SUBJECT:

North Quadrant Community Center,

Petitioner,

Centers for Medicare & Medicaid Services

I decide that the Centers for Medicare & Medicaid Services (CMS) properly terminated the participation of Petitioner, North Quadrant Community Center, (also known as Jacksonville Community Center) as a federally qualified health center (FQHC) in the Medicare program, effective February 13, 2003.

I. Background

By letter dated August 29, 2002, the Health Resources and Services Administration (HRSA) notified Petitioner of its decision to disapprove its Public Health Service (PHS) grant pursuant to 45 C.F.R. � 74.62(a)(3) and the PHS Grants Policy Statement, Section 8-22. By letter dated January 23, 2003, CMS notified Petitioner that it no longer met the requirements for participation as a supplier of services under Part B of the Medicare program established under title XVIII of the Social Security Act (Act), and that it was terminating Petitioner's participation as a FQHC in the Medicare program, effective February 13, 2003. By letter dated February 5, 2003, Petitioner requested a hearing.

On November 5, 2004, Petitioner submitted a prehearing brief. On November 23, 2004, CMS filed a Motion to Dismiss, accompanied by two exhibits, CMS Exhibits (CMS Exs.) 1 and 2. On November 30, 2004, Petitioner filed a response to the Motion to Dismiss, accompanied by two exhibits, Petitioner's Exhibits (P. Exs.) 1 and 2. I denied CMS's Motion to Dismiss in a Ruling dated May 23, 2005. I incorporate my May 23, 2005 Ruling into this Decision by reference. In my Ruling, I agreed that Petitioner does have a right to a hearing but it is limited in scope. The only issue that I may decide in this case is whether CMS had a basis to terminate the FQHC agreement. Further, in my Ruling, I noted that there is an issue of whether Petitioner continued to receive grants after CMS's January 23, 2003 notification letter. Petitioner submitted, with its response to CMS's Motion to Dismiss, a HRSA Notice of Grant Award for a project called the Ryan White Title III: Early Intervention Services. P. Ex. 2. Under the Ryan White Title III: Early Intervention Services grant, $75,000 of supplemental funds was granted to Petitioner from at least September 30, 2002 through September 29, 2003, a period of seven months after CMS terminated Petitioner's FQHC agreement. I directed the parties that should any motion for summary judgment be filed, the parties should argue their positions on how the existence of other grants, if any, would affect a motion for summary judgment.

On July 22, 2005, CMS filed a Motion for Summary Judgment. On August 20, 2005, Petitioner filed its response to the Motion for Summary Judgment, accompanied by three additional exhibits. The first of these additional exhibits is hereafter marked as P. Ex. 3. The second of the additional exhibits is already before me as CMS Ex. 1. The third additional exhibit is already before me as P. Ex. 2.

On September 22, 2005, I requested supplemental information from the parties. Petitioner filed its supplemental response (Petitioner's Supplemental Response) on October 28, 2005. CMS filed its supplemental response (CMS's Supplemental Response) on November 1, 2005. On November 21, 2005, I conducted a telephonic conference.

Neither party objected to any of the exhibits submitted. I admit into evidence CMS Exs. 1 and 2 and P. Exs. 1 - 3. I base my decision in this case on the law and the parties' submissions.

II. Applicable law and regulations

FQHCs provide both professional and ancillary health care services in rural and urban areas that are designated shortage areas or areas that have medically under served populations and are also required to provide preventive health care services as mandated by their specific PHS grant. FQHCs are deemed to be suppliers not providers. 42 C.F.R. � 498.2. FQHCs are eligible to receive 100% reimbursement of all reasonable costs incurred as a result of their treatment of Medicare beneficiaries and Medicaid recipients. 42 C.F.R. � 405.501(b). Prospective FQHCs apply for FQHC status through HRSA. HRSA determines if an entity meets the PHS Act requirements as a FQHC, or makes recommendations to CMS that an entity qualifies as a FQHC "look alike," and also monitors PHS grantees to ensure their continued compliance with all statutory FQHC requirements. A FQHC is defined at 42 C.F.R. � 405.2401(b) as:

an entity that has entered into an agreement with CMS to meet Medicare program requirements under � 405.2434 and -

(1) Is receiving a grant under section 329, 330 or 340 of the Public Health Service Act, or is receiving funding from such a grant under a contract with the recipient of such a grant and meets the requirements to receive a grant under section 329, 330 or 340 of the Public Health Service Act;

(2) Based on the recommendation of the PHS, is determined by CMS to meet the requirements for receiving such a grant;

(3) Was treated by CMS, for purposes of part B, as a comprehensive federally funded health center (FFHC) as of January 1, 1990; or

(4) Is an outpatient health program or facility operated by a tribe or tribal organizations under the Indian Self-Determination Act or by an Urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act.

Entities qualifying as FQHCs under subsection (2) above are known as FQHC "look alikes." See 42 C.F.R. �� 405.2430(a)(1)(i) and 405.2430(b)(1) - (2).

Once it has been determined that a prospective FQHC meets all requirements, the prospective FQHC enters into an agreement with CMS, by way of signing an attestation statement, that it agrees to remain in compliance with all FQHC requirements and that it agrees to inform CMS of any changes resulting in noncompliance with the FQHC requirements. 42 C.F.R. � 405.2434(a).

When CMS terminates an agreement with a FQHC, CMS must notify the FQHC in writing of its intent to terminate the agreement at least 15 days before the effective date stated in the written notice. 42 C.F.R. � 405.2436.

III. Issue, findings of fact and conclusions of law

A. Issue

The issue in this case is whether CMS properly determined to terminate Petitioner's participation as a FQHC, effective February 13, 2003.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision. I set forth each Finding below, as a separate heading. I discuss each Finding in detail.

1. Summary disposition is appropriate in this case.

A threshold question in this case is whether summary disposition is appropriate. Summary disposition is appropriate where either: there are no disputed issues of material fact and the only questions that must be decided involve the application of law to the undisputed facts; or the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made.

I have looked closely at the parties' arguments to decide whether there are disputed issues of material fact. There are no disputed material facts in this case. Essentially, the parties are relying on the same facts and are making legal arguments based on those facts.

2. CMS properly determined to terminate Petitioner's participation as a FQHC, effective February 13, 2003.

A facility can only be designated a FQHC if it meets the definition of a FQHC. A FQHC is defined at 42 C.F.R. � 405.2401(b) and that definition is included in Section II of this Decision.

Petitioner was a FQHC providing health care services in Jacksonville, Florida. By letter dated August 29, 2002, HRSA notified Petitioner of its decision to disapprove its PHS grant pursuant to 45 C.F.R. � 74.62(a)(3) and the PHS Grants Policy Statement, Section 8-22. CMS Ex. 1. Once Petitioner's PHS grant was disapproved, Petitioner no longer qualified as a FQHC under subsection (1) of the regulatory definition set out at 42 C.F.R. � 405.2401(b).

I cannot review the underlying actions of HRSA that caused it to disapprove Petitioner's grant. Once HRSA determines that a FQHC no longer qualifies for a grant, a facility may apply for FQHC look alike status. Entities qualifying as FQHCs under subsection (2) above are known as FQHC "look alikes." See 42 C.F.R. � 405.2430(a)(1)(i) and 405.2430(b)(1) - (2). However, Petitioner admits in its pre-hearing brief at page 8 that it did not apply for formal look alike status under 42 C.F.R. � 405.2401(2). Petitioner's argument that it was, "for all intents and purposes, prohibited from applying for look alike status" because of HRSA's actions is unavailing. The mere fact that a facility is no longer receiving a grant, for any reason, results in the conclusion that the facility fails to satisfy the definition of a FQHC under subsection (1) of the regulatory definition. Further, the mere fact that Petitioner never applied for look alike status, for whatever reason, prevents CMS from making a determination that it qualifies for look alike status and results in the conclusion that such a facility fails to satisfy the definition of a FQHC under subsection (2) of the definition. Further, Petitioner provided no evidence that it satisfied the definition of a FQHC under subsections (3) and (4) of the regulatory definition. Under the FQHC definition at 42 C.F.R. � 405.2401, Petitioner does not qualify as a FQHC under subsection (3) because it was not treated by CMS as a FFHC as of January 1, 1990, nor does it qualify under subsection (4) because it has not claimed to have any connection with an Indian tribal organization. Therefore, as of August 29, 2002, Petitioner no longer met the statutory definition of a FQHC.

By letter dated January 23, 2003, CMS notified Petitioner that it no longer met the requirements for participation as a supplier of services under Part B of the Medicare program established under title XVIII of the Act, and that it was terminating Petitioner's participation in the Medicare program, effective February 13, 2003. CMS Ex. 2.

CMS is authorized to terminate an agreement with a FQHC if it finds that the FQHC no longer meets the requirements specified under 42 C.F.R. � 405.2440. Here, CMS was authorized to terminate Petitioner's participation as a FQHC because Petitioner no longer met the requirements for a FQHC since its section 330 PHS grant was disapproved and it did not meet the definition of a FQHC under any other subsection. Petitioner does not dispute that its PHS grant was disapproved. CMS acted to terminate Petitioner's participation as a FQHC by its letter of January 23, 2003 to Petitioner. Thereafter, in accordance with 42 C.F.R. � 405.2436(c), the effective date of Petitioner's termination was no earlier than 15 days later. In this instance, the effective date of Petitioner's termination was February 13, 2003. CMS Ex. 2.

As I noted in my May 23, 2005 Ruling, there is an issue of whether Petitioner continued to receive grants after receiving CMS's January 23, 2003 notification letter. Petitioner submitted with its response to CMS's Motion to Dismiss a HRSA Notice of Grant Award for a project called the Ryan White Title III: Early Intervention Services. P. Ex. 2. It would seem that $75,000 of supplemental funds was granted to Petitioner from at least September 30, 2002 through September 29, 2003, a period of seven months after CMS terminated Petitioner's FQHC agreement. I requested further information from the parties to determine whether the Ryan White Title III: Early Intervention Services grant made by HRSA to Petitioner was either a Section 329, 330, 340, or 340A grant. September 22, 2005 letter to the parties.

I subsequently held a conference call by telephone on November 21, 2005, to clarify the parties' supplemental responses. During the conference, it was determined that the Ryan White Title III: Early Intervention Services grant of September 27, 2002, made by HRSA, was not a Section 329, 330, 340, or 340A grant, and I sent the parties a letter summarizing the telephone conference to that effect. November 21, 2005 Letter to the Parties Summarizing the November 21, 2005 Telephone Conference. Petitioner did not object to the letter summarizing the telephone conference. In fact, Petitioner agreed with this determination as shown by its statement in its Supplemental Response that "[a]lthough Section 329, 330, 340 and 340A programs are eligible grantees as authorized in Section 2652 of the Public Health Service Act such programs do not form the basis for the Ryan White Title III: Early Intervention Services program." Petitioner's Supplemental Response, at 1 (emphasis added). Therefore, Petitioner continued not to satisfy the definition of a FQHC under subsection (1) of the regulatory definition.

Petitioner argues that although it may not have met the accepted definition of a FQHC look alike, it was a de facto FQHC because it continued to meet PHS grant requirements by virtue of the fact that it continued to receive grant funds through September 29, 2003, and continued to provide medical services to its patients. Petitioner's Response to CMS's Motion for Summary Judgment, at 3 - 4. I find Petitioner's argument unavailing, merely an excuse for its failure to apply for look alike status, and an unsuccessful attempt to circumvent the requirement that CMS must make a formal determination that a facility qualifies as a FQHC look alike. As I stated above, the mere fact that Petitioner never applied for look alike status, for whatever reason, prevents CMS from making a determination that Petitioner qualifies for look alike status and results in the conclusion that such a facility fails to satisfy the definition of a FQHC under subsection (2) of the definition.

IV. Conclusion

I decide that CMS properly terminated Petitioner's participation as a FQHC, effective February 13, 2003.

Anne E. Blair

Administrative Law Judge