Department of Community Health v. Pruitt Corp.

The Georgia Department of Community Health incorrectly relied on a 2001 cost report instead of a 2002 accepted, but unaudited ten-month cost report to set the 2004 Medicaid reimbursement rates for a Medicaid-nursing facility that changed ownership in 2002.

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This Medicaid reimbursement case is before us for a second time. The appeal began when the Georgia Department of Community Health challenged a superior court ruling that reversed the department’s calculation of Medicaid reimbursement rates for a nursing facility owned by Pruitt Corporation.1 We reversed the superior court’s judgment on appeal, but the Supreme Court found fault with our standard of review and remanded the case to us for further consideration.2 We have now conducted the appropriate review, and we affirm the superior court ruling. Although our prior opinion sets forth the facts in detail, we will repeat the relevant facts here for ease of discussion. In order to participate in the state Medicaid program, a nursing facility must enter into an agreement with the department. That agreement incorporates by reference the department’s nursing facility policies and procedures manual, which sets forth the methodology for calculating Medicaid reimbursement rates.

Pursuant to the manual, the department establishes a facility-specific “per diem” Medicaid reimbursement rate for each nursing facility based on revenues, expenses, and statistical data reflected in a facility’s “cost report.” Nursing facilities must submit an annual cost report by September 30 for each fiscal year ending June 30. The department then audits the report and establishes a new per diem rate for the facility for the following fiscal year. When a nursing facility changes ownership, the department requires both the buyer and seller to submit a cost report for the respective period of time that it operated the facility.

Department of Community Health v. Pruitt Corp.

The Georgia Department of Community Health incorrectly relied on a 2001 cost report instead of a 2002 accepted, but unaudited ten-month cost report to set the 2004 Medicaid reimbursement rates for a Medicaid-nursing facility that changed ownership in 2002.

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