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Date: February 18, 1999

In the Case of:

CHS Home Health Agency,
Petitioner,

- v. -

Health Care Financing Administration.

Docket No. C-97-405
Decision No. CR577

For the reasons stated below, I conclude that CHS Home Health Agency, San Francisco, California (Petitioner or Agency), was not in substantial compliance with Medicare conditions of participation (COP) governing home health agencies (HHAs). Accordingly, the Health Care Financing Administration (HCFA) was authorized to terminate Petitioner's Medicare participation agreement.

I. Background

A. Applicable law and regulations

The applicable law for providers, including HHAs whose participation in the Medicare program has been terminated, has been set forth in numerous decisions, including Prescribed Care, Inc., DAB CR492 (1997), and CSM Home Health Services, Inc., DAB CR440 (1996), aff'd, DAB 1622 (1997). The discussion below reflects the applicable law as stated in those decisions.

Section 1861(m) of the Social Security Act (Act) describes the covered services that HHAs provide under the Medicare program. The statutory requirements for HHAs, including COP, are described in section 1861(o) of the Act.

The Secretary of the United States Department of Health and Human Services (Secretary) has issued regulations which govern the participation of HHAs in the Medicare program. These regulations are contained in 42 C.F.R. Part 484. Specifically, the provisions contained in 42 C.F.R. �� 484.10-484.52 set forth the Secretary's requirements for Medicare participation of HHAs and establish COP for these entities. The regulations express these COP as broadly stated criteria. For example, the provisions of 42 C.F.R. � 484.14, the COP for Organization, services, and administration, state:

Organization, services furnished, administrative control, and lines of authority for the delegation of responsibility down to the patient care level are clearly set forth in writing and are readily identifiable. Administrative and supervisory functions are not delegated to another agency or organization and all services not furnished directly, including services provided through subunits are monitored and controlled by the parent agency. If an agency has subunits, appropriate administrative records are maintained for each subunit.

The regulations also set forth standards of participation as subsidiary components of the COP. As an example, the standard for the duties of the administrator of a HHA, contained in 42 C.F.R. � 484.14(c), includes but is not limited to: organizing and directing the agency's ongoing functions; maintaining liaison among the governing body, professional personnel and staff; employing qualified personnel and ensuring adequate staff education and evaluations; ensuring the adequacy of public information materials and activities; and, implementing an effective budgeting and accounting system.

The Secretary is required to determine whether a Medicare provider of services, including a HHA, is complying substantially with the Medicare participation requirements established by the Act and regulations. Act, section 1866(b)(2). The Secretary may terminate the participation in Medicare of a provider which the Secretary finds not to be complying substantially with participation requirements. Act, section 1866(b)(2)(A).

The process and criteria for determining whether a provider is complying substantially with Medicare participation requirements are established by regulations published at 42 C.F.R. Part 488. The Secretary, through HCFA, has entered into agreements with State survey agencies, pursuant to the Act and regulations, to conduct periodic surveys of providers, including HHAs, in order to ascertain whether the providers are complying with Medicare participation requirements. Act, section 1864(a); 42 C.F.R. �� 488.10, 488.11, 488.20.

State survey agencies conduct surveys of HHAs and make recommendations to HCFA as to whether such facilities meet federal participation requirements for the Medicare program. Id. HCFA considers survey results from the State survey agencies as the bases for its determinations regarding the initial or continued participation of HHAs in the Medicare program.

In determining whether a provider is compliant with a particular COP, the State survey agency evaluates the manner and degree to which the provider satisfies the various standards within each condition. 42 C.F.R. � 488.26(b). The State survey agency documents its findings on HCFA Form 2567, which the provider receives after the survey is completed. The State survey agency also makes a recommendation to HCFA as to whether there is a basis for termination. HCFA may accept or reject the recommendation after reviewing the survey findings.

HCFA may terminate participation in Medicare when it determines, either on its own initiative or based on a State survey agency report, that a provider is not complying with one or more Medicare COP. See 42 C.F.R. �� 488.20, 488.24, 488.26. Failure to comply with a COP occurs where deficiencies, either individually or in combination, are "of such character as to substantially limit the provider's . . . capacity to furnish adequate care or which adversely affect the health and safety of patients . . . ." 42 C.F.R. � 488.24(b).

Where HCFA determines that there is a deficiency, but that the deficiency is not so severe as to constitute a condition-level deficiency, then HCFA may not terminate the provider's participation in the Medicare program without first affording the provider the opportunity to correct the deficiency. 42 C.F.R. � 488.28.

Termination of participation is a remedy intended to protect the health and safety of program beneficiaries, it is not a punishment. Termination of participation should be invoked in the circumstances where a provider's deficiency or deficiencies establish that the provider is substantially incapable of providing care consistent with Medicare participation requirements. Termination should not be invoked unless the evidence proving a provider's failure to comply with participation requirements establishes that the provider cannot provide care consistent with that which is required by the Act and regulations. CSM Home Health Services, Inc., DAB CR440 (1996), at 3; Prescribed Care, Inc., DAB CR492 (1997), at 3.

Generally, a determination as to whether a provider is not complying with COP depends on the extent to which that provider is found not be complying with the standards that are components of that condition. 42 C.F.R. � 488.26(b). A provider may be found not to have complied with a condition of participation where it is shown that a provider has committed a pattern of failures to comply with the standards that comprise the condition. But, proof of a pattern of failures to comply with a standard or standards may not be the only basis to find that a provider has failed to comply with a condition of participation. The determinative issue in any case where noncompliance is demonstrated is whether the failure to comply is so egregious as to show that the provider is not capable of providing care consistent with that which is required by the Act and regulations. CSM, at 4; Prescribed Care, at 3.

B. Burden of proof

The burden of proof in this case is governed by the decision of an appellate panel of the Departmental Appeals Board (DAB) in Hillman Rehabilitation Center,

DAB 1611 (1997). Under Hillman, HCFA bears the burden of coming forward with evidence sufficient to establish a prima facie case that Petitioner failed to comply with participation requirements. Once HCFA establishes a prima facie case of noncompliance, Petitioner has the burden of proving, by a preponderance of the evidence, that it complied substantially with participation requirements. Hillman, at 3-8.

In determining whether HCFA has met its burden of establishing a prima facie case, I may consider rebuttal evidence offered by Petitioner that HCFA's evidence is neither credible or relevant to the issue of Petitioner's compliance with participation requirements or that the weight of the evidence establishes that the regulatory deficiency alleged by HCFA did not occur. If I conclude that the preponderance of the evidence establishes that such circumstances exist, then I will find that HCFA has not met its burden of establishing a prima facie case (but rather, that its case is based on unsubstantiated allegations) and Petitioner will not be obligated to prove that it was substantially complying with participation requirements.⁽¹⁾

C. Procedural history of this case

The California Department of Health Services (CDHS) conducted a recertification survey of Petitioner, which concluded on February 6, 1997. CDHS also conducted a follow-up survey of Petitioner, which concluded on

April 23, 1997. At the conclusion of each survey, CDHS determined Petitioner to be out of compliance with two COP, namely, Organization, services, and administration, 42 C.F.R. � 484.14, and Evaluation of the agency's program, 42 C.F.R. � 484.52. By letter dated May 27, 1997, HCFA notified Petitioner that CDHS found deficiencies during the follow-up survey. HCFA found Petitioner out of compliance with the two COP CDHS identified, and notified Petitioner that its Medicare provider agreement would be terminated on June 16, 1997. Petitioner filed a request for hearing.

I held a hearing in this case on January 6-8, 1998, in San Francisco, California. Following the hearing, the parties submitted posthearing briefs and reply briefs. The parties also submitted proposed findings of facts and conclusions of law.

After the hearing, HCFA contended that it discovered substantial prejudicial error in the hearing transcript, due to missing language. HCFA requested a review of the hearing tape, and amendment of the transcript to reflect words missing from the testimony of a witness.⁽²⁾ HCFA also restated its objection to my ruling at the hearing to admit Petitioner's Exhibit (P. Ex.) 1 into evidence. HCFA Opening Posthearing Memorandum (HCFA Br.) at 7-8. Finally, HCFA attached a document to its posthearing briefs that was not included as a proposed exhibit either during the prehearing document exchange, or introduced for admission into the record at the hearing. I address each of these matters below.

With regard to the purported transcript error, HCFA contended that the missing words in the testimony of the witness in question, Dr. C. Allen Wall, completed "a thought that bore directly on HCFA's contention that the petitioner was out of compliance with" the COP for Organization, services, and administration. HCFA also asserted that the transcript had to reflect the witness' complete statement in order for me to assess his credibility. Finally, HCFA argued that absent a correction to the transcript, it could not include material information elicited from the witness during his testimony in its brief and proposed findings of fact and conclusions of law.⁽³⁾

At my request, the court reporting service reviewed the relevant portion of the hearing tapes in this case. The service stated that, as to the witness statement(s) HCFA alleges to be missing, the witness' counsel cut off his testimony, which is why a double dash appears in the transcript. The service stated that any words the witness may have uttered at this point are faint and indistinguishable, and cannot be heard over counsel's voice. Thus, review of the hearing tapes did not clearly indicate any transcription error, and absent a stipulation by the parties to add the language HCFA counsel alleges to be missing, I did not order any changes to the transcript.⁽⁴⁾

With regard to the admission into evidence of P. Ex. 1, HCFA repeated its objection to the admission of this exhibit, a document entitled CHS Home Health Agency - Policies and Procedures, at the hearing, stating that:

[A] specific request was made of Petitioner to produce its policies and procedures manuals at the time of the follow-up survey which was completed on April 23, 1997; the policies and procedures manuals produced at the time of the survey were markedly different from Petitioner's Exhibit 1, most provisions of which are dated after the follow-up survey was completed.

HCFA Br. at 7-8.

HCFA argued that the survey process is the means to determine an entity's compliance with Medicare COP, citing to 42 C.F.R. � 488.26(c). HCFA also cited a decision by an appellate panel of the DAB in Carmel Convalescent Hospital, DAB 1584 (1996), to support its contention that when an entity's participation in Medicare is terminated because of alleged non-compliance with one or more COP, "the critical date for establishing compliance is the survey date." Carmel, DAB 1584 (1996), at 12. Therefore, in HCFA's view, actions that Petitioner took or documents Petitioner created after the CDHS follow-up survey ended were not relevant to the survey process, and should not be admissible. HCFA Br. at 8.

As I stated when admitting P. Ex. 1 into evidence at the hearing, HCFA's objection(s) appear to relate more to the weight to be assigned to the information contained in P. Ex. 1, rather than to its admissibility. Transcript (Tr.) 696. HCFA has presented no new argument or made any showing that would persuade me to reconsider my ruling on the admissibility of P. Ex. 1.

With regard to a document submitted following the hearing, HCFA attempts to introduce new evidence in its initial posthearing brief, by appending an excerpt from a publication by the American Nurses Association entitled "Standards of Home Health Nursing Practice." HCFA refers to this document in an apparent effort to bolster its allegation that Petitioner had not complied with the standard for coordination of patient services under 42 C.F.R. 484.14(g). HCFA Br. at 44, n.18.

HCFA was apprised of the schedule for submitting exhibits in my Prehearing Order dated August 25, 1997, and did not submit these documents as proposed exhibits during the prehearing document exchange. Nor did HCFA seek admission of this document as an exhibit at the hearing, or seek permission to add this document as an attachment to its brief. Under such circumstances, it is patently unfair to Petitioner to allow HCFA to introduce a new exhibit at this late date, when there is no opportunity for Petitioner to review or object to the document or to obtain witness testimony related to it. Due to the obvious breach of due process, I reject and will not consider this untimely exhibit or any argument which relies upon references thereto.

II. Issue to be decided

Since Petitioner stipulated at the hearing that it was out of compliance with two COP at the conclusion of the first survey on February 6, 1997,⁽⁶⁾ the issue before me is whether Petitioner remained out of substantial compliance with Medicare COP at the completion of the follow-up survey on April 23, 1997.

III. Findings of fact and conclusions of law

1. At all relevant times to this case, Petitioner was a HHA that participated in the Medicare program.

2. On February 6, 1997, CDHS, acting as an agent for HCFA, completed a Medicare recertification survey of Petitioner, pursuant to 42 C.F.R. � 488.10, to determine Petitioner's eligibility to continue participation in the Medicare program. HCFA Ex. 5.

3. At the completion of the recertification survey on February 6, 1997, CDHS found Petitioner out of compliance with two COP, namely, Organization, services and administration, 42 C.F.R. � 484.14, and Evaluation of the agency's program, 42 C.F.R. � 484.52. HCFA Ex. 5.

4. Based upon the survey findings, CDHS advised Petitioner that sanctions, including termination, could be imposed against it unless it submitted an acceptable plan of correction and took necessary steps to achieve compliance. 42 C.F.R. � 488.28.

5. On April 23, 1997, CDHS completed a follow-up Medicare certification survey of Petitioner, to determine the Agency's eligibility to continue participation in the Medicare program. HCFA Ex. 3.

6. At the completion of the follow-up survey on April 23, 1997, CDHS found and certified to HCFA that Petitioner remained out of compliance with two COP for HHAs, specifically, Organization, services and administration, 42 C.F.R. � 484.14, and Evaluation of the agency's program, 42 C.F.R. � 484.52. HCFA Ex. 2-4.

7. By letter dated May 27, 1997, HCFA notified Petitioner that it found Petitioner out of compliance with two COP, specifically, Organization, services and administration, 42 C.F.R. � 484.14, and Evaluation of the agency's program, 42 C.F.R. � 484.52, and that its participation in the Medicare program would be terminated June 16, 1997. HCFA Ex. 1.

8. As a matter of law, HCFA may terminate a provider agreement if it shows that a HHA is not in compliance with one or more COP. 42 C.F.R. �� 489.53(a); 488.24(b).

9. As a matter of law, HCFA may terminate a provider agreement if it shows that a HHA had the opportunity, but failed to correct, deficiencies previously identified. 42 C.F.R. �� 488.28; 489.53(a).

10. Petitioner stipulated that it was out of compliance with the COP for Organization, services and administration (42 C.F.R. � 484.14), and Evaluation of the agency's program (42 C.F.R. � 484.52), at the conclusion of the first survey, that is, as of February 6, 1997. Tr. 14-15.

11. HCFA has shown that Petitioner did not correct its deficiencies and remained out of compliance with the two COP as of the date of the follow-up survey, that is, April 23, 1997. HCFA Ex. 3.

12. HCFA was authorized to terminate Petitioner's provider agreement, pursuant to 42 C.F.R. �� 488.24(b); 488.28; and 489.53(a).

IV. Discussion

A. Organization, services and administration --

42 C.F.R. � 484.14.

The COP for Organization, services, and administration requires a HHA to "clearly set forth in writing" matters relating to organization, services furnished, administrative control and delegations of authority "down to the patient care level." 42 C.F.R. � 484.14. The COP also prohibits delegation of administrative and supervisory functions to another agency, requires monitoring and control of all services the HHA does not provide, and requires appropriate record keeping for any HHA subunits. Id.

At the follow-up survey, CDHS cited Petitioner's deficiencies on HCFA Form 2567 under GTags 128, 133, 143 and 146, respectively. HCFA Ex. 3. Specifically, CDHS found that this COP was out of compliance because Petitioner: 1) lacked a governing body that "assumed full legal authority and responsibility for the operation of the agency" (GTag 128); 2) did not ensure that its administrator "organized and directed the agency's ongoing functions" (GTag 133); 3) failed to coordinate patient services with all personnel to ensure effective coordination and support of objectives set forth in patients' plans of care (GTag 143); and, 4) failed to ensure that arranged services were provided under written contract conforming with federal statutory requirements (GTag 146).⁽⁷⁾ Id. at 3, 4, 7, and 12, respectively. CDHS concluded that the "cumulative effect of these systemic practices, which were also identified during the last standard and extended survey and which remain uncorrected during this follow-up survey, resulted in the failure of the agency to deliver statutorily mandated compliance with organization and administrative functions and providing services to their patients." Id. at 3. HCFA asserted that it had "adduced substantial evidence" at hearing to show that Petitioner did not comply with this COP, because, among other reasons , of "the cumulative effect of Petitioner's systemic noncompliant practices, which had been identified during the first survey and remained uncorrected at the time of the revisit survey . . . ." HCFA Br. at 29.

1. Governing body, 42 C.F.R. � 484.14(b)(GTag 128).

Under this standard, the Agency is required to have a governing body (or persons designated to perform the governing body function) that asserts full control over Petitioner's operations. 42 C.F.R. � 484.14(b). In its follow-up survey, CDHS found that Petitioner did not comply with this standard because its governing body failed to assume full legal authority and responsibility for the Agency's operation. HCFA Ex. 3 at 4. In support of its finding, CDHS stated that the governing body "did not establish or implement policies or procedures that prohibited noncompliant practices identified under G133, G143, G146, G243, G244 and G245." Id.

As additional support for its position that Petitioner did not comply with this standard, HCFA cited to hearing testimony of Dr. Donna Dymon, a HCFA Nurse Consultant, who concurred with CDHS findings that Petitioner had not met the applicable standard. In her testimony, Dr. Dymon stated that the governing body is ultimately responsible for delivery of patient care, by assuming legal responsibility for the HHA and establishing and implementing appropriate policies and procedures. Tr. 26. She also testified that Petitioner's deficiencies under other standards could be attributed to the governing body's failure to enact and implement appropriate policies and procedures, and to assume ultimate authority and responsibility for Petitioner's operations. See generally, Tr. 26-28; HCFA Br. at 58-59.

HCFA also asserted that the record contained other evidence that the Agency's governing body did not exercise full control over its operation, citing contradictions between Petitioner's records and the testimony of two witnesses. HCFA Br. at 59-60. Specifically, HCFA pointed to testimony by Dr. C. Allen Wall, who identified himself as an owner, the Medical Director, and a member of the governing body of Petitioner. Tr. 410.

In his testimony, Dr. Wall stated that the governing body reviewed and approved changes in the Agency's policy manuals every year. Id.; Tr. 429. HCFA contends, however, that the governing body minutes for a 15-month period do not include any reference to governing body review or approval of such changes. HCFA Br. at 60, citing to HCFA Ex. 35, 68. HCFA also cited to Dr. Wall's testimony that the governing body reviewed the administrator's performance annually, noting that the governing body's minutes for the 15-month period contained no reference to evaluating the administrator. Tr. 471; HCFA Br. at 59-60. Finally, HCFA argued that the Agency's records and testimony of two witnesses, Dr. Wall and Diana Wall, the Agency's Director of Nurses, conflicted generally as to the identity and role of the governing body, thereby signifying "communication and coordination problems in the agency's organization and management." HCFA Br. at 60.

For Petitioner, Dr. Wall testified on the subject of who assumed authority and responsibility for Petitioner's governing body. According to Dr. Wall, he assumed full legal responsibility for any of the Agency's potential liabilities due to his ownership interest, thereby ensuring that the Agency's patients received quality care. Tr. 412.

Petitioner also asserted that the governing body exercised adequate oversight of the Agency's operations. In support of its position, Petitioner referred to the regular meetings of the governing body and the Agency's various committees, and the governing body's review and approval of "the Policies and Procedures Manual and revisions thereto." P. Br. at 15, citing testimony by Dr. C. Allen Wall at Tr. 430. Petitioner also argued that the governing body addressed issues relevant to the Agency's ultimate direction. Id., citing Minutes of the Governing Body of April 3, 1997 (HCFA Ex. 68).

As to the identity and role of the governing body, Dr. Wall identified five persons who served on the governing body: Betty Ellis, the Agency's Administrator; Gilbert Broadhurst, the Agency's Comptroller; Diana Wall, Director of Nurses; Elizabeth O'Connor, a registered nurse who was unaffiliated with the Agency; and, himself. Tr. 470-471. Dr. Wall also stated that the governing body met quarterly, and exercised its authority and responsibility, citing as an example the governing body's role in evaluating the Agency's administrator. Id.

As to the governing body's responsibilities to establish and implement appropriate policies and procedures, Dr. Wall testified that the governing body decided to rewrite the HHA's manuals in late July 1996, with the goal of completing the revisions by the end of 1996. Tr. 415. He maintained that the dates contained on pages of the policies and procedures manual merely reflected the reference dates for word processing, as opposed to the actual effective dates of changes in Petitioner's policies and procedures. Tr. 418; P. Ex. 1. In an additional effort to show that the governing body exercised full control of the Agency's operations, implemented appropriate policies and procedures, and had not engaged in noncompliant practices, Dr. Wall also testified that no patient had ever filed a complaint against the Agency, nor had any person or entity ever filed a lawsuit against the Agency. Tr. 412; see also, P. Br. 13-14.

My review of the record shows numerous contradictions between the documentary records and testimonial evidence on the identity of the governing body and the role of that body with respect to Petitioner's operations. For example, Dr. Wall testified that he was legally responsible for the Agency's liabilities, and presumably, its operations, thereby ensuring adequate patient care. Tr. 412. Under such a circumstance, I might infer that Dr. Wall had become, in fact, the person designated to perform the governing body function. Yet, he also testified that Petitioner had a fully functioning governing body, consisting of four other persons and himself, that guided the Agency's operations and was responsible for its ultimate direction. Tr. 470-471.

My review of the record, however, indicates that Petitioner's organizational chart, minutes of governing body meetings and Dr. Wall's and Ms. Wall's testimony are in conflict on a matter as basic as who served on the Agency's governing body. Dr. Wall testified that five people served on the governing body, including himself. Tr. 470-471. However, Petitioner's organizational chart⁽⁸⁾ and governing body minutes for April 3, 1997,⁽⁹⁾ lists six members: C. Allen Wall, M.D.; Diana Wall, R.N.; Gilbert Broadhurst; Betty Ellis; Judy Hensley, R.N.; and, D.I. Macatiag, M.D. I note, however, that Ms. O'Connor, who Dr. Wall named as one of the governing body members in his testimony, is not listed on Petitioner's organizational chart or in any minutes of governing body meetings.⁽¹⁰⁾ By contrast, Dr. Wall did not name

Dr. Macatiag as a governing body member in his testimony. Yet, Dr. Macatiag was listed on Petitioner's organizational chart and otherwise noted as a member of the governing body.⁽¹¹⁾

Dr. Wall also testified that Ms. Wall was a member of the governing body. Tr. 470. Additionally, Petitioner's revised organizational chart, as of April 23, 1997, lists Ms. Wall as a member of the governing body.⁽¹²⁾ Minutes of governing body meetings on January 4, 1996, April 4, 1996, July 11, 1996, and October 3, 1996, respectively,⁽¹³⁾ and on April 3, 1997,⁽¹⁴⁾ indicated that Ms. Wall attended those meetings. Dr. Wall's testimony, coupled with written documentation such as the organizational chart and governing body minutes, support a conclusion that Ms. Wall was a member of Petitioner's governing body.

Ms. Wall, however, testified that she had never served on the Agency's governing body, and lacked knowledge as to the membership of that body. Tr. 622-623. Petitioner presented no written evidence (such as, governing body minutes, charter or bylaw provisions, or a list containing the names, positions and terms of office of governing body members) that might have clarified which persons or incumbents of specified positions were elected or designated to serve on the governing body, or that would clarify the governing body's role. Given the contradiction in Dr. Wall's testimony, Ms. Wall's testimony and the written records, it is unclear, at best, who performed Petitioner's governing body function.⁽¹⁵⁾

The record also contains conflicting information on the governing body's establishment and implementation of changes to the Agency's policies and procedures. As discussed previously, Dr. Wall testified that the governing body decided to rewrite the HHA's manuals in late July 1996, with the goal of completing the revisions by the end of 1996, and that the dates contained on pages of the policies and procedures manual merely reflected the reference dates for word processing, as opposed to the actual effective dates of changes in Petitioner's policies and procedures. Yet, Petitioner's governing body minutes for 1996, contain no reference to review, revision, approval or implementation of Agency policies and procedures. HCFA Ex. 35. Indeed, the governing body minutes contain only one reference to Petitioner's policies and procedures. That reference, which appears in the minutes for April 3, 1997, stated that "[a]ll policies and [p]rocedures are to be reviewed, revised, rewritten by April 30, 1997." HCFA Ex. 68 at 1. Further, Dr. Wall also testified that the plan of correction Petitioner submitted to CDHS after the first survey stated that "the manual would be available on April 30th," and that the agency's administrator may have misunderstood the timing for corrective actions. Tr. 421. His admissions, coupled with other information in the record, also show a lack of communication between the governing body and the administrator regarding the establishment and implementation of appropriate procedures.

Petitioner did not offer persuasive evidence that the governing body, however constituted or empowered, regularly monitored the Agency's operations or offered guidance or oversight of its policies and procedures. Petitioner's contention that the governing body specifically approved (and Petitioner's staff implemented) changes to the its policies and procedures prior to the end follow-up survey, which concluded on April 23, 1997, is not supported by the record. In fact, minutes of the governing body clearly stated that revisions to the Agency's policies and procedures were to be completed by April 30, 1997, which date is one week after CDHS completed the follow-up survey. HCFA Ex. 68 at 1.

Given the numerous conflicts between testimony and documentary evidence (or the lack thereof) on matters such as the membership, role and functioning of the governing body, the governing body's review and approval of policies and procedures, and evaluation of the administrator's performance, I conclude that HCFA demonstrated a pattern of communication and coordination problems in Petitioner's organization and management. I also conclude that Petitioner lacked a governing body that assumed full legal authority and responsibility for its operations. Finally, I conclude that HCFA has demonstrated that Petitioner was out of compliance with this standard at the time of the follow-up survey.

2. Administrator, 42 C.F.R. � 484.14 (GTag 133).

Under the applicable standard, the administrator is responsible for numerous aspects of a HHA's operation, including but not limited to: organizing and directing the Agency's ongoing functions; maintaining liaison among the governing body, the group of professional personnel and the staff; and, employing qualified personnel and ensuring adequate staff education and evaluations.

At the time of the follow-up survey, CDHS concluded that the administrator failed to organize and direct the Agency's ongoing functions, thereby failing to meet this standard. HCFA Ex. 3 at 4-7. Among the problems CDHS cited were that the administrator: 1) failed to ensure completion of a review of Petitioner's policies and procedures manual; 2) did not know the status of all of the Agency's staff; 3) showed a lack of familiarity with federal and State regulations for HHAs; 4) had failed to develop a complete program evaluation policy with the governing body, or ensure that the governing body had adopted such policy; and, 5) failed to ensure that Petitioner had a current or updated quality assurance manual. Id.; see HCFA Br. at 29-36. Below, I address several of the problems HCFA cited.

In addressing this deficiency, HCFA emphasized the overall failure of the administrator to ensure that Petitioner completed its review and revision of policies and procedures prior to the commencement of the follow-up survey. HCFA Br. at 29-36. Noelle Tracy, a State surveyor, testified that she cited Petitioner for deficiencies with respect to its policies and procedures manual during the first survey in February, 1997, and that Petitioner informed CDHS, in its allegation of compliance, that it would complete its review and revision of policies and procedures by April 20, 1997. HCFA Br. at 30, citing Tr. 143, 224. Yet, the administrator could not provide CDHS with a revised policies and procedures manual during the follow-up survey. HCFA Ex. 3 at 5, 7.

Further, the administrator could only show the State surveyors three limited or conflicted revisions to policies cited as deficient during the first survey. See HCFA Ex. 30-33. The three revised documents, contained in the administrative and professional policy and procedures manuals, were for venipuncture draw, simple wound care and the home visit record. HCFA Ex. 3 at 5; HCFA Ex. 30-33. All revisions to the documents were reflected in pencil. HCFA Ex. 3 at 5; Tr. 141. CDHS also noted that the policies the administrator provided to CDHS for the "home visit record" in Petitioner's administrative and professional policy and procedures manuals were two completely different policies. HCFA Ex. 3 at 5-6; see HCFA Ex. 30, 31. Ms. Tracy testified that when she asked, during the follow-up survey, why the two policies differed, a member of the Petitioner's nursing staff, Molly Pruyn, R.N., informed her that the policy for the home visit record contained in the administrative policy and procedure manual would not be used. Tr. 144. Ms. Tracy then placed a notation on the document that this policy will not be used, per Ms. Pruyn. Tr. 144-145; see HCFA Ex. 31.

CDHS also cited Petitioner under this standard because the administrator failed to provide evidence that the group of professional personnel conducted an annual review of the Agency's policies. Tr. 147-148; HCFA Ex. 5 at 13-15. During the first survey, Petitioner had been unable to offer any written evidence (such as minutes) that the professional advisory group or the governing body had reviewed and approved the Agency's policies. HCFA Ex. 5 at 14. Ex. 3 at 5; Tr. 153; see HCFA Br. at 30, citing Tr. 143, 224. According to Ms. Tracy, she did not believe the committee had completed its review of Petitioner's policies, and thereby remained out of compliance with the standard at the time of the follow-up survey. Tr. 152; HCFA Ex. 69.

Ms. Tracy based her opinion on her review of minutes of the professional advisory committee (or group of professional personnel) at the time of the follow-up survey. She stated that the inability of the administrator to provide her with a revised policy and procedures manual--according to Ms. Tracy, the administrator informed her that the policies "were being typed"--and the absence of any reference in the governing body and professional group minutes to review and approval of the revised policies. Tr. 153-154; HCFA Ex. 68, 69.

With regard to the administrator's knowledge of federal regulations governing HHAs, CDHS noted that Petitioner "had only recently obtained" a copy of the federal regulations governing HHAs. HCFA Ex. 3 at 6. At the hearing, Ms. Tracy stated that she elicited the information about the Agency's acquisition of copies of the federal and State licensing agency regulations for HHAs during a follow-up survey interview with the administrator, when she asked the administrator if she had knowledge of those regulations. Tr. 158.

In fact, even a cursory review of the record shows that Petitioner had not completed its review and revision of policies and procedures by April 20, 1997. When CDHS conducted interviews during the follow-up survey (on April 22, 1997), Agency staff indicated that its overall policies and procedures were "still being revised," even though Petitioner apparently had indicated such review and revision would be complete by April 20, 1997. See Testimony of Noelle Tracy, Tr. 224-225.

Moreover, the few revised policies and procedures Petitioner produced reflected contradictions and pencil changes. HCFA Br. at 30-31; Tr. 141, 146, 153. For example, in reviewing the "home visit record" policies contained in the administrative and professional policy and procedures manuals, I note little, if any, similarity between the two policies. The policy contained in the professional manual sets forth different procedures for various medical personnel. HCFA Ex. 30. The policy contained in the administrative manual is much more general, and lacks specific details for various medical personnel. HCFA Ex. 31. Although Dr. Wall claimed that the two policies for the "home visit record" were substantively the same,⁽¹⁶⁾ though worded differently, a member of the Agency's own staff admitted, in effect, that the two policies were not the same, when she informed Ms. Tracy that the second policy would not be used.

Other documents reflected "revision" in pencil. As Ms. Tracy testified, while an agency is not prohibited by regulation from revising such documents in pencil, she did not believe changes to policies and procedures in such a manner reflected good administrative practice because "anybody could come along and change" them. HCFA Br. at 31, n.10, citing Tr. 141. Given the contradictions between the contents of policies and procedures and the physical appearance of the few documents the administrator presented to CDHS for review, it is apparent that the documents represented draft policies, rather than final policies. HCFA Ex. 3 at 5; HCFA Ex. 30-33; see also, Tr. 141, 146; 152-153.

Nor did Petitioner produce, at any time during the follow-up survey, evidence that the administrator had ensured that the group of professional personnel and/or the governing body had completed its review of the Agency's policies and procedures. Indeed, the minutes of the professional advisory committee for April 3, 1997, state that the committee discussed the requirements for a quality assurance program and on-going evaluations of current programs. HCFA Ex. 69 at 1. The minutes did not refer to the committee having completed its review of policies and procedures. Id.

In HCFA's view, the deficiencies described above show a clear pattern of failures by the administrator to organize and direct ongoing agency functions, and to act as liaison among the group of professional personnel, the governing body and the agency staff. HCFA Br. at 36. Petitioner has presented little credible evidence to rebut HCFA's assertions that Petitioner did not comply with this standard at the completion of the follow-up survey. I conclude that HCFA has demonstrated that Petitioner was out of compliance with this standard at the time of the follow-up survey.

3. Coordination of patient services, 42 C.F.R. � 484.14(g) (GTag 143).

Under the applicable standard, "all personnel furnishing services maintain liaison to ensure that their efforts are coordinated effectively and support the objectives outlined in the plan of care."

As an administrative law judge (ALJ) noted in another case addressing this standard:

The standard contains the key words and phrases "liaison" and "effective interchange, reporting and coordination of patient care." These are not defined. It is evident, however, that this standard requires a home health agency to assure that there is effective communication and cooperation among its staff along with accurate documentation of whatever communication and cooperation that occurs.

CSM Home Health Services, Inc., DAB CR440 (1996), at 13.

Many of the arguments HCFA presents in support of this argument relies upon a clinical record review CDHS conducted for seven patients during the follow-up survey. HCFA Ex. 3 at 7-12. Based upon this review, CDHS determined that for two of seven patients, identified as Patient #2 and #6, Petitioner did not meet this standard.

For example, CDHS stated that its record review for Patient #2 "revealed the lack of evidence of coordination of case conferences between the skilled nurse and the home health aide to support the goals in the plan of care." HCFA Ex. 3 at 8. When CDHS spoke with the Agency staff about the apparent lack of service coordination for Patient #2 to support the goals contained in the plan of care, the staff indicated that it had a separate record for case conferences, but failed to produce case conference reports. See Testimony of Diana Marana, Tr. 356-357; Id. Ms. Marana, a State surveyor, also testified that in her opinion, documentation that Petitioner's staff engaged in service coordination would be necessary in order for the staff "to know the current condition of the patient," and that should the staff fail to ensure such coordination, the well-being of the patient might be affected. Tr. 357-358.

For Patient #6, CDHS indicated that its clinical record review showed that, despite numerous recorded observations and concerns by a variety of staff, such as a medical social worker, skilled nurse, physical therapist, home health aide, and an occupational therapist, there was a lack of evidence that all of the members of the patient's health care team had coordinated services for the patient. HCFA Ex. 3 at 8-12. Ms. Tracy also testified that to make such a showing, she would have expected to see regularly dated documentation showing communication or coordination among the health care team members to revise the plan of care and care goals. Tr. 190-191; see HCFA Br. at 44. For example, Ms. Tracy stated that the clinical record review showed lengthy gaps in communications among members of the health care team. Tr. 190-191.

My review of the record shows that for each of the seven patients, CDHS appears to rely extensively on whether a specific type of document was present in the patient's record, in order to show that the Agency staff failed to establish and maintain effective liaison and coordination to support patient care plan objectives. Clearly, Petitioner's failure to provide CDHS with case conference reports said to exist is significant. Similarly, the general absence of written documentation showing communication and coordination among Agency staff is notable. Yet, as an ALJ stated in CSM:

. . . I do not agree that the standard requires that a patient's record contain a specific type of document (such as a case conference report) in order to document liaison or coordination of care. Nor do I find that the standard requires that case conferences, as opposed to other types of communication, must occur in order for liaison and coordination of services to be present. The regulation does not specify the type of communications that must take place and be documented.

CSM, DAB CR440 (1996), at 14.

What HCFA failed to show is how the absence of specific documents (or document types) resulted in the Agency staff's failure to maintain effective liaison and coordination and meet the objectives of patient care plans. For this reason, I do not conclude that Petitioner was out of compliance with this standard at the completion of the follow-up survey.⁽¹⁷⁾

For the reasons set forth above, however, I have determined that Petitioner was out of compliance with the standards for its governing body (GTag 128), 42 C.F.R. � 484.14(b)(GTag 128), and its administrator (GTag 133), 42 C.F.R. � 484.14. I also conclude that Petitioner remained substantially out of compliance with the COP governing Organization, services, and administration, 42 C.F.R. � 484.14, at the conclusion of the follow-up survey.

B. Evaluation of the agency's program -- 42 C.F.R. � 484.52.

The COP for evaluation of a HHA's program requires it to conduct an overall evaluation of its program at least annually. Such evaluation must be performed by the group of professional personnel (as defined in 42 C.F.R. � 484.16), the agency's staff, and consumers, or by professional personnel from outside the agency working in conjunction with the agency. The evaluation must consist of an overall policy and administrative review and a review of clinical records, and must assess the extent to which the HHA's program is appropriate, adequate, effective, and efficient. Persons responsible for operating the HHA must act upon the report and results of the evaluation.

Petitioner stipulated that it was out of compliance with this COP at the completion of the first survey in February, 1997. See p. 8, n.5, infra. Therefore, the only issue is whether Petitioner corrected the deficiencies and was in compliance with this COP at the completion of the follow-up survey.

CDHS determined that Petitioner was out of compliance with this COP at the completion of the follow-up survey in April 1997. CDHS cited Petitioner specifically for its failure: (1) to establish written policies and procedures requiring an overall evaluation of the Agency's total program at least annually (GTag 243); (2) to evaluate the Agency's program (consisting of an overall policy and administrative review and clinical records review (GTag 244); and, (3) to assess the extent to which the Agency's program was appropriate, adequate, effective and efficient (GTag 245). HCFA Ex. 3 at 36.

In the view of CDHS, these deficiencies had been cited during the first survey, remained uncorrected, and the cumulative effect of the deficiencies resulted in the failure of Petitioner to comply with the COP. Id.

At the hearing, Dr. Dymon stated that State surveyors are taught to look for certain information as a means of assessing compliance with this COP. Tr. 36-37. According to Dr. Dymon, the State surveyors have been instructed to review an agency's written policy on program evaluation, as well as conduct a clinical record review. Tr. 37. She also testified that, in her view, compliance with this COP affects the capacity of a HHA to render adequate care to patients. Id.

With respect to Petitioner's program evaluation policy, Dr. Dymon testified that the document Petitioner provided to CDHS at the follow-up survey would not satisfy the requirement under GTag 243. Tr. 39; HCFA Ex. 25. In Dr. Dymon's view, the program evaluation policy Petitioner provided to CDHS for review was deficient because "it does not define who is going to conduct the program evaluation. . .." Tr. 40. She also testified that the program evaluation policy had "a problem with the last paragraph about the clinical record review." Id.

As to the clinical review record section in the Agency's program evaluation policy, Dr. Dymon testified that she could not ascertain whether professional staff were to review clinical records every 62 days or on a quarterly basis. Tr. 40-41. She also testified that federal regulations require two different types of clinical record review. Tr. 41.

Ms. Tracy also testified on this issue, stating that when she asked the administrator for a copy of that policy, she received three pages of a document which the administrator obtained by facsimile. Tr. 160-161; see HCFA Ex. 25. In deeming the document incomplete, Ms. Tracy stated that the policy did not address all the elements of a program evaluation, and did not appear to have been adopted by the Agency's governing body. Tr. 159, 217; HCFA Ex. 25.

Ms. Tracy described reasons why she deemed the document incomplete, including the presence of blank spaces under headings such as "Outline of Action", and a sentence in the document which read: "[t]he committee will choose an annual date and a quarterly review date." Tr. 161; see HCFA Ex. 25. She also cited to a "number of things that the agency is going to be doing and completing by different dates . . . and an incomplete outline of action on page three . . ." Tr. 217. In Ms. Tracy's view, Petitioner's obligation to conduct an annual evaluation of its programs was "like the foundation" for a HHA, so that the Agency can determine how it is performing, what changes are necessary, and how to provide adequate care. Tr. 221.

Petitioner was also responsible for having its policies and procedures reviewed by its group of professional personnel at least annually. Ms. Tracy testified that at the time of the first survey, CDHS cited Petitioner for a deficiency because its review of the records and staff interviews revealed that the professional advisory committee had not reviewed the Agency's policies on scope of services offered, admission and discharge policies, medical supervision and plans of care, emergency care clinical records, personnel qualifications, and program evaluation. Tr. 148; HCFA Ex. 5 at 13.

Ms. Tracy also testified that, while the professional advisory committee and the governing body met during the interval between the first and second surveys, the professional advisory committee had not completed its review of the Agency's policies and procedures before CDHS completed the second survey. Tr. 148-153. As an example of why she believed the policies and procedures had not been reviewed, Ms. Tracy testified that Petitioner submitted revised portions of its administrative manual to CDHS on April 24, 1997, after CDHS completed its survey. Tr. 155-156; see HCFA Ex. 23-24. Ms. Tracy stated that she saw no evidence, on either of the two documents CDHS received, indicating the professional advisory committee had reviewed those portions of the manual (that is, the policies). Tr. 156-157.

In reviewing the record, I note that in addition to the testimony and records referred to above, minutes of the governing body and the professional advisory committee from January 1996 through April 1997 do not indicate that either body had reviewed or approved a program evaluation policy at the time of the follow-up survey. HCFA Ex. 35, 36, 68, 69. The program evaluation policy that Petitioner relies upon to show compliance is dated June 15, 1997, which date is nearly two months after the completion of the follow-up survey. P. Ex. 1; Tr. 92-97.

Petitioner has presented no credible evidence that it achieved compliance with the standards cited by CDHS by the completion of the follow-up survey. I conclude that Petitioner remained substantially out of compliance with the COP governing evaluation of the agency's program, 42 C.F.R. � 484.52, at the conclusion of the follow-up survey.

IV. Conclusion

I am persuaded that the record establishes that Petitioner's conduct relating to the COP at 42 C.F.R. � 484.14, Organization, services, and administration, did not comply substantially with the Medicare requirements. I am also persuaded that the record establishes that Petitioner's conduct relating to the COP at 42 C.F.R. � 484.52, Evaluation of the agency's program, did not comply substantially with Medicare requirements.

HCFA is authorized to terminate Petitioner's Medicare provider agreement if the deficiencies are such that Petitioner fails to comply with one or more COP. 42 C.F.R. �� 484.24; 489.53(a)(1) and (3). HCFA is also authorized to terminate Petitioner's provider agreement if HCFA finds that, as a provider, Petitioner had the opportunity but failed to correct deficiencies previously identified. 42 C.F.R. �� 488.28; 489.53(a). HCFA has shown that Petitioner failed to correct deficiencies CDHS identified at the first survey of Petitioner in February, 1997. HCFA has also shown that Petitioner remained out of compliance with the two COP at the completion of the follow-up survey. Petitioner has not shown, by a preponderance of the evidence, that it was in compliance with the two COP at the completion of the follow-up survey. Consequently, I conclude that Petitioner's termination was authorized.

Stephen J. Ahlgren
Administrative Law Judge

1. An appellate panel of the DAB has reiterated that the burden of persuasion set forth in Hillman applies only where the evidence proffered by both sides is "in equipoise." Oak Lawn Pavilion, Inc., DAB 1638 (1997), at 16-17. In such cases, the burden of persuasion would be on Petitioner.

2. Letter from Anne Hall, Assistant Regional Counsel Representative for HCFA, to Administrative Law Judge Stephen J. Ahlgren, dated February 17, 1998.

3. Id. at 2.

4. HCFA sought Petitioner's stipulation as to the missing language, but Petitioner would not agree to a stipulation. ⁽⁵⁾

5. Letter from David C. Wheeler, counsel for Petitioner, to Administrative Law Judge Stephen J. Ahlgren, February 19, 1998.

6. Tr. 14-15.

7. At the hearing, HCFA withdrew the noncompliance finding as to GTag 146. Tr. 35; HCFA Br. at 29, n.9. Therefore, I do not address GTag 146 in this decision.

8. HCFA Ex. 23 at 32. This document, entitled Organizational Structure, is part of Petitioner's Policies and Procedures. The original date of the document is January, 1987, and other dates listed indicate revision in May, 1988, January, 1989, January, 1990, and April 23, 1997. HCFA states that Petitioner submitted the document to CDHS on April 24, 1997, the date after CDHS concluded its follow-up survey.

9. HCFA Ex. 68 at 1.

10. Id.

11. Dr. Macatiag is listed as a member of the governing body on Petitioner's organizational chart. HCFA Ex. 23 at 32. He also is listed in the governing body minutes of April 3, 1997. HCFA Ex. 68.

12. HCFA Ex. 23 at 32.

13. HCFA Ex. 35.

14. HCFA Ex. 68 at 1.

15. Indeed, HCFA contended that the testimony of two of Petitioner's witnesses, Dr. Wall and Ms. Wall, "raised questions as to the identity and role of the governing body," although conceding that HCFA had not cited Petitioner for failure to have a governing body. HCFA Br. at 59-60.

16. Tr. 486-487.

17. For reasons not set forth in this decision, HCFA may well have demonstrated, however, that Petitioner was out of compliance with other standards, such as duties of the registered nurse, 42 C.F.R. � 484.30, and medical social services, 42 C.F.R. � 484.34, with respect to the care of Patient #6.