New Jersey Department of Human Services, DAB No. 513 (1984)

GAB Decision 513
Docket No. 83-205

April 18, 1984

New Jersey Department of Human Services;
Ballard, Judith; Garrett, Donald Settle, Norval


The New Jersey Department of Human Services (State) appealed a
disallowance by the Health Care Financing Administration (Agency) of
$2,248,090 in federal financial participation (FFP) in Medicaid payments
to Greystone Park Psychiatric Center (Greystone Park). Two types of
payments are in question. For inpatient hospital services provided to
individuals age 65 and older in an institution for mental diseases
(IMD), the Agency disallowed $2,233,783 in payments for services from
June 20, 1981 through January 18, 1982. For inpatient psychiatric
services provided to individuals under age 21, the Agency disallowed
$14,307 in payments for services from April 25 through June 26, 1981.
In both cases, the Agency asserted that the facility's Medicaid provider
agreement was not valid during those time periods. The State contested
the dates of the disallowance period and argued that the regulations
imposing certain Medicare requirements on an IMD participating in the
Medicaid program were inappropriate, inconsistent, and irrational. In
the alternative, the State argued that the facility substantially
complied with the Medicare requirements. For the reasons stated below,
we uphold the disallowance, except for payments made on behalf of those
persons age 65 and over for services from January 11, 1982 through
January 18, 1982.

Summary of Relevant Certification Regulatory Requirements

"Inpatient psychiatric services for individuals under age 21" are
defined as services provided under the direction of a physician in a
facility or program accredited by the Joint Commission on Accreditation
of Hospitals (JCAH), meeting additional requirements regarding
certification of need for services, treatment, and plans of care. 42
CFR 440.160 (1980); 42 CFR Part 441, Subpart D (1980).

"Inpatient hospital services for individuals age 65 or older" in an
IMD means services provided under the direction of a physician in an IMD
which meet utilization review plan requirements and special psychiatric
hospital requirements under Medicare. 42 CFR 440.140(a)( 1980); 42 CFR
405.1035 through 405.1038 (1980). These special requirements include
JCAH accreditation and special medical record and staffing requirements.

(2) Factual History

In August 1980, Greystone Park lost its JCAH accreditation. At the
same time, the Agency's regional office conducted a review of Greystone
Park to determine compliance with Medicare conditions of participation.
The Agency found that Greystone Park did not meet the special Medicare
staffing requirements. The State survey agency also reviewed Greystone
Park in the fall of 1980 and found an inadequate nursing staff.

Greystone Park appealed the loss of JCAH accreditation, but the
decision was upheld by the Director of JCAH's Accreditation Program for
Psychiatric Facilities on April 30, 1981 retroactive to April 25, 1981.
On the basis of this decision, a series of adverse actions were
initiated against Greystone Park terminating its Medicare and Medicaid
provider agreements.

JCAH resurveyed Greystone Park in June 1981 and in September 1981
granted the facility a conditional one year accreditation. The survey
report noted continuing problems in professional services and staff
composition, and the accreditation was specifically limited because of
"deficiencies in . . . staff composition." State's Appeal File, Exhibit
6. The accreditation was effective as of the first day following
completion of the survey, June 27, 1981. Based on the accreditation,
the State Medicaid agency issued a new Medicaid provider agreement
effective retroactively to June 27, 1981. (In December 1981, the Agency
sent a letter to the State questioning the validity of that provider
agreement.)

In the fall of 1981, Greystone Park reapplied for Medicare
certification. The State survey agency conducted a survey in November
1981 and in January 1982 issued a statement of deficiencies and plan of
correction noting that the special staffing requirements were again not
met. In the middle of January 1982, the State survey agency revisited
Greystone Park with the specific purpose of verifying nursing staff
status. The survey agency recommended certification and another review
in three months. In late January 1982, the Agency notified the State
that for those under age 21, JCAH reaccreditation was sufficient to
reinstitute the Medicaid provider agreement as of June 27, 1981. In May
1982, the Agency notified Greystone Park that a new Medicare provider
agreement would be issued retroactively to January 19, 1982. In June
1982, the Agency notified the State that the previously issued Medicaid
provider agreement was now acceptable for services to those age 65 and
older on or after January 19, 1982.

JCAH Accreditation Alone Is Not Sufficient for Title XIX Certification
of an IMD Providing Inpatient Hospital Services

The State contended that JCAH reaccreditation of the facility on June
27, 1981 was sufficient under the Social Security Act (Act) for Medicaid
certification (3) as an IMD providing inpatient hospital services to
persons age 65 or older.

In summary, the State's arguments were:

* The Social Security Act requires only that an IMD have JCAH
accreditation in order to be certified as a Medicaid provider.

* Imposition by the Agency of additional Medicare requirements in
order for an IMD to receive Medicaid certification is inappropriate and
inconsistent with the Act.

* The imposition of Medicare requirements discriminates against
individuals age 65 and over as compared with those under age 21.

* The regulations coerce facilities into Medicare participation and
are therefore irrational.

The Act defines and limits the types of services for which FFP can be
claimed. The two types of Medicaid services relevant to this appeal
are:

inpatient hospital services, skilled nursing facility services, and
intermediate care facility services for individuals 65 years of age or
over in an institution for tuberculosis or mental diseases.

(Section 1905(a)(14))

and

inpatient psychiatric hospital services for individuals under age 21,
as defined in subsection (h).

(Section 1905(a)(16))

"Inpatient hospital services for individuals age 65 and over in an
IMD" is not defined in the Act. As with other medical services included
in the original Medicaid amendments of 1965, "inpatient hospital
services" is defined in the regulations. FFP is available for inpatient
hospital services for individuals age 65 or older in an "institution for
mental diseases that meets the requirements under Medicare, Secs.
405.1035 and 405.1036 of this chapter. . . ." 42 CFR 440.140(a)(1)(ii).
These two Medicare conditions incorporated by reference impose on an IMD
special requirements also required of "psychiatric hospitals" under
Medicare and relate to utilization review plans, clinical records, and
"staffing (4) requirements the Secretary finds necessary for carrying
out an active treatment program." 42 CFR 405.1036(a).

For Medicaid individuals under age 21, JCAH accreditation renders a
facility or program eligible to receive FFP so long as the services are
in compliance with 42 CFR Part 441, Subpart D and the services are
provided under the direction of a physician. Section 1905(h)(1) of the
Act.

The Secretary has been charged with the responsibility of
implementing the Social Security Act and to make and publish such rules
and regulations as may be necessary to the efficient administration of
the Secretary's functions. Section 1102 of the Act. The Medicaid
regulations in question were promulgated under the authority of Section
1102.

The Supreme Court, faced with a similar general implementation
provision, has held that the validity of a regulation promulgated under
that provision will be sustained so long as it is "reasonably related to
the purposes of the enabling legislation." Thorpe v. Housing Authority
of the City of Durham, 393 U.S. 268, 280-281 (1969); see also, Mourning
v. Family Publications Services, Inc., 411 U.S. 356 (1973). Given our
discussion below, we find that the State has not shown that the
regulations are not "reasonably related" to the enabling legislation and
not necessary to the efficient administration of the Medicaid program.
In addition, the regulations can be viewed as an interpretation of the
phrase "inpatient hospital services" in the Medicaid amendments to the
Act, and we would find that interpretation reasonable.

Until 1965, the Social Security Act excluded payments for care of
individuals in IMDs or who had been diagnosed as psychotic and were
patients in medical institutions. The Social Security Act Amendments of
1965, Pub. L. 89-97, provided for the first time for medical assistance
on behalf of individuals age 65 or older who were patients in IMDs. To
receive federal funding for such assistance, however, states had to have
programs which met certain standards such as providing an individual
plan of care for each patient to assure that, among other things, he or
she would be given appropriate medical treatment within the institution
and that alternate plans of care be developed. These provisions were
originally proposed as amendments to Titles I, X, XIV, and XVI of the
Act, but identical provisions were incorporated into Title XIX
(Medicaid) at Sections 1902(a)(20) and (21). The provisions were
promoted on the Senate floor by Senator Carlson who spoke of "great
strides in the field of mental disease," stating that he was "convinced
that the time has come that these diseases should no longer be set apart
from others . . ." The Senator also referred to the need for greater
flexibility in care of the aged than in other age groups, since it is
difficult to determine whether an elderly person is mentally ill or
merely senile, and "it may be appropriate for him at one (5) time to be
in a mental institution and at another to be in a nursing home, his own
home, or in some other arrangement." 110 Cong. Rec. 21349 (1964).

The rational underpinning of the Secretary's regulations seems
apparent given the statutory scheme and legislative history. First,
inpatient hospital services for IMDs and tuberculosis hospitals would be
similar in many respects to inpatient services for hospitals generally.
The Secretary would therefore use Medicare statutory standards which
(unlike those for Medicaid) spell out in some detail requirements for
inpatient hospital services.

Second, IMDs providing inpatient psychiatric hospital services have a
purpose different, though related, from institutions solely providing
hospital care. To ensure that the Medicaid program is paying for active
treatment rather than care which is merely custodial, the regulations
require IMDs providing inpatient hospital services not only to be
accredited by JCAH but also to meet conditions of participation for
psychiatric hospitals under Medicare (as spelled out in the statute)
including special staffing requirements.

Congress has indicated its intentions as part of the Medicaid program
to support the provision of services that amount to more than custodial
care for the aged in IMDs. Sections 1902(a)(20) and (21) of the Act.
Elsewhere in the Act, in the Medicare provisions, there is a definition
of inpatient hospital services to aged psychiatric patients which
describe such services. There is no indication in the legislative
history of the 1965 amendments that Congress intended Medicaid to
support a lesser standard of quality of care than the Medicare program
provided. It was, therefore, reasonable for the Secretary to use the
Medicare provisions to define under Medicaid inpatient hospital services
for persons age 65 or older in an IMD. Moreover, adoption of Medicare
standards for inpatient hospital services for the aged in IMDs promotes
efficiency by permitting a hospital to be certified to participate in
both the Medicare and Medicaid programs by meeting one set of standards.

In 1972, the Social Security Act was amended at Section 1905(h) to
provide for inpatient psychiatric hospital services to individuals under
age 21. Unlike IMD services for the aged in the 1965 amendments, these
services are specifically defined in the Act. This is the result of a
conflict between the House and Senate versions of the bill. The House
version made no provision for coverage of this service, while the Senate
version authorized coverage in an accredited institution providing
active care and treatment such as the services provided by a psychiatric
institution in the Medicare program. S. Rep. No. 1230, 92nd Cong., 2nd
Sess. 281 (1972). The Conference Report set specific limitations on the
Senate bill (H.R. Rep. No. 1605, 92nd Cong., 2nd Sess. 65 (1972)), which
are now codified in Section 1905(h) of the Act and 42 CFR 440.160. In
particular, (6) Congress wanted to ensure that these individuals would
reasonably be expected to benefit from active treatment and therefore
required specific standards relating to certification for services,
independent review teams and individualized plans of care. These
standards are set forth in detail at 42 CFR 441.150 et seq. Thus, the
historical development of the Act created differing regulatory
requirements to meet the different service needs of different age
populations.

The State claimed that the Agency had applied the Medicare
requirements relating to psychiatric hospitals to all IMDs serving the
aged, and this was improper because reimbursable services for the aged
in an IMD can be skilled nursing and intermediate care level as well as
inpatient hospital level. The State is misreading the regulations,
according to the Agency (Agency's brief, pp. 34 - 35), and we agree.

The regulations tailor specific requirements to each of the services
which can be provided in an IMD. 42 CFR 440.140. Only subsection (a)(
1) which defines inpatient hospital services for those age 65 and over
in an IMD imposes Medicare requirements relating to a psychiatric
hospital on an IMD. Subsections (b) and (c) refer specifically to
skilled nursing or intermediate care services, each with other specified
requirements. While each says that the services must be provided in an
IMD "as defined in paragraph (a) of this section," it is referring to
the definition of IMD in (a)(2), not the definition of inpatient
hospital services in (a)(1)(ii). /1/


The State also argued that since Congress did not adopt the Medicare
requirements for inpatient psychiatric hospital services to individuals
under age 21, Congress thereby intended to reject such a requirement for
IMD psychiatric services to persons age 65 and older. As discussed
above, the provisions were adopted seven years apart; Congress adopted
different requirements for the younger age population based on different
treatment needs and purposes. There is no indication in the legislative
history that Congress either rejected the standards imposed by the
regulations on IMDs providing inpatient services to the older age
population or disavowed the substantive bases for the distinct statutory
requirements.

(7) Finally, the State contended that compliance with the regulatory
requirements for the aged in IMDs improperly coerces a facility into
Medicare participation even if such participation is not desired. The
regulatory framework does not support that contention.

There are two mechanisms by which a facility can demonstrate
compliance with the relevant requirements: (1) certification by the
State survey agency to the State Medicaid agency that all requirements
for participation under Medicaid have been met (42 CFR 431.610(e)); or
(2) the issuance of a Medicare provider agreement by the Agency after
the State survey agency has certified that all conditions of
participation are satisfied. If an IMD has a Medicare provider
agreement, it therefore complies with the regulations. The facts in
this appeal indicate that the facility could have pursued Medicaid
certification without receiving Medicare certification. After the
Medicaid provider agreement was terminated on May 25, 1981, the State
issued a new provider agreement based on the reinstatement of JCAH
accreditation. There is no evidence in the file that the survey agency
conducted a survey for the State Medicaid agency to determine whether
Greystone Park was in compliance with Medicaid requirements. This
option was available to the State without the necessity of seeking
readmission to the Medicare program. Instead, Greystone Park
voluntarily opted to reapply for a new provider agreement under
Medicare.

In summary, we cannot find that the questioned regulation is not
reasonably related to the purposes of the Medicaid amendments to the Act
or a reasonable interpretation of the phrase "inpatient hospital
services in an IMD."

JCAH Accreditation by Itself Does Not Demonstrate Substantial Compliance
with 42 CFR 405.1038

In order to be certified as a Medicaid provider, an IMD providing
inaptient hospital services to persons age 65 and over must have JCAH
accreditation and must substantially comply with special Medicare
staffing requirements. The State argued that JCAH accreditation
standards address approximately 90% of the Medicare requirements and
that compliance with these standards, as evidenced by receipt of
accreditation, demonstrates substantial compliance with the Medicare
requirements. Even assuming that the JCAH standards are very similar to
the Medicare standards, it is clear that the regulations require not
only that JCAH accredit the facility but also that the State survey
agency make an independent judgment of substantial compliance with 42
CFR 405.1038. In this case, the State survey (8) agency found serious
problems of compliance with that very standard until January 1982. /2/


As discussed above, the mechanism provided by statute under Medicaid
to certify compliance with these conditions is certification by the
state Medicaid agency or the Department (which issues Medicare provider
agreements), not JCAH. Section 1902(a)(33) of the Act. The regulations
also clearly specify that the state survey agency must determine whether
an institution meets the requirements for participation in the Medicaid
program. 42 CFR 431.610(e). Thus, even if the standards are similar,
only the State survey agency may determine compliance with applicable
Medicaid requirements. Under Medicare, a similar process exists.
Institutions accredited as hospitals by JCAH are "deemed" to meet all
applicable Medicare conditions of participation for hospitals except for
the staffing requirements as the Secretary finds necessary to carry out
an active program of treatment. Section 1861(f) of the Act. Section
405.1036(a) of 42 CFR states that a psychiatric facility must ". . .
meet staffing requirements the Secretary finds necessary for carrying
out an active treatment program." The Secretary has set forth these
requirements at 405.1038. While the Secretary could have opted for JCAH
accreditation as being sufficient to meet this requirement, the
regulations specifically exclude such an approach. Because the two sets
of standards are sufficiently different, the Secretary determined that
JCAH accreditation alone is not sufficient for Medicaid funding.

In this case, in November 1981, the State survey agency reviewed
Greystone Park's compliance with the special staffing requirements. It
found that those requirements were "not met." Agency's Appeal File,
Exhibit 15.

Given the statutory and regulatory framework, and the fact that the
State survey agency found noncompliance with the special staffing
requirements, we cannot find that funding was appropriate here, even if
JCAH standards were met.

Dates of Disallowance

a. Beginning Dates

The State argued that FFP should be allowed from April 25, 1981 to
May 24, 1981 for services to individuals under age 21 and from June 20,
1981 (9) to July 19, 1981 for services to individuals age 65 and older.
The extra 30 days FFP should be given in accordance with 42 CFR 441.11,
argued the State. The regulation states that if a Medicaid provider is
terminated, FFP may be continued for 30 days for payments for
individuals admitted to the facility before the provider agreement was
terminated if the State "makes reasonable efforts to transfer the
individuals to another facility or to alternate care."

In summary, the State's arguments were:

* The Agency instructed the State to claim for the extra 30 days.

* The Agency never asked for information concerning transfer efforts.

* Transfer efforts were ongoing after the loss of accreditation.

In the June 1, 1981 letter written by the Regional Medicaid Director
to the State, the Agency told the State that Greystone Park's Medicare
provider agreement would be terminated as of June 20, 1981. The letter
also stated that Medicaid payments for services to individuals age 65
and older could be continued no more than 30 days in accordance with
441.11 to "allow your agency to make reasonable efforts to transfer the
individuals. . . ." State's Exhibit 3. The Agency also said that, for
those individuals under age 21, FFP was discontinued as of April 25,
1981 but could be extended until May 24, 1981 if similar efforts were
made. There is another letter in the record dated June 15, 1982 from
the Associate Regional Administrator, Division of Program Operations, to
the State, which appears to assume that the extra 30 days of FFP were
appropriate. State's Appeal File, Exhibit 17.

Under the regulations, the State must demonstrate that reasonable
transfer efforts were made, in order to be eligible for the additional
funds. There is nothing in the regulations that indicates that, in the
absence of evidence to the contrary, there is an assumption that
reasonable transfer efforts were made. The State has the burden to
demonstrate its efforts, especially since transfer effort information
would be more likely to be in the custody of the State (Medicaid is a
state-run program).

To be consistent with the applicable regulations, the Associate
Regional Administrator's letter must be read as based on an assumption
that reasonable transfer efforts were in fact made. The letter does not
purport to state a finding on that specific matter. (As discussed
below, this assumption is not warranted.) Thus, the two letters are not
really in conflict.

(10) Even if there was a conflict, however, the disallowance letter
(written by a higher ranking Agency official) represents the Agency's
final determination. The State has not argued that a disallowance
letter can not state a different position on the disallowance period
than a preliminary letter from a lower ranking official. Nor has the
State alleged that it has been prejudiced by the alleged change.

Indeed, the evidence provided by the State as to transfer efforts is
completely unconvincing. The State's Exhibit 20 is a memorandum
relating to efforts to "discharge" 40 patients from Greystone Park into
long term care facilities. There is no indication that these actions
were taken in response to the facility's termination from the Medicaid
program. The memorandum indicates that the efforts seem to be part of
what should have been an on-going "planned discharge preparation for
patients identified as suitable for discharge to nursing homes."

The memorandum mentions moving 40 patients. Even assuming that the
memorandum was addressed to the subject of moving Medicaid patients, the
Agency asserts that this does not represent reasonable efforts to
transfer all Medicaid patients. /3/ The State alleged that the transfer
of psychiatric patients is a difficult task, but the only evidence
provided for its efforts is an undated, unsigned, handwritten list of
nursing homes contacted. There is no indication for what purpose the
list was compiled or what specifically were the outcomes of the
contacts. /4/

In summary, the State provided no evidence showing that reasonable
efforts were made to transfer Medicaid patients after the facility was
notified that Medicaid payments would no longer be available.
Therefore, there is no basis for allowing an additional 30 days of FFP;
the Agency's beginning dates for the disallowance are correct.

b. Ending Date

The State argued that the ending date of the disallowance for
services to individuals age 65 and older should be January 11, 1982, not
January (11) 18, 1982. The State cited 42 CFR 489.13(b), which says
that for Medicare provider agreements, if all federal requirements are
not met on the date of the survey, the agreement will be effective on
the earlier of the following:

(1) The date on which the provider meets all requirements.

(2) The date on which the provider submits a correction plan
acceptable to HCFA or an approvable waiver request, or both.

According to the State, an acceptable plan of correction was
submitted by Greystone Park on January 11, 1982. Although a
verification survey was conducted on January 19, 1982, the State said
that the date of the submission of the acceptable plan should be the
operative date.

The Agency argued that the State survey agency, as the agent for the
Secretary, certifies compliance with applicable Medicare and Medicaid
regulations. That agency conducted a survey in November 1981 to
determine compliance with special staffing requirements and found these
requirements were not met. A resurvey on January 19, 1982 showed the
facility to be in compliance based on a plan of correction. The Agency
argued that the State cited to the wrong regulation, and that the
applicable regulation is 42 CFR 489.57, which states the conditions
under which the Agency will accept a new Medicare provider agreement
after a termination. The Agency concluded that those conditions were
not met until January 19, 1982. According to the Agency, 489.13 is
irrelevant because it pertains only to facilities applying for Medicare
participation for the first time, not to those which had been previously
terminated and were seeking readmission. Summary of Telephone
Conference Call, March 27, 1984, p. 2.

We disagree with the Agency's reasoning. Section 489.57 does not
speak to the date on which a Medicare agreement becomes effective. It
merely states under what circumstances a new Medicare provider agreement
will be accepted by the Agency after a prior agreement has been
terminated. In particular, the section states that HCFA will not accept
a new agreement "unless" (not until):

(a) HCFA finds that the reason for the termination of the previous
agreement has been removed and there is reasonable assurance that it
will not recur.

(b) HCFA finds that the provider has fulfilled, or has made
satisfactory arrangements to fulfilll, all of that statutory and
regulatory responsibilities of its previous agreement.

(12) We agree with the State's analysis of 489.57 as set forth in the
telephone conference call held in this appeal. Termination of Greystone
Park's Medicaid and Medicare provider agreements was based on the loss
of JCAH accreditation. Respondent's Exhibits 7, 8. The first part of
489.57 was satisfied when the facility regained JCAH accreditation in
September, 1981. The rest of 489.57 was satisfied by the plan of
correction submitted on January 11, 1982. This is the pertinent date
(rather than the January 19, 1982 date) because the January 19 survey
found the plan of correction acceptable as it related to the remaining
problem of the special staffing requirements.

The Agency's explanation of the applicability of the two regulatory
sections is not bolstered by the regulatory history. Some form of
489.57 has been present in the regulations since 1968 (until 1980 the
provision was designated as 42 CFR 405.616). The regulation always
during that period of time couched recertification as not possible
"unless. . . ." The predecessor of 489.13 (which was designated as 42
CFR 405.606) from 1968 until 1980 said nothing about effective dates of
provider agreements. That section was called "Acceptance of a Provider
as a Participant." The change proposed in 1979 (44 Fed. Reg. 6958,
(1979)), finalized in 1980 (45 Fed. Reg. 22933, (1980)), in part added
language as to "the effective date of the agreement." At no time during
that 12 year period was there any mention of an effective date provision
for facilities recertified after termination. In particular, the
preambles to the proposed and final 1980 regulations are silent as to
the existence of a similar regulation for terminated facilities.

In addition, the preamble to the final rule in 1980 makes it clear
that 489.13 was applicable to more than new facilities. In the section
called "Analysis of Public Comments," the Department noted:

Comment: One commenter believed that the regulation deals with new
providers or program participants but does not specifically deal with
recertifications.

Response: The regulations have been modified to clarify that the
rules apply at the time of recertification as well as initial
certification.

45 Fed. Reg. 22933, 22934 (1980).

While it may be arguable whether the Department meant the word
"recertification" to encompass certification after termination, with
regard to 489.13(b), it is clear that the Department meant the
regulation to apply to a broader range of facilities than the Agency has
alleged in this appeal.

(13) When questioned during the telephone conference about whether
the reasons underlying 489.13 would apply to both new and re-applying
facilities, the Agency said that a new provider should be given "the
benefit of the doubt," while providers such as Greystone Park, "with a
history of problems," did not deserve the benefit of retroactivity.
Summary of Telephone Conference Call, March 27, 1984, p. 2. With both
groups of facilities, however, the state survey agency's process is the
same inasmuch as it determines whether the facility meets all the
relevant standards and requirements. The Department has decided that,
if a state Medicaid agency takes some time to issue a provider agreement
after the survey agency does a survey or the facility submits a plan of
correction or waiver request, the facility should not be penalized for
this time lapse by having the date of its provider agreement delayed.
The important date is that on which the facility actually complied with
all requirements, not some artificial date when the papers were finally
processed. The Agency has not convinced us that that reasoning applies
only to new facilities.

In short, the Agency has provided no convincing evidence or argument
that 42 CFR 489.13 is not applicable to this appeal. The Agency found
the facility complied with the requirements of 489.57; we then look to
489.13 to tell us on what date the provider agreement became valid. The
disallowance, therefore, is overturned for the period January 11 through
January 18, 1982.

Conclusion

Based on the reasons discussed above, we uphold the disallowance
except for the period from January 11, 1982 through January 18, 1982.
/1/ The State also asserted that an intermediate care facility,
even though its services are not covered by the Medicare program, is
required to meet the Medicare statutory standards as a psychiatric
hospital if it seeks Medicaid eligibility as an IMD. This is an
inaccurate reading of the applicable regulations. As stated above,
intermediate care services provided in an IMD must meet the applicable
requirements set forth in the Medicaid regulations at 42 CFR 440.140(
c). /2/ Even the survey upon which JCAH based its accreditation
noted continued deficiencies in professional services and staff
composition. It appears that Greystone Park received only a one year
accreditation (rather than the usual two) in part because of these
deficiencies. /3/ There is no indication in the record of the
number of Medicaid patients in Greystone Park; the Medicare provider
agreement does cover 1,275 beds, however. State's Exhibit 16. /4/
Indeed, another memorandum provided by the State, albeit also undated,
unsigned, and handwritten, with no specific context noted, could
actually bolster the Agency's position since it states that efforts to
relocate Greystone patients were not well-planned and coordinated.
State's Exhibit 20, p. 3.

NOVEMBER 14, 1984