Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: California Department of Health Services
DATE: June 15, 1992
Docket No. 91-151
Decision No. 1338
DECISION
The California Department of Health Services (California or
State)
appealed a disallowance by the Health Care Financing
Administration
(HCFA) of $5,690,544 in federal financial participation (FFP)
claimed
under Title XIX (Medicaid) of the Social Security Act (Act) for
the
period August 1, 1987 through February 28, 1989. HCFA reported that
the
claims were for ancillary and physician services provided to
individuals
ages 22-64 in Institutions for Mental Diseases (IMDs) who
were
ineligible for Medicaid services under section 1905(a) of the Act.
California did not dispute that services were provided to individuals
ages
22-64 in IMDs. Instead, it argued that the prohibition on FFP
for
services to persons in IMDs applies only to inpatient hospital,
nursing
facility and intermediate care facility services, and not to
the
ancillary and physician services at issue here. For the
reasons
discussed below, we agree with HCFA that section 1905(a) of the Act
bars
FFP for any services to individuals in IMDs who are ages
22-64.
Consequently, we sustain the disallowance in full.
General Background
Title XIX of the Act authorizes federal grants to states to aid
in
financing state programs which provide medical assistance and
related
services to needy individuals. Section 1905(a) of the Act
enumerates
various services for which payment qualifies as "medical
assistance."
They include:
(1) inpatient hospital services (other than
services in an
institution for mental diseases); . . .
(4)(A) nursing facility services (other than services in
an
institution for mental diseases) for individuals 21 years of
age
or older; . . .
(14) inpatient hospital services and nursing facility
services
for individuals 65 years of age or over in an institution
for
mental diseases; (15) services in an intermediate care
facility
for the mentally retarded (other than in an institution
for
mental diseases) . . . . 1/
Following the last of the enumerated paragraphs describing
services
covered by Medicaid is language which provides that "medical
assistance"
does not include payments "with respect to care or services for
any
individual who has not attained 65 years of age and who is an
individual
in an institution for mental diseases" (except for
inpatient
psychiatric hospital services for individuals under age 21).
2/ This
prohibition on payment for services provided to individuals
ages 22-64
in an IMD is known as the general IMD exclusion.
Analysis
The Act
California argued that the IMD exclusion does not apply to ancillary
and
physician services because the parenthetical language permitting
payment
for services other than in an IMD appears only in paragraphs (1),
(4),
and (15) of section 1905(a) of the Act with respect to
inpatient
hospital, nursing and intermediate care facility (ICF)
services.
California noted that the parenthetical does not appear in the
other
numbered paragraphs of section 1905(a) authorizing payment for
other
services, including the ancillary and physician services at issue
here.
The absence of the parenthetical from the paragraphs relating
to
ancillary and physician services, California contended, means that it
is
entitled to FFP in the costs of such services when provided
to
individuals ages 22-64 in IMDs.
California's position conflicts with the plain wording of the general
IMD
exclusion appearing after the last numbered paragraph in section
1905(a) of
the Act. That wording bars payments with respect to any care
or
services for individuals ages 22-64 in IMDs. The Board has
previously
held that the general IMD exclusion in effect renders such
persons ineligible
for all Medicaid care or services by reason of their
institutional status,
and does not itself distinguish between types of
services. Joint
Consideration: Admission/Discharge Issue, DAB No. 436,
at 7 (1983);
Petition for Clarification of Decision No. 436, DAB No. 535
(1984).
This holding was based on the statutory language and on HCFA's
longstanding
regulations treating the exclusion not only as a limit on
services, but as a
limit on eligibility. 42 C.F.R. .. 435.1008,
441.13(a)(2). HCFA's
reading of the IMD exclusion was also expressly
stated in the preamble to
regulations removing the partial-month
eligibility provision at issue in the
cited Board decisions:
The language at section 1905(a) of the Act
specifically excludes
FFP for any services provided
to . . . patients under age 65 in an
institution for
mental diseases . . . The plain language of
the
statute thus clearly precludes FFP for all such
services.
50 Fed. Reg. 13196, 13197 (1985).
Under the partial month eligibility provisions at former 42 C.F.R.
.
435.1008(b), and our holdings above, states could receive FFP
in
non-institutional services to individuals ages 22-64 in IMDs during
the
month of admission to the IMD, so long as such services were covered
in
the state plan. Its removal eliminated the only circumstance in
which
FFP was available for any services to individuals ages 22-64 in IMDs.
3/
The preamble acknowledged that some commenters felt that there was
no
basis for eliminating FFP for noninstitutional services provided
to
persons in IMDs; their view is similar to California's argument that
the
IMD exclusion does not apply to ancillary and physician
services.
HCFA's response to those comments was entirely consistent with
its
position in this appeal:
We believe the statute (section 1905(a) of the Act)
clearly
justifies these regulations. The
language of this provision
prohibits FFP for all
services to individuals in certain types of
institutions (with specified exceptions).
50 Fed. Reg. 13196, 13197 (1985).
The specified exceptions relate to the age of the individual, not to
the
nature of the services as being "ancillary" or
otherwise
"non-institutional."
HCFA argued that California's interpretation that FFP is available
in
services other than inpatient hospital, nursing facility and
ICF
services provided in an IMD renders the general IMD
exclusion
meaningless, and therefore violates the canon of statutory
construction
that effect should be given to all provisions of a statute so
that no
part is rendered superfluous or insignificant. 4/ California
did not
dispute HCFA's position that this canon is a basic principle
of
statutory construction, but argued that applying the general
IMD
exclusion to bar FFP for all services to individuals ages 22-64 in
IMDs
would make the parenthetical restrictions in sections 1905(a)(1),
(4),
and (15) of the Act unnecessary and superfluous. The absence of
any
reference to IMDs in the paragraphs describing other categories
of
services, California asserted, reveals congressional intent that
the
only services to be excluded from medical assistance when provided
to
persons ages 22-64 in IMDs are inpatient hospital, nursing facility
and
ICF services.
California's argument ignores a compelling reason for the presence of
the
parenthetical language in sections 1905(a)(1) and (4) of the Act, in
addition
to the general IMD exclusion. Specifically, the parenthetical
language
distinguishes inpatient hospital and nursing facility services,
which section
1902(a)(10)(A) of the Act requires states to provide, from
those same
services when provided to individuals over 65 years of age in
IMDs pursuant
to section 1905(a)(14) of the Act, for which coverage is
optional. 5/
In Joint Consideration: Admission/Discharge Issue the
Board discussed
the history of the parenthetical language, which was
included in the original
Medicaid law enacted as part of the Social
Security Act Amendments of 1965,
Public Law 89-97. The Board observed
that the relevant Senate report
explained that the addition of the
parenthetical phrase would help make it
clear that it is optional for a
state to include services for the aged in
tuberculosis or mental
institutions. 6/ See S. Rep. No. 404, 89th
Cong., 1st Sess., pt. 1, at
80-81 (1965). Congress added the
parenthetical to distinguish between
two types of covered services, mandatory
institutional services for all
eligible individuals, and optional
institutional services for the aged
in IMDs. Joint Consideration, at
8.
The parenthetical in section 1905(a)(15) serves a similar purpose. If
a
state opted to cover ICF services and the coverage was not qualified
by
the parenthetical "other than in an IMD," the state could be viewed
as
choosing to cover ICF services in an IMD to individuals over age
65
(since the general IMD exclusion does not apply to such
individuals).
Congress intended, however, that a state be allowed to cover
services in
an IMD to individuals over age 65 only if the state met the
condition
set out in section 1902(a)(21) of the Act. Thus, states must
separately
choose to cover ICF services other than in an IMD and ICF and
other
institutional services to individuals over age 65 in an IMD.
Accordingly, we conclude that the parenthetical language in
sections
1905(a)(1), (4), and (15) of the Act is not rendered superfluous
or
insignificant by HCFA's reading of the general IMD exclusion
that
follows the numbered paragraphs in section 1905(a).
The IMD exclusion and long-term care
California maintained that limiting the IMD exclusion to only
inpatient
hospital, nursing and ICF services is consistent with
congressional
intent that Medicaid not pay for long-term care for the
mentally ill, as
provision of this care had historically been the states'
responsibility.
Since the ancillary services at issue here are not part of
long-term
care services traditionally provided by state mental
hospitals,
California argued, they were not meant to be excluded from
Medicaid.
Thus, California reasoned, the exclusion was intended by Congress
to
refer only to services reimbursed by the inpatient per diem rate,
which
includes long-term care services, and not to separately
reimbursable
services provided in or out of the IMD, such as ancillary and
physician
services. Consistent with this view, California also asserted
that
providing ancillary services to individuals in IMDs is supported by
the
Medicaid regulations, since they do not include those services in
the
definition of long-term care.
We find that the reference to "long-term care" in the legislative
history
does not support limiting the IMD exclusion to only the sort of
services that
are encompassed by an inpatient per-diem rate, including
those that are
long-term in nature. Legislative history cannot be
resorted to for the
purpose of construing a statute contrary to its
plain and unambiguous
terms. See 73 Am. Jur. 2d. Statutes, .. 151, 170,
175; Singer,
Sutherland on Statutory Construction, .. 48.01, 72.04.
Here, California's
reliance on the reference to long-term care in the
legislative history is
misplaced because it ignores the wording of the
statute itself which excludes
coverage for care or services for any
individual who is a patient in an IMD
and not covered by the exceptions
for the aged or children, irrespective of
the duration of the care. See
Pennsylvania Dept. of Public Welfare, DAB
No. 1042 (1989). Our
determination that the State cannot reasonable
rely on the reference to
long-term care in the legislative history is also
supported by the
following considerations:
o The key point in the legislative
history is that Congress did
not want to authorize Medicaid funding for care
which was a traditional
state responsibility. S. Rep. No. 404, 89th
Cong, 1st Sess., pt. 1, at
144-46 (1965); Schweiker v. Wilson, 450 U.S. 221,
101 S.Ct. 1074 (1980).
However, California did not argue that the states'
responsibility to pay
for services in institutions for the mentally ill has
been restricted
only to those services directly associated with long-term
care; rather,
states have traditionally paid for all care and services
for
institutionalized individuals. To permit FFP in the payments for
the
services at issue would simply shift costs from the State to the
federal
government with no corresponding increase in services to
Medicaid
beneficiaries. See Pennsylvania Dept. of Public Welfare at
6-7. The
intent of Congress that states bear costs that have
traditionally been
their responsibility is not violated by excluding FFP for
ancillary
services when provided to individuals institutionalized in an
IMD.
o The Board addressed the legislative
history's reference to
long-term care for the mentally ill in Pennsylvania,
where we upheld the
disallowance of FFP in the costs of emergency medical
services for
individuals ages 22-64 in IMDs. Pennsylvania asserted that
the
reference to long-term care in the legislative history meant
that
Congress did not intend to exclude emergency services in IMDs.
The
Board noted, however, that Congress specifically applied the
exclusion
not only to nursing facility services (which are normally
identified
with long-term care), but also to inpatient hospital services,
which
would include acute care on a short-term basis. Pennsylvania, at
6-9.
Thus, the IMD exclusion was intended to encompass services other
than
merely those that are long-term in nature.
Based on these considerations, we conclude that the IMD exclusion was
not
intended to distinguish among types of services in IMDs, and was not
aimed
exclusively at long-term care services or services paid under an
inpatient
per diem rate. Rather, the focus of the IMD exclusion is on
the
institutional status and age of the individual.
Because the IMD exclusion is not limited only to services associated
with
long-term care, California's position that the IMD exclusion does
not
apply to ancillary services is not supported by the fact that the
regulatory
definition of long-term care does not include ancillary
services. See
42 C.F.R. . 447.251. The regulatory definition also does
not include
inpatient hospital services, which California acknowledged
are covered by the
IMD exclusion, and thus does not serve as a guide for
applying the IMD
exclusion. Moreover, the definition is a limited one,
for the purposes
of the regulatory subpart on payment methods in which
it appears.
California also quoted language from the legislative history of Public
Law
92-603, which provided an exception to the IMD exclusion for persons
under
21, as cited in Kantrowitz v. Weinberger, 388 F. Supp. 1127
(1974):
Under present medicaid law, reimbursement for
inpatient care of
individuals in institutions for
mental disease is limited to those
otherwise
eligible individuals who are 65 years of age or
older.
Matching for outpatient care for mentally ill
children, as well as
needy adults, is currently
available under Title XIX.
S. Rep. No. 1230, 92d Cong., 2d Sess. 280 (1972).
California asserted that this description indicates that long-term
care,
which it accepts as covered by the IMD exclusion, does not
include
ancillary and physician services. However, we conclude that
the
statement in the quoted report that outpatient care is available
for
mentally ill adults should not be read as meaning that such care --
or
other care not long-term in nature, such as ancillary services -- may
be
provided to mentally ill adults when they are in IMDs. This is
evident
from the language immediately following the portion cited by
California:
The committee supports use of these funds where
appropriate and
believes that outpatient treatment
in the patient's own community
should be used
wherever possible. However, in some cases,
inpatient care in an institution for mental diseases is necessary.
The committee amendment would therefore authorize
Federal matching
under medicaid for eligible
children, age 21 or under, receiving
active care and
treatment for mental diseases in an accredited
medical institution.
Id. at 280-81.
The cited language treats outpatient psychiatric care and inpatient
care
in an IMD as mutually exclusive, and indicates that
outpatient,
community-based care is the preferable alternative. Thus,
the statement
quoted by California that outpatient care was allowable for
mentally ill
adults does not mean that outpatient or other care is allowable
when
provided to residents of IMDs.
Other issues
California also maintained that barring FFP for ancillary and
physician
services to individuals in IMDs conflicts with the requirement
of
section 1902(a)(10) of the Act that states provide Medicaid to
all
categorically eligible recipients, including recipients of SSI.
The
State asserted that excluding FFP in ancillary and physician
services
for SSI recipients in IMDs would contravene Congress's intent that
SSI
beneficiaries as a group be provided with adequate health care,
by
preventing them from receiving the same level of services available
to
non-IMD SSI recipients. HCFA's refusal to provide FFP for
SSI
recipients ages 22-64 in IMDs leaves this group without adequate
health
care, California argued, as there is no guarantee that they will
receive
services other than room, board and mental health services.
Section 1902(a)(10) of the Act, which provides that "medical
assistance"
must be made available to categorically eligible recipients of
other
forms of aid, including SSI recipients, must be read in conjunction
with
section 1905(a) of the Act, which specifically excludes from
the
definition of "medical assistance" any care or services to persons
ages
22-64 in IMDs. The obligation to provide medical assistance
to
categorically eligible individuals does not extend to services that
are
not included in the definition of medical assistance. Thus,
the
requirement that medical assistance be made available to SSI
recipients
does not mean that care and services must be made available to
those SSI
recipients ages 22-64 in IMDs. We agree with HCFA that the
fact that
states may be required to provide medical assistance to recipients
of
certain kinds of assistance does not override the explicit
congressional
determination that payments for treatment of individuals in
IMDs do not
qualify as medical assistance.
Conclusion
We conclude that the general IMD exclusion in section 1905(a) of the
Act
does not distinguish among services, and prohibits Medicaid payment
for
the ancillary and physician services that California provided
to
individuals ages 22-64 in IMDs. Accordingly, we uphold the
disallowance
in this case.
Donald F. Garrett
Norval D. (John) Settle
Judith A. Ballard Presiding Board Member
1. We have quoted the relevant provisions as in effect at the time
of
our decision and cited by California in its appeal. During the
time
that the disallowed services were provided, section
1905(a)(4)(A)
referred to "skilled nursing facilities" instead of nursing
facilities;
section 1905(a)(14) included "intermediate care facility
services"; and
section 1905(a)(15) referred to "intermediate care facility
services"
instead of services in an intermediate care facility for the
mentally
retarded. The changes were effected by Public Law 100-203, .
4211, 101
Stat. 1330 (1987), and are applicable to services rendered on or
after
October 1, 1990.
2. Section 1905(a)(16) of the Act provides that medical
assistance
includes payments for inpatient psychiatric services for
individuals
under age 21. Section 1905(h) states that this includes
inpatient
psychiatric services provided prior to the date an individual
attains
age 22, where the individual had been receiving services in the
period
immediately preceding the date of attaining age 21. For ease
of
reference, we refer in this decision to the IMD exclusion as
covering
individuals ages 22-64 years in IMDs. We note that there has
been no
assertion that this disallowance includes payments for services
to
persons 65 years of age or older in IMDs, or for inpatient
psychiatric
hospital services for individuals under age 21.
3. The U.S. Supreme Court, in finding that an ICF could be an
IMD,
noted that services performed for the mentally ill may be covered
under
the Act, provided the services are performed in a hospital, a
skilled
nursing facility, or an ICF that is not an IMD. Connecticut v.
Heckler,
471 U.S. 524, 105 S.Ct. 2210 (1985). Thus, it is not the
nature of the
services provided that invokes the IMD exclusion.
4. We base our decision here primarily on the plain wording of
the
general exclusion. To the extent that resort to construction aids
is
necessary, however, we agree with HCFA that they support its
view,
rather than California's.
5. Section 1902(a)(10)(A) of the Act requires that medical
assistance
provided to eligible individuals under state plans must include at
least
the care and services listed in paragraphs (1) through (5), (17)
and
(21) of section 1905(a). IMD services for individuals over
age 65 are
thus excepted from mandatory coverage.
6. As in effect at the time of Joint Consideration, both
the
parenthetical language and the general IMD exclusion also applied
to
institutions for the treatment of tuberculosis; this reference
was
removed effective July 18, 1984 by section 2335(f) of Public Law
No.