Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Colorado Department of Social Services
DATE: January 28, 1992
Docket No. 91-132
Decision No. 1297
DECISION
The Colorado Department of Social Services (State) appealed a
determination by the Health Care Financing Administration (HCFA)
disallowing $94,049 in federal financial participation (FFP) claimed
under Title XIX (Medicaid) of the Social Security Act (Act). HCFA
disallowed FFP in expenditures for personal care services (PCS) provided
by the spouses of recipients from July 1, 1985 through June 30, 1988
under the State's Home and Community Based Services Waiver for the
Elderly, Blind and Disabled (waiver). HCFA determined that FFP was not
available for PCS provided by spouses.
We find that the State reasonably interpreted federal regulations
to
permit it to cover spouses as providers by adopting an
alternative
definition of PCS in its waiver and that the State was entitled
to rely
on its interpretation in the absence of notice of a
contrary
interpretation by HCFA. We further find that the State did in
fact
adopt an alternative definition of PCS in its waiver that
permitted
spouses as providers and that HCFA approved the definition.
Therefore,
for the reasons explained in more detail below, we reverse
the
disallowance in full.
Background
1. Applicable authority
Medicaid generally provides federal funding for medical assistance
to
needy individuals. A waiver authorizes a state to provide
certain
services, not usually considered medical assistance, as a less
costly
alternative to long-term care services in an institutional
setting. In
order to provide this option, Congress authorized the
Secretary to "by
waiver provide that a State plan . . . may include as
'medical
assistance' under such plan payment for part or all of the cost of
home
or community-based services (other than room and board) approved by
the
Secretary which are provided pursuant to a written plan of care
to
individuals" [who would otherwise need institutional care].
Section
1915(c)(1) of the Act. Such waivers are for a renewable
three-year
term. Section 1915(c)(3). Personal care services are
specifically
included under waiver authority. Section
1915(c)(4)(B).
Personal care services are defined by regulation as follows:
Unless defined differently by a State agency for
purposes of a
waiver . . . "personal care
services in a recipient's home" means
services prescribed by a physician in
accordance with the recipient's
plan of treatment and provided by an
individual who is --
(1) Qualified to provide the services;
(2) Supervised by a registered nurse; and
(3) Not a member of the recipient's family.
42 C.F.R. . 440.170(f) (1989) (unchanged during the period at issue).
In
1987, HCFA issued guidance on considerations applicable to specific
services
provided under waiver, which stated in regard to PCS as
follows:
1. Personal care services cannot be covered
when they are provided
to recipients by their
spouses or to minor recipients by their
parents.
2. Services provided by relatives or friends,
except as noted in
item 1, may be covered only if
the relatives or friends meet the
qualifications for providers of care, there
are strict controls to
assure that payment is made to the relative or friend
as providers only
in return for specific services rendered, and there is
adequate
justification as to why the relative or friend is the provider of
care .
. . .
State Medicaid Manual (SMM), . 4442.3B (July 1987).
2. Factual background
Colorado submitted its initial request for a waiver under section
1915(c)
of the Act on July 9, 1982. State Exhibit (Ex.) A. HCFA
granted
the waiver for a three-year period ending June 30, 1985. PCS
were among
the waivered services proposed in the request and were
defined as --
services furnished to a recipient in his/her home as
indicated in
the recipient's plan of care and
rendered by a qualified personal
care provider. Services provided shall
include but not be limited to:
(1) Assistance
with personal hygiene, dressing, eating
and
ambulatory needs
of the individual.
(2) Performing
household tasks incidental to the
person's
health care
needs or otherwise necessary to contribute to
maintaining the individual at
home.
(3) Transporting
or accompanying individual so that
he/she
may receive
services as indicated in the plan of care.
State Ex. A at 22.
Service providers for PCS were required to be qualified and to
meet
training requirements and standards set forth in an appendix to
the
waiver request. Id. at 26 and 65 (Appendix D). The standards
refer to
"responsible personnel management, including . . .
recruitment,
selection, retention, and termination" and training to be
provided for
PCS providers. Id.
The waiver request does not address explicitly whether spouses or
other
family members could qualify as PCS providers. However,
State
legislation signed in June 1983 expressly authorized payment for
PCS
provided by a family member. See HCFA Brief (Br.) at 6; HCFA Ex.
6
(discussing Colorado Senate Bill No. 149). State
regulations
subsequently included spouses in the definition of family.
State Ex. D.
The State's waiver was extended in May 1985 for an additional
three
years. The record does not reflect any discussion between HCFA
and the
State concerning spousal PCS at the time of the 1985 extension of
the
State's waiver but does contain extensive correspondence on the
subject
from December 1986 to July 1991 (including the
disallowance
determination). HCFA Exs. 1, 2, 3, 4, 6, 7, 8, 11, 12, 13,
14; State
Ex. D.
Analysis
1. The State relied on a reasonable interpretation of
federal
regulations and adopted an alternative definition which
permitted
spouses as PCS providers.
The dispute here results in part from two different interpretations of
the
language in 42 C.F.R. . 440.170(f), which defines PCS as, among
other things,
provided by an individual who is not in the recipient's
family "[u]nless
defined differently . . . for purposes of a waiver."
The State asserted that
this provision means that adoption of a
different definition in a waiver
superseded the federal definition in
its entirety. State Br. at
4. HCFA asserted, however, that the
restriction on PCS providers was a
part of the State's definition,
unless the State clearly defined differently
which family members may be
providers. HCFA Br. at 10.
When a regulation is subject to more than one reasonable reading, we
have
previously held that "we cannot hold a state accountable for an
agency policy
interpretation that is not compelled by the plain meaning
of a statutory or
regulatory provision unless the state has received
actual notice."
Maine Medicaid Fraud Control Unit, DAB No. 1182 at 12
(1990). We
therefore consider whether HCFA's interpretation was
compelled by the plain
meaning, and whether the State had notice of
HCFA's interpretation.
The regulation was ambiguous and could be interpreted reasonably in
either
way. HCFA's interpretation was not unreasonable, since states
seeking waivers
are generally required to be clear about the scope of
their waiver
requests. See, e.g., Oregon Dept. of Human Resources, DAB
No.
1030 at 11 (1989)(and cases cited therein). However,
HCFA's
interpretation requires reading in a provision, which does not appear
on
the face of the regulation, that a state must respond to each element
of
the definition in its waiver or be considered to have adopted each
by
default. At a minimum, the wording of the regulation is not clear
in
requiring express rejection of each element of the federal definition.
The plain language, which simply states the meaning of PCS unless
"defined
differently," is in accord with the State's position that the
regulation only
applies in the absence of any alternative definition.
Absent notice to the
contrary, the State reasonably relied on its
alternative definition as
approved and substituted in toto for the
federal requirements.
HCFA has pointed to no notice which it provided to the State prior to
its
approval of the 1985 waiver request that it would treat all elements
of the
regulatory definition as adopted unless the State expressly
provided
otherwise in the waiver. 1/ Further, HCFA's actions during the
review
process did not give notice to the State that its proposed
definition of PCS
had failed to address specific elements of the
regulation and that HCFA would
therefore treat these elements as adopted
into the State's definition. In
reviewing the State's waiver proposal,
HCFA did not inquire what position the
State meant to take on spousal
PCS or other elements of the federal
definition as to which the waiver
request was silent (such as the requirement
for supervision by a
registered nurse). HCFA did not condition or limit
its approval to
preclude spousal PCS. The State relied on HCFA's
approval in incurring
obligations to providers. In these circumstances,
HCFA can fairly be
bound by the State's PCS definition which it approved and
which does not
include any restriction of family providers.
Our reading of the regulation to permit the State to redefine PCS as
it
did is also supported by the structure of the waiver process
itself.
The states are encouraged to seek new ways of
preventing
institutionalization by suspending many federal
restrictions. We have
recognized that "states are given substantial
independence in the
operation of a program under a waiver . . . . The
waiver regulation
establishes a process for obtaining a waiver without
setting detailed
program requirements." Florida Dept. of Health and
Rehabilitative
Services, DAB No. 1100 at 11 (1989). The State had to,
and did, clearly
describe what services would be provided and what safeguards
would be in
place. However, no detailed requirements demanded that the
State
specify which provisions it would not include in its program or why
it
selected particular elements in its program definitions and not
others.
The State's definition included some elements from the
federal
regulation. For example, PCS services under both definitions
must be
provided in the home, under a plan of care, and by a qualified
provider.
The State included more detail than the federal regulation as to
the
nature of the particular services included and the training and
other
standards required of providers. The State did not include
requirements
for physician prescription, registered nurse supervision of
all
providers, and exclusion of family member providers. 2/ The silence
of
the waiver definition as to some provisions in the federal
regulation
can be read as a selection by the State of certain elements
and
rejection of others. It was not unreasonable for the State to
assume
that it had addressed the federal regulation in its waiver request
and
had proposed an alternative definition.
HCFA argued that the original waiver request could not have
included
coverage for spousal PCS, since the State law authorizing spousal
PCS
was not passed until after HCFA approved the waiver. However, the
delay
in passage of the State law does not affect whether the waiver
as
approved was broad enough to permit the State to pay for such
services
once authorized. The State may well have waited to enact
authorization
until it had received approval for federal participation in the
costs.
In any case, the payments at issue occurred during the second
waiver
period. The 1985 renewal was approved by HCFA after the State
law had
been in effect for some time.
HCFA also contended that the provisions for training and standards for
PCS
providers misled reviewers by implying that providers would
be
professionals. HCFA Br. at 11-12. However, these standards can
also be
read as substitute safeguards, making less important the limitations
to
non-family members. The record includes an affidavit from the
State
manager for community health programs to the effect that "all
providers
of [PCS] were required to meet the same certification
standards. No
different standards were applied if the provider was also
the spouse of
the recipient." State Ex. E. Thus, the record
indicates that the
standards were applied by the State to family members, as
an alternative
safeguard to restricting them by definition from serving as
providers.
It is not even clear that HCFA consistently claimed that the
federal
definition remained in force as to each element about which the
State
request is silent. HCFA does not appear to have objected to
the
omission of the physician's prescription or registered nurse
supervision
requirements. State Br. at 4. The disallowance letter
acknowledged
that waiver "services need not conform to the specific
service
definitions used for non-waivered services," but nevertheless
insisted
that "the general principle established under this
[regulation]
regarding family members being excluded from providing [PCS]
also
applies" to services under a waiver. State Ex. D at 1.
We conclude that the State reasonably relied on its interpretation of
the
federal regulations to permit a different definition of PCS and that
the
definition in the State's waiver effectively authorized spousal PCS
by
substituting for the federal definition. If some general
principles
rather than the regulation itself underlie a prohibition of
spousal PCS,
we must look elsewhere for a reason not to apply the definition
of PCS
provided in the State waiver. We turn now to HCFA's arguments
that
spousal PCS cannot be provided under a waiver, even if the
waiver
request clearly included such services in the PCS definition.
2. The State was not prevented from paying for spousal PCS under
its
waiver by any federal law or policy during the period at issue.
Section 4442.3B of the SMM is the only federal policy
expressly
prohibiting spousal PCS under approved waivers. As we noted,
SMM .
4442.3B (July 1987) does not govern this case, since it was not
issued
in time to provide notice to the State. In any event, the State
has
since revised its waiver program for later periods to conform with
the
requirements.
Nevertheless, HCFA argued that the State could not cover spousal PCS,
even
if it had clearly requested to do so in its proposed waiver,
because Congress
did not intend to pay spouses for services they could
provide to recipients
themselves. HCFA Br. at 8. However, HCFA could
not identify anything in
the waiver authority provisions or the
legislative history prohibiting
spousal PCS from coverage under waivers.
As HCFA itself states, "the purpose
of the [waiver] legislation was to
permit States to waive the definition of
covered Medicaid services to
include certain nonmedical support services" to
prevent
institutionalization. HCFA Br. at 8. Nothing in this
purpose is
inconsistent with permitting spouses to provide PCS when the
recipient
spouse may otherwise require institutionalization. The only
legislative
history to which HCFA alluded says nothing about spouses as
providers,
but sets forth an expectation that states with waivers will
find
"innovative and cost-effective means" to provide services. S. Rep.
No.
139, 97th Cong., 1st Sess. 481, reprinted in 1981 U.S. Code Cong.
&
Admin. News 396, 748. Clearly, the essential goal was to
reduce
Medicaid costs by obviating the need for institutionalization.
Using
spouses to provide PCS may well have served this goal.
HCFA's reliance on the general principle that "Medicaid cannot pay
for
services that are provided free of charge" is also misplaced.
First,
these services would not necessarily be provided "free of charge"
but
for the waiver. Spouses may well have had to resort to
placing
recipients in nursing homes, if other sources of PCS were not
available
or if they had to take outside employment absent payment for their
PCS
services. Second, HCFA pointed to no policy guidance stating
this
principle which would require applying it here to override a good
faith
effort by a State to define PCS based on a reasonable interpretation
of
federal regulations, in the context of a waiver program inviting
states
to innovate. State Ex. D at 2.
HCFA also argued that payments to spouses as providers are tantamount
to
direct payments to recipients, because the spouse's income would
be
available to the recipient in eligibility determinations. HCFA Br.
at
9, citing 42 C.F.R. . 435.822(b) and Oregon at 4. This argument
may
support HCFA's current interpretation but does not persuade us that
that
interpretation is mandated. Nothing in the regulation or Board
decision
cited by HCFA requires considering payments to spouses for
services
properly provided under the terms of a waiver as impermissible
direct
payments to recipients. Whether these payments constitute
income
impacting on the recipient's eligibility is not an issue in this
case.
Conclusion
For the reasons discussed above, we reverse the disallowance in full.
_____________________________
Judith
A. Ballard
_____________________________
Cecilia Sparks Ford
____________________________
Donald
F. Garrett Presiding Board
Member.1.
HCFA pointed to SMM . 4442.3B,
which
limits a state's ability to
define
PCS differently in the area of
family member providers by prohibiting payment
to spouses or parents and
placing certain restrictions on other
relatives. Our decision does not
undermine this policy interpreting the
extent to which states may
redefine PCS under waivers. However, SMM .
4442.3B was not issued until
July 1987, too late in the disallowance period
for the State to have
altered its waiver. In obtaining approval of its
1988 waiver renewal,
the State changed its law and regulations in order to
comply with HCFA's
conditions. See HCFA Br. at 6; HCFA Exs. 8, 9,
10. Thus, the State
had notice for prospective periods that waivers
contemplating spousal
PCS would not be approved, but no such notice was given
to the State
prior to the 1985 waiver renewal approval. (Similarly,
the
correspondence between HCFA and the State cannot be considered
timely
notice of HCFA's policy for the 1985 renewal period.)
2. In its discussion of service providers in the waiver, the
State
indicated its intention to contract for PCS only from home
health
agencies in those cases where "physicians prescribe such
service
treatment and supervision of a registered nurse is necessary." State
Ex.
A at 26 (emphasis in original). The State requested the option in
other
situations to contract with other sources, including individuals.
Id.
Plainly, the State thought that it had redefined PCS not to
require
physician prescription and registered nurse supervision in all cases
by
its omission of these requirements in its
definition.