Court Opinion

ID: 4021523
Source: CourtListenerOpinion
Date Created: 2016-08-03 17:09:48.308052+00
Date Added: 2024-06-11T13:11:04.994093
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Beaver County Behavioral Health,              :
                       Petitioner             :
                                              :
                     v.                       :
                                              :
Department of Human Services,                 :   No. 1120 C.D. 2015
                      Respondent              :   Submitted: January 15, 2016

BEFORE:       HONORABLE MARY HANNAH LEAVITT, President Judge
              HONORABLE ANNE E. COVEY, Judge
              HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY
JUDGE COVEY                                       FILED: August 3, 2016

              Beaver County Behavioral Health (BCBH) petitions this Court for
review of the Pennsylvania Department of Human Services’ (the Department),
Bureau of Hearings and Appeals’ (BHA) June 5, 2015 order adopting the
administrative law judge’s (ALJ) recommendation denying BCBH’s administrative
appeal (Decision). The sole issue for this Court’s review is whether the Department’s
Office of Developmental Programs (ODP) complied with rate-setting regulations in
establishing its November 15, 2011 to June 30, 2012 Supports Coordination
Organization (SCO) reimbursement rates.1 After review, we affirm.
              BCBH is an SCO that employs 16 support coordinators (SC) who
provide supports coordination services (SCS) through ODP to 755 eligible
participants with intellectual disabilities in Beaver County.

       1
        This matter originally involved three separate appeals by SCOs to the BHA challenging the
Department’s fee schedule for supports coordinator services. The appeals were consolidated. The
two other appellants raised additional issues not raised by BCBH. Only BCBH appealed to this
Court.
            The [SCs] are responsible for providing for the overall
            locating, coordinating and monitoring of the services that
            the individual is in need of. They develop their individual
            service plans (ISP) that the case manager is responsible for
            [sic] facilitating the team meetings, documenting everything
            in the ISP according to the regulation set forth by the
            Department within the time frame set forth by the
            Department. Those documents are then mailed out to the
            team members and then the [SC] is responsible for locating
            any services that the individual needs, coordinating those
            services, monitoring all the services that are put in place
            and also ensuring their health and safety. A[n SC] is
            required to have a bachelor’s degree[.]
            There is turnover among [SCs]. . . . When [BCBH] bring[s]
            in a new [SC], it takes at least 3 months for that person to
            become fully productive.
            Even an experienced [SC] receives 40 hours of training per
            year. New employees require additional training [i]n order
            to understand and do their job. This training is not
            mandated by the Department.
            [SC] services are funded by the [Department]. The
            payment is based on a billable rate established by the
            Department times the number of billable units of service
            provided. There are no other purchasers of [SC] services
            for the intellectually disabled other than the Department.

Reproduced Record (R.R.) at 300a, Stipulation of Facts.

            ODP administers and oversees the Consolidated Waiver and
Person/Family-Directed Support (P/FDS) waiver (Waivers) programs.               “The
consolidated and P/FDS waivers are home and community[-]based waivers . . .
approved by the [United States (U.S.)] Department of Health and Human Services,
Centers for Medicare and Medicaid Services (‘CMS’) under Section 1915(c) of the
Social Security Act, 42 U.S.C. § 1396n(c).” Decision, Finding of Fact (FOF) ¶ 9.
BCBH provides SC services under the Waivers programs. Id. ¶ 10. “To become a
Waiver provider, a qualified provider must meet certain qualifications, enroll in the

                                         2
Promise billing system, register with the Home and Community Services Information
System . . . and be willing to provide the services and sign a provider agreement.
[BCBH] signed [an agreement] for fiscal year (FY) 2011-2012.” Decision, FOF ¶ 11.
            Before July 1, 2009, SCOs contracted directly with and were paid
directly by counties for services provided. “Effective July 1, 2009, the Prospective
Payment System (PPS) used historical data reported in cost reports for services
delivered to Waiver participants as the base data to develop prospective payment
rates for certain Waiver services in order to comply with CMS requirements
regarding waivers.”   Id. ¶ 15.   For FYs 2009-2010 and 2010-2011, ODP used
provider-submitted historical expense data to develop payment rates. In September
2010, ODP announced that effective for FY 2011-2012, SC service rates would be
based upon a fee schedule.
            By October 4, 2011 letter, ODP informed BCBH that rate setting for the
period between July 1, 2011 and November 14, 2011, would be as follows:

            Contrary to ODP’s intent when it requested SC providers
            submit cost reports to support the rate-setting process for
            FY 2010-2011, the payment rates were not developed from
            the cost report data submitted by SC providers in October
            2009. Providers reported several difficulties in completing
            their cost report(s), including identifying units, allocating
            administration expenses and allocating staff time between
            waiver SC services and Targeted Services Management.
            ODP determined it was not possible to use the data to
            develop FY 2010-2011 payment rates because the reported
            difficulties undermined the reliability and accuracy of the
            cost report data. For example, analysis of the FY 2008-
            2009 data in the approved cost reports showed unit costs
            ranging from $10.67 to $45.08 and extreme rate changes for
            many individual providers, ranging from rate increases of
            70% to rate decreases of 40%, even after applying similar
            productivity adjustments as were applied in developing the
            FY 2009-2010 payment rates.
            The payment rates for FY 2010-2011 and FY 2011-2012 for
            the period July 1, 2011 through November 14, 2011 were
                                         3
            therefore based on each provider’s FY 2009-2010 payment
            rate(s) instead of the FY 2008-2009 cost report data. To
            establish each provider’s FY 2010-2011 payment rate(s),
            ODP first applied a cost of living increase of 0% to each FY
            2009-2010 rate. ODP then projected total FY 2010-2011
            waiver expenditures using the proposed payment rates and
            projected utilization for all waiver services and compared
            those projected expenditures to the adjusted budget
            amounts. A rate adjustment factor (RAF) of -2.50% was
            applied to the adjusted unit costs for all waiver services
            except fee schedule, outcome-based and vendor services, so
            that the estimated waiver expenditures would not exceed the
            available waiver appropriation.

R.R. at 15a. The letter further notified BCBH that, “[e]ffective November 15, 2011,
SC services will be paid using the Medical Assistance Program Fee Schedule rates
that will be located on the [Department’s] web site.” R.R. at 14a.
            On November 15, 2011, ODP began reimbursing SCOs in accordance
with a fee schedule rate. The fee schedule rate for SC services was developed by a
workgroup (Workgroup). In developing the fee schedule, the Workgroup used a
market-based approach, identified cost components and then reviewed “staff salaries;
titles; wages; employee-related expenses; reviewed an independent data source for
salary for positions necessary to staff SCS; U[.]S[.] Department of Labor Statistics;
Economic Research Institute information; a survey that Mercer Human Resources
conducted; training; travel; direct and non-direct non-salary costs; and indirect costs
administration and overhead costs.”     Decision, FOF ¶¶ 27-28.        The Workgroup
calculated its rate for SCS based on the following assumptions:

            a. Wages and salaries;
            b. Hours worked;
            c. Employee[-]related expenses for the SC, supervisor,
            assistant director and director;
            d. Staffing for supervisors, assistant directors and directors;

                                           4
               e. Additional monies to cover more than the ODP required
               forty (40) hours of training;
               f. Direct non-salary costs including reimbursement for
               mileage using the state’s rate of reimbursement;
               g. Assigned 58.4% productivity factor;
               h. Adjusted for the four (4) geographical areas based on the
               Pennsylvania Department of Labor wage dat[a] for certain
               direct care positions and on population.

Id. ¶ 29. ODP’s fee schedule billed in 15-minute intervals. For the period November
15, 2011 to June 30, 2012, ODP assigned BCBH a fee schedule rate of $19.08 per 15-
minute unit.
               On December 13, 2011, BCBH filed a Written Appeal and Request for
Hearing with the BHA. An ALJ conducted a hearing on June 11, 2013. At the
hearing, BCBH presented the testimony of Carl Herbein (Herbein), President and
CEO of Herbein and Company, an accounting firm BCBH retained to review the
modeled rates. Herbein conducted a survey of SC providers (Herbein Survey). The
ALJ summarized the Herbein Survey results as follows:

               a. Sixty-one (61) SCOs received, via mail or email, the
               survey;
               b. Twenty-six (26) of sixty-one (61), or forty-three (43)
               percent of the SCOs responded to the survey;
               c. Different categories of SCO[s] from different
               geographical regions/zones responded to the survey;
               d. The Respondents of the survey represented forty-four
               (44) percent of the units of service SCOs billed;
               e. The Respondents represented an adequate and usable
               cross section of SCOs in PA for the time period for
               purposes of analyzing the questions and results sought;
               f. Responses in the range of 1/6 to 1/3 of Respondents is,
               not unusual for accounting survey purposes;

                                            5
            g. Herbein summarized the survey results and created a
            spreadsheet;
            h. If responses were unclear, Herbein asked questions of the
            SCOs;
            i. Herbein arrived at a weighted average to determine hours
            worked for a full-time SC, taking into account lunch and
            other breaks; paid time off for vacation, holidays and sick
            time; training; turnover; travel; and direct care billable
            hours;
            j. Herbein determined that SCOs averaged 939 billable
            hours versus ODP’s 1,215 billable hours;
            k. Herbein determined that SCOs had an average of 1,992
            total working hours;
            l. Herbein calculated the productivity percentage as forty-
            seven (47) percent (939 billable hours /1,992 total working
            hours) versus ODP’s 58 %;
            m. ODP overstated SCOs billable hours by 29.4% (1,215
            (ODP billable hours) minus 939 (SCOs billable hours)
            =276. 276/939 =29.4 %)[;]
            n. ODP underpaid SCOs by 29.4%.

Id. ¶ 40 (citations omitted). The ALJ noted that “Herbein did not include definitions
or a glossary with [the] survey; instructions for completion; or ask the SCOs to
identify who completed the survey.”      Id. ¶ 41.   “Based on the Herbein report,
[BCBH] calculated the number of billable hours for the year for SCS as 939 hours.”
Id. ¶ 42. Finally, “[a]ccording to [BCBH], ODP overstated SCOs billable hours by
276 hours (1,215-939=276) or 29.4% (276/939), resulting in an underpayment in fees
owed to SCOs as [the] recommended rate was too low.” Id. ¶ 43.
            Agnes Rudolph (Rudolph), Accountant and Regional Fiscal Officer for
Liberty Health Care Corporation assigned to ODP and Workgroup co-chair, was
called to testify by both BCBH and ODP.         Rudolph described the process and
methods under which the fee schedule was developed. Thereafter, the ALJ issued a

                                         6
recommendation denying BCBH’s appeal. By June 15, 2015 order, the BHA adopted
the ALJ’s recommendation in its entirety. BCBH appealed to this Court.2
              BCBH argues that ODP violated Section 51.52 of the Department’s
Regulations3 in establishing SC fees by relying on conjecture rather than actual data
for the productivity component identified therein.4 Section 51.52 of the Department’s
Regulations provides:

              (a) Fee schedule rates are established using the following
              methodology:
                 (1) Market-based approach using the following cost
                 considerations:
                    (i) Wages for staff.
                    (ii) Staff-related expenses.
                    (iii) Productivity.
                       (A) Indirect program expenses.
                       (B) Administration-related expenses.
                       (C) Geographical cost considerations.
                 (2) Review of approved [Home and Community-Based
                 Services (]HCBS[)] definitions and determinations
                 made about cost components which reflect costs that
                 are necessary and related to the delivery of each
                 HCBS.
                 (3) Use of independent data sources such as the
                 Pennsylvania-specific compensation study and data
                 from previously[-]approved cost reports, as
                 applicable.

       2
          “Our scope of review in an appeal of an adjudication of the [BHA] is limited to whether
constitutional rights were violated, whether an error of law occurred, or whether essential findings
of fact are supported by substantial evidence.” Grane Hospice Care, Inc. v. Dep’t of Pub. Welfare
74 A.3d 1094, 1098 n.4 (Pa. Cmwlth. 2013).
        3
          55 Pa. Code § 51.52 (describes the ODC fee schedule rate process).
        4
          See 55 Pa. Code § 51.52(a)(1)(iii).
                                                 7
               (b) The Department will pay for fee schedule services at the
               rate determined by the Department.
               (c) The Department will update the fee schedule rates under
               the [Medical Assistance] Program fee schedule as a notice
               in the Pennsylvania Bulletin.
               (d) Subsection (a)(1)(iii)(C) does not apply to a provider
               under the Adult Autism Waiver.

55 Pa. Code § 51.52 (emphasis added).                  Section 51.42 of the Department’s
Regulations defines “[m]arket-based approach” as “[a] process used to develop
[medical assistance] or Department-established fees based on independent data
sources[5] for a particular waiver service’s cost components, including the
consideration of reasonable and necessary costs for the delivery of a waiver service.”
55 Pa. Code § 51.42.
               BCBH asserts that, although ODP collected independent data pertaining
to wages for staff, indirect program expenses, administration-related expenses, and
geographical cost considerations, it collected no productivity data. Thus, BCBH
maintains ODP violated Section 51.52 of the Department’s Regulations by making
unsupported assumptions and failing to consider relevant factors where “the non-
data-based process ODP used resulted in a productivity factor that has little or no
relationship to the reality of the most relevant market – Pennsylvania SCOs.” BCBH
Br. at 17. BCBH acknowledges that “[t]he regulation provides little guidance as to
what is meant by a market-based approach. However, at the least, the methodology
seems to require collection of data.” BCBH Br. at 16. BCBH reasons that, based on
the process ODP used, “ODP failed to follow the requirements of its [R]egulation
regarding [the] use [of] independent data or approved cost reports to develop a fee
schedule.” BCBH Br. at 19.

      5
          The Department’s Regulations do not define the term “independent data sources.”
                                                 8
            In response, the Department contends that Section 51.52 of the
Department’s Regulations does not mandate particular data sources to be used, the
number of data sources, or the manner in which they must be used. The Department
asserts:

            ODP used independent data to determine the productivity
            factor it used to establish the fee schedule rate for [SC]
            services for the period of November 15, 2011 to June 30,
            2012. When ODP calculated the productivity factor, it used
            2,080 hours a year as the potential number of hours a[n SC]
            could work because that is the number of hours used by the
            Bureau of Labor and Statistics to convert annual wages into
            hourly rates. In addition, ODP’s [sic] used thirty days of
            paid time off because that is the number of paid time off
            days ODP used for other services for which ODP calculated
            a fee schedule rate. ODP also included forty hours a year
            for training because this is the amount of training required
            by ODP. Finally, ODP chose eleven hours of travel time
            after examining the type of travel that support coordinators
            must do in both rural and city areas.
            Moreover, [BCBH’s] reliance on the survey of [SCOs]
            conducted by [Herbein] as support for its claim that ODP’s
            process resulted in a miscalculation of the productivity rate
            is misplaced. There simply is no requirement that ODP use
            the data that [Herbein] relied on to reach his conclusions. . .
            . In fact, ODP could not use such data because [the
            information collected by Herbein did not constitute
            independent data].

Department Br. at 12-13 (citations omitted).
            “This Court defers to an agency’s expertise and gives the agency’s
interpretation of its regulations great weight unless it is plainly erroneous or
inconsistent with the regulations. Statutory and regulatory interpretations should be
accorded great deference.” D’Alonzo v. State Real Estate Comm’n, 702 A.2d 1102,
1104-05 (Pa. Cmwlth. 1997) (citation omitted); see also Graystone Acad. Charter

                                          9
Sch. v. Coatesville Area Sch. Dist., 99 A.3d 125 (Pa. Cmwlth. 2014); Eastwood
Nursing & Rehab. Ctr. v. Dep’t of Pub. Welfare,6 910 A.2d 134 (Pa. Cmwlth. 2006).

               The task of the reviewing court is limited to determining
               whether the agency’s interpretation is consistent with the
               regulation and with the statute under which the regulation
               was promulgated. The [U.S.] Supreme Court has referred
               to this deference as the interpretive lawmaking power of
               administrative agencies and has characterized it as a
               ‘necessary adjunct’ of the authority to promulgate and
               enforce regulations. Martin v. Occupational Safety [&]
               Health Review Comm[’n], 499 U.S. 144, 152 . . . (1991).

Dep’t of Envtl. Prot. v. N. Am. Refractories Co., 791 A.2d 461, 464-65 (Pa. Cmwlth.
2002) (citations omitted). Further, “[w]hen the fact finder has determined the weight
and the credibility of evidence, this [C]ourt will not disturb such determinations on
review.” Bucks Cnty. Children & Youth Soc. Servs. Agency v. Dep’t of Pub. Welfare,
977 A.2d 1254, 1256 (Pa. Cmwlth. 2009).
               In her Decision, the ALJ recommended and, by adopting the ALJ’s
recommendation, the BHA concluded:

               ODP complied with. . . [Section 51.52 of the Department’s
               Regulations,] when it established fee schedule rates for FY
               2011-2012. ODP utilized a market-based approach that
               considered productivity which is required by [Section 51.52
               of the Department’s Regulations]. [Rudolph] testified in
               great detail about the considerations the Department
               examined to arrive at its productivity assumption, including
               wages; staff[-]related expenses; productivity; definitions
               and determinations made about cost components that reflect
               costs necessary and related to the delivery of the services;
               and independent data sources noted in [FOF] numbers 27
               and 29. (N.T. 105-124, 210-212). On the contrary,
               [BCBH] rel[ies] on the Herbein [S]urvey as proof that the
               established fee schedule rates for FY 2011-2012 were about
               ‘29.4%’ less than what is justified by the facts. (N.T. 161,
               163).

      6
          The Department of Human Services was formerly the Department of Public Welfare.
                                              10
              The Herbein [S]urvey fails to recognize that there is no
              requirement that ODP conduct a survey to justify its
              productivity assumption in establishing its fee schedule
              rates. Further [Section 51.52(a)(3) of the Department’s
              Regulations] mandates the ‘use of independent data
              sources.’ 55 Pa. Code § [51.]52[(a)](3). The Herbein
              [S]urvey consistently makes reference to the data it
              collected in its survey of 26 existing SCOs - this does not
              represent an independent data source.[7] Furthermore,

       7
          Neither the ALJ in her recommendation nor the BHA in its June 5, 2015 order specifically
explain the BHA’s rationale for concluding that the Herbein Survey did not constitute an
independent data source. However, BCBH declared in its brief that “[a]lso pending in BHA, before
a different [ALJ], were appeals filed by three other SCOs raising the same issues as this appeal.
Those appeals were . . . consolidated for hearing. . . . The decision [in those matters] . . . also
denied the appeals.” BCBH Br. at 5 n.2. BCBH attached that decision to its brief as Appendix B:
In the Appeals of Lancaster, York/Adams and Centre Cnty. Mental Health/Mental Retardation
offices (Docket Nos. XXX-XX-XXXX, XXX-XX-XXXX, and XXX-XX-XXXX), which the BHA adopted on
September 21, 2015. In that matter, the SCOs also relied on the Herbein Survey. In its decision in
that case, the BHA further explained its regulatory interpretation:

              The [a]ppellants failed to demonstrate that the Department should
              have surveyed SCOs or used actual SCO data to calculate SCO
              productivity rates when calculating the new fee schedule. Per Section
              51.52 [of the Department’s Regulations], ODP was required to use a
              market-based approach to calculate the new SCO fee schedule for
              Waiver reimbursements for staff wages, staff-related expenses, and
              productivity effective November 15, 2011. 55 Pa. Code § 51.52.
              This meant that ODP was prohibited from using actual SCO expenses
              and needed to rely upon other sources of data for the calculations.
              The wisdom of this methodology may be debated as it forced ODP to
              look to non-SCO sources, such as the U.S. Department of Labor and
              an education setting to gather data and make productivity
              assumptions. It also provided little guidance for ODP in applying the
              market-based [approach] to create the new fee schedule. ODP
              gathered education, salary, benefit, training, and other work
              environment data from a school setting that it found similar to SCO
              providers to base its fee schedule calculations and productivity
              assumptions. As CMS approved the implementation of the PPS, ODP
              had broad discretion to develop and implement the fee schedule for
              Waiver providers. Pa. Pharmacists Ass’n v. Houstoun, 283 F.3d 531,
              533 (3d Cir. 2002), 42 U.S.C. § 1396a, 42 U.S.C. § 1396b. Contrary
              to the concern of the [a]ppellants, the Department cannot dictate all
              the terms of the provider contracts or ignore the basic supply side
                                                11
             pursuant to [Section 51.52 of the Department’s
             Regulations,] the Department will pay for fee schedule
             services at the rate determined by the Department.
             Therefore, I am able to find that ODP complied with the
             regulations when it established the fee schedule rate for
             SCS.

Decision, Analysis at I.
             Section 51.52 of the Department’s Regulations requires ODP use a
“[m]arket-based approach.” Id. A market-based approach is “[a] process used to
develop [medical assistance] or Department-established fees based on independent
data sources for a particular waiver service’s cost components, including the
consideration of reasonable and necessary costs for the delivery of a waiver service.”
55 Pa. Code § 51.42. In accordance with Section 51.52(a)(1)(iii) of the Department’s
Regulations, ODP considered “indirect program expenses,” “[a]dministration-related
expenses” and “[g]eographical cost considerations.” Id.; see Decision, FOF ¶¶ 27,
29. Pursuant to Section 51.52(a)(3) of the Department’s Regulations, ODP “[u]se[d]
. . . independent data sources such as the Pennsylvania-specific compensation study
and data from previously approved cost reports,” as described in the Decision. 55 Pa.
Code § 51.52(a)(3). Our Supreme Court has opined:

             economics. The Department must compensate Waiver providers
             sufficiently for them to remain providers or it will deprive Waiver
             recipients of adequate access to providers as required by 42 U.S.C. §
             1396a(a)(30)(A). This means that while the Department must balance
             the need for adequate services being available with ensuring that
             taxpayers get the most for the funds expended. The ODP used a
             rational basis considering data from the U.S. Department of Labor,
             Mercer Report, and what it found to be a similarly situated employer
             to create a fee schedule. This was done in accordance with Section
             51.52’s requirement to use a market-based approach rather than actual
             SCO expenses. Accordingly, the [a]ppellants failed to demonstrate
             that the Department should have used actual SCO expenses data when
             calculating the new fee schedule. 55 Pa. Code § 51.52.
BCBH Br. App. B at 13-14.
                                              12
            Appreciating the competence and knowledge an agency
            possesses in its relevant field, . . . an appellate court ‘will
            not lightly substitute its judgment for that of a body selected
            for its expertise whose experience and expertise make it
            better qualified than a court of law to weigh facts within its
            field.’ Borough of Ellwood City [v. Pa. Labor Relations
            Bd.], 998 A.2d [589,] 594 [(Pa. 2010)].

Lancaster Cnty. v. Pa. Labor Relations Bd., 94 A.3d 979, 986 (Pa. 2014). The BHA,
in adopting the ALJ’s finding, deemed both Rudolph’s and Herbein’s testimony
credible. However, given the Department’s interpretation of its Regulations, the
BHA, as it was free to do, clearly assigned more weight to Rudolph’s testimony,
evidencing the “considerations the Department examined to arrive at its productivity
assumption[.]” Decision, Analysis at I. This Court will not disturb weight and
credibility determinations on review. Bucks Cnty. Accordingly, we hold that ODP
complied with rate-setting regulations in establishing its November 15, 2011 to June
30, 2012 SCO reimbursement rates.
            For all of the above reasons, the BHA’s order is affirmed.

                                      ___________________________
                                      ANNE E. COVEY, Judge

                                          13
            IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Beaver County Behavioral Health,       :
                       Petitioner      :
                                       :
                  v.                   :
                                       :
Department of Human Services,          :   No. 1120 C.D. 2015
                      Respondent       :

                                    ORDER

            AND NOW, this 3rd day of August, 2016, the Pennsylvania Department
of Human Services’, Bureau of Hearings and Appeals’ June 5, 2015 order is affirmed.

                                     ___________________________
                                     ANNE E. COVEY, Judge