535 A.2d 1243 | Pa. Commw. Ct. | 1988
Opinion by
Eight county-operated nursing homes (collectively, petitioners)
Petitioners, participants in the Pennsylvania Medical Assistance (MA) Program, are skilled nursing and intermediate care facilities (SNFs and ICFs, respectively). Prior to the reimbursement revision here at issue, petitioners were reimbursed by the Department on the basis of actual allowable costs subject to a ceiling on net operating costs calculated on the basis of the Statewide weighted average cost of providing long-term care in county nursing homes. However, Section 201 of the General Appropriation Act of 1980 modified such computation by providing that:
For public nursing homes. . . . Effective January 1, 1981, in accordance with Federal regulations, the [Department] shall replace the current Statewide ceilings for county nursing homes. New ceilings shall be calculated for each standard metropolitan statistical area and nonstandard metropolitan statistical area group within the State and shall be paid retroactively to July 1, 1980. The new ceilings shall provide that no public nursing home shall have a ceiling below its rate that was in effect prior to implementation of the new ceilings. This and any other change in the method of county home reimbursement must be approved in advance by the Federal Department of Health and Human Services. (Emphasis added.)
On July 26, 1980, the Department advised all interested parties
Public notice of changes in Statewide method or level of reimbursement.
(a) When notice is required. [T]he agency must provide public notice of any proposed change in the Statewide method or level of reimbursement for a service, if the change is expected to increase or decrease the Medicaid payments for that service by 1 percent or more during the 12 months following thé effective date of the change.
The commentary accompanying the regulation requires public notice of proposed changes that meet all of the following conditions:
(1) The proposed change affects the general method of payment to all providers of a particular service.
(2) The proposed change áflfects the level of payment for that particular service. . . .
(3) The proposed change is projected to affect a States Medicaid expenditure for a particular service by 1% or more during the 12 months following the effective date of the change. (Emphasis added.)
On July 25, 1981, the Department implemented
Upon receipt of audit information indicating the retroactive reimbursement at the revised ceiling only to October 1, 1980, petitioners individually appealed to the Department and the appeals were consolidated for a hearing before a designated Hearing Examiner. The Hearing Examiner determined that the proposed change in reimbursement affected only county-operated nursing facilities, thus rendering 42 C.F.R. §447.205 inapplicable to the instant matter because the proposed change did not affect the general method of payment to all providers of a particular service. The Hearing Examiner concluded that the Department acted improperly in delaying the effective date of reimbursement at the newly-revised rate and held that payments should be paid retroactive to July 1, 1980, in accordance with the statutory mandate. The Office of Hearings and Appeals adopted the Hearing Examiners decision in its entirety.
Upon administrative appeal, the Executive Deputy Secretary of the Department concluded that county nursing facilities comprised a separate class of provider rendering a distinct type of service. Having so found, the Secretary determined that the proposed change in reimbursement of county nursing homes affected “the general method of payment to all providers,” thus calling into play the federal notice requirement of 42 C.F.R. §447.205. He finally determined that the tripartite test of that regulation had been met in toto and that
Upon appeal, petitioners contend the Secretary erred in holding the federal notice provision here applicable. As they correctly argue, such provision requires public notice of a proposed change in reimbursement only if three criteria coalesce. Petitioners submit that two of the three requisite criteria are absent, that is, that the proposed change in reimbursement will not affect all providers of a particular service nor vary Medicaid expenditures by 1% or more during the year following the effective date of the change. The Department counters that its application of the regulation constituted a reasoned judgment taken to protect the public fisc; had it failed to abide by federal regulatory constraints, HHS might have withheld monies, or so the Department now contends.
Our threshhold determination, of course, is whether the proposed change in reimbursement ceilings affects the general method of payment to all providers of a particular service.
During the course of preliminary communications regarding the implementation of the revision here at issue, HHS advised the Department that it questioned the reasonableness of classifying facilities on the basis of
The Department contends that our review of the regulation is restrained by the fact that it was promulgated pursuant to department legislative rule-making authority. See Sections 201 and 403 of the Code, 62 P.S. §§201, 403. As such, we may not invalidate the rule unless we find it so unreasonable as to be the expression of a whim instead of an exercise of judgment. Mountain Rest Nursing Home, Inc. v. Department of Public Welfare, 73 Pa. Commonwealth Ct. 42, 457 A.2d 600 (1983). We are well aware of this principle but cannot
Accordingly, the Order of the Department is reversed.
Order
And Now, this 20th day of January, 1988, the Order of the Department of Public Welfare in the above-captioned matter is reversed.
Carbon County Home for the Aged, Cedarbrook, Cedar-brook-Fountain Hill Annex, Westmoreland Manor, Beaver Valley Geriatric Center, Fair Acres Geriatric Center, Pocopson Home and Philadelphia Nursing Home. ;
See 10 Pa Bulletin 3122.
See 11 Pa. Bulletin 2610-21.
We find no support for the Departments contentions that petitioners are here precluded from relief by their failure to take preliminary action to enjoin the implementation of the regulation or to seek a declaration from HHS as to the propriety of same. As neither contention was raised in the Departments Petition for Reconsideration or at any prior juncture in the instant matter, we will not now consider these arguments.
The regulations formerly contained in 42 C.F.R. §430.1 are now found in 42 C.F.R. §§400.200 and 400.203.
Act of August 14, 1935, Ch. 531, Title XIX, added by the Act of July 30, 1965, § 121(a), 79 Stat. 344 (current version at 42 U.S.C.A. §1396(d) (a)-(o) (West Supp. 1987)).
We do note that by letter dated March 17, 1981, HHS granted approval to the MA plan amendment, effective July 1, 1980.