Granville House, Inc., DAB No. 912 (1987)

DEPARTMENTAL GRANT APPEALS BOARD

Department of Health and Human Services

SUBJECT:  Granville House, Inc.   

Docket No. 87-17
Decision No. 912

DATE:  October 23, 1987

DECISION

Granville House, Inc. (Granville) appealed the April 27, 1987 decision
of the Minnesota Department of Human Services (State) which denied
reimbursement for treatment programs for alcoholism and other chemical
dependencies for residents aged 21 to 65 in two intermediate care
facilities operated by Granville.  The basis for the decision was that
the facilities were institutions for mental diseases (IMDs) under
federal regulations and guidelines.  Section 1905(a) of the Social
Security Act (Act) excludes from the definition of "medical assistance"
for which Medicaid funding is available services to individuals under
age 65 who are patients in an IMD.  Funding for individuals under age 21
in Granville's facilities was continued in accordance with section
1905(a)(16), which includes as "medical assistance" the category of
"inpatient psychiatric hospital services" for such individuals.  The Act
provides, in language following section 1905(a)(18), that this is an
exception to the IMD exclusion.

The State's determination was issued to clarify an earlier determination
dated December 31, 1986.  The earlier determination proposed to
terminate the provider agreements for the two Granville facilities on
the ground that the services they provided were not eligible for
Medicaid funding under revised guidelines for identifying IMDs
(September 1986 State Medicaid Manual, section 4390), issued by the
federal Health Care Financing Administration (HCFA).  The revised
guidelines included criteria for determining when alcoholism treatment
facilities are IMDs.

Granville appealed the initial determination to the State pursuant to
the provisions of the Minnesota Administrative Procedure Act.  That
appeal has not been decided.  Granville appealed concurrently to this
Board, maintaining that such an appeal was appropriate under the
decision of the U.S. Court of Appeals for the Eighth Circuit in
Granville House, Inc. v. Dept.  of Health and Human Services, 722 F.2d
451 (8th Cir. 1985).  That decision stated that any disputes concerning
alcoholism guidelines promulgated by HCFA would be appealable to the
Board. 1/

Following the issuance of the State's clarifying determination, on which
both parties commented, the Board issued an order to show cause setting
forth its analysis of the case.  The Board indicated that it appeared
that the State had correctly determined that the facilities in question
were IMDs and thus ineligible for Medicaid funding except for services
provided to individuals under age 21.  As discussed below, we adopt that
preliminary analysis.

Our tentative view that the State's determination was correct was based
on our understanding that Granville had represented to the State that
the services provided by its facilities qualified as "inpatient
psychiatric services" under the Act.  It is clear from the fact that
section 1905(a) of the Act provides for funding for inpatient
psychiatric services only as an exception to the prohibition on funding
IMDs that a facility which provides such services is an IMD.  Moreover,
under section 1905(h) such services must be provided by an institution
which qualifies as a "psychiatric hospital" under section 1861(f) of the
Act.  To qualify under that section, an institution must be "primarily
engaged in providing . . . psychiatric services for the diagnosis and
treatment of mentally ill persons; . . . ."  HCFA regulations define an
IMD as "an institution that is primarily engaged in providing diagnosis,
treatment or care of persons with mental diseases. . . ."  42 CFR
435.1009.  Finally, another Eighth Circuit decision, Minnesota v.
Heckler, 718 F.2d 852 (8th Cir.  1983), recognizes that inpatient
psychiatric services constitute the type of treatment which would be a
basis for categorizing a facility as an IMD.

Granville did not challenge this legal analysis in its response to the
order.  However, Granville denied that it had represented its facilities
as inpatient psychiatric facilities.  Granville stated that its
facilities were certified by the Joint Commission on Accreditation of
Hospitals (JCAH) as chemical dependency facilities, notwithstanding the
use of the term "psychiatric facility" on the certificate.  Granville
also stated that the State had unilaterally recertified the facilities
as IMDs without Granville's having applied for IMD status.  Granville
argued that the Board therefore could not uphold the State's
determination on the basis stated in the order.

We conclude that Granville did in fact represent its facilities as
inpatient psychiatric facilities and that it should be held to that
representation.  Granville's assertion that the State unilaterally
recertified its facilities as IMDs is disingenuous. Documentation
submitted by Granville establishes that Granville requested the State to
"undertake qualifications of the Granville programs" as IMDs based on
Granville's recognition that the State would follow HCFA's alcoholism
guidelines.  (Letter dated January 13, 1987 from Johnson and Eustis to
Baird, included as an attachment to letter from Eustis to Ballard dated
September 28, 1987)  Granville admitted that the services provided by
its facilities "obviously included those necessary for such
designation."  (Letter from Eustis to Ballard dated May 5, 1987, p. 2)
Moreover, Granville did not deny the preliminary finding in the order to
show cause that its services qualified as inpatient psychiatric services
under 42 CFR Part 441, Subpart D, which implements sections 1905(a)(16)
and 1905(h) of the Act.

Granville asserted, however, that, given the State's determination to
follow HCFA's guidelines, Granville had no choice but to represent its
facilities as providing inpatient psychiatric services if it wished to
receive any further Medicaid funds for patients under 21 years of age.
There may be some truth in this.  Nevertheless, if the facilities did
not actually provide inpatient psychiatric services, as Granville
alleged, then it is not entitled to retain Medicaid funds available only
for such services.  Granville cannot have it both ways:  it cannot
maintain that its facilities are not providing inpatient psychiatric
services for purposes of determining whether the facilities are IMDs and
at the same time seek and accept funding based on the provision of such
services.  To do so would be to obtain federal funds under false
pretenses.  Furthermore, 42 CFR 441.151(b) requires JCAH accreditation
as a psychiatric facility in order to qualify as an inpatient
psychiatric facility for purposes of title XIX.  Accordingly, we cannot
accept Granville's disavowal of its JCAH accreditation as a psychiatric
facility when it relied on that accreditation to obtain Medicaid
funding.

Thus, we find that Granville did represent that the two facilities in
question provided inpatient psychiatric services and that the State
correctly determined that the facilities were IMDs on that basis.  Our
decision does not make the facilities inpatient psychiatric facilities
if in fact they were not; we merely determine that the State properly
relied on Granville's representations in finding the facilities to be
IMDs.  Whether or not the services provided by the facilities were
actually of this nature is not within the scope of this decision.  Our
jurisdiction is defined by the mandate of the Eighth Circuit to review
any disputes concerning the alcoholism guidelines promulgated by HCFA.
A dispute about the nature of the services actually provided there does
not relate to either the interpretation of these guidelines or their
legality in the first instance.

Granville's response to the order to show cause also argued that
Medicaid reimbursement cannot properly be denied on the ground that the
chemical dependency specialists providing services in its facilities
were "lay" rather than medical personnel.  The HCFA guidelines provide
in pertinent part that "[l]ay counseling (as the primary method of care)
does not constitute 'medical or remedial treatment' required for
Medicaid reimbursement under 42 CFR 440.2(b)."  (Section 4390, para. 3)
Although included in the HCFA guidelines, this statement has no bearing
on the stated purpose of the guidelines to assist in identifying IMDs;
instead, it bears on whether the services are excluded from Medicaid
funding for a separate reason, having to do solely with the nature of
the services irrespective of the nature of the facility.  Thus,
Granville's argument does not raise an issue arising from HCFA's
guidelines for determining when alcoholism- treatment facilities are
IMDs, as contemplated by the Eighth Circuit.  The Eighth Circuit was not
dealing with the separate issue of whether the services were or were not
"medical or remedial treatment."

Moreover, even if the State's initial determination that Granville's
facilities were not entitled to Medicaid funding was based on the
provision of lay services, that determination was withdrawn; the State
then determined that Medicaid funding was available for inpatient
psychiatric services provided to individuals under age 21.  While the
possibility exists that the State might at a later date reverse itself
and deny all Medicaid reimbursement on the ground that the services were
provided by lay rather than medical staff, Granville's argument at this
point raises only a hypothetical question.  The Board may agree to
consider any disputed matter not within its jurisdiction at the request
of the parties; however, HCFA unequivocally objected to the Board's
consideration of this hypothetical question. Accordingly, the Board may
not proceed on this issue.

We note finally that it appeared from Granville's response to the order
that Granville might be requesting reconsideration of the Board decision
which required HCFA to issue revised alcoholism guidelines to support
any determination that facilities providing alcoholism treatment
programs are IMDs.  Granville House, Inc., Decision No. 529, April 9,
1984.  In response to the Board's inquiry, Granville stated that it was
not--

directly attacking Decision No. 529.  We are simply asserting the clear
evidentiary record by claiming our services are for the primary medical
disease of alcoholism.

(Letter from Eustis to Ballard dated September 28, 1987, p. 1) While
denying that Granville was requesting reconsideration of Decision No.
529, this statement nevertheless raises issues addressed by Decision No.
529.  In Decision No. 529, however, the Board thoroughly examined the
evidentiary record, concluding that the fact that alcoholism may be
considered a primary disease did not exclude its classification as a
mental disease for purposes of identifying IMDs.  Moreover, applying the
term "medical" to the disease does not avail Granville here; such
classification is a prerequisite for Medicaid funding but does not
preclude the disease also being classified as "mental."  Clearly, the
International Classification of Diseases (the ICD) classifies the
disorder as mental for some purposes; this Board held in Decision No.
529 that HCFA may reasonably use the ICD classification to trigger
further inquiry into the nature of services a particular facility
provides.  Granville did not allege any error of fact or law which would
provide a basis for reconsideration of this matter under the Board's
regulations.  (See 45 CFR 16.13.)

Conclusion

For the reasons discussed above, we sustain the State's determination
that the two Granville facilities in question were IMDs.  We further
conclude that Granville's appeal raises no other issues which the Board
may appropriately consider.

 


                           ________________________________ Donald F.
                           Garrett

 


                           ________________________________ Norval D.
                           (John) Settle

 


                           ________________________________ Judith A.
                           Ballard Presiding Board Member

 

 

1.   The history of the Granville litigation is described in an order to
show cause issued by the Board to the parties, dated June 5,