GAB Decision 744
April 21, 1986
New York State Department of Social Services;
Docket No. 85-35
Ballard, Judith A.; Garrett, Donald F. Settle, Norval D.
The New York State Department of Social Services (State) appealed a
determination by the Health Care Financing Administration (Agency)
disallowing $334,648.32 claimed by the State for inpatient hospital
services in two institutions for mental diseases (IMDs) under Title XIX
(Medicaid) of the Social Security Act for quarters ended March 31, 1984
and June 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 any
calendar quarter unless the state shows that during that 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 determined that the State failed to
include one patient in each of two IMDs. As discussed below, we
conclude that neither patient was required to be included in the review,
and accordingly reverse the disallowance.
We issued an Order to Develop the Record in this case as well as
four
others which set out preliminary analyses and questions on three
general
issues concerning the medical review requirement and the
statutory
exceptions in section 1903(g)(4).(2)
The Order also contained specific questions pertinent to this appeal.
The
Agency submitted one consolidated response to the Order on the
cross-cutting
issues; in addition, the Agency attorney in this case
submitted a
supplemental response to the general issues as well as a
response to the
case-specific questions. The State responded to both
parts of the
Order.
In this Decision, we discuss the cross-cutting issues only to the
extent
they are relevant to the New York facts.
Applicable Law and Brief Overview of New York Process
Section 1903(g)(1) of the Act requires the state agency responsible
for
the administration of a state's Medicaid plan to submit a
written,
quarterly showing demonstrating that --
(it) has an effective program of medical review of the care
of
patients in mental hospitals, skilled nursing facilities,
and
intermediate care facilities pursuant to section 1902(a)(26) and
(31)
whereby the professional management of each case is reviewed
and
evaluated at least annually by independent professional review teams.
A state's showing for each quarter must be "satisfactory" or FFP paid
to
the state for expenditures for long-stay services will be
decreased
according to the formula set out in section 1903(g)(5).
Section 1902(a)(31) requires in pertinent part that a state
plan
provide:
(B) for periodic inspections to be made in all . . .
mental
institutions . . . within the State by one or more medical review
teams
. . . of (i) the care being provided in . . . (mental institutions .
.
.) 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. . . .
Regulations implementing the statutory utilization control
requirements
are found at 42 CFR Part 456 (1982). 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 the Administrator, in each
quarter,
that it has met the following requirements for each recipient;
* * * *(3)
(4) A regular program of reviews, including medical evaluations,
and
annual on-site reviews of the care of each recipient. . . .
(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 . . . by the end of the quarter in
which
a review is required under paragraph (b)(2) of this section.
The statute at section 1903(g)(4) (B) /2/ provides exceptions to
the
requirement for "reviews of each recipient in every facility in
the
State" in certain circumstances where a state had reviewed 98% of
all
facilities and 100% of all facilities with 200 or more
certified
Medicaid beds requiring review. The parties argued about
whether the
exceptions applied in this case. We do not reach that issue
because
both facilities had more than 200 certified Medicaid beds. Had
we found
a violation in either facility, the exceptions still would not
apply
since they are not applicable to facilities with more than 200
certified
Medicaid beds.
In New York, the annual reviews of psychiatric hospitals were
conducted
by Utilization Review Associates, under contract with the New York
State
Office of Mental Health (OMH). Approximately six weeks before
the
scheduled review date, OMH prepared a list identifying current
Medicaid
recipients who were inpatients at the hospital to be reviewed.
This
identification of patients was based on several automated data
bases
maintained centrally at OMH. The list was then sent to the
hospital.
"Shortly before the review date," the hospital updated the list and
then
submitted it to the review team. (State's Brief, p. 3) The fact
that
the facilities here are psychiatric hospitals is significant
because
such hospitals are IMDs. FFP may be available under Medicaid
for
inpatient psychiatric hospital services to individuals under age 21
(or
in certain circumstances, under age 22). Otherwise, inpatient
services
are covered only if provided other than in an IMD or to an
individual
age 65 or over. In addition, any individual aged 22 to 64 in
an IMD is
rendered ineligible for Medicaid by reason of this institutional
status.
See, generally, section 1905( a) of the Act; 42 CFR 435.1008.
(4)
Marcy Psychiatric Center
In August 1984, federal reviewers found that one patient, C.V., /3/
in
Marcy Psychiatric Center had not been included in an annual
patient
review for the quarter ended March 31, 1984. The Agency
subsequently
issued a disallowance for that quarter as well as the successive
quarter
based on the finding that a review for this patient had still not
been
completed.
The review at Marcy took place from September 6, 1983 through
September
13, 1983 and covered 557 patients. C.V. was in the facility
on
September 6, but did not become 65 years old until September 11,
1983.
Her name did not appear on OMH's list of current recipients or on
the
hospital's updated list.
The question to be resolved is whether C.V. is to be considered a
Medicaid
recipient as of the first day of the on-site review. In South
Dakota
Department of Social Services, Decision No. 650, May 28, 1985,
the Board
determined that a review need not include an individual who
had not been
determined Medicaid eligible as of the first day that the
facility is
reviewed. The Agency also concluded from the decision that
"the review
must include all persons in the facility determined to be
Medicaid eligible
as of the first day of the review." (Agency's General
Response to Board's
Order, p. 10)
The Agency's interpretation of our South Dakota decision is overbroad.
The
Board there held that a patient who had not been determined eligible
for
Medicaid on the first day of a review conducted in a facility was
not
required to be included in the review. The decision does
not
necessarily stand for its converse and very general proposition that
an
on-site medical review must include all persons in a facility
determined
to be Medicaid eligible as of the first day of the review.
As we find
below, the statute and regulations do not require review of a
patient
for whom the State completed the paperwork finding income and
medical
eligibility prior to review but who had not actually met a
condition
necessary to be found eligible for Medicaid in general, and
inpatient
psychiatric services in particular, until after the review had
begun.
In this case, the Agency focused on the definition in 42 CFR 400.203
which
states that "unless the context indicates otherwise" a recipient
is an
"individual who has been determined eligible for Medicaid." The
Agency
presented evidence (5) to show that although C.V. turned 65
during the
review, a Medicaid eligibility determination was actually
done some time
during the month prior to the start of the review. The
State presented
evidence to show that it made the eligibility
determination for C.V. after
the start of the review.
The parties presented contradictory evidence and information about
the
eligibility determination process in general in New York and the
process
followed for this patient in particular. The Agency admitted
that, if
the "determination" were completed after the start of the review,
then
under our South Dakota decision, the disallowance would be
improper. We
need not find when the paperwork on eligibility was
completed for C.V.,
however, because even if we were to find that the Agency
was correct
that the paperwork "determination" was made prior to the review,
we
would still find that there was no violation.
As mentioned above, the regulation references "annual on-site reviews
of
the care of each recipient" and "on-site review of each recipient
in
every facility." 42 CFR 456.652. Recipient is defined, "unless
the
context indicates otherwise" as an "individual who has been
determined
eligible for Medicaid." 42 CFR 400.203. Agency regulations
do not
specify at what point a patient becomes "an individual who has
been
determined eligible for Medicaid." We conclude that, in the context
of
the medical review of an IMD, a state could reasonably read
the
regulation as not applying to a patient who, at the time the
review
begins, has not yet attained the qualifying age to receive
Medicaid
inpatient psychiatric services, even if the patient meets income
and
other eligibility requirements. The State could have reasonably
viewed
its action as merely anticipating that the individual would
become
eligible, and not as a completed eligibility action.
The Agency argued, in effect, that the patient had been determined to
be
currently eligible for Medicaid because the State's Medicaid
program
provided for a full month of Medicaid payments for an individual who
was
determined eligible any time during a particular month. The
Agency
contended that once the eligibility determination was made, the
State
knew that Medicaid would cover the full month of services;
therefore,
the individual's care should be reviewed.
Under Medicaid regulations at 42 CFR 435.914, a state may make
an
eligibility determination effective on the first day of the month
in
which the individual becomes eligible. Such determinations
are
considered to be determinations of retroactive eligibility (see 42
CFR
435.1002(b)). The fact that the State (6) may have anticipated that
it
could make a retroactive determination does not necessarily mean
that
the State is required to include as the subject of a review such
a
person not yet meeting all conditions of eligibility. In the absence
of
specific guidance by the Agency requiring review of such patients,
we
conclude that the State's system of identifying patients for review
need
not include such patients in order to be found satisfactory. Thus,
we
reverse the finding of a violation for Marcy Psychiatric Center.
Buffalo Psychiatric Center
In August 1984, federal reviewers found that one patient, T.S., in
Buffalo
Psychiatric Center had not been included in an annual patient
review for the
quarter ended March 31, 1984. The Agency subsequently
issued a
disallowance for that quarter as well as the successive quarter
based on the
finding that a review for this patient had still not been
completed.
Although there is a dispute between the parties as to the exact date
that
the State made a paper "eligibility determination" for patient T.
S., both
parties agree that the determination was done before the first
day of the
review of the Buffalo facility, some time during the month of
January
1984. The State asserted, and the Agency did not deny, that the
list of
those patients requiring review sent from the State to the
facility was dated
December 20, 1983. T.S.'s name was not on the list.
The facility ran
its own listing of people age 65 and over on Thursday,
January 26,
1984. On Friday, January 27, the facility prepared the 327
survey forms
for the review which began on Monday, January 30. T.S.
turned 65 years
old on Saturday, January 28. T.S. was not reviewed
during the January 1984
review, but was subsequently reviewed on
December 14, 1984.
This situation is different from the circumstances surrounding
C.V.
because not only was T.S.'s paperwork done before the review, but
he
also turned 65 years old before the review. The State did not review
a
patient in an IMD who turned 65 on the Saturday before a Monday
review
(see prior section for discussion of the importance of the
age
requirement), and the system identified all recipients as of
two
business days before the review where one day was needed to prepare
the
survey papers. We cannot find, however, given the
circumstances
surrounding this review, that the State did not have an
effective
program of medical review.
Here, we find that the State's system was operating in a wholly
reasonable
and satisfactory manner. The language of the statute and
regulations is
very general; there is very little Agency guidance to
assist the State
in knowing what sort of review system the Agency would
find acceptable,
and(7) what guidance there is does not bolster the
Agency's position.
Chapter 5-6-20, Suggested Format, Content and
Methodology Reviews and
Inspections, a subchapter of the Medical
Assistance Manual's chapter on
Medical Review in Skilled Nursing Homes
and Mental Hospital n4, encourages
the states to gather "advance
knowledge about patients and their problems (in
order to) enhance
materially both the efficiency and the effectiveness of
on-site medical
reviews." The Manual goes on to state:
Information on the medical history, conditions, treatment
regimen and
other needs and characteristics of medical assistance patients .
. .
should be assembled and studied by 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. .
.
.
Manual, Part 5, p. 62.
The Manual contains a list of the "Suggested Sequence of Medical
Review
Events" which states:
1. Review team prepares schedules for on-site reviews . . .
2. Three weeks or more prior to the date of the scheduled
on-site
review visit, the review team assembles the medical evaluation
and
related information and prior review reports on each patient.
3. Review team analyzes pre-review patient information,
develops a
"feel" for the kinds of situations to be dealt with during review
visit
to the provider facility concerned; and, develops its overall
strategy
and work load distributions for the upcoming review. Pertinent
notes
are made on each patient and of any matters to be cleared up or to
which
special attention is to be paid during the forthcoming review.
4. . . . a pre-printed review team check-off form for each
patient
(provides):
- patient, facility, and physician identification data and
related
information.(8)$T- "Alert" notes made for any patient-status,
patient
care, or facility factors made by members of the review team
during
their pre-review analysis of patient information.
5. No more than 48 hours immediately preceding the exact
date set
for the on-site review, the provider facility concerned may be
notified.
6. Upon arrival at the provider facility, the review team
meets with
the administrator and/or chief nurse for an introductory
conference
during which the purposes of periodic medical review are explained
and
the general format to be followed by the review team and its
individual
members during the course of the visit is outlined.
7. Work of members of the review team then proceeds
according to
plan.
. . . .
From the Agency guidance and the State's description of what was done
by
the facility to prepare for the review once it received the OMH list,
it
is clear that there are some processing steps which must be taken by
the
facility before the reviewers can do their job. In the case of
the
Buffalo facility, forms for over 300 patients had to be generated.
No
inference could have been drawn from the Agency guidance that a
system
which updated an IMD list two business days before a review began
to
include all people 65 or older was not a reasonable system. We
note
that even if the facility had updated the list on Friday, the
last
business day preceding the review, T.S. would not have been on the
list.
In other words, the State included everyone in its review that it
could
reasonably identify as a recipient as of time the review
began.
Although the facility could have anticipated that T.S. would
become
eligible over the weekend, we do not think that a failure to
anticipate
renders a system inadequate and ineffective. For the same
reasons as
stated in the prior section, we also find that the fact the State
may
have determined T.S. to be retroactively eligible for payments for
the
entire month does not render the system ineffective. In the context
of
medical review, the requirement for a review of each recipient must
be
read as meaning that the review must include each person the State
could
reasonably identify as a patient who (9) met all
eligibility
requirements and had been determined eligible. The State,
here, met
that standard. We therefore, find no violation for Buffalo
Psychiatric
Center. /5/
Conclusion
For the reasons stated above, we overturn the disallowance pertaining
to
both IMDs. /1/ Amendments to section 1903(g)(1) as contained in
section
2363 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 federal financial participation. Although section 2368
of
DEFRA also amended the medical review requirement, those changes have
no
substantive effect on the issues
here. /2/ Public Law
95-142
added section 1903(g)(4) (B), among other amendments, to section
1903(
g). See section 20 of the Medicare-Medicaid Anti-Fraud and
Abuse
Amendments of 1977, Pub. L. 95-142, October 25,
1977. /3/ The
patients are
identified by their initials to protect their privacy.
/4/
The Manual is MSA-PRG-25 and
is dated November 13, 1982.
/5/
Because we have found for the
State on a very fact-specific
basis for both patients, we do not address
other general State arguments
pertaining to the meaning of the statutory
requirements and exceptions.