CASE | DECISION | JUDGE

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Wells House,

Petitioner,

DATE: November 13, 2000
                                          
             - v -

 

Health Care Financing Administration

Docket No.C-98-554
Decision No. CR714
DECISION
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I decide that the Health Care Financing Administration (HCFA) correctly determined to certify Petitioner, Wells House, to participate in the Medicare program, effective April 14, 1998.

I. Background

By letter dated May 4, 1998, HCFA certified Petitioner to participate as a provider in the Medicare program, effective April 14, 1998. Petitioner disagreed with HCFA's determination by contending that Medicare certification should have been granted at an earlier date and requested a hearing. This case was assigned to Administrative Law Judge (ALJ) Edward Steinman. Subsequently, this case was reassigned to ALJ Cynthia Josserand and then to me.

HCFA submitted a motion for summary judgment with six accompanying exhibits, marked exhibits A - F. I have remarked HCFA's exhibits as exhibits 1 - 6, to comply with Civil Remedies Division procedures. Petitioner submitted a motion for summary judgment accompanied by two declarations and five exhibits, marked as exhibits 1 - 5. Petitioner's reply brief was accompanied by three additional exhibits, marked as exhibits 6 - 8. Neither party objected to any of the exhibits submitted. I admit into evidence HCFA Exhibits (HCFA Exs.) 1 - 6 and Petitioner Exhibits (P. Exs.) 1 - 8. I base my decision in this case on the law and the parties' submissions.

II. Applicable law and regulations

The regulations require that an entity, such as a hospice, must apply to HCFA to be certified to participate in Medicare. 42 C.F.R. § 489.10(a). In order to be certified, an applicant must first be surveyed to ascertain whether the applicant meets all conditions of participation. 42 C.F.R. § 489.10(a). HCFA has delegated to the individual State survey agencies the authority to conduct surveys on HCFA's behalf. After the requisite surveys have been completed, the State survey agency forwards a recommendation to HCFA concerning the applicant's compliance with the federal requirements. 42 C.F.R. § 488.11. HCFA then makes an independent determination to either grant or deny the application for Medicare certification. HCFA will accept an applicant's participation agreement on the date that a survey of that applicant is completed, provided that the applicant meets all of the pertinent federal requirements on that date. 42 C.F.R. § 489.13. The regulations do not permit HCFA to certify a provider to participate in Medicare on a date that is earlier than the date of the completion of the certification survey. 42 C.F.R. § 489.13(b), (c).

If an applicant for participation fails to satisfy all federal requirements as of the date of completion of the survey, then HCFA will not certify that applicant to participate in Medicare until HCFA is satisfied that the applicant meets the federal requirements. Id. If HCFA finds, on the basis of a survey, that an applicant (other than a skilled nursing facility) complies with all conditions of participation, but has a lower level deficiency or deficiencies, then HCFA will certify the applicant to participate on the earlier of the following dates: the date that the applicant actually complies with all federal requirements; or, the date on which HCFA or the State survey agency receives from the applicant a plan of correction which addresses the outstanding deficiencies and which HCFA accepts. Id.

The regulations which define the Secretary's requirements for Medicare participation for a hospice program establishes conditions of participation for those hospice programs. These conditions of participation, which must be met by a hospice program, are set forth in the statute at section 1861(dd) of the Social Security Act (Act) and are implemented in the regulations at 42 C.F.R. Part 418. The regulations express these conditions of participation as broadly stated criteria. The regulations also state standards of participation as subsidiary components of the conditions of participation. In determining whether there has been compliance with a particular condition of participation, a State survey agency evaluates the manner and degree of the provider's compliance with the various standards within each condition. 42 C.F.R. § 488.26(b).

III. Issue, Findings of Fact, and conclusions of Law

A. Issue

The issue in this case is whether HCFA correctly determined to certify Petitioner to participate in Medicare, effective April 14, 1998.

B. Findings of Fact and Conclusions of Law

I make the following findings of fact and conclusions of law to support my decision that HCFA correctly determined to certify Petitioner in Medicare, effective April 14, 1998.

1. A hospice that applies for participation in the Medicare program may not participate until HCFA determines that the hospice meets federal requirements.

2. A hospice that applies for participation in the Medicare program will be surveyed on behalf of HCFA by a State survey agency to determine whether the hospice meets federal requirements. The hospice will be certified to participate in Medicare, effective the date that the survey is completed, if the hospice meets all the conditions of participation in Medicare, and any other federal requirements.

3. An initial Medicare certification survey of Petitioner was completed on December 10, 1997 by the California State survey agency. On that date, Petitioner was found to be out of compliance with seven conditions of participation and, as a result, Petitioner's application to participate in the Medicare program was denied. HCFA Ex. 1. A second certification survey was completed on April 14, 1998. The second survey found that Petitioner was in compliance with all applicable conditions of participation. By letter dated May 4, 1998, HCFA notified Petitioner that HCFA had approved Petitioner's request to participate in Medicare as a hospice provider, effective April 14, 1998. HCFA Ex. 4.

4. The effective date of certification of a provider agreement is the earlier of:

(i) The date on which a provider or supplier meets all conditions of participation. [or]

(ii) The date on which a provider or supplier is found to meet all conditions of participation or coverage, but has lower level deficiencies, and HCFA or the State survey agency receives an acceptable plan of correction for the lower level deficiencies . . . .

42 C.F.R. § 489.13(c)(2)(i), (ii).

5. Petitioner cannot be certified as of February 18, 1998, the date of its plan of correction following the initial medicare certification survey on December 10, 1997, because it did not meet the requirements of 42 C.F.R. § 489.13(c)(2)(ii).

6. HCFA properly determined to certify Petitioner's participation in Medicare as a hospice, effective April 14, 1998.

IV. Discussion

Petitioner operates a hospice program in Long Beach, California. Petitioner applied for a State license as a hospice on February 21, 1997. Petitioner was surveyed for the State license on August 12, 1997. The State licensing survey resulted in a finding of deficiencies which were later corrected. Petitioner received a Congregate Living Health Facility-B (CLHF) license, effective September 26, 1997.

An initial Medicare certification survey was completed on December 10, 1997 by the California State survey agency. By letter dated January 15, 1998, HCFA notified Petitioner that the certification survey found that Petitioner was not in compliance with seven conditions of participation and, as a result, Petitioner's application to participate in the Medicare program was denied. HCFA Ex. 1. The notice letter cited 42 C.F.R. § 489.10(a) as requiring that a provider meet the necessary conditions of participation in order to be accepted into participation with the Medicare program. Id. The denial was not appealed by Petitioner. Rather, Petitioner submitted a plan of correction on February 18, 1998.

On February 20, 1998, Petitioner submitted a second application and request for certification to participate as a hospice provider in the Medicare program. HCFA Ex. 2. A second certification survey was completed on April 14, 1998. The second survey found that Petitioner was in compliance with all conditions of participation specified at 42 C.F.R. Part 418. By letter dated May 4, 1998, HCFA notified Petitioner that HCFA had approved Petitioner's request to participate in Medicare as a hospice provider, effective April 14, 1998. HCFA Ex. 4. Petitioner requested reconsideration of HCFA's determination by contending that Medicare certification should have been granted at an earlier date. By letter dated June 17, 1998, HCFA notified Petitioner that it could not grant Petitioner's request for an earlier effective date. HCFA Ex. 6. Subsequently, Petitioner requested a hearing.

It is HCFA's responsibility to determine whether an applicant for participation in the Medicare program as a provider meets the applicable conditions of participation for certification as a provider. 42 C.F.R. § 488.12; see, e.g., Arbor Hospital of Greater Indianapolis, DAB No. 1591, at 7 n.6 (1996); Central Suffolk Hospital v. Shalala, 841 F. Supp. 492, 495 (E.D.N.Y. 1994). Until there is a finding of full compliance made by HCFA, HCFA is not authorized to certify the applicant. Governing regulations provide that the earliest date on which HCFA has authority to certify a provider to participate in Medicare is the date of the completion of the Medicare certification survey by the State agency that finds the provider in compliance with all conditions of participation. 42 C.F.R. § 489.13.

The date of the survey that found Petitioner to be in compliance with conditions of participation was April 14, 1998. The earliest date on which HCFA had authority to certify Petitioner is April 14, 1998. The Medicare participation agreement was made effective on the earliest day permissible, April 14, 1998. Until there is an onsite certification survey that has been completed and "there is a finding of full compliance [with Medicare conditions of participation] by HCFA, HCFA does not have the authority to issue a provider number." Arbor Hospital, DAB No. 1591; accord Suffolk Hospital v. Shalala, 841 F. Supp. 492.

The regulations state that the initial effective date of certification of a provider agreement is the earlier of:

(i) The date on which a provider or supplier meets all conditions of participation. [or]

(ii) The date on which a provider or supplier is found to meet all conditions of participation or coverage, but has lower level deficiencies, and HCFA or the State survey agency receives an acceptable plan of correction for the lower level deficiencies . . . .

42 C.F.R. § 489.13(c)(2)(i), (ii). Petitioner's basis for its motion for summary judgment is that the effective date for Medicare certification should be found when Petitioner was in substantial compliance with lower levels of deficiencies and not when Petitioner was in complete compliance. P. Br., at 1. Petitioner argues that, under 42 C.F.R. § 489.13(c)(2)(ii), it filed a plan of correction on February 18, 1998, following the December 10, 1997 survey and that, based on that plan of correction, HCFA should have granted Petitioner certification, effective February 18, 1998.

Section 489.13(c)(2)(ii) of the regulations has two elements that must both be met. First, the provider must have been found to meet all the conditions of participation; second, the provider must have only low level deficiencies that can be cured by an acceptable plan of correction. In this case, Petitioner had met neither element prior to April 14, 1998.

It is clear that Petitioner had not met the first element because HCFA's notice letter of January 15, 1998, determined that Petitioner was not in compliance with seven conditions of participation applicable to hospice programs and Petitioner failed to appeal this notice letter. HCFA Ex. 1. Petitioner cannot now challenge this determination, because any such challenge would be untimely. A request for hearing to challenge this determination would have to have been filed no later that March 21, 1998, 60 days from the presumed date of receipt by Petitioner. 42 C.F.R. § 498.40(a)(2).

It is also clear that Petitioner had not met the second element of section 489.13(c)(2)(ii). Petitioner was not in compliance with seven conditions of participation. The regulations express these conditions of participation as broadly stated criteria. Each condition of participation is made up of a number of related standards of participation. Each standard of participation, taken individually, could be a basis of a deficiency. Therefore, failing to be in compliance with even one condition is a failure in a broad area. Petitioner concedes that the term "low level deficiencies" is not defined in the regulations. P. Br., at 8. Petitioner suggests that low level deficiencies must be something less than immediate jeopardy. P. Br., at 8 n.9. I find that Petitioner's suggestion is unsupportable. A low level deficiency must be something relatively minor that can be cured by submitting an acceptable plan of correction. A finding that a provider broadly fails to meet requirements such that it is out of compliance with a condition of participation cannot be characterized as a low level deficiency.

The requirement for a hospice to participate in Medicare is that it meet the conditions of participation. 42 C.F.R. § 489.10(a). The December 10, 1997 survey disclosed that Petitioner was not complying with conditions of participation directly relating to patient care. For example, Petitioner: (1) lacked a medical director with overall responsibility for the medical component of the hospice's patient care program, in violation of 42 C.F.R. § 418.54; (2) failed to ensure the continuity of outpatient care, in violation of 42 C.F.R. § 418.56; (3) failed to establish and maintain an individualized written plan of care for each patient, in violation of 42 C.F.R. § 418.58; (4) failed to provide written instructions for patient care, in violation of 42 C.F.R. § 418.68; and (5) failed to ensure that drugs and biologicals were provided as needed for the palliation and management of terminal illness and related conditions, in violation of 42 C.F.R. § 418.80. These are non-compliances of a serious and systemic nature that directly impact on patient care and cannot be considered low level deficiencies. Whatever the precise meaning of "low level deficiencies" may be, it is evident that failure of even one condition of participation, let alone seven such areas, cannot be what is meant by "low level deficiencies" as stated in 42 C.F.R. § 489.13(c)(2)(ii).

As support for its position, Petitioner relies on statements by Petitioner's owner, Ronald Morgan, and a hired consultant, Susan McGloghlon, both of whom maintain that the Statement of Deficiencies, evidencing Petitioner's failure to meet seven conditions of participation following the December survey, reflects only "lower level deficiencies."

Mr. Morgan states only that he "considered the deficiencies [cited on the Statement of Deficiencies] to be lower level." P. Br., at 16. Mr. Morgan's opinion, however, is not supported by any reasons. If Mr. Morgan is disagreeing with the factual findings expressed in the Statement of Deficiencies, then he has waited too long to pursue this argument. The time to challenge the facts upon which the Statement of Deficiencies was based was within 60 days following receipt of HCFA's January 15, 1998 notice letter. Mr. Morgan cannot now contest that the findings in the Statement of Deficiencies, if accurate, constitute non-compliance with seven conditions of participation. In fact, when Petitioner submitted a plan of correction after the December survey, the plan of correction reflected profound systemic changes. These profound systemic changes indicate an awareness on Petitioner's part that the survey disclosed deficiencies in conditions of participation that required fundamental changes in the way that the Petitioner would be providing care to its patients. These are not lower level deficiencies.

Ms. McGloghlon, the hired consultant, asserts that Petitioner was in substantial compliance and had only "lower level deficiencies." P. Br., at 17. She flatly contradicted HCFA's determination that Petitioner was not in compliance with seven conditions of participation without explaining the reasons behind her conclusion and based solely on second-hand information. She reviewed only the Statement of Deficiencies and the plan of correction for the December 10, 1997 survey. Id. She did not, as the surveyors did, perform her own onsite compliance review nor did she perform a paper compliance review at any time. Neither did she review relevant contemporaneous records. In addition, she has not shown that she is familiar with Medicare requirements of hospice programs. She made no reference to any training or work experience in this area. She was not present at the time the December 10, 1997 survey was conducted. In light of these facts, I give her self-serving statement little weight.

In addition, Petitioner had not met the second element of section 489.13(c)(2)(ii) because HCFA never accepted the February 18, 1998 plan of correction. Petitioner argues that it was given permission to submit a plan of correction in a letter from the County of Los Angeles Department of Health Services (LADHS) dated December 30, 1997. P. Ex. 4. Petitioner further reasons that HCFA is now compelled to accept the plan of correction dated February 18, 1998 and certify Petitioner, as of that date. Petitioner concedes that LADHS claimed that the plan of correction letter, dated December 30, 1997, was inadvertently transmitted to Petitioner. P. Br., at 15. Nevertheless, Petitioner seems to argue that HCFA should be bound by this letter. However, HCFA cannot be compelled to accept a plan of correction since a plan of correction may not adequately address the deficiencies concerned or because a plan of correction may not be an option available to the provider. When conditions of participation are not met, the only option available to a provider is a new application and a resurvey to determine compliance with conditions of participation. LADHS inadvertently transmitted the plan of correction letter to Petitioner. P. Br., at 15. The January 15, 1998 notice letter denying Petitioner's Medicare application did not give Petitioner an opportunity to submit a plan of correction. The January 15, 1998 notice letter only gave Petitioner the option to reapply. Nevertheless, Petitioner filed a plan of correction on February 18, 1998, when it evidently knew that this avenue was not available to it.

Even if HCFA could be compelled to accept Petitioner's plan of correction, I find that HCFA is not compelled to certify Petitioner as of February 18, 1998. As previously discussed, Petitioner had not met the required elements of 42 C.F.R. § 489.13(c)(2)(ii). The Petitioner had not meet all the conditions of participation, nor are the deficiencies involved low level deficiencies.

Petitioner further argues that the regulations and HCFA's actions were such as to excessively delay certification and cause Petitioner to incur large expenditures on behalf of its patients that were not reimbursed by Medicare. This argument also must fail since it requests relief based on principles of equity which I have no authority to grant under the regulations. Therapeutic Rehabilitation Centers, Inc., DAB CR531 (1998). There is no exception to the regulations that would permit HCFA to certify a provider at a date earlier than the date of completion of the survey in the circumstances where completion of the survey has been delayed for reasons that are beyond the ability of the provider to control. Id.

Alternatively, Petitioner argues that the effective date of certification could be the date of the State licensing survey on August 12, 1997, or the date it received the CLHF license on September 26, 1997, or the date of the Medicare certification survey on December 10, 1997, even though Petitioner concedes that it was not in compliance on the date of that survey. Neither of these dates are possible certification dates. HCFA cannot base Medicare certification on a State licensing survey or on the date a State license was issued. As stated in Arbor Hospital:

HCFA must evaluate the findings [resulting from a survey] and make conclusions on whether the conditions are satisfied. Unlike the surveyors, HCFA is looking not just at the findings, but at how those findings comport with the [Social Security] Act and regulations. Only then may a finding of compliance be made, and that finding may be only made by HCFA.

DAB No. 1591, at 7 n.6. HCFA cannot grant certification until HCFA finds that a provider has met all the Medicare conditions of participation. Id.

Under the regulations, HCFA could not have granted a Medicare provider agreement until, among other things, an onsite survey verified that Petitioner had finally achieved compliance with all the conditions of participation pertaining to hospice programs. 42 C.F.R. § 489.13(c)(2)(i). This compliance was verified on April 14, 1998. April 14, 1998, is the earliest date on which certification could have been granted.

III. Conclusion

HCFA correctly determined to certify Petitioner to participate in the Medicare program, effective April 14, 1998.

JUDGE
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Marion T. Silva

Chief Administrative Law Judge

 

CASE | DECISION | JUDGE