DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Arkansas Department of Human Services
Docket No. 88-52
Decision No. 984
DATE: September 1, 1988
DECISION
The Arkansas Department of Human Services (State) appealed
the
disallowance by the Health Care Financing Administration (Agency)
of
$756,953 in federal financial participation (FFP) in expenditures
for
long-term care services provided under Title XIX of the Social
Security
Act (Medicaid). The Agency found that there were periods of
time in the
State's fiscal year 1986 when it did not have valid provider
agreements
with certain long-term care providers.
The issues before the Board are (1) whether a State is bound by
the
automatic cancellation date (ACD) that it establishes for a
provider
agreement when its initial survey shows that a plan of correction
(POC)
is needed to bring the facility into compliance with
Medicaid
requirements; and (2) whether the State showed that its survey
agency
made the requisite finding for one facility that patient safety
and
health would not be jeopardized if that facility's provider
agreement
were extended without a state survey. For the reasons stated
below, we
affirm the disallowance.
Background
Section 1902(a)(27) of the Social Security Act requires the state to
have
a provider agreement with every provider of services under the
state Medicaid
plan. Under 42 C.F.R. 442.12, a state may not execute a
provider
agreement with a facility for long-term care services nor make
Medicaid
payments to a facility for those services unless the state
survey agency has
certified the facility as meeting the requirements for
participation in
Medicaid. A provider agreement may not be for a period
longer than 12
months, 42 C.F.R. 442.15, with an effective date of
either the date the
survey agency finds that all federal requirements
have been met, or the date
when the facility meets the requirements or
submits an acceptable plan of
correction (POC) to the survey agency. 42
C.F.R. 442.13. If there
are deficiencies to be corrected, the survey
agency may certify a facility
for up to 12 months with a condition that
the certification will
automatically be cancelled on a specified date
within the certification
period unless the survey agency finds that all
deficiencies have been
corrected or that substantial progress in
correcting the deficiencies has
been made and the facility has a new,
acceptable POC. 42 C.F.R.
442.111(c). The automatic cancellation date
(ACD) must be no later than 60
days after the last day specified in the
POC. Id.
The state survey agency will normally schedule a survey in advance of
the
date that a provider agreement is due to expire. In cases where it
is
impracticable to complete a survey before the provider agreement's
expiration
date, the provider agreement may be extended by the state
Medicaid agency for
up to two months beyond its original expiration date
if, prior to expiration,
the Medicaid agency receives written notice
from the survey agency that the
extension will not jeopardize the
patients' health and safety. 42
C.F.R. 442.16.
The HCFA review underlying the disallowance at issue here found
that
certain facilities' provider agreements were automatically
cancelled
when the State survey agency failed to make a finding, prior to the
ACD
which it had set for each facility, that all deficiencies had
been
satisfactorily corrected or that substantial progress had been made
in
correcting the deficiencies and that a new acceptable POC had
been
submitted. In addition, the reviewers found that in four instances
the
State Medicaid agency had extended provider agreements for two
months
without having received from the State survey agency its
determination
in writing that the extension would not jeopardize the
patients' health
and safety.
While the State admitted that the ACD specified in each facility's POC
had
passed before it was resurveyed, the State argued that no
disallowance should
be taken for those facilities which were resurveyed
within 60 days after the
last date specified in the POC. The State
argued essentially that since
the regulation provided for a period of up
to 60 days, the State should be
given the benefit of the complete 60-day
period even though a shorter period
had been set by the survey agency.
The State also pointed out 2 facilities
where resurveys were completed 4
and 14 days after the sixtieth day.
The State characterized the ACDs
that were established for a date prior to 60
days after the last date
specified in the POC as "clerical errors," and it
contended that in
taking a disallowance for these facilities, and the two
facilities whose
ACDs were exceeded by less than a month, the Agency was
ignoring the
purpose of 42 C.F.R. 442.111, which was to ensure that a timely
resurvey
took place. With respect to the facilities whose extensions of
provider
agreements were challenged, the State submitted a certification
and
transmittal (C&T) form for only one facility, Hot Springs Nursing
Home
(Hot Springs). This C & T, it claimed, satisfied the
requirement, at 42
C.F.R. 442.16, of a written state survey agency
certification that
patient health and safety would not be jeopardized by an
extension,
under the Board's holding in New Mexico Human Services Dept., DGAB
No.
708 (1985). State's Ex. 4. The State argued that the
disallowance for
Hot Springs should therefore be overturned.
Discussion
Turning first to the question of Hot Springs, we find that the State
has
apparently misunderstood the New Mexico decision. It is true that
the
Board held in that case that the section 442.16 requirement of a
written
finding was satisfied by a check mark in the box corresponding to
the
block reading "in compliance with program requirements" on the C&T
form
submitted with the survey agency's recommendation of an extension of
the
provider agreement. We held that if the facility was in compliance
with
program requirements, then surely patient safety and health were not
at
risk. The C&T form submitted by the State in the present case,
however,
certified the facility as being in compliance based on an acceptable
POC
at the beginning of the term of the provider agreement, rather than
at
the time (approximately one year later) that an extension was
approved.
This C&T therefore does not satisfy the requirement that the
survey
agency certify to the Medicaid agency that patient health and
safety
will not be endangered by an extension. The Agency submitted
with its
response a C&T form that was apparently the one used to grant
the
extension to Hot Springs, Agency's Ex. B, and pointed out that the
box
corresponding to the entry "in compliance with program requirements"
was
not checked. The State did not attempt to rebut this in its
reply
brief. Consequently, we conclude that the disallowance for
this
facility must stand.
As for the facilities which were not surveyed by their respective ACDs,
we
do not agree with the State's reading of the regulation that the ACDs
set by
the survey agency can be ignored. As the Agency maintained,
the
regulation simply does not state that the period of
certification
automatically ends on the sixtieth day after the last day
specified in
the POC. If it did, then we might be able to accept the
State's
characterization of the survey agency's setting an earlier ACD as a
mere
clerical act which, if performed "erroneously," can be corrected
without
consultation with the responsible survey agency.
The regulation provides, however, that an ACD be established no later
than
60 days after the last day specified in the POC, 42 C.F.R.
442.111(c)(2)
(emphasis added). This comports with the requirement of
42 C.F.R.
442.111(c) that a provider's certification with deficiencies
will be
automatically canceled on a specified date within the
certification period,
and definitely implies that the state survey
agency, which is responsible for
the overall evaluation of the POC, may
exercise its judgment as to how long
it may run the risk, so to speak,
that a promised correction of a deficiency
may go unremedied. Where a
deficiency is relatively serious and its
correction is required at an
early date, the survey agency may determine that
it should set an early
ACD in order to assure soon after the promised date
that the deficiency
has been remedied. On the other hand, the survey
agency may decide to
set the maximum permissible ACD in the case of a lesser
deficiency so
that it can be flexible in scheduling a resurvey of the
facility. Thus,
we disagree with the State that the Agency's
interpretation of the
regulations as requiring adherence to the cancellation
date established
by the survey agency elevates form over substance.
Moreover, we note
that although the State characterized these "early" ACDs as
clerical
errors, it did not introduce any evidence whatsoever to support
this
characterization. We therefore affirm the disallowance of
costs
incurred between the ACD and the date cancellation of the
provider
agreement was rescinded by the resurvey.
Conclusion
Based on the foregoing, we affirm the disallowance for the 22
contested
facilities. Thus, the total amount of the disallowance,
including that
part not contested by the State, is $3,115,452.
________________________________ Cecilia Sparks Ford
________________________________ Alexander G. Teitz
________________________________ Donald F. Garrett
Presiding
Board