DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Alabama Medicaid Agency
Docket No. 88-51
Decision No. 975
DATE: August 5, 1988
DECISION
The Alabama Medicaid Agency (State) appealed a determination by the
Health
Care Financing Administration (Agency) disallowing $170,149 in
federal
funding claimed by the State under the Medicaid program of the
Social
Security Act (Act) for the quarter ending December 31, 1987.
The
disallowance was taken pursuant to section 1903(g)(1) of the Act,
which
provides for reduction of a state's federal medical
assistance
percentage of amounts claimed for a calendar quarter for
long-stay
services 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."
The Agency alleged that Alabama's inspection of care reviews in
two
intermediate care facilities (ICFs) that primarily care for
mental
patients, S. D. Allen ICF and Alice M. Kidd ICF, were invalid
because
the review teams did not contain a physician. Alabama asserted
that the
Agency had misapplied its regulations and that the composition of
the
review teams met the Agency requirements.
For the reasons discussed below, we conclude that the position the
Agency
advanced here conflicts with the plain meaning of the Agency's
own
regulations on review team composition and otherwise lacks a
reasonable
basis. Accordingly, we reverse the disallowance.
It is undisputed that the inspection teams in issue were comprised
of
three registered nurses. State Brief (Br.), p. 7. The State
indicated
that while a physician did not accompany the review team, a
staff
physician for the Alabama Medicaid Agency was available for
consultation
with the team if necessary. Id. Additionally, after
the teams had
completed their in-person reviews, they met with this physician
to
analyze the team's findings. Id. The Agency's basis for
this
disallowance was its assertion that under its regulations and
the
statute, each inspection team should have included a physician while
on
site at the ICFs.
Agency regulations at 42 C.F.R. 456.602 provide the
substantive
requirements concerning the composition of review teams in the
various
facilities participating in the Medicaid program. This
regulation is
the regulation a State would look to in determining the
requirements
relating to the composition of a review team. The
regulation provides
as follows:
Section 456.602 Inspection team.
(a) A team, as described in this section . . .
must
periodically inspect the care and services
provided to
recipients in each facility.
(b) Each team conducting periodic inspections must
have
a least one member who is at [sic] physician
or
registered nurse and other appropriate health and
social
service personnel.
(c) For an IMD other than an ICF, each team must have
a
psychiatrist or physician knowledgeable about
mental
institutions and other appropriate mental health
and
social service personnel.
(d) For an ICF that primarily cares for mental
patients,
each team must have at least one member who knows
the
problems and needs of mentally retarded
[sic]
individuals.
(e) For an institution for the mentally retarded or
persons
with related conditions, each team must have
at least one
member who knows the problems and needs
of mentally retarded
individuals.
It is undisputed that the facilities at issue are ICFs that
primarily
care for mental patients. Consequently, the relevant
subsections of
this regulation are subsections (b) and (d). The plain
meaning of these
subsections is that, for an ICF that primarily cares for
mental
patients, the inspection team may have either a physician or
a
registered nurse. Subsection (b) states the general rule which
permits
a state to use either a physician or a nurse on a review team.
This
rule would apply unless another subsection specifically provides
a
stricter requirement. Subsection (c) provides that, for an IMD
other
than an ICF, there must be a psychiatrist or physician
knowledgeable
about mental institutions. Subsection (d) provides that,
for ICFs that
primarily care for mental patients, each team must have at
least one
member who knows the problems and needs of mental patients.
The clear
effect of all three subsections discussed is that an ICF that
primarily
cares for mental patients need not have a physician or psychiatrist
as a
member of the inspection team, but must have one member of the team
who
knows the problems of mental patients.
The Agency argued that section 456.602 was "silent" as to whether
an
ICF/IMD must have a physician on the team, and that
section
456.654(a)(7), which is discussed below, was therefore
controlling.
Agency Br., pp. 3-4. The Agency, however, focused entirely
on
subsections (c) and (d) of section 456.602 and ignored the effect
of
subsection (b), which sets out the general rule permitting either
a
physician or a nurse. Furthermore, subsection (c), which refers to
IMDs
and requires a psychiatrist or physician on the team,
specifically
excludes ICFs from its scope. Thus, there is simply no
reasonable basis
to interpret the wording of section 456.602 to require a
physician on a
team reviewing an ICF/IMD. Correspondingly, there is no
reasonable
basis to conclude that the regulation setting the
substantive
requirements for state review teams is simply "silent" as to
the
requirements for this facility.
This conclusion is supported by the history of the regulations.
The
rules concerning inspection teams in ICFs have been in effect
since
January 1974 without substantive change. The regulations in
effect
between 1974 and 1978 addressed the composition of inspection teams
in
ICFs under a separate subsection and clearly did not require a
physician
on the team for any type of ICF, including an institution for
mental
diseases. 42 C.F.R. 450.24(a)(2), promulgated at 39 Fed. Reg.
2220
(January 17, 1974). In regulations subsequently promulgated
on
September 29, 1978 and October 1, 1979, the Agency consolidated
the
rules concerning inspection teams for skilled nursing facilities
(SNFs),
ICFs and IMDs. 43 Fed. Reg. 45176 (September 29, 1978); 44 Fed.
Reg.
56333 (October 1, 1979). In the 1979 rulemaking, the Agency
implemented
a statutory amendment made by Public Law 95-142 that allows
states to
have either a physician or a registered nurse on review teams for
SNFs.
Even though the Agency at that time specifically required that SNFs
that
were IMDs still must have a physician or a psychiatrist on the
team,
presumably to implement the Agency's interpretation of
section
1902(a)(26) discussed below, it retained without change in the very
same
section the rule that permitted ICFs that are IMDs to have either
a
physician or a registered nurse. See 44 Fed. Reg. 56335 (1979).
The Agency's primary argument on appeal was that the rules concerning
the
showing the State must make to demonstrate that it met the medical
review
requirements suggested that a physician had to be on the review
team of an
ICF that primarily cares for mental patients. The regulation
cited by
the Agency, 42 C.F.R. 456.654(a)(7), lists what must be
included in the
State's quarterly showing under section 1903(g). It
provides:
For each on-site review in a mental hospital, skilled
nursing
or intermediate care facility that primarily cares for
mental
patients, or inpatient psychiatric facility, list the
name and
qualifications of one team member who is a physician; .
. . .
This provision does in fact require a state to list as part of its
showing
the name of a physician even in the case of an ICF that
primarily cares for
mental patients. However, section 456.654(a)(7) need
not be read to conflict
with Subpart I since a state could have a
physician on its review team even
for an ICF that primarily cares for
mental patients and, if so, would be
required to make that known in its
showing. Under section 456.602 in
Subpart I, a state is not obliged to
have a physician on an ICF review team,
but has the option to include
either a physician or a registered nurse.
Section 456.654(a)(7),
therefore, can be interpreted to complement the
substantive rules in
Subpart I by requiring a physician to be listed for the
facilities at
issue in those instances where a state has exercised its option
to
include a physician on the team.
We also think that this interpretation of the nature and effect of the
two
provisions, sections 456.602 and 456.654, is reasonable in view of
the fact
that a state is dependent on the Agency's regulations for
instructions as to
how to proceed in completing its medical reviews.
There would be no apparent
purpose in taking a reduction under the
medical review requirements when the
Agency's primary regulation setting
out the substantive requirements permits
the State to proceed as it did.
We also reject the Agency's argument that its position was supported
by
section 1902(a)(26) of the Act. That section provides that a State
plan
for medical assistance must--
if the State plan includes medical assistance for
inpatient
mental hospital services, provide--
* * *
(B) for periodic inspections to be made in all
mental
institutions within the State by one or more
medical review
teams (composed of physicians and
other appropriate health
and social service
personnel) of the care being provided . .
. ;
The Agency argued that an ICF that primarily cares for mental
patients
would be a "mental institution" within the meaning of this provision
and
therefore must include a physician on its medical review team.
We have several problems with the Agency citation of this provision as
a
basis for the disallowance.
o This interpretation would be directly contrary to the
rules
concerning inspection teams for ICFs in 42 C.F.R 456.602, which
have
been in effect since 1974. Aside from its arguments relating to
section
456.654, the Agency provided no evidence, either in the
regulations
concerning the substantive medical review requirements or in
their
preambles, that it had ever so interpreted section 1902(a)(26)(B)
in
this manner.
o While the Agency conceivably has the discretion to interpret
section
1902(a)(26) as covering ICFs that primarily care for mental patients,
it
clearly also could view section 1902(a)(31) as the controlling
statutory
provision. Section 1902(a)(31)(B) requires annual medical
reviews in
SNFs and ICFs generally and specifies that review teams need only
be
composed of a physician or a registered nurse. Certainly
whether
section 1902(a)(26) would apply is not free of all doubt since ICFs
that
primarily care for mental patients arguably might be viewed as
not
providing "inpatient mental hospital services" and thus would not
be
"mental institutions" within the meaning of that provision. As
the
State noted in its brief, ICFs that primarily care for mental
patients
might reasonably be distinguished from SNFs/IMDs and mental
hospitals by
virtue of the level of care that is provided to the
patients. State Br.
p. 13.
o When the Agency implemented the 1979 statutory amendment
permitting
SNF teams generally to be composed of a physician or a registered
nurse,
it required in section 456.602(c) that IMDs other than ICFs be
reviewed
by teams composed either of a physician or a psychiatrist.
(See the
regulatory history of section 456.602 discussed above.) The
Agency's
special rule for IMDs other than ICFs presumably reflected the
Agency's
view concerning the scope of section 1902(a)(26). In any
event, the
Agency at that time retained the rule in section 456.602 that
required
teams in ICFs that primarily care for mental patients to be composed
of
only a physician or a registered nurse.
o Contrary to what the Agency argued, the Agency's action
transmittal
implementing the statutory change allowing either a nurse or a
physician
to lead the review team in SNFs adds further support for the
State's
position that a physician is not required for ICFs that primarily
care
for mental patients. See HCFA Action Transmittal 79-61 (June 13,
1979),
pp. 3-4, Agency Exhibit 13. While the action transmittal is
not
altogether free of ambiguity, a careful reading suggests that the
only
facilities where a physician is still required to be on the review
team
are mental hospitals and SNFs designated as IMDs. The
action
transmittal makes no special reference to ICFs that primarily care
for
mental patients, and leaves the impression that such facilities need
not
have a physician on their review team but rather need only meet
the
requirements for ICFs generally.
Conclusion
For the foregoing reasons, we find that the Agency's position
conflicts
with the plain meaning of its regulations and otherwise lacks
a
reasonable basis. Accordingly, the disallowance is reversed.
________________________________ Judith A. Ballard
________________________________ Cecilia Sparks Ford
________________________________ Donald F. Garrett
Presiding
Board