GAB Decision 756
May 30, 1986
New Hampshire Department of Health and Welfare;
Docket No. 85-38
Ballard, Judith A.; Settle, Norval D. Garrett, Donald F.
The New Hampshire Department of Health and Welfare (State) appealed a
determination by the Health Care Financing Administration (Agency)
disallowing federal funding 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 initially found that the
State
had failed to include in its annual medical reviews two patients in
one
intermediate care facility (Rockingham) and three patients in a
second
facility (Briston Manor). During the course of this appeal, the
Agency
reviewed documentation submitted by the State and withdrew
the
disallowance for the quarter ending September 30, 1984 and reversed
its
finding for one patient at Briston Manor. As a result, the
Agency
reduced the amount of the disallowance from $208,231.01 to
$192,511.80.
Four patients, two in each facility, still remain in dispute,
however.
As discussed below, we conclude that the State's failure to review
the
remaining four patients(2) constitutes a violation of the medical
review
requirement. We uphold in full the amended disallowance of
$192,511.80.
Factual background and arguments
The Agency assessed a disallowance for the Rockingham facility on
the
ground that the State failed to include in its annual medical review
two
Medicaid recipients, M.C. and O.R. The record shows that the
Rockingham
facility was reviewed by the State from February 1 to February 17,
1984.
State's appeal file, Ex. C. Both the recipients had been patients
at
the facility at least since December 1983 and M.C. had been
determined
to be eligible for nursing home benefits on January 4, 1984, and
O.R.
had been determined eligible on January 5, 1984. The Agency
also
assessed a disallowance for Briston Manor on the ground that the
State
failed to include two Medical recipients there in its annual
review.
The State reviewed the facility from March 6 to March 15, 1984 and
both
patients were residents at the facility and eligible for
Medicaid
nursing home benefits at the time of the review.
The State made two arguments specifically relating to the patients in
the
Rockingham facility. The State argued that neither patient could
be
considered a violation because: (1) the review team reviewed
those
patients that appeared on a computer-generated list of
Medicaid
eligibles prepared by the team prior to its entry in the facility
and
neither patients had been reviewed within a year of being
transferred
from another facility. The State also made several general
arguments to
the effect that the Agency had misapplied the medical
review
requirements with respect to all four patients in question.
Following
our description of the applicable statute and regulation, we
discuss
first the State's arguments concerning Rockingham and then its
more
general arguments.
Statutory and regulatory framework
Section 1903(g)(1)(D) 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 (SNFs),
and
intermediate care facilities (ICFs) 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.
(Emphasis supplied)(3)
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)(B) requires in pertinent part that a State
plan
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 . . . 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.
.
. .
Regulations implementing the statutory utilization control
requirements
are found at 42 CFR Part 456 (1984). 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:
* * * *
(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.
(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.(4)
(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.
Rockingham
The State argued that it performed a complete review of recipients at
this
facility because the individuals not reviewed apparently had not
been
included on the computer-generated list of Medicaid eligibles, and
that the
State's obligation under the medical review requirements should
be limited to
individuals included on that list. State's response to
Board's order,
pp. 4-6. The State's witness at a Board hearing
testified that prior to
a review at a facility, the State Office of
Medical Services submits to the
review team a computer-generated list of
the patients that are Medicaid
recipients in the facility to be
reviewed. Tr., p. 17. The review
team then proceeds to the facility,
checks its list against the facility's
patient list, resolves any
discrepancies, and then begins the review.
Although the State has never been able to identify specifically why
it
failed to review the two patients at Rockingham, the State's
witness
testified that the computer-generated list for the review team may
have
been prepared a month in advance of the review of the facility.
Tr., p.
29. The State also suggested in its brief that there may have
been a
substantial time lag (up to a month) between the date a person
was
determined eligible and the date this information was entered into
the
State's computer system. State's response to Board's order, pp.
4-6.
Since the two patients here were determined eligible in early
January,
the State surmised that they probably would not have been on
the
computer list prepared for the review that began on February 1.
The
State concluded that it would be "unreasonable" and "inexpedient"
to
require that the review team rely on data other than
the
computer-generated list when conducting the regularly scheduled
reviews,
and that since the patients at issue were probably not on the list,
no
penalty should be assessed for the State's failure to review them.
Id.
The Agency responded that the State knew or should have known that
the
computer list could not be relied on to include every Medicaid
recipient
in the facility as required by statute and regulations.
Agency's
response to Board's order, pp. 3-4. The Agency argued that the
State
had not exercised good faith and due diligence in relying on a list
that
might have been a month out-of-date. The Agency noted(5) that
based on
its own hearing testimony (Tr., p. 18) the State could have
generated a
weekly computer listing instead of a monthly one. The
Agency concluded
that the State's explanation should not absolve it from its
failure to
review these two patients.
The patients in question were determined eligible for
Medicaid
approximately four weeks before the review of the facility
was
conducted. The State has never demonstrated precisely why the
two
patients here were not reviewed. We do not know whether these
patients
were omitted from the list that was given to the review team or
whether
some mixup occurred when the review team arrived at the facility
and
conferred with facility officials or whether the review team
simply
neglected to review these patients. The State nevertheless
speculated
that the names were not on the list used by the review team and
that the
reason for the omission may have been the potential delay of a month
in
the State's computer system for inputting newly determined recipients
or
the possibility that the review team had prepared its list a month
in
advance of its visit. Even if we were to accept the
State's
explanation, which is merely speculative, the State still has
not
demonstrated why these hypothetical procedures would have
been
reasonable under the circumstances. The State did not explain,
for
example, why it could not have prepared a followup computer list
or
performed a followup inquiry of eligibility determinations just prior
to
the review to verify the currency of any advance list used
for
preparation.
The statute and regulations require 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
(1984).
In our view, it is incumbent on the State under the statute
and
regulations in reviewing all "recipients" to take reasonable efforts
to
insure that its list is current and complete. While the Board has
held
that a patient need not be considered eligible for Medicaid until
the
review team reasonably had access to information regarding
the
eligibility determination (Idaho Department of Health and
Welfare,
Decision No. 747, April 28, 1986), we conclude here that the review
team
could not have acted reasonably by relying solely on a computer
list
that was either prepared a month in advance of(6) the review or that
was
potentially a month out-of-date in identifying those who were
currently
eligible. /2/
The State's second argument concerning Rockingham was that the State
had
met the intent of the federal law and regulations governing
annual
medical reviews of Medicaid recipients since both patients in
question
had been reviewed later in the same calender year (eight months
after
the facility-wide review in question), and as a result were
reviewed
within one year of their entry into Rockingham. State's
post-hearing
brief, pp. 7-9.
We find that the State was required to review the two patients when
it
performed the facility-wide review in February, and that any
subsequent
review over eight months later would not meet the annual medical
review
requirements as set out in the statute and regulations. The
Agency has
implemented the statutory annual review requirements by providing
for an
annual review in each facility. Thus, section
456.652(b)(2)
specifically requires "(an) on-site review . . . 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." The Agency clearly viewed
the
requirement for an annual review in each participating facility
as
precluding states from demonstrating compliance based on the length
of
time individual patients had resided in their respective
facilities
before a review was conducted. See, also, the preamble to
the
regulation implementing this requirement. 44 Fed. Reg. 56333,
56335
(October 1, 1979). In some instances this may mean that a patient
has
to be reviewed more than once in a calendar year; in other
instances,
depending on fortuitous circumstances such as the date of
transfer, a
patient may not have to be reviewed at all in a calendar
year. (7)
The Board in an earlier decision discussed the reasonableness of
this
requirement at length. We stated:
In our view, . . . the Agency reasonably interpreted the statute
to
require annual reviews of facilities rather than the tracking
of
individual patients. Since the latter system would require that
a
review team visit a particular facility as many times within a year
as
the number of Medicaid patients in the facility with
different
anniversary dates, the Agency could reasonably have concluded
that
annual reviews of facilities -- which would conserve state resources
and
be easier for the federal government to validate -- were sufficient
to
satisfy the statutory objective of an annual review of each
patient's
case. Indeed, here the State does not argue that tracking of
individual
patients should be substituted for reviews scheduled on the basis
of the
facility's entry date into the Medicaid program and subsequent
reviews.
Instead, its position is that it can show compliance with the
annual
review requirement on a case-by-case basis for Medicaid patients
not
included in the annual facility reviews. Under the State's
approach,
however, compliance may become dependent upon purely fortuitous
events,
such as a patient's (transfer from a previous facility). Thus,
we think
that the Agency reasonably determined that annual facility reviews
were
to be the sole mechanism for complying with the requirement for
an
annual review of each patient's case. West Virginia Department of
Human
Services, Decision No. 686, August 21, 1985, pp. 8-9.
Finally, we note that the subsequent reviews of these patients
occurred
after the patients had been identified by the Agency in its
validation
survey. Thus, it appears that the reviews resulted from
corrective
action following the Agency's survey and would not be an
indication on
their own that the State had an effective program of medical
review.
Accordingly, the fact that the patients here may have been reviewed in
a
subsequent quarter (within a year of entering the facility or within
a
year of a prior review in a different facility) is not a basis to
find
that the State met the annual review requirement where the State
failed
to review the patients during the required facility-wide review
in
February.(8)
General arguments
The State also made several general arguments concerning the
medical
review requirements which we discuss below.
Quality of care
First, the State argued that the patients from both facilities were,
at
all times, receiving the appropriate level of nursing home care and
that
the quality of their care was not affected by the review teams's
initial
oversight. State's response to Board's order, p. 2. The
State's
argument, however, begs the question. The statute and
regulations set
up specific procedures for determining whether the patients
in the
facilities here were receiving the proper medical care. The
State did
not follow those procedures for the patients in question, yet the
State
alleged that the quality of patient care was not affected and that
the
patients were receiving the appropriate level of care. While the
State
may believe that this was the case, we have no way of verifying
whether
the patient's care was proper within the intent of the statute
or
regulations since these patients were not in fact reviewed. The
State's
after-the-fact allegations are simply not sufficient to meet the
medical
review requirements at issue. Moreover, as we discussed
specifically
with reference to the two patients at Rockingham, the subsequent
review
over eight months later of the patients here cannot overcome the
State's
failure to review the patients in its facility-wide review in
February
and March.
Equities
The State also argued that imposition of the penalty here would be
unfair
and inequitable since only four patients out of 992 (or less than
one-half of
one percent) had not been reviewed and since the performance
of medical
reviews per se was only one of four criteria considered by
the Agency in its
validation survey. State's brief, pp. 1, 10. The
State also
argued that the penalty computation is structured so that New
Hampshire and
other smaller states receive a disproportionately high
penalty in relation to
larger states. State's brief, pp. 6-8.
As we have concluded in prior Board decisions concerning the
medical
review requirements, the statute contains no indication that
the
Secretary has discretion to find that the State has made 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.
See,
e.g., North Carolina Department of Human Resources, Decision No.
728,
March 18, 1986, pp. 7-8; Delaware Department of(9) Health and
Social
Services, Decision No. 732, March 21, 1986. Furthermore, the
Agency has
taken the position, based on 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 Board has upheld that position as a
reasonable
interpretation of the statutory provision. North Carolina,
supra.
Further, this Board is bound by all applicable laws and regulations.
45
CFR 16.14. Thus, the Board is bound by the statutory provisions
at
issue even if they require a penalty for failing to review a
small
percentage of patients or even if the penalty computation (or
the
exception provisions) give larger states an advantage over
smaller
states. Moreover, it is irrelevant under the statute and
regulations
that the State may have performed well in other criteria
considered by
the Agency in its validation survey if the State specifically
failed to
meet the requirements at issue here.
Disallowance for subsequent quarter
The State also argued that any disallowance for the quarter ending
June
30, 1984 was improper since the Agency had specifically referred to
the
quarter in which the reviews had to be performed (the quarter
ending
March 31, 1984) as the quarter subject to the Agency validation
survey
in the notice preceding that survey. State's brief, p. 3.
Addressing this argument in other cases, the Board found clear
authority
in sections 1903(g)(1) and 1903(g)(5) for the imposition of
a
disallowance for each quarter for which a satisfactory showing is
not
made. Michigan Department of Social Services, Decision No. 491,
December
30, 1983; North Carolina Department of Human Resources,
Decision No.
728, March 18, 1986, pp. 9-10. In Michigan, 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(10) 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.
Accordingly, we find that the Agency properly assessed a disallowance
for
the quarter ending June 30, 1984 since the State relied on an annual
medical
review for that quarter which had been performed in the quarter
ending March
31, 1984 and which did not comply with the applicable
requirements. Moreover,
while the Agency advised the State of its intent
to perform a validation
survey for the quarter ending March 31, 1984
(State Appeal file, Exs. A, B),
the Agency never indicated that a
disallowance arising from that survey would
be limited to the same
quarter if medical review failings identified by the
survey applied to
subsequent quarters as well.
Exceptions to requirements
Finally, the State argued that it qualified for the exception to
the
medical review requirements set out in section 1903(g) (4) (B) of
the
Social Security Act and implemented by 42 CFR 456.653. The
exception
allows the Secretary to find a State's showing to be satisfactory
under
certain circumstances if the Secretary first finds the State
has
performed facility-wide reviews in each of not less than 98 percent
of
the number of facilities in the State requiring the review and in
all
facilities having 200 or more beds. The State alleged that it
had
performed facility-wide reviews during the quarter ending March 31,
1984
in all 26 facilities that had to be reviewed and, thus, the State
had
completed reviews, as required, by the end of the showing quarter in
100
percent of the facilities requiring review. We find, however, that
the
State did not qualify as having made a satisfactory showing under
the
exception. The two facilities here cannot be considered to have
been
reviewed as required by statute and regulation since the State did
not
perform medical reviews of all recipients in each
facility.
Consequently, the exception provisions are not applicable here
since the
State had not completed reviews by the end of the showing quarter
of 98
percent of its facilities. Two of the State's 26 facilities had
not
been reviewed, and the State therefore was well below the 98
percent
threshold for the exception to apply. See Delaware Department
of Health
and Social Services, Decision No. 732, March 21, 1986, p.
9.(11)$%
Conclusion
Based on the foregoing, we uphold the remaining disallowance
of
$192,511.80. /1/ Amendments to section 1903(g) 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 FFP. Although section 2368 of DEFRA
also amended the
medical review requirement, these changes have no
substantive effect on
the issues
here. /2/ The facts here are
clearly distinguishable
from a prior Board case cited by the State, South
Dakota Department of
Social Services, Decision No. 650, May 28, 1985.
In that case, the
Board held that the State was not obligated to review an
individual who
had been determined to be eligible for Medicaid nursing home
benefits
after the State had already begun its review of the patients in
the
facility. Here, the eligibility determinations took place
approximately
four weeks before the State's review of the facility began.