Last year Capozzi and Associates filed a complaint in the Board of Claims challenging DPW's use of quarterly assessment reviews to set the MA-CMIs used in year 4 case-mix rates, as well as Right-to-Know litigation which required dpw to release detailed information to providers on the components of their year 4 rate determinations. While DPW released the rate detail information in response to our complaint, they have not issued final rate notices to providers and they advised last October that they intended to continue use of quarterly assessment reviews in case-mix rate setting.
The provider associations had advised DPW that DPW's failure to continue to use comprehensive assessments, as required by DPW regulations, was costing nursing facility providers more than $75 million. The claim, filed on behalf of one group of 19 provider facilities, argued that year 4 rates were set in violation of not only DPW regulations, but also in violation of other provisions of state and federal law.

After Capozzi and Associates, P.C., filed the complaint, the associations continued their settlement efforts with DPW. These combined efforts have reached a positive result ---

Last week, DPW agreed to set rates for Year 4 (July 1998 through June 1999) without using quarterly assessment reviews and to revise provider payments to reflect corrected final rates by the end of this summer.

In the interim, DPW will continue to make payments to providers for Year 4 services at the current "interim rates" adjusted for inflation as of 10/1/98, 1/1/99, and 4/1/99. DPW will also be requesting provider assistance with filling in gaps in the assessment database in order to complete its computation of the correct MA-CMI's.

DPW has also advised that, because of its continuation of the use of comprehensive assessments, it does not expect to implement the transition payment option described in its 10/31/98 public notice.

We have requested DPW to confirm this agreement to all nursing facility providers. DPW and the associations are preparing worksheets to assist providers in computing the amount due from DPW as a result of the final rate computations. 

If you have questions concerning the implications of DPW's new position on Year 4 rates for your facility, please feel free to click here to contact our office or by phone at [717] 233-4101.
 

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Act No. 1998-57 (Effective November 11, 1998) establishes the Commonwealth Procurement Code, which applies to "every expenditure of funds, other than investment of funds, by Commonwealth agencies under any contract, irrespective of their source" with several exceptions, one of which (62 Pa.C.S.A. § 102(e)) provides:

Nothing in this part shall apply to medical assistance provider agreements entered into by the Department of Public Welfare under the medical assistance programs.

The new Code does not make any change to the authority of the Board of Claims to adjudicate implied contract and quasi-contract claims. Section 103 of the new Code makes clear that the Code applies only to written agreements. This confirms the intent of Code to continue the jurisdiction of the Board of Claim over provider agreements, since provider agreement claims involve implied claims and quasi-contract claims and are based on terms not included in the written provider agreement. The Board of Claims has jurisdiction to hear all claims arising from contracts entered into by the Commonwealth, including claims arising from implied and quasi-contractual agreements. 

The provisions of the new Code that deal with the Board of Claims also confirm the intent of the code to continue the Board's authority with respect to provider payment disputes based on a written agreement. Section 1721 of the new Code continues the Board's functions with respect to disputes involving written contracts already provided by prior law, while a later provision of the new Code subjects the Board's authority with respect to written contracts, other than medical assistance provider agreements, only insofar as it conflicts with the new Code's provisions for resolution of written contract disputes by agency procurement officers. The new Code does not repeal or affect any aspect of the Board of Claims' statutory authority to adjudicate provider payment disputes with the Department of Public Welfare.

The new Code's provisions also do not repeal any waivers of sovereign immunity already specifically authorized by statute, including those provided by the statutes creating the Board of Claims (Act of May 20, 1937, P.L. 728, No. 193; Act of April 9, 1929, P.L. 343, No. 176; Act of March 30, 1811, P.L. 145, Ch. XCIX). The Board of Claims statutes have been construed by Pennsylvania's appellate courts to waive sovereign immunity and authorize provider reimbursement claims against the Department of Public Welfare. 

Further, while the new Code indicates that it is to provide a "complete and exclusive procedure to govern the procurement by Commonwealth agencies of supplies, services and construction", this section also makes that procedure subject to the exceptions provided in the Code, including the exception in Section 102(e). Finally, while the new Code repeals all other acts or parts of acts insofar as they are inconsistent with the new Code, the preservation of provider rights in Section 102(e) saves from such repeal any act or parts of acts related to the Section 102(e) exception. The new Code thereforedoes not repeal any act or parts of acts related to Medical Assistance provider agreements, including any provisions of the Board of Claims Act authorizing provider claims to be adjudicated by the Board of Claims.

Medical Assistance providers continue to have the right to seek additional reimbursement, interest, and other monetary damages from the Department of Public Welfare through claims before the Board of Claims whether related to services provided under their provider agreements or to services provided pursuant to implied contracts or in quasi-contract. If you have any questions on how the new Code's provisions will impact on your pending appeals or future appeal rights, please contact us at our address and phone number noted above or through our website.

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DPW has recently announced its proposed solution to the provider associations' concerns about the unforeseen impact of DPW's use of the MDS 2.0 in the calculation of Year 4 case-mix rates. DPW has posted on its electronic bulletin board (11/06/98) information for providers on how its Transition Payments can affect reimbursement for the 1st quarter of Year 4. Some providers have filed a complaint in the Board of Claims seeking additional reimbursement on the basis that DPW's use of the MDS 2.0 in the Year 4 calculations violates DPW regulations and federal law.

DPW will soon be sending out its offer to providers requesting a response in 30 days. Providers need to assess whether DPW's offer is a good deal for them or not in order to make an informed decision on electing to take the offer or not. While DPW's electronic bulletin board posting is a place to begin the analysis, providers need to develop more information to make the decision.

1. The Transition Payment is based on 4 quarterly rates each year. The posting on the electronic bulletin might lead you to believe that a –0- payment is due many providers; however, the Transition Payment is based on the difference between the provider's "regular" case-mix rate, computed according DPW's current methods, and the provider's April 1, 1998 rate inflated forward. DPW has provided information on the inflators to be used. To get the Transition Payment Rate for each Year 4 quarter, you need to multiply the April 1, 1998 rate by the multipliers for that quarter:

(a) for July 1, 1998 by 1.0084

(b) for October 1, 1998 by 1.0084x1.0071

(c) for January 1, 1999 by 1.0084x1.0071x1.0109

(d) for April 1, 1999 by 1.0084x1.0071x1.0109 x 1.0069

Thus, even if the Transition Payment is –0- for the 1st or 2nd quarters, it may be more for a later quarter. Since election of the offer must be made on a yearly basis (i.e., for all of Year 4), providers must determine if any quarter in Year 4 will yield a higher payment due to election of the Transition Payment, including the effects of changes in the MA-CMI during Year 4.

Thus, for example, a provider listed on DPW's posting as having a –0- effect for the 1st quarter where its April 1, 1998 rate is 97.09 and its July 1, 1998 rate is 99.75, would benefit from the election if its July 1, 1998 rate remained the same throughout Year 4, because by the 4th quarter, its Transition Payment Rate would be 100.36. However, if its MA-CMI rose each quarter during Year 4, it would not obtain any benefit from the election and, if its MA-CMI decreased during Year 4, it might benefit sooner from the election.

2. The election can be made on a facility by facility basis.

If the reconstructed data indicates that one facility benefits from the election of the Transition Payment offer and another in a chain organization does not, DPW's description of the offer indicates that the facility that will benefit can take the offer, while the facility that does not benefit can refuse it and preserve its appeal rights.

3. If the election provides no benefit during Year 4, there appears to be no reason to take the election and waive any appeal rights for Year 4. Therefore, if your analysis indicates no benefit, you may only need to assess whether to get involved in litigation of the Quarterly Assessment issue.

NOTE: You can still make the election for Year 5 or for Year 6 if there is a benefit in those fiscal periods, even if you do not take the election for Year 4.

4. You can estimate the value of litigating the Quarterly Assessment issue.

In making a decision about whether to reject the election offer or, even where the election brings no benefit, whether to litigate the Quarterly Assessment issue, providers need to estimate what their MA CMI's for Year 4 would be if they were computed without using Quarterly Assessment Reviews. Providers currently have sufficient data about the February 1, 1998, May 1, 1998, and August 1, 1998 Picture Days to reconstruct the MA CMI's for the July 1, 1998, October 1, 1998, and January 1, 1999 rates. Since the November 1, 1998 Picture Date is still incomplete, projecting the April 1, 1999 rate must involve some estimates. 

In order to reconstruct the MA CMI for each quarter to be what is would have been had no Quarterly Assessment Reviews been used, a provider must analyze the data that existed on each Picture Date to establish the MA-CMI as if Quarterly Assessment Reviews were not used and then restate the CMI for each individual based on that data and the MA CMI based on the revised total of CMI's. For example, if an individual's annual assessment would still have been valid on the Picture Date, it can be used to redetermine that individual's CMI, and so on.

FOR MORE INFORMATION OR ASSISTANCE IN ANALYZING YOUR YEAR 4 TRANSITION PAYMENT ELECTION OPTION, YOU CAN CONTACT OUR OFFICE AT 717-233-4101 OR SEND AN E-MAIL INQUIRY ADDRESSED TO:BRUCEB@CAPOZZIASSOCIATES.COM
 

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By Adam L. Young

As the new Millennium quickly approaches, the medical community is paying greater attention to the possible technological failure known as the Year 2000 Problem. At issue are possible computer glitches that threaten to cause microchip-based equipment to malfunction or cease working on midnight, December 31, 1999. 

This problem was created by early computer programmers who, in an effort to save time, entered dates into programs using a six-digit reference (12/31/99) as opposed to an eight-digit system (12/31/1999). The practical implication of recording dates in this manner is that a computer may read 1/1/00 as coming before 12/31/99. Although no one knows for certain what effect this simple error will have on electronic devices, doomsayers predict an array of glitches ranging from the incorrect recording of dates on patient charts to causing an entire facility's computer system to crash. There are a number of legal considerations developing in reaction to the Year 2000 Problem about which nursing facilities should be aware. As speculation concerning the Year 2000 Problem abounds, government and private organizations have stepped up their efforts to minimize exposure.

A highly publicized reaction to the problem was HCFA's announcement on June 11, 1998, that it will delay the implementation of consolidated billing for nursing homes. Citing the agency's inability to both implement the changes mandated in the Balanced Budget Amendment and fix its own Year 2000 bugs, HCFA indefinitely postponed its move to this highly publicized payment system. Although not a devastating move for the industry, HCFA's concern foreshadows the urgency of the situation.

A second governmental reaction to the crisis came when the FDA required manufactures of medical equipment to identify equipment that could malfunction due to the Year 2000 Problem. As a result, nursing facilities may receive notice from manufacturers identifying possible problems with their equipment. However, facilities should not be lulled by manufactures' assurances, given the wide variety of chips often used in the same model of medical equipment. To assure compliance, facilities should see that each piece of equipment is individually tested for the Year 2000 bug.

While the government's reaction to the Year 2000 Problem centers around avoiding future trouble, insurers are motivated by a desire to protect their interests. Presently, medical malpractice insurers are beginning to inquire about the status of Year 2000 compliance programs. Facilities that move too slowly to address the problem will likely end up paying higher premiums. More troubling for a facility than higher insurance rates are attempts by insurers to limit year 2000 liability by writing exclusions for year 2000 occurrences into their policies. These exclusions call for intense scrutiny of new insurance policies and contracts being considered by a facility, with a watchful eye toward avoiding any agreement in which one party seeks to shield its liability for Year 2000 occurrences.

Although the technical problems posed by the Year 2000 Problem are myriad, the growth of reactions to the Year 2000 Bug continue to build. For this reason, nursing facilities should have Year 2000 compliance plans in place and beware the growing number of false solutions and "Band-Aid" remedies. With proper foresight and attention, nursing facilities can protect themselves against this pending scourge.
 

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By Stephen A. Miller, Esquire

It is a common practice for employers to require employees to provide an adequate window of notice before resigning from a position. When employees fail to provide such notice, employers typically withhold payment of employees' vacation time or other accrued benefits. What many employers do not know, however, is that under Pennsylvania's Wage Payment and Collection Law, employers may be required to give employees the same notice prior to termination. Under Pennsylvania's Wage Payment and Collection Law, an employer can be found liable to a terminated employee in the event the employer does not give an employee sufficient notice prior to termination.

Section 291 of Pennsylvania's Wage Payment and Collection Law, located at 43 P.S. §291, mandates that employers who require employees to provide notice before resigning must oblige with tantamount notice to terminated employees. An employer who disregards such notice can be found liable in an amount equal to any forfeiture sustainable by the terminated employee had he or she failed to provide proper notice upon resignation.

For example, Anne Smith, of Smith's Dry Cleaning, requires her employees to provide her with two weeks notice before resigning. It is Anne's published policy that, if her employees do not provide proper notice, such employees will forfeit remaining vacation or personal time accrued up to the date of termination. One of Anne's Employees, Zamfir, resigns without providing two weeks notice. Zamfir was a long-term employee. He had accrued three weeks vacation prior to resigning and did not use any up to that point. Anne refuses to pay Zamfir his vacation because Zamfir did not provide the required notice. Later the same day, since business appeared off and was not picking up, Anne decided to terminate one of her press operators, Xavier. Xavier is also a long-term employee with three weeks vacation who has not used any of his vacation to date. Xavier earned $800.00 each week. Anne called Xavier into her office and summarily terminated him. She paid him $2,400.00 for his unused vacation in addition to his final paycheck. Under this scenario, because Anne did not give Xavier the same notice that she requires for resignation, Xavier may now register a complaint with the Department of Labor and Industry or bring his own civil action against Anne for violation of Section 291 of Pennsylvania's Wage Payment and Collection Law. Xavier has an excellent chance of success to obtain an award in an amount equal to the forfeiture that he would have suffered (three weeks vacation) had he not provided two weeks notice to his employer. Ann will probably be found liable and will be ordered to pay Xavier an additional $2,400.00.

There are four notable exceptions to this general rule. Where the employer terminates an employee for incapacity, misconduct or because of a general suspension of labor or a suspension of work ordered by an employee, the employer would not be found liable for failing to provide notice. In other words, if an employer terminates an employee because the employee is unable to perform his or her duties or because the employee violated the employer's rules, then the employer does not have to provide notice of the termination to the employee. Similarly, in the case of a general suspension of labor, (i.e. a close of the business) or where employees strike, the employer does not have to provide prior notice. Therefore, the only instance where the employer is required to give an employee notice is where the employee is being laid off for purely economic reasons or where the employee is being laid off for reasons other than misconduct, incapacity, closing of the business or strike.

The exceptions to the general rule raise the issue as to whether an employee who is not performing up to the employer's standards must be provided notice before termination. The case law reported under this section is very limited and very old. Three cases from 1916 deal with discharge in general and one case from 1912 deals with acts constituting discharge. Under the 1916 case law, the employer is justified in terminating the employee without notice where the employee's conduct creates an injury or loss to the business or disorganization of the affairs of the business. In this case, the Superior Court seems to indicate that where an employee is not performing up to standards and is causing a detrimental economic effect to the employer, the employer does not have to give the employee notice of termination. However, because the provision has not been addressed in the courts recently, the viability of this ruling is uncertain. Employers should be prepared to show a real economic detriment and not merely allege that a bad employee always causes pecuniary loss.

To ensure compliance with the Act, employers should, at least, provide employees with notice if the employee is being laid off for purely economic reasons. It should be noted that the employer is not required to keep the soon-to-be-terminated employee at his or her place of business during the notice period. Therefore, the employer could terminate the employee with pay for the notice period, and not be obligated to situate the employee at the workplace. In most scenarios, both for legal and obvious practical reasons, such is the employer's best option. 

Because terminations motivated by purely economic reasons are not common, Section 291 appears to be more a legal novelty than a breathing and active provision of law. However, the Statute remains in effect in Pennsylvania and employers remain subject to liability for violations. To ensure compliance with the law and to avoid liability, employers should conform their termination practices to this law.
 
 

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As nursing facilities across the country begin to deal with the implementation of the new Medicare prospective payment system (PPS) between July 1, 1998 and January 1, 1999, much of their attention has been focused by trade journals, consultants, and seminar speakers on amending their contracts for ancillary services to deal with the requirements for consolidated billing of Part B services within PPS. The facility's contract with its residents --- the most fundamental contract a facility has --- is also affected by PPS; and, in order to comply with federal and state "Resident Rights" rules, Medicare-participating nursing facilities must be advised of changes resulting from the implementation of PPS.

Federal certification standards, adopted as part of the Nursing Home Reform Act (OBRA-87), require participating providers to:

Residents who are eligible for benefits as "Qualified Medicare Beneficiaries" need to be advised that Congress, in the Balanced Budget Act of 1997, has precluded charges being assessed against them for any co-payments due for Medicare-covered services. Providers can continue to collect any uncollected co-payments for such services through the Medicare Bad Debt reimbursement process.

Residents also need to be advised that the nursing facility is responsible for providing or arranging for many Medicare-covered services that the residents are to receive while in the facility. PPS requires Medicare-participating facilities to provide directly, or through arrangement, most of the Medicare Part B covered services for their residents. This requires amendment to the facility's notice about the services which are available to residents in the facility and the charges associated with those services, as well as notice concerning which services the resident remains free to arrange for on their own and resident liability for electing to obtain services from a source other than the ones provided through the facility.

Finally, the PPS rules which require the facility to cover certain Medicare Part B covered services provided to residents outside of the facility will need to be explained to residents and their families. These rules require not only amendment to the facility's notice about the services which are available to residents from the facility, but also education and training of residents and their families to assure that when such services are provided there is no confusion concerning whether the services are to be billed through the facility to Medicare or not.

While residents and their families have many sources of information about PPS, including Medicare Program materials, nursing facilities have an affirmative duty to provide their residents with information about the new system and should obtain confirmation from residents and their families that they have provided the information. Providing this information also makes good business sense - especially since PPS involves good news for Medicare beneficiaries residing at nursing facilities.

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In the majority of unemployment compensation cases, employers bear the burden of proving that the employee that they terminated was fired for willful misconduct. As willful misconduct is defined as an intentional violation of an employer’s workplace rule, that burden is often a heavy one. One of the most powerful tools for assisting employers in shouldering this burden is the employee handbook. When carefully drafted by the employer’s counsel, and properly implemented by the employer, employee handbooks can be the difference between proving willful misconduct and paying compensation. An employee handbook cannot guarantee that an employee’s conduct will be found to be willful misconduct, however, it will make carrying the burden of proving willful misconduct much easier.

In a Pennsylvania unemployment compensation contest, to prove willful misconduct, the employer must show that the employee’s conduct constitutes a knowing and intentional violation of the employer’s workplace rule. Under this standard, the employer must show much more than the fact that an employee’s conduct broke the employer’s rules. The employer must show that the employee knew about the rule and that the violation of the rule was intentional. If the employer lacks written workplace rules and a way to show that the employee was aware of that rule, the employer’s burden is nearly impossible to meet.

With a skillfully drafted employee handbook, an employer can attend an Unemployment Compensation Hearing prepared to meet its burden and be successful. A properly drafted handbook will help the employer prove to the Referee the existence of its workplace rule; that the employee was aware of the rule; that the employee’s conduct violated the rule, that the employee’s violation was intentional, and most important, that the employee's behavior constitutes willful misconduct. Further, the employee handbook also assists in showing that the employer’s decision was fair, because the employee was amply warned that his/her conduct could result in termination (while fairness of an employment decision is not a legal element that must be proved to successfully deny compensation, it is often an important factor in how a Referee views an unemployment compensation case). By providing the employer with the tools to prove willful misconduct, a well-drafted and well-implemented employee handbook is often the difference between winning and losing an unemployment compensation hearing.

While an employee handbook cannot guarantee that an employee’s conduct will be found to be willful misconduct, it will make carrying that burden that much easier. Employers face a heavy burden when disputing an employee’s claim for unemployment compensation. An employee handbook helps the employer meet that burden and successfully defend against the claim. Successfully defending against an unemployment claim results in less money being diverted from the employer’s reserve account, a better overall experience rating and substantial reduction in payroll costs to the employer.

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Collection of accounts can be one of the most frustrating duties of any business office. This frustration can be compounded when the payment on the outstanding account is delayed by an appeal of a finding of Medical Assistance ineligibility. Not only does this delay result in an extensive period of financial uncertainty, but even if Medical Assistance eligibility is established, payment is not made until after the administrative appeals process is complete. As a result, even payment for a person found eligible for Medical Assistance benefits can be delayed for period in excess of five months or more. 

While most facilities believe that there is nothing they can do to protect themselves from this financial uncertainty and significant delay in payment, this belief is not true. Facilities can and do protect themselves. Furthermore, this protection is not dependent on an eventual finding of Medical Assistance eligibility. Facilities who involve themselves in their residents’ Medical Assistance eligibility appeals can obtain Medical Assistance payments for their residents for significant periods of time, even if their residents are later determined to be ineligible for Medical Assistance. Best of all, once these benefits are obtained, even if Medical Assistance eligibility is not established, the Department of Public Welfare is prohibited from recouping them.

How can these benefits be obtained? These benefits can be obtained through Department of Public Welfare regulations known as the "interim assistance" regulations. Title 55 of the Pennsylvania Code Section 275.4 provides compensation for Medical Assistance applicants who have appealed a denial of Medical Assistance eligibility, but who have not received timely, final decisions from the Department of Public Welfare. Under Section 275.4, the Department of Public Welfare is required to issue final administrative actions of Medical Assistance eligibility appeals within ninety (90) days from the date each appeal is filed. Final administrative actions are defined as decisions by the Bureau of Hearings and Appeals, as well as later reviews by the Secretary of the Department of Public Welfare. If final administrative actions are not issued within the ninety (90) day period, appellants or their representatives are permitted to petition for interim assistance. 

Upon petition for interim assistance benefits, the Department must begin paying Medical Assistance benefits to the petitioner until the Department issues a final administrative action. These interim benefits are identical to Medical Assistance benefits in every way except that they are levied as a penalty against the Department for its failure to issue a timely decision. Because there is a penalty, benefits may never be recouped.

Capozzi & Associates, P.C. is skilled and experienced in litigating Medical Assistance eligibility matters, including interim assistance. Furthermore, we are experienced in integrating interim assistance benefits into the larger accounts receivable collection plans for health care providers. For more information on collections of accounts receivable, Medical Assistance eligibility, and interim assistance, please contact either Jeff Miller or Lou Capozzi at (717) 233-4101.