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Hillhaven Corporation12/23/1999
Marilyn L. Graves Clerk, Court of Appeals of Wisconsin
APPEAL from an order of the circuit court for Dane County: ROBERT DE CHAMBEAU, Judge. Reversed.
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The Department of Health and Family Services (DHFS) and the Bureau of Health Care Financing appeal from an order of the Dane County Circuit Court reversing a DHFS decision. DHFS determined that a trust set up by the Hillhaven Corporation, Vencor, Inc., to provide health benefits to its employees was "self-insurance" for purposes of DHFS's Medical Assistance Program reimbursement methodology. The circuit court concluded that there was no basis by which to categorize the Hillhaven trust as self-insurance. DHFS argues that the circuit court erred because its determination that the trust was self-insurance was consistent with the purpose of its reimbursement rules and consistent with the commonly understood definition of self-insurance under Wisconsin law. Because we conclude that DHFS's determination was both reasonable and consistent with the purpose of the reimbursement rules, we defer to DHFS's decision and reverse the decision of the circuit court.
I. Background
. Hillhaven owns several nursing homes in Wisconsin that are certified providers under the Medical Assistance Program. Hillhaven provides health insurance as a fringe benefit for the employees at these nursing homes. Rather than contracting with a commercial insurer, Hillhaven created the Hillhaven Corporation Voluntary Participant Benefit Trust. Instead of paying more expensive premium payments to a third-party insurance company, Hillhaven and the participating employees make contributions to the trust fund. The fund is used to provide health-care benefits to participating Hillhaven employees, former employees, and their dependents, and to pay administrative expenses. Under the terms of the trust, Hillhaven has the right to determine the amounts and the times of its contributions, but Hillhaven contracted with an insurance company to administer the trust and set the amount of the contributions. The assets of the trust fund can be used only for providing health benefits to employees and for administrative expenses. Contributions to the trust fund may never revert to Hillhaven's control. If the trust funds are ever inadequate to pay any claims under Hillhaven's health plan, Hillhaven must cover the deficiency.
. Under § 49.45(6m)(ag), Stats., DHFS is charged with establishing the rate system for reimbursing nursing homes participating in the Medical Assistance Program. As stipulated in § 49.45(6m)(ag), DHFS updates its rate-setting methodology each year in the "Methods of Implementation For Title XIX Nursing Home Payment Rates" (Methods). DHFS's Bureau of Health Care Financing (Bureau) is primarily responsible for establishing the nursing home payment rates. The Methods state that its purpose is "to ensure that nursing homes ... are paid appropriately for care provided to Medicaid residents in a cost-efficient fashion." The Methods include a section devoted to reimbursement for nursing homes that use self-insurance plans. Section 1.248, "Self-Insurance Costs," provides:
The allowable expense for self-insurance plans is the actual claims paid during the cost reporting period. At the facility's option, accrual of pending claims may be made to the extent that such claims are paid within 75 days of the close of the cost reporting period. Such accrued claims may not be expensed in the following year's cost report. If a facility's self-insurance fund is managed by an independent (non-related) trustee, the fee paid to the trustee may be included in allowable self-insurance costs. If actuarial determinations are performe
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