DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Washington State Department of Social and Health Services
Docket No. 87-180
Decision No. 940
DATE: March 1, 1988
DECISION
The Washington State Department of Social and Health Services
(State)
appealed an amended determination by the Health Care Financing
Agency
(HCFA, Agency) disallowing $203,865.71 in federal
financial
participation claimed by the State under the Social Security Act
(Act)
for the calendar quarters ending December 31, 1986, March 31, 1987,
and
June 30, 1987. 1/ The disallowance was taken pursuant to
section
1903(g)(1) of the Act which provides for the reduction of a
State's
federal medical assistance percentage of amounts claimed for a
calendar
quarter unless the State shows that during the quarter it had
"an
effective program of medical review of the care of patients . .
.
whereby the professional management of each case is reviewed
and
evaluated at least annually by independent professional teams."
Based on a validation survey, the Agency found that the State had
failed
to include in its annual medical reviews three patients in Issaquah
Care
Center, a dually certified skilled nursing and intermediate
care
facility (SNF/ICF), two patients in Pleasant Acres Nursing Home,
a
SNF/ICF facility, and two patients in Rose Vista Nursing Center,
a
SNF/ICF facility.
As discussed below, we sustain the findings for these facilities,
subject
to a possible reduction by the Agency in the amount of the
disallowance for
Rose Vista Nursing Center as discussed on page 7.
What the requirements are
The regulations implementing sections 1902(a)(26) and (31) and
section
1903(g)(1) are found at 42 C.F.R. Part 456 (1986). In
particular,
section 456.652 provides--
(a) . . .
[i]n order to avoid a reduction in FFP,
the
Medicaid agency must make a satisfactory showing to
the
administrator, in each quarter, that it has met
the
following requirements for each recipient;
* * *
(4) A
regular program of reviews, including
medical
evaluations, and annual on-site reviews of the care of
each
recipient, as specified in . . . Subpart I of this part.
(b) Annual
on-site review requirements. (1) An agency
meets
the
quarterly on-site review requirements of
paragraph
(a)(4) of this section for a quarter if it completes
on-site
reviews of each recipient in every facility in the
State,
and
in every State-owned facility regardless of location,
by
the end
of the quarter in which a review is required
under
paragraph (b)(2) of this section.
(2)
An on-site review is required in a facility by the
end
of a
quarter if the facility entered the Medicaid
program
during the same calendar quarter 1 year earlier or has
not
been
reviewed since the same calendar quarter 1
year
earlier. If there is no Medicaid recipient in the
facility
on the day a review is scheduled, the review is not
required
until the next quarter in which there is a
Medicaid
recipient in the facility.
(3)
If a facility is not reviewed in the quarter in
which
it
is required to be reviewed under paragraph (b)(2) of
this
section, it will continue to require a review in
each
subsequent quarter until the review is performed.
.Issaquah Care Center
The Agency assessed a disallowance for this facility at both the SNF
and
ICF level of care on the ground that the State failed to include in
its
review one ICF patient and two SNF patients. Originally, the
Agency's
disallowance was for the quarters ending December 31, 1986, March
31,
1987, and June 30, 1987 for both levels of care. After
reviewing
documentation submitted by the State, the Agency determined that
reviews
for the one ICF patient and for one SNF patient were not required
beyond
the December 31, 1986 quarter, as these patients died in February,
1987.
As a result, the disallowance for ICF care for this facility was
applied
only to the December 31, 1986 quarter. The Agency did not
reduce the
disallowance for the facility at the SNF level of care because
the
Agency contended that the third patient had not been reviewed in any
of
the three quarters as required. Thus, the disallowance at the SNF
level
was assessed for all three quarters against this facility.
As for the two patients who died in February, 1987, the State
acknowledged
that these two patients were not reviewed in the December
31, 1986
quarter. The State, however, contended that the fact that
these
patients were not reviewed did not mean the State had a less than
effective
program of utilization review. The State argued that the
problem was with the
nursing home since the nursing home had the
responsibility to notify the
State nursing care consultant that these
patients were Medicaid
admissions.
The State also argued that no disallowance should be assessed against
the
facility for SNF care with regard to the third patient. The Agency
had
determined that the State failed to review this patient for the
quarters
ending December 31, 1986, March 31, 1987, and June 30, 1987.
The State
submitted a copy of a patient review form which indicated that
this patient
was reviewed on December 9, 1985. The State contended that
this review
was performed as required during the year preceding the
facility review which
was performed on October 22, 1986. The State
alleged that it is normal
procedure under Washington's waiver
utilization control system to base
facility reviews upon client reviews
conducted during the period between the
prior (November 11, 1985) and
current (October 22, 1986) facility
reviews. Thus, the State argued
that the December 9, 1985 patient
review satisfies the 1986 annual
Inspection of Care (IOC) review requirements
as it falls between the
November 11, 1985 IOC review and the October 22, 1986
IOC review.
We agree with the Agency that the State has failed to show that it had
an
effective program of medical review of the care of patients in
this
facility. The Board has previously found that the State bears
the
ultimate responsibility for identifying patients subject to the
annual
review requirement and cannot rely solely on review lists supplied by
a
facility without taking reasonable efforts to insure their
completeness.
See North Carolina Dept. of Human Resources, DGAB No. 728
(1986); see
also Idaho Dept. of Health and Welfare, DGAB No. 747 (1986). As
we
explained in Idaho and later in Missouri Dept. of Social Services,
DGAB
No. 801 (1986) at 8, the type of extenuating circumstances that
would
reduce the State's ultimate responsibility in these situations are,
for
example, where the State has shown that its system for
identifying
Medicaid patients was effective in all respects, but that it was
not
reasonable for the review team to have known of the
eligibility
determinations for a particular patient. In the instant
case, the State
has failed to show that it had an effective program for
identifying
which patients in the facility were eligible for Medicaid.
In fact, the
State presented no evidence of what its system is for
identifying
patients subject to review in a facility. Also, the State
failed to
present any evidence to show when it determined these two
particular
patients eligible for Medicaid. Consequently, there is no support
for
the State's contention that the State's nursing care consultant had
no
reason to know that these two patients were Medicaid admissions. We
do
know, moreover, that the State paid the facility on November 17,
1986
for claims submitted for services rendered to these patients during
the
entire month of October, 1986, the month the facility was
reviewed.
Respondent's Appeal File, Attachment B. Thus, in the absence
of
evidence showing it would be unreasonable for the State review team
to
have access to information on whether these patients were
Medicaid
eligible at the time of the review, we conclude there was no reason
why
the State should not have identified these two patients for
review.
Therefore, we sustain the Agency's finding that the State failed
to
review these two patients for the quarter ending December 31, 1986
and
sustain the disallowance against the facility for ICF and SNF care
for
this quarter..In addition, we also conclude that the State did
not
review the third patient by the end of the quarter in which the
review
was required, December 31, 1986, nor in the two subsequent quarters
as
required under the regulation. It is true that this patient
was
admitted to this facility after the November 22, 1985 annual review
was
performed and that a review for this patient for the quarter
ending
December 31, 1985 was not required. However, that does not mean
that
the review performed after the patient's admission to the facility
on
December 9, 1985 would satisfy the requirement for an annual review
for
this patient for the annual period ending December 31, 1986.
In
recognition of the practical administrative difficulties of
tracking
individual patients, HCFA implemented the annual review
requirement
through an approach tracking reviews of facilities, making a
facility
review due by the end of the quarter in which the facility's
previous
year review was performed. Consequently, the fact that the
facility was
reviewed in the quarter ending December 31, 1985 means that the
facility
must be reviewed by the end of the quarter ending December 31,
1986. 42
C.F.R. 456.652(b). Thus, this patient's review in
December, 1985 is not
within the facility's annual review period of January
1, 1986 through
December 31, 1986. Indeed, this patient was not reviewed for
a period
spanning approximately two years. Accordingly, the State
failed to
review this patient during the annual review period required by
42
C.F.R. 456.652(b).
While the State alleged that under its waiver utilization control
system
it based facility reviews upon client reviews conducted during
the
period between the prior and current facility reviews, the
State
provided no evidence of its procedure nor evidence to show that
this
procedure had been approved by the Agency. Thus, there is no
evidence
of an approved procedure that modified the time frame prescribed by
the
regulation for completing facility-wide reviews. The
regulations
specify that the facility-wide review must take place during the
year
following the quarter during which the previous review took place.
In
the absence of evidence that the Agency approved a procedure waiving
the
regulatory requirements, we are bound by the regulations which in
this
instance provide that an annual review, which includes each
Medicaid
patient, is due for this facility during the quarter ending December
31,
1986..Therefore, we sustain the Agency's determination that the
State
did not have an effective program of utilization control at
this
facility at the SNF level of care for the quarters ending December
31,
1986, March 31, 1987, and June 30, 1987.
Pleasant Acres Nursing Home
The Agency assessed a disallowance against this facility at the SNF
level
of care because the State failed to review two SNF patients at the
time of
the facility's annual on-site review on October 21, 1986.
The
disallowance was assessed for the quarters ending December 31, 1986,
and
March 31, 1987.
The State acknowledged that these two patients were not reviewed
but
claimed that the patients here were not reviewed because the
facility
did not notify the State nursing care consultant that these patients
had
been admitted as Medicaid patients.
We agree with the Agency that the State failed to show it had an
effective
program of medical review of the care of patients. As we
stated above,
the State bears the ultimate responsibility for
identifying patients subject
to the annual review requirement and cannot
rely solely on review lists
supplied by a facility without taking
reasonable efforts to insure their
completeness. North Carolina, supra.
The State failed to present any
evidence to show why these patients who
were admitted as Medicaid patients in
July, 1985, were not identified as
Medicaid patients by the time of the
October 21, 1986 review. Thus, in
the absence of evidence showing it
would be unreasonable for the State
review team to have access to information
on whether these patients were
Medicaid eligible at the time of the review,
we conclude there was no
reason why the State should not have identified
these patients for
review. Therefore, we sustain the Agency's findings
that the State
failed to review these two SNF patients in Pleasant Acres
Nursing Home
for the quarter ending December 31, 1986 and March 31, 1987.
Rose Vista Nursing Center
The Agency assessed a disallowance against the facility at the SNF
level
of care because the State failed to review two SNF patients at the
time
of the facility's annual on-site review on October 8, 1986.
The
disallowance was assessed for the quarters ending December 31,
1986,
March 31, 1987 and June 30, 1987. The State acknowledged that
these
patients were not reviewed by the quarter ending December 31,
1986.
However, the State here presented evidence showing that these
patients
were reviewed on February 23, 1987. Appellant's Appeal File,
Tab 1.
The State argued that the patients were not reviewed because
the
facility failed to notify the State nursing care consultant that
these
patients had been admitted as Medicaid patients.
For the reasons we indicated previously, we agree with the Agency that
the
State failed to show it had an effective program of medical review
of the
care of these patients for the quarter ending December 31, 1986.
The State
presented no evidence to show why these patients were not
identified as
Medicaid recipients at the time of the October 8, 1986
review.
Therefore, we sustain the Agency's finding that the State
failed to review
these patients at Rose Vista Nursing Center. It
appears, however, that
these two patients were reviewed before the end
of the quarter ending March
31, 1987. Appellant's Appeal File, Exhibit
1. Neither party
specifically addressed the implications of that review
in its briefs.
Consequently, the Agency may wish to review the State's
documentation and
consider whether the disallowance assessed against
this facility for the
quarters ending March 31, 1987 and June 30, 1987
was inappropriate. If
so, the disallowance should be then reduced
accordingly.
State's Good Faith and Due Diligence Arguments
In its reply brief, the State argued for the first time that on the
basis
of Delaware Division of Health and Human Services v. United
States
Dept. of Health and Human Services, 665 Fed. Supp. 1104 (D. Del.
1987),
which reversed the Board's decision in Delaware Dept. of Health
and Social
Services, DGAB No. 732 (1986), the State's failure to inspect
the patients
here due to reporting problems is precisely the type of
good faith and due
diligence which would fall within the exception
provided for by the
statute. Section 1903(g)(4)(B).
At the outset, we note that the Board is not bound to apply the
cited
District Court decision as controlling precedent because the
instant
appeal is from a different district than the court in Delaware,
supra.
See also Tennessee Dept. of Health and Environment, DGAB. 921 (1987)
at
12. Moreover, we believe the District Court's.conclusion concerning
the
good faith and due diligence exception is inconsistent with
the
statutory requirement. Section 1902(a)(31), which is incorporated
by
specific reference into section 1903(g)(1), expressly requires that
the
State Plan provide--
(B) with respect to each skilled nursing
or intermediate care
facility within the
State, for periodic onsite inspections of
the
care being provided to each person
receiving medical assistance,
by one or
more independent professional review teams. . . .
Emphasis added.
In its analysis of the good faith and due diligence exception,
the
District Court overlooked this specific statutory requirement. As
a
result, we believe that the Court's conclusion that a State may
satisfy
the good faith and due diligence exception if a review was conducted
in
a facility, even though not every patient in the facility
who
reasonably should have been reviewed has been reviewed, is
erroneous.
Thus, there is no basis for concluding that the State met the
statutory
exception. 2/.Conclusion
For the foregoing reasons, we sustain the Agency's findings subject to
a
possible reduction in the amount of the disallowance for Rose
Vista
Nursing Center.
________________________________
Cecilia
Sparks Ford
________________________________ Norval
D.
(John) Settle
________________________________ Donald
F.
Garrett Presiding Board Member
1. The initial disallowance of $325,241.81 was
reduced based upon
supplemental documentation by the State.
2. We also note that the State has not shown that it
has met, in any
event, the threshold requirement for the statutory exception
that it
reviewed 98% of all the facilities due for review, including
all
facilities with 200 or more Medicaid certified beds, by the close of
the
quarter in which the review was required (or in the case of
technical
exceptions, the State met the standard within 30 days of the close
of
the quarter). The Board has determined that the statute requires
that
the State must show that it met this threshold standard before
the
statutory exceptions may even be considered. See, Arkansas
Dept. of
Human Services, DGAB No. 735 (1986); and Pennsylvania Dept. of
Public
Welfare, DGAB No. 746 (1986). Thus, we could not conclude that
the
State met the exception without first deciding whether the threshold
was