SUBJECT:

New LIfe Plus Center, CMHC,

Petitioner,

Health Care Financing Administration

I enter summary disposition sustaining the determination of the Health Care Financing Administration (HCFA) not to certify Petitioner, New Life Plus Center, CMHC, to participate in the Medicare program as a community mental health center (CMHC) providing partial hospitalization services. I do so because Petitioner has failed to show that it is providing screening services which comply with the requirements of federal law and Florida State law.

I. Background

Petitioner is a for-profit corporation that is located in Miami, Florida. Petitioner applied to participate in the Medicare program as a CMHC providing partial hospitalization services. On September 23, 1998, HCFA notified Petitioner that it had determined that Petitioner did not meet applicable certification requirements. On November 23, 1998, Petitioner requested HCFA to reconsider its determination. On December 21, 1998, HCFA notified Petitioner that it had reviewed Petitioner's reconsideration request and had determined that its initial denial of the request was correct.

Petitioner requested a hearing and the case was assigned to Administrative Law Judge Mimi Hwang Leahy for a hearing and a decision. HCFA moved for summary disposition. Petitioner opposed HCFA's motion. HCFA submitted a brief (HCFA Br.) and nine exhibits (HCFA Ex. 1 - HCFA Ex. 9) in support of its motion. Petitioner submitted a brief (P. Br.), but did not submit any exhibits, in opposition to HCFA's motion. HCFA submitted a reply brief (HCFA Reply Br.) and an additional exhibit, HCFA Ex. 10.

This case was subsequently transferred to me on March 3, 2000. I am receiving into evidence HCFA Ex. 1 - HCFA Ex. 10.

II. 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 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, the section was recodified as section 1913(c)(1) of the Public Health Service Act. 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 psycho social 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) Provides 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) Provides 24-hour-a-day emergency care services;

(3) Provides day treatment or other partial hospitalization services, or psycho social rehabilitation services;

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

(5) Provides consultation and education services; and

(6) Meets 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 Public Health Service Act and the above-cited regulation. In a document that is entitled "All States Letter 76-95" (All States Letter), HCFA states that a community mental health center must provide all of the services that are listed in the Public Health Service Act, either directly or under arrangements with others. HCFA Ex. 1. The term "under arrangements" is defined in the All States Letter to mean that a CMHC may arrange for those services described at section 1913(c)(1) of the Public Health Services Act 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) of the Public Health Service Act. 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 provided 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 (Florida State 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 Family Services], 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).

III. Issues, findings of fact and conclusions of law

A. Issues

This case is one of a series of cases that have been heard and decided recently by administrative law judges of the Civil Remedies Division involving the general issue of whether a CMHC meets certification requirements for participation in Medicare. Many of these cases involve CMHCs that are located in the State of Florida. Recent decisions which address the participation status of Florida CMHCs include the following: New Millennium CMHC, Inc., DAB CR672 (2000); Long Life Wellness Center, DAB CR657 (2000); Charity Behavioral Services, Inc., DAB CR635 (1999); T.L.C. Mental Health Center, DAB CR636 (1999); Psychstar of America, DAB CR645 (2000).

These cases do not involve identical questions of law and fact, but the issues raised by them are very closely related. As I discuss above, at Part II of this decision, qualification to participate in Medicare as a CMHC depends on application of both federal and State laws. In order to qualify for participation, a CMHC must meet both federal and applicable State requirements. What lies at the heart of this case is that Petitioner is a for-profit entity which seeks to operate under State laws which do not recognize for-profit entities as CMHCs.

The specific issues in this case are whether:

1. Petitioner established that it satisfied Medicare participation criteria for a CMHC providing partial hospitalization services.⁽¹⁾

2. I have authority to hear and decide Petitioner's argument that HCFA's actions against Petitioner constitute a violation of due process.

B. Findings of fact and conclusions of law.

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

1. Summary disposition is appropriate 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 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.

2. Petitioner does not satisfy participation criteria for a CMHC providing partial hospitalization services because it has not established that it provides 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 Public Health Service Act - an entity must meet criteria which, among other things, include the following:

1. It must meet applicable licensing or certification requirements in the State in which it is located. 42 C.F.R. § 410.2;

2. It must provide all of the services that are listed in section 1913(c)(1) of the Public Health Service Act. Act, section 1861(ff)(3)(B);

3. The 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. Public Health Service Act, section 1913(c)(1); 42 C.F.R. § 410.2; and,

4. Screening may be done either directly by a CMHC or through an arrangement with another entity. HCFA Ex. 1.

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.

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) of the Act and section 1913(c)(1) of the Public Health Service Act, 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 is a for-profit facility which has not contracted with DCF. See HCFA Ex. 5, at 4. It has not contested this fact in its brief nor has it made any showing that it is a nonprofit, publicly funded CMHC that is certified to perform transfer evaluations under Florida State law. See HCFA Ex. 4.

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. 1. 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 3 - 4.

I have evaluated Petitioner's arguments that it has established a satisfactory arrangement with another entity for performing screening. I find them to be unpersuasive. 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 it satisfies the statutory requirements for Medicare certification by providing services "under arrangements" pursuant to its contract with Miami Behavioral Health Center, Inc. (Miami Behavioral Health), which is a CMHC under Florida law. HCFA does not contest the fact that Miami Behavioral Health can provide transfer evaluations under Florida law. HCFA Br., at 10.

However, HCFA asserts that Petitioner's contract ("Evaluation and Screening Agreement") with Miami Behavioral Health fails on its face to satisfy the criteria for performing screening through another entity. See HCFA Ex. 8. HCFA argues that, for the agreement to meet federal participation requirements, the agreement must recite that Petitioner retains the necessary management responsibility or supervisory authority over the screening process. HCFA alleges that Petitioner's contract provides that Petitioner "will maintain overall management responsibility for the evaluation and screening services provided under this agreement"and that Petitioner "shall at all times retain and exercise control of the patient candidates and all evaluations and screenings as described herein." HCFA Ex. 8, at 1 and 4. However, HCFA states, these provisions are contradicted by a subsequent clause that indicates that Miami Behavioral Health is "at all times acting and performing its duties as an independent contractor" and not as an agent of Petitioner. HCFA Ex. 8, at 1, 4. Following this contractual language is a clause stating that Petitioner will supervise the services described in the contract including but not limited to credentialing all Miami Behavioral Health staff involved in the screening process, and reviewing reports with and meeting with Miami Behavioral Health. HCFA Ex. 8, at 4.

In its brief, Petitioner makes the argument that the contractual language is unambiguous and a plain reading of the contract clearly supports a finding of compliance with the federal criteria. Petitioner argues that the "overall management responsibility" provision quoted above, as well as the section of the agreement relating to control and supervision, demonstrate satisfactorily that Petitioner will be retaining management and supervisory authority over the screening process. P. Br., at 2. Moreover, Petitioner argues that the provisions relating to Petitioner's control and the status of Miami Behavioral Health as an independent contractor are not inconsistent with each other.

I am not convinced by Petitioner's arguments. HCFA maintains that Petitioner's agreement with Miami Behavioral Health, with its contradictory terms, does not satisfy the federal criteria. I agree. The agreement clearly states that Miami Behavioral Health functions as an independent contractor and that the relationship with Petitioner is not that of principal and agent. This clause contradicts the terms elsewhere in the contract that state that Petitioner has "overall management responsibility" for the screening services and has control and supervision over the screening process. Such contradictory statements are inadequate to establish that Petitioner will be providing the requisite supervision and control over Miami Behavioral Health. Thus, I find that Petitioner's contract fails to satisfy applicable federal criteria for the provision of screening services "under arrangements."

Moreover, I agree with HCFA's further argument that since Petitioner is not qualified under State law to provide the screening services itself, it cannot supervise the performance by an entity that is qualified under the law to perform the transfer evaluations. HCFA points out that the Assistant Secretary for Mental Health of DCF, John Bryant, has stated in his Declaration that under Florida law, an entity which is not authorized to perform a transfer evaluation is also not authorized to supervise, evaluate, assume professional responsibility for, or otherwise control the performance of such an evaluation by a CMHC or clinic. HCFA Ex. 4, at 2. Because Petitioner would be prohibited under Florida law from supervising, being responsible for, or otherwise controlling the manner in which Miami Behavioral Health conducts a transfer evaluation, Petitioner could not exercise the supervision and control necessary to satisfy the criteria for the provision of services "under arrangements" discussed above.

3. Petitioner did not establish that it is actually providing screening services.

Finally, HCFA alleges that Petitioner has not provided any proof that Miami Behavioral Health has in fact ever provided screening services on its behalf pursuant to the contract. As support for this contention, HCFA asserts that, during an on-site visit on May 19, 1998, Petitioner was asked to produce documentation substantiating the provision of screening services, and the facility administrator stated that Petitioner had not provided such services. HCFA Ex. 5, at 4. HCFA contends that Petitioner has not alleged that Miami Behavioral Health has ever provided screening services on its behalf pursuant to the terms of the agreement.

The Act requires that a CMHC actually be providing screening services - either directly or through an acceptable other arrangement - in order to qualify for reimbursement for partial hospitalization services. The statutory definition of a CMHC includes the statement that a CMHC is an entity that is providing specified services. Act, section 1861(ff)(3)(B)(i). The Act does not define the term "providing." However, the common and ordinary meaning of the term is that something is actually being given. A capability to provide something is not synonymous with the concept of "providing." Thus, the capability to provide screening services is not enough to satisfy the Act's requirements. A CMHC will not qualify to participate in Medicare if it establishes that it has the capability to provide screening services but fails to establish that it actually is providing such services.

The language in the Act is not ambiguous. Moreover, HCFA has interpreted and applied the Act consistent with its plain meaning. In the All States Letter, HCFA poses and responds to the following question:

How many of the defining services must a CMHC be providing for it to meet the definition [of partial hospitalization services] at 42 C.F.R. [§] 410.2? We believe that a CMHC must be providing all the listed services. Allowing a facility to claim that it has the capacity to provide one or more of the services without actually providing it will allow entities that are not truly CMHCs to participate.

HCFA Ex. 1, at 1 (emphasis added).

Petitioner has not challenged HCFA's statement that Petitioner has never provided any screening services. Nor has Petitioner offered any evidence that it is actually providing - or that it ever has provided - screening services via its agreement with Miami Behavioral Health. During the on-site visit on May 19, 1998, the facility's Administrator admitted that it had not provided any screening services. Moreover, Petitioner has not averred, nor offered any proof, that it has provided such services through its agreement at any date subsequent to May 19, 1998. Therefore, based on Petitioner's failure to prove that it is in fact providing screening services, I find that HCFA is further justified in denying Petitioner participation in Medicare.

4. I do not have the authority to hear and decide Petitioner's additional affirmative arguments.

Petitioner asserts that HCFA has treated it differently from other CMHC applicants in violation of due process. According to Petitioner, its agreement is similar to other entities' screening agreements that were found to meet federal participation requirements by HCFA. P. Br., at 2. Petitioner argues that it had relied on HCFA's representations and proceeded to provide the required services to the community at a great deal of expense that HCFA is now attempting to avoid reimbursing. It is Petitioner's contention that HCFA should not be permitted to induce applicants to expend time, effort, and money in treating Medicare patients, and then be allowed to avoid paying for the benefits by relying on its own advisory opinion (i.e., the All States Letter).

Petitioner is essentially arguing that HCFA should be estopped from denying Petitioner's certification application because Petitioner was led to believe that its certification application would be approved based: (1) on past general practice where HCFA had previously accepted other evaluation and screening agreements which conformed to Petitioner's agreement with Miami Behavioral Health in the instant case; (2) Petitioner relied on HCFA's representations and proceeded to provide the required services to the community at a great deal of expense. P. Br., at 2 - 3.

I do not have authority to hear and decide these arguments. My authority in cases involving HCFA is limited to hearing and deciding those issues which the Secretary of the Department has delegated authority for me to hear and decide. That authority is specified in 42 C.F.R. §§ 498.3 and 498.5. The regulations authorize me only to hear and decide cases involving specified initial determinations by HCFA.

The 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 such a case, I may decide whether HCFA applied applicable regulations and interpretations of the law correctly to the facts of a case. I may also decide whether HCFA's interpretation of a regulation is correct or incorrect.

I do not have authority to hear claims of estoppel against HCFA or the Secretary. It is well-established that I and other administrative law judges on this Board lack the authority to hear and decide estoppel arguments in cases involving the manner in which HCFA allegedly has processed applications for provider certification. GranCare Home Health Service & Hospice, DAB CR464 (1997); The Rivers HealthCare Resources, Inc., DAB CR446 (1996); SRA, Inc. D/B/A St. Mary Parish Dialysis Center, DAB CR341 (1994). Petitioner has offered no argument here which would give me reason to revisit the holdings in these decisions.

Alfonso J. Montano

Administrative Law Judge

1. In its response brief, Petitioner states that the "only issue on appeal" is whether "[Petitioner] has failed to satisfy the requirements for providing 24-hour-a-day emergency care services as set forth in 42 C.F.R. § 410.2(2)." P. Br., at 1. HCFA states in a footnote in its reply brief that it "presumes that this statement is a typographical error, for the agency has previously indicated that it is seeking summary disposition only on the issue of whether petitioner satisfies the screening requirement and not on the issue of whether petitioner is providing the emergency services described in Section 1913(c)(1) of the PHSA." HCFA Reply Br., at 1- 2, n.1 (citing to HCFA Br., at 2, n.1). Because Petitioner's brief does not address the issue of whether Petitioner is providing emergency services, I will also presume that Petitioner's statement in its brief is a typographical error. The issues in this case are those set forth above.