15-1800-16210-2

 

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE DEPARTMENT OF HUMAN SERVICES

 

 

In the Matter of the Rate Appeal of REM Minnesota, Inc.

RECOMMENDATION FOR SUMMARY DISPOSITION

 

 

            The Department of Human Services filed a Motion for Summary Disposition on August 2, 2005.  REM Minnesota, Inc. filed a response on August 15, 2005.  The Department of Human Services filed its reply on August 23, 2005. Barry Greller, Assistant Attorney General, 445 Minnesota Street, Suite 900, St. Paul, MN 55101, appeared on behalf of the Department of Human Services (“Department”).  Gregory Merz, Gray, Plant, Mooty, Mooty & Bennett, P.A., 500 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402, appeared on behalf of REM Minnesota, Inc. (“Respondent” or “REM”).

 

            The Department has moved for Summary Disposition on the issue of whether it correctly identified vacant beds in determining the number of leave days eligible for payment under Medical Assistance for REM’s facilities during three audit periods.[1]

 

            Based on the pleadings and memoranda filed in this matter, and for the reasons set forth in the accompanying Memorandum, incorporated herein, the Administrative Law Judge makes the following:

 

NOTICE

 

This report is a recommendation, not a final decision.  The Commissioner of Human Services will make the final decision after a review of the record.  The Commissioner may adopt, reject or modify the Findings of Fact, Conclusions, and Recommendations.  Under Minn. Stat. § 14.61, the final decision of the Commissioner shall not be made until this Report has been made available to the parties to the proceeding for at least ten days.  An opportunity must be afforded to each party adversely affected by this Report to file exceptions and present argument to the Commissioner.  Parties should contact Kevin Goodno, Commissioner, Department of Human Services, 444 Lafayette Road, St. Paul, MN 55155 to learn the procedure for filing exceptions or presenting argument.

 

If the Commissioner fails to issue a final decision within 90 days of the close of the record, this report will constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a.  The record closes upon the filing of exceptions to the report and the presentation of argument to the Commissioner, or upon the expiration of the deadline for doing so.  The Commissioner must notify the parties and the Administrative Law Judge of the date on which the record closes.

 

Under Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail or as otherwise provided by law.

 

RECOMMENDATION

 

IT IS HEREBY RECOMMENDED that the Commissioner of Human Services order that:

 

1.                  The Department’s Motion for Summary Disposition be GRANTED.

2.                  REM’s Cross Motion for Summary Disposition be DENIED. 

3.                  The Department’s decision to require REM Minnesota, Inc. to repay reimbursement for leave days for the period from October 1, 2000, through June 30, 2003, be AFFIRMED.

 

Dated this 15th day of September, 2005.       

 

 

/s/ Beverly Jones Heydinger

BEVERLY JONES HEYDINGER

Administrative Law Judge

 

 

MEMORANDUM

 

Standard for Summary Disposition

 

            Summary disposition is the administrative equivalent of summary judgment.  Summary disposition is appropriate where there is no genuine issue as to any material fact and one party is entitled to judgment as a matter of law.[2]  The Office of Administrative Hearings has generally followed the summary judgment standards developed in judicial courts in considering motions for summary disposition of contested case matters.[3]

 

The moving party has the initial burden of showing the absence of a genuine issue concerning any material fact.  A genuine issue is one that is not sham or frivolous.  To successfully resist a motion for summary judgment, the nonmoving party must show that there are specific facts in dispute that have a bearing on the outcome of the case.[4]

 

The facts are set forth in the documents filed by the parties in support of their motions and are not disputed by the parties.  Although the parties do not assert that there are facts in dispute, if reasonable minds could differ as to the import of the evidence, judgment as a matter of law should not be granted.[5]

           

In this case, there are no material facts in dispute.  The matter involves an interpretation of the statutes and rules that govern reimbursement to intermediate care facilities for persons with mental retardation and related disabilities (ICF/MRs).

 

 

Summary of the Facts

 

            The Department sets daily rates for ICF/MRs in order to reimburse them for care given to persons with mental retardation and related disabilities who qualify for Minnesota’s Medical Assistance (“M.A.”) program.  M.A. is partially funded by the federal Medicaid program.  The Respondent operates ICF/MRs throughout Minnesota and applies to the Department for reimbursement for the care that it provides.  Residents of an ICF/MR are also “recipients” of M.A. whose care costs are paid by the Department. 

 

            Since 1987 the Department’s rule has allowed an ICF/MR to be paid for a day that the facility does not provide care to a resident because the resident is in the hospital or on therapeutic leave.[6]  These “leave day” payments are authorized under federal law, if part of the state’s approved Medicaid plan.[7]  Minnesota’s approved Medicaid plan provides for leave day payments.

 

            The applicable rule provision states:

 

A leave day is eligible for payment under medical assistance, subject to the limitations of this part.  The leave day must be for hospital leave or therapeutic leave of a recipient who has not been discharged from the long-term care facility.  A reserved bed must be held for a recipient on hospital leave or therapeutic leave.[8]

 

            The terms “leave day,” “hospital leave,” “therapeutic leave,” and “reserved bed” are all defined in the rule.  A “leave day” is defined, in applicable part, as “any calendar day during which the recipient leaves the facility and is absent overnight, and all subsequent, consecutive calendar days.”[9]  “Hospital leave” describes a resident’s stay at a hospital for necessary medical care, with the expectation that the resident will return to the ICF/MR.[10]  “Therapeutic leave” is an absence to a camp or program for appropriate care, or for a home visit or vacation, with the expectation that the resident will return to the ICF/MR.[11]  Persons on leave are not considered to be discharged.

 

            The purpose of these provisions is to assure that a resident who leaves the facility temporarily for specified reasons will be able to return to the same bed at that facility, and that the facility will be paid to hold a place, subject to certain limitations.  A reserved bed must be held for a recipient on hospital leave or therapeutic leave.[12]  The logic of this provision is expressed in the 1987 Statement of Need and Reasonableness (SONAR) drafted by the Department in support of its rule.  It states that: 

 

It is reasonable to require a facility to hold a reserved bed for a recipient because the recipient needs a bed to return to at the end of the leave and returning to the same long-term care facility ensures the recipient continuity of care in familiar surroundings from staff who are acquainted with the recipient and his condition.[13]

 

However, there are limits on the number of hospital leave days and therapeutic leave days that will be reimbursed.[14]  One of those limitations is at the heart of this dispute.  It provides that MA will not pay for leave days if the facility has had a vacant bed for more than 60 consecutive days prior to the leave.  The rule provides:

 

Payment for leave days for hospital leave and therapeutic leave shall be subject to the limitation as in items A to C.  For purposes of this subpart, a reserved bed is not a vacant bed when determining occupancy rates and eligibility for payment of a leave day.[15]

 

            Only item B applies to these REM facilities, all of which have 24 or fewer licensed beds, and is relevant to this dispute.  Item B states:

 

Long-term care facilities with 24 or fewer licensed beds shall not receive payment for leave days if a licensed bed has been vacant for 60 consecutive days prior to the first leave day of a hospital leave or therapeutic leave.

 

The parties do not dispute the application of this provision prior to a change in the law in 2000.  Prior to 2000 an ICF/MR would be paid for a reserved bed so long as the facility had not had a “vacant bed” for 60 consecutive days before the resident began the hospital or therapeutic leave.  A bed was vacant if the recipient had died or been discharged and, therefore, was not on leave.  As the SONAR explains, it was not necessary to reimburse a facility to hold an empty bed for a returning resident if the facility already had a bed empty. 

 

One reason for paying for reserved beds is to ensure a bed will be available to the recipient returning from leave and to ensure that a facility does not incur a monetary loss from keeping the bed unoccupied until the recipient returns.  However, a long-term care facility having vacant beds may have capacity in excess of the demand and would not be in danger of incurring a monetary loss by reserving the bed for the recipient.  Therefore, it would be contrary to statute and to the concept of reserved beds to pay to reserve a bed at a time when the demand for beds is less than the facility’s ability to meet the demand.  Items A and B are reasonable because they provide evidence that the facility has at least one bed that is in excess of demand.[16]

 

            It is clear from the SONAR that the concept of paying for a reserved bed was primarily to benefit the recipient and not the facility.  There was a secondary benefit to a facility that stayed full because it was paid to reserve the bed during the time that the resident was on leave.  But it is clear that a facility with a vacant bed for 60 consecutive days prior to the resident’s leave would not be paid to hold the reserved bed during a hospital or therapeutic leave.  Such a facility would incur a monetary loss during the resident’s leave.

 

            From July 1998 through January 1999, a task force that included DHS staff, recipients and ICF/MR facility operators developed a new reimbursement methodology based on certain principles.[17]  The Department proposed legislation,[18] and the Minnesota Legislature made significant changes in the ICF/MR reimbursement methodology effective October 1, 2000.

 

Prior to the passage of this legislation, a facility was not reimbursed for a vacant bed.  One of the provisions of the new law allowed the Department to make temporary rate adjustments for up to 90 days in the event that an ICF/MR discharged a recipient and a bed was vacant.  As part of the 2000 amendments, the Legislature provided:

 

[Temporary Rate Adjustments to Address Occupancy and Access.]  If a facility is operating at less than 100 percent occupancy on September 30, 2000, or if a recipient is discharged from a facility, the commissioner shall adjust the total payment rate for up to 90 days for the remaining recipients.  This mechanism shall not be used to pay for hospital or therapeutic leave days beyond the maximums allowed.  Facility payment adjustments exceeding 90 days to address a demonstrated need for access must be submitted to the statewide advisory committee with a local system needs assessment, plan, and budget for review and recommendation.[19]

 

            This provision remained in effect until it was repealed in 2003.[20] 

 

The purpose of the provision was to compensate a facility for a vacant bed for a limited time in order to evaluate whether that bed capacity should be retained or whether it should be eliminated.  The provision allowed payment for the vacant bed for 90 days to allow that determination to be made by increasing the per diem rate for the remaining residents.  As a result, under the vacancy adjustment provision, the ICF/MR’s total payment would be the same as it had been before the resident’s discharge, as if the bed was not vacant.[21]

 

The Department’s Audit of REM’s leave days

 

            In July 2003, the Department began an audit of leave day payments to REM.[22]  Audits were conducted for three periods:  October 1, 2000 to June 30, 2001; July 1, 2001 to June 30, 2002; and July 1, 2002 to June 30, 2003.[23]

 

            Based on the audit results, the Department determined that REM had been paid for leave days that did not qualify for payment under Minn. R. 9505.0415, subp. 7.  The Department disallowed a total of $201,191.12 for the three audit periods combined.[24]

 

            The audit findings for the period October 1, 2000 to June 30, 2001 were issued on May 7, 2004, and are set forth in Bettcher Affidavit, Ex. E.  REM challenged the findings.[25] At REM’s request, the Department reviewed the audit and reissued final audit findings on June 29, 2004.[26]  The same steps were followed for each of the other two audit periods, and final audit findings were issued.[27]  REM appealed the final audit findings for each of the three audit periods.[28]

 

ANALYSIS

 

As the rule states, a facility will not be paid for leave days if it had a vacant bed for 60 consecutive prior days.  Thus, if the temporary rate adjustment alters what is defined as a vacant bed, it may also affect payment for leave days.  The Department’s position is that the temporary rate adjustment had no effect on the payment for leave days.  In its view, a paid vacant bed is still vacant and will be counted when determining if a leave day will be reimbursed.

 

The Department relied on the language of Minn. R. 9505.0415, subp. 7, and denied payment to REM for leave days if the facility had a vacant bed for 60 consecutive days prior to the leave.  In determining eligibility for leave payment, it did not consider whether or not the costs of the vacant bed were reimbursed under the temporary rate adjustment.  It relied on the plain language of the word “vacant” to mean empty, not filled, and distinct from “reserved,” defined in the rule as a bed that is held for a resident away from the facility for defined purposes.  It does not believe that the term “vacant” is altered by whether the bed was reimbursed or not under the temporary rate adjustment.

 

            The Department’s position is logical and based on the plain language of the statute.  The bed was still empty even if the costs were covered, and the facility was free to fill the bed at any time.  Unlike a reserved bed, a vacant bed is not held for a returning resident.  The language of the temporary rate adjustment does not alter any of the provisions for payment of leave days.

 

            The Department also points to a portion of the temporary rate adjustment provision which states:  “This mechanism [the temporary rate adjustment] shall not be used to pay for hospital or therapeutic leave days beyond the maximums allowed.”

 

            It is not crystal clear what this means, but the most logical meaning is that the temporary rate adjustment cannot be used to pay for extra leave days beyond those allowed in the rules (18 hospital days and 72 or more therapeutic leave days[29]).  As stated in Mr. Bettcher’s Affidavit, “[The temporary rate adjustment] is to be used only when a vacancy occurs as a result of the permanent discharge of a consumer.”[30]  Or, stated another way, the temporary rate adjustment is not intended to pay for excess leave days.  However, that does not address the question raised here:  whether a bed that is actually vacant, and not reserved for any resident who is on an approved leave, is counted as vacant if the facility is reimbursed for it under the temporary rate adjustment.  Although the language relied upon by the Department does not answer that question, it does lend support to the Department’s position that the Legislature was aware of the leave day policies and did not amend any of them.  That is further supported by the Department’s bulletins issued in September and November of 2000 that made no reference to any change in payment for leave days.[31]

 

            The essence of REM’s position is that the temporary rate adjustment converts a vacant bed to a full bed, and thus, such beds should not be treated as vacant when determining payment for leave days.  However, neither the language of the temporary rate adjustment statute nor the policy that underlies the payment for leave days supports this interpretation.  The statute does not make such a statement.  It states that “If a facility is operating at less than 100 percent occupancy on September 30, 2000, or if a recipient is discharged from a facility, the commissioner shall adjust the total payment rate for up to 90 days for the remaining recipients.”[32]  The statute says nothing about whether the occupancy numbers are to be adjusted, or whether vacant beds shall be counted any differently.  It says only that the rates for other residents will be adjusted for up to 90 days.  There is no basis to conclude that the statute intended to have any effect on occupancy rates or on the number of vacant beds.

 

            Although REM claims that the statutory language is ambiguous, that argument is premised on its claim that the rule governing payment for leave days is also ambiguous.  There is no basis for that claim.  The provision governing payment for leave days was in effect for many years prior to the enactment of the temporary rate adjustment and REM has not made any credible showing that it was ambiguous or inconsistently enforced.  Instead, it claims that the ambiguity was created in the rule by the enactment of the temporary rate adjustment because the statute does not define what constitutes a vacancy nor does it specify how a provider’s occupancy is to be determined.  However, the term “vacant” is clearly understood.  REM has not demonstrated that the rule is ambiguous.

 

Not only are the statute and rule clear, but the Department’s interpretation is consistent with the policy behind payment for leave days.  If the purpose of the payment for leave days is to assure that there is a bed for the resident to return to, it is inconsistent to treat the vacant reimbursed bed as “full.”  It is still available to the resident, and the policy behind the rule that prohibited payment to a facility that had excess capacity during the 60 consecutive prior days still applies.  If REM’s position were adopted, the Department would have to pay for a leave day even if the facility had one or more vacant beds for longer than 60 consecutive prior days, and in the most extreme situation, for up to 90 days for the temporary rate adjustment plus 60 additional days.  Since there is no sound policy reason to support payment for leave days when one or more beds are consistently vacant, it does not make sense to stretch the plain meaning of the statute to attempt to achieve such a result.  The temporary rate adjustment pays for vacant beds to address retaining capacity, but is not an alternative method to pay for leave days.  There is no support in the statute or rule for such an interpretation.

 

REM claims that Department staff made statements that demonstrated that REM’s interpretation was the correct one.  It contends that the task force envisioned that a provider that received the vacancy adjustment would still be eligible to be paid for leave days. 

 

Its argument is based, in part, on the deposition of Pamela Erkel, a Department representative on the task force.  She was asked: 

 

Question:  It was the case that the task force envisioned that providers that received the vacancy adjustment would still be eligible to be paid for leave days; correct? 

 

Answer:  It was felt to be adequate.

 

Question:  I’m not sure I understand the answer to my question.  A provider that got the vacancy adjustment for 90 days would still be eligible to be paid for leave days.  That was what the task force intended; correct?

 

Answer:  Yes.[33] 

 

However, when asked, Ms. Erkel stated that she recalled the task force conversations about the relationship between the vacancy adjustment and leave days, but that she did not understand the discussion because she was not familiar with the rate system at that time.[34]  In addition, her answers to the questions posed do not clearly indicate that the Department intended to overlook the vacant days covered by the temporary rate adjustment in the payment for leave days.  Not only did Ms. Erkel disqualify herself from offering an informed opinion about the interrelationship of leave days and the temporary rate adjustment, but it is also possible that a facility could receive the temporary rate adjustment for 90 days and be paid for leave days so long as the payment for leave days began before 60 days of the temporary rate adjustment had run.  Thus, this portion of the deposition does not support REM’s position in any meaningful way.

 

REM also relies on the notes that a REM representative, Nancy Holovnia, took at a meeting where Department representative Steve Larson was present.  Ms. Holovnia could not recall the specific statements made at that meeting,[35] but her notes show that there was discussion of when to count the 60 days (apparently the vacant days tied to payment for leave days) if the bed was paid for by the temporary rate adjustment.[36]  She stated that the connection between the two provisions was not clear at that meeting,[37]  but her notes show that Mr. Larson stated that the 60-day clock began to run on the 91^st day.[38]  Ms. Holovnia made a note that stated, “90 days paid & then 60 days starts at 91^st day.”  In her view, this clearly meant that a bed was not considered vacant for purposes of calculating eligibility for leave days until the temporary rate adjustment period had ended, and the leave days would be paid unless 60 additional vacant bed days had passed thereafter.  However, there is no record of the precise question asked or answered, and her interpretation of her note is inconsistent with an e-mail message between Department staff reporting that a question about “leave days exceeding the max” was unresolved.[39]  Although this may be some evidence in support of REM’s position, it is hardly enough to determine as a matter of law that a vacant bed will not be considered vacant when determining the application of an unrelated rule provision governing payment for leave days.

 

REM’s argument based on the Sample Occupancy Report, created for an entirely different purpose two years after the temporary rate adjustment went into effect, likewise offers only weak support for its position and is inconsistent with the language of the temporary rate adjustment and rule governing payment for leave days.  The language of the statute and rule supports the Department’s audit findings disallowing payment for certain leave days.  Accordingly, its decision should be affirmed.

 

B.J.H.