Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Americare Certified Special Services, Inc., |
DATE: October 6, 2000 |
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Health Care Financing Administration
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Docket No.C-99-587
Decision No. CR703 |
DECISION | |
I decide that the Health Care Financing Administration
(HCFA) correctly determined to certify Petitioner, Americare Certified
Special Services, Inc., to participate in the Medicare program, effective
April 24, 1998. On that date, Petitioner met all the federal requirements
for participation, including those imposed following the President's Moratorium,
which was effective September 15, 1997. I. Background By letter dated September 14, 1998, HCFA informed Petitioner
that its effective date for participation in the Medicare program was
April 24, 1998.(1) Petitioner disagreed
with HCFA's determination and requested a hearing. The case was assigned
to Administrative Law Judge Mimi Hwang Leahy for a hearing and decision.
The parties agreed that the case could be heard and decided without an
in-person hearing. The parties each submitted exhibits and written arguments.(2)
Subsequently, the case was reassigned, first to Administrative Law Judge
Marc Hillson, and then to me. I admit into evidence HCFA Exhibits (HCFA
Exs.) 1 - 15 and Petitioner Exhibits (P. Exs.) 1 - 9. I base my decision
in this case on the law and on the parties' submissions. II. Issue, Findings of Fact, and Conclusions of
Law
The issue in this case is whether HCFA correctly determined
to certify Petitioner to participate in Medicare, effective April 24,
1998.
I make the following findings of fact and conclusions
of law (Findings) to support my decision that HCFA correctly determined
to certify Petitioner to participate in Medicare, effective April 24,
1998. I discuss each of these Findings in detail, below.
III. Discussion
The regulations require that an entity, such as a home
health agency, must apply to HCFA to be certified to participate in Medicare.
42 C.F.R. � 489.10(a). In order to be certified, an applicant must first
be surveyed to ascertain whether the applicant meets all of the federal
requirements, which, for a home health agency, means meeting all conditions
of participation. 42 C.F.R. �� 488.10; 489.10(d); Part 484. HCFA has delegated
to the individual State survey agencies the authority to conduct surveys
on HCFA's behalf. After the requisite surveys have been completed, the
State survey agency forwards a recommendation to HCFA concerning the applicant's
compliance with the federal requirements. 42 C.F.R. � 488.11. HCFA will
accept an applicant's participation agreement on the date that a survey
of that applicant is completed, provided that the applicant meets all
of the pertinent federal requirements on that date. 42 C.F.R. � 489.13.(3) If an applicant for participation fails to satisfy all
federal requirements as of the date of completion of the survey, then
HCFA will not certify that applicant to participate in Medicare until
HCFA is satisfied that the applicant meets the federal requirements. Id.
If HCFA finds, on the basis of a survey, that an applicant (other than
a skilled nursing facility) complies with all conditions of participation,
but fails to comply with a lesser requirement or requirements, then HCFA
will certify the applicant to participate on the earlier of the following
dates: the date that the applicant actually complies with all federal
requirements; or, the date on which HCFA or the State survey agency receives
from the applicant a plan of correction which addresses the outstanding
deficiencies and which HCFA accepts. Id. The conditions of participation which must be met by a
home health agency are set forth in the statute at sections 1861(o) and
1891(a) of the Social Security Act (Act) and implemented in the HCFA regulations
at 42 C.F.R. Part 484. Of particular relevance in this matter, 42 C.F.R.
� 484.1 provides that home health agencies must assure that they meet
certain additional requirements set forth in that Part which are considered
necessary to ensure the health and safety of patients. One such requirement
for agencies applying on behalf of a subunit is that the subunit must
independently meet the conditions of participation. In contrast, a branch
office need not be independently surveyed; it need only be located sufficiently
close to a parent or subunit to share administration, supervision, and
services in a manner that renders it unnecessary for the branch independently
to meet the conditions of participation. 42 C.F.R. � 484.2. Before it
can be determined that a home health agency has met the conditions of
participation, it must first be ascertained whether an applicant is seeking
certification of a parent, a subunit, or a branch. If HCFA cannot make
this determination based on the information provided by a home health
agency or a State survey agency, then HCFA cannot determine whether an
applicant has met the conditions of participation. Also relevant is a Moratorium on the approval of new Medicare
home health agency providers which was effective September 15, 1997.(4)
The Moratorium was lifted on January 13, 1998, at which time new surety
bond and capitalization requirements for home health agencies were imposed.
HCFA Ex. 6; see 63 Fed. Reg. 292, et. seq. (1998); 42 C.F.R. ��
489.28, 489.61. An exception to the Moratorium was made for home health
agencies which had been determined by HCFA (not by a State survey
agency) to have successfully completed an initial survey. HCFA Exs. 5,
6. Successful completion meant that the facility was in compliance with
federal participation requirements at the condition-level and had satisfied
all of the provider agreement requirements. If deficiencies existed which
did not constitute a condition-level deficiency, a fully acceptable plan
of correction needed to have been received before September 15, 1997.
HCFA Ex. 5, at 2 - 3.
It is evident from application of the law to the facts
of this case that the earliest date that Petitioner established that it
met all of the requisite federal participation requirements is April 24,
1998. Thus, that date, April 24, 1998, is the date on which HCFA correctly
certified Petitioner for participation.
Petitioner is a home health agency. Petitioner's Statement
of Material Facts (PMF), at 1; HCFA Brief (Br.), at 9. Petitioner's main
office is located in Brooklyn, New York. HCFA Br., at 9. Prior to 1996,
Petitioner was only licensed to operate in the five boroughs of New York
City. PMF, at 1. In 1996, Petitioner submitted an application to the New
York State Department of Health (NYSDH) to establish a subunit to service
the suburban areas of Nassau, Suffolk, Sullivan, Ulster, Orange, Rockland,
Dutchess, Putnam, and Westchester Counties. Id. Under Petitioner's
plan, a subunit would be established in Westbury, New York, with branches
in Orange, Westchester, and Putnam Counties. Id. On August 28, 1997, NYSDH completed a survey of the subunit
and found standard-level deficiencies. HCFA Ex. 7.(5)
On September 10, 1997, Petitioner submitted a plan of correction.
P. Ex. 2. On September 12, 1997, NYSDH informed Petitioner that its plan
of correction was acceptable. HCFA Ex. 8. On October 7, 1997, NYSDH recommended
certification of Petitioner's subunit and two branches, which appear to
have been changed from Petitioner's initial request for branches in three
counties, to branches in only White Plains and Suffern, New York. HCFA
Ex. 9. As noted above, however, on September 15, 1997, the President had
announced the Moratorium on the admission of new home health agencies
to the Medicare program. HCFA Ex. 3. From the exhibits in evidence (HCFA Exs. 10 and 15) and
HCFA's argument (HCFA Br., at 10) it appears that while reviewing the
material forwarded by NYSDH, HCFA determined that Petitioner had not provided
documentation concerning the organizational structure between its parent,
subunit, and branches, such that HCFA was unable to determine whether
Petitioner's components met the regulatory definition of subunit or branch.
From this evidence, it appears also that HCFA directed NYSDH to request
such information from Petitioner. On November 5, 1997, NYSDH requested
that Petitioner provide it with the information HCFA had requested regarding
Petitioner's organizational structure. P. Ex. 10. On December 24, 1997,
Petitioner provided this information to NYSDH. HCFA Ex. 11, at 2 - 21.
NYSDH forwarded the information to HCFA on January 14, 1998. Id.,
at 1. On January 13, 1998, the Moratorium was lifted. HCFA Ex.
6. In the aftermath of the Moratorium, several new requirements for certification
of home health agencies were imposed. Accordingly, in a letter dated January
29, 1998, NYSDH informed Petitioner of the new requirements, which included
new application forms and a capitalization and surety bond requirement.
HCFA Ex. 12. Upon receipt of the new forms, as well as other necessary
information, HCFA determined that the subunit's effective date of participation
was April 24, 1998. HCFA Ex. 14.
It is HCFA's responsibility to determine whether an applicant
for participation in the Medicare program as a home health agency meets
the applicable conditions of participation for certification as a provider.
42 C.F.R. � 488.12; Arbor Hospital of Greater Indianapolis, DAB
No. 1591, at 7 - 8, n.6 (1996); see, e.g., Central Suffolk
Hospital v. Shalala, 841 F. Supp. 492, 495 (E.D. N.Y. 1994). Until
there is a finding of full compliance made by HCFA, HCFA is not authorized
to certify the applicant. A prerequisite to determining whether a home
health agency is in compliance with participation requirements is that
HCFA must be able to ascertain whether a component of the home health
agency is a parent, a subunit, or a branch. Where HCFA cannot ascertain
whether a home health agency component is a subunit or branch, it cannot
ascertain whether or not the conditions of participation have been met. Here the evidence shows (HCFA Exs. 10, 11, and 15) that
HCFA was unable to make this determination because, initially, Petitioner
had not put in sufficient evidence regarding its organizational structure.
HCFA requested this information from Petitioner via the NYSDH, which informed
Petitioner that it could not continue processing Petitioner's application
without it. HCFA Ex. 10. This information was not provided to either NYSDH
or HCFA until after the Moratorium was in place. Thus, Petitioner was
not covered by the exception to the Moratorium for applicants who had
successfully completed an initial survey, since successful completion
of the survey must be determined by HCFA, not by a State survey agency
such as NYSDH. Moreover, HCFA defined successful completion of a survey
in the context of the Moratorium as ". . . a determination by HCFA
(emphasis added) that the facility is in compliance with Medicare requirements
at the condition-level, and satisfaction of all provider agreement requirements."
HCFA Ex. 5, at 3. HCFA never made such a determination. Petitioner asserts that neither it nor NYSDH had any doubt
as to whether Petitioner's subunit met the conditions of participation
(and, by inference, that its asserted branches were indeed branches and
did not need to be separately surveyed). Petitioner asserts further that
HCFA is attempting to incorporate a program memorandum, HCFA 97-1 (HCFA
Ex. 2) into the regulation in an improper attempt at substantive rulemaking
by using the section of the regulation containing definitions at 42 C.F.R.
� 484.2 to impose an obligation independent of other conditions and obligations.
Petitioner argues alternatively that, even if the definition section at
42 C.F.R. � 484.2 is a substantive pre-requisite for home health agency
certification, Petitioner fulfilled that requirement by September 10,
1997. Thus, there was no need for HCFA to "delve into the minutiae of
Americare's organization to distinguish subunits from branches." P. Reply
Br., at 14. It is, however, just this "minutiae" of an organization
that HCFA must delve into to determine the status of a home health agency's
components, particularly where HCFA needs to determine whether a component
is a subunit or a branch. It is necessary to distinguish between a branch
and subunit of a home health agency to ensure the health and safety of
patients served by such entities. See Homelife Nursing, Inc.,
DAB CR417, at 5 - 6 (1996). If a branch is not "sufficiently close" to
share administration, supervision, and services with a parent or subunit,
it must meet the conditions of participation on its own, which means that
it must separately undergo an onsite survey to protect the health and
safety of its patients. 42 C.F.R. � 484.2. Thus, the demonstration of
a corporate relationship and the organizational structure of an applicant
is the necessary prerequisite to the entire certification process. Program
Memorandum 97-1 merely serves to give guidance as to how to go about making
the determination. The memorandum does not impose on HCFA the duty to
make such a determination. That duty is inherent in the regulation itself.
42 C.F.R. �� 484.1, 484.2. Petitioner has argued also (P. Br., at 8 - 10) that the
imposition of the new certification requirements imposed once the Moratorium
was lifted was an improper retroactive application of the requirements
to Petitioner. However, once the Moratorium was lifted, Petitioner, along
with all other providers with pending Medicare applications who had not
completed an initial survey, had to satisfy the new requirements before
being certified. 63 Fed. Reg. 292, et seq. (1998); 42 C.F.R.
�� 489.28, 489.61. I do not have the authority to hold otherwise. III. Conclusion HCFA correctly determined to certify Petitioner to participate in the Medicare program, effective April 24, 1998. On that date, HCFA determined that Petitioner met all the federal requirements for participation, including those imposed following the President's Moratorium. |
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JUDGE | |
Marion T. Silva Chief Administrative Law Judge |
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FOOTNOTES | |
1. Initially, HCFA certified Petitioner's subunit as of July 27, 1998. Petitioner protested this date to HCFA, and HCFA retracted the date of July 27, 1998, and certified Petitioner as of April 24, 1998. HCFA Ex. 14; P. Ex. 7. 2. By motion dated December 14, 1999, HCFA requested permission to file a sur-reply brief. HCFA appended the brief to its motion. In its response dated December 21, 1999, Petitioner objected to my consideration of this brief. I note that in Judge Leahy's order scheduling the briefing in this case, she contemplated an initial exchange of briefs and one response. However, her order did not preclude the receipt of subsequent briefing. As Petitioner had the opportunity to respond to HCFA's brief (and did so in its December 21, 1999 response) I perceive no prejudice to Petitioner in my considering HCFA's sur-reply. 3. Effective September 17, 1997, the regulation at 42 C.F.R. � 489.13 was changed. With regard to home health agencies, this change is important only insofar as it relates to the effective date being the date the State or HCFA receives a plan of correction as opposed to the date a facility submits a plan of correction. Otherwise, the effective date for a home health agency continued to be the date on which the home health agency met all condition-level requirements and had an acceptable plan of correction for standard-level deficiencies. 62 Fed. Reg. 43932 - 43933 (1997). 4. A U.S. District Court upheld the Moratorium's validity in Putnam Home Health Care, Inc., v. United States, No. 97-1274-Civ-J-20C (M.D. Fla., Dec. 9, 1997). 5. Where Petitioner and HCFA have introduced the same document into evidence as an exhibit, I cite to HCFA's exhibits. | |