DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Illinois Department of Public Aid
Request for Reconsideration of DGAB No. 920
DATE: March 22, 1988
RULING ON REQUEST FOR RECONSIDERATION
In a submission dated January 8, 1988, the Health Care
Financing
Administration (HCFA) requested that the Board reconsider its
decision
in Illinois Dept. of Public Aid, DGAB No. 920 (1987). The
State opposed
the request in a submission dated February 16, 1988.
The primary issue addressed in DGAB No. 920 was whether federal
Medicaid
funding was available under section 1910(c)(2) of the Social
Security
Act (Act) for certain payments made to three facilities which HCFA
had
determined did not meet skilled nursing facility (SNF)
certification
requirements. Section 1910(c)(2) provides:
Any skilled nursing facility . . . which is
dissatisfied with a
determination by [HCFA] that it
no longer qualifies as [an SNF] for
purposes of
[Medicaid] shall be entitled to a hearing by [HCFA] .
.
. Any agreement between the facility and the State
agency shall
remain in effect until the period for
filing a request for a
hearing has expired or, if a
request has been filed, until a
decision has been
made [unless] the continuation of provider status
constitutes an immediate and serious threat to the health
and
safety of patients . . . .
HCFA said this section provides federal funding pending appeal only
where
HCFA specifically invokes its authority, granted in the same 1980
amendments
which enacted section 1910(c), to "look behind" state surveys
of
"Medicaid-only" facilities. The section did not apply here, HCFA
said,
because one of the facilities had participated in Medicare as well
as
Medicaid and the other two had applied to participate in Medicare, so
the
HCFA certification decision was for purposes of Medicare, not
Medicaid.
Under HCFA regulations, whenever HCFA terminates or denies
.Medicare
certification, the state must notify the facility that the
Medicaid agreement
is terminated on the effective date of HCFA's action.
42 C.F.R. 442.20.
This regulation (which predated section 1910(c)) is
based on section 1910(a)
of the Act, which provides for deeming a
facility to be eligible for Medicaid
based on Medicare certification.
HCFA's position, in effect, makes the
application of section 1910(c)(2)
contingent on whether a facility's Medicaid
agreement is directly
terminated by HCFA, rather than by the state, even
though the underlying
certification decision is made by HCFA in both
circumstances.
In DGAB No. 920, the Board concluded, after applying basic principles
of
statutory construction, that section 1910(c)(2) continued the
Illinois
facilities' provider agreements in effect because:
o The plain language of section 1910(c)(2) covers the
HCFA
determinations here; since SNF certification requirements are the
same
for both Medicare and Medicaid, the certification decisions
were
determinations that the facilities no longer qualified as SNFs
for
purposes of Medicaid as well as Medicare;
o Section 1910(c)(2) applies to "any facility" and makes no
distinction
based on Medicare status of the facility;
o The word "determination" in section 1910(c)(2) clearly refers back
to
actions by HCFA under section 1910(c)(1); that section authorizes
HCFA
to cancel approval of any facility based on either the new
Medicaid
"look behind" authority in section 1902(a)(33)(B) or a finding
of
grounds for termination of a Medicare agreement (including
a
determination that a facility fails to meet certification
requirements);
o Congress placed the provision in section 1910 with subsection
(a),
which governs "approval" of SNFs as "qualified" to participate in
both
programs; and
o Nothing in the legislative history evidences an intent different
from
what the statutory language provides; indeed, the legislative history
of
related provisions indicates that Congress was concerned about
the
effects of immediate termination on a facility's Medicaid
residents,
which are the same regardless of whether a facility participates
in
Medicare or has applied to do so.
The Board also rejected HCFA's contention that its regulation at 42
C.F.R.
442.20 precluded federal funding. The Board found that this
regulation
did not address the question of when funding ends and that
HCFA's contention
that Medicaid funding always ends when Medicare
certification ends conflicted
with other HCFA regulations and policy
statements.
Under Board regulations, the Board has the power to reconsider its
own
decision "where a party alleges a clear error of fact or law."
45
C.F.R. 16.13. HCFA did not allege in its reconsideration request
that
the Board had erred in analyzing the statutory language, nor that
the
Board had erred in concluding that nothing in the legislative
history
contradicted the plain meaning of the statutory provision.
Rather, HCFA
challenged the Board's decision primarily on the basis that the
Board
had overstepped its authority by rejecting a "plausible"
interpretation
advanced by HCFA and that the Board's decision had the effect
of
limiting the intended effect of HCFA's regulations and overruling
HCFA's
longstanding interpretation of section 1910(a).
As explained below, we agree with HCFA's articulate presentation on
what
the general role of the Board should be and on the deference to
which
Agency policy choices are entitled. HCFA's allegation that the
Board
overstepped its authority here, however, reflects a misunderstanding
of
the Board's holding. The Board did not reject a
reasonable
interpretation by HCFA to which the Board should have
deferred. To the
contrary, the Board rejected the interpretation of
section 1910(c)(2)
which HCFA advanced here because it is --
o Contrary to congressional intent as evidenced by the
statutory
language and the context in which it appears;
o Based primarily on a statement in the legislative history
which
addressed the new "look behind" authority (rather than the
appeal
provisions of section 1910(c)(2)) and which, in any event, referred
to
"facilities which participate in medicaid but not in medicare," so
that
it would cover the two facilities here which had only applied
to
participate in Medicare;
o Based on a strained reading of the phrase "for the purposes
of
[Medicaid]" as meaning that section 1910(c)(2) does not cover
HCFA's
determination for Medicare about whether a facility qualifies as an
SNF;
this reading ignores the fact that such a determination is
a
determination about whether the facility qualifies for Medicaid and
also
ignores the fact that there are other, more logical explanations of
why
Congress would insert that phrase;
o Not a position which HCFA had articulated in a regulation or
other
formal guidance; indeed, HCFA had said in a preamble to a
related
regulation that section 1910(c) was "self-implementing," which
implies
that the plain language controls;
o Based on arguments about existing HCFA policy which state a
position
in conflict with published statements about that policy;
o Based on a view that Congress intended in the l980 amendments only
to
expand HCFA's authority, when clearly Congress had other purposes
in
mind as well, such as protecting the rights of residents, states,
and
facilities when HCFA makes determinations which affect them (so long
as
there is no immediate threat to patient health and safety --
the
situation we have here).
Having concluded that the statute provides for federal funding under
the
circumstances here and that HCFA's regulations did not preclude it,
the
Board was bound to allow it.
We also are not persuaded by HCFA's arguments that the Board's
decision
limits the intended effect of HCFA's regulations and overrules
HCFA's
longstanding interpretation of section 1910(a). As the State
pointed
out, HCFA's arguments concerning HCFA regulations and section
1910(a)
are, for the most part, simply a restatement of arguments rejected
in
the decision. To the extent they raise new issues, we have
examined
them and find them to be without merit. For example, HCFA
cites a
preamble to a 1975 proposed rule in support of its position that
42
C.F.R 442.20 precluded federal funding pending appeal; as HCFA
itself
had acknowledged earlier, however, the final rule specifically left
this
question open.
Finally, we reject HCFA's arguments concerning whether the State
had
notice of HCFA's interpretation; they do not show a clear error in
the
Board's decision. The arguments are not based on notice through
a
regulation or formal policy guidance (which would have changed
our
analysis), but on the State's adoption of a position HCFA took
in
litigation under circumstances which are distinguishable from
the
circumstances here.
While the Board usually declines to engage in a lengthy analysis of
issues
previously considered, we have chosen here to provide a point by
point
discussion of HCFA's allegations, which we quote verbatim below.
We do so to
explain to HCFA why we consider its concerns about Board
authority to be
unwarranted and, where necessary, to clarify the basis
for the Board's
decision.
For the reasons explained below, we affirm our decision.
Issue: Whether the Board Improperly Rejected HCFA's
Plausible
Interpretation
HCFA's Allegation:
HCFA disputes the panel's apparent view that the
Board may overrule
HCFA's longstanding position and
statutory interpretation because
HCFA's
interpretation is not "mandated" by the plain language
of
1910(c)(2). In Decision 920, the panel does
not, and can not,
point to any provision in the
statute or legislative history or in
HCFA policy
statements or regulations that "mandates" its (and
the
state's) preferred alternative reading.
Nor does the Board
conclude (nor can it) that HCFA's
reading is not plausible or is
unsupported by
legislative intent.
Analysis: The Board did not, and would not, overrule an
Agency
interpretation on the ground that it is not "mandated" by the
statute.
As explained above, the Board's decision was based on the plain
meaning
of the .statute. The Board rejected the interpretation HCFA
advanced
here as inconsistent with legislative intent and as otherwise based
on a
rationale which was not supported.
HCFA's Allegation:
Instead the Board in Decision 920 chooses to adopt
the state's
alternative interpretation, finding that
the state's reading is the
more plausible way to
read the plain language and asserting that
the
state's interpretation is consistent with the
legislative
intent. See, e.g., Decision at p.
3 (state's reading is
"consistent with the
legislative history"), p. 12 (statutory
language
suggesting that the provision is applicable for
Medicaid-only facilities is explained away by saying the words
"can
reasonably be understood" to have a different
meaning from that
advocated by HCFA or that "it is
possible" to read them to have a
meaning different
from that advocated by HCFA), p. 13 (the plain
language is "broad enough" to cover the state's interpretation),
p.
14 (legislative history referring explicitly and
exclusively to
Medicaid-only facilities is "not a
complete explanation"), p. 17
(just because several
provisions in 1910 expand the Secretary's
authority
"does not mean" that the purpose of the legislation
was
to expand the Secretary's authority for its own
sake). These kinds
of statements in Decision
920 suggest that the Board feels that
HCFA's
interpretations can be overruled whenever the Board
can
devise any plausible interpretation different
from that advocated
by HCFA.
Analysis: The Board did not suggest that an Agency interpretation
can
be overruled any time there is a second plausible interpretation;
as
noted above, this was not the situation in this case.
The Board's analysis of the legislative intent was in line with
recent
Supreme Court cases which conclude that the plain meaning of a
statutory
provision should govern absent a clearly expressed legislative
intent to
the contrary. See, Consumer Product Safety Commission v. GTE
Sylvania,
Inc., 447 U.S. 102 (1980); United States v. Locke, 471 U.S. 84
(1985).
The effect of the phrases quoted by HCFA has to be considered in
this
context.
The Board rejected in DGAB No. 920 HCFA's position that the phrase
"for
purposes of this title" necessarily means that section
1910(c)(2)
applies solely to Medicaid-only facilities. The Board found
this
reading to be unreasonable because it ignores the fact that
the
Secretary's determination that a facility no longer qualifies as an
SNF
means that a facility no longer qualifies under both titles.
The
obvious reason for including the phrase is that, although
section
1910(c)(1) refers to canceling approval and, therefore,
terminating
participation in both programs, section 1910(c)(2) deals only
with the
effect of that determination on the Medicaid agreement. The
decision
discusses alternative explanations of why Congress included the
phrase
to show why we do not think the phrase evidences an intent to
restrict
the provision solely to Medicaid-only facilities.
The statement in the decision that the language of subsection (c)(2)
is
"broad enough to cover both situations described in section
1910(c)(1)"
means that the more general language of subsection (c)(2) covers
the
specific situations described in subsection (c)(1); i.e., both a
new
"look behind" situation and termination of a Medicare agreement.
The discussion of the legislative history showed how that history
was
consistent with the plain meaning of the statute, contrary to
HCFA's
argument that Congress' sole purpose in enacting the 1980
legislation
which included section 1910(c) was to expand the Secretary's
authority.
HCFA's Allegation:
Faced with two alternative and possible readings of
a statutory
provision, the Board has decided that
it, rather than HCFA, should
make this highly
important Medicaid policy for the Department.
But
the Board is certainly not the intended
policymaker for the
Department. Nor is it the
expert agency in this area. The
principle of
deference to the agency with the programmatic
expertise, while perhaps not directly applicable in the case
of
administrative proceedings within the Department,
is nevertheless a
sound approach.
Analysis: We agree that the Board is neither the intended
policymaker
for the Department nor the expert agency in this area, and that
the
principle of deference to agency programmatic expertise is a
sound
approach for the Board .to take. It does not automatically
follow,
however, that the Board must adopt every interpretation advanced by
HCFA
in a Board proceeding irrespective of whether that
interpretation
comports with the statutory language and with HCFA policy
articulated
elsewhere.
HCFA's Allegation:
Moreover, while the Board's decision is thoughtful
and even
creative in coming up with possible ways to
read the legislation in
opposition to HCFA's
interpretation, HCFA submits that the Board's
or a
state's ability to devise alternatives to HCFA's
position
should not be outcome determinative.
Rather, when there are
alternative readings, the
programmatic agency should be the body
entitled to
select the Department's policy. And even assuming
that
the Board has the power to make policy not only
to fill in the
interstices where Congress and HCFA
have not acted but even in
cases like this one where
HCFA has already developed policies and
regulations
consistent with the law, we submit that the Board
should use restraint in exercising any such policymaking power
and
should overturn HCFA's Medicaid interpretations
only when another
reading is far more compelling
than has been established here. In
subsequent
sections, we discuss in greater detail why HCFA's
interpretation is the one that best comports with the
legislative
intent and the legislative history, that
best gives effect to 1972
and 1980 legislation, and
that advances sound programmatic goals
while
remaining true to Congress' language.
Analysis: We agree that if there are alternative reasonable
readings,
the programmatic agency should be entitled to select the
Department's
policy. HCFA's reading advanced here is not a reasonable
alternative,
however. For reasons explained above, we conclude that the
plain
meaning of the statute controls; thus, we are bound to apply it.
In
doing so, we are not engaging in policymaking, but simply giving
effect
to the policy established by Congress.
.Issue: Whether the Board Improperly Restricted the Intended Effect
of
Controlling Regulations
HCFA's Allegation:
HCFA relied on longstanding, validly promulgated
regulations as the
basis for its conclusion that FFP
was unavailable to the state once
the Secretary,
under his Medicare authority, had denied or
terminated the SNF provider agreements of the three facilities
in
question. Given these circumstances, under
42 CFR 442.20, the
state was obliged to deny or
terminate those facilities' Medicaid
provider
agreements and, thus, the facilities neither had
proper
certification nor could they have valid
provider agreements. The
Board maintained,
however, that 42 CFR 442.20 did not address the
relevant issue in this case, which the Board said was
whether
1910(c)(2) nevertheless continued those
facilities' Medicaid
provider agreements until after
a hearing. After the Board's
decision, 42 CFR
442.20 has substantially less effect than HCFA
intended in its promulgation. For example, in proposing
the
clarification to the regulation governing state
action in the case
of dual-program facilities whose
Medicare provider agreements were
denied or
terminated, the Department specifically noted that
FFP
for dual-program facilities would end with the
date specified by
the Secretary as the ending date
of the Medicare agreement. See 42
Fed. Reg.
3665, 3666 (January 18, 1977); see also,
Woodstock/Kenosha (where the issue was whether HCFA could deny
FFP
as of the Medicare nonrenewal date in the case
of a dual-program
facility).
Analysis: The cited preamble statement from the proposed rules is
not
evidence that HCFA had a longstanding interpretation of 42 C.F.R.
442.20
as precluding FFP pending a provider appeal. The preamble to the
final
rules stated that the Agency had decided not to issue final rules on
the
question whether FFP in payments to facilities should be
continued
throughout the hearing process. 44 Fed. Reg. 9749 (February
15, 1979).
Indeed, an Agency submission in this case confirmed that "final
rules on
the general availability of FFP after termination were deferred
for
fuller development." Agency's July 31, .1987 submission, p.
2.
Woodstock/Kenosha was based on the 1975 regulation, issued prior to
the
time when the Department was considering what its policy should be
with
respect to continuing FFP during provider appeals. These
regulations,
of course, preceded section 1910(c).
HCFA's Allegation:
That regulatory intent has never been
disavowed. Even after
section 1910(c)(2) was
enacted, HCFA has always considered 42 CFR
442.20 to
have a scope and effect (including an FFP effect)
separate and apart from the "look behind" provision.
This
distinction between the Secretary's
dual-program authority and the
look behind authority
has been reaffirmed in very recent regulatory
packages cited to the Board in prior submissions. After
enactment
of section 1910(c)(2), HCFA and also the
State of Illinois
continued to operate with respect
to dual program facilities just
as they had before
enactment of section 1910(c)(2). See Lake
Bluff
Health Center, Inc. v. Schweiker, No. 81 C
5100 (N.D. Ill. Sept.
25, 1981, reprinted in
Medicare and Medicaid Guide (CCH)(1981-2
Transfer
Binder) paragraph 31,525). Significantly, after
enactment
of section 1910(c)(2), HCFA published
notice that it considered the
"look behind"
authority to be self-executing; it did not find that
any of its pre-existing regulations were affected by
this
additional authority and it did not see a need
to create additional
regulations. The Board
concluded from this notice that HCFA had
not acted
to interpret 1910(c)(2). We submit that HCFA's
announcement that no additional action was needed either
to
effectuate the new look behind or, by direct
implication, to
operate under its current
regulations in light of the new provision
does
constitute significant "action." The decision suggests
that
HCFA must more explicitly announce that there
is nothing new to
announce or it will lose its
ability to act in accordance with its
statutory
interpretations and existing regulations. We urge
the
Board to reexamine this directive: no
agency can be expected to
explicitly and publicly
disavow every interpretation that a grantee
could
devise that is an alternative of HCFA's views; it makes
far
more sense to hold grantees to the terms of
existing regulations
unless and until such
regulations are disavowed by the agency.
Analysis: The decision does not stand for the proposition that
the
Agency must explicitly and publicly disavow any alternative readings
of
a regulation in order to preclude reliance on them. The point
being
made was that HCFA's notice that it considered section 1910(c) to
be
"self-implementing" supports, rather than undercuts, the view that
the
plain meaning of that section governs. Moreover, HCFA had
not
previously interpreted section 442.20 as always requiring termination
of
Medicaid FFP on the effective date of the Secretary's
Medicare
determination; thus, contrary to what HCFA argued, the preamble
state-
ment that the "look behind" provision in sections 1902(a)(33)(B)
and
1910(c) was "self-implementing" could not act to confirm such
an
interpretation.
HCFA's Allegation:
The Board's decision emasculates a whole series of
regulations.
The decision either wipes out 42 CFR
442.20 entirely or severely
limits the intended
effect of 42 CFR 442.20 to situations involving
facilities where the Secretary has found an "immediate threat"
to
patient health and safety, a limitation wholly
absent from the
regulation. The decision
emasculates the intended effect of 42 CFR
442.153(d)
which provides that in the case of facilities that
have
sought and been denied Medicare participation,
the Medicare hearing
procedures govern and not the
Medicaid procedures; that regulation
was intended to
assure that such facilities obtain Medicare
post-termination hearings regardless of the Medicaid
appeal
procedures, thus assuring coterminous
Medicare and Medicaid
participation. The
Board's decision, however, effectively wipes
out
that regulation too since the Board (at p. 16) says that
the
Secretary can effectuate coterminous Medicare
and Medicaid
participation only in the event of
"immediate and serious threat"
[to]
facilities. That regulation is not by its terms and intent
so
restricted. Nothing in the normal Medicare
procedures to which 42
CFR 442.153(d) refers require
the Secretary to make a written
determination that
there is an "immediate threat" or require a
Secretarial certification that the facility had notice of
its
deficiencies and an opportunity to correct them,
as is the
procedure required in the event of action
under the "look behind."
We also note that the Board
is incorrect in its assumption that the
Secretary
made the required "immediate threat" findings in the
Lake
Bluff case. There the Secretary made the
typical Medicare
termination finding that the
facility did not meet all of the
Conditions of
Participation and thus jeopardized the patients
health and safety; that assuredly is not the "immediate
threat"
finding required in look behind cases.
Analysis: HCFA's allegation regarding the effect of the decision
on
HCFA regulations is premised on HCFA's arguments in this case about
what
those regulations did --arguments which stated a view we
found
conflicted with HCFA's previously established policy.
We find no support for the Agency's broad reading of section 442.20
as
always requiring coterminous participation. The notice given by a
state
pursuant to that section will generally end Medicaid participation
on
the effective date of whatever Medicare action has been taken, but
HCFA
itself has recognized exceptions to this. The suggestion in a
footnote
to the decision that the Agency's reading of section 442.20(b) can
be
reconciled with section 1910(c) (by limiting its application to
those
cases where the Secretary has found an immediate and serious threat
to
patient health and safety) merely indicated another reason why we
did
not agree with the State that section 1910(c) required repeal of
the
regulation, nor with HCFA that the choice not to delete the
regulation
was significant.
Section 431.153(d) merely provides that Medicare hearing procedures
govern
and that the decision made in the Medicare hearing is binding for
purposes of
Medicaid participation. The Board's decision does not
affect this
regulation. Moreover, the regulations governing Medicare
hearing
procedures support the Board's conclusion that the plain
language of section
1910(c)(2) covers the determinations here. Section
405.1510 uses
language parallel to section 1910(c)(2), referring to
appeals procedures for
a facility "which is dissatisfied with an initial
determination (see section
405.1502) that it does not qualify as a
provider of services; . . ."
The .appealable determinations under
section 405.1502 include a
determination, upon request, about whether a
facility qualifies under the
applicable provider definition, as well as
a determination terminating a
provider agreement. Like section
1910(c)(1), such determinations are
not limited to decisions based on
certification surveys.
We did not "assume" that the Secretary had in fact made any
"immediate
threat" findings in the Lake Bluff case; we stated (as one reason
why we
did not find the decision in that case persuasive) that the
court's
analysis was premised on the view that there had been a finding
of
immediate threat. The court described the situation as one where
"there
has been a decision that immediate jeopardy exists." HCFA's
appeal
file, Ex. B, p. 17. In a footnote, the court quoted HCFA
letters
referencing the serious threat to health and safety, concluding that
the
absence of the specific words "immediate jeopardy" was
insignificant.
HCFA's appeal file, Ex. B, p. 18.
HCFA's Allegation:
Moreover, despite 42 CFR 442.153(d), the Board holds
that the
Medicaid provider agreement of a
dual-program facility continues
pending a hearing
even though the Medicare provider agreement ends.
The Board's decision thus brushes aside the requirements
for
"coterminous" participation, which requirement
is statutory in
origin. See Woodstock/Kenosha
and our argument below disputing the
panel's
contention that Congress modified the Secretary's
pre-existing statutory authority and the regulations
implementing
that authority.
Analysis: The basic rationale of Woodstock/Kenosha is that
section
1910(a) requires that "the certifications are to be coterminous"
because
"Medicaid certification is dependent on Medicare certification"
for
SNFs. HCFA's appeal file, Ex. 6, pp. 50-51 (emphasis added).
This
rationale supports the Board's conclusion that HCFA's Medicare
actions
here were determinations that the facilities no longer qualified
for
Medicaid, within the plain meaning of section 1910(c)(2). The
Board's
decision does not ignore or undercut HCFA's authority under
section
1910(a) to make certification decisions for SNFs, nor does it
modify
HCFA's authority under 42 C.F.R. 442.153(d) to render
final
certification decisions.
HCFA's Allegation:
Further, the Board's decision negates 42 CFR 442.11
which
specifically provides that, in cases where the
state Medicaid
agency terminates a provider
agreement when services provided do
not meet the
applicable definitions (i.e., when the facility does
not comply with the requirements for certification), FFP ends
on
the date specified by the Secretary for Medicare
(with certain
limited exceptions not pertinent
here). (We discuss below the
Board's
contention that it can create exceptions to permit
continuation of FFP because HCFA has done so). Regulatory
section
42 CFR 442.11 applies here since the state
under 42 CFR 442.20
takes the action against the
facility. This regulation is directly
applicable and explicitly mandates the cut off of FFP;
this
regulatory mandate is inconsistent with the
Board's decision. By
ignoring or overruling
this directly applicable regulation, the
Board has
overreached its authority. 45 CFR 16.14.
Analysis: The Board agrees that, pursuant to 45 C.F.R. 16.14, it
is
bound by all applicable laws and regulations. Section 441.11 (which,
we
assume, is the regulation which HCFA meant to cite since there is
no
section 442.11) is not applicable here, however. It
establishes
conditions under which a state agency which has terminated a
facility's
provider agreement may receive FFP for a 30-day period after
termination
on the basis that it is making reasonable efforts to transfer
patients.
While the regulation states that FFP may be continued on this basis
for
no more than a 30-day period after termination or expiration of
a
Medicare agreement, to read it as precluding allowing FFP on some
other
basis (such as a two-month extension under 42 C.F.R. 442.16 or
a
provider appeal under PRG-11) would be inconsistent with HCFA's
own
policies. We also note that two of the facilities here did not have
any
Medicare agreement.
Issue: HCFA's Interpretation Best Effectuates Congressional Intent
HCFA's Allegation:
The Board in Decision 920 made several very
significant policy
calls, altering longstanding
policies and regulations. It has done
this
even though HCFA's reading of section 1910(c)(2) is
plausible
and consistent with those pre-existing
policies and with and [sic]
the full import of the
Department's validly promulgated regulations
and
also is an interpretation that is in fact more compelling
than
the alternative selected by the Board.
HCFA's interpretation
should prevail because it
gives maximum effect to the entire
statutory scheme
while remaining consistent with Congress' intent
and
language in enacting the 1980 amendments.
Analysis: The Board did not alter any longstanding Agency policies
or
regulations. As we explained above, the interpretation of the
statute
which HCFA advanced here conflicts with the plain meaning of the
statute
and ignores key aspects of the statutory scheme, such as
the
relationship between sections 1910(c)(2) and 1910(c)(1). It
was,
moreover, based on a view of the statutory scheme -- as always
requiring
coterminous participation -- which was in conflict with
policy
previously established by HCFA.
HCFA's Allegation:
The legislative history of the "look behind"
provision states that
Congress wanted to expand the
Secretary's authority to deal with
noncomplying
facilities, and Congress said that it wanted to
assure
that noncomplying facilities do not receive
federal funds:
Under current law, the authority to determine
whether
an SNF or ICF that participates in medicaid but
not
medicare meets the requirements for participation
in
medicaid lies solely with the State medicaid
agency.
Based on current limited authority, the Secretary
has
issued regulations directed at assuring that
States
have followed Federal standards and norms in
carrying
out their survey and certification
programs. However,
the Committee is concerned that,
without the authority
to validate State agency compliance
reviews and to
make an independent judgment as to the
extent of
compliance in particular facilities, the
Secretary
lacks the means necessary to assure that
Federal
matching funds are being used to reimburse only
those
SNFs and ICF that actually comply with
medicaid
requirements.
H.R. Rep. No. 86-1167, 96th Cong., 2nd Sess. 57,
reprinted in 1980
U.S. Cong. & Ad. News 5570
(emphasis added). The Board's
interpretation,
however, permits noncomplying facilities to receive
Medicaid money even beyond what they would have received prior
to
the enactment of the new look behind provision,
and it restricts
the Secretary's pre-existing
authority.
Analysis: The quoted legislative history pertains specifically to
the
new authority to "look behind" state surveys of
Medicaid-only
facilities. Congress clearly had other purposes in
enacting the 1980
amendments, however. The same committee report refers
to the section as
authorizing the Secretary "to 'look behind' a state's
survey of an ICF
or SNF and . . . to terminate the participation of the
facility in
medicare and medicaid" (emphasis added).
While Congress was concerned about assuring facilities' compliance
with
applicable requirements, Congress clearly did not intend an
immediate
cut off of funds whenever any noncompliance was found. The
intermediate
sanction provision permits funding for patients already admitted
to a
noncomplying facility. Further, the conference report states:
. . . it is intended that Federal financial
participation be
continued with respect to medicaid
patients of a facility
decertified by the Secretary
during such reasonable time as is
required to effect
the transfer of medicaid patients from the
facility. Further, the conferees note that it is not the
intention
of this provision to alter the access to a
full evidentiary hearing
before decertification of a
facility occurs, as provided under
current law.
Section 1910(c)(2) specifically provides for continuation of a
Medicaid
provider agreement pending appeal where there is no immediate
threat.
Having concluded that HCFA had determined that each of the facilities
in
question "no longer qualifie[d] as an [SNF] for purposes of"
Medicaid,
the Board was bound by section 1910(c)(2) to reverse the
disallowances
irrespective of whether the facilities were in compliance
during the
appeal period.
HCFA's Allegation:
The Board never says that HCFA's interpretation is
inconsistent
with Congressional intent (as indeed it
can not given the
legislative history quoted above);
the Board instead struggles to
show how its
preferred interpretation can also be said to be
consistent with legislative intent. To find this consistency,
the
Board resorts to comments made in parts of the
legislative history
dealing with provisions other
than section 1910(c)(2). HCFA
submits that the
Board's explications of the legislative history
are
wrong, taken out of context and/or are irrelevant to the
intent
of section 1910(c).
Analysis: While the Board did not explicitly state that
HCFA's
interpretation was inconsistent with congressional intent,
that
conclusion is necessarily implied from the Board's discussion of
the
plain meaning of the statute, which is the best evidence
of
congressional intent and which governs unless contradicted by
the
legislative history. As noted previously, the legislative history
was
examined primarily to determine whether there was anything
which
contradicted the plain meaning of the statute. The Board found
that the
legislative history did not directly address the scope of
section
1910(c)(2). The Board nevertheless found that its reading of
section
1910(c)(2) (based on the plain language) was consistent with
the
legislative purpose behind other parts of the 1980 amendments.
HCFA's Allegation:
The Board first finds a legislative intent to
provide
"alternatives" (Decision pp. 16-17,
18). HCFA submits that the
Board has totally
misread the legislative history regarding the
"alternative" discussed by Congress. The Board almost seems to
be
saying that because Congress mentioned the word
"alternative," then
anything that is an alternative
to the pre-existing system is
consistent with
legislative intent. But Congress's discussion
was
far more specific and does not support the view
expressed in
Decision 920.
Analysis: The Board found that, in delaying the termination of
the
Medicaid provider agreement until it was finally determined whether
the
facility met applicable requirements, section 1910(c)(2) was
consistent
with congressional concerns about the problems of scarce Medicaid
beds
and transfer trauma. The Board did not imply that any alternative
to
the existing sanction of outright termination of Medicaid
participation
was consistent with legislative intent. HCFA's
Allegation:
Initially, we note that in 1980 Congress enacted
both the new "look
behind authority" and also
provisions entitled "alternative to
decertification
of long term care facilities." The provisions
were
adopted as separate statutory provisions
although they were
discussed together in the
legislative history (other than in
introductory
paragraphs, however, the separate provisions are
discussed in separate paragraphs within the legislative
history).
Congress's call for an alternative to
decertification was obviously
the legislative
background of the Medicare provision that created
the "alternative sanction" (i.e., denial of payment for
patients
admitted after a specified date in certain
situations at the
Secretary's option) and of the
parallel Medicaid provision giving
the states this
same alternative authority. "Alternatives" to
decertification played no part in the Congress' discussion of
the
separate "look behind" authority which became
section 1910(c)(2).
We submit that the Board created
an alternative Congress neither
authorized nor
wanted.
Analysis: The Board acknowledged in the decision that the House
Report
on the 1980 amendments referred only to the denial of payment
for
patients admitted after a specified date as an intermediate,
or
alternative, sanction. The Board merely stated that the option
of
decertifying while continuing Medicaid payments under the
provider
agreement pending appeal was another alternative to outright
termination
and thus consistent with the underlying purpose of the
intermediate
sanction. This purpose has some relevance to section
1910(c)(2) since
the provisions were enacted at the same time, as part of the
same
section of the 1980 amendments, and were discussed together in
the
relevant committee reports.
The "look behind" authority did not become section 1910(c)(2);
that
authority is established in sections 1902(a)(33)(B) and 1910(c)(1).
HCFA's Allegation:
Moreover, the Board's interpretation of the new look
behind statute
codified at section 1910(c)(2) does
not create an "alternative to
decertification"; it
creates rather an alternative to loss of FFP.
Indeed, the Board decision maintains that FFP continues because
of
1910(c)(2) even in the face of
decertification. The effect of
1910(c)(2) as
the Board interprets it can hardly be characterized
as an alternative to decertification when it occurs in the event
of
decertification.
Analysis: In enacting section 1910(c)(2), Congress obviously
determined
that there were some circumstances where Medicaid funding should
be
provided pending appeal of a decertification decision. This is
an
alternative to immediate termination and moderates the harsh effects
of
outright termination mentioned in the legislative history, i.e.,
the
need to immediately move the patients out of the facility,
irrespective
of the availability of beds or the effect on the patients.
HCFA's Allegation:
The Board also cites to a legislative intent (which
it admits is
not expressed in connection with the
new look behind provision) to
avoid moving patients
(to prevent "transfer trauma") and to do
something
about the shortage of SNFs. The decision suggests
(see
p. 16 and also p. 7) that paying FFP to states
for facilities whose
agreements have been denied or
terminated under Medicare by the
Secretary will
effectuate legislative intent by preventing transfer
trauma. While HCFA agrees that the Board's interpretation
will
surely discourage patient transfers out of
unqualified facilities,
we strongly disagree with
the Board's suggestion that an
interpretation
keeping patients in decertified facilities satisfies
any congressional intent. Congress in 1980 acted to give
the
Secretary greater power to rid the Medicaid
program of noncomplying
facilities, not to retain
patients in such facilities to avoid
"transfer
trauma" or to maintain a large number of SNF beds.
Not
only has the Board confused the legislative
intent of separate
statutory enactments
("alternative sanction" and the "new look
behind"),
but it has advanced a wholly incongruous result as
the
purported intent of Congress.
.Analysis: Even under the reading HCFA advanced here,
section
1910(c)(2) permits Medicaid patients to remain in facilities which
HCFA
has determined pursuant to its "look behind" authority no longer
qualify
as SNFs or ICFs. If keeping patients in noncomplying facilities
is "a
wholly incongruous result," then the Agency's reading of
section
1910(c)(2) as well as the Board's reading would be flawed on this
basis.
HCFA's Allegation:
HCFA recognizes that under its interpretation of
1910(c)(2), a
Medicaid-only facility whose Medicaid
agreement is directly
affected by the Secretary's
action pursuant to his "new look
behind" authority
does obtain continuation of its provider
agreement,
which in turn makes it likely that the facility's
patients will not be transferred until after a hearing. The
Board
suggests that there is no reason why there
should be differences in
result for Medicaid-only
and dual program facilities. HCFA submits
that
a different outcome for dual-program facilities is
well-supported by the legislative history. Prior to 1980
the
Secretary had no real authority to deal with
Medicaid-only
facilities. Thus, even though
after 1980 such facilities stay in
Medicaid until
after a hearing, this still represents a distinct
improvement over the pre-existing system when the Secretary
could
never cut off payment. This expansion of
the Secretary's authority
is what Congress was
striving for, not the incidental consequence
that
some patients will likely not be transferred to a
certified
facility.
Analysis: The Agency justifies the "incongruous result" referred
to
above in the case of Medicaid-only facilities on the ground
that,
overall, the Secretary's authority with respect to such facilities
was
expanded. The result can be justified in the case of
facilities
participating in both Medicare and Medicaid on the ground that
other
legislative goals were served. As noted in the decision, the
plain
language and legislative history show that the purpose of
the
legislation was not simply expansion of the Secretary's
authority
without regard to other considerations.
HCFA's Allegation:
Moreover, there is a sound programmatic reason that
is fully
consistent with the legislative history
that explains why Congress
would opt for
pre-termination hearings only in the case of
Medicaid-only facilities, but not in the case of
dual-program
facilities. Congress understood
that the state agency is primarily
responsible for
Medicaid-only facilities. Congress, therefore,
logically chose to extend the provider agreement only
for
Medicaid-only facilities because it recognized
that in these cases
there was an official dispute
regarding certification status
between the state
Medicaid agency, which normally makes the
controlling certification decisions for such facilities, and
the
Secretary. Because the normally
controlling decision of the state
is in dispute,
Congress authorized a hearing to resolve the
conflict between the administering agency's finding
of
certification and the Secretary's opposite
finding. But in the
case of dual-program
facilities like those involved in the instant
case,
there should (because of section 1910(a) and 42 CFR
442.20)
be no difference in the state's and
Secretary's certifications as a
matter of law (if
not fact); the Secretary's decision on the
Medicare
side in such cases forces the state to take similar
action
on the Medicaid side. And, in any
event, Congress had in 1972
already resolved that
for dual-program SNFs, the Secretary's
decision was
primary.
Analysis: As the Board's decision points out, the "look
behind"
authority is not limited to those situations where HCFA disagrees
with
the state agency about a facility's certifiability. The
state's
decision to certify a facility is based on a survey conducted at
a
specific point in time. The "look behind" determination may be based
on
changed conditions in the facility prior to a new state survey, in
which
case it would not directly challenge the state's certification.
Thus,
the alleged distinction between Medicaid-only and
dually-certified
facilities cannot be justified on the basis that there is an
official
dispute between the Secretary and the state agency where the
Secretary
finds the former facilities no longer qualified as SNFs but not
where
the Secretary finds the latter no longer qualified.
Under section 1910(c)(2) as applied by the Board, the Secretary's
decision
that a facility no longer qualifies as an SNF is primary, or
controlling;
however, Medicaid funding is continued until his decision
is final.
HCFA's Allegation:
HCFA recognizes, of course, that the state agency
may not always
want to take Medicaid action against
the facility as required by 42
CFR 442.20, but any
unofficial disagreement can have no force and
effect
in such situations; it is official actions upon
which
certifications and provider agreements are
based. The state is
bound to act to assure
that there is coterminous participation of
such
SNFs. Consequently, in the case of dual-program SNFs there
is
no state-federal conflict to be resolved.
Analysis: Congress did not require either an official or an
unofficial
dispute as a prerequisite for application of section
1910(c)(2). While
the possibility of a dispute may logically explain
why Congress chose to
enact section 1910(c)(2), it is not logical to conclude
that that
possibility exists only for Medicaid facilities which have not
applied
for Medicare certification.
HCFA's Allegations:
HCFA urged below that some cognizable disagreement
must be present
before the Secretary can even invoke
the "look behind" authority,
but the Board found no
authority, apart from the Lake Bluff
decision, that
supports HCFA's contention. On the contrary,
HCFA's
position is supported by Congress's enactment
which specifically
limits the Secretary's "look
behind" authority to situations where
the Secretary
has "cause to question" the state's determination.
Social Security Act section 1902(a)(33)(B). Again Congress
was
careful to maintain the state's position as the
primary certifier
for Medicaid-only facilities and
to assure that the Secretary does
not interject
himself into purely Medicaid situations without
adequate reason. This same concern also supports the
continuation
of a Medicaid-only facility's provider
agreement based on the
state's certification.
Analysis: Section 1910(c)(1) provides for canceling approval
either
based on the section 1902(a)(33)(B) authority or based on grounds
for
termination of a Medicare agreement under section 1866(b). The
latter
does not require that there be a cause to question Medicaid
actions.
Moreover, as indicated above, merely because the Secretary has "cause
to
question" a facility's Medicaid certification does not mean that
there
is a dispute between the Secretary and the state agency. Under
HCFA's
view, a facility and state would be in a worse position where the
"cause
to question" a facility's Medicaid certification arose based on
a
federal survey initiated in response to the facility's
voluntary
application for Medicare than if the survey resulted from a
consumer
complaint about the facility. This distinction appears to be
wholly
arbitrary.
HCFA's Allegation:
When the Secretary in fulfilling his responsibility
for making
certification decisions for Medicare
finds noncompliance (as was
the case here), the
Secretary is not interfering in purely Medicaid
affairs; this is not a "look behind" situation. The Secretary
is
simply performing his primary job to certify all
facilities that
apply to him for SNF
certification. With the three facilities
here,
no official conflict existed between the state and
federal
certifications (although the Board finds a
conflict of sorts in the
fact that the state had
certified the facilities and the Secretary
did
not). The Board decision states that it covers
all
circumstances where the Secretary's action
affects a dual-program
facility. Under
Decision 920, then, even in those common
situations
where the Secretary terminates a dual program
facility
upon the specific recommendation of the
state acting as the
Medicare survey agency, that
dual program SNF now obtains a
pre-termination
hearing. Such a result is surely unwarranted
and
it can find support nowhere in the legislative
intent of section
1910(c)(2).
Analysis: Section 1910(c)(1) clearly indicates that Congress saw
a
relationship between the Secretary's "look behind" authority and
the
Secretary's authority to determine if a dual-program facility
qualifies
as an SNF. In either case, the Secretary may cancel approval
of a
facility which has been participating in the Medicaid program.
When the
Secretary acts to cancel approval of a facility, section
1910(c)(2)
applies; the absence of any official conflict between the state
agency
and the Secretary is irrelevant.
HCFA's Allegation:
In short, virtually no legislative rationale is
served by the
Board's interpretation and in fact
many consequences adverse to the
Secretary's
enforcement efforts flow from Decision 920.
HCFA
submits that the Board should reconsider its
decision paying
particular attention to the
rationale behind section 1910(c)(2).
Decision 920
simply places undue reliance on what the Board
perceives as the plain language of the statute. As the
Seventh
Circuit's decision in Woodstock/Kenosha
notes, however,
interpretations that may seem to
make the most sense out of the
plain language are
not necessarily those that best reflect the
rationale behind the provision; and effectuating the
statutory
rationale is the primary object of
statutory interpretation. Such
advice is
particularly sound in the case of omnibus budget
enactments like 1980 legislation where, because Congress is
trying
enact so much at one time (e.g., in 1980 the
legislation affected
virtually every spending
program from defense to school lunches)
the
statutory language may be far from perfect. In
Woodstock/Kenosha, the state and facility argued that HHS could
not
disallow FFP in the case of a SNF whose Medicare
agreement was
nonrenewed by the Secretary but the
state failed to nonrenew its
Medicaid agreement for
the same duration; the state and facility
argued
that the controlling regulation, an earlier version of
42
CFR 442.20, did not use the word "nonrenewal" and
a subsequent
regulation that did use the word
"nonrenewal" mentioned that the
change was an
"expansion" of the Secretary's authority. The
Court
concluded that the most important
consideration was the legislative
intent and the
Secretary's intent to require coterminous Medicare
and Medicaid agreements for SNFs so that the presence or absence
of
the word "nonrenewal" was not crucial. The
Board here should
similarly uphold that
interpretation that best advances the stated
legislative intent of section 1910(c). And that is
HCFA's
interpretation, not the state's.
Analysis: We agree that interpretations that may seem to make the
most
sense out of the plain language are not necessarily those that
best
reflect the rationale behind the provision. Here, however, there
is no
evidence that Congress had a rationale inconsistent with the
plain
meaning, and the plain meaning is consistent with the
legislative
purpose underlying related provisions.
The Board in DGAB No. 920 did not reject the Agency's interpretation
on
the ground that the statutory language was imperfect and
contained
ambiguities; rather, the Board found that interpretation conflicted
with
the plain language of the statute and, thus, with the only
stated
legislative intent.
Issue: Whether the Board's Decision Improperly Modifies
Statutory
Authority
HCFA's Allegation:
Nothing in the 1980 legislative history even
remotely suggests that
Congress intended to undo its
1972 enactments regarding
dual-program SNFs or that
it wanted to modify the policies and
regulations
implementing the 1972 legislation that had for years
governed provider agreements, certification status, and
FFP
available with respect to dual-program
SNFs. Yet such far-reaching
changes are
wrought, not by the will of Congress, but by Board
Decision 920.
Analysis: Since section 1910(c)(2) is clear on its face, the absence
of
an explicit explanation in the legislative history is not
important,
particularly since the section is consistent with legislative
goals of
related provisions. HCFA's allegation that DGAB No. 920
modifies Agency
policies and regulations is unsupported.
HCFA's Allegation:
HCFA's interpretation, not the state interpretation
adopted in the
Board's decision, gives full effect
to both Congress's prior action
and the 1980
enactment. The Board's decision provides no
reasonable basis for implying a repeal of Congress's
earlier
legislation. The Board's decision
claims that the 1980 legislative
history's mention
of the effect on Medicaid-only facilities was
"not a
complete explanation." This hardly seems an adequate
basis
to imply modification of an unmentioned prior
statute or to
overturn years of HCFA policy.
Analysis: The effect of section 1910(c)(2) as applied by the Board
is
not to repeal earlier legislation; rather, the Board's decision
gives
full effect to section 1910(a) by recognizing HCFA's role in
determining
whether a facility qualifies as an SNF for purposes of both
titles.
The Board merely found that HCFA's reliance on one statement in
the
legislative history was misplaced; it did not regard this as a
license
to attribute a meaning other than the plain meaning to
section
1910(c)(2). Notably, HCFA does not dispute the Board's
conclusion
regarding the limited nature of the statement HCFA quoted from
the
legislative history.
HCFA's Allegation:
In enacting the 1980 legislation, Congress
recognized the
distinction between Medicaid-only and
dual-program SNFs and
indicated no intent to change
existing law mandating that Medicare
and Medicaid
SNF participation be coterminous and no intent to
alter the exclusive applicability of the post-termination
Medicare
appeals procedures to both Medicare and
Medicaid participation of
dual-program
facilities. The House Commerce Committee
explained
that "under current law, the authority to
determine whether [a
facility] that participates in
medicaid but not medicare" means
that Medicaid
participation requirement "lies solely with the
State
medicaid agency." This statement surely
indicates that Congress
was aware of the different
authority with respect to facilities
also
participating in Medicare. Congress recognized that in
such
cases the state did not have the authority it
had in Medicaid-only
cases; rather, the state was
required under existing law to make
Medicaid
participation consistent with the Secretary's decision
on
Medicare participation. It follows that
Congress was also aware
that under existing law (42
CFR 442.153(d)), the Medicare
post-termination
review procedures would be binding for purposes of
Medicaid participation, notwithstanding state law provisions
for
pre-termination hearings in the case of
Medicaid-only facilities.
Nothing in either the
statute or the legislative history suggests
that
Congress intended to change this longstanding
scheme,
particularly in view of the fact that
Congress did not modify
section 1910(a) which, as
interpreted by the Seventh Circuit in
Woodstock/Kenosha, requires that a facility's
Medicaid
participation (and FFP) would be
coterminous with Medicare
participation. The
pre-termination hearing provisions of
1910(c)(2)
were intended to provide a Medicaid-only facility a
forum to challenge a decertification in the face of an
official
dispute between the Medicaid agency and the
Secretary, each of whom
had after 1980 certification
authority. The Board in Decision 920
has newly
conferred on the states separate authority to
determine
the Medicaid participation of dual-program
facilities. Indeed, at
page 15 of its
decision, the Board states that "We see no reason
why a state's certification of a facility as eligible
to
participate in Medicaid should be entitled to
less deference merely
because the facility
participates in Medicare as well." This
statement simply turns on its head the longstanding
statutory
authority of the Secretary in dual
facility situations which
Congress clearly
recognized in the 1980 legislative history.
Analysis: The Board's decision does not disturb the
Secretary's
authority to determine whether a dually certified facility is
qualified
as an SNF under both titles XVIII and XIX. It merely means
that
Medicaid funding continues until the determination is final.
Similarly,
DGAB No. 920 does not "confer on the states separate authority
to
determine the Medicaid participation" of such a facility.
Section
1910(c)(2) gives the states no substantive authority; the
Medicaid
provider agreement simply remains in effect pending an appeal
by
operation of law.
As indicated earlier, the court's recognition in Woodstock/Kenosha of
the
coterminous nature of Medicare and Medicaid certification supports
the
Board's conclusion that, in terminating or denying Medicare
participation,
HCFA here determined that the facilities no longer
qualified for Medicaid so
that section 1910(c)(2) applies. Furthermore,
as DGAB No. 920 points
out, when section 1910(c)(2) applies, Medicaid
certification ends at the same
time as Medicare certification; section
1910(c)(2) merely extends Medicaid
funding under the provider agreement.
The meaning of section 431.153(d) was addressed above.
HCFA's Allegation:
The Board compounds this error by finding that when
the Secretary
denies a Medicare application by a
Medicaid facility, this operates
as a "look behind"
with respect to the state's prior Medicaid
certification. (Decision p. 10). The Board reasons that in such
a
case, the Medicare application is merely the
"impetus" for the look
behind of the state's
Medicaid certification. But the Secretary is
simply carrying out his statutory responsibility to act on
the
facility's request for Medicare participation,
not setting out to
look behind the state's Medicaid
certification. Moreover in the
case of
dual-program facilities, it is the facility that seeks
out
the Secretary's certification; it is not the
Secretary trying to
interject himself into the
state-facility relationship. The fact
that
once the Secretary in his Medicare capacity determines
that
the facility does not meet SNF certification
standards, the state
(and not the Secretary as the
Board suggests in the last line on
page 10 of the
decision) then terminates the facility's Medicaid
participation as required by law does not equate to a look
behind
by the Secretary.
Analysis: The Board found that when the Secretary denied a
Medicare
application by a Medicaid facility, this was in effect an exercise
of
his "look behind" authority regardless of the label applied.
The Board stated that section 1910(c)(2) covers the situation where
the
Secretary "cancels approval" of a Medicaid facility which has
applied
for Medicare participation; it is irrelevant whether the
Secretary
himself terminates the facility's Medicaid participation in
this
situation or requires the State to do so.
HCFA's Allegation:
Typically, sections 1910(a) and 42 CFR 442.20 apply
to situations
where a facility applies for Medicare
and Medicaid at the same time
or the facility is
currently participating in both programs, rather
than where the facility is participating in Medicaid and
then
applies for Medicare. But this does not
permit an inference that
the basic principle of the
statutory scheme -- that a facility
cannot
participate in Medicaid when the Secretary has
determined
that it does not meet the identical
Medicare standards -- has no
force when the
Secretary is acting on the Medicare application of a
Medicaid facility. The Board's suggestion (p. 11) that
the
facility whose Medicare application is denied
remains a
Medicaid-only facility and hence is not
subject to this principle
is a bootstrap
argument. By the same token, it could be
argued
that when the Secretary terminates a dual
facility's Medicare
agreement, that facility becomes
a Medicaid-only facility. This
suggestion is
simply untenable, unwarranted, and certainly
undesirable. The Board should reconsider whether it can
(or
should) imply a repeal or restriction of the
Secretary's
pre-existing statutory authority to deal
with dual-program
facilities, especially since
Decision 920 offers such limited
support for this
proposition.
Analysis: The Agency did not previously clarify that its definition
of
a "Medicaid-only" facility was limited to facilities which
participate
only in Medicaid and have not applied to participate in
Medicare.
Indeed, the Agency's "Medicaid-only" argument was based on the
reference
in the legislative history to a facility that "participates in
medicaid
but not medicare." The Board's suggestion that, under HCFA's
own
reading, section 1910(c)(2) applies to a facility participating
in
Medicaid whose Medicare application had been denied was thus
not
intended to artfully dodge the application of the principle that
a
facility cannot participate in Medicaid when the Secretary
has
determined that it does not meet the Medicare standards. As
indicated
previously, HCFA's position that the Board should read section
1910(a)
as precluding any exceptions to this principle is inconsistent
with
HCFA's own policies, which read it as permitting exceptions.
Issue: Whether HCFA's Policies Are Consistent With
HCFA's
Interpretation
HCFA's Allegation:
Central to the Board's analysis in Decision 920 is
its conclusion
that it should reject out of hand
HCFA's argument that
certification and a valid
provider agreement are prerequisite to
FFP because
HCFA has itself been inconsistent in applying that
principle. In effect, the Board's argument is that HCFA
cannot
rely on a sound governing principle if it has
ever made an
exception to that principle; for the
Board, any HCFA exception no
matter how limited
permits the Board to make any exception, no
matter
how large. Here again, the Board assumes the role of
the
Medicaid policymaker for the Secretary.
Analysis: The Board found that Congress in section 1910(c)(2)
had
created a limited exception to the general rule that Medicaid funding
is
available only if a facility is properly certified. The Board
pointed
to HCFA's exceptions as a basis for rejecting HCFA's position here
that
the general rule did not permit exceptions. The Board also
cited
exceptions made by HCFA in discussing the effect of 42 C.F.R.
442.20(b).
This in no way implies that the Board may itself create exceptions
to
the general rule.
HCFA's Allegation:
Almost all of the exceptions cited by the Board are
exceptions that
were promulgated through
notice-and-comment regulations. HCFA, of
course, as the Secretary's delegate for Medicaid policy, acts
in
the Secretary's name to issue such regulations
that are necessary
to best carry out the Medicare
and Medicaid programs. As the Board
has noted,
there are some situations where HCFA has concluded
that
it will pay FFP following termination of a
provider agreement. If
the Board more closely
scrutinizes these exceptions, it should
recognize
that these are limited exceptions that advance
important
programmatic goals. Thus, a
regulatory exception permits FFP for
30 days after
the effective date of termination of a provider
agreement to assure orderly transfer of patients admitted to
the
facility prior to the effective date. And
another regulation
permits the state to continue a
provider agreement without a 12
month certification
in those circumstances where the state is
administratively unable to reach a certification decision
within
the 12 month period; again this is a limited
exception which
acknowledges that states sometimes
need additional time to reach
the proper
certification decision. And a very new
regulatory
exception permits FFP for 120 days after
termination in cases where
the state appeals
mechanism is being used. As the preamble to
the
regulation candidly discusses, HCFA departed
from the general
principle that FFP is unavailable
without certification or a valid
provider agreement
(which principle it reaffirmed and which is the
basic rule of 42 CFR 441.11 as discussed above) only after it
was
persuaded by commenters that a limited exception
would ultimately
encourage appropriate and timely
decertifications and timely
completion of Medicaid
appeals. HCFA in each instance fully
explained
the important programmatic goals that would be
furthered
by its limited regulatory
exceptions. In each instance, the
exception
made it more likely that states would decertify
noncompliant facilities by removing disincentives to state action.
Analysis: The fact that HCFA's exceptions are limited ones
which
advance important programmatic goals does not mean that the Board
erred
in finding that HCFA did not regard the principle that funding
is
available only for properly certified facilities as inviolate.
The
scope of the statutory exception in section 1910(c)(2) and the
purpose
which it served may be different from the scope and purpose of
HCFA's
regulatory exceptions, but this difference similarly does not mean
that
the finding referred to above was erroneous.
HCFA's Allegation:
The Board also cited two non-regulatory policies
that continued FFP
after termination of a provider
agreement. The Board referred to
the policy of
continued FFP under PRG-11. The Board, not
HCFA,
really deserves the "credit" for that
exception and that policy
certainly should not be
held against HCFA in this case. The Board
also
cited to the fact that HCFA permits the state to continue
a
dual-program SNF's provider agreement for a short
period in order
to allow the state agency to process
and act on the notice from
HCFA that the facility's
Medicare agreement has been terminated.
This
non-regulatory exception is too insubstantial to support
the
Board's claim that HCFA does not practice what
it preaches. Indeed
that exception is
warranted by the notice principle relied on by
the
Board.
Analysis: HCFA replaced PRG-11 with a rule permitting funding for up
to
120 days where a facility appeals the revocation of its certification
by
the state agency. PRG-11 itself specifically permits funding
pending
appeals in certain circumstances; past Board decisions dealt with
issues
such as whether HCFA had revoked PRG-11 and whether PRG-11 applied
to
the facts presented, not with the basic policy established in PRG-11.
DGAB No. 920 found that HCFA's policy was that the effective date of
the
termination of a facility's Medicaid agreement could be delayed up to
15
days after the state agency receives notice from HCFA of a
Medicare
denial. This is not in the Board's view an "insubstantial"
exception.
Regardless of its scope and purpose, however, this exception shows
that
HCFA had determined that exceptions were permissible.
HCFA's Allegation:
From these very limited exceptions to a generally
applicable
regulatory rule, the Board perceives a
theme of fairness to the
states or "other
considerations" which the Board claims would
justify
exceptions to the rule. The Board then leaps to
the
unwarranted conclusion that it can make
exceptions. Here, the
Board finds
justification in its assertion that concerns about
transfer trauma and lack of available beds may be present in
the
case of Medicare-mandated terminations.
The Board's logic equally
well supports an
indefinite extension of FFP for every terminated
facility since that would surely prevent transfer trauma and
would
maintain a large number of SNF beds.
HCFA submits that the Board
is not empowered to
create exceptions at will and further that even
if
it can create justifiable exceptions, it has not
adequately
justified the exception it created in
Decision 920.
Analysis: The Board agrees that it is not empowered to
create
exceptions. DGAB No. 920 merely gives effect to the plain
language of
section 1910(c)(2), and finds that this effect is consistent
with
legislative goals of related provisions.
Issue: Whether the Board's Interpretation Advances Any
Programmatic
Purpose
HCFA's Allegation:
HCFA seeks reconsideration not only because the
Board's decision
has such farreaching effects on
Medicaid policy, statutes and
regulations, but also
because the Board has taken this action
without
advancing a single programmatically sound reason for
doing
so. We have already indicated that HCFA
disputes the Board's
assertion that the state's
interpretation, which it adopts, is
consistent with
any legislative intent; its interpretation does not
provide the alternative that Congress intended and if it
advances
the cause of minimizing patient transfers
or the cause of
increasing the number of medicaid
facilities, it does so at the
unacceptably high cost
of maximizing the number of patients who
will be
allowed to remain in facilities that are not
providing
adequate care. The state's and the
Board's interpretation advances
only one
cause: it gives more money to the states and
undoubtedly
permits the states to give more money to
unqualified facilities.
With such a result, we urge
that the Board will reconsider its
decision.
Analysis: The Board did not consider section 1910(c)(2) without
regard
to whether the State's reading advanced any programmatic
purpose.
Instead, the Board indicated that, consistent with concerns
expressed in
the legislative history, this reading would help alleviate the
shortage
of Medicaid beds and would avoid transfer trauma in some
cases.
Congress presumably made the judgment that the cost of doing so
--
providing Medicaid funding to uncertified facilities for a
limited
period -- was not unacceptably high.
We also note that Congress, in enacting section 1910(c), was
obviously
concerned in part with facilities' due process rights
(subordinating
them, of course, to patient health and safety). HCFA has
not identified
any programmatic purpose which justifies making those rights
contingent
on a facility's Medicare status.
Issue: Whether the Board Erred in Finding that the State Had No Notice
HCFA's Allegation:
Lastly, HCFA submits that the panel clearly erred in
concluding
that the State had no notice of HCFA's
position. We submit that
the regulations
previously cited provided specific notice of HCFA's
position that FFP would not be forthcoming the the case
of
dual-program SNFs for which the Secretary denied
or terminated
Medicare participation. HCFA had
since at least 1975 taken this
position and had
never changed it. See, e.g., 42 CFR 441.11.
Analysis: As discussed above, the regulations cited by HCFA did
not
give the State notice that no funding would be paid pending appeal
for
an SNF whose Medicare participation had been terminated or denied by
the
Secretary.
HCFA's Allegation:
The Board says that after the 1980 legislation, HCFA
did not advise
the state of its position in time for
the state to protect itself
by moving the patients
from the three facilities. HCFA's
consistent
position is that for dual-program facilities like
those
involved in this case, there was no change in
its position and
therefore HCFA had nothing to
publish: its policy was already
published in
the regulations. Decision 920 errs when it holds
that
HCFA did not provide notice of its
position. By saying that HCFA
did not provide
notice, the Board's Decision effectively holds that
HCFA must give notice to the states whenever HCFA believes there
is
no change but the state might perhaps think there
had been a
change.
Analysis: As discussed earlier, DGAB No. 920 did not suggest that
HCFA
had to reaffirm the validity of existing regulations after the
enactment
of the 1980 amendments. The Board found that the regulation
relied on
by HCFA simply did not address question governed by new
section
1910(c)(2).
HCFA's Allegation:
In any event, in recent regulatory packages HCFA has
reaffirmed its
position. The Board was
unwilling to find that this was adequate
notice in
this case since the Federal Register notices came
after
the events of these cases. No such
notice problems can exist in
the future. HCFA urges
the Board to clarify that Decision 920, if
not
reconsidered and revised in its entirety, governs only
cases
arising prior to HCFA's reaffirmation of its
policy position in the
recent regulatory
packages.
Analysis: DGAB No. 920 was decided based on the facts in that
case. We
do not consider it appropriate here to speculate about what
our analysis
would be in a similar case arising during a later time
period. We do
note, however, that we do not agree with the State's
position that
notice is wholly irrelevant. The Board's analysis would
have been
different if HCFA's interpretation had appeared in a
regulation. See
45 C.F.R. 16.14. It would also have been
different if HCFA had shown
that it had provided the states with official
notice of a
contemporaneous interpretation of the statute, considering all
relevant
factors, including the effect of section 1910(c)(1).
HCFA's Allegation:
Moreover, HCFA submits that the State of Illinois
had actual and
timely notice of HCFA's position
concerning the effect of the 1980
amendments.
The State of Illinois was a party to the Lake Bluff
litigation wherein HCFA's position was advanced and confirmed by
a
federal court in Illinois. In that case, the
State of Illinois not
only knew of HCFA's position
-- that for dual-program facilities,
the Secretary
could act under his pre-existing authority and such
action did not constitute a "new look behind" -- but in fact
the
State fully supported that position. HCFA
attaches to this request
for reconsideration a copy
of the brief filed on behalf of the
Illinois
Department of Public Aid in that case. We point,
for
example, to the state's argument on page 18
where the state
explains its view of the "look
behind" provision:
This section has no applicability to the
termination
of Lake Bluff. Lake Bluff is not a
Medicaid-only
skilled nursing facility but participates in
both
Medicare and Medicaid. It cannot claim the
protection
of this new amendment of the Medicaid act
which
relates only to facilities which are inspected
and
certified by the state Medicaid agency as skilled
or
intermediate care facilities and thus not under
the
supervision of the Department of HHS and
the
Secretary. Clearly the intent of the Congress
and the
clear meaning of the amendment of sec. 1396i is
to
allow the Secretary to disregard the
state's
certification of Medicaid facilities, conduct his
own
inspection and require termination if warranted.
***
No such disagreement exists here, and as Lake
Bluff
participates in both Medicare and Medicaid
the
sanctions and procedural safeguards contained in
42
USC sec. 1396i(c)(1-2) are inapplicable.
Analysis: The quoted language shows that the State was aware of
the
position HCFA took in the Lake Bluff litigation regarding the scope
of
section 1910(c)(2). It is not sufficient to establish, however,
that
the Board erred in finding that the State did not have adequate
notice
that HCFA would disallow federal funding in the circumstances of
this
case.
The circumstances of the Lake Bluff case were different. That
case
involved a situation where the State had conducted its own
survey,
finding a serious threat to the health and safety of patients in
that
facility, and relied on its own laws and authority to terminate
the
facility. State's Lake Bluff brief, pp. 1-2; 16-17. The
facility
argued, nonetheless, that it was entitled to a pre-termination
hearing
under both Medicaid and Medicare, relying on various provisions in
the
1980 amendments. The case did not involve the circumstances here
where
there is either a termination of certification by HCFA, but no
finding
of a serious threat to patient health and safety, or a denial by HCFA
of
a Medicare application from a facility previously participating only
in
Medicaid.
For the reasons stated above, we affirm our decision.
________________________________ Norval D. (John) Settle
________________________________ Alexander G. Teitz
________________________________ Judith A. Ballard
Presiding
Board