Psychiatric Healthcare v. Dept. Soc. Serv., WD 61691.

Citation100 S.W.3d 891
Decision Date01 April 2003
Docket NumberNo. WD 61691.,WD 61691.
PartiesPSYCHIATRIC HEALTHCARE CORPORATION OF MISSOURI d/b/a Lakeland Regional Hospital, Respondent, v. DEPARTMENT OF SOCIAL SERVICES, Division of Medical Services, Appellant.
CourtCourt of Appeal of Missouri (US)
100 S.W.3d 891
PSYCHIATRIC HEALTHCARE CORPORATION OF MISSOURI d/b/a Lakeland Regional Hospital, Respondent,
DEPARTMENT OF SOCIAL SERVICES, Division of Medical Services, Appellant.
No. WD 61691.
Missouri Court of Appeals, Western District.
April 1, 2003.

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James Robert Layton, Jefferson City, MO, for Appellant.

Richard Donald Watters, St. Louis, MO, for Respondent.



This appeal arises from a judgment by the Cole County Circuit Court reversing the decision of the Administrative Hearing Commission ("Commission"). The Commission ruled that the Missouri Department of Social Services, Division of Medical Services ("the Division") could recoup payments previously made to Psychiatric Healthcare Corporation ("Hospital") for medical care and treatment of Medicaid beneficiaries. On appeal, Hospital asks this court to uphold the circuit court's declaratory judgment that two of the Division's regulations are invalid and asks this court to reverse the Commission's decision as to a particular patient, identified as Patient 7.

Factual and Procedural Background

The Division is charged by law, pursuant to section 208.201 RSMo, with the responsibility of administering the federal Medicaid Program1 in Missouri. In order to receive federal funds for its administration of the program, the State has implemented statutes and regulations to comply with federal Medicaid requirements. 42 U.S.C. § 1302 and §§ 1396, et seq. As authorized by statute, the Division has implemented specific regulations applicable to licensed health care providers authorized under section 208.153 to provide Medicaid services in Missouri.2 Federal regulations govern the Division's rules and regulations applicable to Medicaid providers.3 The Division

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is required by those federal regulations to conduct monitoring of Medicaid providers and review of Medicaid claims, and is empowered by section 208.201.5 RSMo to do so. This monitoring and review is conducted under the authority and procedural guidelines round at 13 CSR 70-15.020, 13 CSR 70-15.070, and 13 CSR 70-15.090.4

The procedure the Division uses to fulfill its monitoring and review duties is as follows. The Division contracts with a review agency, CIMRO, Inc., to conduct three types of utilization reviews of inpatient care for psychiatric patients under twenty-one years of age. Those reviews are: (1) the admission review, performed at the point of admission to determine whether inpatient care is medically necessary; (2) the continuing stay review, conducted while the patient is in the hospital to determine whether continued stay as an inpatient is medically necessary; and (3) certificate of need reviews, which are conducted several months after the patient is discharged from the hospital to determine whether the inpatient stay was medically necessary and whether the hospital has complied with specific patient record keeping requirements.

The Admission and Continuing Stay Reviews:

The admission and continuing stay reviews both are governed by 13 CSR 70-15.020. The purpose of these reviews is to prospectively determine whether the patient's admission and continuing stay are "medically necessary."5 With regard to the admission review, when a Medicaid patient arrives at a hospital, the hospital calls CIMRO to obtain approval for admission. The hospital's staff informs CIMRO what is contained in the medical record, and the CIMRO nurse may ask questions of the hospital about the patient's condition. The nurse reviewer compares the patient's medical information with a set of written screening criteria to determine whether to approve admission. That set of written criteria, used for both the admission and continuing stay reviews, are the severity of illness/intensity of service ("SI/IS") criteria mandated for use by regulations 13 CSR 70-15.020(6) and 13 CSR 70-15.020(11)(B). These criteria, referenced to herein as "Criteria A" are set forth in Appendix A to this opinion. If the nurse reviewer approves the admission, the hospital is advised of an "initial length of stay" determination, i.e., the number of days inpatient hospital care is initially approved for that patient.

Once the initial length of stay is exhausted, if the hospital believes the patient requires a longer stay, the hospital again contacts CIMRO. The CIMRO nurse reviewer again reviews the medical record information for the patient, compares it to the same SI/IS criteria (Criteria A), and makes a decision about the additional length of stay to be approved. Generally, for continuing stay reviews, CIMRO nurses approve five days at a time. A single patient may have multiple continuing stay reviews during the course of hospitalization.

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The Retrospective CON Reviews:

Several months after the patients are discharged, CIMRO, under the Division's direction, conducts a post-utilization, or certification of need ("CON") review of the treatment records of a sample of the provider's patients. A quarterly review involving a sample of 25% of a provider's claims is done in psychiatric cases for patients less than twenty-one years of age. Guidelines and procedures for the retrospective CON reviews are found at 13 CSR 70-15.070. There are two types of CON reviews applicable to this appeal. The first is a retrospective re-review of the medical necessity of the patient's hospitalization, and the second is a review for the presence of a timely completed CON form.

The first type of CON review, performed six to eighteen months after the patient is discharged, is based on a review of the patient's entire medical records. First, a nurse reviews the record, applying a new set of SI/IS criteria, which differ from the original SI/IS criteria used in the admission and continuing stay process. This second set of criteria are referred to at the Division's regulation 13 CSR 70-15.070(11)(D) as the "Child and Adolescent Assessment Psychiatric Treatment screening criteria." These criteria are referenced to herein as "Criteria B" and are set forth in Appendix B to this opinion. If the nurse reviewer determines that the new criteria are met, no further action is taken. If the nurse determines that the new criteria are not met, she refers the case to a physician reviewer for a re-determination of the medical necessity of the hospitalization. In making this re-determination, the physician reviewer is not required to apply any written criteria (including either Criteria A or Criteria B); rather, each physician reviewer must determine, based on his own medical judgment, whether the admission or the continued stay was medically necessary.

The second type of CON review is conducted merely to determine whether a qualifying and timely-filed CON form is present in the patient's file. The Division's regulations 13 CSR 70-15.070(5) and (6) require a written and signed CON form to be completed as to each patient within fourteen days of admission.6 If on CON review the form is not present, the hospital has twenty days in which to submit the original form (which must have been completed within the first fourteen days after admission). If the hospital does not produce a copy of the timely and properly completed form, all payment for the patient's entire hospitalization is recouped by the Division pursuant to 13 CSR 70-15.070(11).

Application of the Rules

In the case at hand, Hospital is an inpatient psychiatric hospital located in Springfield, Missouri, providing psychiatric services to juveniles who qualify for Medicaid coverage. Hospital receives payment for its services to Medicaid patients from the Division. This appeal is the result of determinations by the Division after CON reviews to recoup $92,445.34 from Hospital for Medicaid payments made for acute inpatient psychiatric services provided to eighteen adolescent Medicaid beneficiaries between 1996 and 1998.

For each of the patients involved in this case, CIMRO initially approved the admission and the continuing stays at Hospital

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as being "medically necessary" based on the above described procedures. The CON reviews in this case resulted in either (1) physician reviewers determining that some or all of the inpatient hospitalization was not medically necessary, or 2) a determination that a properly completed CON review form was not present in the patient's file. Based on these reviews, the Division ordered recoupment of funds paid to Hospital for the treatment of the eighteen patients originally involved in this case. At or before the Commission hearing, the Division admitted it had improperly recouped payments on six of those eighteen patients: Patients 3, 4, 9, 10, 13, and 18. These patients are not at issue in this appeal. The remaining patients fall into two categories: (1) those for whom recoupment was ordered based on a finding that there was not a timely and properly completed CON form included in the patient's file (Patients 6, 7, 8, 11, 15, 16, and 17); and (2) those for whom recoupment was ordered based on a physician reviewer's failure to find "medical necessity" for the continued stays (Patients 1, 2, 5, 12, and 14). The Commission reversed the Division's recoupment decisions as to Patients 1 and 12, and the Division has not appealed that decision to this court. Thus, in this second category of patients, only Patients 2, 5, and 14 remain at issue in this appeal.

Patient 7

The issue with regard to Patient 7 — the subject of Point III below — concerns a technical denial issued by the Division in a letter to Hospital dated February 16, 1999. The Division asserted it was entitled to recoupment of the entire amount paid to Hospital for Patient 7's treatment. The letter indicates that recoupment was required because a timely-filed CON form was not included in the patient's file. Hospital...

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