Moody Nursing Home, Inc. v. United States, 431-78.

• Decision Date: 30 April 1980
• Docket Number: No. 431-78.,431-78.
• Citation: 621 F.2d 399
• Parties: MOODY NURSING HOME, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

621 F.2d 399

MOODY NURSING HOME, INC. v. The UNITED STATES.

No. 431-78.

United States Court of Claims.

April 30, 1980.

Cleburne E. Gregory, III, Atlanta, Ga., attorney for record, for plaintiff; Arnall, Golden & Gregory, Atlanta, Ga., of counsel.

Marsha D. Peterson, Washington, D.C., with whom was Asst. Atty. Gen. Alice Daniel, Washington, D.C., for defendant; Alvin N. Jaffe, Dept. of Health, Ed. & Welfare, Washington, D.C., of counsel.

Before FRIEDMAN, Chief Judge, and KUNZIG and BENNETT, Judges.

ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

KUNZIG, Judge:

We are presented in this case with the question of how much reimbursement, if any, plaintiff, a skilled nursing facility, is due for physician fees incurred in operating a required utilization review program. For the reasons stated below, we affirm the decision of the Blue Cross Association Provider Appeals Committee and hold the apportionment of utilization review costs between Medicare and private patients proper.

Plaintiff, Moody Nursing Home, Inc., is a qualified skilled nursing facility under the Medicare program. 42 U.S.C. § 1395x(j) (1976). In order to qualify as a skilled nursing home and be eligible for reimbursement of reasonable costs for care provided Medicare patients, plaintiff must meet a variety of requirements. The requirement with which we are concerned is that Moody Nursing Home establish a utilization review plan. Id. at § 1395x(j)(8) and (k). The purpose of the utilization review plan is to establish a committee of physicians to review patients for eligibility, length of stay and adequacy of care among other things.

Moody Nursing Home established a utilization review plan in qualifying for the Medicare program. While the statute says that such plan shall provide for review "on a sample, or other basis," id. at § 1395x(k)(1), plaintiff elected to review the admissions of all patients to its facility. While eligibility for the Medicare program initially rests upon the attending physician, the utilization review committee's review can establish eligibility. Id. at § 1395f. Thus, by reviewing all patients' admissions, Moody was able to qualify many patients for Medicare whose own physicians had for some reason not qualified them.¹

Plaintiff obviously does not provide its services gratis. For care provided to qualified Medicare patients, it is reimbursed through its fiscal intermediary, United Hospitals Service Association of Atlanta, a Blue Cross Plan affiliate. In turn, the intermediary is reimbursed by the Secretary of Health, Education and Welfare. See Sacred Heart Hospital v. United States, 616 F.2d 477 (Ct.Cl.1980); Overlook Nursing Home, Inc. v. United States, 214 Ct.Cl. 60, 556 F.2d 500 (1977). As this court explained recently in Pasadena Hospital Association, Ltd. v. United States, 618 F.2d 728, at 729 (Ct.Cl.1980), the fiscal intermediary makes interim estimated payments for services rendered to Medicare patients. The intermediary is then responsible for auditing the provider's annual cost reports to determine which costs were properly charged to Medicare and make any necessary adjustments.

For fiscal years 1969 to 1972, plaintiff charged Medicare for 100 percent of the physician fees associated with operation of the utilization review plan and was paid estimated interim amounts based on these charges. Upon auditing the annual cost reports for those years, however, the intermediary determined that it had overpaid plaintiff because the nursing home was only entitled to those physician's fee attributable to patients ultimately determined to be eligible for Medicare.

Moody appealed the intermediary's decision to the Blue Cross Association Provider Appeals Committee (BCA) which apportioned the physician's fees between those patients over age 65 and those under age 65. Health, Education and Welfare's Social Security Administration's Bureau of Health Insurance (BHI) directed BCA to revise its decision and to apportion the utilization review costs among all patients, with Medicare reimbursing only those costs allocable to Medicare patients.

Subsequently, plaintiff filed the instant suit in the United States District Court for the Northern District of Georgia. That court effectively affirmed BCA's decision as revised by BHI. On appeal, however, the United States Court of Appeals for the Fifth Circuit determined that the district court was without jurisdiction and ordered the case transferred to this court pursuant to 28 U.S.C. § 1406(c) (1976). The district court so transferred and we must consider the appeal.

Our jurisdiction to consider this case is well established. See Pasadena Hospital Ass'n Ltd. v. United States, 618 F.2d 728, 729 (Ct.Cl.1980). Our scope of review, however, is limited to determining whether the administrative decision is arbitrary, capricious, unsupported by substantial evidence or contains errors of law. Overlook Nursing Home, Inc. v. United States, 214 Ct.Cl. 60, 65, 556 F.2d 500, 502 (1977).

As noted above, as a prerequisite to participation in the Medicare program, Moody was required to establish a utilization review plan. 42 U.S.C. § 1395x(j)(8) (1976). That utilization review plan must meet the requirements of section 1861(k) of the Medicare Act, id. at § 1395x(k), which provides:

A utilization review plan of a . . . skilled nursing facility shall be considered sufficient if it is applicable to services furnished by the institution to individuals entitled to insurance benefits under this subchapter, and if it provides — (1) for the review, on a sample or other basis, of admissions to the institution, the duration of stays therein, and the professional services (. . .) furnished, (A) with respect to the medical necessity of the services, and (B) for the purpose of promoting the most efficient use of available health facilities and services . . .. Emphasis added.

The regulations in effect at the times in question outline similar requirements for the utilization review plan.²

Plaintiff argues that the statute and regulations set only minimal requirements for a utilization review plan and its decision to review all patients is a suitable "other basis" for the plan entitling it to reimbursement. Moreover, Moody contends that since Medicare is remedial and to be liberally construed in favor of guaranteeing adequate medical care to the aged, citing Whitman v. Weinberger, 382 F.Supp. 256 (E.D. Va.1974), the nursing home is performing a valuable service for Medicare in evaluating the eligibility of all its patients over age 65 and thus deserves reimbursement for its utilization review plan costs. This seems to be the crux...