CASE | DECISION | ISSUE, FINDINGS OF FACT AND CONCLUSIONS OF LAW | JUDGE

Decision No. CR652
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

IN THE CASE OF  


SUBJECT:

Lauderhill Community Mental Health Center,

Petitioner,

DATE: March 6, 2000
                                          
             - v -
 
Health Care Financing Administration Docket No.C-99-636
DECISION
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I enter summary disposition sustaining the determination of the Health Care Financing Administration (HCFA) to deny certification to Petitioner, Lauderhill Community Mental Health Center, to participate in the Medicare program as a community mental health center (CMHC) providing partial hospitalization services. I do so because Petitioner has not shown that it may provide screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admissions consistent with the requirements of federal and applicable Florida State law.

Background

Petitioner is a corporation that is located in Lauderhill, Florida. Petitioner applied to be certified to participate in the Medicare program as a CMHC providing partial hospitalization services. On December 29, 1998, HCFA notified Petitioner that it had determined that Petitioner did not qualify to be certified as a CMHC. Petitioner applied for reconsideration of HCFA's determination on February 18, 1999. On March 29, 1999, HCFA notified Petitioner that it had determined to deny Petitioner's reconsideration request. Petitioner then requested a hearing.

The case was assigned to me for a hearing and a decision. HCFA moved for summary disposition. Petitioner opposed HCFA's motion. HCFA submitted seven proposed exhibits (HCFA Ex. 1 - 7) with its motion. Petitioner submitted three proposed exhibits (P. Ex. 1 - 3) with its reply in opposition to HCFA's motion. Neither party objected to the proposed exhibits. I hereby receive into evidence HCFA Ex. 1-7 and P. Ex. 1-3.


Governing law

A. Federal law

"Partial hospitalization services" are services which are described at section 1861(ff) of the Social Security Act (Act) and which are reimbursed by the Medicare program. "Partial hospitalization services" consist of services that are prescribed by a physician and provided, pursuant to specified statutory criteria, and which include: individual and group therapy with physicians and psychologists; occupational therapy requiring the skills of a qualified occupational therapist; services of social workers, trained psychiatric nurses, and other staff trained to work with psychiatric patients; drugs and biologicals furnished for therapeutic purposes; individualized activity therapies; family counseling; patient training and education; diagnostic services; and such other services as the Secretary of this Department may determine to be reasonable and necessary. Act, sections 1861(ff)(1); 1861(ff)(2)(A) - (I).

The Medicare program will reimburse for partial hospitalization services that are provided by either a certified hospital or by a CMHC. See Act, section 1861(ff)(3)(A). A "community mental health center" is defined by the Act to mean an entity:

(i) providing the services described in section 1916(c)(4) of the Public
Health Service Act; and

(ii) meeting applicable licensing or certification requirements for community
mental health centers in the State in which it is located.


Act, section 1861(ff)(3)(B)(i), (ii). Although the Act refers to section 1916 of the Public Health Service Act (PHSA), the section was recodified as section 1913(c)(1) of the PHSA. Under this section, the services that a CMHC must provide include the following:

(i) outpatient services, including specialized outpatient services for children, the elderly, the seriously mentally ill, and residents of the . . . [community mental health center's] service area discharged from inpatient treatment at a mental health facility;

(ii) 24-hour-a-day emergency care services;

(iii) day treatment or other partial hospitalization services or psychosocial rehabilitation services; and

(iv) screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admission.


Additionally, the Secretary of this Department has issued a regulation which defines the term "community mental health center." A CMHC is defined by the regulation to be an entity that:


(1) [p]rovides outpatient services, including specialized outpatient services for children, the elderly, individuals who are chronically mentally ill, and residents of its mental health service area who have been discharged from inpatient treatment at a mental health facility;

(2) [p]rovides 24-hour-a-day emergency care services;

(3) [p]rovides day treatment or other partial hospitalization services, or psychosocial rehabilitation services;

(4) [p]rovides screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admission;

(5) [p]rovides consultation and education services; and

(6) [m]eets applicable licensing or certification requirements for CMHC's in the State in which it is located.


42 C.F.R. § 410.2.

HCFA has published policy guidelines which describe a CMHC's obligations under section 1913(c)(1) of the PHSA and the above-cited regulation. In a document that is entitled "All States Letter 76-95" (All States Letter), HCFA states that a CMHC must provide all of the services that are listed in the PHSA, either directly or under arrangements with others. HCFA Ex. 2. The term "under arrangements" is defined in the All States Letter to mean that a CMHC may arrange for those services described at section 1916(c)(4) of the PHSA (now codified as section 1913(c)(1) of the PHSA) and partial hospitalization services:


under a written arrangement, agreement or contract with other agencies, organizations, or individuals who are not CMHC employees, and for which the CMHC maintains overall management responsibility. The written agreement includes at least the identification of the services to be provided and the manner in which the contracted services are coordinated, supervised, and evaluated by the CMHC . . . .

Id., at 3 (emphasis added).

HCFA has elected to defer to the laws of the States in order to determine what constitutes adequate screening for patients being considered for admission to State mental health facilities pursuant to section 1913(c)(1)(iv) of the PHSA. In a memorandum dated August 21, 1998, HCFA stated that "screening":

constitutes the performance of at least one of the steps in a process by which an individual is clinically evaluated, pursuant to State law, for the appropriateness of admis[s]ion to a State mental health facility by an entity that has both the appropriate clinical personnel and authorization under State law to perform all of the steps in the clinical evaluation process except those required to be performed by a 24 hour facility.

HCFA Ex. 3 at 1 (emphasis in original).

B. Florida State law

Florida State law defines the entities that are authorized to perform the procedures which are necessary prerequisites to admission of individuals for treatment at a Florida State mental health facility. Under the Florida Mental Health Act, F.S.A. § 394.451, et seq., only certain types of entities are authorized to perform the necessary procedures. Specifically, these entities are limited to those entities which are authorized to perform "transfer evaluations." F.S.A. § 394.461(2). A "transfer evaluation" is defined under Florida State law as being:

the process, as approved by the appropriate district office of the . . . [Florida Department of Children and Families], whereby a person who is being considered for placement in a state treatment facility is first evaluated for appropriateness of admission to the facility by a community-based public receiving facility or by a community mental health center or clinic if the public receiving facility is not a community mental health center or clinic.

F.S.A. § 394.455(29).

Under Florida State law, a "community mental health center or clinic" is a:

publicly-funded, not-for-profit center which contracts with . . . [the Florida Department of Children and Families] for the provision of inpatient, outpatient, day treatment, or emergency services.

F.S.A. § 394.455(6).

 

ISSUE, FINDINGS OF FACT AND CONCLUSIONS OF LAW
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Issue

The issue in this case is whether HCFA properly determined not to certify Petitioner to participate in Medicare as a CMHC providing partial hospitalization services.

Findings of fact and conclusions of law

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

1. Summary disposition is appropriate in this case.

A threshold question in this case is whether summary disposition is appropriate. Summary disposition is appropriate either where: there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, where the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. I have looked closely at Petitioner's arguments in order to decide whether there exist any genuinely disputed issues of material fact.

I am assuming the facts that Petitioner asserts in its brief and exhibits to be true for purposes of deciding HCFA's motion for summary disposition. I conclude that summary disposition is appropriate in this case notwithstanding my decision to accept as true the facts alleged by Petitioner. As I explain in detail in the Findings which follow, Petitioner has failed to make a showing that it qualifies to participate in Medicare as a CMHC providing partial hospitalization services even accepting as true the facts which Petitioner alleges.

2. Petitioner did not satisfy participation criteria for a CMHC
providing partial hospitalization services because it did not
provide requisite screening services for patients who are
candidates for admission to State mental health facilities.

As I discuss above, at Part II. A. of this decision, in order to be certified to provide partial hospitalization services - and to satisfy the statutory definition of a CMHC contained at section 1913(c)(1) of the PHSA - an entity must meet criteria which, among other things, include the following:

(i) [i]t must meet applicable licensing or certification requirements in the State in which it is located. 42 C.F.R. § 410.2;

(ii) [i]t must provide all of the services that are listed in section 1913(c)(1) of the PHSA. Act, section 1861(ff)(3)(A);

(iii) [t]he services that it must provide must include screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admissions. PHSA, section 1913(c)(1)(iv); 42 C.F.R. § 410.2; and,

(iv) [s]creening may be done either directly by a CMHC or through an arrangement with another entity. HCFA Ex. 2.


HCFA asserts that Petitioner fails to meet these criteria because Petitioner may not offer screening directly consistent with the requirements of Florida State law nor has Petitioner shown that it has entered into an acceptable arrangement with a third party for the performance of screening. Additionally, HCFA argues that Petitioner has not shown that it actually is performing screening of patients for referral either directly or through an acceptable arrangement with another entity.

a. Petitioner cannot qualify under federal participation requirements
to perform screening directly because Petitioner cannot qualify under
Florida State law to perform transfer evaluations.

In order to be able to perform directly the screening services that are required under section 1861(ff)(3)(A) of the Act and section 1913(c)(1)(iv) of the PHSA, Petitioner must be authorized to perform transfer evaluations pursuant to Florida State law. Federal law requires a CMHC to comply with applicable State requirements in order to participate in Medicare. 42 C.F.R. § 410.2. Florida's law governing a transfer evaluation by a CMHC is plainly applicable State law inasmuch as a transfer evaluation is a process that is identical to screening. Under federal law, screening is the clinical evaluation of a patient to determine his or her suitability for hospitalization in a State mental health facility. Under Florida State law, a transfer evaluation also is a clinical evaluation of a patient to determine his or her suitability for transfer to a State mental health facility. F.S.A. § 394.455(29).

Petitioner cannot qualify to perform screening directly because it cannot qualify pursuant to Florida State law to perform transfer evaluations. Florida State law provides that a CMHC may perform a transfer evaluation only if it is a not-for-profit publicly funded entity. F.S.A. § 394.455(6). Petitioner has not made any showing that it is a nonprofit publicly funded CMHC that is certified to perform transfer evaluations under Florida State law.

b. Petitioner does not qualify under federal participation requirements
to provide screening through arrangements with others because it has
not shown that it has an arrangement with another entity which
complies with federal requirements.

In order to comply with federal participation criteria an arrangement between a CMHC and another entity must provide that the CMHC retains overall supervision over the screening process. HCFA Ex. 2. It is not sufficient for the CMHC merely to refer a patient to another entity for screening. The CMHC must directly supervise the basic functions which the other entity performs that comprise screening. Id., at 1-3.

Petitioner does not comply with federal participation requirements which govern screening through an arrangement with others. The evidence in this case does not show that Petitioner has a screening arrangement with another entity which complies with federal requirements.

Petitioner argues that, under Florida State law, an entity known as a "receiving facility" is permitted to perform transfer evaluations. Petitioner's Brief (P. Br.), at 3 - 4. Petitioner then asserts that it may satisfy the screening requirement by transferring its patients to a receiving facility which will then perform the requisite screening. This argument is essentially the same argument that was made by the facility in the case of T.L.C. Mental Health Center, DAB CR636 (1999). I held there that a referral of a patient to a receiving facility does not satisfy the screening requirement where the referring entity does not exercise the supervisory authority that is required by HCFA. T.L.C., DAB CR636, at 8. I restate that holding here.

As Petitioner describes referral of a patient to a screening facility, it is not screening through an arrangement with others as is required by HCFA, because Petitioner would not retain the necessary management control or supervisory authority over the screening process. The fact that the receiving facility may be authorized under Florida State law to perform a transfer evaluation begs the question of whether Petitioner is exercising the requisite supervision of the receiving facility's performance of its functions.

c. The question of whether Petitioner actually is providing screening is moot.

HCFA argues that it is not enough for Petitioner to establish that it is capable of providing screening, either directly, or through an acceptable arrangement with another entity. HCFA asserts that, in order to satisfy participation criteria, Petitioner must show that it is providing screening consistent with federal and applicable State requirements.

It is not necessary for me to address this issue here. Whether or not Petitioner is screening patients for referral is a moot point because Petitioner does not satisfy the criteria for performing screening.

3. HCFA's application of the law is not on its face inconsistent
with the law. Moreover, I do not have the authority to decide that
HCFA's application of the law is ultra vires.

Petitioner argues that HCFA's August 21, 1998 memorandum, in which HCFA explained what it meant by screening through an arrangement with another entity, constitutes a departure by HCFA from its previous policy concerning certification of CMHCs to provide partial hospitalization services. P. Br., at 6; see HCFA Ex. 3. Petitioner asserts that such an allegedly fundamental change in policy by HCFA - and any certification determination that HCFA makes pursuant to the allegedly changed policy - is unlawful where HCFA has failed to follow the notice and comment requirements of the Administrative Procedures Act (APA).

I do not find that this argument provides a basis for me to order that HCFA certify Petitioner to participate in Medicare. First, Petitioner has made no showing that HCFA's interpretation of the law as is stated in HCFA's August 21, 1998 memorandum is inconsistent with federal statutes or regulations published by the Secretary.

Indeed, HCFA's policy statement is consistent with the requirements of law. Section 1913(c)(1)(iv) of the PHSA requires a CMHC to provide screening. The PHSA could be read consistent with its plain meaning to require that a CMHC provide screening directly. HCFA has chosen to apply the statute somewhat more liberally by allowing a CMHC to provide screening via an arrangement with another entity. However, it is not unreasonable - and it is certainly consistent with the plain meaning of the PHSA - for HCFA to require that any screening done via such an arrangement be done with the CMHC exercising the same degree of control and supervision over such screening as if the CMHC had performed the screening directly.

Second, I lack the authority to do what Petitioner requests, which is to declare HCFA's official interpretation of law to be ultra vires because HCFA failed to publish it pursuant to the notice and comment requirements of the APA. I have no authority to declare an official interpretation of law by HCFA to be ultra vires the requirements of the Act. Regulations give me the authority to hear and decide whether HCFA's determination that an entity fails to qualify as a provider was made correctly. 42 C.F.R. §§ 498.3(b)(1), 498.5(a)(2). In the course of hearing and deciding such a case, I may decide whether HCFA applied correctly to the facts of a case applicable regulations or official interpretations of law. I may also decide whether HCFA's interpretation of a regulation is correct or incorrect. However, I lack the authority to decide whether HCFA or the Secretary published an interpretation of the law in violation of the APA.

4. I do not have the authority to order HCFA to certify Petitioner
to participate in Medicare on the ground that HCFA's determination
not to certify Petitioner is arbitrary and capricious.

Petitioner argues that I should declare HCFA's determination to deny Petitioner certification to be unlawful on the ground that the certification determination was arbitrary and capricious. Petitioner contends that, prior to August 21, 1998, HCFA made determinations to certify CMHCs to participate in Medicare which are inconsistent with the policy that HCFA announced in the August 21, 1998 memorandum. However, according to Petitioner, HCFA has not rescinded these pre-August 21, 1998 determinations even while it is enforcing the August 21, 1998 memorandum against entities which apply for certification after August 21, 1998. P. Br., at 7. Petitioner asserts that this allegedly disparate treatment of entities by HCFA establishes HCFA to be arbitrary and capricious in denying certification to Petitioner.

I do not have the authority to order HCFA to certify Petitioner to participate in Medicare on the ground that HCFA's determination not to certify Petitioner is arbitrary and capricious in light of its alleged failure to decertify other CMHCs. My authority is limited pursuant to 42 C.F.R. §§ 498.3 and 498.5 to hearing and deciding whether HCFA's determination in this case, given the undisputed facts, complies with applicable law.

The premise which underlies HCFA's August 21, 1998 memorandum is that, prior to that date, HCFA had misunderstood the implications of Florida State law and had been certifying incorrectly as CMHCs entities that did not comply with the requirements of Florida State law. I am aware of nothing in the Act or in regulations which commands HCFA to continue to certify applicants to participate on the ground that it has certified similarly situated applicants in the past. And, there is nothing in the Act or regulations which prohibits HCFA from changing its provider certification policies prospectively, as its understanding of the meaning of State laws evolves.

5. I do not have the authority to hear and decide Petitioner's claim of estoppel.

Petitioner asserts that it remained in operation after September 1998 and incurred expenses based on its understanding from conversations with employees of HCFA that Petitioner would be certified to participate in Medicare. P. Br., at 8. Petitioner asserts that it relied to its detriment on representations allegedly made to it by HCFA's employees. It contends that it suffered damages as a consequence of its reliance on these alleged statements. Presumably, Petitioner would have me award money damages to it premised on the injury caused by its reliance on the representations allegedly made by HCFA's employees.

For purposes of deciding Petitioner's argument I am assuming to be true Petitioner's contentions about the representations that HCFA's employees are alleged to have made. I am also assuming to be true Petitioner's assertions that it relied on these representations to its detriment. Notwithstanding, I lack the authority to hear and decide Petitioner's claim to equitable relief based on estoppel.

On several previous occasions, I have held that I lack the authority to decide claims of estoppel in cases involving the manner in which HCFA allegedly has processed applications for provider certification. T.L.C. Mental Health Center, DAB CR636 (1999); GranCare Home Health Service & Hospice, DAB CR464 (1997); The Rivers Health Care Resources, Inc., DAB CR446 (1996); SRA, Inc. d/b/a St. Mary Parish Dialysis Center, DAB CR341 (1994). As I explain above, at Finding 3 of this decision, my authority in a case involving HCFA is limited to hearing and deciding whether any of those determinations that are described in 42 C.F.R. §§ 498.3 and 498.5 was made correctly by HCFA. My authority to hear and decide a case involving HCFA does not extend to awarding money damages based on principles of estoppel. Petitioner has offered no argument here which would give me reason to revisit my previous decisions that I lack the authority to hear and decide estoppel arguments.

 

JUDGE
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Steven T. Kessel
Administrative Law Judge

 

CASE | DECISION | ISSUE, FINDINGS OF FACT AND CONCLUSIONS OF LAW | JUDGE