DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Pennsylvania Department DATE: April 24, 1989 of Public
Welfare Docket Nos. 88-150 88-237 Decision No. 1042
DECISION
The Pennsylvania Department of Public Welfare (Pennsylvania) appealed
disallowances by the Health Care Financing Administration (HCFA) of a
total of $5,357,331 in federal financial participation (FFP) claimed
under Title XIX (Medicaid) of the Social Security Act (Act) for the
period from July 1, 1985 through March 31, 1988. The claims were based
on payments made for alleged emergency hospital services, at the per
diem rates generally applicable to inpatient psychiatric hospital
services. The services were provided by institutions for mental
diseases (IMDs) for inpatients between 22 and 65 years of age.
We uphold the disallowance, based on statutory and regulatory provisions
excluding from the scope of "medical assistance" under Title XIX all
care or services provided to individuals between 22 and 65 years of age
in an IMD.
Applicable Laws and Regulations
Title XIX of the Act authorizes federal grants to aid in financing state
programs which provide medical assistance and related services to needy
individuals, in accordance with an approved state plan. The Secretary
of Health and Human Services (HHS) is required to pay a percentage of
the "total amount expended as medical assistance under the State plan"
and associated administrative costs. Section 1903(a) of the
Act. "Medical assistance" is defined in section 1905(a) of the Act
generally as payment for covered services provided to individuals who
meet specified eligibility requirements. Among the services which may
be covered in a state plan are "any other medical care, and any other
type of remedial care recognized under State law, specified by the
Secretary." Section 1905(a)(21). Following the list of eligible
services, however, section 1905(a) explicitly excludes from the term
"medical assistance" payment for "care or services for any individual
who has not attained 65 years of age and who is a patient in an
institution for mental diseases" (except for inpatient psychiatric
hospital services for individuals under age 21). The IMD exclusion is
also incorporated specifically into the definition of various levels of
institutional service which qualify as "medical assistance." For
example, "medical assistance" is defined to include "inpatient
hospital
services (other than services in an institution for mental diseases)."
Section 1905(a)(1).
HCFA's regulations at 42 C.F.R. Part 441, Subpart A, set out general
limitations on payment of FFP. The provision at 42 C.F.R. 441.13(a)(2)
states that FFP is not available in expenditures for services for
individuals between ages 22 and 65 "in an institution for mental
diseases." The current regulatory definition of "in an institution"
is
"admitted to live there and receive treatment or services provided there
that are appropriate." 42 C.F.R. 435.1009.
HCFA's regulations also specify what medical or remedial care may be
covered (in addition to services expressly listed in section 1905(a)),
and authorize coverage for "emergency hospital services." Under 42
C.F.R. 440.170(e), "emergency hospital services" are services: (1)
necessary to prevent the death or serious impairment of the health of a
recipient, and (2) because of this threat, necessarily provided at the
most accessible hospital available that is equipped to furnish the
needed services. FFP is available --
even if the hospital does not currently meet . . . the definitions
of inpatient or outpatient hospital services under [42 C.F.R.]
sections 440.10 [inpatient hospital services] and 440.20
[outpatient hospital services].
42 C.F.R. 440.170(e)(ii) (emphasis added).
The regulatory definition of "inpatient hospital services" includes
a
requirement that the services must be provided in a facility which is
not an IMD. 42 C.F.R. 440.10(a)(3)(i).
Case Background
The Pennsylvania Medicaid State Plan provides coverage for "emergency
hospital services" (although there is some dispute here as to the scope
of that coverage). In an affidavit submitted by the State, an official
of the State's Office of Mental Health (OMH), attests:
Prior to 1985, OMH did not bill under Title XIX for emergency
hospital services because it was unaware of the State plan
provisions with respect to this category of services and because it
had been led to believe that all services rendered in an IMD were
precluded from Title XIX payments with respect to persons under 65
years of age.
State's Ex. VIII. The affidavit further explains that in 1985, after
the Supreme Court issued its decision in Connecticut Department of
Income Maintenance, 471 U.S. 524 (1985), OMH requested a review of
emergency hospital services provided by State hospitals to individuals
between 22 and 64 years of age and that this review led the State to
submit a retroactive claim for such services in 1987. State's Ex. VIII.
The claims were made at the per diem rates generally used by the
hospitals to claim for inpatient psychiatric hospital services.
HCFA deferred and then disallowed federal funding for this claim and for
subsequent claims submitted by the State for services provided by State
mental hospitals as well as private psychiatric hospitals.
Parties' Arguments
Pennsylvania argued that the "emergency hospital services" regulation
at
42 C.F.R. 440.170(e)(ii) created an exception to the IMD exclusion,
authorizing FFP in all emergency hospital services by waiving
requirements which normally apply to inpatient hospital services,
including the requirement that the hospital not be an IMD. Pennsylvania
also contended that the services were not within the overall IMD
exclusion because the emergency patients were not "in" an IMD on a
long-term basis. While Pennsylvania conceded that the patients had been
"admitted" to IMDs, it alleged that the disputed services were provided
to patients admitted to the facility only temporarily while receiving
emergency care, and that the patients were then either discharged or
provided long-term placement, as appropriate.
Pennsylvania relied on a reference to "long-term care" in IMDs, cited
in
the Connecticut decision, to support its argument that Congress intended
the IMD exclusion to exclude only services to patients who have been
admitted to live in the facility on a long-term basis.
HCFA responded that the general IMD exclusion applies to emergency
hospital services, notwithstanding 42 C.F.R. 440.170(e). HCFA argued
that patients staying longer than a single day would be patients "in"
an
IMD within the scope of the general IMD exclusion and the regulatory
definition at 42 C.F.R. 435.1009 because these provisions are not
restricted by their terms to long-term patients. HCFA pointed out that
the facilities had claimed a per diem rate of reimbursement which
includes room and board (rather than simply a fee for the particular
services rendered), indicating that the patients had been in the
facility for at least one full day. Specifically, HCFA alleged (and
Pennsylvania did not deny) that the patients had actually been admitted
to the facilities and remained from at least 2 to 20 days.
HCFA also argued that emergency hospital services under HCFA's
regulations and the State plan were limited to emergency room and
outpatient procedures (even if provided in a facility which failed to
meet the definition of inpatient hospital services for reasons other
than IMD status). In particular, HCFA alleged that Pennsylvania's State
plan provided for reimbursement of emergency hospital services only as
an outpatient service on a fee basis, rather than at the per diem rate
used to reimburse inpatient services.
In response to a specific Board order, the State submitted its State
plan provisions on "emergency hospital services," acknowledging that
the
plan did not specifically refer to inpatient emergency hospital services
but arguing nonetheless that such services were covered.
General Overview of Our Opinion
The primary issues presented in this case are (1) whether the "emergency
hospital services" regulation, in waiving facility characteristic
requirements for emergency hospital services, created a regulatory
exception to the statutory IMD exclusion; and (2) whether the patients
here were "in" IMDs.
The State's position on each of these issues rests on inferences which
the State would have us draw from HCFA's choice of isolated words in its
regulations. At most, however, these words introduce an ambiguity which
must be resolved by reference to the context in which those words
appear, and, more importantly, in a manner which does not conflict with
the statute. Congress intended to exclude Medicaid funding for
individuals in IMDs since those individuals were the traditional
responsibility of the State. There is no question here that the State
traditionally paid for all services in these IMDs irrespective of
whether the patients were admitted on an emergency basis. To permit FFP
in the payments would simply shift costs from the State to the federal
government with no corresponding increase in services to Medicaid
beneficiaries. Pennsylvania relied on the fact that HCFA used the
phrase "to live" (in the definition of "in an institution")
without
specifying that this included receiving room and board on a temporary
basis. We think it is clear from the context and history that the
phrase "to live" was not used in the sense of formally taking up
residence in a place. The evidence shows, moreover, that the State did
not begin claiming for emergency services in IMDs when this language was
introduced in 1978, but developed its claiming theory in 1985 based on
the reference to "long-term care" in the Connecticut decision. As
the
U.S. Court of Appeals for the Seventh Circuit said in rejecting a
similar attempt by Illinois to claim FFP for inpatient services in IMDs,
any expectation the State had that it might receive FFP for these
services "would seem to have nothing to recommend it other than the
traditional desire to take advantage of a loophole." Illinois v. Bowen,
786 F.2d 288, 293 (7th Cir. 1986).
Below, we explain our analysis of the statutory language and purpose,
and also provide a detailed analysis of why we consider the State's
reading of the regulations to be unreasonable. We also discuss the
issue, raised by HCFA, concerning whether emergency hospital services
were limited under the State plan to outpatient services. While the
State provided enough information to call into question HCFA's assertion
that the plan authorized only outpatient emergency services, the State's
evidence falls far short of establishing that it officially interpreted
its plan to include inpatient emergency services. In our view, the fact
that the State provided nothing definitively showing that, as a matter
of administrative practice, it paid for inpatient emergency hospital
services in institutions which did not ordinarily qualify under the
program suggests that the State's position that its plan covers
inpatient emergency services may simply be part of the State's
after-the-fact attempt at justifying these claims.
Whether the emergency hospital services regulation provided an exception
to the IMD exclusion
As discussed above, section 1905(a) of the Act excludes coverage for
"care or services for any individual" who is a patient in an IMD and
not
covered by the exceptions for the aged or children. As HCFA pointed
out, the IMD exclusion was based on a general congressional belief that
care in mental institutions was a traditional state responsibility and
on a general distrust of the effectiveness and efficiency of care in
IMDs. S. Rep. No. 404, 89th Cong, 1st Sess., pt. 1, pp. 145-56 (1965);
Schweiker v. Wilson, 450 U.S. 221, 242 (1980). Thus, once a patient
aged 22-65 had the status of being in an IMD (irrespective of that
person's meeting the eligibility requirements for Medicaid), FFP would
no longer be available for any care or services provided to that person.
The State apparently considered HCFA to have authority to override the
statutory exclusion under the authority in section 1905(a)(21) to
specify other medical and remedial care which could be covered. Whether
HCFA has such authority is not readily apparent; not only does the
exclusion appear in the statute as a limit on all services, but Congress
itself authorized funding for the aged and children in IMDs only under
very carefully prescribed circumstances and has specifically declined to
consider extending the exceptions to individuals in other age groups.
See sections 1902(a)(20) and 1905(h) of the Act; H.R. Rep. No. 65, 92d
Cong., 2d Sess. 65 (1972); see also section 1102 of the Act.
The State did not deny here that it had traditionally paid for all care
and services in IMDs, including for individuals admitted on an emergency
basis. Instead, the State relied on the reference to "long-term care"
in the legislative history of the IMD exclusion (also referred to in the
Connecticut decision) as indicating that Congress did not intend to
exclude emergency services. This reliance is misplaced because it
ignores the wording of the statute itself which excludes care or
services for any individual in an IMD irrespective of the duration of
the care. Moreover, Congress specifically applied the exclusion not
only to nursing facilities (which are normally identified with
"long-term care"), but also to "inpatient hospital services,"
which
would include acute care on a short-term basis. The key factor in
deciding whether the exclusion applies is the overall character of the
institution as being one "primarily for the care and treatment of
persons with mental illness." 42 C.F.R. 435.1009.
Even assuming, however, that HCFA could specify that inpatient services
provided to individuals admitted to an IMD on an emergency basis could
be a covered service, we would not find that HCFA exercised such
authority in 42 C.F.R. 440.170(e) to cover the individuals in question
here.
Neither the emergency hospital services regulation nor any other
authority in this record demonstrates an intent by HCFA to except
emergency services from the general IMD exclusion at 42 C.F.R.
44l.13(a)(2), which by its terms applies to all services in an IMD. The
mere fact that section 440.170(e) specifies that a hospital does not
have to meet the definition of "inpatient hospital services" to provide
emergency services does not indicate an intent to waive the IMD
exclusion; rather, it can be explained by the fact that neither the Act
nor the regulations contain a separate definition of "hospital"; thus,
the only way to waive health and safety standards for hospitals
providing emergency services is to refer to requirements for "inpatient
hospital services."
In addition, the history of the Medicaid regulations clearly indicates
that the IMD exclusion must be applied as a limit on availability of FFP
for emergency hospital services. The relevant provisions have been
essentially unchanged since originally issued in 1968. 33 Fed. Reg.
16165 (November 5, 1968). The organization of the Medicaid regulations,
however, was altered in 1978 when HCFA rewrote all existing Medicaid
regulations "in clearer simpler language." 43 Fed. Reg. 45176
(September 29, 1978). HCFA stated, at that time, that it intended to
make no substantive changes in the regulations. Under the old
organization, the general IMD exclusion was at 45 C.F.R. 249.10(c) and
was labeled "limitations." The exclusion applied to "medical
and
remedial care and services" listed in 45 C.F.R. 249.10(b). In that
section were listed all covered Medicaid services, including emergency
hospital services. 45 C.F.R. 249.10(b)(15)(vi), (c)(1968). This leaves
no doubt that in the present version HCFA also intended that emergency
hospital services would be subject to the general IMD exclusion.
Finally, we note that, in response to arguments by various states
(including Pennsylvania), that HCFA regulations authorized FFP in
inpatient hospital services provided to individuals aged 22 to 65 during
the months they were admitted to an IMD, HCFA amended the regulations at
42 C.F.R. 435.1008(b) and 435.1004(b) in 1985. HCFA explained in the
preamble to the final rule that the purpose of these amendments was to
clarify that no FFP is available "for any services furnished to certain
institutionalized individuals." 50 Fed. Reg. 13196 (April 3, 1985).
Thus, we conclude that the reference to the definition of "inpatient
hospital services" in the "emergency hospital services" regulations
cannot reasonably be read as overriding the IMD exclusion.
Whether These Patients Were in an Institution
Pennsylvania asserted that these services were allowable because the
patients were admitted to the institutions only on an emergency basis,
and thus were not "admitted to live there and receive treatment or
services provided there that are appropriate" within the meaning of 42
C.F.R. 435.1009. Pennsylvania argued that receipt of inpatient services
did not necessarily mean that an individual was admitted "to live"
at
the facility. Pennsylvania noted that the term "inpatient" is
separately defined in 42 C.F.R. 435.1009, and argued that there would be
no need for separate definitions unless the meanings were different.
Pennsylvania asserted that HCFA's position made no distinction between
the terms. Pennsylvania also alleged that there was no evidence here
that the services were provided to individuals who had given up any
residence outside of the institution, and concluded that the Board
should find that the patients were not "admitted to live" in the IMDs
and thus were not within the IMD exclusion. We reject Pennsylvania's
position as we discuss below.
The statutory language of the IMD exclusion, excluding all care and
services provided to individuals "in an institution for mental
diseases," is quite broad. The common meaning of the term "in"
connotes
"location or position in space or in some materially bounded object."
Webster's Third New International Dictionary of the English Language
1139 (P. Gove, ed. 1976). The statutory term literally could include
any person who sets foot within the bounds of an IMD.
The regulatory definition is clearly more narrow than the literal terms
of the statute, but is set forth to interpret the statutory language and
must be read consistently with that language and congressional intent.
As discussed above, we find that the State's reliance on the reference
to "long-term care" in the legislative history of the exclusion is
misplaced. We also find that the State reads an intent into the choice
of the phrase "to live" which is simply unwarranted when the term
is
considered in context, and is unsupported by any evidence that HCFA
specifically intended through use of that word to extend funding to
individuals who had not previously been covered.
"To live" commonly means to "reside" or to "dwell."
Webster's Third New
International Dictionary 1323 (P. Gove, ed. 1976). The State would have
use read the regulation to mean that an individual must "reside" in
an
IMD to have the requisite institutional status. Since "dwell" can
mean
simply "to exist or be present," however, we find the phrase "to
live"
to be ambiguous; we find no basis for concluding that "to live" means
formally taking up residence. Id., p. 706. If HCFA had wished to adopt
this result, HCFA could have used the more precise "reside" instead.
We
think that HCFA's interpretation, that the individuals here receiving
room and board for periods of 2 to 20 days (and, perhaps, longer) were
admitted to live in the institution, is an interpretation which is more
consistent with the language and purpose of the IMD exclusion than the
interpretation the State proposed.
HCFA's interpretation is also supported by the following factors:
o The phrase "admitted to live there" first appeared in the 1978
recodification referenced above and, therefore, was not intended as a
substantive change. Prior to 1978, the regulation contained the phrase
"admitted to participate in the living arrangements." 45 C.F.R. 248.60
(1971); 42 C.F.R. 448.60 (1978); see 36 Fed. Reg. 3872 (February 27,
1971); 42 Fed. Reg. 52827 (September 30, 1977); 43 Fed Reg. 45176
(September 29, 1978). The earlier phrase supports the conclusion that
"to live" was not intended to refer to permanent residence.
o The term "to live there" was necessary to ensure that the definition
included both individuals admitted as inpatients receiving medical
treatment as well as other individuals placed in the facility for
custodial, non-medical, care (but not outpatients receiving services at
the institution). The differences in 42 C.F.R. 435.1009 between the
definitions of "in an institution" and "inpatient" arise
because
"inpatient" is a more restrictive term. An "inpatient" means
"a patient
who has been admitted to a medical institution on recommendation of a
physician or dentist and is receiving room, board, and professional
services in the institution on a 24-hour basis." Since an IMD may not
necessarily qualify as a "medical institution" under 42 C.F.R. 435.1009
(and, even if it did, may admit individuals for non-medical, custodial
care), the definition of "in an institution" had to be broader so
as to
encompass inpatients as well as anyone who was admitted without a
physician's recommendation or who was not receiving professional
services on a 24-hour basis.
o On the other hand, we find the difference between the definition of
"in an institution" and "inmate of a public institution"
under section
435.1009 to be significant. Although a person is an "inmate" if "living
in" a public institution, the definition specifies that a person is not
considered an "inmate" if in a public institution only "for a
temporary
period pending other arrangements appropriate to his needs." The
specific limitation implies that the term "living" can otherwise include
a temporary stay. No similar limitation appears in the definition of
"in an institution."
o Limiting the IMD exclusion to individuals who reside at a facility
would make the IMD exclusion more difficult to apply. Standards would
be necessary to determine at what point an individual resides at a
facility, and facilities would have to keep separate records for
patients who have given up other residence to stay at the facility, and
those who do not reside at the facility. There might be conflicts
between the intent of the individual, the facility, and the State over
where the individual resides.
o To limit the IMD exclusion to those who formally reside in a facility
is contrary to longstanding policy and practice with respect to the
definition of an IMD. Since 1975, when HCFA began to examine whether
particular nursing facilities were IMDs, one factor which HCFA stated it
considered relevant was whether the patient population as a whole was
primarily at the institution for care and treatment of a mental disease.
Joint Consideration: Institutions for Mental Diseases, DAB No. 231
(1981). No distinction was made between patients based on whether they
"resided" at the facility.
Finally, even if the phrase "in an institution" did not include
individuals admitted to the IMD only temporarily, the record here would
not support a blanket assumption that emergency admissions are always
temporary. Pennsylvania conceded that there was no federal or State
definition or interpretation which distinguished between emergency and
ordinary admissions. Pennsylvania Letter to Board, dated December 6,
1989. It is not clear that the patients were only temporarily at the
IMDs; HCFA alleged, and Pennsylvania did not deny, that some of the
patients remained at the IMD after the 20-day period of "emergency
treatment" under Pennsylvania law. See 55 Pa. Admin. Code 5100.86 and
5100.87 (Shepard's 1984), State's Ex. IX.
Thus, we find that, in the context of the IMD exclusion, the only
reasonable reading of the phrase "in an institution for mental diseases"
includes any individual admitted to the facility either as an inpatient
or for custodial care and room and board, whether for emergency
treatment or not.
The State plan
As noted above, HCFA took the position that the State plan did not cover
emergency hospital services on other than an outpatient basis. Since
this factual allegation would have provided an independent basis for
this disallowance, but Pennsylvania had not had an opportunity to rebut
the allegation, the Board issued an order, directing Pennsylvania to
show cause why the Board should not find that the services claimed were
not in accordance with the State plan.
In response, Pennsylvania provided parts of its State plan which
generally authorized payment for emergency hospital services "with
limitations" described in item 2.a.(2) of the State Plan. State's Ex.
III. The limitations were included in the State plan under the category
of "Outpatient Hospital Services," and contained references only to
outpatient services, including a prohibition on payments to clinics or
emergency rooms for services rendered in the hospital emergency room to
a recipient admitted to the hospital the same day. State's Ex. VI.
There was no mention, either in the general emergency hospital services
authorization or in the limitations, of inpatient emergency services.
Pennsylvania asserted that no reference was needed because there was no
limitation on payments for inpatient emergency hospital services under
the State plan.
Although the Board had ordered Pennsylvania to provide copies of any
State policies which interpreted its plan to include inpatient emergency
hospital services, Pennsylvania submitted nothing except regulations
which prescribe circumstances under which individuals who had not been
formally committed could be involuntarily retained on an emergency basis
in mental institutions for a maximum of 20 days. 55 Pa. Admin. Code
5100.86 and 5100.87 (Shepard's 1984), State's Ex. IX. Pennsylvania also
cited a state regulation defining "emergency inpatient psychiatric
hospital services." 55 Pa. Admin. Code 1151.2. Nothing in these
regulations indicates that they were intended to be an interpretation of
the scope of emergency hospital services covered under the State
Medicaid plan, however.
The lack of any written policies specifying that inpatient services
could qualify as emergency hospital services, or any provisions related
to how such services would be reimbursed (even though a hospital which
was not generally qualified to provide inpatient services might not have
an established Medicaid per diem rate) raises a substantial question
about whether the State intended to cover such services, whether
provided in an IMD or not. We do not need to decide this issue
definitively since it is not necessary to our decision. We note,
however, that the fact that nothing in the State plan or implementing
State policies refers to inpatient emergency hospital services at all
(much less to such services in an IMD), together with the fact that
Pennsylvania never previously submitted claims for these services,
indicates that Pennsylvania was not relying on either federal approval
or a longstanding State interpretation of the emergency hospital
services exception in providing the services here and claiming FFP for
them.
Conclusion
For the reasons stated above, we uphold the disallowances in the full
amount of $5,357,331.
________________________________ Norval D. (John) Settle
________________________________ Alexander G. Teitz
________________________________ Judith A. Ballard Presiding
Board