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FRANKLIN COUNTY NURSING HOME v. COMMONWEALTH PENNSYLVANIA (06/06/89)

decided: June 6, 1989.

FRANKLIN COUNTY NURSING HOME, PETITIONER,
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, RESPONDENT



PETITION FOR REVIEW (DEPARTMENT OF PUBLIC WELFARE).

COUNSEL

Gerald Gornish, Jeffrey B. Schwartz and Steven E. Bernstein, Wolf, Block, Schorr and Solis-Cohen, Philadelphia, for petitioner.

Bruce G. Baron, Asst. Counsel, Harrisburg, for respondent.

Crumlish, Jr., President Judge, and Craig, Doyle, Barry, Colins, McGinley and Smith, JJ. McGinley, Judge, dissenting.

Author: Smith

[ 126 Pa. Commw. Page 376]

Franklin County Nursing Home (Franklin) appeals from an order of the Executive Deputy Secretary of the Department of Public Welfare (DPW) denying Franklin reimbursement of costs under Pennsylvania's medical assistance program, Section 443.1 of the Public Welfare Code.*fn1 This Court reverses DPW.*fn2

The issue before this Court is whether Section 201 of the General Appropriations Act of 1980 (Act)*fn3 required DPW to

[ 126 Pa. Commw. Page 377]

    reimburse Franklin for the period October 1, 1980 to June 30, 1981 at a rate not less than its immediately preceding rate, and whether the Act further required DPW to utilize Franklin's final audited rate in determining the rate of reimbursement as opposed to Franklin's interim rate for the period October 1, 1980 to June 30, 1981.

I

Franklin is a county skilled nursing and intermediate care facility providing services to Medicaid patients pursuant to the medical assistance program. In Section 201 of the Act, signed into law on June 18, 1980, the General Assembly directed DPW to replace the existing statewide ceiling system of reimbursement rates for county nursing homes with a new group-based ceiling system which involved the calculation of separate reimbursement ceilings for county homes within each of the five standard metropolitan statistical areas (SMSA) in the Commonwealth. Section 201 further provided that no public nursing home would have a ceiling below its reimbursement rate in effect prior to implementation of the new ceilings and that a change in the method of reimbursement must receive prior approval by the United States Department of Health and Human Services (HHS).

On July 26, 1980, DPW published a notice in the Pennsylvania Bulletin (10 Pa.B. 3122) stating its intention to amend the current statewide ceilings in accordance with requirements of the Act. Subsequently, on September 30, 1980, DPW submitted a request to HHS for approval of a proposed amendment to the Pennsylvania State Plan for Medical Assistance (state plan) noting on the HHS transmittal form that such amendment was being sought to comply with Section 201 of the Act. HHS disapproved the request in a letter dated December 24, 1980 for reasons set forth in an attached memorandum which stated the following with reference to the "no loss" clause of the Act:

Additionally, we observe that the language in the Pennsylvania appropriations bill concerning the subject amendment

[ 126 Pa. Commw. Page 378]

    includes a 'no loss' clause for affected facilities. That is, the appropriations language provides that no public nursing home shall have a ceiling below its rate that was in effect prior to the imposition of the ceilings. The 'no loss' clause appears acceptable, but this provision should be included in the plan.

Although the state plan was approved by HHS in March of 1981,*fn4 the final plan did not include the "no loss" clause referred to in the Act, nor was this clause included in the subsequent DPW regulations which implemented the Act.*fn5

After publication of DPW's proposed rules at 10 Pa.B. 4963-4973 (1980), but prior to approval of the state plan by HHS, Franklin wrote DPW to inquire about the proposed changes in reimbursement to county homes. DPW responded by letter dated January 29, 1981 that if a county home's SMSA ceiling is less than the reimbursement rate which the home received on December 30, 1980, reimbursement at the higher rate would continue.

The SMSA based ceilings became effective October 1, 1980 and Franklin was assigned to the non-SMSA Group III. The skilled nursing facility ceiling for Group III was $39.24 for the period October 1, 1980 through December 31, 1980 and the intermediate care facility ceiling for this period was $29.14. Franklin's final audited rates for this same three month ...


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