GAB Decision 735
May 28, 1986
Arkansas Department of Human Services;
Docket No. 85-42
Ballard, Judith A.; Garrett, Donald F. Settle Norval D.
The Arkansas Department of Human Services (State) appealed a
determination by the Health Care Financing Agency (Agency) disallowing
$363,421.02 claimed for intermediate care facility (ICF) and mental
hospital (MH) services under Title XIX of the Social Security Act (Act)
for the quarters ending March 31, 1984, June 30, 1984, and September 30,
1984. The disallowance was taken pursuant to section 1903(g)(1)(D) of
the Act, which 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 . . . whereby the professional
management of each case is reviewed and evaluated at least anually by
independent professional review teams." /1/ During the course of the
proceedings before this Board, the Agency withdrew its allegation of
non-review for two patients. Remaining in issue here are the Agency
findings that the State failed to include in its annual reviews one
Medicaid patient in each of two ICFs, and had failed to conduct any
patient reviews for two years in one MH. Thus the total disallowance
remaining in issue is $253,318.47. /2/
(2)
As discussed below, we conclude that the Agency properly determined
that
the State failed to comply with the annual review requirement as to
one
patient in each of two ICFs and as to the MH. Thus, we uphold
the
disallowance in the reduced amount.
Our decision below is based on the parties' written submissions.
The
State was given the opportunity for an evidentiary hearing but
declined.
The State indicated that due to the extensive briefing and
documents
submitted in this matter a hearing would be an unnecessary expense
and
delay. State letter to Board, dated September 6, 1985.
Statutory and Regulatory Framework
The requirement in section 1903(g)(1)(D) for an effective program
of
annual medical reviews is amplified in sections 1902(a)(26) and (31),
as
follows:
Sec. 1902(a) A State plan for medical assistance must --
(26) . . . provide . . . for periodic inspections to be made in
all .
. . mental institutions . . . within the State by one or more
medical
review teams (composed of physicians and other appropriate health
and
social service personnel . . .) of (i) the care being provided . .
.
(ii) with respect to each of the patients receiving such care,
the
adequacy of the services available. . . .
(31) provide . . . for periodic on-site inspections to be made
in all
. . . intermediate care facilities . . . within the State by one or
more
independent professional review teams (composed of physicians
or
registered nurses and other appropriate health and social
service
personnel) of (i) the care being provided in such intermediate
care
facilities to persons receiving assistance under the State(3) plan .
.
. (ii) with respect to each of the patients receiving such care,
the
adequacy of the services available. . . . /3/
Section 1903(g)(4)(B) provides:
(B) The Secretary shall find a showing of a State, with respect
to a
calendar quarter under paragraph (1), to be satisfactory under
such
paragraph with respect to the requirement that the State conduct
annual
onsite inspections in mental hospitals, skilled nursing facilities,
and
intermediate care facilities inder paragraphs (26) and (31) of
section
1902(a), if the showing demonstrates that the State has conducted
such
an onsite inspection during the 12-month period ending on the last
date
of the calendar quarter --
(i) in each of not less than 98 per centum of the number of
such
hospitals and facilities requiring such inspection, and
(ii) in every such hospital or facility which has 200 or more beds,
and that, with respect to such hospitals and facilities not
inspected
within such period, the State has exercised good faith and due
diligence
in attempting to conduct such inspection, or if the State
demonstrates
to the satisfaction of the Secretary that it would have made
such a
showing but for failings of a technical nature only.
Implementing regulations are found at 42 CFR Part 456 (1982).
In
particular, section 456.652 provides that --
(a) . . . . (in) order to avoid a reduction in FFP, the
Medicaid
agency must make a satisfactory showing the adminstrator, in
each
quarter, that it has met the following requirements for each
recipient;*
* * (4)
(4) A regular program of reviews, including medical evaluations,
and
annual on-site reviews of the care of each recipient, as specified in
.
. . Subpart I of this part.
(b) Annual on-site review requirements. (1) An agency
meets the
quarterly on-site review requirements of paragraph (a)(4) of
this
section for a quarter if it completes on-site reviews of each
recipient
in every facility in the State, and in every State-owned
facility
regardless of location, by the end of the quarter in which a review
is
required under paragraph (b)(2) of this section.
(2) An on-site review is required in a facility by the end of
a
quarter if the facility entered the Medicaid program during the
same
calendar quarter 1 year earlier or has not been reviewed since the
same
calendar quarter 1 year earlier. If there is no Medicaid recipient
in
the facility on the day a review is scheduled, the review is
not
required until the next quarter in which there is a Medicaid
recipient
in the facility.
(3) If a facility is not reviewed in the quarter in which it
is
required to be reviewed under paragraph (b)(2) of this section, it
will
continue to require a review in each subsequent quarter until the
review
is performed.
* * * *
Discussion
In July 1984 the Agency conducted a survey to validate the State's
showing
that it had in operation the required program of medical review
for the
quarter ending March 31, 1984. The survey sought to verify that
the
required reviews were performed as reported within the twelve-month
period
ending March 31, 1984 and that any further reviews required to be
conducted
in the following two quarters were performed. As a result of
this
validation survey the Agency determined that the State had failed
to conduct
the necessary reviews of two patients, F.H. and J.T., /4/ in
Hot
Springs Nursing Home, an ICF, during the quarters ending March 31,
June 30,
and September 30, 1984; had failed to conduct a review of
Patient B.J.
in Jonesboro Human Development Center, an ICF/MR (an
intermediate care
facility for the mentally retarded), during(5) the
same three quarters;
had failed to conduct a review of Patient J.W. in
Johnson's Meadowlake, an
ICF, during the quarters ending March 31 and
June 30, 1984; and had
conducted no patient reviews for two years at
Arkansas State Hospital, an
MH. During the proceedings before the
Board, the Agency dropped its
allegation as to Patients J.T. and J.W.
I. Whether the State has shown that the statutory exception in
section
1903(g)(4)(B) is applicable here.
Before the statutory exception in section 1903(g)(4)(B) can apply,
the
State must show that it has completed reviews by the close of
the
quarter in which a review is required in every hospital or
facility
which has 200 or more beds. We asked the parties to this
appeal whether
the State conducted reviews in all facilities with 200 or more
Medicaid
certified beds requiring review during the annual period ending
March
31, 1984. See Order to Develop the Record, dated November 8,
1985, Part
11, p. 3. The Agency responded that Arkansas State Hospital
had 200 or
more Medicaid certified beds. The State did not deny that
the facility
had 200 or more Medicaid certified beds; rather, it merely
contended
that it could not say that during the disallowance period the
facility
"had 200 or more Medicaid patients." State Response to Order to
Develop
the Record, dated December 27, 1985. The relevant question as to
whether
a facility has 200 or more certified beds is not how many
Medicaid
patients were actually in the facility, but whether the facility has
200
or more beds that are certified as meeting the standards for
Medicaid
patients. See 1903(g)( 4)(B)(ii).
In order for a facility to participate in the Medicaid program, the
state
survey Agency must survey the facility to determine whether it can
be
certified as a Medicaid provider. The actions taken on the basis
of
this review are reflected on form HCFA-1539, entitled
"Medicare/Medicaid
Certification and Transmittal" (C & T). This
form indicates at No. 14
how many beds are certified at each level of care
for the particular
facility being reviewed.
Since the MH was certified to participate in the Medicaid program,
the
State certainly must have at least the C & T in its
possession.
Therefore, since the State did not produce the C & T or any
other
documents showing the number of certified beds in the facility, we
find
that the Arkansas State Hospital had 200 or more certified
beds.
Therefore, we conclude that the State has failed to meet one of
the
conditions necessary for the statutory exception in section
1903(g)(4)(
B) to apply.
Since we have determined that the statutory exception in
1903(g)(4)(B)
does not apply, we will examine the facilities which the
Agency
determined were in violation of the medical review requirements.
(6)
11. Arkansas State Hospital.
The State failed to present any arguments to rebut the Agency's finding
of
a violation for this facility; no reasons were given as to why
annual
patient reviews had not been performed for a two-year period.
Therefore, we
uphold the disallowance pertaining to this facility.
111. Jonesboro Human Development Center
The Agency assessed a disallowance for this facility on the ground
that
the State failed to include in its review Patient B.J. Patient B.J.
had
been reviewed previously on December 9, 1982 and was due to be
reviewed
in December, 1983. His name was listed on the Vendor Report
dated
November, 1983. He was not reviewed again, however, until October
1984.
The State claimed that it reviewed this patient during the
applicable
quarter but, because of an "administrative failing," did not have
the
document to substantiate its claim. The State contended that it
had
submitted other documentation to indicate that the review team
did
appear at the patient's facility. As a result, the State requested
an
exception to producing the review form for Patient B.J. The State
asked
that the Board take the evidence submitted as a whole to indicate
that
the patient had been reviewed.
There is no dispute that the review team did appear at the
facility.
However, this fact alone is not sufficient to allow us to find, as
the
State requested, that the patient in question was reviewed. The
State
claims that the one piece of documentation, i.e., the Inspection of
Care
Form, is lost. This form apparently is the State's means
of
establishing that the review team personally contacted and observed
the
patient as well as reviewed the patient's records as required by 42
CFR
456.608 (1983). Moreover, this document would contain
the
determinations made by the team regarding the adequacy of the
care
provided to the patient. The team must submit a report which
contains
specific findings about individual recipients. 42 CFR 456.611
(1982).
While it is conceivable that the State could have used other means
(such
as an affidavit from a member of the review team or testimony at
a
hearing) to substantiate its assertion that the review for this
patient
had been performed, the State failed to provide any form of
evidence
related to the actual review of this patient in December 1983.
/5/
(7) Therefore, for these reasons, we uphold the disallowance for
this
facility.
IV. Hot Springs Nursing Home.
The State essentially argued that it had demonstrated that it
maintained
an effective medical review program in that timely inspections of
care
were conducted at this facility. A medical review team conducting
an
inspection of care in an institution in Arkansas relies on a
"Vendor
Report" for a list of Medicaid recipients to be reviewed. The
Vendor
Report is generated monthly (usually around the 24th of each month),
and
includes each recipient's name, Medicaid number, entry and exit
dates,
dates served, and amount paid. The State contended that the
review
team's reliance on the most current Vendor Report is reasonable
even
though the report may not include the names of patients
determined
Medicaid-eligible and financially eligible within the previous
two
months. For information more recent than that contained in the
Vendor
Report, the State said the team is dependent upon the administrator
of
the facility. The State argued that the accuracy and completeness
of
the administrator's information is beyond its control.
Patient F.H., having previously been determined Medicaid-eligible,
was
determined to be financially eligible for Medicaid benefits
for
institutional services on September 16, 1983. His name did not
appear
on the Vendor Report dated September 24, 1983, which was utilized by
the
review team in conducting its review on October 24 of that
year.
Patient F.H. was discharged from the institution on October 1,
1984,
never having been reviewed. /6/
There is no dispute that Patient F.H. had been determined in
all
respects to be Medicaid eligible prior to the review and was present
in
the facility throughout the review. The record(8) shows that
Patient
F.H. was determined eligible to receive benefits on September 16,
1983,
and the copy of that determination was received by the State's Long
Term
Care Office on September 19, 1983. The State's review of Hot
Springs
Nursing Home began October 24, 1983. Thus, the determination
of
eligibility was made over one month prior to the beginning of
the
review. Moreover, the State admitted that the Vendor Report may
not
include a patient's name for at least two months from the
date
eligibility was determined.
The regulations, however, require an annual review in each facility of
the
care of "each recipient." A "recipient" is defined generally as
"an
individual who has been determined eligible for Medicaid." 42
CFR
400.203 (1982). The State argued it was reasonable here to rely on
the
September 24, 1983 Vendor Report. However, in view of the fact that
the
State admitted that Patient F.H.'s name probably would not appear
until
the November 24, 1983 Vendor Report was issued, we conclude that
the
State could not reasonably have relied on the September 24, 1983
report
without some interim State-generated update of this report. The
State
never established that an interim update based on information
received
by the State's Long Term Care Office was not possible in this
instance.
The State indicated instead that it was dependent on the
facility's
administrator to update the information and that the accuracy
and
completeness of the administrator's information was beyond the
State's
control. The State provided a copy of the Vendor Report used
for this
facility's review. This report contained handwritten notations
which
the State indicated showed the information provided by the facility
to
the review team to update the Vendor Report. The State, however,
failed
to indicate why Patient F.H.'s name was not included when other
patients
who appeared to have been determined eligible at or about the same
time
were included. In North Carolina Department of Human Resources,
supra,
the State of North Carolina made similar arguments as well as
contending
that Agency policies and procedures, specifically, the Agency
Medical
Assistance Manual (MSA-PRG-25), dated November 11, 1982, permit
states
to rely on information provided by the facility regarding
current
Medicaid eligibles. The Board, after examining the language of
the
Manual, as well as the preamble to the final regulations
implementing
1903(g), was not persuaded that the language cited by North
Carolina
articulated a policy to permit the states to restrict reviews
to
patients identified by the facility as eligible for Medicaid.
The
Board, found that the language did not provide a basis for
permitting
states to abdicate their responsibility to verify any
information
provided by the facility. See, North Carolina Department of
Human
Resources, supra, at 5-6. (9)
Moreover, the State here did not provide any evidence on how the
State
informed the facility that a patient had been determined eligible
for
Medicaid and whether the eligibility information was given to
the
facility by the State in a timely manner; and whether the
directions
given the facility on how to update the Vendor Report were
adequate to
identify all Medicaid recipients not on the report. Thus,
even if the
State could demonstrate that it had been unable to update its
Vendor
Report itself, the State would not prevail here because the State
has
not shown that the failure to include Patient F.H. was the fault of
the
provider and not the fault of the State's system. /7/
For these reasons, we uphold the disallowance pertaining to Hot
Springs
Nursing Home. /8/
(10)
Conclusion
For the foregoing reasons, we sustain the disallowance pertaining
to
Arkansas State Hospital, Jonesboro Human Development Center, and
Hot
Springs Nursing Home. /1/ Amendments to section 1903(g) as
contained in
section 2363 of the
Deficit Reduction Act (DEFRA) of 1984,
enacted July 18, 1984, Pub. L. 93-369,
have eliminated all utilization
control requirements other than the medical
review requirement as a
basis for reductions in federal financial
participation. /2/
Since the
Agency withdrew its allegation as to Patient J.W., the
disallowance
calculation for the quarter ending March 31, 1984 should be
reduced since
that patient was the only violation alleged for Johnson's
Meadowlake
Home. According to our calculations, the reduction would
change the
disallowance calculation for the quarter ending March 31,
1984 as follows:
19,256,383 x 1/3 x 2/115 x 16,810/17,815 = $106,810.65.
Thus, it appears that
the total disallowance at issue is $253,318.47. If
this figure is incorrect
and the parties cannot agree on the correct
calculation, they may return to
the Board. /3/ DEFRA
also
amended the language of subsections (26) and (31) of section
1902(a),
effective July 18, 1984. The statutory language quoted here
was the
applicable law during most of the disallowance period. The
amendments
changed requirements relating to the composition of the review
teams but
made no change relevant to our decision
here. /4/ The patients
are
identified by their initials to protect their privacy. /5/ We
note
that while the State does not
qualify for the statutory
exception, Action Transmittal 77-106 states that
disorderly record
keeping would not constitute good faith and due diligence
under the
exception. Losing a document may result from disorderly
record keeping.
/6/ We note here in the case of Patient F.H., and for Patient
B.J.
discussed immediately above, that the disallowance taken was for
the
quarters ending March 31, 1984, June 30, 1984, and September 30,
1984.
The reviews for these patients, however, were due to be performed by
the
quarter ending December 31, 1983. While the State did not argue
that
the Agency was wrong in imposing a disallowance for quarters beyond
the
quarter in which the facility was required to be reviewed, the
Board
previously has found clear authority in section 1903(g)(1)
and
1903(g)(5) for continuing disallowances for each quarter for which
a
satisfactory showing is not made. See, North Carolina Department
of
Human Services, Decision No. 728, March 18, 1986; Michigan
Department
of Social Services, Decision No. 491, December 30,
1983. /7/ The
State also
argued that the provision under Medicaid for retroactive
eligibility was the
reason the State failed to identify and review
Patient F.H. The State,
however, did not dispute the Agency's position
that the federal reviewers
recognized that if a patient was not
certified Medicaid eligible at the time
of the survey, but subsequently
was certified eligible retroactively to a
date prior to the survey,
there was no way the survey team would have known
to survey this
patient. In recognition of this, the surveyors checked
the date the
retroactive eligibility determinations were made.
Consequently, the
surveyors found a failure to review for whom the
eligibility
determination predated the onsite
survey. /8/ By our
finding
here, we do not imply that the retrospective identification by
the
Agency of one or more patients omitted from a medical review
is
necessarily always a proper basis for a finding that the State
violated
the on-site medical review requirement. We have found in other
cases
that the patients identified by the Agency did not have to be
reviewed.
See, e.g., North Carolina Department of Human Resources, Decision
No.
728, March 18, 1986.