DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Pennsylvania Department of
Public Welfare
Docket No. 86-121
Decision No. 840
DATE: February 20, 1987
DECISION
The Pennsylvania Department of Public Welfare (Pennsylvania/
State)
appealed a determination by the Health Care Financing
Administration
(HCFA/Agency) disallowing $300,812.33 in federal funds claimed
by the
State under the Medicaid program of the Social Security Act (Act)
for
the quarters ending September 30 and December 31, 1985. The
Agency
based the disallowance on its finding that during these two
quarters
Pennsylvania did not have an effective program of control over
the
utilization of institutional long-term care services for
patients
receiving medical assistance, as required by section 1903(g)(1) of
the
Act. The Agency found that the State failed to conduct
satisfactory
annual reviews at two intermediate care facilities (ICFs),
Valley Manor
Nursing Home and Camp Hill Nursing Home. Specifi- cally,
HCFA found
that the State failed to review a total of three Medicaid
recipients
during the annual reviews at those facilities. Pennsylvania
argued that
it was not required to review one of the recipients.
Although
Pennsylvania admitted that the remaining two recipients should have
been
reviewed, it argued that its failure to review those individuals
could
be excused under the technical failings exception to the annual
review
requirement.
Based on the following analysis, we conclude that although the State
was
not required to review one of the two cited patients at Valley
Manor,
its failure to review the remaining patients (one each at Valley
Manor
and Camp Hill) did not fall within the statutory
exception.
Accordingly, we sustain the disallowance.
Statutory and Regulatory Framework
Section 1903(g)(1) of the Act requires the state agency respon- sible
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 . . .
intermediate care facilities pursuant to
paragraphs . . . (31) of section 1902(a) 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).
In pertinent part, section 1902(a)(31)(B) requires that a state
plan
provide --
with respect to each . . . 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 . . . including
with
respect to each such person (i) 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) . . .
[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. .
. . 1/
Section 1903(g)(4)(B) provides two exceptions to the annual
review
requirement whereby --
[T]he Secretary shall find a showing . .
. to be satisfactory . .
. if the
showing demonstrates that the State has conducted
such
an onsite inspection during the
12-month period ending on the
last date
of the calendar quarter --
(i)
in each of not less than 98 per centum of the number
of
such
hospitals and facilities requiring such inspection, and
(ii) in every such hospital or facility which has 200
or
more
beds,
and that, with respect to such hospitals
and facilities not
inspected within such
period, the State has exercised good
faith
and due diligence in attempting to
conduct such inspection, or if
the State
demonstrates to the satisfaction of the Secretary
that
it would have made such a showing
but for failings of a technical
nature
only.
Section 1903(g)(4)(B) is implemented by 42 CFR 456.653, "Accept-
able
reasons for not meeting requirements for annual on-site review,"
which
provides in pertinent part that --
The Administrator will find an agency's
showing satisfactory,
even if it failed
to meet the annual review requirements
of
.456.652(a)(4), if --
(a) The agency demonstrates that --
(1)
It completed reviews by the end of the quarter in
at
least
98 percent of all facilities requiring review by
the
end of
the quarter;
(2)
It completed reviews by the end of the quarter in
all
facilities with 200 or more certified Medicaid
beds
requiring review by the end of the quarter; and
(3)
With respect to all unreviewed facilities, the
agency
exercised good faith and due diligence by attempting
to
review
those facilities and would have succeeded but
for
events
beyond its control which it would not have
reasonably
anticipated; or
(b) The agency demonstrates that
it failed to meet the standard
in
paragraph (a)(1) and (2) of this section for
technical
reasons, but met the standard
within 30 days after the close of
the
quarter. Technical reasons are circumstances within
the
agency's control.
Pennsylvania's System for Identifying Individuals Eligible for
Medicaid
Nursing Home Benefits
In Pennsylvania, applications for Medicaid nursing home benefits
are
processed by County Assistance Offices (CAO) throughout the State.
The
CAO staff double-checks the initial eligibility determinations made
by
caseworkers and enters that information into the State's
computer
system. The computer produces a Medical Assistance card for
accepted
applicants and enters those names into the Medical
Assistance
Eligibility File. This information, along with other
necessary billing
information, is provided to the applicant's facility.
The State's
computer system does not produce a master list of Medicaid
recipients
for a particular facility. Thus, in order to identify
patients to be
included in an annual review the State's Inspection of Care
(IOC) team
relies exclusively on billing and eligibility information provided
by
the facility at the beginning of the review.
Argument and Analysis
The Valley Manor and Camp Hill facilities each have less than
200
certified Medicaid beds. See Pennsylvania Exs. C and D. The
parties
agreed that, for purposes of the statutory exceptions, by the close
of
the September 30, 1985 quarter, Pennsylvania had reviewed 98% of
all
facilities requiring review including all facilities with 200 or
more
certified Medicaid beds. However, Pennsylvania admitted that it
failed
to review three Medicaid recipients: Patients E.M. and H.D. in
Valley
Manor Nursing Home and patient G.M.W. in Camp Hill Nursing Home.
2/
A. Patient E.M. (Valley Manor)
Pennsylvania contended that this patient was not subject to review as
she
could not reasonably be identified as a Medicaid recipient by the
review
team. Patient E.M. was determined Medicaid eligible on September
11,
1985. The eligibility information was entered into the State's
computer
system on September 20, 1985. The State review of Valley Manor
occurred
from September 16-19, 1985. Pennsylvania argued that the
relevant date
for determining whether this patient should have been
reviewed was the date
the information regarding her Medicaid eligibility
was entered into the
computer system, September 20.
HCFA insisted that, by the definition of the term "recipient" at 42
CFR
400.203, this individual was a Medicaid recipient at the start of
the
Valley Manor review and thus, subject to review. The regulation
defines
a recipient, unless the context indicates otherwise, as "an
individual
who has been determined eligible for Medicaid." Citing the
quoted
language, HCFA concluded that the operative date for determining if
this
patient should have been reviewed was the date on which she
became
eligible for Medicaid, September 11, rather than the date her name
was
entered into the computer system. HCFA contended that
Pennsylvania's
argument was similar to one rejected by the Board in West
Virginia
Department of Human Services, Decision No. 686, August 21, 1985.
We disagree with HCFA's position on this issue. As we discuss below,
we
do not believe that our holding in West Virginia is controlling
here.
In the context of the annual review require- ment, the issue is
not
whether this patient was a "recipient" for other purposes under
the
regulatory definition of that term. Rather, the issue is whether
the
information regarding this patient's recipient status was
reasonably
available to the facility and the IOC team conducting the
review.
HCFA's reliance on our holding in West Virginia is misplaced. The
West
Virginia decision involved a large number of patients
determined
eligible for Medicaid benefits well before the review challenged
by the
Agency. Based on the regulatory definition of the term
"recipient," we
rejected West Virginia's argument that these individuals were
not
"recipients" because the facilities had not actually received
Medicaid
payments on their behalf. Moreover, the facts of that case
demonstrated
that West Virginia's system for providing current listings of
Medicaid
recipients to its IOC teams was inefficient and ineffective.
West
Virginia, supra at 4-6.
In Idaho Department of Public Welfare, Decision No. 747, April 28,
1986,
we found that a state may not be held responsible for reviewing
a
Medicaid recipient when notice of the patient's status was
not
reasonably available to the IOC team at the beginning of their
review.
In Idaho, the issue centered around Idaho's failure to review a
patient
found eligible for Medicaid benefits two days prior to the start of
an
IOC review. The patient in question in that case did not appear
on
Idaho's computer-generated eligibility list until eight days after
her
application for benefits was approved. Idaho argued that until
the
patient's name appeared on the computer print-out, its IOC team had
no
way of identi- fying the patient for review. We found that
Idaho's
system for identifying Medicaid recipients was reasonable and, in
the
context of that case, had operated efficiently. Further, we
recognized
that there was very little Agency guidance available to states
regarding
preparation of patient lists for annual reviews. We noted
that while
the Medical Assistance Manual encouraged state review teams to
obtain a
current list of Medicaid recipients from the facility prior to
the
review, the Manual did not define the term "current." Moreover,
the
Manual clearly indicated that basic preparation for the review
should
begin more than two days prior to the review. Idaho, supra at
6-7.
The facts here are similar to those in Idaho. Patient E.M.
was
determined eligible for Medicaid on Wednesday, September 11, and
the
annual review of Valley Manor began on the following Monday,
September
16. Thus, Pennsylvania officials had two working days to
process this
information, enter it into the computer, and provide it to the
facility.
Even if Pennsylvania's system had produced a master list of
recipients
for the IOC team's use during review, the facts here lead to
a
conclusion that the State likely could not have processed
this
information in time for the annual review of Valley Manor.
We find the facts surrounding the patient E.M. to be controlled by
our
holding in Idaho. This patient could not have reasonably
been
identified in time for the annual review. Accordingly, we find
that
Pennsylvania was not required to include this patient in the
September
1985 annual review of Valley Manor.
B. Patients H.D. (Valley Manor) and G.M.W. (Camp Hill)
The State initially indicated that, although it had followed its
usual
procedures for identifying Medicaid recipients in need of reviews,
the
personnel at Valley Manor did not notify the IOC team of patient
H.D.'s
Medicaid status. Pennsylvania Brief, p. 3; Pennsylvania Ex.
C. In a
later submission, the State indicated that although this
patient had
previously been a Medicaid recipient, she was in private pay
status
during July and August of 1985 as a result of money she had
received
which would enable her to pay for her care for those two
months. The
decision to place this patient in private pay status to use
up her
"excess assets" had been made "verbally between the business office
of
Valley Manor and the caseworker . . . ." Pennsylvania
Submission,
December 16, 1986; Pennsylvania Tab 3. However, although
the patient
was again a Medicaid recipient in September 1985, the facility
did not
advise the IOC team of that fact. Pennsylvania Submission, December
16,
1986.
Patient G.M.W. was determined eligible for Medicaid on November
19,
1985. The on-site review at Camp Hill occurred from December
23-31,
1985. The facility informed the reviewers that this patient's
status
was "pending." Pennsylvania Brief, p. 4; Pennsylvania Ex.
D. The State
indicated that its "guess is that the facility never
received notice"
that the patient G.M.W. was Medicaid eligible even
though notice was
sent to Camp Hill and the patient was eligible "a month
before the
review." Pennsylvania Submission, December 16, 1986.
The State asserted that its failure to review both these recipients
could
be excused under the technical failings exception to the annual
review
requirement. The State specifically argued that the failure to
review
patient H.D. at Valley Manor could be attributed to record
keeping
errors by the facility.
In past decisions we have analyzed the technical failings exception
to
the annual review requirement. See Delaware Department of Health
and
Social Services, Decision No. 732, March 21, 1986; and
Pennsylvania
Department of Public Welfare, Decision No. 746, April 28,
1986.
Admittedly, there is little guidance about what is properly regarded
as
a technical failing. 3/ While the language of the statutory
and
regulatory history indicates that this exception will apply only
when
the number of violations is relatively insignificant, a finding that
the
technical failings exception applies cannot be based on the number
of
violations alone. The regulation relates the concept of
technical
failings to the reasons for which the reviews were missed.
The heading
of 42 CFR 456.653 refers to "[a]cceptable reasons" and the
provision on
the technical failings exception states a requirement for
"technical
reasons." We have not found either an unexcused failure to
attempt a
review or a review deficient for no apparent reason to be a
technical
failing. We believe the term "technical failings," however
imprecise,
is, nonetheless, a term of art. Thus, we do not believe, as some
states
have argued, that a few unexcused individual reviews missed in
the
overall annual review constitute mere "technicalities" and
therefore
fall within the technical failings exception. Moreover, we
generally
agree with the basic principle underlying HCFA's position that
poor
administration or bad record keeping should not be considered
a
technical failing.
Here, in both instances the State conceded that these individuals
were
part of the universe of patients requiring review. While the
State
initially could not explain how these patients were missed, the
State's
later explanations in response to Board questions have done no more
than
to confirm that these individ- uals should have been
readily
identifiable. These explanations do not provide an acceptable
reason
for missing these patients. The Medicaid recipient status of
patient
H.D. at Valley Manor fluctuated during the summer preceding the
review,
yet she was admittedly in recipient status at the time of the
review.
See Pennsylvania Tab 3. The State provided no evidence that
would
show that her status in the review month was unknown to the facility
or
that somehow it was administratively infeasible for the facility to
have
identified this patient for the IOC team. Regarding patient G.M.W.
at
Camp Hill, there is no dispute regarding her Medicaid eligibility,
the
State having apparently mailed notification of this patient's
recipient
status to the facility approximately one month prior to the
review.
While the facilities may share some of the blame for the failure to
review
these patients, Pennsylvania chose to rely exclusively on the
facilities to
identify patients needing review and must bear the
ultimate responsibility to
conduct satisfactory annual reviews. See
North Carolina Department of
Human Resources, Decision No. 728, March
18, 1986, p. 5. Simply stating
that these recipients fell through the
cracks, as it were, is not a
sufficient basis for us to find that
technical reasons exist qualifying for
the technical failings
exceptions. 4/
Conclusion
Based on our analysis we conclude that patient E.M. in Valley Manor
could
not have reasonably been identified as a Medicaid recipient prior
to the
review. Thus, the IOC team was not required to include her in
the
review of Valley Manor. However, since we have determined
that
Pennsylvania's failure to review
patient H.D. at Valley Manor and patient G.M.W. at Camp Hill was not
due
to technical reasons, we sustain the disallowance in the entire
amount
of $300,812.33.
________________________________
Judith
A. Ballard
________________________________
Norval
D. (John) Settle
________________________________
Cecilia
Sparks Ford Presiding Board Member
1. The regulation at 42 CFR 456.652(b)(3)
provides that a facility
which is not reviewed in the quarter during which a
review is required
continues to require review in subsequent quarters until a
valid review
is performed. Thus, this disallowance was taken for the
last two
quarters of 1985.
2. In order to protect the privacy of the patients,
we refer to them
by their initials.
3. From the legislative history we know only that the
"technical
failings" exception would cover the situation where the state
had
conducted reviews in most but not all facilities by the close of
the
showing quarter, but completed the remaining reviews within
"several
weeks." See 44 Fed. Reg. 56336, October 1, 1979.
4. The State also argued that the small number of
missed reviews
bears testimony to its good faith and due diligence and the
efficiency
of its system. However, as the State is aware, we have
previously
concluded that the statute and regulations state a general
requirement
for an annual medical review of each Medicaid patient in each
facility.
See Delaware, supra; and Pennsylvania, supra. The nature of
the
circumstances here indicates that there may be a flaw in
Pennsylvania's
system of relying exclusively on information provided by the
facilities,
so that, even though the Agency's survey (which generally would
examine
only a small proportion of the State's facilities) uncovered only a
few
violations, the likelihood is that more violations exist. Thus,
the
failure to review these two patients may not be dismissed as a
mere
technicality solely because of their statistical insignificance in
the
universe of patients requiring review.