DNE
    STATE OF WISCONSIN
    DEPARTMENT OF JUSTICE
J.B. VAN HOLLEN
ATTORNEY GENERAL
Raymond P. Taffora
Deputy Attorney General
114 East, State Capitol
P.O. Box 7857
Madison, WI 53707-7857
608/266-1221
TTY 1-800-947-3529
            October 14, 2009       OAG-4-09
AddressMs. Karen Timberlake
ReStartSecretary
Department of Health Services

1 West Wilson Street

Madison, WI 53707
SalutationDear Ms. Timberlake:
¶ 1. You indicate that a group of counties is giving consideration to establishing a commission under Wis. Stat. § 66.0301. You advise that the commission would be a separate governmental legal entity that would lease a unit in an existing county-owned skilled care nursing home facility that currently provides specialized care to the developmentally disabled and to persons with mental illness. You state that the primary purpose of the commission would be to assure that this specialized unit continues to operate, thereby ensuring the continued availability of specialized services to residents of these counties. You also state that the commission would defray losses that are currently incurred solely by the county (“County”) in which the specialized unit is located. My understanding is that both the County and all other counties that currently have residents in the specialized unit desire to voluntarily become commission members.
BACKGROUND
¶ 2. Medicaid is a cooperative federal-state program created under Title XIX of the Social Security Act that provides reimbursement for certain kinds of medical care given to persons with limited financial resources. Harris v. McRae, 448 U.S. 297, 308-09 (1980). Although the federal and state governments share the costs of the Medicaid program, the primary responsibility for its administration lies with a designated single state agency in each state. 42 U.S.C. §§ 1396a(a)(5) and 1396b (2009). In Wisconsin, the Division of Health Care Access and Accountability (“DHCAA”) in the Department of Health Services (“DHS”) serves as the single state Medicaid agency under 42 C.F.R. Part 431 (2007). DHCAA reimburses health care providers for covered medical services received by persons who have qualified for Medicaid. Under Wis. Stat. § 49.45(2)(a)11., DHCAA certifies nursing homes and other health care providers to participate in the state Medicaid program. The Division of Quality Assurance (“DQA”) in DHS licenses nursing homes. A nursing home licensed by DQA under Wis. Stat. § 50.03 qualifies as a Wisconsin Medicaid provider. Wis. Admin. Code § HFS 105.08. The legal entity that is named on the Wis. Stat. ch. 50 license issued by DQA is certified by DHCAA under the Medicaid program as a nursing home provider. That legal entity receives Medicaid reimbursement from DHCAA.
¶ 3. Each county has “the primary responsibility for the well-being, treatment and care of the mentally ill, [and] developmentally disabled” who are residents of the county. Wis. Stat. § 51.42(1)(b). That “responsibility is limited to the programs, services and resources that the county board of supervisors is reasonably able to provide within the limits of available state and federal funds and of county funds required to be appropriated to match state funds.” Id. Consequently, in protective placement proceedings “[e]xcept as provided in s. 49.45(30m), the county may not be required to provide funding, in addition to its funds that are required to be appropriated to match state funds, in order to provide protective placement or protective services to an individual.” Wis. Stat. § 55.12(5).
¶ 4. You advise that few private nursing homes have programs or facilities for the specialized treatment and supervision of individuals with significant behavioral problems due to mental illness or developmental disabilities. You state that certain counties do operate nursing homes with dedicated units that provide such specialized services, but most counties lack the financial resources to establish such units. You indicate that a county that is responsible for the care of a resident who needs such specialized nursing home services therefore often contracts for the placement of that resident in another county in which there is a county nursing home that does have such a specialized services unit. You also state that most but not all residents to whom counties provide care and treatment under Wis. Stat. § 51.42 have qualified for Medicaid. A county nursing home that admits a Medicaid-eligible resident of another county bills the Medicaid program for the care that the nursing home provides. The authorized Medicaid reimbursement rate is normally significantly less than the full cost of providing specialized care for persons with mental illness or developmental disabilities. All Medicaid providers, including nursing homes, are precluded by federal and state statutes and regulations from billing otherwise legally or financially responsible third parties for any amount in excess of the applicable Medicaid reimbursement rate, even where the full cost of providing care to the patient substantially exceeds the amount of government reimbursement received. A county that operates a nursing home with a dedicated unit that provides specialized services to persons with mental illness or developmental disabilities must therefore use funds from its own county treasury to cover any deficits generated as a result of providing services to Medicaid recipients who are residents of other counties.
¶ 5. According to the information you have provided, the County owns and operates a nursing home that does include a dedicated unit which provides specialized services to persons with mental illness and developmental disabilities. You advise that the County has determined that it can no longer afford to cover substantial deficits that it is incurring in connection with the operation of the specialized unit, and that it therefore may be forced to close that unit. You state that the deficits result primarily from treating Medicaid patients who require specialized care for mental illness or developmental disabilities. My understanding is that the human services departments of certain other counties currently contract with the facility to receive care for individual residents of those counties in the specialized unit of the nursing home and that those counties have proposed entering into an intergovernmental agreement under Wis. Stat. § 66.0301 to create a commission that would lease the specialized unit from the County. You indicate that the County would also be a party to the intergovernmental agreement and a member of the commission. It is my understanding that the specialized unit would not be governed by a multi-county human services department, as has been done in other counties that share costs of medical facilities. See, e.g., http://www.norcen.org/. My understanding is that the human services department in each of these other counties would therefore continue to be required to enter into a contract with the facility for the care of each individual resident in the specialized unit. See Wis. Stat. § 51.42(3)(as)1r.
¶ 6. You state that the commission would be licensed and certified as a skilled Medicaid facility and would be responsible for all costs, including capital costs, necessary to maintain the specialized unit and keep it operational. You advise that the County would retain ownership of the land, building, fixtures, equipment, and personal property and would continue to provide all labor, materials, and related services necessary to operate the specialized unit. You indicate that the County would continue to hire, pay, supervise, and discharge all employees, would continue to maintain all financial accounts, and would continue to collect all patient charges.
¶ 7. You state that the commission would make payments to the County for rental of the facility. You advise that the rental payments would consist of reimbursement for all costs that could have been reported on Medicaid Program Nursing Home Cost Reports by the County had it not entered into the lease. You have not inquired about the Medicaid reimbursement aspects of the proposed lease arrangement.
¶ 8. You state that the commission would also pay additional funds to the County for the various services that the County agrees to continue to provide. You indicate that all state and federal funds that the commission receives in connection with the operation of the facility and all assessments made by the commission against its member counties would be remitted to the County by the commission.
¶ 9. You advise that the proposed annual assessments against the other counties would be entirely prospective and would take into consideration required lease payments, operational costs, anticipated patient days per member, capital costs, and any other expenses that the commission anticipates would be incurred in the ensuing fiscal year in order to maintain the facility in appropriate operating condition. You state that the assessments would be made against these counties on a uniform prorated basis. Although you have provided no specific examples, you advise that the proposed assessments would also take into consideration the prorated expenses to be incurred by the commission that are associated with a member county’s residents in the facility.[1] Because most persons who receive services in the specialized unit are Medicaid recipients, a substantial portion of the proposed assessments against the other member counties would therefore necessarily be used to defray deficits anticipated to occur as a result of providing care to Medicaid patients for whom each such county is responsible under Wis. Stat. § 51.42(1)(b).
¶ 10. You advise that annual assessments against the County would consist of two components. You indicate that one component of those assessments would be computed at the same uniform, prorated rate and upon the same bases that annual assessments are made against the other counties. My understanding is that this first component of the annual assessment would therefore take into consideration the prorated expenses to be incurred by the commission that are associated with the County’s own residents in the facility. You advise that the second component of the annual assessment against the County would be a retroactive assessment that is the difference between the proceeds of all prospective assessments made against all counties at the uniform prorated rate and the actual costs of the commission’s operations, as determined in its Medicaid cost reports. You have not inquired about the Medicaid reimbursement aspects of the commission’s payment of all of the assessments to the County.
¶ 11. The materials you have provided indicate that a county could be expelled from the commission by a two thirds vote of all member counties. Those materials also indicate that a county could withdraw from the commission at the close of any fiscal year by providing timely notice to the commission. They also indicate that a condition of commission membership for the other counties would be that upon withdrawal or expulsion each such county must take all actions necessary to remove all of its residents who are patients of the facility in a manner that is consistent with federal and state law. You state that, by prior agreement, assessments against a county that withdraws or is expelled from the commission would continue as long as the county has residents in the facility.
QUESTION PRESENTED AND BRIEF ANSWER
¶ 12. You ask whether the mandatory assessments by the commission would violate federal and state statutory and regulatory provisions prohibiting Medicaid supplementation.
¶ 13. In my opinion, counties may enter into joint agreements to collectively furnish and fund nursing home services if the agreements do not violate federal and state Medicaid statutes and regulations prohibiting supplementation. Assessments resulting from such agreements that are computed without reference to and that are not attributable to purchase of services contracts involving Medicaid patients would not constitute supplementation. Assessments that are computed with reference to or are attributable to purchase of services contracts involving particular Medicaid patients are not permissible. The validity of hybrid assessments that do not fit solely within either one of those two categories must be determined on a case-by-case basis.
¶ 14. You have not specifically inquired whether any county could be forced to join the commission in order to have its residents served by the specialized unit. I decline to provide an opinion concerning that issue because I understand that a similar issue is in civil litigation between two counties. See 77 Op. Att’y Gen. Preface No. 3.D. (1988).
ANALYSIS
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