SUBJECT:

Comprehensive Mental Health Center of Monroe,

Petitioner,

Health Care Financing Administration

The three cases that I decide here arise from separate hearing requests. I did not consolidate them inasmuch as a different Petitioner requested a hearing in each case. However, I am electing to issue consolidated decisions for three reasons: first, the three Petitioners are closely related entities; second, the jurisdictional facts are identical in all three cases; and third, the outcome of all three cases depends on resolving a common legal issue.

I dismiss the hearing request in each of the three cases. I find that these Petitioners have no rights to hearings inasmuch as the Health Care Financing Administration (HCFA) did not make determinations affecting any Petitioner that gave that Petitioner a right to a hearing. Specifically, I find that HCFA made no adverse initial or reconsideration determination in any of the three cases concerning the Medicare certification status of any Petitioner. The determinations that HCFA made involved classification of the reimbursement status of the three Petitioners. Moreover, HCFA did not consent to granting Petitioners hearings.

I. Background and Undisputed Material Facts

The facts that I recite here are not disputed. I base my recitation of the facts on the exhibits that Petitioners attached to their motions for summary disposition. Each Petitioner submitted 21 proposed exhibits in support of its motion for summary disposition, and an additional exhibit as part of its reply to HCFA's cross motion for summary disposition, for a total of 22 exhibits from Petitioner in each case. Each of Petitioner's sets of exhibits is numbered sequentially along with that case's docket number. For example, in the case of Comprehensive Mental Health Center of Alexandria, Petitioner submitted 22 proposed exhibits which are designated as P. Ex. 1 - P. Ex. 22. Each of the 22 proposed exhibits also is designated with the case's docket number of C-00-146. I am receiving into evidence the 22 proposed exhibits that each Petitioner submitted. In these decisions when I refer to an exhibit, I refer to that exhibit by the docket number of the case in which it has been admitted as well as by its exhibit number.

Petitioners, Comprehensive Mental Health Center of Baton Rouge (Petitioner Baton Rouge), Comprehensive Mental Health Center of Alexandria (Petitioner Alexandria), and Comprehensive Mental Health Center of Monroe (Petitioner Monroe) are all community mental health centers. Each of the Petitioners is incorporated as a wholly-owned subsidiary of Comm-Care Corporation (Comm-Care). C-00-145, P. Ex. 1; C-00-146, P. Ex. 1; C-00-147, P. Ex. 1.

Each Petitioner is certified to participate in the Medicare program as a community mental health center (CMHC) providing partial hospitalization services. C-00-145, P. Ex. 11; C-00-146, P. Ex. 11; C-00-147, P. Ex. 11. A CMHC is defined by section 1861(ff)(3)(B) of the Social Security Act (Act) and by section 1913(c)(1) of the Public Health Service Act to be an entity that provides specified mental health services. These services include specialized outpatient services for children, the elderly, individuals with serious mental illnesses, and residents of a CMHC's service area who have been discharged from inpatient treatment at a mental health facility. The services also include 24-hour-a-day emergency care services, day treatment or other partial hospitalization services, and screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admission.

The three Petitioners were established originally and were certified to participate in Medicare as free-standing clinics in Baton Rouge, Alexandria, and Monroe, Louisiana. C-00-145, P. Ex. 11 at 1; C-00-146, P. Ex. 11 at 1; C-00-147, P. Ex. 11 at 1. With the passage of time and for efficiency purposes, Comm-Care relocated each of the three Petitioners to the premises of a long-term care facility that was owned and operated by Comm-Care. Petitioner Alexandria was relocated to the premises of Comm-Care's Tioga Manor Nursing Center, Petitioner Baton Rouge was relocated to the premises of Comm-Care's Community Care Center of Baker, and Petitioner Monroe was relocated to the premises of Comm-Care's Ridgecrest Nursing Home. C-00-145, P. Ex. 11 at 1 - 2; C-00-146, P. Ex. 11 at 1 - 2; C-00-147, P. Ex. 11 at 1 - 2.

Each of the long-term care facilities to which a Petitioner was relocated is separately certified from the Petitioner to participate in the Medicare program as a skilled nursing facility. Section 1819(a) of the Act defines a skilled nursing facility to be an entity which is primarily engaged in providing to residents skilled nursing care and related services for residents who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons, and which is not primarily established for the care and treatment of mental illnesses.

Petitioners contend that, in their initial requests for certification as Medicare participants, which they made in 1995 and 1996, they asked that they be classified as being provider- based for purposes of reimbursement. Petitioners' reply brief at 2 - 4; C-00-145, P. Ex. 6; C-00-146, P. Ex. 6; C-00-147, P. Ex. 6. Under the Medicare program, a "provider-based" reimbursement status may have important reimbursement implications for a participating facility. Essentially, a provider-based facility is one which has been found to be an integral part of another provider so that the other provider may claim reimbursement for the services that are provided by the integrated facility as if those services were given by the provider itself. HCFA Program Memorandum A-96-7. If a facility is accorded provider-based reimbursement status, it may mean that the provider with which the facility is integrated may be able to claim reimbursement from Medicare for certain of the integrated facility's costs. Such costs may not be reimbursable, either to the facility or to the provider with which it asserts to be integrated, if the facility is not accorded provider-based status. Thus, in some circumstances, Medicare may effectively pay more for the services of a provider-based facility than it would pay if the facility were determined to be a free-standing facility.

However, although Petitioners sought provider-based reimbursement classification, HCFA did not accord them that status. HCFA determined that Petitioners were free-standing facilities. C-00-145, P. Ex. 8; C-00-146, P. Ex. 8; C-00-147, P. Ex. 8. It is unclear from the record of these cases if or how HCFA communicated these initial reimbursement classifications to Petitioners or to Comm-Care. In any event, Petitioners claimed reimbursement from HCFA's Medicare intermediary as if they were provider-based facilities. Petitioners' briefs at 3.

On February 9, 1998, the intermediary notified Comm-Care that it would have to re-file its December 12, 1997 Medicare cost report. C-00-145, P. Ex. 10; C-00-146, P. Ex. 10; C-00-147, P. Ex. 10. The intermediary advised Comm-Care that Petitioners had been reported incorrectly on Comm-Care's cost report as if they were provider-based facilities when, in fact, they were free-standing entities. Ids.

Comm-Care then requested HCFA to classify Petitioners as provider-based facilities, effective from June 1, 1996 forward. C-00-145, P. Ex. 11 - P. Ex. 13; C-00-146, P. Ex. 11 - P. Ex. 13; C-00-147, P. Ex. 11 - P. Ex. 13. On or about March 1, 1998, HCFA notified Comm-Care by telephone that HCFA had determined that the three Petitioners all were free-standing facilities and were not provider-based. C-00-145, P. Ex. 9; C-00-146, P. Ex. 9; C-00-147, P. Ex. 9. On March 19, 1998, Comm-Care requested reconsideration from HCFA. C-00-145, P. Ex. 14; C-00-146, P. Ex. 14; C-00-147, P. Ex. 14. On July 9, 1998, HCFA advised Comm-Care orally that it had denied the reconsideration requests. C-00-145, P. Ex. 9; C-00-146, P. Ex. 9; C-00-147, P. Ex. 9.

Petitioners requested hearings before the Provider Reimbursement Review Board (PRRB) to challenge HCFA's classification of their reimbursement status. The PRRB concluded that it lacked jurisdiction to hear these challenges. C-00-145, P. Ex. 18; C-00-146, P. Ex. 18; C-00-147, P. Ex. 18. Petitioners filed requests for reconsideration with the PRRB, which were denied. C-00-145, P. Exs. 19, 20; C-00-146, P. Exs. 19, 20; C-00-147, P. Exs. 19, 20. On November 3, 1999, Petitioners filed requests for hearing seeking hearings before an administrative law judge in order to challenge HCFA's determinations as to their reimbursement classification status. The cases were assigned to me for hearings and decisions. Petitioners filed motions seeking summary disposition in their favor. HCFA cross-moved for summary disposition in each case.

II. Issues, Findings of Fact and Conclusions of Law

A. Issue

The issue in these cases is whether I am authorized to hear and decide Petitioners' challenges to HCFA's reimbursement classification determinations that Petitioners are free-standing facilities, and not provider-based facilities as Petitioners contend. Because I find that I do not have authority to hear and decide these cases, I decline to address other issues that the parties have raised. These other issues are: whether Petitioners timely filed their hearing requests; assuming Petitioners did not timely file their hearing requests, whether they established good cause for not having done so; and whether Petitioners satisfy HCFA's criteria for provider-based reimbursement status.

B. Findings of Fact and Conclusions of Law

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

1. I do not have authority to hear and decide these cases.

These cases address the identical issue that was heard and decided in Specialty Hospital of Southern California - La Mirada, DAB CR630 (1999), aff'd DAB No. 1730 (2000), and in Metropolitan Methodist Hospital, DAB CR574 (1999), aff'd DAB No. 1694 (1999). Those cases reach the same result that I reach here. Under the regulations which govern these cases, a determination by HCFA as to how to classify a provider for purposes of reimbursement is not a determination which gives a dissatisfied party hearing and appeal rights. I do not have the authority to hear and decide a case in which the issue is reimbursement classification status absent consent from HCFA for me to hear and decide it. As the Departmental Appeals Board explained in its La Mirada decision, parties who seek to contest actions taken by HCFA have rights to hearings only in those limited circumstances where the Act or regulations confer hearing rights. La Mirada, DAB No. 1730 at 7 - 9.

In the regulations which applied to these cases as of the dates that HCFA took its classification actions concerning Petitioners, a prospective provider had a right to a hearing to challenge a determination as to whether it is qualified to participate in Medicare as a provider of services. 42 C.F.R. § 498.3(b)(1). Hearing rights have been conferred in other specifically defined circumstances. La Mirada, DAB No. 1730 at 8 n.8. However, the regulations which apply to these cases did not confer a hearing right on a provider that is dissatisfied with the way in which HCFA classified it for reimbursement purposes.

Petitioners do not have a right to a hearing to challenge their reimbursement classifications. The facts of these cases show that what is at issue here are reimbursement classifications and not determinations of provider participation status. Under Medicare, a provider certification has a very different meaning than does a reimbursement classification. "Provider certification" is the act of determining whether a prospective provider meets the terms and conditions of participation in Medicare. Essentially, these terms and conditions address issues pertaining to quality of care, health, and safety. "Reimbursement classification" is the act of determining how a certified provider will be reimbursed for the services that it provides.

Petitioners are certified to participate in Medicare as are the skilled nursing facilities with which they are associated. HCFA never determined that Petitioners failed to qualify as providers of services nor has it determined to terminate their status as providers. The sole point of dispute between Petitioners and HCFA is the methodology by which Medicare reimburses for the services that Petitioners provide.

The issue in these cases is clear, as is the law on which I base my rulings. The outcome is clear as well. Petitioners have no rights to hearings because they are challenging their reimbursement classifications and not their certification status.

To some extent, however, the waters of these cases have been muddied by the inconsistent positions that HCFA has taken in other cases which involve reimbursement classification issues. In the cases that I discuss above, HCFA has argued - correctly - that administrative law judges do not have the authority to hear and decide reimbursement classification issues. However, on other occasions, HCFA has advocated that facilities be given hearings to contest reimbursement classifications. That was the position that HCFA took in Johns Hopkins Health Systems, DAB CR598 (1999), aff'd DAB No. 1712 (1999); in The Memorial Hospital at Easton, DAB CR634 (1999); and, most recently, in Baylor University Medical Center, DAB CR701 (2000) and Baylor Medical Center at Richardson, DAB CR702 (2000) (in the Johns Hopkins case, HCFA had a change of heart and argued that I had no authority to hear and decide the case after it had advocated that I hear and decide it and after I had ruled that I would hear and decide the case).

I elected to hear and decide the Johns Hopkins, Easton, Baylor, and Baylor at Richardson cases because, in each of those cases, HCFA advocated that I hear and decide it. As the Departmental Appeals Board noted in its La Mirada decision:

We see no reason, however, why the fact that Petitioner is not entitled to a hearing under either section 1866(h)(1) [of the Act] or section 498.3(b) [of the regulations] would preclude the [administrative law judge] from providing a hearing if the Secretary, or HCFA, acting pursuant to a delegation of Secretarial authority, consented to such review . . . .

DAB No. 1730 at 12 n.12 (emphasis in original). However, my decisions to hear and decide these cases in no way suggests that I - unlike HCFA - have been inconsistent in my analysis of when I have authority to hear and decide a case. I have held consistently that I do not have the authority to hear and decide a classification issue when that issue has been presented to me for a decision.

I can discern no principled distinction between those cases in which HCFA has argued that administrative law judges have the authority to hear and decide reimbursement classification issues and those cases in which HCFA has argued that administrative law judges lack the authority to hear and decide reimbursement classification issues. Arguably, there may exist an instance where there are both provider certification and reimbursement classification issues at stake. In that circumstance, the administrative law judge would have the authority to hear and decide the certification issue. But, under no circumstance do the regulations that were in effect at the time of the Johns Hopkins, Easton, Baylor, or Baylor at Richardson decisions authorize an administrative law judge to hear and decide a reimbursement classification issue, even by bootstrapping that issue on to a certification issue.

Petitioners in these cases argue that, in fact, they are challenging the initial determinations that HCFA made concerning their participation status. They assert that they are challenging HCFA's initial determinations that they are free-standing and not provider-based facilities which, according to Petitioners, were made as part of HCFA's determinations that they qualified to participate in Medicare as CMHCs. Thus, according to Petitioners, they have hearing rights in these cases inasmuch as the determinations that Petitioners were free-standing facilities are inextricably bound to the determinations that they qualified to participate as CMHCs. Petitioners' reply brief at 2 - 4; see C-00-145, P. Ex. 8; C-00-146, P. Ex. 8; C-00-147, P. Ex. 8.

However, as I explain above, no hearing rights exist to challenge a reimbursement classification determination, even where that determination is made as an aspect of a determination concerning whether a facility meets participation criteria. Reimbursement classification and participation are entirely separate concepts. Petitioners gain no hearing rights here from HCFA's original determinations to approve their participation and simultaneously to classify them as free-standing entities.

Petitioners note that the regulations governing hearings were amended effective October 10, 2000. The new regulation, which is to be codified at 42 C.F.R. § 498.3(b)(2), provides that an initial determination by HCFA shall include:

Whether a prospective department of a provider, remote location of a hospital, satellite facility, or provider-based entity qualifies for provider-based status under § 413.65 of this chapter, or whether such a facility or entity currently treated as a department of a provider, remote location of a hospital, satellite facility, or a provider-based entity no longer qualifies for that status under § 413.65 of this chapter.

65 Fed. Reg. 18,434, 18,549 (2000). The new regulation gives a provider the right to a hearing to challenge a determination as to whether it is a provider-based facility. Arguably, Petitioners would have had hearing rights in these cases to challenge HCFA's determinations that they were free-standing and not provider-based facilities had this regulation been in effect on the dates that HCFA made its determinations. However, this regulation was not in effect prior to October 10, 2000, and the determinations in these cases were made prior to that date. There is nothing in the regulation or in the Federal Register that states or suggests that the Secretary intended that this regulation have retroactive effect. I do not find that the regulation was intended to apply retroactively absent a clear statement of intent by the Secretary to apply it retroactively.

Finally, Petitioners argue that, if they are denied hearings, they will be without recourse in this Department to challenge their reimbursement classifications. They point out that the PRRB has previously refused to hear and decide the challenges that Petitioners raised before that Board. Petitioners argue that they will be denied due process if no entity within this Department will hear their cases.

I am not unmindful of the due process concerns raised by Petitioners. However, my authority to hear and decide cases is limited to that which has been delegated to me by the Secretary. The Secretary has not delegated to me the authority to hear and decide reimbursement classification determinations that were made by HCFA prior to October 10, 2000. Therefore, I may not hear and decide these cases.

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

I observed at Part II.A. of these decisions that the parties have raised three issues which I am declining to hear and decide. I do so because these issues are made moot by the absence of authority for me to hear and decide these cases.

Steven T. Kessel

Administrative Law Judge