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Monmouth Medical Center v. State

Decided: March 27, 1978.

MONMOUTH MEDICAL CENTER, A NONPROFIT CORPORATION OF THE STATE OF NEW JERSEY, APPELLANT,
v.
STATE OF NEW JERSEY; ANN KLEIN, COMMISSIONER OF INSTITUTIONS AND AGENCIES OF THE STATE OF NEW JERSEY; GERALD J. REILLY, DIRECTOR OF THE DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES OF THE STATE OF NEW JERSEY, RESPONDENTS



On appeal from the Division of Medical Assistance and Health Services.

Matthews, Crane and Antell. The opinion of the court was delivered by Matthews, P.J.A.D.

Matthews

Monmouth Medical Center (claimant), a provider of in-patient hospital services under the New Jersey Medical Assistance and Health Services Program (Medicaid), N.J.S.A. 30:4D-1 et seq. , appeals from a final decision of the Director of the Division of Medical Assistance and Health Services modifying in part the decision of the program fiscal intermediary, Prudential Insurance Company of America (Prudential), to deny in part the payment of claims submitted by claimant for services provided to three Medicaid recipients, Luther Townsend, James Remkowski and Madeline B. Papikas. (A fourth recipient's claim is not challenged on this appeal).

Monmouth Medical Center is a nonprofit hospital located in Long Branch, Monmouth County. It entered into an agreement with the former Department of Institutions and Agencies to provide medically necessary inpatient services to persons deemed eligible to receive benefits under the Medicaid program, and agreed to "abide by the rules and regulations" of the program. N.J.A.C. 10:52-1.1(1)(iv). The

controversy before us arises because of the Director's insistence that under the agreement claimant is bound by the express provisions of N.J.A.C. 10:52-1.2(a)(18) (Note), (b)(1), which literally preclude reimbursement for inpatient hospital services provided while a patient awaits placement in a skilled nursing facility or intermediate care facility.

Originally Prudential, as agent of the Department of Institutions and Agencies for the purposes of reviewing claims submitted by providers under the Medicaid program, denied coverage for portions of the periods during which the named individuals were patients and receiving care at the Monmouth Medical Center. In each instance claimant requested a fair hearing before the Division. Thereafter, a full hearing on each case was held before a hearing officer, who recommended the claimant be reimbursed for the payment periods which had been denied by Prudential. The Director rejected the hearing officer's recommendation in the Townsend case and denied payment for the period in question, and he modified the hearing officer's recommendations in the Papikas and Rempkowski cases, allowing payments for part of the disputed periods.

The following constitute brief summaries of the basic facts surrounding the hospitalization of the three patients whose cases precipitated these proceedings.

Luther Townsend, a Medicaid recipient with a history of alcoholism and chronic epilepsy, was hospitalized from April 7, 1975 to May 28, 1975 with a broken hip. Surgery was performed on April 15, 1975. Sometime after April 9, 1975 claimant's Social Services Department worker began a search for a nursing home that would accept a patient with Townsend's disabilities and whose only source of funds was Medicaid. On May 28, 1975 a bed was finally found in a home in Cliffwood Beach, Monmouth County. It is undisputed that there was no hesitation or delay on the part of the attending physician, or the Social Services Department in placing Townsend in any nursing home that would accept him.

However, Prudential and the Director determined that further inpatient hospital stay was not medically necessary beyond May 8, 1975. In addition, it was the Director's decision that, since § 202.9 of the Hospital Services Manual (N.J.A.C. 10:52-1.2(a) 18 Note, (b)1), provides that payment for special circumstances is specifically precluded for patients awaiting placement in a skilled nursing facility or intermediate care facility, the denial of payments to Townsend was justified, even though through no fault of his own or that of his provider he was not able to be discharged until May 29, 1975. It is conceded by the Division that Townsend required medical attention beyond May 8, 1975 but that such attention should have been given in a lesser care facility. In reinstating Prudential's decision, the Director denied claimant reimbursement for 19 days at a cost of $2,827.39.

In the case of Madeline Papikas, hospital services were rendered from June 1, 1974 to December 10, 1974. The Director determined that her inpatient hospital stay was not medically necessary beyond September 1, 1974. Accordingly, 99 days of hospitalization were rejected. Mrs. Papikas' case involved a series of bureaucratic delays by government agencies in approving her Medicaid coverage which made it initially impossible to place her in a lower level care facility. By the time the delays were resolved on December 5, 1974 the patient had recovered to the point where she could be released. It is conceded that Mrs. Papikas required medical attention and that Monmouth Medical Center was the only facility then available to render the needed care.

The period of time involved in the case of James Rempkowski extended from November 23, 1975 to March 9, 1976. The patient required intensive medical care from November 11, 1975 to January 13, 1976. The Utilization Review Committee in essence agreed with Prudential's determination that there was a decrease in the medical necessity for acute bed care at that time. However, as in the Papikas case, there were again eligibility problems. Eligibility was cleared

on February 19, 1976, and the patient's Medicaid number was received on February 21, 1976. The patient was discharged and admitted to Bayview Convalescent Center on March 9, 1976, as he had already been placed on the waiting list. Prudential denied payment for January 13, 1976 to March 9, 1976. The Director again modified the hearing officer's recommendation and allowed payment up to and including February 19, 1976, as the effective date of eligibility. However, he determined that no payment be made beyond the above date because Regulation 202.9, referred to above, precluded payment for patients awaiting nursing home placement.

In each case the Director found that medical necessity is based on where needed care is obtained and not on whether the care is in fact necessary for the well-being of the patient.

It is undisputed that it would have been negligent for claimant to have discharged any of these patients to anything but a skilled nursing care facility on the respective dates that hospital care was no longer required.

I

Title XIX of the Social Security Act, 42 U.S.C.A. § 1396 et seq. , establishes a Medical Assistance Program under which participating states may provide federally-funded medical assistance to needy persons. Title XIX establishes two groups of needy persons: (1) the "categorically" needy, which includes needy persons with dependent children, and the aged, blind, and disabled, 42 U.S.C.A. § 1396a(a)(10)(A), and (2) the "medically" needy, which includes persons financially ineligible for AFDC or SSI benefits, 42 U.S.C.A. § 1396a(a)(10)(C). Participating states are not required to extend Medicaid coverage to the "medically" needy, and New Jersey has chosen not to do so (N.J.S.A. 30:4D-3(f)). The ...


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