CARRAWAY METHODIST MEDICAL CENTER v. Heckler
| Decision Date | 22 March 1984 |
| Docket Number | Civ. A. No. 82-C-2655-S. |
| Citation | 582 F. Supp. 1337 |
| Parties | CARRAWAY METHODIST MEDICAL CENTER, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant. |
| Court | U.S. District Court — Northern District of Alabama |
William D. Wise, Birmingham, Ala., Margaret M. Manning, Sanford V. Teplitzky, Deborah A. Randall, Ober, Grimes & Shriver, Baltimore, Md., for plaintiff.
Frank W. Donaldson, U.S. Atty., Herbert J. Lewis, III, Asst. U.S. Atty., Mary P. Thornton, Birmingham, Ala., for defendant.
Two questions are presented for review by this action: (1) is the interpretation by the Secretary of the Department of Health and Human Services ("the Secretary") of 42 C.F.R. § 405(d)(10) a reasonable one, and (2) does substantial evidence support the determination by the Secretary that the intermediate care unit ("IMC") of plaintiff Carraway Methodist Medical Center ("Carraway") is not a "special care unit," within the meaning of the aforesaid regulation.
Carraway is a "provider of service" under the Medicare Act, pursuant to 42 U.S.C. § 1395cc. It is a short term, acute care, non-profit hospital located in Birmingham, Alabama. Under its contractual relationship with the Secretary, it is obligated to furnish hospital services to Medicare beneficiaries. It is entitled to receive reimbursements from the Secretary for the reasonable costs incurred in furnishing such services.
Provider reimbursement is generally effectuated through a fiscal "intermediary" selected by the provider and appointed to act as an agent for the Secretary in reviewing claims and administering payments. The final determinations of the intermediary are subject to a right of appeal to a Provider Reimbursement Review Board ("PRRB"). Decisions of the PRRB become final unless the Secretary reverses, affirms, or modifies them.
In accordance with her statutory authority, the Secretary has issued certain regulations which provide that all necessary and proper, direct and indirect, expenses of a hospital in the production of services are allowable as reasonable costs. Direct and indirect costs of rendering services to all patients are allocated to the various departments of a hospital. For the purpose of apportioning the costs of services rendered to Medicare patients, the departments of a hospital fall into one of two categories: (1) departments which render routine services, and (2) "special care units."
"Routine services" include room, dietary and nursing services, minor medical and surgical supplies and the use of equipment for which a separate charge is not customarily made. 42 C.F.R. 405.452(d)(2). Under the regulatory scheme, the apportionment of costs requires the computation of average per diem costs of routine services and an allocation of those costs between Medicare beneficiaries and other patients.
In 1972, special care units were first recognized in the apportionment scheme. The applicable regulation, which was in effect during the times material to this case, provides for the separate calculation of the average cost per diem for "intensive care units, coronary care units, and other special care inpatient hospital units ..." 42 C.F.R. 405.452(d)(8). The regulatory definition states:
To be considered an intensive care unit, coronary care unit, or other special care inpatient hospital unit, the unit must be in a hospital, must be one in which the care required is extraordinary and on a concentrated and continuous basis and must be physically identifiable as separate from general patient care areas. There shall be specific written policies for each of such designated units which include, but are not limited to burn, coronary care, pulmonary care, trauma, and intensive care units but excludes post-anesthesia recovery rooms, or maternity labor rooms.
The special care cost computations usually result in higher per diem rates for reimbursement purposes than the rates for routine care areas.
Virtually all of the facts are undisputed. The parties are in agreement that the Intermediate Care Unit at Carraway is in a hospital, is physically identifiable as separate from general patient care areas, and that Carraway has specific written policies for the unit. Thus, three of the four requirements of 42 C.F.R. 405.452(d)(10) are admittedly met. The issue is whether the unit is "one in which the care required is extraordinary and on a concentrated and continuous basis."
Carraway has designated four special care units: Intensive Care Unit (ICU), Intermediate Care Unit (IMCU), Coronary Care Unit (CCU), and the Neurosurgical Unit ("Neuro"). The ICU, CCU, and Neuro are accepted by the Secretary as special care units. Between 1972 and 1977, the IMCU was treated by the intermediary and by the Secretary as a special care unit.
The IMCU at Carraway was designed to provide care for critically ill patients who are not in need of the two invasive procedures available in ICU — respiratory support and hemodynamic monitoring. The IMCU, along with the ICU and CCU, is located on the third floor of the hospital. Like the ICU and CCU, it is under the jurisdiction of the Critical Care Committee of Carraway; and it adheres to that committee's critical care policy and procedure manual.
Critically ill patients who do not require respiratory support or hemodynamic monitoring are admitted directly to IMCU or transferred there from ICU or CCU. The record is manifestly clear that if the IMCU did not exist, patients who would otherwise be admitted or transferred to IMCU would remain in or be admitted to ICU, Neuro, or CCU; for they could not be treated on the routine floors.1
IMCU patients come from a variety of sources. Roughly half (49.3%) of them are direct admissions (i.e., from the emergency room, admissions office, etc.). Forty-two percent of its patients are transferred from ICU or CCU when they no longer require mechanical respiration or hemodynamic monitoring. Nearly eight percent of IMCU's patients are transferred from routine care areas.
The ICU, CCU and IMCU have electronic monitors. Because the patients in ICU and CCU are often immobilized by invasive equipment, these units utilize "hard-wired" monitors. In the IMCU, telemetric monitors, which send signals directly to the monitoring computer, are used. Telemetric monitors are less restrictive than hard-wire monitors.
Registered nurses in the IMCU receive the same special critical care training as the ICU and CCU nurses.
The nurse/patient ratio (1:2) for the IMCU is roughly half that of the ICU and CCU, although IMCU patients frequently receive one-to-one nursing care. On the other hand, the patient/nurse ratio in the Neuro unit seems to be even lower than that of the IMCU.2
Extensive life-saving equipment is available in the IMCU.
The daily rates for the IMCU are lower than the rates for ICU, CCU and Neuro.3 However, IMCU's rates are significantly higher than those of the routine areas of the hospital.
IMCU's costs per available day are substantially lower than those of ICU and CCU, but they seem to be higher than Neuro's costs per available day.
In ICU and CCU, all of the patients can be visually seen from the nurse's station — in contrast to the rooms of IMCU, which cannot be observed from the nurses' station. The record is silent on whether Neuro's patients are observable from the nurses' station.
In the words of the Intermediary's expert witness In his view, the IMCU at Carraway is "significantly above" its routine care areas.4
From 1972, when special care units were first recognized by the Secretary, until 1977 the IMCU at Carraway was treated and reimbursed as a special care unit.
Carraway duly filed its cost report for the fiscal year ending June 30, 1978. An audit was subsequently conducted by the Intermediary; and the Intermediary determined that the IMCU did not qualify as a special care unit. The intermediary reclassified the IMCU as a routine care area; and the ultimate result was a decrease in Carraway's 1978 Medicare reimbursement by $54,000.
Carraway appealed the decision of the Intermediary to the PRRB. The PRRB conducted a hearing; and, based on the hearing, it overturned the decision of the Intermediary and found that the IMCU at Carraway is a special care unit. The Chairman of PRRB dissented; and the Secretary, through her designee the Deputy Administrator of the Health Care Financing Administration, undertook sua sponte a review of the PRRB decision. The PRRB decision was reversed, based on the Secretary's narrow interpretation of 42 C.F.R. § 405.452(d)(10). Carraway timely filed this action thereafter.
The Secretary's interpretation is summarized in her brief filed herein:
Only two levels of care recognized by Medicare regulations — special and routine — and in determining whether a purported special care unit meets the regulatory criteria, the Secretary has chosen to compare the care...
To continue reading
Request your trial
-
Carraway Methodist Medical Center v. Heckler
...Sec. 405.452(d)(10), for an intermediate care unit (IMCU) located in Carraway Methodist Medical Center. The district court, 582 F.Supp. 1337 (N.D.Ala.1984), reversed the decision of the Secretary that the IMCU did not qualify as a special care unit, finding that the Secretary's interpretati......
- Barnosky Oils, Inc. v. Union Oil Co. of California, Civ. A. No. 77-71163.