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HomeMy WebLinkAbout05282013 City Council Special Meeting Laydowns I 4illb LAYDOWN ti•K‘11) Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2013-040 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, ACCEPTING • • ! • _ _ ! . • . - • ! THE SETTLEMENT AND RELEASE AGREEMENT NEGOTIATED BETWEEN THE STATE OF ALASKA AND PROVIDENCE SEWARD MEDICAL AND CARE CENTER RELATING TO A MEDICAID RATE APPEAL IN AN APPROXIMATE AMOUNT OF$6.1 MILLION OVER FOUR YEARS WHEREAS,the City of Seward("City")owns the local hospital and long-term care facilities I which are on the City's behalf operated by Providence Health & Services ("Providence") as Providence Seward Medical and Care Center("PSMC"); and WHEREAS,on February 28,2013,the Seward City Council approved Resolution 2013-015, authorizing negotiations to proceed to settle a rate dispute filed by PSMC with the State of Alaska Department of Health and Social Services("State")relative to the FY2011 Seward Mountain Haven Medicaid Rate,which was established utilizing FY2009 as the"base year"for rates to be inflation adjusted for fiscal years 2011, 2012, 2013, and 2014; and WHEREAS,the City and Providence are parties to a Management and Operating Agreement which provides, in pertinent part, that: 1) the City shall own and have financial responsibility for PSMC;2)Providence assumes all rights,duties,liabilities and obligations arising from operation of PSMC;3)Providence shall negotiate,prepare and execute contracts in connection with the operation of PSMC; 4) Providence shall notify the City of any proposed settlement of litigation on behalf of PSMC involving payment of an amount in excess of$25,000;and)Providence shall not assume or be liable for any claim,liability,or obligation of PSMC arising from operation of PSMC pursuant to the Agreement,except where such claim,liability or obligation arises from Providence's negligence or material breach of the Agreement; and WHEREAS,the Settlement and Release Agreement substantially complies with the terms discussed with the Seward City Council when it approved Resolution 2013-015, with two exceptions: 1)due to a major computer software migration,the State of Alaska DHSS is anticipating significant potential delays in processing Medicaid reimbursements, which may adversely impact their ability to process Seward's claims within the initial 90-day window that they were committing to, and instead, the State is agreeing to re-process those claims by December 31, 2013; and 2) the State of Alaska requires that the parties agree to dismiss this matter with prejudice, thereby I necessitating legal action by the City in the event it is necessary to enforce the terms of this Agreement; and • WHEREAS, the State's settlement offer will increase the per diem base rate for Seward Mountain Haven by approximately$137.00 per patient per day,and adjusted rate will be used as the i . CITY OF SEWARD,ALASKA RESOLUTION 2013-040 base rate to be inflated for fiscal years 2012, 2013, and 2014, with a total estimated increased payment to Seward Mountain Haven resulting from this adjustment over the four-year rate cycle,of approximately$6.1 million; and WHEREAS, the Seward City Council met in executive session on February 26, 2013 to discuss the merits of the settlement offer, approved d the proposed-settlement offer on February 28, 2013, and required that the administration bring forward for theii final consideration and approval,i iew a final negotiated agreement. AIP (nu 's NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. In the matter of the Providence Seward Medical Center Case No.2012-MRC-02 IFY2011 LTC Medicaid Rate Appeal,the Seward City Council hereby concurs with doh to-Providence Health&Services' recommendai; „ , ' ' , ' acceptance of a settlement offer from the State of Alaska, subject to the conditions set forth in this Resolution, increasing the per diem base rate for Seward Mountain Haven by$137.00 per patient per day,which adjusted rate would be used as the base rate to be inflated for fiscal years 2012, 2013, and 2014. The estimated total increased payment to Seward Mountain Haven resulting from this adjustment over the four-year rate cycle is approximately$6.1 million Section 2. The Seward City Council hereby accepts the negotiated Settlemen and Release Agreement negotiated between the State of Alaska Department of Health and Social Services and Providence Health and Services, in substantial form as attached hereto, and authorized the city manager to execute said Agreement. Section 3. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 28th day of May, 2013. THE CITY OF SEWARD, ALASKA David Seaward, Mayor AYES: NOES: ABSENT: ILAY DOWN Council Agenda Statement a of sets, C9 Meeting Date: May 28, 2013 4 P Through: James Hunt, City Manager From: Kristin Erchinger, Finance Director Agenda Item: Final Settlement and Release Agreement Related to Seward Mountain Haven's Medicaid Rate for 2011, 2012, 2013 and 2014 BACKGROUND &JUSTIFICATION: The City of Seward ("City") owns the local hospital and long-term care facility (collectively, "PSMC")which are operated by Providence Health&Services("Providence")under management agreement with the City. The City is financially responsible for the operations of the health facilities. Providence has managed the long-term care facility in Seward on the City's behalf since April 2003. The 2009 year represented a rebasing year for the purposes of establishing Medicaid rates for the subsequent fiscal years 2011,2012,2013 and 2014. The State of Alaska Department of Health and Social Services ("State") established the 2011 rate for the operations of SMH at$538.44 per day. PSMC filed a Notice of Appeal to these rates. The Seward City Council approved Resolution 2013-015 on February 28, 2013, authorizing negotiation of a formal settlement agreement with the State of Alaska, and requested that the final I settlement agreement be brought before them for approval. Attached is the Settlement and Release Agreement which was negotiated between the State of Alaska DHSS and attorneys for Providence Health&Services representing PSMC. The terms of the settlement agreement are consistent with the information previously provided to Council;namely,that the facility will receive approximately $6.1 million in additional reimbursements over a four-year period,representing approximately one- half of the amount the City and PSMC felt that PSMC was entitled to claim. The reason for settling this claim had primarily to do with the potential downside risk associated with a prolonged legal battle,as well as the State's intent to argue that PSMC is not entitled to either a waiver of the lower of cost or charges issue, or correction of an error on the submitted forms used as the basis for establishing rates. In the worst case scenario,PSMC would have been filing four separate years'rate cases with each case taking an estimated two to four years to resolve in the courts, incurring significant legal fees with the risk of an adverse legal decision. Ultimately,the legal fees associated with this matter have been entirely borne by Providence Health & Services, not by PSMC. The administration recommends acceptance of the Settlement and Release Agreement. INTENT: This purpose of this resolution is to support the terms of the Settlement and Release Agreement as negotiated by Providence Health &Services with the State of Alaska DHSS,in order to settle this rate dispute with the State of Alaska and obtain the additional Medicaid claims funds that the facility is entitled to, as quickly as possible. CITY OF SEWARD RESOLUTION 2013-040 CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan(document source here): X 2. Strategic Plan(document source here): X 1. Other(list): X ATTORNEY REVIEW: Yes X No FISCAL NOTE: I This resolution upports does-net-object-to-the Settlement and Release Agreement with the State of Alaska. It will result in approximately$6.1 million in additional funding coming to PSMC over a four-year period,representing approximately one-half of the funding to which the facility felt it was entitled. It is fair to expect that at least$2 million of that settlement will come directly to the City of Seward to repay a loan granted to PSMC in 2011 by the Seward City Council,and be used to cover debt service costs of Seward Mountain Haven. The remaining funds will be available to PSMC to cover operational shortfalls,costs, and cash flow. Finance Department: RECOMMENDATION: I City Council approve Resolution 2013-040, reviewing-authorizing the Settlement and Release Agreement related to a dispute with the State of Alaska relating to a Medicaid rate appeal. ccc9t ckk toAbne 1- `r out ki,icto- NVjitl- SETTLEMENT AND RELEASE AGREEMENT This Settlement and Release Agreement("Agreement") is entered into between the State of Alaska, Department of Health and Social Services("State"), and Providence Seward Hospital ("Providence Seward"or"the Facility"). The State and Providence Seward are sometimes referred to in the Agreement collectively as the"parties". RECITALS A. Providence Seward operates a combined Critical Access Hospital and Long-Term Care facility Seward, Alaska and provides medical assistance services to eligible persons under the Alaska Medicaid program, AS 47.07.010, etc. seq. B. In connection with its provision of long-term care(nursing home/skilled nursing)medical assistance services under the Alaska Medicaid program,Providence Seward has a pending administrative appeal of its Medicaid long term care per diem rate before the Office of Hearing and Appeals in the consolidated appeal entitled In the Matter of Providence Seward Medical Center, Facility FY 2011 and FY 2013 Nursing Home Medicaid Rate, Consolidated Case No. OAH No. 12-0364-MDR("the Appeal). C. The parties now desire to settle all claims asserted in the Medicaid long term care rate appeal referred to in Paragraph B, as well as claims that Providence Seward could have asserted against the State regarding facts, such Settlement and Release Agreement/Providence Seward Page 1 of 10 Case No. OAH No. 12-0634-MDR; Agency No. 2012-MRC-04 as acts or omissions that arose or existed prior to and through the date of settlement, that relate in any way to the claims asserted by Providence Seward in the pending appeal related to the Medicaid per diem long term care rate to be used for the Fiscal Years 2011,2012, 2013, and 2014 (sometimes referred to as "the Appeal Claims"). This Agreement is binding on the parties' successors, transferees, and assigns to the same extent it is binding on the parties. NOW, THEREFORE, in exchange for the mutual promises contained in this Agreement,the parties agree as follows: 1. Release. Providence Seward hereby releases, acquits, and forever discharges the State of Alaska, its departments, agencies and other subdivisions, officials, officers and/or employees,partners, contractors, successors and/or predecessors in interest, agents, attorneys, and any other persons or entities acting through or on behalf of the State of Alaska("the State") from any and all actions, causes of action, suits, controversies, claims, demands of every kind and nature, whether mature or to mature in the future, and whether or not the existence or nature of any such cause of action or claim is now known or contemplated, arising out of or relating in any respect to Providence Seward's appeal of its Medicaid long term care rates for Fiscal Years 2011, 2012, 2013 and 2014. 2. Dismissal of Appeal. a. Concurrently with the execution of this Agreement, the parties shall execute a stipulation for dismissal with prejudice in In The Matter of Providence Seward Medical Center, Facility. FY 2011 and FY 2013 Nursing Home Settlement and Release Agreement/Providence Seward Page 2 of 10 Case No. OAH No. 12-0634-MDR;Agency No. 2012-MRC-04 Medicaid Rate, Consolidated Case No. OAH No. 12-0634. The stipulation for dismissal with prejudice will be filed with the Office of Administrative Hearings within 15 days of the last signature on the Agreement. The parties shall take whatever additional actions may be necessary, if any, in order to accomplish dismissal of the subject matters with prejudice to their refiling. b. The parties shall attach a copy of the executed Settlement Agreement to the Stipulation for Dismissal. The parties agree that incorporating the Settlement Agreement into the Order of Dismissal is appropriate to assure a clear and accurate record and to facilitate implementation of the Agreement. The parties will further work together to assure the terms of this Agreement are implemented within the time frame set forth in Paragraph 3 below. 3. Payment to Providence Seward. Payment to the Facility will be made by adjusting the Facility's Medicaid long term care per diem base rate for FY 2011, and recalculating the rates for FY 2012, 2013 and 2014 pursuant to 7 AAC 150.150 using the adjusted base rate for FY 2011. No adjustments will be made to any CON add-ons to the base rate; the CON add-ons are a separate and distinct part of the overall Medicaid long term care rate and are not part of this appeal or its settlement. a. The adjusted Medicaid long term care base rates for Providence Seward Medical Center's nursing home are established as follows (the rates for Fiscal Years 2012 and 2013 include adjustment for inflation): FY 2011: $674.41 Settlement and Release Agreement/Providence Seward Page 3 of 10 Case No. OA11 No. 12-0634-MDR; Agency No. 2012-MRC-04 FY 2012: $688.45 FY 2013: $704.16 FY 2014 $704.16 plus adjustment for inflation under 7 AAC 150.150 b. The final long term care per diem rates, including the previously established CON add-ons, are: FY 2011: 674.41 +CON 193.70 =Final Rate$867.81 FY 2012: 688.45 +CON 192.96 =Final Rate$881.41 FY 2013: 704.16 +CON 192.77 =Final Rate $896.93 FY 2014: 704.16 +inflation adjustment+ CON to be established. c. The parties agree that payment to the Facility will be made as follows: (i). The Facility's Medicaid claims for services provided in Fiscal Years 2011, 2012 and 2013 which have been paid through the date of the final signature of this Agreement at the prior long term care rate will be reprocessed at the final long term care rates established above in paragraph b. (ii). Timely-filed Medicaid claims for services provided during Fiscal Years 2012 and 2013 that are to be paid at the long term care rate but have not been paid as of the date of final signature of this Agreement, and all timely-filed Medicaid claims for services provided during Fiscal Year 2014 that are to be paid at the long term care rate, will be processed at rates set established above in paragraph b. Settlement and Release Agreement/Providence Seward Page 4 of 10 Case No. OAII No. 12-0634-MDR; Agency No. 2012-MRC-04 (iii) The timing of the reprocessing of claims is dependent upon the ability of the department to schedule the reprocessing into the claims payment process, but the reprocessing will be done as soon as possible given the constraints of the claims processing system,but no later than December 31, 2013. Enforcement of the Agreement, including the release, is dependent upon payment to the Facility under this Paragraph. 4. Effect of Settlement. The parties agree that this Settlement Agreement is a comprehensive and final settlement for Providence Seward's Medicaid long term care rates for its Fiscal Years 2011 —2014. The parties agree that this Agreement does not apportion the settlement amount among the contested issues in the Appeal. The parties agree that this Agreement does not have, and may not be read to have, any impact of any kind on the Medicaid rates established for any year subsequent to Providence Seward's FY 2014. The parties agree that nothing in this Agreement is intended to affect the claims or defenses of any person or entity other than the parties to this Agreement. This Agreement may not be used as precedent for similar or dissimilar issues raised by Providence Seward or any other facility in an appeal of its Medicaid rates. 5. Fees and Costs. Each party will bear its own costs, attorneys' fees and consultants' fees. Settlement and Release Agreement/Providence Seward Page 5 of 10 Case No. OAI I No. I 2-0634-MDR; Agency No. 2012-MRC-04 6. Complete Agreement. The parties intend this Agreement to incorporate the complete settlement between the parties with respect to all issues raised in the pending appeals that are the subject of this settlement and as further set forth in Paragraph 1 above. All prior negotiations, representations, and agreements, whether written or oral, are hereby merged into this Agreement.This Agreement may only be amended by a signed writing executed by both parties, which specifically refers to this Agreement. 7. No Admission. This Agreement is the result of the compromise of disputed claims and does not constitute an admission of liability by either party to this Agreement. Specifically, the parties acknowledge that there has been no agreement between them on the legal issues. Nothing in this Agreement constitutes an admission regarding any issue of law or fact by the parties and no party may make a statement or publication which attributes, infers, or implies fault or liability to any of the parties. 8. Construction/Severability: This Agreement is made and entered into in the State of Alaska and shall in all respects be interpreted, enforced, and governed by and according to the laws of Alaska. Each party acknowledges that the terms of this Agreement are contractual and not mere recitals, and further represent that they have read them carefully, fully understand them, and voluntarily accept them for the purposes of making a full and final compromise of the Appeal Claims for the Facility's FYs 2011, 2012, 2013 and 2014. Settlement and Release Agreement/Providence Seward Page 6 of 10 Case No. OAH No. 12-0634-MDR; Agency No. 2012-MRC-04 All parts of this Agreement shall be construed fairly according to their terms.No presumption shall be applied for or against either party based on which party originated the documents or drafts thereof. Paragraph headings are for convenience only and shall not be construed to alter or otherwise affect the meaning of the text of any section. Should any provision of this Agreement be declared or determined by any court of competent jurisdiction to be illegal, invalid, or unenforceable,the legality, validity, and enforceability of the remaining provisions shall not be affected thereby, and said illegal, invalid, or unenforceable part, term, or provision shall be deemed not to be a part of this Agreement, provided that the parties agree that the court shall, if possible, construe this Agreement so as to give full force and effect to each of its provisions. The pending rate appeal referred to in the Recitals at Paragraph B above did not involve any allegations or proof of, or defenses to,any claims of potential or actual administrative, civil, or criminal liability relating to any alleged wrongful receipt of Medicaid payments from the State of Alaska. Therefore, any such allegations, claims,proof, and defenses are outside the scope of this agreement. This agreement does not address in any way potential or actual wrongful actions by the Facility relating to participation in the Alaska Medicaid program. Nothing in this Agreement will be used to bar the State or federal government from administrative, civil, and/or criminal sanctions for, or relating to, wrongful actions by the Facility, or any person or entity, under the Alaska Medicaid program. Failure by the Facility to follow Medicaid billing practice requirements, or other Settlement and Release Agreement/Providence Seward Page 7 of 10 Case No. OAH No. 12-0634-MDR; Agency No. 2012-MRC-04 Medicaid requirements, during the Facility's participation in the Alaska Medicaid program is outside the scope of this Agreement, and this Agreement is not a bar to collection by the State from the Facility of amounts, if any, owed by the Facility to the State because of the Facility's failure to follow Medicaid billing practice requirements, or other Medicaid requirements, of the Alaska Medicaid program. Nothing in this Agreement shall be construed as a limitation of any kind of any of the rights and privileges of the Facility to oppose through proper legal process any claim of failure by the Facility to follow Medicaid billing practice requirements, or other Alaska Medicaid Program requirements, during the Facility's participation in the Alaska Medicaid program, if such claim is made by the State in the future. IN WITNESS WHEREOF,the parties have executed this Settlement and Release Agreement on the respective dates set forth opposite their signatures. PROVIDENCE SEWARD MEDICAL CENTER Date: By: Joseph Fong Administrator PROVIDENCE HEALTH& SERVICES ALASKA Date: By: _ Sean McCallister Operations Administrator Critical Access Hospitals Settlement and Release Agreement/Providence Seward Page 8 of 10 Case No. OAH No. 12-0634-MDR; Agency No. 2012-MRC-04 CITY OF SEWARD Date: By: James Hunt City Manager Attested by: Date: By: City Clerk Settlement and Release Agreement/Providence Seward Page 9 of 10 Case No. OAH No. 12-0634-MDR;Agency No. 2012-MRC-04 DAVIS WRIGHT TREMAINE Date: By: Jon S. Dawson Attorneys for Providence Seward Medical Center STATE OF ALASKA DEPARTMENT OF HEALTH AND SOCIAL SERVICES Date: By: Jared Kosin, ED, Office of Rate Review Department of Health and Social Services MICHAEL C. GERAGHTY ATTORNEY GENERAL Date: By: Linda L. Kesterson Assistant Attorney General Attorneys for the State Settlement and Release Agreement/Providence Seward Page 10 of 10 Case No. DAH No. 12-0634-MDR;Agency No. 2012-MRC-04 BEFORE THE ALASKA OFFICE OF ADMINISTRATIVE HEARINGS ON REFERRAL BY THE COMMISSIONER OF HEALTH AND SOCIAL SERVICES In the Matter of 5 ) PROVIDENCE SEWARD MEDICAL CENTER ) 6 ) Consolidated Case Facility. ) OAII No. 12-0634-MDR 7 ) 8 FY 2011 and FY 2013 Nursing Home Medicaid Rate ) 9 10 STIPULATION FOR DISMISSAL 11 Pursuant to the attached Settlement Agreement, the parties to this matter 12 have reached a settlement of all outstanding issues. The parties hereby stipulate and 1 agree that this matter be DISMISSED, with prejudice. 14 DATED: MICHAEL C. GERAGIITY I' ATTORNEY GENERAL 16 17 By: Linda L. Kesterson 18 Assistant Attorney General z 19 Alaska Bar No. 9006025 Attorneys for State of Alaska Q > z .a 20 DATED: DAVIS WRIGIIT TREMAINE LLw < w o, Z 1- 0 Q m w J N w � cQQn 21 Hxa � Qw By: a1- 0o00 22 Jon S. Dawson QLL " Alaska Bar No. 8406022 r z U '2Q '_,3 Attorneys for Providence SEWARD 24 Medical Center 25 26