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Bartley Healthcare Nursing and Rehabilitation v. New Jersey Department of Health and Senior Services

February 15, 2011

BARTLEY HEALTHCARE NURSING AND REHABILITATION, PETITIONER-APPELLANT,
v.
NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES, RESPONDENT-RESPONDENT.



On appeal from a Final Decision of the New Jersey Department of Health and Senior Services.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted January 25, 2011 - Decided Before Judges Carchman and Graves.

Appellant Bartley Healthcare Nursing and Rehabilitation appeals from the final decision of the Acting Commissioner of Health and Senior Services (DHSS or the Department) concluding that the salaries and benefits of two of appellant's vice-presidents should be reclassified and allocated to the management cost center in appellant's 2006 Medicaid cost report. The reallocation reduced the reimbursement rate to which Bartley was entitled under the Medicaid reimbursement program. We affirm.

These are the relevant facts. When seeking reimbursement for services provided under Medicaid, a nursing facility (NF) must submit a cost report allocating its expenses to a variety of categories, or "cost centers." Many of these categories are governed by "screens," or expense caps that designate the maximum reimbursement deemed reasonable by the Department. The rate component for each category is then calculated based on the lower of the NF's actual costs and the reasonable screen imposed by the Department. An NF's goal is to allocate its costs in a manner that places its actual costs for each category below the screen in order to obtain the maximum reimbursement rate.

Bartley is the owner and operator of two healthcare facilities: Bartley Healthcare Nursing and Rehabilitation (BHNR), and Bartley Assisted Living (BAL). In April 2007, Bartley submitted a nursing facility rate setting and reimbursement cost report for the period from January 1, 2006 to December 31, 2006. During this period, Laura Hoey served as Bartley's Vice President of Management and Operations (Management VP), and Susan Shaffer served as the Vice President of Customer and Employee Relations (Relations VP).

On September 14, 2007, the Department performed a "desk review" and made the following adjustments: (1) the salary and benefits of the Management VP were reallocated from the cost centers for "housekeeping," "property operating," and "other administrative" to the "management" cost center; and (2) the salary and benefits of the Relations VP were reallocated to the "non-allowable" section from the "other administrative" cost center. These changes shifted costs from categories in which Bartley had available cost allocation under the statutory caps, or "screens," to a category that was limited. The change reduced Bartley's total allocable expenses, thereby reducing its overall reimbursement rate.

The altered cost report became the basis for the Department's calculation of Bartley's prospective Medicaid reimbursement rate for the period from July 1, 2007 to June 30, 2008, and the Department notified Bartley of the rate in November 2007.

Bartley initiated a Level I appeal of its cost reallocation and stated:

We disagree with the reclassification of reported salaries and benefits from the housekeeping and maintenance cost centers to the management cost center and from the other administrative cost center to non-allowable expense. The individuals who were paid these salaries were properly classified on the filed cost report based on their job duties for the employees in question. . ..

We believe that the reclassifications were made based on the Titles of these people and not on the basis of their job duties.

In support of its appeal, Bartley provided the Department with relevant job descriptions. The description for the Management VP read:

Primary Duties:

[1.] Responsible for the oversight of all maintenance department staff[;]

[2.] Responsible for the oversight of all building physical plant[;]

[3.] Responsible for the oversight of all renovation projects[;]

[4.] Responsible for the ordering and purchasing of all furniture, fixtures and equipment[;]

[5.] Responsible for the oversight of the housekeeping vendor . . . [;]

[6.] Responsible for housekeeping contract negotiations and relations[;]

[7.] Provide assistance to staff as needed[;]

[8.] Review and approve all maintenance and service contracts and purchases[;]

[9.] Approve all maintenance expenditures[;]

[10.] Responsible for contract services providers for the facility maintenance[;]

[11.] Coordinates with design and professional consultants for building and physical plant[;]

[12.] Responsible for supervision of all site and exterior maintenance[.] Secondary Duties:

[1.] Ensure operational functions are carried out promptly and efficiently[;]

[2.] Assist in developing, implementing and coordinating administrative policies and procedures[;]

[3.] Evaluate employee performance and make recommendations concerning wage and salary adjustments[;]

[4.] Ensure that all department staff members receive mandatory in-service training as required by the federal, state and local standards, guidelines and regulations as well as the facility's guidelines[.]

The job description for the Relations VP stated:

Primary Duties:

[1.] Responsible for the daily operations of the human resources department[;]

[2.] Responsible for the execution of human resource and employment policies and procedures[;]

[3.] Responsible for the oversight of resident customer service programs[;]

[4.] Responsible for the oversight of the employer relations program[;]

[5.] Responsible for the coordination of the employee ...


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