30 Mass. App. Ct. 553 | Mass. App. Ct. | 1991
This is another in a series of appeals in which a determination must be made whether a health care provider’s claim relating to rates for Medicaid recipients established by
In the present case, Baystate Medical Center, Inc. (Baystate) in Springfield appealed the reimbursement rates assigned to the hospital for fiscal year 1982 to the Division of Administrative Law Appeals (division). By regulation of the Rate Setting Commission, prospective per diem rates were calculated for each hospital for fiscal year 1982 by using 1980 costs and adjusting them for various factors including inflation. 114.1 Code Mass. Regs. §§ 3.01-3.20 (1981). See Beth Israel Hosp. Assn. v. Rate Setting Commn., 24 Mass. App. Ct. at 496-497. Baystate relied on several contentions in claiming that the rates thus established were not “adequate, fair and reasonable.” G. L. c. 6A, § 36, as inserted by St. 1973, c. 1229, § 2. Of those contentions, Baystate on appeal relies on only one: that it experienced a shift in its case mix in fiscal year 1982 to more intensely ill patients whose care, because of ancillary services required, was more costly than if the intensity of its case mix had remained as it was in 1980.
After a lengthy hearing, the division issued a decision in which it determined that, based upon special circumstances affecting Baystate’s case mix intensity, it had jurisdiction to hear Baystate’s claim. On the merits of Baystate’s claim, the
The Rate Setting Commission brought the present action in Superior Court against Baystate and the division.
The relevant facts, found by the division’s hearing officer, are as follows.
The boundary line, the vagueness of which has been acknowledged, between a challenge to the substantive validity of a regulation and a claim of unfair application of a regulation has been defined most recently in Rate Setting Commn. v. Division of Hearings Officers, 401 Mass. at 545-547. The court said that a challenge would fall within the latter category “only if the provider can demonstrate circumstances — other than voluntary business decisions — which make application of the rate to that provider different from its application to all other providers in the class” (emphasis original). Id. at 545 (quoting from Medi-Cab of Mass. Bay, Inc. v. Rate Setting Commn., 401 Mass. at 364). The court went on to illustrate what it meant by “different:”
“[A] particular provider may service an area containing an unusually high concentration of patients with ex*557 treme health care needs; may require unusual equipment because of the unique nature of its services within the class, or because of the nature of its clientele; may traverse a territory with unusual geographic or transportation characteristics imposing a burden that other providers in the same class do not experience; or may cover an area where the population density differs greatly from that in areas covered by similar providers. It is unnecessary to burden the Superior Court with these types of specialized issues.” Id. at 545-546.
The court repeated the idea that the circumstances making a provider’s situation different, justifying a rate hearing before the division, must be “other than voluntary business decisions.” Id. at 547. See also Medi-Cab of Mass. Bay, Inc. v. Rate Setting Commn., 401 Mass. at 363-364 n.9.
There are, thus, two aspects to the jurisdictional test: the existence of special circumstances and the extent to which they reflect voluntary business decisions. The Beth. Israel decision, on which the Superior Court judge rested his decision, discussed only the special circumstances test. The claim made by Beth Israel Hospital was based upon a decrease in its patients’ average length of stay which, like a shift in case mix intensity toward more seriously ill patients, resulted in an increase in the number of ancillary services per patient day and a corresponding increase in the daily cost of caring for patients. 24 Mass. App. Ct. at 497-498. This court analyzed Beth Israel Hospital’s claim as being, in essence, a claim that the regulation was invalid because it should have factored average length of stay intensity into the rate setting methodology. Id. at 500-505. In the Beth Israel case, however, the pressures causing the decreases in the average length of stay were industry-wide. Id. at 504 & n.17. The pressures on Baystate, on the other hand, were not predominantly industry-wide but reflected its evolution from a community hospital to a tertiary care facility. We conclude that special circumstances unique to Baystate made application of the rate for fiscal year 1982 different from its application to other providers in the class.
As the hearing officer commented in her decision, the shift in Baystate’s case mix intensity was in some sense voluntary. The changes reflected in the hospital’s increased costs could not have come about without the intentional expansion and upgrading of staff, acquisition of sophisticated technology, and other efforts to improve the hospital’s reputation in the medical community. On the other hand, it is also true that the shift in patient intensity might be viewed, as it was by the hearing officer, as having been beyond the control of the hospital in the sense that the additional costs were incurred in providing appropriate and necessary medical services to those patients who actually came to the hospital for care. We agree with the hearing officer’s application of the voluntariness test to Baystate’s claim. The circumstances faced by Baystate between fiscal years 1980 and 1982 are the relevant ones. It seems clear to us that it was primarily the mergers in the mid-seventies, and the gradual upgrading of Baystate’s staff, facilities, and reputation which followed, and not any business decisions made in the early eighties, that resulted in sicker patients being admitted to the hospital in fiscal year 1982.
As support for its contention that the hospital’s claim fails on jurisdictional grounds because its actions were voluntary,
The judgment vacating the decision of the division is reversed, and the case is remanded to the Superior Court for further proceedings on other issues raised in the Rate Setting Commission’s petition for review, if any, not resolved in this appeal. If there are no other issues to be resolved, the Rate Setting Commission shall be ordered to adjust Baystate’s rates as ordered by the division.
So ordered.
Such an appeal would fhave been taken to the agency known at the time as the Division of Hearings Officers. The division is now known as the Division of Administrative Law Appeals. See G. L. c. 7, § 4H, as appearing in St. 1983, c. 683.
The division did not appear to defend the action.
Other claims of error on the part of the division alleged in the petition were not litigated or decided in the Superior Court.
Because the division did not appear in the Superior Court action, no transcript of the proceedings before the division was filed in the case. The division’s original written decision and its decision after reconsideration
A further intensity factor relied upon by Baystate was the increase in day and out-patient surgery. We do not think that factor strengthens the hospital’s claim because the development was State-mandated and could not be a basis for finding unique circumstances affecting Baystate.
The rate setting methodology has been changed several times since 1981. See Beth Israel Hosp. Assn. v. Rate Setting Commn., 24 Mass. App. Ct. at 496 n.4; G. L. c. 6A, § 32, as amended through St. 1989, c. 653, §§ 5-10; G. L. c. 6A, § 32B, as inserted by St. 1988, c. 23, § 3.