Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State, Dept. of Health & Social Services v. North Star Hospital (7/20/2012) sp-6696

State, Dept. of Health & Social Services v. North Star Hospital (7/20/2012) sp-6696

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER . 

        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 

        303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email 

        corrections@appellate.courts.state.ak.us. 



                 THE SUPREME COURT OF THE STATE OF ALASKA 



STATE OF ALASKA,                               ) 

DEPARTMENT OF HEALTH &                         )       Supreme Court No. S-14074 

SOCIAL SERVICES,                               ) 

                                               )       Superior Court No. 3AN-09-07396 CI 

                        Appellant,             ) 

                                               )       O P I N I O N 

        v.                                     ) 

                                               )       No. 6696 - July 20, 2012 

NORTH STAR HOSPITAL,                           )
 

                                               )
 

                        Appellee.              )
 

                                               )
 



                Appeal from the Superior Court of the State of Alaska,  Third 

                Judicial District, Anchorage, Michael L. Wolverton, Judge. 



                Appearances: Thomas A. Dosik, Assistant Attorney General, 

                Anchorage, and John J. Burns, Attorney General, Juneau, for 

                Appellant. Stephen D. Rose, Garvey Schubert Barer, Seattle, 

                Washington, for Appellee. 



                Before:     Carpeneti,     Chief    Justice,  Fabe,    Winfree,    and 

                Stowers, Justices. [Christen, Justice, not participating.] 



                FABE, Justice. 



I.      INTRODUCTION 



                The Office of Rate Review, a division of the State Department of Health 



and Social Services (DHSS), set a Medicaid payment rate for North Star Hospital based 


----------------------- Page 2-----------------------

on a 2005 home office   cost report that did not reflect a substantial increase in costs 



incurred by North Star in 2006.           While making its determination, the Office of Rate 



Review   had   access   to   an   unaudited   version   of   a   2006   home   office   cost   report   that 



reflected these increased costs.   The audited version of the 2006 home office cost report 



was delayed through no fault of either party. 



                The Office of Rate Review refused to grant North Star's request for an 



interim rate pending the audit of the 2006 report or to reconsider the rate once it received 



the audited 2006 report.  In response, North Star administratively challenged the Office 



of   Rate   Review's   rate   determination.     The   DHSS   Commissioner   concluded   that   the 



Office of Rate Review's refusal to consider data from the unaudited 2006 report was 



proper   and   that   the   Office   of   Rate   Review   was   not   required   to   grant   North   Star   a 



temporary rate preceding completion of the audit of the 2006 report.  The Commissioner 



also   concluded   that   DHSS   did   not   have   jurisdiction   to   determine   whether   7   Alaska 



Administrative Code (AAC) 150.170(b)(12), which establishes which home office costs 



are to be considered, was in conflict with AS 47.07.070, which requires that the rate be 



based upon reasonable costs.   North Star appealed the decision to the superior court and 



the superior court reversed, concluding that because the audited 2006 home office cost 



statement was overdue at no fault of North Star, it was error for the Office of Rate 



Review to refuse to grant North Star's request for a temporary rate in order to consider 



the audited version of the 2006 report.         We affirm the superior court's decision. 



II.     FACTS AND PROCEEDINGS 



        A.      Facts 



                At least once every four years, the Office of Rate Review must determine 



prospective   Medicaid   base   payment   rates   in   compliance   with   the   methodology   and 



                                                   -2-                                             6696
 


----------------------- Page 3-----------------------

criteria established in 7 AAC 150.160.1            On December 19, 2007, the Office of Rate 



Review held an informal public hearing to aid in its determination of several hospitals' 



base rates for fiscal years 2008-2011.  Medicaid providers are entitled to reimbursement 



based   on   this   base   rate,   regardless   of   the   actual   cost   incurred   in   subsequent   years. 



        1       7 AAC 150.160(a) (2012) provides: 



                The   department   will   use   the   following   methodology   and 

                criteria in reviewing and establishing prospective payment 

                rates for the Medicaid program: 



                (1)     the department will consider the following with the 

                relative    importance     of  each   criterion   being   a  matter    of 

                department discretion: 



                        (A)     whether the costs are related to patient care and 

                        are attributable to the Medicaid program; 



                        (B) whether the payment rate is reasonably related to 

                        costs; 



                (2)      the department will set annual rates established for the 

                facility's fiscal year; 



                (3)     base years may be changed to more current years and 

                may be subject to audit; the department may determine the 

                timing for a re-basing under this paragraph and whether and 

                when to conduct an audit; 



                (4)     for all facilities, except facilities with rate agreements 

                established under 7 AAC 150.190, the department 



                        (A)     will perform a re-basing for the first fiscal year 

                        beginning after notification to the facilities that a re- 

                        basing will be done; 



                        (B)     will perform a re-basing no less than every four 

                        years; and 



                        (C)     may perform a re-basing sooner than every four 

                        years. 



                                                  -3-                                             6696
 


----------------------- Page 4-----------------------

Consequently, the base rates set by the Office of Rate Review affect up to four years of 



Medicaid payments. 



                One component of the prospective base rate calculation is the home office 

cost2 of the hospital provider.      7 AAC 150.170(b)(12) provides: 



                [A]llowable   home   office   costs   may   not   exceed   the   most 

                recent Medicare-audited Medicare home office cost statement 

                available     in  the   department's     files  60   days   before    the 

                beginning      of   a  re-based    prospective     rate   year;   if  the 

                Medicare-audited Medicare home office cost statement is not 

                from the same year as the facility's base year, the costs will 

                be inflated to the facility's base year using the methodology 

                described in 7 AAC 150.150. 



                At the time of the hearing, the fiscal year 2005 audited home office cost 



report for North Star Hospital was on file 60 days before the beginning of the re-basing 



year.   But before the hearing, North Star submitted to the Office of Rate Review an 



unaudited fiscal year 2006 home office cost report that reflected a substantial - almost 



100% - increase in its home office costs.            The audited version of the 2006 report was 



unavailable because, despite North Star's timely submission of the 2006 report to the 



federal auditor, the federal auditor was late in completing the audited version of that 



home office cost report. 



                In a letter to the Office of Rate Review on December 17, 2007, North Star 



objected to the payment rate based on the 2005 home office cost report.                     North Star 



argued that the base rate did not comply with AS 47.07.070(b)(1), which requires that 



when   "determining   the   rates   of   payment   for   health   facilities   for   a   fiscal   year,   the 



department shall . . . set rates for facilities that are based on . . . reasonable costs related 



        2       Home office costs are the costs attributable to the central headquarters of 



Medicaid providers with multiple facilities. 



                                                   -4-                                               6696 


----------------------- Page 5-----------------------

to patient care."3    North Star further argued that it "seems patently unfair to allow huge 



swings in the calculations upon which rates are set to be determined by the speed with 



which a fiscal intermediary completes its audit."            North Star requested that either the 



"known 2006 home office costs be allowed, or the rate setting . . . be delayed until the 



2006 audited home office cost is available." 



                Under     7  AAC     150.030(b),     the  Office   of  Rate   Review     may   establish 

temporary prospective rates at its discretion.4         At the December 19 hearing, North Star 



requested a temporary rate pending the final determination.   The Office of Rate Review 



denied North Star's request. 



                At the same December 19 hearing, the base rates for Providence Alaska 



Medical Center and Providence Kodiak Island Medical Center were reviewed.  Prior to 



the   meeting,   the   Office   of   Rate   Review   had   given   each   of   these   two   facilities   desk 

reviews which recommended a base rate.5              Because 7 AAC 150.200(b)(3) states that a 



        3       AS 47.07.070(b) states: 



                In determining the rates of payment for health facilities for a 

                fiscal    year,   the   department     shall,   within    the   limit   of 

                appropriations made by the legislature for the department's 

                programs      under    this  chapter   and   under   AS    47.25.120    - 

                47.25.300 for that fiscal year, including anticipated available 

                federal revenue for that fiscal year, set rates for facilities that 

                are based on (1) reasonable costs related to patient care; and 

                (2) audit and inspection results and reports, when the audit or 

                inspection is conducted under AS 47.07.074. 



        4       7 AAC 150.030(b) provides:            "The department may establish temporary 



prospective payment rates. The final rate approved by the department supersedes the 

temporary rate, and payments will be adjusted in accordance with the final rate." 



        5       7 AAC 150.200 (i)(2) defines desk review as:  "[T]he department's review 



that is conducted without the auditor visiting the facility being desk-reviewed for the 

                                                                                         (continued...) 



                                                   -5-                                             6696
 


----------------------- Page 6-----------------------

                                                                         6 

facility has at least 40 days to respond to the   desk review  and because Providence 



Alaska Medical Center and Providence Kodiak Island Medical Center received their desk 



reviews on dates leaving less than 40 days to respond to their reviews, both Providence 



facilities   requested   temporary   rates   so   they   could   adequately   respond   to   their   desk 



reviews.    These requests were granted.         The final Medicaid rate for Providence Alaska 



Medical Center was issued on March 17, 2008.   The final Medicaid rate for Providence 



Kodiak Island Medical Center was issued on March 28, 2008. 



                On December 28, 2007, North Star was informed that the Office of Rate 



Review had set its base year rate, effective January 2008, at $562.12 "per patient day" 



using the audited 2005 home office cost report already on file.               On January 22, 2008, 



North Star again requested that the Office of Rate Review use the unaudited 2006 home 



office cost report instead of the 2005 home office cost report or that it delay its decision 



until the audited 2006 home office cost report was returned by the fiscal intermediary. 



                On February 13, 2008, the Office of Rate Review refused both of North 



Star's requests.    On March 13, 2008, North Star received the federal audit of the 2006 



home office cost report.   North Star sent the audited report to the Office of Rate Review 



that same day, and the audited numbers were virtually identical to the home office costs 



        5(...continued) 



purpose of conducting tests or the initial phase of a field audit." 



        6       7 AAC 150.200(b)(3) provides: 



                [A] facility may file with the department a response to the 

                department's field audit or desk review report no more than 

                40 days after the date the department issues the report; the 

                department may make additional related adjustments if the 

                facility makes objections to the department's adjustments; the 

                department will provide to the facility a description of any 

                additional adjustments[.] 



                                                  -6-                                             6696
 


----------------------- Page 7-----------------------

found in the unaudited 2006 home office cost report. Reliance on the audited 2006 home 



office cost report, rather than the 2005 home office cost report, would have resulted in 



an increased payment to North Star of $30.19 per patient day. 



        B.        Proceedings 



                 North     Star   appealed     the   Office    of  Rate    Review's      decision    to  the 



Commissioner          of  the   Department       of   Health    and    Social    Services     pursuant     to 

AS 44.62.540.7       Larry Pederson was appointed as the hearing officer for DHSS.  North 



Star sought to revoke the imposed rate and require the Office of Rate Review to consider 



the    2006    home    office   cost   report.    The    Office    of  Rate    Review     urged    that  the 



Commissioner rule as a matter of law that the rate was correct.  On April 16, 2009, the 



hearing   officer   issued   a   proposed   decision   that   upheld   the   Office   of   Rate   Review's 



imposed Medicaid base rate at $562.12.  On April 21, 2009, the Commissioner adopted 



the proposed decision as DHSS's final administrative action on the matter. 



                    North     Star   appealed     this   decision     to  the    superior    court    under 

AS 44.62.560.8       The superior court reversed the Commissioner's decision, concluding 



that the Office of Rate Review erred by refusing to grant North Star's request for a 



temporary   rate   until   the   audited   2006   home   cost   report   was   returned   by   the   federal 



auditor.    The superior court observed that the Providence Medical Centers had been 



        7        AS   44.62.540(a)   provides   in   relevant   part:   "The   agency   may   order   a 



reconsideration of all or part of the case on its own motion or on petition of a party.  To 

be considered by the agency, a petition for reconsideration must be filed with the agency 

within    15   days   after   delivery   or  mailing    of  the   decision.    The    power     to  order   a 

reconsideration   expires   30   days   after   the   delivery      or   mailing   of   a   decision   to   the 

respondent." 



        8        AS 44.62.560(a) provides in relevant part: "Judicial review by the superior 



court of a final administrative order may be had by filing a notice of appeal in accordance 

with the applicable rules of court governing appeals in civil matters." 



                                                    -7-                                               6696
 


----------------------- Page 8-----------------------

granted temporary rates in order to have time to respond to overdue state agency reports. 



Similarly, the superior court reasoned, North Star requested a temporary rate "while they 



awaited an overdue report from a federal agency contractor." 



                The    superior   court   further   reasoned    that   DHSS    "committed     error  by 



refusing to set the Medicaid payment rates based on reasonable costs related to patient 



care, thereby setting North Star's Medicaid payment rate too low."               The superior court 



noted that state and federal regulations also require the agency to follow Alaska's State 

Medicaid      Plan,9  which    provides    that  "[f]acilities  have   the  opportunity    to  provide 



additional information on significant changes that would impact the rates." 



                The superior court further noted that "although [DHSS] argues that they 



followed their regulation to the 'letter,' they did not do so in regard to [the Providence 



        9       See AS 47.07.040, which provides: 



                The department shall prepare a state plan in accordance with 

                the provisions of 42 U.S.C. 1396-1396p (Title XIX, Social 

                Security Act, Medical Assistance) and submit it for approval 

                to   the  United    States  Department      of  Health    and  Human 

                Services.    The plan shall designate that the Department of 

                Health    and   Social   Services   is   the  single   state   agency  to 

                administer this plan.  The department shall act for the state in 

                any negotiations relative to the submission and approval of 

                the plan.   The department may make those arrangements or 

                regulatory   changes,   not   inconsistent   with   law,   as   may   be 

                required under federal law to obtain and retain approval of 

                the United States Department of Health and Human Services 

                to secure for the state the optimum federal payment under the 

                provisions     of  42  U.S.C.    1396-1396p      (Title  XIX,    Social 

                Security Act, Medical Assistance). 



See also 42 C.F.R.  447.253(i) (2012):          "The Medicaid agency must pay for inpatient 

hospital and long term care services using rates determined in accordance with methods 

and standards specified in an approved State plan." 



                                                  -8-                                            6696
 


----------------------- Page 9-----------------------

Medical Centers]" when they allowed the centers to submit additional information long 



after DHSS's internal deadlines had passed.             The superior court concluded that since 



"being overdue [was] no fault of North Star," the audited 2006 report should have been 



considered and that "[b]y allowing such supplemental information to be submitted, the 



department would have been able to determine the most up-to-date assessment of the 



reasonable costs related to patient care."        The superior court remanded to the Office of 



Rate Review with instructions to use North Star's audited 2006 home office cost report 



to set North Star's base rate. 



                DHSS appeals. 



III.    STANDARD OF REVIEW 



                When   the   superior   court   acts   as   an   intermediate   court   of   appeal,   "we 

independently   review   the merits of the underlying administrative decision."10 When 



reviewing      an  agency     decision,   we   have   "recognized      four  principal    standards    of 

review."11   The first is the " 'substantial evidence' test" used for questions of fact.12  The 



second   is   the   "   'reasonable   basis'   test"   used   for   questions   of   law   involving   agency 

expertise.13   Third is the " 'substitution of judgment' test" used for questions of law 



        10      Usibelli Coal Mine, Inc. v. State, Dep't of Natural Res., 921 P.2d 1134, 



1141 (Alaska 1996). 



        11      Handley v. State, Dep't of Revenue , 838 P.2d 1231, 1233 (Alaska 1992) 



(quoting Jager v. State , 537 P.2d 1100, 1107 n.23 (Alaska 1975)). 



        12      Id. 



        13      Id. 



                                                  -9-                                             6696
 


----------------------- Page 10-----------------------

where no expertise is involved.14         Finally, the " 'reasonable and not arbitrary' test" is 



used for review of administrative regulations.15 



IV.      DISCUSSION 



                In  State   of   Alaska,   Department   of   Health   &   Social   Services   v.   Valley 



Hospital   Association,   Inc. ,   we   addressed   a   similar   question:   whether   DHSS's   rate- 



setting   for   Medicaid   reimbursement   was   arbitrary   and   capricious   because   it   did   not 

reflect   the   most   recent   cost   data.16  There,     DHSS     had   established    the   Medicaid 



reimbursement rate based on data that was not current, applying a newly adopted rule 



that "in practical effect precluded DHSS's consideration of up-to-date cost data, which 

would otherwise entitle Valley to a higher reimbursement rate."17                Valley Hospital had 



filed an earlier Medicaid cost report, submitted as an interim cost report, which lacked 



certain    current   data   due   to  its  medical   management       computer     software's    lack   of 

capacity.18    Historically the inaccuracy of the interim cost report had not affected the 



annual rate determination because Valley Hospital would later provide to DHSS a more 

accurate printout of its actual Medicaid-eligible billings.19           Because DHSS changed its 



regulation, so that its rate determination "would endure for four, rather than one, years," 



it determined that the interim report with less current data was the only data it would 



        14      Id. 



        15      Id. 



        16       116 P.3d 580, 584-85 (Alaska 2005). 



        17      Id. at 581. 



        18      Id. at 582. 



        19      Id. 



                                                  -10-                                             6696
 


----------------------- Page 11-----------------------

consider, even though more accurate data was available.20            DHSS faulted Valley Hospital 



for filing an inaccurate Medicaid cost report, although DHSS made "no claim that the 



rate it set [was] in fact accurate, or superior in integrity to a rate established by accurate 

data."21 



                We     held   that  DHSS     acted   arbitrarily   and   capriciously    in  setting  the 



Medicaid reimbursement rate for Valley Hospital because "most importantly, at the time 



it calculated   Valley's reimbursement rate, DHSS's Medicaid   staff appeared   to   have 



known that there was a significant discrepancy between Valley's [submitted] log data 



and the [more accurate billings] report, and that using the log data would result in a lower 

reimbursement rate."22       We took note of "some authority suggesting that adherence to 



a valid regulation can be illegal when there are unusual circumstances that make such 

adherence   highly   unreasonable."23        We   also   recognized   authority,   relied   on   by   the 



superior court in that case, "that an agency [may act] arbitrarily and capriciously in 



refusing to correct an error in a facility's reimbursement data, even though the correction 

was apparently prohibited by the applicable regulations."24  Because we were persuaded 



that   Valley   Hospital   had   "suffered   a   substantial   injustice,   offset   by   no   compelling 



        20      Id. at 582.
 



        21      Id. at 583.
 



        22
     Id. at 587. 



        23      Id. at 586. 



        24      Id. (citing Beverly Enters. v. Miss. Div. of Medicaid , 808 So. 2d 939, 942- 



43 (Miss. 2002)). 



                                                  -11-                                             6696
 


----------------------- Page 12-----------------------

justification," we held that DHSS acted improperly in calculating the hospital's Medicaid 

reimbursement rate.25 



               DHSS argues that in the present case there are "good reasons to prefer 



audited data" and to "use a statement available before the new rate year begins."  DHSS 



explains that an audited report is superior to an unaudited report, that DHSS cannot be 



responsible for auditing reports, and that DHSS staff needs at least 60 days to calculate 



rates. All of these assertions may be true.      But regulations expressly permit the Office 



of Rate Review to   grant a temporary rate, and DHSS concedes that any subsequent 



discrepancy between the temporary rate and the final rate will be adjusted, allowing for 

reimbursement of the overpayment or underpayment.26          Thus, the Office of Rate Review 



could have granted a temporary rate and then adjusted the final rate based upon the 



audited 2006 home office cost report when it was returned by the fiscal intermediary in 



March. 



               Moreover, using the audited 2006 home office cost report would allow 



DHSS to comply with AS 47.07.070(b)'s requirement that the department "set rates for 



facilities that are based on (1) reasonable costs related to patient care; and (2) audit and 



        25     Id. at 587. 



        26     DHSS qualifies its concession by asserting that rerunning billings under a 



newly     established   permanent    rate  is  "a  resource-intensive    process   that  creates 

administrative and fiscal burdens."  It also argues that "[i]f the provider has not properly 

budgeted [for the possibility of underpayment], it may cause serious problems to the 

provider" and "where the state underpays under a temporary rate, the department may 

have to seek additional funding from the legislature to make up a shortfall." But these 

reasons are insufficient to justify setting a rate, based on outdated data, which does not 

accurately reflect the reasonable costs related to patient care. Moreover, at the same time 

the Office of Rate Review denied North Star's request for a temporary rate, it granted 

temporary rates to Providence Alaska Medical Center and Providence Kodiak Island 

Medical Center, indicating that the administrative burdens are not insurmountable. 



                                              -12-                                        6696
 


----------------------- Page 13-----------------------

inspection     results   and   reports,   when    the  audit   or  inspection    is  conducted     under 



AS 47.07.074."  DHSS argues that it should not be required to conduct its own internal 



audit of the unaudited 2006 home office cost report, but that is not what North Star is 



suggesting.   At the time the Office of Rate Review set North Star's rate, North Star had 



submitted its 2006 report to the federal auditor, fully expecting it to be returned in time 



for the rate review.      The federal auditor delayed North Star's receipt of the audited 



report.  Approving a temporary rate would have allowed time for receipt of the audited 



2006 report and allowed the final rate   to   be   set   to reflect the hospital's "reasonable 



costs," as required by AS 47.07.070(b). 



                DHSS       further   notes   that  compliance      with   7  AAC     150.170(b)(12)'s 



requirement that it use the data available 60 days before the rate year begins provides 



DHSS staff the time needed to calculate the rates for facilities.             This, DHSS contends, 



allows the "prospective rate system" to work.              In  City of Cordova v. Medicaid Rate 



Commission, Department of Health & Social Services, we recognized that a prospective 

rate setting system was designed to save costs.27            Facilities are paid at predetermined 



rates   established   every   four   years,   predicated   upon     a   base   year   that   "provides   an 



incentive for facilities to minimize their costs because a facility providing a service at a 



cost less than the pre-determined rate is permitted to keep the difference . . . , while a 



facility providing the service at a cost greater than the pre-determined amount suffers a 

loss in the amount of the difference."28         DHSS argues that a strict interpretation of the 



rule will preserve the integrity of the prospective system and ensure that rates are kept 



low because if "a facility were able to constantly adjust its rates based on any costs that 



        27      789 P.2d 346, 348 (Alaska 1990). 



        28      Id. 



                                                  -13-                                               6696 


----------------------- Page 14-----------------------

it might incur during the course of a rate year, there would be little incentive for that 



facility to operate in an efficient manner." 



                We understand that 7 AAC 150.170(b)(12)'s 60-day requirement is part of 



this prospective rate regime.   But allowing the four-year prospective rate to be set based 



on the hospital's more recent 2006 cost data does not, as DHSS claims, undermine the 



purpose of the prospective rate system. DHSS has the discretion to grant temporary rates 



under 7 AAC 150.030(b), and in fact it granted temporary rates to both of the Providence 



Medical Centers, adjusting their final rates based on updated data in March 2008, the 



same month that the federal auditor completed North Star's audited 2006 home office 



cost report.    And facilities still have an incentive to operate efficiently while under a 



temporary rate structure because it is uncontested that any discrepancy between the 



temporary rate and the permanent rate will be reimbursed to the damaged party. 



                Additionally, there is no reason to believe that applying the temporary rate 



in this case would create an exception that would devour the 60-day rule.                  Here, North 



Star had done everything necessary to provide the Office of Rate Review with the most 



up-to-date report, with the expectation that the federal auditor would complete the report 



in   a   timely   fashion.  North   Star's   conduct   cannot   be   faulted   because   the   failure   to 



produce the audited 2006 home cost report on time was not something that North Star 



could control. 



                Finally, North Star is correct in its argument that AS 47.07.070 requires that 



the rate be based upon "reasonable costs related to patient care" and that the Alaska State 



Medicaid Plan allows for an adjustment of rates when "significant changes . . . would 



impact the rates."     The 2005 home office cost statement states North Star's costs were 



$613,056.     The more recent 2006 home office cost statement states North Star's home 



office costs were a significantly higher $1,214,888.  DHSS acknowledges that reliance 



on the 2006 audited report is "advantageous" to North Star because it would result in a 



                                                  -14-                                            6696
 


----------------------- Page 15-----------------------

higher reimbursement to North Star, which North Star estimates totals "hundreds of 



thousands of dollars."      Such a discrepancy is by no means insignificant. We conclude 



there is no compelling reason to prefer the audited 2005 cost report to the audited 2006 



report. 



                In summary, the present case and  Valley Hospital are similar in a most 



important respect:     At the time DHSS calculated both hospitals' reimbursement rates, 



DHSS's Medicaid staff appeared to have known that there was a significant discrepancy 



between the most current data available and the outdated data it relied on, and that using 

outdated   data   "would   result   in   a   lower   reimbursement   rate."29 In   this   case,   it   was 



unreasonable for the Office of Rate Review to rely upon the 2005 home office cost report 



when North Star had submitted the more recent 2006 home office cost report, the audit 



of which had been delayed through no fault of North Star, and when an interim rate 



could have been set pending receipt of the audited 2006 report.  Thus, DHSS abused its 



discretion when failing to consider the audited 2006 home office cost report. 



V.       CONCLUSION 



                For these reasons, we AFFIRM the superior court's decision reversing 



DHSS's decision. 



        29      Valley Hosp., 116 P.3d at 587. 



                                                 -15-                                             6696 

Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC