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Glendive Medical Center6/18/2002
Submitted on Briefs: September 6, 2001
Glendive Medical Center, Inc. (GMC), appeals from an order of the Montana Seventh Judicial District, Dawson County, affirming the Findings of Fact and Conclusions of Law of the Board of Public Assistance of the State of Montana. We affirm.
We restate the issue on appeal as follows:
Did the District Court err in determining that the decision of the Board of Public Assistance was legally correct?
BACKGROUND
The following relevant facts are taken from the undisputed findings of the hearings officer for the Montana Board of Public Assistance. Additional facts will be included in the discussion as necessary.
GMC operates a hospital, nursing home, and the Eastern Montana Veterans Home (EMVH), in Glendive, Montana. EMVH is a state-owned, 80- bed health care facility licensed by the Montana Department of Public Health and Human Services (DPHHS) to participate in the Montana Medicaid program as a skilled nursing facility for the sole use of veterans and their spouses. GMC originally contracted with the former Department of Corrections and Human Services (DCHS) to operate EMVH on behalf of DCHS. Since the July 1, 1995, effective date of an agency reorganization mandated by the 1995 Legislature, DPHHS has succeeded DCHS as the state agency party to the contract with GMC for the operation of EMVH.
GMC began management and operation of the newly-constructed EMVH in July 1995. GMC receives revenue from several sources for the operation of EMVH, including Veterans Administration (VA) per diem payments, Medicaid reimbursements, payments made by patients from their own resources, workers' compensation , and private insurance. Soon after assuming management and operation of EMVH, GMC applied for enrollment of EMVH in the Montana Medicaid program as a provider of skilled nursing facility services. GMC executed a provider enrollment form and a Medicaid nursing facility provider agreement on behalf of EMVH, and began submitting claims to Medicare and Medicaid in August 1995, after receiving its certification from the state.
GMC initially received Medicaid payments on behalf of EMVH based upon an interim, temporary Medicaid rate, until it filed a cost report with DPHHS based upon at least six months of participation in the Medicaid program. Upon receiving the cost report, DPHHS then calculates the proper Medicaid rate through an adjustment process based upon the reported costs submitted by EMVH. However, prior to submission of the six-month cost report, due in February 1996, GMC and DPHHS initiated discussions regarding the correct method of reporting the VA per diem payments.
GMC asserted that the Administrative Rules of Montana did not require it to report its receipt of the monthly VA per diem payment as anything other than a subsidy to offset against its general operating expenses. The rate at which Medicaid reimburses a participating medical facility is based upon operating costs reported in the facility's annual cost report. Medicaid reimbursement rates therefore differ from facility to facility. Under GMC's suggested method of reporting the per diem payments, the rate at which Medicaid reimbursed GMC would be lower as a result of lower reported operating costs.
DPHHS, however, argued that the administrative rules required GMC to report the monthly VA per diem payment as a third-party liability payment. Reporting the per diem payments as a third-party payment would reduce GMC's Medicaid reimbursements by the aggregate amount of the VA per diem payment for each month, resulting in a steeper reduction of Medicaid reimbursement payments than u
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