Legal Challenge and Findings
In response to OHA’s position, the Oregon Association of Community Mental Health Providers commissioned a legal analysis. The findings, prepared by Hatfield Knivila, LLC, argued that OHA’s interpretation is inconsistent with the plain language of the federal Medicaid Act and guidance from the Centers for Medicare & Medicaid Services (CMS).
The legal analysis made several key points:
1. Statutory Interpretation: The term “institution” in the federal statute refers to a single “facility” or “establishment,” not an “organization” or “corporation” that may operate multiple facilities. Therefore, the 16-bed limit should apply to each individual, separately licensed facility.
2. CMS Guidance: The CMS State Medicaid Manual provides criteria for determining if a component of a larger organization is a separate facility. A facility should be treated as independent if it is separately licensed. Since the CGRC proposal involved separately licensed facilities, each with 16 or fewer beds, they should not be subject to the IMD exclusion.
3. The “1,500-Foot Rule” [1] is an OHA Invention: The legal analysis found no basis in federal law or CMS guidance for OHA’s 1,500-foot [1] proximity rule. The analysis concluded that OHA’s policy was an arbitrary and overly restrictive barrier to the development of needed behavioral health services.