GAB Decision 728
March 18, 1986
North Carolina Department of Human Resources;
Docket No. 85-23
Ford, Cecilia Sparks; Settle, Norval D Garrett, Donald F.
The North Carolina Department of Human Resources (State) appealed a
determination by the Health Care Financing Administration (Agency)
disallowing federal financial participation (FFP) claimed for services
provided in long-term care facilities under title XIX of the Social
Security Act (Act) for the quarters ending March 31, June 30, and
September 30, 1984. The disallowance was taken pursuant to section
1903(g)(1)(D) 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 review teams."
/1/
Based on a validation survey, the Agency found that the State had
failed
to include in its annual medical reviews five patients in one
facility
(Caswell Center) and two patients in a second facility (Hillhaven
Orange
Nursing Center). During the course of the proceedings before
this
Board, the Agency revised its findings to reflect the State's failure
to
review one patient in each of two additional facilities (Rowan
Manor,
Inc. and Louisburg Nursing Center), thus increasing the
amount
disallowed from$272,890.91 to$453,520.59. As discussed below,
we
conclude that both patients in Hillhaven Orange Nursing Center
were
required to be included in the(2) medical review from which they
were
omitted, and uphold the disallowance for this facility. We
further
conclude that none of the five patients in Caswell Center was
required
to be included in the medical review from which they were omitted,
and
reverse the disallowance for that facility. Finally, we conclude
that
neither the patient in Rowan Manor, Inc. nor the patient in
Louisburg
Nursing Center was required to be reviewed, and reverse the
disallowance
for those facilities.
Statutory and Regulatory Framework
The requirement in Section 1903(g)(1)(D) for an effective program
of
annual medical reviews is amplified in section 1902(a)(26) and (31),
as
follows:
Sec. 1902(a) A State plan for medical assistance must--
(26) . . . provide . . . for periodic inspections to be made in
all
skilled nursing facilities . . . within the State by one or more
medical
review teams (composed of . . . physicians or registered nurses
and
other appropriate health and social service personnel) of (i) the
care
being provided in such nursing facilities . . . to persons
receiving
assistance under the State Plan, (ii) with respect to each of
the
patients receiving such care, the adequacy of the services available.
.
. .
(31) provide . . . for periodic on-site inspections to be made
in all
. . . intermediate care facilities . . . within the State by one or
more
independent professional review teams (composed of physicians
or
registered nurses and other appropriate health and social
service
personnel) of (i) the care being provided in such intermediate
care
facilities to persons receiving assistance under the State plan . .
.
(ii) with respect to each of the patients receiving such care,
the
adequacy of the services available. . . . /2/
Implementing regulations are found at 42 CFR Part 456 (1978).
In
particular, section 456.652 provides that --
(a) . . . (in) order to avoid a reduction in FFP, the Medicaid
agency
must make a satisfactory showing to(3) 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.
Other regulations are referred to as appropriate in the course of
this
decision.
The Board has held that the foregoing provisions state a
general
requirement for an annual review of all Medicaid patients in a
facility
regardless of the length of time a patient has been in the
facility.
West Virginia Department of Human Services, Decision No. 686,
August 21,
1985. The Board has also held that a State is not required
to review a
patient who although generally eligible for Medicaid has not
been
determined financially eligible to receive Medicaid
institutional
benefits. Kentucky Division of Medicaid Assistance,
Decision No. 704,
November 20, 1985.(4)
Hillhaven Orange Nursing Center The Agency assessed a disallowance
for
this facility on the ground that the State failed to include in
its
review two patients, D.L. and J.M., /3/ who had been determined
eligible
for Medicaid prior to the review and who were present in the
facility
throughout the review. The record shows that a determination
that
patient D.L. was eligible to receive Medicaid benefits for care
in
Hillhaven Orange Nursing Center was made on March 1, 1983 (State's
reply
brief, undated, p. 14, citing State's appeal file, Ex. 56), and
that
patient J.M. was determined eligible to receive Medicaid benefits
for
care in that facility on August 18, 1983 (Id., citing State's
appeal
file, Ex. 57). /4/ The State's review of Hillhaven Orange Nursing
Center
was conducted from September 13 through September 26, 1983.
Thus, in
the case of D.L., the determination of eligibility was made more
than
six months prior to the beginning of the review. In the case of
J.M.,
the determination of eligibility was made nearly one month prior to
the
beginning of the review. The patients were not reviewed because
the
information used by the review team to determine which patients
to
include in its review did not identify them. The review team relied
on
the most recent Medicaid billing submitted by the facility to the
State,
which was updated on the first day of the review at an
"entrance
conference" with facility authorities, who ostensibly provided
the
review team with the names of all patients currently in the facility
and
not on the most recent Medicaid billing for whom the facility
had
received notice of Medicaid eligibility. (State's letter dated
October
18, 1985, p. 1) The State was unable to explain why this process did
not
identify the two patients in question as Medicaid eligibles. It
stated:
(It) can be conjectured that the facility had not received all
of the
requisite eligibility notifications or that it had somehow slipped
the
facility's attention that the patients were Medicaid eligible. It
is
possible, of course, that the facility was somewhat negligent
in
preparing its list(of Medicaid eligibles).
(Response to Order to Develop the Record, dated November 25, 1985,
p.
5)
The State argued that the patients in question were not required to
be
reviewed since the review team was unaware of their eligibility
for
Medicaid. We find no merit in that argument. The statute
requires an
annual review in each facility of the care of "each recipient."
A
"recipient" is defined as "an individual who has been
determined
eligible for Medicaid." 42 CFR 400.203 (1983). The patients
in question
here were determined eligible for Medicaid long before the review
of the
facility was conducted. While the Board has suggested in dictum
that a
patient may not have "been determined eligible for Medicaid" until
the
review team reasonably has access to information regarding
the
eligibility determination, (West Virginia Department of Human
Services,
supra), the State did not claim here that it was not reasonable
to
expect the review team to have known of the eligibility
determinations
for these patients. Instead, it is implicit in the
State's conjectures
regarding why neither of these patients was on the list
used by the
review team that the list would normally have included these
patients,
given the length of time between their eligibility determinations
and
the annual review in the facility. Thus, the State's failure
to
identify the two patients in question here as Medicaid patients does
not
excuse their omission from the review. Even if their omission from
the
review was the fault of the facility, the State bears the
responsibility
since the statute requires the State to provide for annual
reviews.
The State contended, however, that the Agency's policies and
procedures
permit states to rely on information provided by the facility
regarding
current Medicaid eligibles. (Reply brief, p. 3) The State
cited in
support of its position the Agency's Medical Assistance
Manual
(MSA-PRG-25), dated 11/13/82, which states in part:
Information on . . . medical assistance patients in a skilled
nursing
home should be assembled and studied by(6) the team before
conducting
the on-site review in the facility. A current list of
patients for whom
payments are being made to a particular facility may be
obtained from
the unit in the State responsible for accounting for such
payments.
MSA-PRG-25, Section 5-60-20, p. 62. The State also cited language,
in
the preamble to the final regulations implementing section
1903(g),
which appears in the context of a discussion of the
regulatory
requirement that a review be conducted in the subsequent quarter
when no
Medicaid patient is in a facility on the date that an annual
review
becomes due. The preamble states in part:
Additionally, we do not believe that to require a State to
contact a
facility in each subsequent quarter to determine if there are
Medicaid
patients in the facility is unduly burdensome. In most cases,
the State
will merely telephone the facility to determine whether to
schedule
another review. We have clarified the regulation to specify
that a
review team visit is not required until the State finds that
Medicaid
patients are in the facility.
44 Fed. Reg. 56333, at 56335 (October 1, 1979).
We are not persuaded that the language quoted by the State articulates
a
policy to permit the states to restrict reviews to patients
identified
by the facility as eligible for Medicaid. The language from
MSA-PRG-25
appears in a section explaining some of the advance preparation
that
would assist the review team in conducting the annual reviews. It
is
not expressly intended to define the population to be reviewed.
The
Medical Assistance Manual provides elsewhere that the requirement for
a
medical review applies "to each patient receiving care under the plan
in
a provider facility at the time of an on-site visit by a medical
review
team." Emphasis in original. MSA-PRG-25, Section 5-60-20, p.
64. (See
also MSA-PRG-25, Section 5-60-20, p. 16) Morever, the language
quoted by
the State suggests that the State should verify any information
provided
by the facility based on its own records, since it directs the
review
team to a unit of the State for a list of the patients to be
reviewed.
Nor can the preamble language be considered a comprehensive
statement of
what is required in order for the State to identify patients who
are
subject nto the review conducted in a facility. The language
appears
intended merely to reassure the states that it would not be onerous
to
ascertain whather there are Medicaid recipients present in facility;
it
does not in our view provide a basis for permitting states to
abdicate
their responsibility to verify any information (7)
The State also argued that the Agency's failure to take
disallowances
based on the omission from the annual reviews of other patients
who were
similarly situated (e.g., the patient in Rowan Manor, Inc.)
demonstrated
that the Agency did not have a clear policy regarding those
patients who
should be reviewed. The State asserted that it was unfair
to assess a
disallowance based on "ad hoc determinations of compliance
or
non-compliance," citing Pennhurst State School v. Halderman, 451
U.S. 1
(1981), for the proposition that any condition on the grant of
federal
monies must be clear and unambiguous. (Brief dated April 1,
1985, p.
10)
As applied to the facts here, however, the statutory requirement for
an
annual review of the care of "each recipient" is clear and
unambiguous
since the two patients in question had been determined eligible
for
Medicaid prior to the annual review conducted in their facility and
the
review team could reasonably have been expected to have had
this
information. The fact that the statutory requirement may not be
clear
in all its applications should not prevent the Agency from
disallowing
on the basis of an obvious violation. (See Vermont Department of
Social
and Rehabilitation Services, Decision No. 546, June 27, 1984, p.
7)
The State also asserted that even if the review team missed seven
patients
in two facilities, as originally found by the Agency, it still
reviewed more
than 99.5% of the 1406 patients included in the validation
survey. (We
note that the rate of compliance is even higher when our
reversal of the
disallowance for Caswell Center, discussed later, is
taken into account.) The
State contended that this rate of compliance
with the medical review
requirement showed that the State had an
"effective program of control over
utilization" of longterm services, as
required by the Act, and that there was
therefore no basis for the
imposition of a disallowance pursuant to section
1903(g) of the Act.
(Brief dated April 1, 1985, p. 12; Letter dated
January 22, 1985, p. 1)
We are not persuaded by the State's argument. Although section
1903(
g)(1) requires a showing that "there is in operation in the State
an
effective program of control over utilization of" long-term
care
services, the statute specifies that such a program must consist,
inter
alia, of conducting annual medical reviews of the care of each
Medicaid
patient. (Sections 1903(g)(1)(D) and 1902(a)(26) and (31)) The
statute
provides certain limited exceptions to the requirement for the
annual
review of each patient, (discussed in part below), but contains
no
indication that the Secretary has discretion to find that the State
has
a valid showing if the State did not review patients who
reasonably
should have been identified as Medicaid eligibles and the
exceptions did
not apply. Furthermore, the Agency has taken the
position, based on(8)
advice from the Comptroller General (Decision of the
Comptroller
General, B-164031(3). 154, March 4, 1980), that the
Secretary may not
find a state's showing with respect to a particular
facility valid if
there is a finding of even one violation in a
facility. The Comptroller
General's advice is germane in the case of
each of the two patients in
Hillhaven Orange Nursing Center whose omission
from the review conducted
in that facility was a violation of the medical
review requirement.
The State also argued that it qualified for the statutory exception to
the
medical review requirement in section 1903(g)(4)(B) of the Act. The
State
relied on language of the regulations implementing the exception
providing
that a state's showing will be found satisfactory "even if .
. . (the state)
failed to meet the annual review requirements" if the
state performed
"reviews" in 98% of all facilities and in 100% of all
facilities over 200
beds and exercised good faith and due diligence in
attempting to review the
remaining facilities. 42 CFR 456.653. This,
the State argued,
excused it from performing medical reviews entirely as
long as it performed
other required reviews to the extent specified by
the regulation. The
statute requires, in addition to annual medical
reviews, the review of each
admission. Section 1903(g)(1)(c).
We find the State's interpretation unreasonable. In standard
English
usage, modifiers initially used to describe a noun are understood
to
apply when the noun is repeated soon thereafter. Thus, the
"reviews"
referred to in section 456.653 are the annual medical reviews
specified
in the introductory clause of the subsection. Even if the
regulation
were considered ambiguous, the statute is unequivocally clear that
in
order to qualify for the exception, a state must conduct annual
medical
reviews in at least 98% of all facilities including all facilities
over
200 beds. The State cannot justify its reliance on a
strained
interpretation of the regulations where the statute is clear.
We note,
moreover, that since it does not appear and the State did not
assert
that it exercised good faith and due diligence in attempting to
review
those patients not reviewed, the exception even if properly
construed
would not apply.
The State also asserted that "it is inappropriate for HCFA to count
as
unreviewed for penalty purposes patients receiving less than 60 days
of
care." The State cited in support of this assertion the language
in
section 1903(g)(1) of the Act providing that the federal
medical
assistance percentage shall be decreased " (after) an individual
has
received care as an inpatient in a hospital . . . skilled
nursing
facility or intermediate care facility on (sic) 60 days . . . during
any
fiscal year. . . ." (State's letter dated January 22, 1985,(9) p.
3)
However, since at least one of the two patients in question -- D.L.
--
received care for more than 60 days, we need not address this
argument
further. /5/
Finally, the State argued that there was no authority in the Act
for
imposing a cumulative penalty for quarters beyond the quarter in
which
the facility was required to be reviewed. (Brief dated April 1,
1985,
pp. 17-18) In the case of Hillhaven Orange Nursing Center, the
one
facility for which we uphold the disallowance, a disallowance was
taken
for the quarters ended March 30, 1984 and June 30, 1984 although
the
unsatisfactory review was performed in the first of these two
quarters.
The State did not assert that it reviewed the two patients in
question
in the subsequent quarter.
Addressing this argument in other cases, the Board found clear
authority
in section 1903(g)(1) and 1903(g)(5) for the imposition of
a
disallowance for each quarter for which a satisfactory showing is
not
made. In Michigan Department of Social Services, Decision No.
491,
December 30, 1983, the Board stated that "the effect of these
provisions
is to continue to penalize a state in successive quarters until
the
state performs a review in a manner that complies with the
applicable
statute and regulations." (p. 6) Moreover, as the Board noted
in
Decision No. 491, this statutory scheme was upheld in
Colorado
Department of Social Services v. Department of Health and
Human
Services, 558 F. Supp. 337 (D. Colo. 1983), aff'd, No. 83-1395
(10th
Cir., May 9, 1984), where the Court stated that:
It was appropriate and administratively efficient for the agency
to
invalidate the state's showings for the first two calendar quarters
of
1978, because the showings relied in part on reviews performed
in
certain facilities prior to October 1, 1977, and HHS had
determined
already (in its validation survey for the quarter ending on
December 31,
1977) that those reviews were inadequate.(10)$% Accordingly, we
find
that the Agency properly assessed a disallowance for two
successive
quarters in which the State relied on an annual medical review in
this
facility which did not comply with the applicable requirements.
We therefore uphold the disallowance pertaining to Hillhaven
Orange
Nursing Center.
Caswell Center
The Agency found that the State had improperly omitted five patients
from
its review of this facility, which included 683 Medicaid patients
and took
place from January 31 through March 1, 1984. As discussed
below,
however, we conclude that none of the patients in question need
have been
included in the review.
Patients J.S., T.C., and L.V. were all determined eligible for
Medicaid
prior to the review and were present in the facility when the
review
began. However, each patient was discharged to the hospital
during the
course of the review, and was not present in the facility when
his
individual review was scheduled. Patients J.S. and L.V. were
readmitted
to the facility prior to the end of the review. Patient
T. C. was not
readmitted to a Medicaid-certified bed. The Agency
argued that the
State was required to include in its review any Medicaid
patient who was
present in the facility on the first day of the review.
/6/ It cited in
support of its position South Dakota Department of Social
Services,
Decision No. 650, May 28, 1985.
The Agency's reliance on Decision No. 650 is misplaced, however.
The
Board there held that a patient who had not been determined eligible
for
Medicaid as of the first day of a review conducted in a facility was
not
required to be included in the review. This does not necessarily
imply
that any Medicaid patient present in the facility on the first day of
a
review must be included in the review. Where a review lasts more
than
one day, the first day of the review would be( 11) clearly
determinative
of which patients must be reviewed only in the case of patients
for whom
there is no change in circumstances following that first day.
The
regulations require that the State conduct "on-site reviews of
each
recipient in every facility in the State. . . . " 42 CFR
456.652(b)(1).
(Emphasis added.) If a patient is no longer "in" the facility
on the day
when the review team comes to review him, no review is
reasonably
required. The preamble to the proposed regulations
implementing section
1903(g) supports this view. In discussing its
decision to require an
annual review in each facility without regard to the
period of time that
each patient in a facility had received care, the Agency
stated:
We recognize that, under this interpretation, there may be
some
recipients in a facility who are not reviewed, even though they
have
received care for an annual period, because they either been
(sic)
transferred or were absent from the facility at the time of the
on-site
review. . . . We believe, however, that since most recipients
do not
move in and out of long-term-care facilities, most
individual
receipitents(sic) are being reviewed at least annually under our
present
interpretation.
43 Fed. Reg. 50922, 50925 (November 1, 1978). This discussion
clearly
recognized that patients absent from the facility at the time of
the
review need not be reviewed.
The Agency argued nevertheless that the State could perform a review
for
patients no longer in the facility by reviewing the medical records
for
such patients. (Reply Memorandum dated October 16, 1985, p. 12)
We
disagree. The regulations require that an on-site review of
recipients
in SNFs and ICFs (except in certain cases not relevant here)
include:
(1) Personal contact with and observation of each recipient; and
(2) Review of each recipient's medical record.
42 CFR 456.608(a). Since a review of the medical records alone
would
not satisfy this requirement, we see no basis for penalizing the
State
for failing to review the medical records of patients with whom
personal
contact was not possible.
We note that although two of the three patients in question here
were
readmitted to the facility before the review ended, the Agency did
not
argue that the State should have had personal contact with the
patients
at this point. Such a requirement would clearly be very
difficult to
administer, particularly in a facility the size of Caswell
Center, since
the review team would have to keep track of readmissions and(12
) might
have to extend its stay in the facility indefinitely in order to
review
readmitted patients. Moreover, such a requirement would be
inconsistent
with the Agency's position that the State need not review those
patients
admitted to the facility following the first day of the
review. If the
State need not keep track of patients not in the
facility at the outset
of the review, then it stands to reason that the State
need not keep
track of patients discharged during the course of the
review.
The two remaining patients, D.H. and J.S., were present in the
facility
throughout the review. It initially appeared that patient D.H.
was
determined eligible for Medicaid on January 20, 1984, 11 days before
the
review started. (State's appeal file, Ex. 30) However, during
the
course of the proceedings before the Board, the State
provided
information, which the Agency has not disputed, to establish
that,
although D.H. was determined generally eligible for Medicaid on
January
20, a determination of her eligibility for institutional benefits
was
not made until January 31, 1984. (Response to Order to Develop
the
Record, dated November 25, 1985, p. 6; letter dated January 24,
1986)
Thus, that determination of eligibility was not made until the day
that
the review of the facility began. The Board has held that a
patient not
in the facility at the time that the review team checks with
facility
authorities on the first day of the review to get a "census" of
patients
need not be reviewed. Vermont Agency of Human Services,
Decision No.
687, August 22, 1985. Similarly, a patient who has not
been determined
eligible for Medicaid as of that time should not be required
to be
reviewed. We assume in the absence of evidence to the contrary
that the
review here began at the start of normal working hours, so that it
was
highly unlikely that the eligibility determination for patient D.H.
had
been made at the relevant time. Accordingly, patient D.H. need not
have
been included in the review. (Moreover, as discussed below, we
conclude
that, under the State's system, there was in fact no
eligibility
determination within the meaning of the regulations at the time
that the
review began.)
According to the State, patient J.S. was determined eligible for
Medicaid
payments for institutional care as well as generally eligible
for Medicaid on
January 27, 1984. (Reply brief, undated, p. 14; State's
appeal file,
Ex. 55) The State employed a contractor to determine
whether patients were
eligible for institutional benefits. The
contractor advised the
appropriate county department of social services
(DSS) of its determinations
by sending the DSS a form FL-2 for each
patient showing the date of approval
or denial. The process of
determining a patient's general eligibility
for Medicaid was usually
undertaken contemporaneously by the DSS
itself. (State's Response to
Order to Develop the Record, dated
(13)
November 25, 1985, p. 4) In the case of patient J.S., the January 27,
1984
date was apparently the date of the contractor's approval as shown
on the
FL-2 as well as the date the DSS determined general
Medicaid
eligibility. (The record does not contain the FL-2;
however, the
Agency did not dispute that patient J.S.'s eligibility was
determined in
the fashion described above.)
Although the State characterized January 27, 1984 as the date of
the
determination of Medicaid eligibility for patient J.S., we conclude
that
patient J.S. had not been determined eligible for Medicaid on that
date
within the meaning of the regulations. As noted previously, the
Board
has held that a patient is not required to be reviewed unless there
has
been both a determination of Medicaid eligibility generally and
a
determination of eligibility for institutional benefits. In this
case,
although the DSS knew on January 27 that patient J.S. was eligible
for
Medicaid benefits generally, the contractor had not yet advised the
DSS
that J.S. was eligible for institutional benefits. Since January
27,
1984 fell on a Friday, it is likely that the DSS did not receive
the
FL-2 for patient J.S. from the contractor before the following
Tuesday,
January 31, when the review of the facility began. Since the
State
lacked complete information regarding patient J.S.'s eligibility
when
the review began, it was not required to include him in the review.
Thus, none of the five patients in question were required to have
been
included in the review conducted in Caswell Center. Accordingly,
we
reverse the disallowance for this facility.
Rowan Manor, Inc. and Louisburg Nursing Center
These two facilities were not included in the December 27,
1984
disallowance which the State appealed to this Board. Instead,
a
memorandum dated October 16, 1985, submitted by the Agency in
extended
briefing on this appeal, stated "HCFA hereby notifies North Carolina
and
the Board that the disallowance for the period January 1, 1984
through
September 30, 1984, has been increased to $453,520.59." (p. 1)
This
increase was based on the Agency's finding that the State
improperly
failed to include in the annual review one individual in each of
the two
facilities. The State had discussed the cases of these
individuals in a
brief submitted prior to the Agency's October 16 memorandum,
alleging
that the Agency had acted inconsistently in not requiring that
these
patients be reviewed while imposing a disallowance based on the
State's
failure to review patients who were similarly situated.(14)
The State argued that the disallowance for each of these facilities
was
improper since notice of the disallowance was not given in
accordance
with section 1903(g)(3)(A)(iv) of the Act. That section
provides:
No reduction in the Federal medical assistance percentage of a
State
otherwise required to be imposed under this subsection shall
take
effect--
* * *
(iv) due to the State's unsatisfactory or invalid showing made
with
respect to a calendar quarter beginning after September 30, 1977,
unless
notice of such reduction has been provided to the State no later
than
the first day of the fourth calendar quarter following the
calendar
quarter with respect to which such showing was made.
A disallowance was assessed for both facilities for the quarter
ending
March 31, 1984, and in the case of Louisburg Nursing Center, for
the
subsequent quarter as well. If section 1903(g)(3)(A)(iv)
applied,
notice of the disallowance for the first quarter should have been
given
no later than January 1, 1985, and notice of the disallowance for
the
second quarter should have been given no later than April 1, 1985.
As
indicated above, however, notice was not given until the State
received
the Agency's October 16, 1985 memorandum.
The Agency argued, however, that timely notice was given by
its
disallowance letter dated December 27, 1984 since that letter
advised
the State that it was not in compliance with the annual
review
requirements for the two quarters in question. The Agency noted
that
although it subsequently changed the amount of the disallowance
to
reflect deficiencies in additional facilities, it did not hold the
State
out of compliance for any additional quarters. According to the
Agency,
the Board upheld "a similar change in the amount of the
penalty
calculation" in Ohio Department of Public Health, Decision No. 191,
June
24, 1981. The Agency asserted, moreover, that it could not have
given
earlier notice that deficiencies existed at Rowan Manor, Inc.
and
Louisburg Nursing Center "because it did not become aware of
the
deficiencies until it reviewed the additional information submitted
by
the State during this appeal." The Agency also argued that it
had
authority to correct mistakes resulting from oversight or
inadvertence
notwithstanding the statutory requirement for notice.
(Response to
Order to Develop the Record, dated November 26, 1985)
We do not need to reach the question whether the Agency gave proper
notice
of the increased disallowance since we conclude that the patient
in question
in each facility was not required to be included in the
medical review.
The disallowance for(15)
Rowan Manor, Inc. is based on information not given to the Agency
during
the validation survey. At that time, the State gave the Agency a
copy
of the Notification of Eligibility for Medical Assistance for
the
patient in question. (Appeal file, Ex. 61) This notification was
dated
September 13, 1983 and had an effective date of October 1, 1983.
Based
on this document, the Agency assumed that the patient was not
eligible
for Medicaid until October 1, 1983, following the State's review of
the
facility, conducted from September 8-20, 1983. During the course
of
this appeal, however, the State indicated that this patient was
found
eligible for Medicaid on September 8, 1983, effective September 2,
1983.
(Agency's Supplementary Response to Order to Develop the Record,
dated
January 9, 1986, p. 4; State's reply brief, undated, p.
6)
Nevertheless, we disagree with the Agency's position that this
new
information requires a disallowance. Since the eligibility
determination
was not made until the date on which the review commenced, the
patient
could not reasonably be considered to have been determined eligible
for
Medicaid as of that time. See discussion concerning patient D.H.
in
Caswell Center. (The Agency did not indicate why the effective date
of
the eligibility determination should be relevant here.) Thus, there
was
no basis for requiring that this patient be reviewed.
As regards Louisburg Nursing Center, contrary to the Agency's
assertion,
the record shows that the Agency clearly was aware as early as
October
16, 1984 of the circumstances concerning the Louisburg Nursing
Center
patient which gave rise to the current disallowance for that
facility.
A letter of that date from the Agency's Associate Regional
Administrator
to the State concerning the Agency's preliminary findings based
on its
validation survey listed this patient as unreviewed, noting that he
"was
discharged to the hospital from the facility on the second day of
the
review, prior to the review team initiating actual review
activities."
The Agency did not allege that it had discovered any new facts
about
this patient. The facts as stated in the Agency's October 16,
1984
letter do not support the current disallowance. Since the patient
was
discharged from the facility before the review team could review him,
no
review of his case was required. See discussion concerning
patients
J.S., L.V., and T.C. in Caswell Center.
Accordingly, we conclude that the disallowance for Rowan Manor, Inc.
and
Louisburg Nursing Center must be reversed.(16)
Conclusion
For the foregoing reasons, we sustain the disallowance pertaining
to
Hillhaven Orange Nursing Center, and reverse the disallowance
pertaining
to Caswell Center, Rowan Manor, Inc. and Louisburg Nursing
Center. /1/
Amendments to
section 1903(g) as contained in section 2363( c)
of the Deficit Reduction Act
(DEFRA) of 1984, enacted July 18, 1984,
Pub. L. 98-369, have eliminated all
utilization control requirements
other than the medical review requirement as
a basis for reductions
in
FFP. /2/ DEFRA also
amended the language of subsections (26) and
(31) of section 1902(a).
The statutory language quoted here was the
applicable law at the time of the
actions leading to this appeal.
/3/
The patients are identified by
their initials to protect
their
privacy. /4/ The State
later stated that in the case of patient
J.M., a determination of general
Medicaid eligibility was issued on
August 18, 1983, and a determination of
financial eligibility for
institutional benefits was issued on August
8,1983. It also stated that
in the case of patient D.L., a
determination of general Medicaid
eligibility was issued on May 1, 1983 and a
determination of financial
eligibility for institutional benefits was issued
on August 2, 1983.
(Response to Order to Develop the Record, dated November
25, 1985, p.
5) The State did not provide any new documentation in support of
its
statements, nor did it acknowledge any discrepancy between
these
statements and the information previously furnished. Since the
earlier
information was based on the State's apparently
reasonable
interpretation of documentation supplied by it, we rely on it
and
disregard the State's later statements. We note, in any event,
that
even if the record established the later dates as correct, this
would
not alter our conclusion here since there was still a substantial
period
of time between the date of the determinations and the date the
review
began. /5/ A similar
argument was rejected by the court in
Colorado Department of Social Services
v. Department of Health and Human
Services, 558 F. Supp. 337, 355 (D. Colo.
1983), aff'd, No. 83-1395
(10th Cir., May 9, 1984), where the Court
concluded: For the calendar
quarter in question, the state must have
submitted a satisfactory and
valid showing of an effective program of
utilization control for all
patients in all long-term care facilities, not
simply those patients
whose stays have exceeded 60 days. . .
. /6/ The State appeared
to
argue that since Caswell Center consisted of eight administrative
divisions,
each maintaining its own patient records, the Agency should
look at whether
each patient was present in his respective division on
the first day the
division was reviewed. (Brief dated April 1, 1985, p.
6) The State did not
provide any evidence that the facility was treated
as eight separate
divisions for any other purpose. (Reply brief,
undated, p. 14) In view
of our conclusion here, we need not decide
whether Caswell Center could in
effect be treated as eight separate
facilities for purposes of the medical
review requirement only.