The Georgia Department of Community Health and its Commissioner Timothy P. Burgess collectively, the “department” filed an application for discretionary review of the superior court’s order reversing the department’s final decision in this Medicaid reimbursement case. At issue is the department’s decision regarding the reimbursement rate paid to a particular nursing facility for fiscal year 2004. We granted the application, and reverse the superior court’s judgment. The facts in this case are uncontested. The department reimburses nursing facilities that participate in the state Medicaid program according to a flat “per diem” rate that is facility-specific. A nursing facility’s per diem rate represents the amount of Medicaid reimbursement to which the nursing facility is entitled per “Medicaid patient day.” In order to receive Medicaid reimbursement, a nursing facility must enter into an agreement with the department.
Old Capital Inn, a Medicaid-reimbursed nursing facility, is a party to such an agreement with the department. The agreement itself does not set out the department’s Medicaid reimbursement methodology. Instead, it incorporates by reference the department’s nursing facility policies and procedures manual, which describes in detail the reimbursement methodology. The manual states that the department establishes a nursing facility’s per diem rate based upon data supplied by the facility in its “cost report,” which is a department-provided form for the facility to report its revenues, expenses, and statistical data. Nursing facilities must submit cost reports annually by September 30 of each year for each fiscal year ending June 30. The department then audits the reports and establishes a new per diem rate for the facility for the following fiscal year based on that audit. When a nursing facility changes ownership, the department requires both the buyer and seller to submit separate cost reports based upon the respective periods of time that each owner operated the nursing facility.
