qualified to participate in Medicare. HCFA retains the authority to decide issues of provider certification. HCFA, through its issuance of PMI A-96-7, has articulated the criteria that an off-campus facility must meet to qualify for provider-based status. The fact that the Oncology Center meets these criteria supersedes any finding HSCRC makes on this issue.