DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Illinois Department of Public Aid
Docket No. 87-112
Decision No. 930
DATE: January 7, 1988
DECISION
The Illinois Department of Public Aid (State) appealed a determination
by
the Health Care Financing Administration (HCFA, Agency),
disallowing
$47,186.97 1/ claimed under Title XIX of the Social
Security Act (Act)
for the quarter ending March 31, 1987 for services
rendered in
institutions for mental diseases (IMDs). The disallowance
was taken
pursuant to section 1903(g)(1) of the Act. That section
provides
generally for the reduction of a state's federal medical
assistance
percentage for long-stay services unless the state shows that it
had an
effective program of medical review of the care of patients in
long-term
care facilities (including IMDs) "whereby the professional
management of
each case is reviewed and evaluated at least annually by
independent
professional review teams."
The State admitted here, and indicated on its quarterly showing, that
an
annual review of one IMD performed within the quarter in question
failed
to meet federal requirements since the review team did not include
a
physician as required by 42 C.F.R. 456.602(c). The State
asserted,
however, that it had reviewed the IMD with a properly constituted
review
team within 30 days of the end of the quarter and that it qualified
for
one or more of the exceptions to the annual review requirement,
under
section 1903(g)(4) of the Act. 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 the failure to review any remaining
facilities
was a "technical failing." HCFA argued that the State did
not qualify
for this exception because its failure was due to poor
administration
and because the State had not met applicable requirements for
what
should be included in a showing.
As explained below, we find on the basis of the record here that the
State
demonstrated that the "technical failing" exception applies to the
State's
failure to timely review one IMD, and that the State's showing
satisfied the
applicable requirements in the Agency's action
transmittal. The record
provides no support for HCFA's contention that
the failure was due to poor
administration. Accordingly, we reverse the
disallowance.
Applicable Authority
Section 1903(g)(4) of the Act provides two exceptions to the
annual
review requirement: one where a State demonstrates "good faith and
due
diligence" and one "for failings of a technical nature only."
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:
The Administrator will find an agency's
showing satisfactory,
even if it failed
to meet the annual review requirements . .
.
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 could 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 by the close
of the
quarter for technical reasons, but met the standard
within
30 days after the close of the
quarter.
To clarify the elements necessary for a showing, including a showing
that
one of the exceptions was met, HCFA issued Action Transmittal (AT)
79-61 on
July 2, 1979. See Agency's appeal file, Ex. 1.
Background
The basic facts of this case are uncontested. The State's
quarterly
showing, submitted to the Agency on April 23, 1987, included a
cover
letter which stated that a review of the H. Douglas Singer
Mental
Health and Development Center (Singer facility) was conducted on
March
30, 1987. The cover letter then stated that "as a result of
an
administrative oversight, a physician did not participate in
this
review." The letter further stated that a review which included
a
physician had been completed on April 13, 1987. 2/
The Agency, by disallowance letter dated May 29, 1987, notified the
State
that it was taking the disallowance because the State did not
include an
acceptable reason for not reviewing the Singer facility with
a properly
comprised review team for the period in question.
On appeal to the Board, the State provided undisputed evidence to
support
the following explanation of why the initial review team did not
contain a
physician, as required. The supervisor of the region in which
Singer
was located was hired after the previous review of Singer in
March
1986. Singer is the only IMD in this region; the other
long-term
care facilities are types of facilities which are properly reviewed
with
teams which do not include a physician. The supervisor overlooked
the
need for a physician on the Singer review team, but this oversight
was
noted by the State's quality control section and corrected as soon
as
possible. 3/
The State maintained that it met both exceptions to the Act. 4/
As
discussed below, we find that the State demonstrated that it met
the
technical failings exception of the Act, and we, therefore, reverse
the
disallowance without discussing the "good faith and due
diligence"
exception.
A. The State Provided
Evidence To Show That It Met
the
Technical Failings Exception
The Agency contended that the State cannot take advantage of
the
"technical failing" exception because the reason given by the State
does
not amount to a "technical failing" which would excuse full
compliance.
The Agency submitted that a state has the responsibility to have
a
sufficient number of review teams so that onsite inspections can be
made
at appropriate intervals in each facility. See 42 C.F.R.
456.605.
Moreover, the Agency argued that a state has at least a year to plan
and
fulfill review requirements. Thus, the Agency concluded that, where
the
State's only explanation for its inability to have adequate
staff
available is an "administrative oversight," the failure can only
be
considered poor administration and cannot be treated as a
technical
failing. The Agency asserted that, unlike cases where a
single patient
is missed, the State in this case missed an entire facility
because it
failed to include the required member of the review team due to
its own
employee's failure to be familiar with the applicable
regulations.
The State maintained that it satisfied the technical failings exception
as
previously interpreted by the Board. The State argued that it aimed
for 100%
compliance and missed the mark only through administrative
oversight.
Further, the State asserted that its situation fell within
the definition of
"technical reasons." The State maintained that the
reason for the
improperly composed team was within the control of the
State: an
administrative oversight occurred as to the requirements for
the composition
of the team. Further, the State asserted that, contrary
to the Agency's
argument, it had a sufficient number of review teams
available; however, it
was not until after the end of the quarter that
the State discovered that the
wrong type of review team had been used.
The State explained that it conducts
only a handful of reviews at mental
hospitals and that, in the region in
question, the Singer facility is
the only mental hospital. In previous
decisions, the Board has examined
the "technical failings" exception.
See, e.g., Delaware Dept. of Health
and Social Services, DGAB No. 732 (1986);
Utah Dept. of Health, DGAB No.
843 (1987); and Arkansas Dept. of Human
Services, DGAB No. 923 (1987).
The Board noted that there is little
guidance on what constitutes a
technical failing. 5/ Based on the
legislative history of the
exceptions, however, the Board concluded that
Congress intended that a
state should aim for 100% compliance.
Therefore, the Board has found
that 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 or 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.
We find that the State has demonstrated here that the reason it failed
to
conduct an adequate review of Singer was due to a singular occurrence
rather
than a systemic problem with its system. While this was a
situation
within the control of the State's supervisor, this was her
first experience
with review of an IMD. Further, the State presented
evidence to show
that it properly trained all supervisors. The evidence
shows that the
supervisor attended a statewide training session on April
28 and 29, 1986,
which focused on the annual on-site reviews (called
inspections of
care). See State's appeal file, Ex. 8. The supervisor
attended
additional seminars on June 10, 1986 and March 3, 1987. See
State's
appeal file, Exs. 9 and 10. The supervisor also received an
Inspection
of Care Manual. See State's appeal file, Ex. 11. We also
note
that the State's own quality control section discovered the error
and
corrected it within two weeks of the first review, on April 13,
1987.
We find, therefore, that the State has demonstrated that it aimed
for 100%
compliance and missed the mark only through an administrative
oversight,
which it discovered and corrected.
While this is not exactly the same as a case where a single patient
is
missed, the exceptions are clearly available where a whole facility
is
missed. Moreover, the State here did not completely fail to
review
Singer in a timely manner; the sole defect was in the composition of
the
review team. The Agency provided no evidence to support a
conclusion
that the State has not generally met its responsibility to ensure
that
review teams are properly composed.
Thus, we conclude that the State demonstrated that it met the
statutory
and regulatory requirements for the technical failings
exception.
B. The State Complied
With the Instructions in
Action
Transmittal 79-61
We also conclude, contrary to the Agency's argument, that the State
did
sufficiently comply with the instructions in AT 79-61 for what has to
be
on a quarterly showing. The relevant part of AT 79-61 provides:
V. FACILITIES FOR WHICH NO REVIEW WAS PERFORMED
. . . States must include in
addition to the facility listings
previously required, lists of all facilities, by level of
care,
that were due for an annual review
by the close of the quarter
but did not
receive it. This includes facilities that
were
reviewed in the 30 day period after
the close of the quarter. .
. .
Attach a statement, signed by the Director of the
single
State agency explaining the
reasons for the missed review(s). If
the
State believes the "exception clauses" of
section
1903(g)(4)(B) apply, 1) explain
the attempts the State made to
perform
the reviews and 2) attach a copy of the State's
original
review team schedule showing
the planned dates of review. The
statement should include a full explanation of the
circumstances
which caused the facility
or facilities not to be reviewed on
time. (emphasis in original)
The Agency argued that the State's quarterly showing did not meet
the
requirements of AT 79-61 because the Director's statement explaining
the
reason for the missed review failed to provide support for the
omission
and failed to attach a full explanation of the circumstances
which
caused the facility not to be timely reviewed. Further, the
Agency
asserted that the Director failed to explain the attempts the State
made
to perform the full review, or to attach a copy of the State's
original
review team schedule showing the planned dates of review.
Additionally,
the Agency stated that the quarterly showing did not include
the
separate required listing in addition to the required certification
of
the facilities due for an annual review but not receiving it in
the
showing quarter.
Finally, the Agency argued that here, as in Ohio Dept. of Human
Services,
DGAB No. 824 (1987), the State could not seek to take
advantage of the
exception on the merits where the state provided only a
general explanation
of why a review was missed. In Ohio, the State
simply said that "a
reviewer left State service at a point which made a
timely review
impossible." Id. at p. 6. The Agency also argued that
similar
explanations have been found inadequate by the Board in District
of Columbia
Dept. of Human Services, DGAB No. 833 (1987), and Michigan
Dept. of Social
Services, DGAB No. 885 (1987).
The State maintained that it had complied with all the requirements of
AT
79-61. The State submitted that in order to comply with the
requirement
for a copy of the State's original review team schedule
showing the planned
dates of review, it had specified when the review
with the improperly
composed team was conducted and when the review with
the properly composed
team was conducted, and that it had provided a
copy of the schedule of
reviews for the region. See State's appeal
file, Ex. 7. Finally, the
State argued that AT 79-61 does not require a
state to prove its case;
it states only that a full explanation
"should" be provided. The State
said that it had provided such
explanation when it stated that a physician
was not included because of
an administrative oversight. Moreover, the
State pointed out that it
had provided additional background as to the
circumstances surrounding
the mistake in its initial brief to the Board, but
that the quarterly
showing's explanation of "administrative oversight" still
best
characterizes the error.
In the decisions cited by the Agency, the Board has required that
states
provide sufficient information, such as the type described in the
action
transmittal, to support contentions that the exceptions apply.
The
Board found that a state must, at a minimum, provide
sufficient
information for HCFA to determine whether the exceptions
apply. Here,
contrary to what HCFA argued, the record shows that the
State did
provide a separate listing of facilities which had not been
reviewed.
State's appeal file, Ex. 1. Moreover, in the context of what
happened
here, the information regarding the scheduling of the reviews
was
sufficient. While the reference to an "administrative oversight" in
the
cover letter is somewhat cursory, it is not inaccurate and was
supported
by other information indicating the manner in which the State had
failed
to meet the annual review requirement, i.e., by first performing
a
review with an improperly composed team. 6/
In its brief before the Board, the State provided a consistent, but
more
complete explanation regarding why it missed performing a proper
review,
as well as supporting evidence. Thus, this case is
distinguishable from
the decisions cited by the Agency. In Ohio, the
unreviewed facility was
listed with facilities for which reviews had been
completed within the
showing quarter, even though the date given for the
review showed that
it took place approximately two weeks late. The
showing contained no
reason for the late review, nor any indication that the
State wished to
take advantage of the statutory exceptions. In District
of Columbia,
the appellant conceded that its quarterly showing did not
provide any
notification of the facilities that were not reviewed by the end
of the
quarter, nor did the showing indicate any reason why the facilities
were
not reviewed. Further, the Board found that the appellant's
explanation
before the Board was extremely broad and did not provide such
specifics
as when the reviews were originally scheduled, what key
persons were
replaced, when the reviewers were replaced, and what attempts,
if any,
were made to reschedule timely reviews. The circumstances were
similar
in Michigan. The appellant had stated that bad weather
conditions had
prevented timely reviews. HCFA challenged the
appellant's assertion and
included evidence to show that the weather was mild
during the period.
The Board stated:
A reasonable response would have
rebutted that evidence by
providing the
type of information required by the
action
transmittal. But Michigan
did not provide any explanation or
evidence to rebut HCFA. Michigan relied solely on
legal
arguments concerning the scope and
application of the exceptions.
Thus, we
must infer that Michigan was unable to present
any
evidence which would support its
factual contentions. . . .
Thus, we conclude that the Agency's reliance on these decisions
is
misplaced and that the State here provided sufficient information
to
show that the exception applies.
Conclusion
Based on the foregoing, we reverse the Agency's disallowance.
________________________________
Cecilia
Sparks Ford
________________________________ Norval
D.
(John) Settle
________________________________ Judith
A.
Ballard Presiding Board Member
1. The parties agreed that this amount should be
recalculated based
on additional information submitted by the State.
However, in light of
the decision reached in this case, the recalculation is
unnecessary.
2. The State's cover letter noted two facilities (the
Singer
facility and Chester Mental Health) which had not received valid
reviews
by the end of the quarter, but which had been or would be
properly
reviewed within 30 days of the close of the quarter. The cover
letter
explained that the State had not learned until after the end of
the
quarter that one Medicaid patient had been admitted to the
Chester
facility. The showing indicates that a review of the Chester
facility
had been performed on 6/30/86, which could mean that a review was
not
due during the quarter ending 3/31/87 in any event. HCFA's
disallowance
related to only the Singer facility.
3. While HCFA stipulated that the State had reviewed
98% of all
facilities (including all facilities with 200 or more beds by the
end of
the quarter), HCFA nonetheless argued that the State did not meet
the
threshold requirement for the exception because this exception
is
available only where a state does not meet the 98%/200 bed standard
by
the end of the quarter. The Board has previously rejected
this
argument. In Pennsylvania Dept. of Public Welfare, DGAB No. 746
(1986),
at pp. 9-10, we commented on the technical failings exception.
We said
a state could qualify for the exception if:
the state meets the 98%/200 bed standard
within 30 days of the
close of the
quarter (possibly even meeting the 98%/200
bed
standard before the close of the
quarter) and there were
circumstances
within the state's control, i.e.,
technical
reasons, which prevented 100%
of the required reviews from taking
place during the quarter. (emphasis added)
4. The State maintained that it met the technical
failing exception
as interpreted by this Board. Further, the State
argued that it met the
good faith exception as interpreted by the court in
Delaware Division of
Health and Social Services v. United States
Department of Health and
Human Services, Civil Action No. 86-233 CMW (D. Del.
July 9, 1987). In
overturning the Board's decision, the court in
Delaware states that the
word "technical" connotes a failing of a procedural
nature. 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.
5. 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).
6. In Delaware, the Agency had argued that Agency
action
transmittals established a precondition making the statutory
exception
unavailable to a state unless established on the face of the
quarterly
showing. The Board rejected this argument, stating that the
practical
effect of such a precondition would be to deny the states access to
the
statutory exceptions, contrary to congressional intent, and that
the
action transmittals did not require