Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
New Millennium CMHC, Inc., |
DATE: May 26, 2000 |
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Health Care Financing Administration
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Docket No.C-99-471 Decision No. CR672 |
DECISION | |
I enter summary disposition sustaining the determination
of the Health Care Financing Administration (HCFA) not to certify Petitioner,
New Millennium CMHC, Inc., 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 Hialeah, Florida. Petitioner applied to participate in the Medicare
program as a CMHC providing partial hospitalization services. On August
28, 1998, HCFA notified Petitioner that it had determined that Petitioner
did not meet applicable certification requirements. On November 3, 1998,
Petitioner requested HCFA to reconsider its determination. On November
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 me for a hearing and a decision. HCFA moved for summary disposition.
Petitioner opposed the motion. HCFA submitted nine exhibits (HCFA Ex.
1 - HCFA Ex. 9) in support of its motion. Petitioner submitted seven exhibits
(P. Ex. 1 - P. Ex. 7) in opposition to HCFA's motion. Petitioner submitted
two additional exhibits, which it labeled as P. Ex. 1 and P. Ex. 2 as
attachments to a reply brief that it submitted on April 25, 2000. I am
renumbering these two exhibits as P. Ex. 8 and P. Ex 9. I am receiving
into evidence HCFA Ex. 1 - HCFA Ex. 9 and P. Ex. 1 - P. Ex. 9. II. Governing law
"Partial hospitalization services" are services which
are described at section 1861(ff) of the Social Security 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:
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:
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:
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 Services
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 services 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. 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 1913(c)(1) of the Public Health Services Act and partial hospitalization
services:
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 Services Act. In a memorandum
dated August 21, 1998, HCFA stated that "screening":
HCFA Ex. 3 at 1 (emphasis in original).
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:
F.S.A. § 394.455(29). Under Florida State law, a "community mental health center
or clinic" is a:
F.S.A. § 394.455(6). III. Issues, findings of fact and conclusions
of law
This case is one of a series of cases that I have heard
and decided recently 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. My recent
decisions which address the participation status of Florida CMHCs include
the following: Charity Behavioural 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:
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.
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.
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:
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.
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 has not made any showing that it is a nonprofit
publicly funded CMHC that is certified to perform transfer evaluations
under Florida State law.
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
3 - 4. I have evaluated Petitioner's arguments that it has established
satisfactory arrangements with others 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 contends that it has established acceptable
arrangements with another entity to perform screening. Petitioner asserts
that it is able to satisfy the screening requirement by referring patients
in need of screening to an entity described under Florida State law as
a "receiving facility". Petitioner contends that it has an acceptable
screening arrangement with a specific receiving facility, HealthSouth
Larkin Hospital (Larkin Hospital). See P. Ex. 4; P. Ex. 9. Petitioner argues that, under Florida State law, a receiving
facility is permitted to perform transfer evaluations. Petitioner's brief
at 3 - 4. From this Petitioner 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. DAB CR636 at 8. I restate that holding here. An arrangement that Petitioner may have with a receiving
facility to perform screening will only pass muster under HCFA's criteria
if the arrangement specifies the requisite supervision by Petitioner of
the receiving facility's screening and if the receiving facility itself
satisfies the relevant federal criteria for performing screening. The
fact that a facility is designated as a receiving facility is not in and
of itself sufficient to satisfy federal criteria. As Petitioner describes
referral of a patient to a receiving facility, it generally 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. It also begs
the question of whether the receiving facility is complying with federal
requirements. On its face, the contract between HCFA and Larkin Hospital
fails to satisfy the criteria for performing screening through another
entity. P. Ex. 4. The contract was executed on December 3, 1996. Id.
at 1. It recites that it remains in effect for a period of one year. Id.
at 2. The contract therefore expired on December 3, 1997, nearly one year
prior to the date that HCFA determined that Petitioner was not complying
with participation requirements. Petitioner has not offered any evidence
that the contract has been renewed or that another contract currently
is in effect between Petitioner and Larkin Hospital. Furthermore, even if the contract remains in effect, Petitioner
has not shown that it is actually supervising screening performed by Larkin
Hospital in a way which satisfies participation requirements. The All
States Letter requires that a CMHC which has screening performed via an
arrangement with another entity must retain overall management responsibility
for the performance of screening. HCFA Ex. 2 at 3 - 4. For a CMHC to satisfy
this requirement, it must show not only that it has an agreement with
another entity that recites that the CMHC retains management responsibility
and is supervising screening, but that it is actually exercising management
and supervisory authority over the entity that is doing the screening.
The agreement between Petitioner and Larkin Hospital recites that Petitioner
will supervise screening performed by Larkin Hospital. P. Ex. 4 at 2.
But, Petitioner has offered no evidence to show how that contract actually
was or is being administered. In particular, Petitioner offered no documentation
of the degree of supervision or management authority it exercised or exercises
pursuant to the agreement. Petitioner argues that Larkin Hospital is, in fact, a
receiving facility and is therefore authorized to perform screening arrangements.
As proof for this assertion, Petitioner relies on P. Ex. 9. This exhibit
contains a list which is subtitled "Designated Receiving Facilities."
Id. at 3. Larkin Hospital is one of the names on the list. Id.
However, even if Larkin Hospital is a receiving facility, that fact would
not address the other reasons which I have stated for finding that the
arrangement between Petitioner and Larkin Hospital does not demonstrate
that Petitioner is actually performing screening in compliance with federal
participation requirements. In particular, Petitioner has not shown how
Larkin Hospital meets federal requirements for performing screening. Finally, Petitioner has not shown that it actually is
referring patients to Larkin Hospital to have screening performed. In
Psychstar of America, DAB CR645 (2000) I held that the capacity
to perform screening is not enough to satisfy the requirements which govern
screening. In order to satisfy those requirements, a CMHC must show that
it is actually performing screening, either directly or through an acceptable
arrangement with another entity.
Petitioner argues that HCFA's August 21, 1998 memorandum,
in which HCFA explained that restrictions in State law might preclude
a CMHC from complying with the federal requirement that a CMHC be authorized
under State law to perform mandated functions including screening, constitutes
a departure by HCFA from its previous policy concerning certification
of CMHCs to provide partial hospitalization services. Petitioner's brief
at 7; see HCFA Ex. 3. Petitioner argues that, prior to August 21,
1998, HCFA did not require that a CMHC in Florida be authorized to perform
transfer evaluations pursuant to Florida State law. It asserts that the
policies embodied in the August 21, 1998 memorandum constitute a departure
from that which HCFA stated previously in the All States Letter. See
HCFA Ex. 2. 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 Procedure
Act. 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 the Act and implementing
regulations. The Act requires that a CMHC meet applicable licensing or
certification requirements in the State in which it is located. Act, section
1861(ff)(3)(B)(i), (ii). Regulations reiterate this requirement. 42 C.F.R.
§ 410.2. Second, the August 21, 1998 memorandum does not express
a policy which conflicts with the contents of the All States Letter. HCFA
Ex. 2; HCFA Ex. 3. The All States letter contains explanations of what
are meant by the terms "screening" and "under arrangements." HCFA Ex.
2 at 3 - 4. The August 21, 1998 memorandum further clarifies HCFA's policy
by reiterating the Act's requirement that a CMHC must operate in conformance
with State law. Nothing about this latter pronouncement is inconsistent
with the contents of the All State letter. In reiterating the Act's requirement
of compliance with the requirements of State law, the August 21, 1998
memorandum neither imposed a new requirement on CMHC's, nor did it alter
existing policy. It merely stated the requirements of federal law. It
is true that the All States letter does not discuss a CMHC's obligations
to operate in compliance with the requirements of State law. Moreover,
that omission is not a suggestion that a CMHC may operate in violation
of the requirements of State law. Finally, I lack the authority to declare HCFA's official
interpretation of law to be ultra vires due to HCFA's failure to publish
it pursuant to the notice and comment requirements of the Administrative
Procedure Act. Regulations give me the authority to decide whether HCFA's
interpretations of law are consistent with the Act and regulations. 42
C.F.R. §§ 498.3(b)(1); 498.5(a)(2). But, these regulations do not give
me the authority to declare an interpretation of law by HCFA to be ultra
vires the requirements of the Act. See Ids.
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. See Petitioner's
brief at 8 - 9. 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. HCFA Ex.
3. 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 that I am aware of in either the Act or regulations which forces
HCFA to adhere rigidly to an interpretation of a State law if in fact
HCFA's understanding of how the law operates evolves over time. HCFA plainly
has the responsibility to apply the law in a manner that is consistent
with its understanding of the meaning of that law. HCFA may adapt its
actions to comport with its evolving understanding of the meaning of a
State law. And, HCFA is under no obligation to continue to apply a policy
that it had applied previously if it determines that the requirements
of a State's laws direct it to do otherwise.
Petitioner asserts that it incurred expenses based on
its understanding from conversations with employees of HCFA occurring
in late 1997 and early 1998 that Petitioner would be certified to participate
in Medicare. See Petitioner's brief at 9 - 10. 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. |
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JUDGE | |
Steven T. Kessel |
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