DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Maine Department of Human Services
Docket No. 86-152
Decision No. 857
DATE: April 2, 1987
DECISION
The Maine Department of Human Services (State/Maine) appealed
a
determination by the Health Care Financing Administration
(HCFA/Agency)
disallowing $159,164.65 in federal Medicaid funding claimed by
the State
under Title XIX of the Social Security Act (Act) for the quarters
ending
September 30 and December 31, 1985. HCFA based the disallowance
on its
finding that Maine failed to make a satisfactory showing that it had
a
system of annual medical reviews, as required by section 1903(g)(1)
of
the Act. HCFA found that the State did not conduct acceptable
onsite
reviews of patient care (also known as inspection of care reviews)
at
three intermediate care facilities (ICFs). During the course of
this
appeal, HCFA withdrew its findings of violations at two of
the
facilities. Thus, this decision concerns an alleged violation at
the
D'Youville Pavillion for the quarter ending September 30, 1985.
HCFA
revised the disallowed amount to $39,835.19.
HCFA alleged that Maine's practice of not reviewing patients who
became
Medicaid recipients during the same month that an inspection of
care
review was conducted, but instead reviewing these patients during
an
inspection of care six months later, violated the general
requirement
that all Medicaid recipients in a facility at the beginning of
an
inspection must be reviewed. Maine contended that its system
of
semi-annual reviews, conducted at regular six-month intervals, more
than
satisfied the requirements for annual medical reviews.
Based on our analysis, we find that Maine's system as it has been
applied
in these circumstances satisfies the annual review requirements.
Accordingly,
we reverse this disal- lowance.
What the requirements are
Section 1903(g)(1) of the Act provides for the reduction of a
state's
federal medical assistance percentage of amounts claimed for a
calendar
quarter unless the state shows that during the quarter it had --
. . . an effective program of medical
review of the care of
patients . . .
pursuant to paragraphs . . . (31) of
section
1902(a) whereby the professional
management of each case is
reviewed at
least annually by an independent professional
review
team.
Section 1902(a)(31) requires in pertinent part that a state plan
provide
--
(B) with respect to each . . .
intermediate care facility
within
the
State, for periodic onsite inspections of the care
being
provided to each person receiving medical assistance, by
one
or
more independent professional review teams . . . .
Although the statute refers to each case being reviewed annually,
HCFA
implemented the onsite review requirement as a "facility- based"
system.
Under this system, inspections are considered timely if performed by
the
end of the calendar quarter in which the facility entered the program
or
the quarter in which the facility had been inspected the previous
year.
See 42 CFR 456.652(b)(2). The preamble to this regulation
explained --
Under this interpretation, States would
not be required to track
the length of
time each individual recipient was in a
facility,
and the review date would not
relate to the length of stay of any
individual recipient in that facility.
44 Fed. Reg. 56335 (October 1, 1979).
The regulation at 42 CFR 456.654 requires the states to list in
their
quarterly showings all facilities requiring reviews and the dates
the
facilities are reviewed.
The early cases finding violations of the annual review
requirements
presented situations where whole facilities were unreviewed or
where the
reviews were found inadequate for reasons such as improper
composition
of the review teams. 1/
This Board first addressed issues concerning the adequacy of an
inspection
of care which failed to include all Medicaid recipients in
the facility in a
case where the state's system was designed to review
only a small percentage
of recipients. Vermont Agency of Human Services,
Decision No. 599, December
10, 1984. The Board concluded that Vermont
should have known that its
system was unsatisfactory. This conclusion
was based on the reference
in the statute to "each case" and "each
person" and on the provisions in the
HCFA regulations which require
review of each recipient's medical record (42
CFR 456.608) and
submission of a report by the IOC team containing specific
findings
about individual recipients in the facility (42 CFR
456.611(b)(2)).
Vermont, supra at 4.
A series of subsequent Board decisions addressed questions concerning
what
was meant by the phrases "each recipient" and "in the facility," in
HCFA
regulations. The Board rejected the argument made by several
states
that the requirements applied only to individuals for whom a
state was
actually making Medicaid payments prior to the review. See
West
Virginia Department of Human Resources, Decision No. 686, August
21,
1985. The term "recipient" is defined for Medicaid purposes, unless
the
context otherwise requires, as an individual who has been determined
eligible
for Medicaid. 42 CFR 400.203. On the other hand, the
Board
rejected HCFA's position that anyone in the facility at the start of
the
inspection must be reviewed if the state had made any
eligibility
determination for that patient by that date. The Board recognized
that
states may need to examine various aspects of eligibility prior
to
authorizing Medicaid payments for an individual in a facility and
that
information might not be readily available to the inspection of
care
team on the date the determination process is completed. Thus,
the
Board held that failure to include a patient in a facility review
did
not constitute a violation of the annual review requirements if a
state
had (and followed) a system reasonably designed to identify
all persons who had been determined fully eligible. See, e.g.,
Idaho
Department of Health and Welfare, Decision No. 747, April 28,
1986;
Texas Department of Human Services, Decision No. 830, January 27,
1987;
and Pennsylvania Department of Public Welfare, Decision No.
840,
February 20, 1987.
With respect to the phrase "in the facility," HCFA has said that it
means
recipients in the facility at the start of the review. This
interpretation
has not previously been contested by the states directly,
although questions
have arisen concerning whether a state had to review
patients absent from a
facility during all or part of a review. The
Board rejected HCFA's
contention that a state was required to review any
recipient for whom a bed
in the facility had been reserved; the Board
found that recipients who were
temporarily hospitalized (and therefore
absent from the facility) during the
facility inspection did not need to
be included. See Pennsylvania
Department of Public Welfare, Decision
No. 746, April 28, 1986. On the
other hand, the Board agreed with HCFA
that a state was not excused from
reviewing patients absent from a
facility for a short period in circumstances
where the review team could
have easily arranged a review. See Indiana
Department of Public
Welfare, Decision No. 781, August 28, 1986, p. 10,
n.6.
Each of these issues has arisen, however, in the context of state
review
systems where the inspections of care were scheduled only once a
year.
The issue in this case is whether the State met the statutory
and
regulatory requirements even though it did not include all patients
in
each inspection, given that the State had a system providing for
review
of those patients within six months. Below, we first discuss
the
State's system and HCFA's findings here. We then explain why we
find
that the requirements were met here and why we do not find
HCFA's
arguments to the contrary to be persuasive.
The State's system and what HCFA found
The facts of this appeal are not in dispute. Maine conducts
inspection
of care (IOC) reviews at each ICF in the State every six
months. During
a facility inspection, the IOC team reviews all
recipients in the
facility except those admitted or placed in recipient
status during the
month in which the inspection occurs. The omitted patients
are reviewed
as part of the next IOC review, six months later.
Maine offered several reasons why it does not review recently admitted
or
authorized recipients. The State noted that these individuals have
just
been subject to "intensive review"
regarding their need for admission, pursuant to 42 CFR 456.305 et seq.
The
State reasoned that an IOC review shortly thereafter would be likely
to
produce only redundant information, while a review six months later
would be
more meaningful. Further, Maine indicated that it understood
the annual
review requirements to be satisfied so long as the patients
were included in
the next semi-annual review. See Maine Ex. 28, p. 2;
see also, HCFA Ex.
1.
HCFA based its allegation of a deficiency at D'Youville Pavillion on
the
fact that, during a June 1985 review, Maine's IOC team did not
review
two Medicaid recipients, patients Y.B. and E.T. 2/ The
D'Youville
inspection began June 17, 1985. Patient Y.B. was determined
Medicaid
eligible on June 10, 1985 and patient E.T. was Medicaid
determined
eligible on June 12. As was Maine's practice, neither
patient was
reviewed during the June 1985 review. However, both
patients were
included in the subsequent IOC review which began on December
9, 1985.
Although eligibility determinations for both these patients
occurred
only a few working days prior to the start of the IOC review, Maine
did
not allege that the review team did not have ready access to
the
patients' eligibility information.
Analysis
The facts leave little doubt that, in general, Maine's system
of
semi-annual IOC reviews meets the statutory goal. As the State
pointed
out, its system guarantees that the vast majority of long-term
care
patients will be reviewed twice annually, and increases the
likelihood
that patients residing in a facility less than one year will
receive at
least one review annually.
The key issue here is whether the State's practice of not including
in
each six-month inspection recipients who were admitted or authorized
in
the month of that inspection violates the annual review
requirements.
According to HCFA, the statute and regulations, as well as
prior Board
decisions, dictate that Maine was obligated to review all
Medicaid
recipients present in a facility at the start of each
inspection. HCFA
pointed to no specific language in the statute which
conflicts with the
State's practice, but relied on the wording in the
regulations quoted
above.
In response, the State argued that previous applications of the
regulatory
language were in the context of a system of yearly
inspections. The
State pointed out that HCFA regulations permit
inspections more frequently
than once a year, and argued that language
concerning review of each
recipient had to be considered in the context
of the State's semi-annual
review system. Maine relied on the
regulatory provision at 42 CFR
456.606, which provides:
The team and the agency must determine,
based on the quality of
care and
services being provided in a facility and the
condition
of recipients in the facility,
at what intervals inspections will
be
made. However, the team must inspect the care and
services
provided to each recipient in
the facility at least annually.
This regulation focuses on the statutory goal of reviewing each
recipient
at least annually. In effect, the State used this as a basis
for
reading the next provision in the regulations (section 456.608,
which
provides that "the team's inspection must include . . . contact
with and
observation of each recipient . . . .") as meaning contact with
and
observation of each recipient in the facility who had been
determined
eligible prior to the month of a semi-annual inspection.
Contrary to what
HCFA argued, this reading does not conflict with any
specific language in the
regulation. Since any recipient not reviewed
would be included in the
team inspection six months later, the State's
reading is consistent with and
permits the State to meet the goal, which
is the condition specified for
states choosing to conduct inspections at
more frequent intervals.
HCFA acknowledged that a semi-annual review system like Maine's
is
desirable but argued that "if such reviews are undertaken they must
be
complete." HCFA Brief, p. 7. By this, HCFA meant that each
review must
include each recipient in the facility at the start of the
review.
However, if this is what HCFA intended for reviews at more
frequent
intervals than once a year, HCFA could have easily specified this in
its
policy guidance. Absent clear guidance from HCFA that this is what
it
intended, HCFA cannot fairly impose a funding reduction on Maine for
a
system which is in every other respect more than satisfactory, and
which
meets the condition which is specified in the regulations at 42
CFR
456.606. Notice is particularly critical here where the
State
apparently had the ability to identify and review these patients
during
the inspection in question, but intentionally did not include them
in
this inspection because of a belief that it would be sufficient
to
include them in the inspection six months later.
In its brief, HCFA relied on Board decisions for the proposition that
"in
an on-site review all eligible Medicaid recipients present in the
facility at
the start of the review must be reviewed." HCFA Brief, p.
4. This
fails to consider that those decisions were in the context of
inspections
performed on a yearly basis. Moreover, many of those
decisions have not
adopted HCFA positions that fail to take into account
the purposes of the
annual review requirement and the administrative
difficulties states may
encounter in attempting to meet it. HCFA also
misconstrued Board
decisions when it argued that this case should be
distinguished from past
decisions finding no violation where recipients
were missed "due to error,
computer delay, or inadvertence." HCFA
Brief, p. 5. While a few
of those cases did involve error or delay,
that error or delay occurred in
the process of determining eligibility
for Medicaid and making that
information available to the review team in
a timely manner, so that the
state involved missed a facility resident
who had been determined Medicaid
eligible, even though that state had
(and had followed) a system reasonably
designed to identify and review
all Medicaid recipients. Here, while
the State's decision to omit
certain patients was deliberate, that decision
must be viewed in light
of the State's semi-annual review system, which did
aim to review all
recipients in a timely manner. Thus, the distinction
HCFA pointed out
is not a meaningful one.
HCFA argued that the State's system was unacceptable because it was
not
consistent with the "facility-based" review system which was adopted
in
the regulations. As the State pointed out, however, it was not
tracking
the length of time individual recipients were in the facility.
The
State simply had a system of inspecting each facility twice a year,
so
that it knew when it chose not to include newly admitted or
authorized
recipients that they would be reviewed six months later.
3/
Prior Board decisions which discussed HCFA's facility-based
review
system did so as a basis for rejecting arguments by states, which
had
developed systems of annual facility reviews, that they
could
demonstrate compliance by showing that the recipients who were missed
in
a facility review (without an acceptable explanation) were
nonetheless
reviewed within a year after they were determined Medicaid
eligible. In
these states, the system did not automatically provide for
review six
months later, as Maine's did; in most instances, the
individuals
received a later review because HCFA had picked up the state's
error in
its survey.
HCFA also challenged the reasons why the State chose to wait to review
the
newly admitted or authorized recipients, arguing that the
"Patient
Classification" review the State performed on admission or
authorization
to determine an individual's appropriate level of care was
not
equivalent to an inspection of care review. HCFA is correct on
this
point. On the other hand, there clearly is some overlap between
a
"Patient Classification" review and an inspection of care since
both
examine the appro- priateness of the patient's placement at a
particular
level of care. While the inspection of care also examines
the adequacy
of care the facility is providing to meet the patient's needs,
we do not
think that the State is unreasonable in thinking that this aspect
of the
review will be more meaningful after the patient has resided in
the
facility for a period of time.
Finally, HCFA objected to Maine's system on the basis that, under
the
system, compliance would depend on the "fortuitous occurrence" of
having
no new Medicaid eligibles in the month of review. HCFA called
this a
"haphazard" result. HCFA Brief, pp. 6-7. This objection is
based,
however, on HCFA's view that the State could not be considered
in
compliance unless it included in each inspection every patient who
had
been determined eligible and was in the facility at the start of
the
review. For the reasons explained above, we have concluded that,
absent
guidance to the State that this was what HCFA intended, HCFA
cannot
fairly hold the State to this standard.
Accordingly, we conclude that this disallowance should be reversed. 4/
Conclusion
Based on the foregoing analysis, we find that there was no violation
at
the D'Youville Pavillion. Accordingly, we reverse the
disallowance.
________________________________
Cecilia
Sparks Ford
________________________________
Donald
F. Garrett
________________________________
Judith
A. Ballard Presiding Board Member
1. Apparently, Congress concluded that the Agency
was applying the
annual review requirements too rigidly. In 1977,
Congress added section
1903(g)(4) of the Social Security Act, providing that
reductions should
not be imposed in certain limited circumstances, even if a
state failed
to review every facility. The State did not argue here
that the
statutory exceptions applied.
2. We refer to the patients by their initials to
protect their
privacy.
3. The State also noted that HCFA's concern that it
might encounter
difficulties in surveying the State's compliance with the
annual review
requirement was unjustified. The State pointed out that
it could easily
provide HCFA with information showing that any patient not
included in
one inspection because of the State's policy was reviewed six
months
later. This might not wholly respond to HCFA's concern since it
is
possible that HCFA would perform a compliance survey before the
next
six-month review by the State. This concern is not one which has
been
articulated by HCFA, however, and, in any event, would not justify
the
result here, absent clear guidance by HCFA that a state must take
this
into account in setting up its review system.
4. Maine also raised issues of notice and
estoppel. Given our
conclusions here, we do not need to address these
issues.