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November 24, 1980

Patricia Roberts HARRIS, Secretary of Health and Human Services, Defendant

The opinion of the court was delivered by: FLANNERY


This matter comes before the court on cross-motions for summary judgment. The court must review a final decision by the Secretary of Health and Human Services reversing a decision of the Provider Reimbursement Review Board (PRRB). The PRRB had awarded additional Medicare reimbursement to plaintiff to defray the costs of its Gerontological Treatment Center (GTC).


 Medicare recognizes that a hospital's costs are greater in Special Care Units than in other units, and computes reimbursable costs in such a way that results in higher payments to providers for patients treated in Special Care Units (SCU). See 42 C.F.R. § 405.452(d)(8). Plaintiff operates a psychiatric hospital in the District of Columbia. In 1974 plaintiff began operating a special inpatient treatment center for the diagnosis and treatment of persons who exhibited emotional problems associated with aging and accompanied by medical or neurological disabilities. In its 1975 cost report, plaintiff separately identified the costs of the GTC and treated it as a special care unit pursuant to 42 C.F.R. § 405.452(d)(8).

 On May 31, 1978, defendant's fiscal intermediary disallowed the additional costs computed by the plaintiff for its special care unit on the ground that the GTC was not a special care unit under the applicable regulation, 42 C.F.R. § 405.452(d)(10). Pursuant to 42 U.S.C. § 1395oo, plaintiff appealed the Intermediary's decision to the PRRB. The issue before the board was whether plaintiff's GTC unit qualified as a special care unit.

 The first decision of the PRRB resulted in a deadlock. The PRRB issued a second decision on January 3, 1980, reversing the intermediary's determination and holding that the GTC was a special care unit. One member of the Board dissented from this decision. On March 7, 1980, the Deputy Administrator of the Health Care Finance Administration, acting on behalf of the Secretary of Health and Human Services, reversed the decision of the PRRB. The Deputy Administrator determined that the GTC met all of the requirements of 42 C.F.R. § 405.452(d)(10) *fn1" except the requirement that the care supplied by the unit must be extraordinary and on a concentrated and continuous basis. This appeal followed.


 The scope of review of the Secretary's findings in this case is set forth in 5 U.S.C. § 706. Upon reviewing the administrative record, the Secretary's decision must be set aside if it is unsupported by substantial evidence, arbitrary, capricious, or otherwise not in accordance with law. The issue before the court is whether the GTC provided care that was extraordinary and on a concentrated and continuous basis.

 The Secretary's decision that the GTC did not render extraordinary care on a concentrated and continuous basis is correctly characterized by plaintiff as resting on two grounds. First, the decision points out that the GTC exhibited characteristics not associated with intensive care units. The admittance and discharge patterns differed from those usually associated with intensive care units (Ad.Rec. at 19); the number of nurses on duty varied with the shifts (Ad.Rec. at 20); and the per diem charges were less in the GTC than in the plaintiff's intensive care unit (Id.). The second ground for the Secretary's decision is that the GTC's patients were not critically ill. The decision points out that "One does not associate dining room privileges, pass privileges, smoking privileges, and liberal visiting hours with the critically ill patient." Ad.Rec. at 19.

 The defendant points out that the examples of special care units listed in the regulation-burn, coronary care, pulmonary care, trauma and intensive care-establish a frame of reference against which newly-established units can be measured to determine whether they qualify as special care units. In addition, the defendant notes that all of the examples listed in the regulation provide care involving life saving services, often in a crisis situation.

 Identical contentions were made to the court in Rolling Hills Hospital, Inc. v. PRRB, No. 76-1878 (E.D.Pa.1977) (CCH) Medicare & Medicaid Guide (1977 Transfer Binder) P 28,745. There a rehabilitation unit which provided health care services for disabled and handicapped individuals sought classification as a special care unit and the issue was whether the care provided was extraordinary, continuous, and concentrated. The court reasoned that,

In effect, the Intermediary indicates that a special care unit must be an intensive care unit. However, "intensive" care is not an element required by 20 (now 42) C.F.R. 405.
Further, the regulation does not require (that) special care units deal in life or death situations.
The intermediary thus seems to be applying extra criteria in determining that Rolling Hills' Rehabilitation unit is not a special care unit. ...

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