Opinion ID: 186394
Heading Depth: 2
Heading Rank: 2

Heading: Equivalent Provider Status

Text: 18 As related above, CMS concluded that the St. Elizabeth's TCU did not qualify for the new provider exemption because (1) the fact that it was opened using operating rights acquired from Friel meant it had already been in operation under prior ownership, and (2) Friel was an equivalent provider of skilled nursing and/or rehabilitative services. Decision of Administrator at 11. Under the terms of the governing regulation, both conclusions had to be made to disqualify the TCU from the exemption. See 42 C.F.R. § 413.30(e) (1997). 19 To come to the second conclusion-that Friel operated as a SNF or its equivalent-CMS relied primarily on the fact that Friel was a Medicaid-certified NF and operated as such. Id. Specifically, the Administrator reasoned: 20 [B]oth Medicare SNFs and Medicaid NFs are required to provide directly or indirectly, the same basic range of services. These ranges of services include those nursing services and specialized rehabilitative services needed to attain or maintain each resident's highest practicable level of physical, mental, and psychological well-being. Consequently, the fact that the prior owner of the [TCU's] DON rights was a NF supports the conclusion that it [was] clearly an equivalent provider of skilled nursing and/or rehabilitative services.... 21 Id. As a comparison of the statutory definitions of NFs and SNFs reveals, this reasoning is flawed. The Medicaid statute defines a NF as: 22 An institution (or a distinct part of an institution) which 23 (1) is primarily engaged in providing to residents: 24 (A) skilled nursing care and related services for residents who require medical or nursing care, 25 (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons, or 26 (C) on a regular basis, health-related care and services to individuals who because of their mental or physical condition require care and services (above the level of room and board) which can be made available to them only through institutional facilities.... 27 42 U.S.C. § 1396r(a) (emphasis added). In contrast, Medicare defines a SNF as an institution that: 28 (1) is primarily engaged in providing to residents — 29 (A) skilled nursing care and related services for residents who require medical or nursing care, or 30 (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons, and is not primarily for the care and treatment of mental diseases.... 31 42 U.S.C. § 1395i-3(a) (emphasis added). 32 It is evident that the range of services provided by a NF can encompass skilled nursing or rehabilitative care. Some facilities may, indeed, qualify as both NFs and SNFs. However, a facility must be primarily engaged in providing skilled nursing or rehabilitative care to qualify as a SNF, whereas a facility need not even offer such services at all to qualify as a NF. Thus, the bare fact that an institution has gained NF status or is operating as a NF, without more, is not sufficient to qualify the NF as a SNF or its equivalent. To do so, a NF would additionally have to be primarily engaged in providing... skilled nursing care and related services ... or rehabilitation services.... 42 U.S.C. § 1395i-3(a)(1). 33 The record evidence is all to the effect that Friel was primarily engaged in providing custodial care to its residents; it does not show that Friel was primarily engaged in providing skilled nursing and/or rehabilitative services. The Government points out that Friel provided some treatment of bed sores, vitamin injections, and some unspecified rehabilitation as skilled nursing care, see Govt. Br. at 52-54. But the underlying documentary evidence as to the provision of these services suffices only to show that Friel occasionally provided this limited range of services. Thus, the CMS conclusion that Friel was a SNF or equivalent must be overturned for lack of substantial evidence, under 5 U.S.C. § 706(E)(2).