Opinion ID: 480354
Heading Depth: 2
Heading Rank: 2

Heading: Dietary Cost Reclassification

Text: 39 In its Medicare cost reports filed with Blue Cross for fiscal year 1980, the Monsour Medical Center correctly treated its dietary costs (including its employee cafeteria) and its snack bar costs as separate cost centers. Appellant's cost report claimed the snack bar as a non-reimbursable cost center. Blue Cross subsequently audited the report and discovered that some nonreimbursable snack bar costs had been reported in the reimbursable dietary/cafeteriaost center. It thus reclassified those costs to the snack bar cost center (i.e., it refused to reimburse them). It also reopened the Center's cost reports for fiscal years 1977 through 1979 and adjusted them in the same way. Because the Center was unable to verify its claims that its original reports were accurate, Blue Cross made these adjustments in reliance on data provided by an outside contractor who had operated the cafeteria and had ordered, stored and assembled the food that was ultimately transferred to and served by the snack bar. 40 The Center appealed these reclassification adjustments (approximately $318,000) to the PRRB, which found them to be appropriate. Monsour Medical Center v. Blue Cross & Blue Shield Ass'n./Blue Cross of W. Pa., PRRB Hearing Dec. No. 80-24, at 18 (June 14, 1984); Appellant's App. at A62. The Board found that the Center had failed to maintain verifiable and auditable financial records and statistical data to support [its] costs claimed, as required by 42 C.F.R. Secs. 405.406 and 405.453 (1985). Id. It therefore concluded that Blue Cross's resort to data furnished by the outside contractor was reasonable and responsible[;] ... [it was] an acceptable alternative in view of the [Center's] deficient ... records. Id. The district court concluded that the Board's approval of the cost reclassifications was based upon substantial evidence, 31 and the Center now appeals. 41 We will affirm this portion of the district court's summary judgment order for appellee. The Center disputes the accuracy of the contractor's data, and it has urged this court to consider the Center's own study finding that snack bar meals in fact cost much less than Blue Cross's reclassification indicates, but it has offered no defense of its recordkeeping. Substantial evidence indicates that the Center's records for the years in question do not contain accurate data in sufficient detail to support its claims for dietary cost reimbursement. 42 C.F.R. Sec. 405.453(c) (1985).