Skip Navigation



CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES

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


SUBJECT: Puget Sound Behavioral Health,

Petitioner,

DATE: September 16, 2004
             - v -  

Centers for Medicare & Medicaid Services

 

Docket No. A-04-104
Civil Remedies CR1151
Decision No. 1944
DECISION
...TO TOP

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE D
ECISION

On May 7, 2004, Puget Sound Behavioral Health (Puget Sound) appealed the March 9, 2004, decision of Administrative Law Judge (ALJ) Steven T. Kessel, issuing summary judgment against Puget Sound. Puget Sound Behavioral Health, DAB CR1151 (2004) (ALJ Decision). The ALJ denied Puget Sound's request for an order compelling the Centers for Medicare & Medicaid Services (CMS) to grant a retroactive effective date for Puget Sound's certification as a psychiatric hospital. For the reasons explained fully below, we affirm the ALJ Decision in its entirety.

General Background

Puget Sound is a hospital located in Tacoma, Washington. By letter dated February 1, 2002, CMS certified Puget Sound to participate in the Medicare program as a general hospital effective December 20, 2001. CMS also certified Puget Sound to participate in Medicare as a psychiatric hospital, effective April 4, 2002. On July 24, 2003, Puget Sound requested a hearing to challenge the effective date of its participation as a psychiatric hospital. Puget Sound argued that it should be certified retroactively for one year.

Applicable Legal Authority

A "hospital" and a "psychiatric hospital" are different types of entities for purposes of Medicare participation. A "hospital" is defined at section 1861(e) of the Social Security Act (Act) to be a facility where injured, disabled, or sick persons receive diagnostic, therapeutic, or rehabilitative services on an inpatient basis under the supervision of physicians. The Act establishes specific criteria which a facility must satisfy in order to qualify for certification as a hospital. Act, sections 1861(e)(2)-(9). A "psychiatric hospital" is defined at section 1861(f) of the Act to be a facility which is primarily engaged in providing, under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons. In order to qualify for Medicare participation as a psychiatric hospital, a facility must satisfy the criteria of sections 1861(e)(3)-(9) as a general hospital, and must also meet two special additional criteria that are set forth at sections 1861(f)(3) and (4) of the Act. The implementing regulations set out conditions of participation and lower-level standards for hospitals. 42 C.F.R. Part 482.

In general, a facility must first be surveyed by or on behalf of CMS and must be found to satisfy all applicable participation requirements. 42 C.F.R. § 489.13. However, a facility may be deemed by CMS to meet the requirements for participation and be certified without a survey if it is accredited by an accrediting organization approved by CMS. 42 C.F.R. § 489.13(a)(1)(ii). The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) is an approved accrediting organization for hospitals, and CMS will deem a facility accredited by JCAHO to have satisfied the criteria for participation in Medicare as a hospital. 42 C.F.R. § 488.5. CMS has not approved JCAHO accreditation of psychiatric hospitals. 42 C.F.R. § 488.5(a)(2).

The rules for setting the effective date of a Medicare certification are set in regulations as follows:

(a) Applicability--

(1) General rule. Except as provided in paragraph (a)(2) of this section, this section applies to Medicare provider agreements with, and supplier approval of, entities that, as a basis for participation in Medicare--

(i) Are subject to survey and certification by CMS or the State survey agency; or

(ii) Are deemed to meet Federal requirements on the basis of accreditation by an accrediting organization whose program has CMS approval at the time of accreditation survey and accreditation decision.

* * *

(b) All Federal requirements are met on the date of survey. The agreement or approval is effective on the date the survey (including the Life Safety Code survey, if applicable) is completed, if on that date the provider or supplier meets all applicable Federal requirements as set forth in this chapter. (If the agreement or approval is time-limited, the new agreement or approval is effective on the day following expiration of the current agreement or approval.)

(c) All Federal requirements are not met on the date of survey. If on the date the survey is completed the provider or supplier fails to meet any of the requirements specified in paragraph (b) of this section, the following rules apply:

* * *

(2) For an agreement with, or an approval of, any other provider or supplier, (except those specified in paragraph (a)(2) of this section), the effective date is the earlier of the following:

(i) The date on which the provider or supplier meets all requirements.

(ii) The date on which a provider or supplier is found to meet all conditions of participation or coverage, but has lower level deficiencies, and CMS or the State survey agency receives an acceptable plan of correction for the lower level deficiencies, or an approvable waiver request, or both. (The date of receipt is the effective date regardless of when CMS approves the plan of correction or the waiver request, or both.)

(d) Accredited provider or supplier requests participation in the Medicare program--

(1) General rule. If the provider or supplier is currently accredited by a national accrediting organization whose program had CMS approval at the time of accreditation survey and accreditation decision, and on the basis of accreditation, CMS has deemed the provider or supplier to meet Federal requirements, the effective date depends on whether the provider or supplier is subject to requirements in addition to those included in the accrediting organization's approved program.

(i) Provider or supplier subject to additional requirements. If the provider or supplier is subject to additional requirements, the effective date of the agreement or approval is the date on which the provider or supplier meets all requirements, including the additional requirements.

(ii) Provider or supplier not subject to additional requirements. For a provider or supplier that is not subject to additional requirements, the effective date is the date of the provider's or supplier's initial request for participation if on that date the provider or supplier met all Federal requirements.

(2) Special rule: Retroactive effective date. If a provider or supplier meets the requirements of paragraphs (d)(1) and (d)(1)(i) or (d)(1)(ii) of this section, the effective date may be retroactive for up to one year to encompass dates on which the provider or supplier furnished, to a Medicare beneficiary, covered services for which it has not been paid.

42 C.F.R. § 489.13.

ALJ Decision

The ALJ made two Findings of Fact and Conclusions of Law (FFCLs):

1. Summary disposition is appropriate.

2. As a matter of undisputed fact and law CMS's determination to certify Puget Sound to participate in Medicare as a psychiatric hospital effective April 4, 2002 must be sustained.

ALJ Decision at 2-3. The ALJ further found that the following facts proffered by CMS were undisputed:

  • Between December 2001 and January 2002 Puget Sound applied to CMS for Medicare certification as a hospital. CMS certified Puget Sound to participate in Medicare as a hospital effective December 20, 2001. CMS Ex. 4; CMS Ex. 8. CMS's determination to certify Puget Sound to participate as a hospital was based on Puget Sound's certification by [JCAHO]. CMS Ex. 20.
  • At the same time that Puget Sound applied for certification to participate in Medicare as a hospital it also sought certification as a psychiatric hospital.


  • CMS surveyed Puget Sound from January 16 - 18, 2002 (January 2002 survey) in order to determine whether Puget Sound satisfied all requirements for participation in Medicare as a psychiatric hospital. CMS Ex. 36; CMS Ex. 48; CMS Ex. 58.

  • The surveyors determined that Puget Sound was not in compliance with all of the requirements for participation in Medicare as a psychiatric hospital. CMS Ex. 58. By FAX on February 6, 2002 and by letter dated February 8, 2002, CMS provided Puget Sound with the statement of deficiencies notifying Puget Sound that 11 standard level deficiencies had been identified. CMS Ex. 27; CMS Ex. 58.
  • CMS advised Puget Sound that it would certify Puget Sound to participate in Medicare as a psychiatric hospital on the date that Puget Sound submitted an acceptable plan of correction which addressed the deficiencies that were identified at the January 2002 survey. CMS Ex. 27.


  • Puget Sound filed a plan of correction on April 4, 2002. CMS Ex. 11. CMS accepted Puget Sound's plan of correction on April 11, 2002 and certified Puget Sound to participate in Medicare as a psychiatric hospital effective April 4, 2002. CMS Ex. 7.

Id. at 3-4.

Since Puget Sound could not be deemed by CMS to have satisfied Medicare participation requirements as a psychiatric hospital, a survey was required for CMS to determine whether it met those requirements. See 42 C.F.R. § 489.13. The ALJ concluded that the regulation quoted above provides that the earliest date that a facility requiring a survey may be certified to participate in Medicare is the date of the survey - and then only if that facility satisfies all Medicare participation requirements on the survey date. ALJ Decision at 5; 42 C.F.R. § 489.13(b). If a facility does not satisfy all participation requirements on the survey date, then the earliest date that the facility may be certified is either the date on which it actually meets all participation requirements or the date on which the facility files an acceptable plan of correction (or an acceptable request for a waiver, or both), assuming that the facility was found to have only "lower level" (or standard-level) deficiencies.

The ALJ found that Puget Sound was surveyed for compliance as a psychiatric hospital on January 16-18, 2002, and, hence, that the earliest date that Puget Sound could have been certified as a psychiatric hospital, had it been found to be in compliance with all federal requirements on that date, was January 18, 2002. However, the ALJ noted that, since Puget Sound was found not to have complied with all participation requirements as of that date, but rather had several standard-level deficiencies, the facility was required to submit an acceptable plan of correction, which it did on April 4, 2002. CMS certified Puget Sound to participate as a psychiatric hospital effective April 4, 2002. The ALJ concluded that, by law, this was the earliest date when Puget Sound was eligible to participate as a psychiatric hospital, and therefore granted summary disposition in favor of CMS. The ALJ further stated that, even had he found that Puget Sound could qualify for retroactive certification, the decision to grant a retroactive effective date lay within CMS's discretion.

Standard of Review of Summary Judgment

The Board reviews an ALJ's grant of summary judgment de novo. Madison Health Care, Inc., at 4 (2004). The ALJ in this case instructed the parties that any motion for summary disposition would be decided "according to the principles of Rule 56 of the Federal Rules of Civil Procedure and applicable case law." Initial Pre-Hearing Order at 4 (Aug. 27 (2003). Although not explicitly mentioned in the regulations, summary disposition without an oral hearing is permissible in appeals under Part 498 if there are no genuine issues of material fact. Crestview Parke Care Center, DAB No. 1836 (2002), rev'd sub nom, Crestview Parke Care Center v. Thompson, 373 F.3d 743 (6th Cir. 2004); Vandalia Park, DAB No. 1939 (2004); Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1997), citing Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994).

Issue on Appeal

Puget Sound appealed both of the ALJ's FFCLs. As to FFCL 1, Puget Sound argued that a genuine issue of material fact was presented by the declaration of a hospital employee who attended the survey exit conference. The employee asserted that one of the surveyors stated that Puget Sound met the two special conditions of participation (CoPs), even though it had some standard-level deficiencies, and that Puget Sound could begin billing immediately for psychiatric services. Puget Sound Br. at 5-6. Puget Sound contended that this raised a question of fact about CMS's allegation that Puget Sound was not in compliance with the two special CoPs at the time of the survey. Id. at 6. Puget Sound also pointed to a letter from a surveyor to the CMS Regional Office which showed the two CoPs as "MET." Id. On this basis, Puget Sound argued that summary judgment was inappropriate. As to FFCL 2, Puget Sound argued that it was entitled as a matter of law to receive an effective date retroactive for one year.

CMS contended that the ALJ correctly determined that, even assuming the surveyors made the claimed statements, they did not raise a genuine issue of material fact. CMS contended that, as a matter of law, Puget Sound did not "meet the limited circumstances under which CMS has discretion to grant retroactive certification." CMS Br. at 2. Further, CMS argued that the ALJ correctly found that it would not be appropriate to order CMS to grant retroactive certification because the "special rule" permitting CMS to do so confers discretion to CMS. Id. at 10.

ANALYSIS
...TO TOP

Below, we address first the reasons why Puget Sound could not qualify for certification until it submitted an acceptable plan of correction for all deficiencies found during the survey. In addition, as a preliminary matter, Puget Sound argued that the proper date from which to back date its certification was the date of the survey, rather than the date of the plan of correction. We next explain why Puget Sound did not qualify for retroactive certification. Finally, we conclude that even had Puget Sound met the qualifications for retroactive certification, the regulations reserve discretion to CMS to determine whether to grant an earlier effective date.

Ultimately, however, the core of this dispute reduces to two questions of regulatory interpretation: Does the special rule require (or even permit) retroactive certification of a facility for a time period during which the facility was not yet deemed or shown to be in compliance with all applicable federal requirements, including standard-level requirements? If such retroactive certification is permissible by law, was the ALJ authorized to compel CMS to exercise its discretion in favor of Puget Sound?

1. Puget Sound did not qualify for certification until its plan of correction was submitted.

CMS argued that the effective date regulations explicitly set as conditions precedent to any certification of a psychiatric hospital that it meet "all requirements including the additional requirements." CMS Br. at 7, citing 42 C.F.R. § 489.13(d)(1)(i). These regulations implement section 1861(f) of the Act, which expressly requires that only an institution that "satisfies the requirements" for psychiatric hospitials set out for hospitals and that also (1) maintains clinical records of specified kinds and (2) meets specified staffing requirements may be considered a "psychiatric hospital." The regulations on program participation (but not the statute) set out the requirements for hospitals as overarching "conditions of participation" and lower-level "standards." 42 C.F.R. Part 482. The effective date regulations provide that the requirements are met, where only standard-level deficiencies exist at the time of a certification survey, on the date that the facility submits an acceptable plan of correction (and/or waiver) for those deficiencies, rather than requiring the facility to wait to demonstrate actual correction in order to be certified.

Puget Sound argued that it was eligible for certification as of the date of the survey (rather than the date its plan of correction was filed), because it was deemed to have met the hospital requirements and found to have met the CoPs for the two special requirements. Puget Sound Br. at 4-5. Puget Sound argued that it had presented evidence tending to contradict CMS's assertion that the surveyors determined that Puget Sound "was not in compliance with the special conditions of Medicare participation for psychiatric hospitals." Puget Sound Br. at 5, quoting CMS Br. at 2-3. The evidence consisted of a declaration by Margaret Webster (P. Ex. 1, Webster Declaration), a hospital employee who was present at the exit conference, as well as a memorandum letter from Janice Graham, a CMS Nurse Consultant to the CMS Regional Office regarding the outcome of the Puget Sound survey (CMS Ex. 14, Graham Memorandum). Id. at 5-6. We discuss each in turn.

Ms. Webster declared that one of the surveyors stated that "the surveyors had concluded that [Puget Sound] met the two special [CoPs] for certification as a 'psychiatric hospital,'" and further that because Puget Sound met the two special CoPs, it "could immediately begin billing the Medicare program for psychiatric services." Webster Decl. at 2. Ms. Webster went on to note, however, that the same surveyor stated that "the surveyors had identified certain deficiencies to be corrected by [Puget Sound] (which would be set forth in a written 'Statement of Deficiencies')," but asserted that the facility nevertheless "satisfied the two special" CoPs. Id.

Ms. Graham reported to the Regional Office that, as of the date of the survey, Puget Sound -

(1) "MET" the Condition of Participation relating to "Special Medical Records" (42 C.F.R. § 482.61) and

(2) "MET" the Condition of Participation relating to "Special Staff Requirement" (42 C.F.R. § 482.62).

CMS Ex. 14. The plain meaning of the statements attributed to the surveyor is that Puget Sound met condition-level requirements for the two special conditions precedent applicable to psychiatric hospitals but that it failed to meet some of the standard-level requirements. This meaning is consistent with the Graham Memorandum's language as well. We disagree with Puget Sound that any genuine issue of material fact is thereby presented to preclude summary disposition.

It was uncontested that the applicable section of the regulation for Puget Sound was section 498.13(d)(1)(i), which sets the effective date as "the date on which the provider or supplier meets all requirements, including the additional requirements." The statutory and regulatory requirements that a psychiatric hospital meet all "requirements" before being considered eligible for certification and for a provider agreement under Medicare are nowhere limited to meeting only the condition-level requirements. The Board has held that the phrase "any other requirements" in 42 C.F.R. § 489.13(a) includes lower-level requirements. Golden State Manor and Rehabilitation Center, DAB No. 1597 (1996). While the regulation does allow certification to occur based on an acceptable plan of correction when (and only when) the only deficiencies are at a standard level, the regulation specifies that certification may not be effective prior to the date an acceptable plan of correction was submitted where all requirements are not met because of failure to meet standard-level requirements. The regulation thus distinguishes between failure to meet standard-level, as opposed to condition-level, requirements by accepting the hospital's representation of compliance rather than requiring proof of correction before certification, but in either case the facility has not met all federal requirements. Puget Sound benefitted from this provision by obtaining certification as of the date it submitted an acceptable plan of correction (rather than having to wait for a re-survey). It is, however, irrelevant for purposes of setting an effective date that Puget Sound may have met the condition-level requirements for the two special requirements for psychiatric hospitals at the date of the survey, when it is undisputed that Puget Sound failed to meet all standard-level requirements. Hence, the evidence proffered by Puget Sound does not raise a genuine dispute of material fact.

We are not persuaded that Puget Sound's allegation that a surveyor also told its staff that, despite the deficiency findings, the facility could begin charging Medicare immediately suffices to raise a genuine issue of material fact. Such a statement, assuming for these purposes that it was made as reported, would be an interpretation of how to apply the regulation rather than a statement of fact about what the surveyors found. Puget Sound cited no authority under which a surveyor could deviate from CMS's longstanding and published interpretation of its regulations. While the State survey agencies may conduct surveys for and recommend effective dates to CMS, state surveyors may not set policy or issue interpretations for CMS. See 42 C.F.R. § 488.11; see also 42 C.F.R. § 488.26(c)(4) (surveyors must use federal procedures in order to "ensure uniform and consistent application and interpretation of Federal requirements").

We find no error in the ALJ's conclusion that by law the earliest date for which Puget Sound could be certified under section 498.13(d)(1)(i) was April 4, 2002.

2. Puget Sound did not qualify for retroactive certification.

Puget Sound also argued that, even if the effective date of certification under section 498.13(d)(1)(i) was, as the ALJ found and we have affirmed above, April 4, 2002, it should nevertheless have been granted retroactive certification extending one year back from that date. (1) Puget Sound pointed to the "special rule" in section 489.13(d)(2) which states that "[i]f a provider or supplier meets the requirements of paragraphs (d)(1) and (d)(1)(i) or (d)(1)(ii) of this section, the effective date may be retroactive for up to one year to encompass dates on which the provider or supplier furnished, to a Medicare beneficiary, covered services for which it has not been paid." Puget Sound argued that the purpose of this retroactivity provision is "to reimburse providers who have, in good faith, provided necessary services to Medicare patients prior to completing the certification process" and thus prevent individuals who are not Medicare beneficiaries from bearing these costs. Puget Sound Br. at 7. Puget Sound contended that the ALJ erred in adding a "prerequisite to retroactive certification" that the provider must meet all requirements "as of the date of the survey." Id. at 8. According to Puget Sound, the "plain meaning of the 'special rule' is that, if and when a provider meets the certification requirements, it is entitled to be retroactively certified for up to one year." Id.

We find no merit in this argument, which would fly in the face of the overall structure of the Medicare program. A central goal of the survey and certification process is that beneficiaries are protected by participation requirements assuring that services may be reimbursed only to qualified providers. See, e.g., Sanctuary at Whispering Meadows, DAB No. 1925, at 9 (2004). Puget Sound's reading would compel payment to providers for services provided at time when they may not have met federal requirements and may not even have applied for certification. Certainly, this interpretation is not required by the plain language of the regulation that retroactive payment "may" be allowed "if" the provider meets the applicable requirements. The very description of the retroactivity section as a "special rule" implies that it was not intended to be a broad grant of an extra year of eligibility for payment to all newly certified providers, as Puget Sound would have it.

Puget Sound cited no authority for its assertion that the purpose of the "special rule" was "to reimburse providers who have, in good faith, provided necessary services to Medicare patients prior to completing the certification process." Puget Sound Br. at 5. CMS countered that the purpose of the special rule was to allow retroactive payment in limited circumstances where all requirements were met on a date prior to the normal effective date under the general rules. CMS pointed to the preamble to the regulation which provided examples of the narrow circumstances contemplated, such as when a Medicaid facility provides services to out-of-state Medicaid recipients or when a facility was certified by an approved accrediting organization but did not immediately apply for Medicare certification. We find CMS's interpretation to be a reasonable one and more consistent with the overall structure of the Medicare program.

Puget Sound's reliance here on the concept in Medicare law of avoiding burden-shifting by requiring payment to meet "the necessary costs of efficiently delivering covered services" is misplaced. Cf. Puget Sound Reply Br. at 7. The "necessary costs" to be reimbursed by Medicare funds are by the terms of the regulation limited to "covered services," which does not include services provided by ineligible providers. 42 C.F.R. § 413.9. As the Board explained in Hillman Rehabilitation Ctr. v. HHS, No. 98-3789 (GEB) (D. N.J. May 13, 1999), Medicare involves an exercise of Congress' spending authority, so funds may be expended only for authorized payments which are restricted according to particular types of items or services (provided to eligible individuals), and also by the service definitions, in definitions of terms incorporated in those definitions, and in other statutory provisions. Hillman at 9. The primary purpose of the participation requirements prerequisite to becoming a "provider of services" is to "protect the health and safety of the patients who are the intended beneficiaries of the program, and this interest outweighs any interest the provider might have in program participation." Id. For this reason, Congress provided that "an affirmative determination certifying compliance must be made for a provider to qualify." Id. The definition of "psychiatric hospital" as a "provider of services" expressly includes that it be an institution that "satisfies the requirements" for a "hospital" and maintains the specified records and staffing. It is thus implausible that the retroactivity provision was intended to provide for payments to institutions that did not meet the definition of a "provider of services."

CMS gave notice of its interpretation in the portion of the preamble to the final effective date regulations in which it responded to comments on the proposed rule. The preamble describes the comment and provides the response as follows:

Comment: Two commenters were concerned about how the proposed rule would be applied when a facility had already been accredited by an accrediting organization. The proposed rule would not allow the provider to enter into a retroactive agreement so that it could receive payment for services furnished after accreditation but before it sought participation in Medicare or Medicaid. The commenters stated that this situation commonly arises when a provider that has been surveyed and found to be in compliance with Federal requirements -

- Is participating in its own State's Medicaid program and provides services to a Medicaid recipient from another State; or

- Is not participating in Medicaid but provides services to a Medicaid recipient before learning of the individual's Medicaid status.

Response: We consider the concerns to be justified. Accordingly, we have revised §431.108 (content previously contained in §442.13) and §489.13 to provide that an agreement or approval may be made retroactive for a provider or supplier that -

- Has been deemed to meet all applicable Federal requirements on the basis of accreditation by an accrediting organization whose program had [CMS] approval at the time the organization surveyed and accredited the provider or supplier; and

- Meets all applicable State licensure and Life Safety Code requirements.

Specifically, the final rule provides that the effective date of an agreement or approval can be made retroactive for up to one year to encompass dates on which the provider or supplier furnished covered services to a beneficiary or recipient.

62 Fed. Reg. 43,931 (April 18, 1997) (Preamble). CMS also indicated that the need for retroactivity was expected to be narrow in light of several preexisting regulations that provide for payment in special situations, citing in particular 42 C.F.R. § 431.52 (for Medicaid services furnished out of State) and 42 C.F.R. Part 424 and §§ 440.170(e) and 482.2 (for emergency care furnished by nonparticipating hospitals). Id. While the Preamble language could have been more explicit in stating that the participation requirements must have been met or deemed to have been met at the time the services were provided (rather than a year later), the regulation read with the Preamble certainly served to put Puget Sound on notice that retroactivity was available in order to provide for certain limited situations and not as a general entitlement for all providers.

While we agree with Puget Sound that the Preamble examples do not necessarily exhaust the possible situations in which retroactivity might be granted, the inclusion of these specifics would have little point if the special rule was intended to apply whenever a provider was certified. Generally, examples in the context of legislative, or regulatory, history, suggest that only additional items of analogous nature are encompassed. Puget Sound argued that the preamble language CMS cited should be disregarded because some statements were made by commenters, rather than CMS, and because CMS allegedly quoted some text out of context or erroneously. Puget Sound Br. at 8-9. We have quoted the full context, including clear delineation of the comments and responses. We conclude that the language as a whole does support CMS's position that the special rule was adopted to provide authority to make payment under special conditions that assured that the providers in question were in compliance with the participation requirements at the time the services were provided, e.g., because they were already participating in one State's Medicaid program or because they had already been accredited by an approved organization. Thus, Puget Sound could not qualify because it could not be deemed in compliance with all applicable requirements since JCAHO was not approved to accredit psychiatric hospitals.

We also agree with CMS that the retroactivity provision is in the nature of a limited exception to be construed narrowly, especially since the statute contains no such provision and clearly requires providers to be qualified in order to be paid. CMS Br. at 8-9, n.6. CMS submitted evidence that it applied this interpretation consistently in other matters and in its written communications about and with Puget Sound. See, e.g., CMS Ex. 27, 43, 44, 45.

The ALJ reached the following conclusions on this issue:

Petitioner did not satisfy the prerequisite for retroactive certification that it meet the requirements of 42 C.F.R. § 489.13(d)(1). As is established by the undisputed facts of this case, Petitioner was accredited by JCAHO as a hospital. However, it was not accredited by JCAHO as a psychiatric hospital and, in any event, CMS does not accept accreditation of a psychiatric hospital as an exception to the survey requirement for certification.

Moreover, even if Petitioner were able to show that it met the requirements of 42 C.F.R. § 489.13(d)(1), it would not be able to show that it met the requirements of either 42 C.F.R. §§ 489.13(d)(1)(i) or (d)(1)(ii). These two subsections govern certification of providers or suppliers who are subject to additional requirements (42 C.F.R. § 489.13(d)(1)(i)) or who are not subject to such requirements (42 C.F.R. § 489.13(d)(1)(ii)). In either event the effective date of certification is the date on which the provider or supplier meets all participation requirements. In this case the effective date is April 4, 2002, the date on which Petitioner was certified to participate as a psychiatric hospital. Petitioner has not contended nor offered any facts to show that it met all participation requirements at an earlier date.

ALJ Decision at 9. We conclude that the ALJ did not err in determining that Puget Sound was not eligible for retroactive certification.

3. Even were Puget Sound eligible for consideration for retroactive certification, the discretion to determine whether it should be granted lies with CMS under the regulations.

Puget Sound also disputed the following ALJ conclusion:

The authority to grant retroactive certification pursuant to 42 C.F.R. § 489.13(d)(2) is within the discretion of CMS. The regulation states that a certification date "may be retroactive" if a provider or supplier meets the criteria for retroactive certification. It does not require CMS to grant retroactive certification. I am without authority to compel CMS to exercise its discretion.

ALJ Decision at 10. Puget Sound contended that a provider who met the requirements for the special rule was "entitled to be retroactively certified for one year." (2) Puget Sound Br. at 8.

As CMS argued, the regulation uses permissive rather than mandatory language. CMS Br. at 10. The use of the word "may" is particularly striking in light of the very different phrasing of the rest of section 489.13. In all other instances explaining the rules for determining effective dates, the regulation speaks in terms of "the effective date is" and not what the effective date "may" be. The general principle that the choice of a different word in the same provision should be assumed to be intentional and to convey a different meaning implies that the use of "may" was intended to introduce discretion.

Further, CMS noted that the preamble supports reading the special rule as conferring discretion on CMS. Thus, it provides that:

We believe that additional flexibility in determining effective dates of agreements and approvals will further ensure that all eligible providers and suppliers receive payment. The one-year period for retroactivity is consistent with Medicare and Medicaid regulations which generally require that claims be submitted for payment within one year from the date of service.

Preamble at 46,933 (emphasis added).

We conclude that the ALJ did not err in determining that applying the retroactive effective date is within CMS's discretion when a provider has met the prerequisites, which Puget Sound did not. (3)

Conclusion

We affirm the ALJ Decision.

JUDGE
...TO TOP

Cecilia Sparks Ford

Donald F. Garrett

Judith A. Ballard
Presiding Board Member

FOOTNOTES
...TO TOP

1. The practical consequence would be to allow Puget Sound to bill for psychiatric services which it provided to Medicare patients during the period from April 4, 2001, through April 3, 2002. Puget Sound presented uncontested evidence that it did provide such services. Puget Sound Br. at 7; P. Ex. 2, at 1-3.

2. As addressed supra, Puget Sound contended that the special rule was satisfied if a provider met the requirements for participation at the time it would have normally been certified under the general rules, whereas we have upheld the ALJ's conclusion that the requirements for participation must be met at the time the services to be claimed were provided. In this section, however, we address the question of whether, once the special rule is satisfied under whatever interpretation applies, CMS is obligated or merely permitted in its own discretion to backdate the certification by one year.

3. Puget Sound offered no evidence that CMS abused its discretion in declining to certify Puget Sound retroactively as a psychiatric hospital. Puget Sound did argue that some of its claims for reimbursement qualified as emergency services under 42 C.F.R. § 424.103. The ALJ declined to reach this issue because it was not raised in Puget Sound's request for review and noted that, in any case, Puget Sound had "made no showing that it even submitted emergency services claims to CMS or that CMS ever denied those claims. It has offered no unreimbursed claims and stated no facts to suggest that such (hypothetical) claims should have been reimbursed." ALJ Decision at 10. We agree that this issue is not properly before us. Moreover, Puget Sound has not presented on appeal any additional records that would establish that it submitted claims under section 424.103.

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES