Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: New Jersey Department of Human Services
DATE: June 16, 1992
Docket Nos. 90-118, 90-238, 91-32, 91-94, 91-100, and 91-140
Audit Control No. A-02-88-01029
Decision No. 1339
DECISION
The New Jersey Department of Human Services (New Jersey or State)
appealed
disallowances by the Health Care Financing Administration
(HCFA) of
$7,354,765 in federal financial participation (FFP) claimed by
the
State. The claims were for Medicaid reimbursement for services
provided
to individuals aged 22 to 64 at Hudson County Meadowview
Hospital
Intermediate Care Facility (Meadowview ICF) during the period
October 1, 1986
through March 31, 1991. Section 1905(a) of the Social
Security Act
(Act) excludes from the definition of "medical assistance,"
for which
Medicaid funding is available, care or services provided to
individuals who
are in an institution for mental diseases (IMD). Based
on an Inspector
General audit report covering the period October 1, 1986
through December 31,
1988, HCFA found that Meadowview ICF was an IMD.
HCFA regulations define an IMD generally as having the "overall
character"
of an institution established and maintained primarily for
the care and
treatment of persons with mental diseases. HCFA has also
issued
guidelines for gathering evidence on a facility's overall
character.
Here, HCFA presented no evidence that Meadowview ICF was
licensed as a mental
health facility or that it advertised or held
itself out as such; the State's
evidence showed instead that Meadowview
ICF was established to be a typical
ICF. HCFA relied primarily on
evidence from a review of patient records
performed by psychiatrist
consultants as part of the audit and on testimony
by one of these
consultants. After examining patient records, the
consultant's
testimony, and the expert testimony presented by the State,
however, we
find that the State's evidence shows it reasonably evaluated
the
majority of the patients at Meadowview ICF as being
institutionalized
during the audit period because of their physical disorders
or because
of organic problems HCFA has exempted from classification as
mental
disorders. HCFA's consultant's testimony was on the whole less
credible
than the testimony by the psychiatrist who testified for the
State. In
particular, the consultant's record review was flawed since
he did not
follow HCFA's guidelines; his review of the records focused
on
historical diagnoses of the patients, rather than on whether
the
patients were receiving or required inpatient treatment for a
mental
disorder during the audit period. Moreover, HCFA's evidence
related to
other audit findings either did not support those findings or
lacks
probative value concerning the character of Meadowview ICF during
the
audit period.
Thus, we find that the record does not support a determination
that
Meadowview ICF was an IMD during the audit period. Accordingly,
we
reverse the disallowance for that period. Since HCFA relied for
its
subsequent disallowances entirely on the findings for the audit
period,
we also reverse the disallowances for the subsequent periods.
I. Statutory and Regulatory Background
Title XIX of the Act provides grants to states for medical assistance
to
eligible low-income persons. Section 1905(a), in defining
"medical
assistance," specifically excludes payments for services to
"any
individual who has not attained 65 years of age and who is a patient
in
an institution for . . . mental diseases." This general
prohibition
appears in language following the list of covered services.
The
exclusion also appears as the parenthetical "(other than services in
an
institution for mental diseases)" with respect to certain
institutional
services, including (during the audit period) ICF services.
There are two exceptions to the IMD exclusion. Section
1905(a)(14)
provides for inpatient hospital services and nursing facility
services
for individuals over age 65 in IMDs, and section 1905(a)(16)
provides
for inpatient psychiatric hospital services for individuals under
age
21, as defined in section 1905(h).
Since 1988, the term "institution for mental disease" has been defined
at
section 1905(i) as a hospital, nursing facility, or other institution
of more
than 16 beds, that is primarily engaged in providing diagnosis,
treatment, or
care of persons with mental diseases, including medical
attention, nursing
care, and related services. The longstanding
regulatory definition of
an IMD, in effect during the entire audit
period, is --
an institution that is primarily engaged in providing
diagnosis,
treatment or care of persons with mental diseases,
including
medical attention, nursing care, and related services.
Whether
an institution is an institution for mental diseases
is
determined by its overall character as that of a
facility
established and maintained primarily for the care and
treatment
of individuals with mental diseases, whether or not it
is
licensed as such. . . .
42 C.F.R. .435.1009 (1986-1990). 1/
In December 1982, HCFA issued section 4390 of the State Medicaid
Manual
(SMM), which explained to state Medicaid agencies HCFA's guidelines
for
determining whether a facility is an IMD. This section was revised
in
1986. The Manual lists ten factors to be used cumulatively to
determine
the facility's overall character. The factors listed in
section 4390
are:
1. The facility is licensed as a psychiatric facility for
the
care and treatment of individuals with mental diseases;
2. The facility advertises or holds itself out as a
facility
for the care and treatment of individuals with mental
diseases;
3. The facility is accredited as a psychiatric facility by
the
JCAH;
4. The facility specializes in
providing
psychiatric/psychological care and treatment. This may
be
ascertained through review of patients' records. It may also
be
indicated by the fact that an unusually large proportion of
the
staff has specialized psychiatric/psychological training or
by
the fact that a large proportion of the patients are
receiving
psychopharmacological drugs;
5. The facility is under the jurisdiction of the State's
mental
health authority;
6. More than 50 percent of all the patients in the
facility
have mental diseases which require inpatient treatment
according
to the patients' medical records;
7. A large proportion of the patients in the facility have
been
transferred from a State mental institution for
continuing
treatment of their mental disorders;
8. Independent Professional Review teams report a
preponderance
of mental illness in the diagnoses of the patients in
the
facility (42 C.F.R. 456.1);
9. The average patient age is significantly lower than that
of
a typical nursing home;
10. Part or all of the facility consists of locked wards.
Section 4390 sets forth how patients should be classified as
mentally
diseased or physically diseased for purposes of Guideline 6.
The impact of the IMD exclusion is that FFP is denied for services
to
individuals under age 65 (except for those under age 22 and
receiving
inpatient psychiatric services) who are in an IMD. 42 C.F.R.
.435.1008
and 42 C.F.R. .441.13.
II. Factual Background
On the Meadowview campus, there are three separate facilities: an ICF
unit
with 440 beds, a skilled nursing facility with 110 beds and an
acute
psychiatric care unit with 174 beds. 2/ The State's Division of
Mental
Health and Hospitals monitors the acute psychiatric care unit
only. It
does not have jurisdiction over the ICF portion of Meadowview.
Meadowview ICF
was first certified for Medicaid participation in 1977.
From February 1987 to October 1989, the Office of the Inspector
General,
Office of Audit (OIG) conducted a survey and audit of skilled
nursing
and intermediate care facilities in New Jersey to determine if any
of
these facilities were also IMDs. The OIG reviewed cost data,
licensing
and program information at the State's Department of Human
Services,
Division of Medical Assistance and Health Services and the New
Jersey
Department of Health and selected Meadowview ICF for review. The
OIG
hired Forensic Medical Advisory Services (FMAS) to review
patient
records. FMAS reviewers visited Meadowview ICF on July 26-27,
1988;
August 6-8 and 20-22, 1988; and September 10-11, 1988. The FMAS
review
team consisted of two psychiatrists and a medical records
specialist.
As a result of the OIG/FMAS findings, HCFA determined that Meadowview
ICF
met the following guideline factors from section 4390 of the SMM:
Guideline 4 - Meadowview ICF specializes in
providing
psychiatric/psychological care and treatment;
Guideline 6 - More than 50% of all the patients in the
facility
have mental diseases which require inpatient treatment
according
to the patients' medical records;
Guideline 7 - A large proportion of the patients in the
facility
have been transferred from a State mental institution
for
continuing treatment of their mental disorders;
Guideline 8 - Independent Review Teams report a preponderance
of
mental illness in the diagnoses of the patients in the
facility;
and
Guideline 9 - The average patient age is significantly
lower
than that of a typical nursing home.
State Exhibit (Ex.) D, pp. 6-14.
HCFA determined that these findings cumulatively establish that
Meadowview
ICF had the overall character of an IMD during the audit
period.
The parties agreed that for purposes of determining whether 50% or more
of
the patients were institutionalized at Meadowview ICF because of
mental
disorders, the State could present evidence on patients
representing 10% of
the facility population. The State could choose the
sample randomly or
by picking its most compelling cases.
New Jersey sent a Medical Evaluation Team to Meadowview ICF to conduct
a
survey of the patient records of approximately 10% of the
facility's
patient population to determine those patients' diagnoses and
care.
Thirty-one patients were selected at random for review. First, a
review
was conducted by a review team headed by a physician, the purpose
of
which was to determine whether the sample patients fulfilled
New
Jersey's Medicaid criteria for needing nursing level of care. A
second
review was then performed by a medical evaluation team headed by
a
psychiatrist and physician, the purpose of which was to determine
how
many of the sample patients required treatment for a mental
disorder.
The team reviewed the patients' medical records for the period
October
1, 1986 through December 31, 1988, interviewed Meadowview ICF
personnel
who treated the ICF residents and interviewed the patients who
were
available (four patients had died and two had been discharged from
the
facility).
New Jersey compared its conclusions on these patients with the
FMAS
reviewers' conclusions. New Jersey agreed with FMAS on 16
patients,
seven of whom had primary diagnoses of mental illness and nine of
whom
had exempt diagnoses. See State Reply brief, p. 22; HCFA brief,
pp. 14
and 16; State Ex. J, . 9a and 9b; State Ex. K., .12b. New Jersey
and
HCFA disagreed on the remaining 15 patients. HCFA agreed that if
the
State established that at least seven of these 15 patients were
not
institutionalized for the care and treatment of a mental
disorder
according to the patient medical records, we should find that
Guideline
6 was not met.
The Board conducted an eight-day hearing during which the
parties
presented testimony and evidence relevant to the 15 disputed
patients.
Dr. Esquibel, who testified at the hearing, had reviewed 10 of
these and
Dr. Santucci, the other FMAS consultant hired by HCFA, had reviewed
the
other five patients. Dr. Santucci, however, died prior to the
hearing.
III. HCFA did not establish that Meadowview ICF has the
overall
character of an IMD pursuant to the guidelines.
HCFA contended that the OIG auditor and the FMAS consultants had
applied
the guidelines set forth in SMM, section 4390, to determine
whether
Meadowview ICF had the overall character of an IMD. With
regard to the
use of the ten guidelines, the SMM provides that --
no single guideline will necessarily be determinative in
any
given case. A final determination of a facility's status
rests
on whether an evaluation of the information pertaining to
the
various guidelines establishes that its overall character
is
that of a facility established and/or maintained primarily
for
the care and treatment of individuals with mental diseases . .
.
.
HCFA Ex. 2, SMM, .4390 B.
The guidelines permit assessing the evidence in its entirety and
giving
varying weight to evidence relating to different guidelines.
Here, HCFA stipulated that Guidelines 1, 2, 3, 5, and 10 did not apply
to
Meadowview ICF during the audit period. Yet, evidence relating to
the
first four of these guidelines has been given the greatest weight in
Board
decisions determining that nursing facilities were IMDs. For
example,
in Colorado Dept. of Social Services, DAB No. 985 (1988), we
upheld a
disallowance for Phoenix Center, giving great weight to the
undisputed fact
that the facility held itself out as a psychiatric
treatment center.
In spite of the lack of any such evidence here, HCFA nonetheless
contended
that evidence that Meadowview ICF met Guidelines 4, 6, 7, 8,
and 9 was
sufficient to establish Meadowview ICF as an IMD. As we
discuss below,
we conclude that the evidence here either does not
support HCFA's findings on
these guidelines or has little probative
value concerning the character of
Meadowview ICF. We first discuss
HCFA's findings on Guidelines 8, 7,
and 9, and then turn to the more
difficult questions raised by the
patient-counting evidence HCFA relied
on to support its findings on
Guidelines 4 and 6.
A. The FMAS reviewers do not constitute an
"Independent
Professional Review" team for purposes of Guideline 8.
Guideline 8 indicates that one of the factors in determining whether
a
facility has the overall character of an IMD is whether an
"Independent
Professional Review" team reports a preponderance of mental
illness in
the diagnoses of the patients in the facility. HCFA
contended that the
FMAS consultants constituted an "Independent Professional
Review" team
for purposes of this guideline. HCFA brief, p. 17; State
Ex. D, pp.
8-9. HCFA argued that since FMAS concluded that the patients
at
Meadowview ICF were primarily mentally ill, HCFA had established
this
guideline as one of the factors to determine that Meadowview ICF had
the
overall character of an IMD. HCFA brief, p. 17 and Appendix (App.)
A at
. 26.
We first note that HCFA also relied on the FMAS findings for
its
conclusion that Guideline 6 was met. Even if we agreed with HCFA
that
the FMAS consultants were an "Independent Professional Review" team
and
that their findings were correct (which we do not), we would not
give
those findings any additional weight merely because they could also
be
characterized as meeting Guideline 8. In any event, however,
we
disagree that Guideline 8 was met.
Guideline 8 specifically calls for a report from an
"Independent
Professional Review" team and cites 42 C.F.R. .456.1. That
regulation
implements section 1902(a)(31)(A) of the Act, which requires a
state to
have a program of independent professional review by a team composed
of
a physician or registered nurse and other appropriate health and
social
services personnel. This team's job is to review the plan of
care
developed for each patient and the care actually provided to each
person
receiving medical assistance, to make a determination regarding
the
adequacy of services available to meet the current health needs of
each
patient, to determine the necessity and desirability of
continued
placement in the facility, and to evaluate the feasibility of
meeting
the patient's needs through alternative institutional
and
non-institutional services.
Contrary to HCFA's arguments, the term "Independent Professional
Review"
team has a specific meaning in the Medicaid program. The
reference in
Guideline 8 to the applicable regulations supports our
conclusion that
Guideline 8 was intended to apply to the state teams which
are required
to review facilities in accordance with the utilization
control
requirements. Section 1903(a)(31)(A) of the Act; 42 C.F.R.
.456.1. The
FMAS consultants did not meet the requirements of such a
team; they did
not review each patient in those areas outlined by the
statute. The
FMAS consultants did not review the written plan of care
for each
patient to determine its adequacy nor evaluate the adequacy of
the
services actually received. Moreover, at the time the review
was
performed, the FMAS reviewers did not determine the necessity
and
desirability of each patient's continued placement and whether
the
patient's needs could be met in an alternative placement.
Thus, we conclude that there is no support in the record for
HCFA's
finding that Guideline 8 was met.
B. HCFA's evidence on patient transfers is
insufficient to show
that Guideline 7 was met, and, in any event, has no
probative value here
since most transfers were made long before the audit
period.
HCFA contended that a large number of Meadowview ICF patients
were
transferred from mental hospitals for continuing treatment of
their
mental disorders. HCFA brief, pp. 17-19; State Ex. D, pp.
13-14. HCFA
reasoned that since the medical records indicated that
patients were
admitted to Meadowview ICF with primary diagnoses of mental
disorders,
it is logical to conclude that these patients would be treated
there for
mental illness as well as any other disability. HCFA brief,
p. 19.
While the records may show that many Meadowview ICF patients
were
transferred from mental institutions, this factor alone is
not
conclusive evidence that the patients were admitted to Meadowview
ICF
for continuing treatment of their mental disorders. As we
discuss
below, treatment means more than general nursing care. The
State
presented evidence that, at the time most of these patients
were
transferred to Meadowview ICF in 1977, the State had evaluated
these
patients as patients whose needs could be met in a typical ICF.
HCFA
was relying primarily on historical diagnoses, which stigmatize
forever
as a psychiatric patient any patient who is transferred into a
nursing
facility from a psychiatric hospital. HCFA's conclusion does
not
logically follow from primary diagnosis, given evidence that the
primary
diagnosis does not always reflect a patient's need for
inpatient
treatment of that disorder. Furthermore, HCFA's position
ignores the
fact that a patient may have physical problems that
necessitate
placement in a nursing facility.
Even if we agreed with HCFA that we should equate a primary diagnosis of
a
mental disorder with a need for a continuing treatment of that
disorder,
HCFA's evidence would not be probative here since it relates
to most
patients' admission to Meadowview ICF in 1977. As we discuss
below, the
issue here is the character of the facility during the audit
period, October
1, 1986 through December 31, 1988.
C. HCFA's findings on patient age under
Guideline 9 were
inadequately supported and, in any event, have little
probative value
here.
HCFA argued that Meadowview ICF met Guideline 9 (i.e., the average age
of
the facility's residents was significantly lower than that of a
typical
nursing home). We previously found that evidence of young
average age
was not by itself probative of a facility's overall
character as an
IMD. Colorado, supra, at 17; Washington Dept. of Social
and Health
Services, DAB No. 785, at 14, n. 10 (1986). We found that
the
relatively young age of patients could have a reasonable explanation
other
than that the facility is an IMD.
In this case, the audit findings on this Guideline were also
inadequately
supported. The audit report indicated that the average age
of patients
in nursing homes nationally is about 78 and that the average
age for Medicaid
patients in Meadowview ICF was 66. The report also
stated that the age
distribution of the patients in this facility was
uncharacteristic of New
Jersey nursing home patients. State Ex. D, p.
13. However, the
OIG auditor testified that he used an age study from
another region as a
source for the national average cited. He could not
verify the validity
or accuracy of this data; he did not know where the
data came from or how the
study was made. Tr. at 1291-1292. The
auditor also admitted that
there was no basis for the statement in the
audit report that the age
distribution of the patients in Meadowview ICF
was uncharacteristic for New
Jersey nursing home patients. Tr. at
1253-154.
Consequently, we conclude that HCFA did not have an adequate basis for
its
findings on Guideline 9 and that, even accepting HCFA's national
average as
accurate, the age disparity has little, if any, probative
value.
D. The record does not show that Guidelines 4 and 6 were met.
Guideline 4 requires evidence that the facility specializes in
providing
psychiatric or psychological care and treatment. The
Guideline states
that this may be determined through a review of patients'
records, by an
unusually large proportion of the staff having specialized
psychiatric
or psychological training, or by the fact that a large proportion
of the
patients are receiving psychopharmacological drugs. Guideline 6
calls
for evidence that more than 50% of all the patients in the facility
have
mental diseases which require inpatient treatment according to
the
patients' medical records. Since HCFA primarily relied on the
FMAS
review for its findings on both these guidelines, and since treatment
is
an important aspect of patient evaluation, we consider these
guidelines
together.
In this section, we first discuss general considerations regarding
the
role of diagnosis in patient classification, the relevant time
period
here, the nature of schizophrenia, and the nature of the
treatment
received or required by the patients. These considerations
apply to
most or all of the patients at issue here and lead us to
conclude
generally that the approach used by the FMAS reviewers was flawed
from
the beginning (since it was inconsistent with HCFA's guidelines and
past
Board decisions) and that HCFA's evidence presented here was
similarly
flawed. We then discuss in detail the seven patients where
the State's
evidence most persuasively shows that the State reasonably
evaluated the
patients as institutionalized primarily for their physical
disorders (or
for mental disorders HCFA considers exempt) and as receiving
and
requiring only general nursing care.
1.
HCFA's consultants' approach improperly focused
on historical diagnoses
of patients.
As this Board explained in Washington, at 9-10, several early
court
decisions overturning Board findings that facilities were IMDs
reflected
the courts' underlying concerns with patient counting. The
courts were
concerned that discrimination against patients on the basis of
diagnosis
(which is prohibited) might be present to the extent that patients
were
classified according to historical diagnoses which did not reflect
the
patients' current conditions. The courts therefore emphasized
the
importance of evidence about what treatment the patients were
receiving
because such evidence can ensure that patients are not simply
being
labeled based on historical diagnoses. (See our discussion of
treatment
below.) If patients are classified based on historical
diagnoses, the
resulting evidence is not truly probative of the character of
the
facility.
Another reason for caution in applying patient-counting factors is that
an
ICF may properly treat patients with mental conditions. Section
1905(c)
of the Act (prior to amendment by Pub. L. 100-203); section
1919(a) of the
Act (as added by Pub. L. 100-203). Thus, the mere
presence of such
persons in an ICF is not sufficient to render the
facility an IMD. We
have recognized in our past decisions that when a
facility was not
established as a facility specializing in care and
treatment of persons with
mental diseases, but begins taking on more and
more patients with mental
diseases, it is difficult to draw the line in
determining at what point the
facility would attain the overall
character of an IMD so clearly that the
state should have known that FFP
would not be available for the services
provided at the facility.
HCFA's current guidelines for examining IMD status reflect
these
concerns. The guidelines state that "the reviewers must
determine
whether each patient's current need for institutionalization
results
from a mental disease." They also state: "Classification
is to be
based on current diagnosis . . . ." The guidelines then go on
to set
out classification categories according to whether it is the
patient's
physical or mental disorder which requires "inpatient
treatment."
Although the OIG auditor and other OIG officials met with
representatives
of FMAS prior to the on-site review and referred to
HCFA's guidelines,
apparently this information was not passed on to the
actual reviewers before
they arrived at Meadowview. They were given the
HCFA guidelines at an
initial meeting with the auditor at the facility,
but Dr. Esquibel, one of
the two consultants who actually performed the
review, testified that his
understanding of the review was that he was
to "examine the records and
establish my own diagnosis on each patient
based on the information in the
record . . . . " Tr. at 1710 (emphasis
added); see also Tr. at
1711-1712, 1470. 3/ HCFA has argued in past
IMD cases, however,
that it is the record diagnosis (even if wrong)
which establishes how the
facility views and treats the residents and
which therefore reflects on the
character of the facility. More
important, Dr. Esquibel's statements
illustrate an approach to the
review which is inconsistent with past Board
decisions and HCFA's
guidelines. From this statement, from the patient
information sheets
Dr. Esquibel completed on the patients, and from his
testimony as a
whole, it is evident that Dr. Esquibel was primarily concerned
during
his review in determining which type of schizophrenia each patient
had
been diagnosed as having and whether he agreed with that diagnosis.
Dr. Esquibel also stated that he was to "establish what was, in
my
opinion, the primary reason why that patient was in that facility."
Tr.
at 1710. This is closer to HCFA's guidelines, but is undercut by
his
statement that the "primary diagnosis reflects the reason
for
hospitalization." Tr. at 1712. He made this statement in
reference to
the reason the patient was admitted. We find several
problems with
this. First, HCFA's guideline refers to the "current need
for
institutionalization." 4/ Second, while in some instances we have
found
that reasons for admission may reflect on the character of a
facility,
in this case we have determined that the critical time period is
the
audit period, rather than 1977, when most of these patients
were
admitted to Meadowview ICF. (Our reasons for this conclusion are
set
out below.) Third, it is apparent from some of the patient
worksheets
that the reviewers were confusing admission to Meadowview Hospital
with
admission to Meadowview ICF, but HCFA did not allege here
that
Meadowview ICF was part of a larger institution rather than a
separate
one. Finally, the patient records here illustrate that one
cannot
reasonably equate primary diagnosis with the reason why these
patients
were institutionalized at Meadowview ICF. In many instances,
the
primary diagnosis simply reflected the patient's history.
Moreover,
while any psychiatrist consulting on the patient would
automatically
list schizophrenia as the primary diagnosis, sometimes a
contemporaneous
evaluation by a non-psychiatrist would list a physical
disorder as
primary.
The reviewers' focus on historical psychiatric diagnoses and
symptoms
rather than on the current need for institutionalization is
also
apparent because many of the patient information worksheets completed
by
the reviewers describe patients as having no significant
physical
disorder, even though their records clearly show that they
were
evaluated by their attending physicians during the audit period
as
having serious physical disorders (which were their primary
diagnoses).
This may be explained in part by the lack of guidance the
reviewers
received on the purpose of the review. There also may have
been some
bias introduced by the terms of the contract under which FMAS
agreed to
do the review. 5/
Flaws in the initial review approach would not be significant if
HCFA's
evidence presented to us supported the reviewers' conclusions.
Prior to
the hearing, Dr. Esquibel again reviewed the patient records of
those
patients at issue here, and at the hearing, he elaborated on
his
findings and the reasons for them and in some respects attempted
to
compensate for flaws in the original review. It was apparent at
the
hearing, however, that Dr. Esquibel's further review was primarily
an
attempt to justify the original review findings, rather than
to
accurately apply HCFA's guidelines. This is one of many
reasons,
discussed more fully below, why we reject HCFA's position that we
should
give more weight to Dr. Esquibel's opinions than to those of the
State's
experts.
2.
The patient-counting here should relate to the
audit period, not the
time of admission.
In this case, unlike other cases where there was evidence that
the
facilities specialized in treating mental diseases when they
were
established, HCFA presented no evidence of any intent to
establish
Meadowview ICF as such a specialized facility. While most of
the
patients were transferred from the old Hudson County
Meadowview
institution (which as a whole probably would have been considered
an IMD
at one time), the State presented unrebutted testimony that the
intent
when the ICF was established was to create a facility for residents
who
did not need specialized services above and beyond those offered by
a
typical ICF.
Moreover, the State insisted when the facility was established
that
patient assessments be performed to ensure that patients were not
being
inappropriately placed in the Meadowview ICF. HCFA argued that,
because
patients with mental diseases may appropriately be placed at the
ICF
level, this fact has no significance. We disagree. First, the
State's
evidence suggests that the State's assessments included whether
the
patient's functional needs could be met by this particular
facility.
Thus, approval of placement of these patients in Meadowview ICF
even
though it did not have specialized staff (other than those available
on
a consulting basis) reflects a judgment of the patients' needs.
Also,
at the time Meadowview ICF was established in 1977, there was
little
published guidance on IMD status, and internal field memoranda issued
by
HCFA primarily indicated a concern that states were
inappropriately
dumping patients from state mental institutions into nursing
facilities
to avoid the IMD exclusion (and thus the nursing facilities should
be
consider de facto IMDs). The State's evidence indicates that
such
dumping was not occurring here.
If HCFA had shown that Meadowview ICF was established as a facility
with
the overall character of an IMD, the burden might then have shifted
to
the State to show that Meadowview no longer had that character
during
the audit period. Since HCFA failed to make such a showing,
however,
the issue here is whether the State should have known, by examining
the
character of the facility during the audit period, that it was an
IMD.
Examining the facility during this time period also makes sense since
up
until 1986 policies on how to determine whether an ICF was an IMD
and
what should be considered a mental disease were still evolving.
While
we have found that some facilities could be classified as IMDs prior
to
this time because they were IMDs under any reasonable reading of
the
regulatory definition, those facilities were determined to be
IMDs
primarily on the basis of persuasive evidence other
than
patient-counting information. See Massachusetts Dept. of
Public
Welfare, DAB No. 413 (1983); Washington, supra; and Colorado,
supra.
Thus, in examining the evidence here, we consider the appropriate
time
period to be the audit period, not 1977 when most of these patients
were
admitted to the ICF (and certainly not the time the patients
were
admitted to the original institution known as Meadowview Hospital).
3.
HCFA's position on the role of schizophrenia and
its process in
classifying these patients is not fully supported
by the record.
HCFA relied heavily on Dr. Esquibel's explanation at the hearing
of
schizophrenia and its symptoms. We find, however, that his testimony
is
not fully supported by the written record, raises significant
questions
about what symptoms should be attributed to the disease process
of
schizophrenia, and further supports our conclusion that Dr.
Esquibel
focused too heavily on the patients' history.
HCFA has long used a disorder classification system called the ICD
(and
its further refinement in the system called the DSM-III) for
determining
what is a mental disease. In the context of determining IMD
status,
however, HCFA has exempted certain diagnoses listed as mental
disorders
in these systems. In excluding persons with senile dementia
or organic
brain syndrome (OBS), HCFA stated:
These diagnoses appear frequently among the elderly.
These
conditions are essentially untreatable from a mental
health
point of view, but these patients frequently require
general
nursing care. (Many times they are used by physicians as
a
shorthand characterization for patients whose behavior may be
a
manifestation of underlying neurological damage.)
These
diagnoses should not be considered mental diseases if
the
facility is appropriately treating the patients by
providing
only general nursing care.
HCFA Ex. 2, fourth page. 6/
While schizophrenia is a psychosis which the layman considers
indisputably
a mental disease (and its various forms are listed as
mental disorders in the
ICD and DSM-III), Dr. Esquibel's testimony at
the hearing raised several
issues concerning how to evaluate patients
who have been diagnosed as having
schizophrenia and their treatment
needs. He testified that
schizophrenia results from a defect in the
dopaminergic reactions in the
brain. Dopamine is a "neurotransmitter,"
and the psychotropic drugs
prescribed for schizophrenia operate either
by reducing the amount of
dopamine produced by the brain or by blocking
the related "receptors."
Tr. at 1372-1383. Dr. Esquibel further
testified that the "positive"
symptoms associated with schizophrenia
(delusions, hallucinations, loosening
of associations, incoherence, and
catatonic behavior) can be controlled by
such medication. Tr. at
1383-1384. 7/ This testimony, thus,
raises the question of whether
schizophrenia can be rationally distinguished
from senile dementia and
OBS, which HCFA exempted since they are
neurologically based and not
amenable to treatment with traditional
psychiatric or psychological
methods. While we do not for purposes of
this decision categorize
schizophrenia as an exempt diagnosis, Dr. Esquibel's
testimony is a
factor in why we conclude below that the mere prescription of
a
maintenance level of a psychotropic drug should not be
considered
treatment for a mental disorder which gives a facility the
character of
an IMD.
Dr. Esquibel's testimony also raises the question of whether
patients
whose active symptoms are controlled by the drugs should be
considered
as "having" the disease. Dr. Esquibel took the position,
however, that
no person is ever "cured" of the disease of schizophrenia
because the
person would still have an abnormality in his/her dopamine
production.
8/ His opinion that schizophrenic patients could not be
cured appears
to have contributed to Dr. Esquibel identifying schizophrenia
as a
current primary diagnosis even for patients whose record diagnosis
was
"schizophrenia in remission" and who had shown no active symptoms
for
years.
We do not here specifically reject Dr. Esquibel's position that
Meadowview
ICF patients had not been cured. The DSM-III
distinguishes
schizophrenia in remission from "No Mental Disorder" (a
diagnosis which
"requires consideration of overall level of functioning,
length of time
since the last episode of disturbance, total duration of
the
disturbance, and whether prophylactic treatment is being given").
HCFA
Ex. 83, p. 195. This statement supports a view that the
patients
continue to have the disorder (assuming they were correctly
diagnosed
initially), even if it is in remission. However, it also
points up the
importance of not relying solely on diagnosis or the
prophylactic
(preventative) use of psychotropic drugs as a basis for
classifying
these patients. See also Tr. at 121-122.
Dr. Esquibel's testimony describing "negative" symptoms of
schizophrenia
also points up complications in evaluating the cause of these
patients'
needs and the type of treatment which might be effective. Dr.
Esquibel
took the position that patients who had a primary record diagnosis
of
OBS or senile dementia should nonetheless be considered in light
of
their histories of schizophrenic disorders simply to have
"negative"
symptoms of schizophrenia (which are not decreased by
psychotropic
drugs). 9/ He presented a list of symptoms of
schizophrenia, stating
that this list was derived from the DSM-III.
HCFA Ex. 89; Tr. at 1363.
He identified as "negative" symptoms: memory
deficit, lack of insight,
poor judgment, and disorientation. Tr. at
1370; compare Tr. at 1427.
While he acknowledged that these symptoms were not
exclusive to
schizophrenia, Dr. Esquibel emphasized that the history of the
patient
was important in evaluating the cause of the symptoms.
While history is important in evaluating patients, Dr. Esquibel in
our
view overemphasized the patients' history here to support his
original
evaluations, ignoring evidence pointed out to him on how
treating
physicians or psychiatrists who had examined the patients had
evaluated
their symptoms during the audit period. Moreover, the DSM-III
does not
in fact track Dr. Esquibel's list of positive and negative
symptoms;
instead, it describes active and residual phases of the
disease. The
DSM-III also states: "Even though an active phase of
Schizophrenia may
begin with confusion, the presence of persistent
disorientation or
memory impairment strongly suggests an Organic Mental
Disorder." HCFA
Ex. 83, p. 192. Dr. Esquibel's own testimony
describes the type of
memory deficit common in schizophrenia as an inability
to recall events
because of a failure to register events in the active stages
of the
disease. Tr. at 1406-1407. Excerpts from a textbook on
psychiatry
submitted by HCFA discuss differences between this type of
memory
deficit and deficits caused by organic brain disease, indicating
that
distinctions can be drawn (although this may not be easy). HCFA
Ex. 96.
We see no reason to accept Dr. Esquibel's judgment on which type
of
deficit was present in the patients here with record diagnoses of OBS
or
senile dementia, rather than the judgment of treating physicians
or
psychiatrists who observed the patients. Those actually observing
the
patients over a period of time were in a better position to make
the
distinctions required. 10/
Even where there is no record diagnosis of OBS or senile
dementia,
however, evaluating patients with symptoms such as inability to
make
judgments, self care deficits, disorientation, lack of interest,
and
lack of volition is further complicated since these are also symptoms
of
chronic institutional syndrome. Tr. at 1421-1422. This
syndrome is not
classified as a mental disorder in the DSM-III. Dr.
Esquibel testified
that physical disabilities can contribute to institutional
syndrome and
that this type of syndrome may develop in a patient in any type
of
institution (for example, even a tuberculosis sanitorium). Tr.
at
1707-1708. All of the patients at issue here had been
institutionalized
for lengthy periods of time. Some patients had other
problems which may
have in a broad sense been a "result of a mental
disorder," such as
physical side effects from taking psychotropic drugs, but
we do not
think these patient characteristics should be a basis for
classifying a
facility as an IMD if they are appropriately being addressed
through
general nursing care.
All of these considerations further support our conclusions that
HCFA's
evidence is not persuasive because it focused too heavily on
historical
diagnoses, rather than on the nature of the treatment the
residents of
Meadowview ICF were receiving or in fact required.
4.
HCFA's evidence is not persuasive either on the
treatment the patients
were receiving or on what they required.
In Minnesota v. Heckler, 718 F. 2d 852 (8th Cir. 1983), the court
stated
that --
the characteristics of an IMD must fundamentally center on
the
type of care or nature of services required, not on the
mere
presence in a facility of patients who have, or at one time
did
have, diagnoses of a mental disease.
718 F. 2d at 863.
In the past we have found that the lack of specialized treatment
actually
received by patients is not conclusive on the issue of whether
a facility is
an IMD. We recognized HCFA's genuine concern that states
could avoid
classification of a facility as an IMD by simply not
providing appropriate
treatment to patients. The Court in Minnesota
reasoned that emphasis on
the degree of care and treatment required by a
patient (as opposed to solely
examining the degree of care and treatment
furnished to a patient) should
eliminate this concern.
We previously found that an ICF can be an IMD and this holding
was
ultimately upheld by the Supreme Court. Connecticut v. Heckler,
471
U.S. 524 (1985). This means that treatment received in an ICF must
be
evaluated in light of the level of services appropriately provided in
an
ICF. Consequently, an ICF not providing the same level of services
or
intensity of services as a psychiatric hospital would provide may
still
be considered an IMD. See Massachusetts. Thus, as we found
in
Massachusetts, an ICF may have the overall character of an IMD
even
though the services provided do not amount to active
psychiatric
treatment or intervention. Id., at 13.
Services such as psychoanalysis or individual and group therapy with
a
qualified therapist may constitute treatment. Dr. Esquibel
also
testified that manipulation of the environment and psychodrama are
types
of social therapy used in treating mental disorders. Tr. at
1424-25.
Moreover, in Massachusetts, we found that therapy in activities of
daily
living skills may be considered treatment of a mental disorder
where
there is evidence that these services were needed to improve
the
patient's mental functioning. Similarly, in Iowa Dept. of
Human
Services, DAB No. 1179 (1990), we determined that a
comprehensive
program operated by a full-time staff psychologist using
behavior
modification techniques to help patients develop independence
in
self-care and assistance with activities of daily living skills
to
implement the program was consistent with the needs of severely
and
chronically mentally handicapped persons and constituted treatment
for
mental diseases.
We have, however, distinguished between assistance with activities
of
daily living that constitutes "treatment" in that these therapies
are
designed to enable the resident to move out of the institution, or
at
least reduce the degree of care and treatment required in
the
institution, and assistance with activities of daily living which
does
not constitute treatment. We found that in order to
constitute
"treatment" any program or therapy must be more than the type
of
psycho-social program to help a patient adjust to life in an ICF
which
would be typical of any nursing facility. Washington at 11.
The Board has also considered that psychotropic drugs may
constitute
treatment where the medication is prescribed by a psychiatrist
providing
ongoing monitoring of a resident's progress and where a
psychiatrist has
evaluated the dosage and concluded that the medication was
treatment for
mental illness. See Iowa at 11 and Massachusetts at
14.
The instant case, however, is distinguishable from Massachusetts
and
Iowa. The auditors found that patients of Meadowview ICF had
"periodic
encounters with a psychiatrist or other mental health
professional
during the period under review" and that "this type of continued
care
under the direction of a psychiatrist, more closely resembles care in
an
IMD rather than an ICF." State Ex. D, p. 12. Unlike the
facilities in
Massachusetts and in Iowa, however, Meadowview ICF had no
staff
psychologists or psychiatrists or other staff with specialized
training
such as psychiatric social workers or psychiatric nurses. Tr.
at
468-470. Apparently, an audit finding regarding the staff at
Meadowview
ICF was based in part on a document attached to a provider
application
which listed staff for all the facilities on the Meadowview
campus
including the ICF and the hospital. HCFA Ex. 85. The
auditor assumed
that the psychiatrists listed were on the staff of Meadowview
ICF. HCFA
brief, App. A, . 24 at 13-14; Tr. at 1165, 1175 and
1187-1190. Dr.
Esquibel testified that he also assumed that the ICF
staff had
specialized psychiatric training. Tr. at 1743-1744. The
testimony of
the assistant medical director for the Meadowview complex of
facilities,
however, indicated that there were no psychiatrists or
psychiatric
social workers or nurses on staff of the ICF. Tr. at
458-461; 463-468.
Consequently, there was no evidence of specialized staff of
the ICF or
of special training of the nursing staff. Specialized staff
of
Meadowview Hospital, however, were available only on a consulting
basis
(as required for any ICF during the audit period), if a patient
required
such a consultation. 42 C.F.R. .442.317 (1986).
HCFA also failed to present any evidence of any individual or
group
therapy prescribed or provided at Meadowview ICF by specialized staff
or
any evidence the ongoing caregivers determined that the
patients
required such services during the audit period. Nor did HCFA
present
any evidence that the other types of psychological or social
therapies
described by Dr. Esquibel were provided by specially trained staff.
11/
Furthermore, while some of the patients here required and
received
supervision of some activities of daily living (ADL) by the
nursing
staff, this was not clearly a result of a mental disorder, as opposed
to
physical disorders or chronic institutional syndrome. In any
event,
mere supervision is different from the kind of ADL services necessary
to
develop a resident's potential for independence, which we
previously
considered to be psychological services. It was only after
questioning
at the hearing by the Board that Dr. Esquibel belatedly testified
with
regard to some of the patients at issue that they could have
benefitted
from psychological services to overcome dysfunctions in ADL.
This
testimony, which was more of an afterthought, was not persuasive
because
it was not part of Dr. Esquibel's original evaluation of the
patients.
It appeared to be an attempt to tailor testimony to respond to
the
Board's concerns expressed at the hearing, rather than a
considered
opinion. In any event, the patients' records indicate that
for most of
these patients, the caregivers made ongoing determinations
and
assessments of each patient and concluded that such services were
not
needed. Given the organic and physical problems of these patients,
the
caregivers could have reasonably concluded that these patients would
not
benefit from such services. While psychotropic drugs may be
considered
treatment in some instances, at least two patients of the 15
patients in
dispute did not receive any such medication and the rest received
very
low dosages. Even though Dr. Esquibel contended that the use
of
psychotropic medication constituted treatment, Dr. Erlich, the
State's
psychiatric expert, indicated that the low dosage of
psychotropic
medication here amounted to maintenance of the patient's well
being and
did not constitute treatment. The State's view is not
unreasonable.
The record showed that for the most part, these patients had no
symptoms
of active schizophrenia for years. The use of psychotropic
medications
here could reasonably be viewed as being for prophylactic
purposes to
prevent recurrence of symptoms of active schizophrenia. The
DSM-III
recognizes that schizophrenics may be in remission whether or not
on
medication, if the medication leaves them free of all signs of
the
disturbance. HCFA Ex. 83, p. 195. Moreover, HCFA's reliance
on the
Physician's Desk Reference as supporting its view that
maintenance
dosages of psychotropic drugs constituted treatment is
misplaced. That
publication's description of a maintenance dosage for
Haldol, for
example, states: "Upon achieving a satisfactory therapeutic
response,
dosage should be gradually decreased to the lowest effective
maintenance
level." HCFA Ex. 63, p. 1335. The purpose of
examining treatment here
is to determine the overall character of the
facility. If the patient
has achieved a therapeutic response and does
not need ongoing monitoring
and adjustment of medication by a psychiatrist,
the receipt of the drugs
has no significant affect on the character of the
facility that would
distinguish it from a typical nursing home. Also,
even Dr. Esquibel
acknowledged that a maintenance dosage could be
administered outside an
institution, so the need for a maintenance dosage
does not constitute a
need for inpatient treatment. Tr. at
1404-1405.
The patient records showed that the patients here receiving
such
medication did not need ongoing monitoring and adjustment of
the
medication. In fact, the records did not show any patient
receiving
ongoing care from a psychiatrist. The records showed that
some patients
received a psychiatric consultation with a psychiatrist, but
these were
routine and were prophylactic in nature such as where, for
example, a
resident required an operation for a physical problem and the
attending
physician wanted to make sure that the procedure would not trigger
any
psychological effects. In some instances, the consultations
resulted in
a primary diagnosis of senile dementia or OBS.
Finally, HCFA did not present any evidence that Meadowview ICF held
itself
out as providing specialized services. Instead, unlike
facilities which
the Board determined were IMDs because they were
established primarily to
provide specialized services, the testimony
showed that Meadowview was
established to be a typical ICF, providing
general nursing care. 12/
5. HCFA misclassified at least seven patients.
In our review next of individual patients who were at issue here, we
have
based our conclusions primarily on the patient records and
undisputed
interpretations of those records by the experts who testified
at the
hearing. Where necessary, we have resolved disputes between
the
parties' experts.
HCFA argued generally that we should give more weight to Dr.
Esquibel's
opinions than to Dr. Erlich's. We find, to the contrary,
that on the
whole Dr. Esquibel's evaluations of the patients were less
credible and
persuasive than those of Dr. Erlich, for the following
reasons:
o As discussed above, Dr. Esquibel's initial approach was flawed.
At
the hearing, Dr. Esquibel sought to justify his initial
conclusions,
even in the face of relevant evidence from the patient records
which he
had clearly disregarded in reaching his initial opinions. Dr.
Erlich,
on the other hand, was more straightforward and was willing
to
reevaluate his original opinion for one patient where it appeared for
a
time that the records would not support it. Ultimately, however,
the
records provided more support for his opinions than for those of
Dr.
Esquibel.
o While Dr. Esquibel had excellent credentials as a psychiatrist,
Dr.
Erlich's credentials were also impressive, and he was no
less
knowledgeable in general about the disease of schizophrenia.
Dr.
Esquibel clearly was focused more on theory, but Dr. Erlich had
more
experience with aging patients in nursing homes like those at issue
here
and a better understanding of their needs.
o Dr. Esquibel's evaluation of the patients' physical disorders was
not
only contradicted by their records, but he appeared to evaluate
the
disorders serially, rather than considering the whole complex
of
physical problems exhibited by each patient. His comments on
particular
physical disorders were anecdotal and general, rather than
directly
related to the particular patients at issue. Dr. Erlich was
more
convincing in his evaluations of the patients' physical disorders,
and
his opinions on the physical disorders were supported by Dr. Flaig,
who
was a medical doctor.
o Dr. Esquibel did not appear impartial; rather, he seemed to take
the
approach of ignoring any evidence which did not support the
conclusion
OIG had already reached. While Dr. Erlich was an employee of
the State,
HCFA did not establish any reason for bias on his part other than
the
inference that he might be affected by the State's potential loss
of
Medicaid funding. The sincere and straightforward manner in which
Dr.
Erlich testified indicated that his opinions were unbiased and
genuine,
and not merely contrived to support the State's appeal.
In sum, we give more weight to Dr. Erlich's opinions than to
Dr.
Esquibel's. Even if we found only that Dr. Erlich's opinions
were
reasonable, however, this conclusion would support a result for
the
State since we must be able to say that the State should have known
that
Meadowview ICF was an IMD during the audit period in order for HCFA
to
prevail. We next discuss seven of the individual patients,
explaining
why we conclude that the State could have reasonably determined
that
they were institutionalized during the audit period because of
their
physical disorders, rather than for inpatient treatment of a
mental
disorder, and that they were appropriately receiving only
general
nursing care. We do not need to evaluate the remaining patients
to
support our conclusion that Meadowview ICF did not have the
overall
character of an IMD during the audit period, given the
parties'
agreements discussed in Section II above. We note, however,
that few of
the remaining patients had active symptoms of schizophrenia, all
had at
least some physical problems contributing to their need
for
institutionalization, and few clearly received or required services
that
would constitute inpatient treatment of a mental disease.
Wahlis
This patient was in his mid to late seventies during the audit
period.
When this patient was first institutionalized in 1939, he was
diagnosed
as a schizophrenic, hebephrenic type. However, during the
audit period
when the patient was at Meadowview ICF, the medical
records
overwhelmingly support a different reason for
institutionalization. The
patient's annual medical care plans for 1981
through 1988 indicate
primary diagnoses of OBS, Inactive Tuberculosis,
Emphysema, and Chronic
Schizophrenia with, in most instances, OBS listed
first. These plans
are completed by staff physicians annually at the
ICF in order to
determine the proper care, treatment and placement of the
patient for
the next year. State Ex. 34. The records indicate the
patient received
only a maintenance dose of Activan (State Ex. J, .13), a
psychotropic
medication, which Dr. Esquibel admitted is properly prescribed
for
patients with OBS. Tr. at 1761. As the State pointed out,
there is no
evidence of positive symptoms of schizophrenia during the audit
period,
and HCFA could point to only one psychiatric consult during that
period.
One consultation can hardly be considered treatment for mental
illness.
State Ex. 34, pp. 12-13; Tr. at 1477 and 1765; HCFA Ex. 75, pp.
20-21.
The patient information worksheet and the narrative comments filled out
by
the FMAS reviewer at the time of their review completely disregarded
this
relevant information. Instead, FMAS listed the primary diagnosis
as
only schizophrenia, ignoring other information in the record to
the
contrary. Dr. Esquibel testified that OBS was a physical illness
(Tr.
at 1753), but even though Mr. Wahlis's medical records indicated
OBS,
emphysema and inactive pulmonary tuberculosis as diagnoses for
this
patient, Dr. Esquibel did not note these on his worksheet. Dr.
Esquibel
admitted that his diagnosis disagreed with the everyday caregivers
who
diagnosed the patient with OBS. Tr. at 1756.
Dr. Erlich testified that the mental dysfunctions listed in the
patient
records (forgetfulness, poor memory, emotional lability, and
poor
judgment) were characteristic of OBS and not usually characteristic
of
schizophrenia. Tr. at 156-158. Thus, we conclude that the
patient
records amply support Dr. Erlich's determination that during the
audit
period, this patient was institutionalized primarily for physical
or
organic disorders for which he was properly receiving general
nursing
care, and the patient did not need nor receive specialized
services.
State Ex. J, .13(m); Tr. at 155 and 156.
Wyrowski
This patient was in her early seventies during the review period.
This
patient was first institutionalized in 1937 with an admitting
diagnosis
of schizophrenia, simple or hebephrenic type. In 1964 she
developed
kyphoscoliosis which progressively got worse. The kyphosis of
the spine
required her to use a walker. Her medical records indicated
the
kyphoscoliosis was at 90 degrees which required the social worker
to
either kneel on the floor if the patient was standing or to sit her
down
to talk with the patient. State Ex. 33, Tab 32, p. 6 The
social
worker's notes indicate the patient could not lift her head higher
than
the table and this limited her participation in any activities.
State
Ex. 33, Tab 32, p. 10 The record also indicated that this was a
severe
and handicapping problem which affected all aspects of the
patient's
demeanor. State Ex. 33, Tab 32, p. 8.
Dr. Esquibel testified that he reviewed the records for this patient.
HCFA
App. B, . 24; Tr. at 1897; HCFA Posthearing brief, p. 31. In
his
affidavit and in the narrative comments for this patient, Dr.
Esquibel
indicated that the admission diagnosis into Meadowview ICF in 1978
was
schizophrenia - chronic residual type and the current diagnosis at
the
time of the review was still schizophrenia chronic residual type.
HCFA
App. B, . 24; HCFA Ex. 37. He claimed she was receiving treatment
from
a psychiatrist with a psychotropic medication. HCFA App. B,
.24. In
his declaration, Dr. Esquibel stated that he disagreed with not
only
with Dr. Erlich's primary diagnosis of senile dementia, but also
with
Doctors Kuo and Pino's primary diagnosis of senile dementia in 1986
and
1988, stating that the record revealed no entry to substantiate such
a
shift in diagnosis. HCFA App. B, .24; HCFA Posthearing brief, p.
31.
The patient records, however, fail to support Dr. Esquibel's findings.
The
records indicate that during the audit period, this patient had a
psychiatric
consultation in June 1988, the result of which was that the
psychiatrist
listed her primary diagnosis as senile dementia, her
secondary diagnosis as a
history of chronic schizophrenia, disorganized
type and her third diagnosis
as kyphoscoliosis. HCFA Ex. 76, p. 10. In
1985, the patient had
had a consultation with a psychiatrist, Dr. Pino,
who also diagnosed senile
dementia and ordered the psychotropic
medication for this patient. Dr.
Esquibel admitted during the hearing
that psychotropic medication is also
indicated for senile dementia
patients. Tr. at 985. Therefore,
the fact that this patient was
receiving such medication is not conclusive
evidence that she was
receiving treatment for schizophrenia. Moreover,
her maintenance dose
of Haldol was discontinued on June 1, 1988.
Dr. Esquibel here deliberately chose to overlook the diagnoses in
the
patient records, substituting his judgment based on a brief review
of
the medical records with the judgment of the patient's
everyday
caregivers. He admitted that his attitude during this
review was "to
make what diagnosis I think is appropriate" and that he
substantiated
his diagnosis with material he found. Tr. p. 1902.
As we stated above,
the medical records, however, indicate a different
diagnosis. Moreover,
Dr. Esquibel glossed over this patient's physical
condition; the record
indicates an extreme physical handicap affected this
patient's ability
to interact and get about. Dr. Esquibel's review
failed to take into
account not only the diagnoses but the total clinical
picture for the
patient and how her conditions cumulatively required her to
receive ICF
care for her senile dementia and her kyphoscoliosis. As a
result, the
credibility and reliability of the FMAS findings here are
questionable
and appear biased in favor of finding a psychiatric disorder for
this
patient.
Dr. Erlich's testimony supported the caregivers' view that the type
of
memory defects and other symptoms the patient had were not
just
"negative" symptoms of schizophrenia but indicated senile
dementia. Tr.
at 167. Thus, we conclude that Dr. Esquibel's
findings are not
supportable for this patient. The records support the
State's
conclusion that during the audit period this patient
was
institutionalized because of senile dementia, an exempt diagnosis,
and
physical disorders for which she was properly receiving general
nursing
care, and the patient did not need nor was she receiving
specialized
services.
Milici
This patient was 66 years old at the time of the review and had
been
institutionalized since 1956. The patient died from a
myocardial
infarction on May 5, 1987. When the patient was admitted to
Meadowview
ICF she had been diagnosed with chronic schizophrenia and
hypertension.
State Ex. 37, Tab 36, p. 3. Just prior to the beginning
of the audit
period, this patient had two major surgical procedures: a
left
nephrectomy (removal of left kidney) and subtotal parathyroidectomy
and
excision of thyroid nodules surgery. She also suffered
from
hypertension, chronic obstructive pulmonary disease,
hypercalcemia,
congenital heart failure and thyroid cancer. State Ex.
37, Tab 36, pp.
2 and 26. During the period of audit prior to her death
(a seven-month
period), the patient had been admitted to the hospital for
physical
disorders at least twice.
Dr. Santucci, the original FMAS reviewer for this patient, made
some
arguably contradictory statements in his narrative. HCFA Ex.
41. He
stated that the patient received treatment for her mental
illness yet
did not receive treatment from a psychiatrist or other mental
health
professional. The treatment he indicated she received was
"milieu
therapy." He also indicated that she "required an inpatient
facility
that had medical supervision and could observe her health with
its
variations and direct its care on a weekly basis," and used
this
evaluation of a need for a higher level of care for her
physical
disorders to support a conclusion that she was institutionalized for
a
mental disorder.
Both Dr. Santucci's original findings and Dr. Esquibel's
testimony
disregard medical records showing a patient with severe,
continuous
physical problems. We find that this is another instance
where the FMAS
reviewers glossed over the medical condition of the patient
where there
was a history of the patient being at one time diagnosed
as
schizophrenic.
Dr. Esquibel's opinion that but for her mental disability this
patient
could have been taken care of outside an institution is not
only
contradicted by Dr. Erlich's opinion that her physical
disorders
required nursing facility care, but is simply inconsistent with
the
patient records for the audit period. Moreover, Dr. Esquibel
originally
described the patient's schizophrenia as requiring only the
"protective,
custodial care" of an institution. Tr. at 1523. He
only belatedly
testified that she could benefit from mental health
services. Tr. at
1527. This testimony is simply not credible, for
the reasons stated
above. Finally, we note that the "milieu therapy"
referred to by Dr.
Santucci was not mentioned in the patient records
provided. In any
event, the patient worksheet indicated that this
patient did not receive
any treatment from a psychiatrist or other mental
health specialist. A
psychiatric consultation during the audit period
occurred just prior to
her surgery. HCFA Ex. 80. The purpose of
this was to obtain consent
for the surgery given her past history of
schizophrenia and to authorize
transfer to a psychiatric unit if the surgery
put her into an acute
psychiatric episode. This consultation cannot be
considered in the
nature of treatment. There was only one other
psychiatric note in the
record for the audit period due to some aggressive
behavior. However,
this one consultation does not indicate a continued
acute episode for
which treatment was required. Thus, we conclude that
the State could
have reasonably determined that this patient was receiving
and required
only general nursing home care.
Norian
At the time of the review, this patient was 79 years old and had
been
institutionalized for 49 years. Again, the FMAS reviewer
ignored
information in the medical records relevant to the audit
period. The
records indicate the patient's diagnosis when she was
admitted into the
Meadowview ICF in 1977 was schizophrenia, residual type and
cerebral
arteriosclerosis. HCFA Ex. 72, pp. 1, 3, and 11. Dr.
Esquibel,
however, classified this patient as a patient with a mental
disability
necessitating nursing home care who has no significant
physical
problems. While the record indicates some history of
diagnoses of
schizophrenia, the record also establishes the diagnoses of
cerebral
arteriosclerosis and OBS, as well as other physical conditions such
as
arteriosclerotic heart disease (ASHD), anemia, hyperlipidemia,
and
status post cholecystectomy during the audit period. HCFA Ex. 72,
pp.
16 - 19. While Dr. Esquibel noted that because of the patient's age
she
might have organic brain syndrome, he substituted his own judgment
that
"her behavior has not substantially changed to indicate that the
primary
diagnosis should be chronic brain syndrome" with that of the
patient's
caregivers who had determined that this patient suffered from
OBS. HCFA
Ex. 33.
The record does not support Dr. Esquibel's finding that this patient
had
no significant physical problem. During the audit period, this
patient
was not seen or treated by a psychiatrist. The only arguable
treatment
was the use of psychotropic medication which was at maintenance
dosages.
State Ex. J, . 13j. While Dr. Erlich acknowledged that this
patient had
not given up all of her psychiatric symptoms, he testified that
she was
not a suitable candidate for any kind of psychiatric intervention
in
view of her age and past history, including her organic conditions.
Tr.
at 127-128. The record supports the finding that this patient
was
institutionalized in Meadowview ICF during the audit period because
she
required and received general nursing care. Thus, we cannot
sustain
HCFA's finding with regard to this patient.
Cardwell
This patient was 83 years old at the time of the review. She had
been
in an institution on and off since 1932 and steadily from 1964.
HCFA's reviewers characterized this patient's primary diagnosis
as
schizophrenic, chronic, residual type. While this patient had a
history
of schizophrenia, the records during the audit period fail to
support
the current diagnosis ascribed to this patient by Dr. Esquibel.
Rather,
the medical records do not show any mention of any positive
symptoms
during the audit period. HCFA Ex. 67, p. 4. In fact,
during that
period, a psychiatrist consultation on the patient, the only one
during
the period, indicated that her chronic schizophrenia was in
remission
and her dosage of medication should be decreased as a result.
The
doctor also took note of her other physical symptoms of ASHD
and
hypertension and the fact that the patient was having problems with
her
aging process. HCFA Ex. 67, p. 4.
During the review and during Dr. Esquibel's testimony,
HCFA
mischaracterized the medical records. While the records
certainly
indicate a history of schizophrenia, the records from the audit
period
do not state that schizophrenia was the primary diagnosis for
this
patient. We agree with the State that the records generally
show
primary diagnoses other than schizophrenia. Tr. at 1841-1842,
1847,
1849, 1851-1852, 1853; HCFA Ex. 67, pp. 4, 6, 8, 14, 16, and 17;
State
Ex. 41, pp. 15, 18, 19, 20, and 29. The records also show that
the
patient suffered from impaired mobility and as a result had a
partial
self-care deficit. HCFA Ex. 67, p. 12. She was diagnosed
having
diabetes mellitus, osteoporosis (or osteoarthritis), and hiatal
hernia,
in addition to ASHD and hypertension. HCFA Ex. 67. While
HCFA used
records before the audit period to illustrate a history of
schizophrenia
in this patient, HCFA chose to ignore other records from before
the
audit period which indicated that this patient was aging and that
she
was becoming progressively senile. The social worker remarked in
1983
that "[g]oal-setting for this 78 yr. old patient includes
supportive
therapy in the method in which we handle her advancing senility"
and,
later in 1987, a social worker stated "ICF remains an appropriate
level
of placement . . . still can only foresee an eventual recommendation
for
a SNF transfer as her level of deterioration advances." State Ex.
41,
pp. 30 and 31.
Dr. Erlich testified that this patient's mental condition was
not
contributory to her basic level of functioning and that she did
not
require institutionalization for her psychiatric conditions. Tr.
at
46-47. While Dr. Esquibel testified that it was important to look
at
the functionality of the patient, we are not convinced that he in
fact
looked at all of this patient's physical ailments and advanced
age
together in determining the reason she was institutionalized during
the
audit period. Tr. at 1606. Because he did not consider all of
the
patient's physical ailments together, we cannot reasonably
conclude,
given the other evidence, that this patient's deficit in
functionality
was because of a mental disorder.
Therefore, we do not sustain HCFA's findings for this patient.
Kellerman
This patient was about 73 years old during the audit period.
During
this period, the patient was not treated by a psychiatrist, received
no
psychotropic medication and was free of any symptoms of
active
schizophrenia. The records show that his schizophrenia had been
in
remission since at least 1977. State Ex. 42, p. 2; see also pp. 11 -
17
(the patient's medical care plans which indicate no diagnosis of
mental
illness during this period for which he would require any
treatment).
The record indicates that during this period the primary
diagnoses for
this patient were for physical disorders.
In fact, the record supports a finding that this patient's medical
needs
were acute during this period. Just prior to the review period,
the
patient was hospitalized because of chest pains and shortness of
breath.
In the hospital, he was placed in the ICU (intensive care unit),
his
lung collapsed twice and he was determined to have significant
chronic
obstructive lung disease (COPD). State Ex. 27, Tab 28. p.
15. This
patient was readmitted to the ICF with the primary diagnosis
of Post-Op
Thoracotomy, COPD, Peptic Ulcer, and ASHD. He also had a
left hip
prosthesis a few months later. State Ex. 42, p. 62.
During 1987, this
patient suffered a fractured left ankle which confined him
to a wheel
chair off and on for most of the year and made him walk with a
slight
limp. State Ex. 27, Tab 28, p. 3 and 9; State Ex. 42, p.
68. He also
suffered edema and bursitis of the left elbow, as well as a
fractured
finger of the left hand. State Ex. 42, pp. 64-67. For
this and his
ankle, he was receiving physical therapy at least three times a
week.
In 1988, this patient had surgery again on his left hip,
was
hospitalized again due to his COPD and cardiac arrhythmia, had
surgery
on his right elbow, which later had some swelling over the next
months.
State Ex. 28, pp. 19-23.
Clearly, this patient suffered from acute physical problems which
required
medical treatment and nursing care. HCFA failed to give
appropriate
attention to the records from the audit period here and
virtually ignored the
medical problems of this patient. The State's
challenge to the
reliability of Dr. Esquibel's review seems justified
here given these
circumstances and the fact that his review of this
patient overlooked
significant factors relating to this patient's
condition. 13/ Dr.
Erlich testified that "this patient were it not for
his medical condition
would be able to adjust fairly well on the outside
without having to be in a
nursing facility." Tr. at 101-103.
Thus, we do not sustain HCFA's findings for this patient. Denoia
This patient was 74 years old during the review period. HCFA argued
that
during the audit period the patient's "primary diagnosis
was
schizophrenia as documented by the medical records and history."
HCFA
Posthearing brief, p. 45. HCFA further claimed there are records
of
psychiatric consultations, physical assessments, and nurses' notes
which
document that the primary diagnosis was schizophrenia. Id.
While the record indicates that this patient had a secondary diagnosis
of
schizophrenia, undifferentiated type, HCFA did not establish that
this was
her primary diagnosis or the reason for institutionalization
during the audit
period. Furthermore, we fail to find any psychiatric
consultations
during the review period, or any medical records during
the review period
which indicate that schizophrenia is this patient's
primary diagnosis.
However, the records do show that this patient was
diagnosed just prior to
the beginning of the review period with a
primary diagnosis of diabetes
mellitus, with ASHD and OBS as a secondary
diagnosis. State Ex. 31, p.
16 and 28; see also Nurses' notes, dated
10/86 (indicating diagnoses of
diabetes mellitus, chronic cholecystitis,
ASHD, OBS, and schizophrenia,
hebephrenic type), p. 9.
These diagnoses are consistent with diagnoses made in 1985. State
Ex.
31, p. 13, 18, 36, 38, and 39. In fact, the record indicates that
a
secondary diagnoses of OBS along with diabetes mellitus,
chronic
cholecystitis, and ASHD was made by attending physicians at two
general
hospitals this patient was transferred to from the ICF
for
hospitalization. State Ex. 31, pp. 36 and 38. The
record also shows
these same diagnoses throughout the remainder of the audit
period.
State Ex. 31, pp. 16, 29, 30, 31, and 34.
While the fact that the reviewers ignored the OBS diagnosis leads us
to
question the reliability of their conclusions, the fact that
Dr.
Esquibel indicated that this patient's primary diagnosis during
this
period was schizophrenia, residual type, chronic, is further reason
to
doubt HCFA's findings. Tr. at 1878-1880, and 1882. The records
do not
show this as a diagnosis for this patient; there is only a mention of
a
secondary diagnosis, among others, of schizophrenia,
undifferentiated
type, in the records. This is another example of Dr.
Esquibel
substituting his own judgment, based on a limited review of the
records,
with the judgment of the patient's caregivers.
Dr. Erlich testified that the dosage of Loxitane this patient
was
receiving was a maintenance dose. Tr. at 61. He also
expressed a view
of this patient's capabilities and their causes consistent
with the
caregivers' evaluation indicating she would not have benefitted
from
mental health services. Tr. at 54, 59. Dr. Esquibel's
opinion to the
contrary is simply not persuasive, for reasons explained
above.
Therefore, we conclude that HCFA's findings for this patient cannot
be
sustained on the basis of the records here.
Conclusion
For the reasons explained above, we find that the record does not
support
a determination that Meadowview ICF was an IMD during the audit
period.
Accordingly, we reverse the disallowances totaling $7,354,765
in FFP for the
period October 1, 1986 through March 31, 1991.
_____________________________ Cecilia Sparks Ford
_____________________________ Donald F. Garrett
_____________________________ Judith A. Ballard Presiding
Board
Member
1. This regulation was revised in 1991 to follow the
statutory
provision and now reads that an IMD means "a hospital, nursing
facility,
or other institution of more than 16 beds that is primarily engaged
in .
. . ." The rest of the regulatory language remains the same.
2. HCFA did not allege that the three facilities were one
institution.
Rather, the issue here was whether the ICF facility was an
IMD.
3. The auditor's notes of the meeting with FMAS
representatives
indicates that the FMAS reviewers may have thought they were
to validate
patients' diagnoses, but that the auditor simply intended them
to
validate that the diagnosis codes were correct. HCFA Ex. 19,
second
page.
4. The auditor's notes of the meeting with FMAS representatives
discuss
use of the primary diagnosis and describe the primary diagnosis as
the
reason for admission. HCFA Ex. 19, second page. The auditor
testified
that it was later determined that current diagnosis should be used,
but
he did not know whether this change was ever communicated to FMAS.
Tr.
at 1269.
5. The task order for that contract stated:
The purpose of this review is to provide information
to
confirm/support a determination that an audited Title
XIX
facility (ICF/SNF) is a de facto IMD, and thus ineligible
for
Federal matching funds.
HCFA Ex. 17, p. 1.
6. HCFA has also exempted diagnoses of mental retardation and, based
on
the Board's decision in Granville House, Inc., DAB No. 529
(1984),
recognized that a diagnosis of alcoholism is not sufficient without
an
examination of the type of treatment being given, since such
treatment
does not always follow a psychiatric model. HCFA Ex. 2, fifth
page.
7. In light of this testimony, and the evidence in the records of
the
patients discussed below showing that most of the patients had
no
"positive" symptoms of the disease, we reject HCFA's assertion in
its
reply brief that the Meadowview patients were unable to take care
of
their physical illnesses outside of an ICF setting because of
an
impairment in their mental processes resulting in a "barrier
with
reality." Reply br., p. 13. HCFA's assertion was based on
a
description of the active stages of the disease, which
HCFA
unpersuasively tried to extrapolate to "the schizophrenic" in
general,
even those with no signs of the disturbance.
8. Dr. Esquibel's own testimony seemed in part to contradict this;
he
also testified that 30% of patients "recover" from the disease and
one
"could even say they are cured, . . ." Tr. at 1396, 1401.
9. In fact, Dr. Esquibel's testimony suggested a theory that
an
increase in negative symptoms during the chronic stage may be the
result
of psychotropic drugs, rather than the disease of schizophrenia.
Tr. at
1398.
10. With respect to a few of the patients at issue here, Dr.
Erlich
(the psychiatrist who testified for the State) evaluated the patients
as
having senile dementia or OBS, even though neither diagnosis
was
reflected in their records. We consider the record diagnoses to
have
more weight in determining the character of the facility, but we do
not
here reach the issue of whether these particular patients had
organic
damage since it is not necessary to our decision. We note,
however,
that Dr. Erlich's view of these patients depended in part on
his
observation of the patients and on their history of having had
numerous
electric shock treatments prior to the 1950's. Dr. Esquibel
strongly
disagreed with Dr. Erlich on whether such treatments could cause
organic
brain damage. However, we agree with the State that the
testimony and
evidence which Dr. Esquibel presented is not sufficient to
rebut Dr.
Erlich's opinion on this point. Dr. Esquibel's evidence did
not
distinguish such treatments as they were likely administered to
these
patients from the current state of the art of electric shock
therapy.
11. This lack of evidence of any mental health services
being
prescribed has added significance because New Jersey law in effect
at
the time required that, if mental health services were recommended
and
authorized following a consultation, a specific form had to be made
a
part of the patient's record. State Ex. M, p. 63-15.
12. In posthearing briefing, HCFA took the position that
"custodial
care" was treatment. This position is, in our view,
inconsistent with
HCFA's own guidelines.
13. The State pointed out that this patient had one leg shorter
than
the other. See Tr. at 1625. Dr. Esquibel disagreed with
this
conclusion. Tr. at 1625. However, there are several
mentions on two
separate occasions by the physical therapist that this
patient's left
leg was shorter than the other. HCFA Ex. 78, p. 14 and
15; State Ex.
42, p. 68. Moreover, the social worker notes indicated he
"walked with
a left leg limp." State Ex. 42, p.