Opinion ID: 4537297
Heading Depth: 2
Heading Rank: 3

Heading: Correct Basis for NBVs

Text: ¶39. Methodist asks that this Court hold that NBV adjustments must be based upon new construction costs, arguing that the AHO’s formula was not supported by substantial 17 evidence and that the DOM’s affirmation and adoption of the AHO’s opinion as the DOM’s final decision was mere pretense. ¶40. This Court is not allowed to do the job of administrative agencies and cannot substitute its own opinion in place of an agency decision. Ray, 172 So. 3d at 187. Accordingly, we refuse to dictate how the DOM bases adjustments to NBVs absent any showing that such a rule exists or that the DOM has failed to act in accordance with such rule. ¶41. Methodist further argues that the DOM’s adoption of the AHO’s opinion as its final decision on the matter was mere pretense because the DOM filed another SPA for public notice and comment that attempted to clarify whether the 175 percent adjustment for Methodist was a multiplier or an add-on. The amendment to which Methodist is referring was to take effect January 1, 2016, but the DOM affirmed and adopted the AHO’s opinion on June 24, 2016. The fact that the AHO’s opinion became the DOM’s final decision on the matter well after the clarifying amendment took effect weighs heavily against a finding that the DOM’s affirmation and adoption of the AHO’s opinion was mere pretense. The DOM’s affirmation and adoption of AHO’s opinion as the DOM’s final decision on the matter was clearly meant to overrule any preexisting rules or decisions on the matter. Therefore, we find Methodist’s contention to be without merit. II. Whether the DOM violated state and federal laws requiring notice. ¶42. Methodist argues that the DOM failed to comply with 42 C.F.R. § 447.205, the federal regulation requiring that state Medicaid agencies “provide public notice of any significant 18 proposed change in its methods and standards for setting payment rates for services.” 42 C.F.R. § 447.205(a), Westlaw (current through May 21, 2020). Methodist claims that the DOM also failed to comply with several state laws requiring public notice of an agency’s proposed rule changes. A. Federal Law Requiring Public Notice ¶43. If a state chooses to participate in the Medicaid program, it must submit a State Plan to CMS that satisfies the substantive requirements of 42 U.S.C. § 1396a (a)(13)(A) (2012), and the procedural requirements set forth in 42 C.F.R. § 447.200, Westlaw (current through May 21, 2020). Any later changes in the payment rates established in the State Plan require the state Medicaid agency to submit proposed plan amendments to CMS for approval. 42 C.F.R. § 447.205 requires a state agency “provide public notice of a significant proposed change in its methods and standards for setting payment rates for services.” 42 C.F.R. § 447.205, Westlaw (current through May 21, 2020). Subsection (c) of the regulation outlines the content requirements of the public notice, stating that the notice must include a description of the proposed change in methods and standards, estimates of any expected increase or decrease in annual aggregate expenditures and an explanation for why the agency is changing its methods and standards. 42 C.F.R. § 447.205(c), Westlaw (current through May 21, 2020). ¶44. Here, the DOM’s published notice gave a detailed description of several of the proposed changes that the SPA 15-004 would implement, stated that the “estimated annual aggregate expenditure of the [DOM] are expected to be budget neutral” and explained that 19 the DOM was “implementing these changes to nursing facility reimbursement as authorized by Miss. Code Ann. Section 43-13-117.” ¶45. “As their name suggests . . . ‘notice’ provisions are neither invariably nor primarily designed to afford exhaustive disclosure, but to alert interested parties that their substantive rights may be affected in a forthcoming public proceeding.” Visiting Nurse Ass’n of N. Shore, Inc. v. Bullen, 93 F.3d 997, 1010 (1st Cir. 1996), abrogated on other grounds by Long Term Care Pharmacy Alliance v. Ferguson, 362 F.3d 50 (1st Cir. 2004). “Notice provisions require only that the agency ‘outline[] the substance of the plan in sufficient detail to allow interested parties to decide how and whether to seek more information on the plan’s particular aspects. The agency was not required to publish every minute detail of the plan.’” Id, (quoting Miss. Hosp. Ass’n v. Heckler, 701 F.2d 511, 520 (5th Cir. 1983)). ¶46. Methodist relies on a case from the United States Court of Appeals for the Fourth Circuit to argue that an agency’s failing to provide public notice of an amendment proposing significant changes to the agency’s methods and standards renders the amendment ineffective until proper public notice is published. N.C. Dep’t of Human Res. v. U.S. Dep’t of Health & Human Servs., 999 F.2d 767, 768 (4th Cir. 1993). In that case, however, the portion of the SPA at issue proposed a retroactive effective date. The Health Care Financial Administration (HCFA) Administrator approved the substance of North Carolina’s SPA but denied the portion that specified the retroactive effective date, reasoning that the significant change to the agency’s methods and standards could not become effective retroactively because it would be impossible to give public notice before the retroactive effective date. 20 Id. Therefore, any SPA proposing a retroactive effective date cannot be in compliance with 42 C.F.R. § 447.253(h), Westlaw (current through May 21, 2020), which requires that the state Medicaid agency provide CMS with assurances that it has complied with the publicnotice requirements of 42 C.F.R § 447.205 before CMS will approve the plan change. Id. ¶47. Here, the AHO determined that “Methodist was aware that a general increase of NBVs was imminent and that changes to its adjustment percentage were being considered.” The AHO further found that the publication of the notice was proper and that the notice set forth a comment period but that no comments were received. ¶48. Methodist argues that the AHO’s claim that Methodist knew that changes to its percentage were being considered was pure fabrication. Although the AHO does not cite specific evidence from the record to support his finding, it is evident from the record that Methodist had actual knowledge that some change to their adjusted NBV was imminent. A Methodist employee testified at the administrative hearing and stated that he had participated in the webinars and had seen that Methodist’s proposed NBV was $299,298 for 2015. At this moment, Methodist either knew or should have known that the manner in which Methodist’s NBV adjustment was calculated was going to change under SPA 15-004. Methodist knew that under SPA 15-004, the standard NBV would be rebased to $91,200, and according to the simulation letters and the DOM’s training webinars, Methodist knew its expected NBV would be $299,298. At the administrative hearing, a reimbursement consultant for Methodist testified that Methodist’s expected NBV, $299,298, was consistent with the 328.178 percent add-on that had been used to calculated Methodists adjusted NBV since 2004. This was not 21 true though. If Methodist had done the math, it would have realized that 328.128 percent of $91,200 is $299,298 and that SPA 15-004 was proposing to change Methodist’s NBV adjustment calculation to a 328.178 percent multiplier rather than the 328.178 percent add-on that Methodist had received in past years. Methodist’s simulation letter from the DOM calculated Methodist’s NBV adjustment with a 328.178 percent multiplier, instead of a 328.178 add-on as well. After receiving this notice, Methodist failed to raise an issue with this change, but now Methodist insists that it is still entitled to a 328.178 percent add-on adjustment for its NBV. ¶49. The DOM’s publication of notice included all of the information it was required to address according to 42 C.F.R. § 447.205, including information about where a copy of the SPA could be found to review the entire document. Pursuant to CMS’s requirements, the DOM published the proposed SPA 15-004 on its website, which was accessible by all Medicaid providers. And, as the published notice stated, the DOM provided a copy of the SPA to each satellite Health Department location in all eighty-two counties. These copies of the SPA, which were available to the public for review, included the change to Methodist’s NBV adjustment to 175 percent. ¶50. After reviewing the record, we find that the DOM complied with federal laws requiring notice of proposed changes to the State Plan. B. State Laws Requiring Public Notice ¶51. Methodist argues that the DOM violated state laws that require public notice of proposed changes to state agency rules, which are to be published through the Mississippi 22 Secretary of State’s office in the administrative bulletin. ¶52. “The [DOM] is an agency as defined under Section 25-43-3 and, therefore, must comply in all respects with the Administrative Procedures Law, Section 25-43-1 et seq.” Miss. Code Ann. § 43-13-137 (Rev. 2015). “At lease twenty-five (25) days before the adoption of a rule an agency shall cause notice of its contemplated action to be properly filed with the Secretary of State for publication in the administrative bulletin.” Miss. Code Ann. § 25-43-3.103(1) (Rev. 2018). The Mississippi Code further provides, The Secretary of State retains the authority to reject proposed and newly adopted rules not properly filed in accordance with the Secretary of State’s rules prescribing the numbering system, form, style or transmitting format for such filings. The Secretary of State shall not be empowered to reject filings for reasons of the substance or content or any proposed or newly adopted rule. The Secretary of State shall notify the agency of its rejection of a proposed or newly adopted rule as expeditiously as possible and accompany such notification with a stated reason for the rejection. A rejected filing of a proposed or newly adopted rule does not constitute filing pursuant to Section 25-43-3.101 et seq. of this chapter. Miss. Code Ann. § 25-43-2.101(4) (Rev. 2018). “A rule adopted after July 1, 2005 is invalid unless adopted in substantial compliance with the provision of Sections 25-43-3.102 through 25-43-3.110.” Miss. Code Ann. § 25-43-3.111(1) (Rev. 2018). ¶53. Although Methodist correctly argues that the DOM is an agency subject to the same requirements of other state agencies and is required to substantially comply with notice requirements for newly adopted or proposed rules, the DOM argues that the State Plan is not a “rule” of the agency but rather a contract between the Medicaid office and the federal government that delineates how the state agency will appropriate the funding it receives from the federal government. 23 ¶54. The Centers for Medicare and Medicaid Services (CMS) is the federal agency responsible for ensuring that state Medicare and Medicaid agencies comply with federal law and the federal agency’s requirements for receiving funding. CMS describes the contractual nature of state plans on its website, stating, A Medicaid and CHIP state plan is an agreement between a state and the Federal government describing how that state administers its Medicaid and CHIP programs. It gives an assurance that a state will abide by Federal rules and may claim Federal matching funds for its program activities. The state plan sets out groups of individuals to be covered, services to be provided, methodologies for providers to be reimbursed and the administrative activities that are underway in the state. When a state is planning to make a change to its program policies or operational approach, states send state plan amendments (SPAs) to the Centers for Medicare & Medicaid Services (CMS) for review and approval. States also submit SPAs to request permissible program changes, make corrections, or update their Medicaid or CHIP state plan with new information. https://www.medicaid.gov/medicaid/medicaid-state-plan-amendments/index.html (last visited Apr. 14, 2020). ¶55. The DOM offers further support for its argument that the State Plan is not a rule and therefore is not subject to the public-notice requirements of the Mississippi Administrative Procedures Act (APA) by citing a case in which the Louisiana Supreme Court held that “the State Plan is not a rule under the [Louisiana Administrative Procedures Act].” Women’s and Children’s Hosp. v. Dep’t of Health and Hosps., 2 So. 3d 397, 407 (La. 2009). ¶56. We find CMS’s description of SPAs to be controlling here. When CMS’s description of SPAs is coupled with the highly persuasive language from the Louisiana Supreme Court, we agree that the DOM’s State Plan is not a rule that must comply with the notice 24 requirements of the Mississippi APA. III. Whether the DOM acted contrary to requirements set by the Legislature. ¶57. In 2012, the Legislature directed the DOM to develop a plan providing revisions to the current reimbursement methodology for nursing facility services. . . . [DOM] shall not implement these plans, but shall submit the plans to the Public Health and Welfare Committee of the Senate and the Medicaid Committee of the House no later than October 15, 2012, including necessary legislative recommendations. H.B. 421, Reg. Sess., 2012 Miss. Laws ch. 530, § 5. ¶58. Methodist argues that the DOM violated the letter and spirit of House Bill 421 and acted outside the scope of its legislatively derived authority because the bill mandated that all proposals to revise the reimbursement methodologies pertaining to nursing facilities be submitted to the legislature for review and authorization before the DOM could implement them. We find that the DOM complied with the legislature’s directives. ¶59. The DOM responded to House Bill 421 by creating the Nursing Facility Reimbursement Methodology Revision Committee to assist in developing a revised reimbursement methodology for nursing facilities. The DOM chose the option it thought most appropriate and presented it to the Legislature in a legislative report in which the DOM requested legislative authority to implement changes to the current reimbursement methodology for nursing facilities and to revise several provisions of the State Plan, including provisions of the fair-rental-value system. ¶60. We find that the DOM did not violate House Bill 421 or act beyond the scope of its legislatively derived authority because the Legislature clearly limited the DOM to developing 25 a plan for revisions but not the power to implement them. And the DOM’s legislative report clearly shows that the DOM never had any intention to implement the recommended changes absent legislative approval. ¶61. “[A] statutory creation[] may only exercise those powers expressly granted or necessarily implied by the Legislature and . . . such powers ‘must be found within the four corners of the statute under which the agency operates.’” Green v. Cleary Water, Sewer & Fire Dist., 910 So. 2d 1022, 1026 (Miss. 2005) (quoting Strong v. Bostick, 420 So. 2d 1356, 1361 (Miss. 1982)). ¶62. After receiving the DOM’s report and recommendations for changes to the State Plan in January 2014, the Legislature drafted and passed House Bill 1275 during the 2014 Regular Session. House Bill 1275 authorized the DOM to “update the case-mix payment system resource utilization grouper and classifications and fair rental reimbursement system.” When examining the four corners of the statute, it is clear that the legislature authorized the DOM to update the fair-rental-reimbursement system without including any restrictive or qualifying language. If the Legislature intended to limit the DOM only to enact changes pursuant to the legislative report, then the Legislature would explicitly stated so in House Bill 1275.