Geneva General Hospital v. Thompson, 01-CV-6261 CJS (W.D.N.Y. 3/3/2003)
| Decision Date | 03 March 2003 |
| Docket Number | 01-CV-6261 CJS. |
| Parties | GENEVA GENERAL HOSPITAL, Plaintiff, v. TOMMY G. THOMPSON, as Secretary, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant. |
| Court | U.S. District Court — Western District of New York |
Jeffrey J. Calabrese, Esq., Harter, Secrest & Emery LLP Rochester, New York, for plaintiff.
Michael A. Battle, Esq., United States Attorney for the Western District of New York, Christopher V. Taffe, Esq. Assistant United States Attorney, Rochester, New York, for defendant.
Rachel H. Park, Esq., Assistant Regional Counsel Department of Health and Human Services, Office of the General Counsel, New York, New York
DECISION AND ORDER
This is an action brought pursuant to 42 U.S.C. § 1395oo(f), seeking review of a final determination by the defendant, denying plaintiff's request for an increase in the Medicare reimbursement rate, which it received, for providing end stage renal dialysis ("ESRD") services. The issue in this action is whether or not defendant properly found that plaintiff is not an "Isolated Essential Facility" ("IEF"), within the meaning of 42 C.F.R. § 413.170(g)(2) (1993).1 Now before the Court are plaintiff's motion for summary judgment, or in the alternative, for judgment on the pleadings [#12], and defendant's cross-motion seeking the same relief [#21]. For the reasons that follow, the Court will grant defendant's cross-motion for summary judgment, and correspondingly, will deny the relief sought by plaintiff.
The Medicare Act, 42 U.S.C. § 1395 et seq., provides, inter alia, medical coverage for dialysis treatments to eligible individuals enrolled in the Medicare program. Facilities that choose to become providers under the Medicare program must agree to receive reimbursement for their services based on rates set prospectively by the Health Care Financing Administration ("HCFA").2 The HCFA is required to set these prospective payment rates using a methodology that, inter alia, "[e]ffectively encourages efficient delivery of dialysis services," and "[p]rovides incentives for increasing the use of home dialysis." 42 C.F.R. § 413.170(c)(ii)&(iii).
At the time of the events described herein, providers could request an exception to the reimbursement rate set by the HCFA by demonstrating, with convincing evidence, that their reasonable cost per treatment was going to be higher than the prospective rate, and that the increased cost was "directly attributable" to one of the criteria set forth in 42 C.F.R. § 413.170(g). The criteria which is relevant to the instant action is 42 C.F.R. § 413.170(g)(2), which provided:
Isolated Essential Facility. The facility is the only supplier of dialysis in its geographical area, its patients cannot obtain dialysis services elsewhere without substantial additional hardship, and its excess costs are justifiable. HCFA will consider local permanent residential population density, typical local commuting distances for medical services, volume of treatments, and dialysis facility usage by area residents other than the applying facility's patients, in determining whether an exception requested on this basis is approvable.
The Provider Reimbursement Manual ("PRM"), prepared by the HCFA and distributed to providers, reiterated that, to obtain an Isolated Essential Facility ("IEF") exception, the facility was required to demonstrate and document three elements: 1) "The facility is isolated;" 2) "It is essential for access to care for ESRD beneficiaries; and" 3) "Its costs in excess of the composite rate are justifiable and attributable to the elements listed above." PRM § 2725.3. The term "isolated"
refers to the geographical location of the ESRD facility requesting the rate increase in relation to other ESRD facilities. Generally, to be considered isolated, the facility must be located outside an established metropolitan statistical area (MSA) and must provide dialysis to a permanent population, as opposed to a transient patient population.
PRM § 2725.3(B). The term "essential"
refers to access to care for ESRD beneficiaries. To document that it is essential, the facility must establish that a substantial number of its patients cannot obtain dialysis services elsewhere without additional hardship. Generally, the additional hardship incurred by ESRD patients are travel, time, and costs. However, other relevant factors may be considered in determining of a facility is essential. The ESRD facility must document the additional hardship its patients will incur.
PRM § 2725.3(C). With regard to cost, the PRM states, in relevant part, that
[o]ne factor which may contribute to an IEF higher cost per treatment is a low number of treatments. A facility must address this issue in its exception request by providing a computation of its utilization. . . and justification for any unused capacity. In its justification, the ESRD facility explains how patient fluctuation affects its cost per treatment.
The provider has the burden of proof of establishing all three of the IEF elements: The facility is responsible for demonstrating to HCFA's satisfaction that the requirements of this section, including the criteria in paragraph(g) of this section, are met in full. That is, the burden of proof is on the facility to show that . . . the criteria are met, and that the excessive costs are justifiable under the reasonable cost principles set forth in this part. The burden of proof is not on HCFA to show that the criteria are not met, and that the facility's costs are not allowable.
42 C.F.R. § 413.170(f)(5). The HCFA may not approve an exception request unless the facility "demonstrates with convincing evidence" that it satisfies the foregoing requirements. PRM § 2720.1; See also, 42 C.F.R. § 413.170(f)(5).
Facilities seeking an exception were required to submit an exception request within 180 days after being notified of a new prospective payment rate. 42 C.F.R. § 413.170(f)(4); PRM § 2720.2. These 180-day periods are referred to herein as "windows" or "window periods." Once an exception request was submitted, the HCFA had 60 days in which to disapprove the request, otherwise it was deemed approved. PRM § 2720. To ensure that requests were reviewed within 60 days, the PRM indicated that requests were to be sent to private insurance companies, working as HCFA's "fiscal intermediaries," who then had to review and process the requests within 15 working days. Id. The intermediaries would then forward "a preliminary recommendation, including appropriate workpapers and the reason for the decision, and the cost report and supportive documentation," to HCFA. PRM § 2723.3(F). The HCFA then had 45 working days to "review[] all the information submitted," and make a determination "based on the documentation submitted." PRM § 2720; PRM § 2724.
If a request was denied, the facility could appeal the HCFA's determination to the Provider Reimbursement Review Board ("PRRB"), which had the "authority to determine whether the HCFA action under review conformed to the provisions of [42 C.F.R. § 413.170] paragraph (f)." 42 C.F.R. § 413.170(h)(2); see also, PRM § 2726. Facilities were not, however, permitted to "submit to the . . . PRRB any additional information or cost data that were not submitted . . . at the time the facility requested an exception to its prospective payment rate." 42 C.F.R. § 413.170(h)(3)(ii); see also, PRM § 2726.1. Any decision by the PRRB was further made subject to review by the HCFA Administrator. 42 C.F.R. § 413.170(h)(2). A claimant whose application was denied by the HCFA Administrator could then seek judicial review of the agency's final determination in federal court, pursuant to 42 U.S.C. § 1395oo(f).
Plaintiff Geneva General Hospital is a participating provider in the Medicare program, providing dialysis services in the City of Geneva, New York, in the County of Ontario. On November 1, 1993, defendant opened an exception "window" period, meaning that providers had 180 days, until April 29, 1994, to submit exception requests. On April 20, 1994, Geneva General submitted an exception request to HCFA's intermediary, Blue Cross Blue Shield of the Rochester Area, on the grounds that it was an Isolated Essential Facility, as defined above in 42 C.F.R. § 413.170(g)(2). Plaintiff was then receiving $127.75 per treatment, but was seeking an increase of $50 per treatment. As for being isolated, plaintiff claimed that: 1) it is located on the border of the Rochester Metropolitan Statistical Area ("MSA"), and is rural; 2) it is located 38 miles from the next-nearest facility, and an average of 50 miles from other facilities; 3) the road between Geneva and the next-nearest facility, in Ithaca, is a two-lane road which, in winter, is difficult to travel because of blowing and drifting snow; and 4) if plaintiff's facility did not exist, 42% of current patients would have to travel over 25 miles to receive treatment. As for being essential, plaintiff stated that: 1) it had 61 hemodialyis patients, who ranged in age from 20 to 93; 2) 40% of those patients are diabetic, and 65% are over the age of 60; 3) patients traveled an average of 15 miles to reach plaintiff's facility, but would have to travel an average of 21.9 miles further to reach another facility, resulting in increased travel time and expense; 4) the twelve facilities closest to plaintiff's facility had openings for only 7 patients, which would leave 54 of plaintiff's patients without openings. Plaintiff further indicated that it incurred
higher costs as a result of being an isolated essential facility. These costs are primarily additional labor expenses due to scheduling inefficiency to accommodate patients from outlying areas. Additionally, higher costs are incurred as a result of having only 61 patients on average; whereas, our facility could accommodate as many as 108 patients with its existing 12 stations.
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