DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Arkansas Department of Human Services
Docket No. 87-44
Decision No. 923
DATE: December 4, 1987
DECISION
The Arkansas Department of Human Services (State) appealed a
determination
by the Health Care Financing Administration (HCFA, Agency)
disallowing
$43,062.53 in federal Medicaid funds claimed by the State
under the Social
Security Act (Act) for the calendar quarter ending
December 31, 1986.
The disallowance was taken pursuant to section
1903(g)(1) 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 . . .
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."
HCFA found that Arkansas failed to conduct a satisfactory annual review
of
patients at one skilled nursing facility, Rose Care Center of
Little
Rock. Arkansas admitted that this facility was due for a review
but
argued that it met the requirements for one or more of the exceptions
to
the annual review requirement. One of those exceptions applies where
a
state demonstrates that it reviewed 98% of all facilities (including
all
facilities with 200 or more beds) within 30 days of the end of
the
showing quarter and that its failure to review any remaining
facilities
was a "technical failing." HCFA did not deny that the
threshold 98%/200
bed standard was met here but argued that the reasons the
State did not
review Rose Care did not constitute a "technical failing."
As explained below, we find on the basis of the record here that the
State
demonstrated that the "technical failing" exception applies; the
record
provides no support for the Agency's position that the
circumstances
constitute poor administration or bad recordkeeping.
Accordingly, we reverse
the disallowance.
Facts
The following facts are undisputed:
o Rose Care Center of Little Rock, a skilled nursing facility
(SNF),
was due for an annual on-site review, called an inspection of
care
(IOC), by the end of the quarter ending December 31, 1986.
o The State had received several complaints concerning the quality
of
care at Rose Care. The State performed on-site surveys on
October 6
and October 28, 1986. As a result of the surveys, the State
notified
the facility first on October 7, 1986 and then on October 28, 1986
that
it was terminated as a Medicaid provider effective October 29,
1986
because the facility was out of compliance with the conditions
of
participation for SNFs.
o The complaint surveys performed in October, 1986 consisted of
a
thorough review of the care of the patients; in the course of
events,
the State survey team looked at every Medicaid patient in the
facility
as well as their records to determine if the direct patient care
was
sufficient. Deposition of Jim Brown, pp. 10-12. The State surveyors
did
not complete the IOC form. Ibid., p. 12.
o Rose Care appealed the termination. Although the State had
intended
to cut off Medicaid funding for the facility, the facility obtained
a
State court order staying the termination action until the
State's
Long-Term Care Advisory Board held a full evidentiary hearing.
The
State thought that, as a result of the court order, any payment made
to
the facility would be solely from State funds. Deposition of Jim
Brown,
pp. 21-23.
o During this period, the State was aware that the IOC review
would
normally have been performed for Rose Care in November or
December. The
State did not consider the patients in the facility to be
Medicaid
patients, however, in light of the State's termination
action.
Moreover, the State's surveys and termination action had
caused
hostility between the State and the facility, and the responsible
State
official thought that no further entry into the facility should be
made
until the hearing had been held and a decision issued.
o A hearing was held on December 11, 1986. State officials
thought
that a decision would be rendered before the end of the year, but
the
decision (which upheld the termination) was not issued until
February
16, 1987.
o With its showing for the quarter ending December 31, 1986, the
State
submitted a letter (dated January 22, 1987) explaining that an IOC
for
Rose Care had not been conducted because the facility was terminated.
1/
The letter indicated also that a hearing on this matter had been
held
December 11, 1986, but a decision had not yet been issued.
o An Agency employee spoke with the State on February 10,
1987
concerning the termination of the facility, indicating that the
showing
might not be satisfactory because the review of Rose Care had not
been
performed. The Agency employee indicated he would need to check
this
further with higher level officials. Since the State had not
received
further information from the Agency, it conducted an IOC review of
Rose
Care on February 14-15, 1987 in order to avoid any penalty for
a
subsequent quarter for failure to conduct such a review.
Analysis
Section 1903(g)(4) of the Act provides an exception to the annual
review
requirement "for failings of a technical nature only." 2/ This
section
is implemented by the regulation at 42 C.F.R. 456.653 (1986),
titled,
"Acceptable reasons for not meeting requirements for annual
on-site
review." This regulation states: "Technical reasons are
circumstances
within the [state] agency's control." Section
456.653(b).
The Agency acknowledged in this proceeding that there was "little
written
guidance provided to States defining a technical failing."
Agency's brief, p.
6. HCFA argued somewhat conclusorily that "since a
State may not aim
for less than 100 percent compliance with the annual
review requirements and
we do not interpret poor administration or bad
recordkeeping as a technical
failing, we do not agree that the State
meets the 'technical failing'
exception." Agency's brief, p. 6, citing
Pennsylvania Dept. of Public
Welfare, DGAB No. 746 (1986).
The Board has previously analyzed the technical failings exception to
the
annual review requirement. See, e.g., Utah Dept. of Health,
DGAB
No. 843 (1987); Delaware Dept. of Health and Social Services, DGAB
No.
732 (1986). In those decisions, the Board concluded that
Congress
intended that a state should aim for 100% compliance and, therefore,
an
unexplained failure to attempt a review or a review deficient for
no
apparent reason would not qualify as a technical failing. While
the
Board agreed with the general principle underlying HCFA's position
that
poor administration and bad recordkeeping should not be considered
a
technical failing, the Board also made it clear that not every
failure
on the part of a state can be considered poor administration or
bad
recordkeeping. This would render the regulation meaningless since
a
technical failing is defined as "circumstances within the
State's
control." In Utah, the Board stated that the concepts of
poor
administration and bad recordkeeping connote a systemic
problem
resulting in failings on a regular basis (or at least more than
a
singular occurrence) in a state's system of reviews. 3/
After reviewing the facts here in light of these previous decisions,
we
find for the following reasons that the State demonstrated that
the
"technical failings" exception applies here:
o The State did not fail to identify initially that this facility
was
due for a review in the quarter.
o Under the circumstances here, there was some question about
whether
the State would need to perform a review, given that the State
was
acting to terminate the facility from the Medicaid program.
HCFA
regulations provide that a terminated facility should be reviewed if
the
State intends to claim federal funding for patients in that
facility.
42 C.F.R. 456.652(c). The evidence shows, however, that the
State did
not initially intend to claim federal funding after the end of
October.
Even after the State court stayed the termination action, requiring
the
State to continue payments to the facility, the State considered
making
the payments solely with State funds. 4/ Also, the State
apparently
thought the hearing decision would be issued before the end of
the
quarter. Thus, the State's failure here was in failing to
recognize
before the end of the quarter that, since the termination decision
had
not yet been affirmed, the State should protect its ability to
claim
federal funding for the patients by performing a review.
o During the quarter the State had performed on-site examinations
of
the quality of care provided to individual patients in the
facility,
even though the State had not prepared reports on patients in the
format
required for an IOC. While the Agency suggested, in examining
State and
Agency officials by deposition, that a certification survey may
not
always look at all individual patients, as an IOC review does,
the
State's uncontroverted testimony shows that these particular surveys
did
include observations of each of the Medicaid patients in Rose Care
and
examination of their medical records. Deposition of Jim Brown,
pp.
10-12. The team performing the surveys included registered nurses
who
also perform IOC reviews. Appellant's Appeal file, Exs. E and
I. Thus,
the major substantive requirements for an IOC review were
met. See 42
C.F.R. Part 456, Subpart I.
o The State did not simply disregard the potential need for an
IOC
review, but made its judgment to delay the review in the context of
its
overall relationship with the provider. The State reported
the
situation to the Agency at least as early as its quarterly showing.
o There is no evidence that this was a systemic problem
constituting
poor administration or bad recordkeeping.
We also note that the Agency's apparent reliance on the
Board's
Pennsylvania decision is misplaced. Pennsylvania did not meet
the
98%/200 bed standard, but Arkansas did.
Thus, we conclude that the record provides no support for the
Agency's
position, and, thus, no disallowance should be imposed for failure
to
review the Rose Care Center of Little Rock.
Conclusion
For the reasons stated above, we reverse the disallowance of $43,062.53.
_____________________________ Cecilia
Sparks
Ford
_____________________________ Alexander
G.
Teitz
_____________________________ Judith
A.
Ballard Presiding Board Member
1. The State provided a deposition from a responsible
State official
who stated that he had contacted a HCFA official as early as
November,
1986 concerning the termination of Rose Care and the State's
question
about whether a review of this terminated facility was
necessary.
Deposition of Jim Brown, pp. 13-17. HCFA provided a
deposition from
the HCFA official who disputed this allegation.
Deposition of James
Oge, p. 7. We do not need to resolve this dispute
in making our
decision here.
2. From the legislative history we know only that the
"technical
failings" exception would cover the situation where a 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 S. REP. No. 453, 95th Cong., 1st Sess. 41
(1977).
3. A recent decision by the federal District Court
for the District
of Delaware overturning the Board's decision in Delaware
states that the
word "technical" connotes a failing of a procedural
nature. Delaware
Division of Health and Social Services v. United
States Dept. of Health
and Human Services, Civil Action 86-233 CMW (D. Del.,
July 9, 1987).
While we do not agree with the court's decision in every
respect, we do
not think our decisions on technical failings are inconsistent
with this
view.
4. Although it appears that the State did ultimately
claim federal
funding for payments to Rose Care pending the final
termination
decision, the disallowance here was not based on a finding that
those
payments were unallowable. Rather, the Agency proposed a
reduction in
the rate paid for all long-stay services at the SNF level for
the