Opinion ID: 424821
Heading Depth: 2
Heading Rank: 1

Heading: The Regulatory Definition of a Special Care Unit

Text: 14 During 1977 and 1978, the fiscal years at issue in this case, 42 C.F.R. Sec. 405.452(d)(10) enumerated six criteria necessary to qualify a unit for special care unit treatment. These criteria provided: (1) the unit must be in a hospital; (2) the patient care in the unit must be extraordinary; (3) the care in the unit must be concentrated; (4) the care in the unit must be continuous; (5) the unit must be physically identifiable as separate from general patient care areas of the hospital; and (6) the unit must have specific written policies. 4 15 The Deputy Administrator, in rejecting special care unit treatment for the rehabilitation center, went beyond the plain meaning of these requirements. The Deputy Administrator concluded that the rehabilitation center was not a special care unit because the type of care [rendered by the center was] not comparable to traditional established special care units where patients are in critical condition and in immediate life-threatening situations. R. 0016. 16 The Secretary urges that the critically-ill patient requirement was implicit in 42 C.F.R. Sec. 405.452(d)(10) for the years in dispute, and that it was therefore proper to deny special care unit status for the rehabilitation center. The Secretary supports this interpretation of the regulation with citation to a June 1977 revision to the Provider Reimbursement Manual and an amendment to the regulation on August 18, 1980. 17 The Provider Reimbursement Manual is a portion of the Health Insurance Manual published by the Health Care Financing Administration. The manual is distributed to intermediaries and instructs them in the application of reimbursement regulations. Revision No. 177 to the manual defined special care units as those which incorporated extensive life-saving nursing services. It was this revision that prompted the fiscal intermediary in this case to deny special care unit status to the rehabilitation center. 18 The Secretary argues that the manual definition of a special care unit is entitled to great deference because the Health Care Financing Administration is likely to know more about the underlying intent of 42 C.F.R. Sec. 405.452(d)(10) than the courts. Under the circumstances of this case, however, such deference is not warranted. As the Supreme Court noted in Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 65 S.Ct. 1215, 89 L.Ed. 1700 (1945), a court must ... look to the administrative construction of the regulation if the meaning of the words used is in doubt. Id. at 414, 65 S.Ct. at 1217. The plain meaning of the words used in 42 C.F.R. Sec. 405.452(d)(10) allows of no such doubt here. The regulation itself in no way suggests that special care unit status is to be limited to patient care areas where extensive life-saving services are available. 19 Moreover, as this court noted in St. John's Hickey Memorial Hospital, Inc. v. Califano, 599 F.2d 803 (7th Cir.1979): 20 [T]he degree of deference to be accorded agency action varies with the circumstances, and a careful consideration of the Medicare statute and the manner in which it has been administered reveals that such deference would be particularly inappropriate in this case where we are not setting aside any regulation but only disagreeing with an unofficial interpretation of it. 21 Id. at 812. Thus, we reject the Secretary's argument that we must defer to the Provider Reimbursement Manual Revision as the dispositive indicator of the regulation's intent. 22 We also reject the Secretary's contention that this dispute, which involves provider reimbursement for the 1977 and 1978 fiscal years, can be resolved by reference to a subsequent amendment to the regulatory definition of a special care unit. 23 On August 18, 1980, the Secretary amended 42 C.F.R. Sec. 405.451(d)(10). 45 Fed.Reg. 54,757 (1980). The amended regulation had only prospective effect; it took effect for provider cost reporting periods beginning on or after October 1, 1980. As amended, the regulation labels the type of unit that qualifies for separate reimbursement as an intensive care type inpatient hospital unit, rather than a special care unit. The amended regulation defines the level of care necessary for separate reimbursement treatment as follows: 24 To be considered an intensive care type inpatient hospital unit, the unit must furnish services to critically ill patients .... The unit must also meet the following conditions: 25 (i) The unit must be in a hospital; 26 (ii) The unit must be physically and identifiably separate from general routine patient care areas, including sub-intensive or intermediate care units ...;(iii) There must be specific written policies that include criteria for admission to, and discharge from the unit; 27 (iv) Registered nursing care must be furnished on a continuous 24-hour basis. At least one registered nurse must be present in the unit at all times; 28 (v) A minimum nurse-patient ratio of one nurse to two patient per patients per day must be maintained ...; 29 (vi) The unit must be equipped, or have available for immediate use, life saving equipment necessary to treat the critically ill patients for which it is designed .... 30 45 Fed.Reg. 54,760 (1980). 31 The Secretary now urges that this amendment was intended merely to clarify the underlying intent of the provider reimbursement regulations. Whatever the purported intent of this amendment, we believe that the amended regulation added new requirements for providers seeking the higher level of reimbursement. Thus, while the Secretary's new interpretation of what level of care is required to justify the higher level of reimbursement is a reasonable exercise of the Secretary's delegated authority under the Medicare program, we cannot agree that these requirements were implicit in the plain meaning of the regulation in effect for the cost years at issue here. 32 We agree with the district court that [t]he Deputy Administrator's opinion that for a care unit to be classified a special care unit the patients must be 'in critical condition and in immediate life-threatening situations,' adds a requirement to the regulation that was not applicable during fiscal years 1977 and 1978. Community Hospital of Indianapolis v. Schweiker, No. IP 80-1225-C (S.D.Ind. Feb. 4, 1982). Accordingly, we hold that the Secretary's decision to deny special care unit treatment to the rehabilitation center, to the extent that decision was based on the absence of critically ill patients in the center, cannot be justified under the applicable regulation. 33