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FORBES METROPOLITAN HEALTH SYSTEM v. COMMONWEALTH PENNSYLVANIA (05/03/89)

decided: May 3, 1989.

FORBES METROPOLITAN HEALTH SYSTEM, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, RESPONDENT



Appeal from the Order of the Department of Public Welfare, in the case of Appeal Of: Forbes Metropolitan Health System, Docket Nos. 37-84-138; 37-85-054, and 37-85-085.

COUNSEL

R. Dell Ziegler, with counsel, Stephen H. Nimmo, Buchanan Ingersoll, for petitioner.

Jeffrey P. Schmoyer, Assistant Counsel, with him, Diane J. Bartels, Assistant Counsel, for respondent.

Judges Barry and Smith, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Judge Smith.

Author: Smith

[ 125 Pa. Commw. Page 572]

Forbes Metropolitan Health System (Petitioner) appeals from the Order of the Department of Public Welfare (DPW), Office of Hearings and Appeals (OHA), affirming the Attorney Examiner's recommendation that Petitioner's claim for increased payment for services to Medicaid patients be denied. The OHA order is affirmed.

The issue before this Court is whether DPW acted arbitrarily and capriciously, in violation of Petitioner's constitutional rights or contrary to the law regarding Pennsylvania's Prospective Payment System for Medicaid patients by: a) failing to include costs in Petitioner's base year for interest and depreciation expenses for Petitioner's moveable equipment; b) failing to use the per diem determined by the Auditor General in calculating Petitioner's base year per diem; and c) calculating Petitioner's average length of stay paid claims figure based on Petitioner's and not the Auditor General's count of medical assistance days.

Petitioner, Forbes Metropolitan Health System (formerly Columbia Health Center), is a Pittsburgh hospital participating in Pennsylvania's Medicaid Program. In 1980, in compliance with the Health Care Facilities Act, Act of July 19, 1979, P.L. 130, as amended, 35 P.S.

[ 125 Pa. Commw. Page 573]

§§ 448.701-448.712, Petitioner applied for and obtained a Certificate of Need (CON) from the Health Systems Agency of Southwestern Pennsylvania to build a new hospital. On January 6, 1981, the Secretary of Health for the Commonwealth approved Petitioner's application for approval of capital expenditures. Included in Petitioner's application for approval was a list of $4,000,000 of moveable equipment Petitioner planned to purchase. Petitioner's director of finance testified that fifty to seventy-five percent of the moveable equipment identified on this list was placed in service by April of 1984.

Respondent DPW is responsible for administering Pennsylvania's Medicaid Program. Pursuant to Title XIX of the Social Security Act, 42 U.S.C.A. §§ 1396a-1396q (West Supp. 1984-87), a state may participate in the Medicaid program after approval of the state's plan for medical assistance and reimbursement by the Secretary of Health and Human Services through his designee, the Health Care Finance Administration (HCFA). Prior to 1980, Title XIX required payment by the states on a reasonable cost-related basis. With the passage of the Boren Amendment in 1980, however, states were required to make assurances to the Secretary of Health and Human Services that rates of reimbursement were:

[R]easonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable state and ...


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