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MERCER COUNTY HOME AND HOSPITAL v. COMMONWEALTH PENNSYLVANIA (11/09/89)

decided: November 9, 1989.

MERCER COUNTY HOME AND HOSPITAL, PETITIONER,
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, RESPONDENT



PETITION FOR REVIEW, (DEPARTMENT OF PUBLIC WELFARE).

COUNSEL

Gerald Gornish, with him, Jeffrey B. Schwartz, of counsel, Wolf, Block, Schorr and Solis-Cohen, Philadelphia, for petitioner.

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

Doyle and McGinley, JJ., and Barbieri, Senior Judge.

Author: Mcginley

[ 129 Pa. Commw. Page 410]

Mercer County Home and Hospital (Mercer) has applied, under Pa.R.A.P. 1532(b), for summary relief in favor of its petition for review of the decision of the Pennsylvania Department of Public Welfare (DPW). Pa.R.A.P. 1532(b) allows the Court to enter judgment on an application for summary relief if the right of the applicant thereto is clear.

Mercer seeks review of an order of the Secretary of Public Welfare which denied reimbursement of costs under Pennsylvania's Medical Assistance Program, Section 443.1 of the Public Welfare Code,*fn1 for the period October 1, 1980 through December 31, 1980. The sole issue is whether, under Section 201 of the General Appropriation Act of 1980,*fn2 DPW should use Mercer's interim rate or its final audited rate to calculate the amount of reimbursement due.

This Court in Franklin County Nursing Home v. Department of Public Welfare, 126 Pa. Commonwealth Ct. 375, 559 A.2d 1002 (1989), McGinley, J. dissenting, held that Section 201 requires DPW to reimburse the final audited rate. Because the issue presented here is identical to the issue raised in Franklin, we must reverse DPW.

Mercer is a provider of skilled nursing facility (SNF) and intermediate care facility services under the Pennsylvania

[ 129 Pa. Commw. Page 411]

Medical Assistance Program. Mercer receives interim payments throughout the fiscal year based upon the latest annual adjusted reported costs and approved budgets. At the end of the fiscal year, Mercer's account is audited and an appropriate adjustment made for over or under payments. Prior to 1980, this adjustment had been subject to a statewide ceiling. Section 201 of the General Appropriation Act of 1980 replaced the statewide ceiling with a system whereby separate ceilings were calculated for the various nursing homes within each of Pennsylvania's five Standard Metropolitan Statistical Areas (SMSAs).

By a letter dated June 30, 1982, DPW, through the Auditor General, issued an audit report showing that Mercer's SNF per diem operating costs were $46.22 before the application of any ceilings. Nonetheless, the audit report determined that Mercer's rates for the period October 1, 1980 through December 31, 1980 were capped by the new SMSA ceiling and thus limited to $39.24 per day. The net effect was a loss to Mercer in the amount of $103,632.06.

Mercer appealed from DPW's 1980 audit report and, on December 24, 1984, a DPW hearing officer issued an adjudication recommending that Mercer's appeal be denied. However, on January 25, 1985, the director of the Office of Hearings and Appeals (OHA) rejected the recommendation of the hearing officer and ordered that Mercer be reimbursed on the basis of its final audited rates in effect as of September 30, 1980. ...


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