Gab Decision 113
July 31, 1980 Maryland Department of Health and Mental Hygiene
Docket No. 79-30-MD-HC Przybylinski, Donald; Woodruff, Robert Dell'Acqua,
Frank Panel Chairman
The Maryland Department of Health and Mental Hygiene (State), by
letter dated February 22, 1979, sought review of a January 23, 1979
determination by the Director of the Medicaid Bureau, Health Care
Financing Administration (Agency), to disallow $55,571 in Federal
financial participation (FFP) claimed by the State under Title XIX of
the Social Security Act. The notification of disallowance stated that
FFP was being denied for intermediate care facility (ICF) services
provided by the Mount Sinai Nursing Home (facility) for the quarter
ended June 30, 1978 because the facility's provider agreement had
expired on March 31, 1978.
There are no material issues of fact in dispute. We have, therefore,
determined to proceed to decision based on the written record and briefs
and the State's response to an Order to Show Cause issued by the Board
Chairman; the Agency was not requested to respond to the Order and did
not do so. We conclude that, for the reasons stated below, the
disallowance should be upheld.
I. Statement of the Case
The State has not disputed the fact that a valid provider agreement
for Mount Sinai was not in effect during the period in question. In its
appeal to the Board, the State, however, has argued that it was not
responsible for the failure of Mount Sinai to have a provider agreement;
rather, the dilatory actions of the Agency's Health Standards and
Quality Bureau (HSQB) prevented the State from executing a new provider
agreement with the facility.
The State claims that on January 26, 1978 its Division of Licensing
and Certification sent the results of a survey of Mount Sinai
recommending approval of the facility with requested waivers of several
deficiencies to the Agency's Regional HSQB. Not until February 13, 1979
was notification of certification by the HSQB for Mount Sinai for the
period April 1, 1978 through March 31, 1979 received by the State.
Therefore, the State argues, it was impossible for it to execute a
provider agreement with Mount Sinai prior to February 13, 1979. The
State reasons, "In view of the foregoing facts, i. e., that the Federal
government was solely responsible for the absence of an executed
contract covering the period in question, and that the Maryland Program
has acted as expeditiously as possible to execute an agreement covering
that period, we feel that the State is entitled to FFP for the cost of
care rendered in the Mount Sinai Nursing Home from April 1, 1978 through
June 30, 1978." (State's letter of February 22, 1979, page 2.)
The Agency in its April 20, 1979 response to the State's appeal
replied that any delays by the HSQB in approving the requested waivers
of deficiencies at the facility were immaterial to the facts of this
appeal, as the disallowance concerned FFP for ICF services, and the
State, not the HSQB, had sole responsibility for the certification of
facilities providing ICF services.
In a June 17, 1980 Order the State was asked to show cause why the
disallowance should not be sustained on the grounds that the State's
claim that its failure to have executed an ICF provider agreement with
the facility was attributable to the Agency's HSQB was without merit.
In its July 14, 1980 response to the Order, the State, citing 42 CFR
449.33(a)(2), declared that its survey agency withheld certification of
the ICF portion of the facility pending HSQB approval of the skilled
nursing facility (SNF) beds in the facility because questions of Life
Safety Code violations existed. The State explained that, since the
Life Safety Code requirements for ICFs and SNFs are identical, it was
reasonable for the State survey agency to delay certifying the ICF
portion of the facility until the HSQB had reached a determination on
the SNF portion.
II. Regulations
The Medicaid regulations have been recodified several times in recent
years, but for the period in question (April through June 1978) the
applicable regulations are set forth in 42 CFR Part 449 (1977),
"Services and Payment in Medical Service Programs."
FFP was denied for ICF services provided by Mount Sinai during this
period. To obtain FFP for payments made to an ICF, the State must
comply with the provisions of 42 CFR 449.10(b)(15)(i)(E) requiring the
single State agency and the provider facility to execute an agreement
which the single State agency determines is in accordance with 42 CFR
449.33 and meets all of the conditions of 42 CFR 449.10(b)(15(i). The
regulations require that prior to the execution of the provider
agreement and the making of payments, the agency designated pursuant to
Sec. 450.100 (the survey agency) must certify that the facility meets
the definition in Sec. 449.10(b)(15) and is in full compliance with
standards prescribed in the regulations (see 42 CFR 449.12 and 449.33(
a)(2)).
Upon certification by the survey agency, the single State agency then
executes a provider agreement with the facility in accordance with the
Federal regulations. 42 CFR 449.33(a)(6).
III. Discussion
The central issue in this appeal is whether the State's claim that
the Agency's HSQB, by taking more than a year to issue its certification
of the facility, was responsible for the failure to have an ICF provider
agreement in effect with Mount Sinai during the period in question is
valid and provides a basis for the Board to reverse the disallowance.
In addition to participating in the Medicaid program as a provider of
ICF services, the Mount Sinai Nursing Home also provided Medicaid SNF
services and participated in the Medicare program. This is relevant
because the Agency's HSQB only becomes involved in the Medicaid program
through its role in the Medicare program.
The HSQB was established by the Health Care Financing Administration
to monitor the quality of care provided to Medicare beneficiaries. The
HSQB requires that facilities providing care to Medicare beneficiaries
are structurally safe, provide for a sanitary environment, are well
staffed, and have needed services available. The HSQB also requires
that the actual care provided to beneficiaries is of high quality and
ensures that medical services are necessary and are provided in the most
appropriate setting. The HSQB's Office of Standards and Certification
monitors standards enforcement and the State's survey and certification
of health care facilities.
Medicare is a federally administered program, while Medicaid is a
cooperative federal-state program administered by the individual states.
The two major types of services provided by nursing facilities
participating in the Medicaid program are intermediate care facility
(ICF) services and skilled nursing facility (SNF) services. Different
standards are imposed for each type of facility, reflecting the
different services provided in each type of facility. Section 1902(a)(
28) of the Social Security Act provides that the requirements and
standards for a SNF participating in the Medicare program set forth in
Sec. 1861(j) of the Social Security Act shall also be applied to a SNF
participating in the Medicaid program. Similarly, Sec. 1910(a)(i) of
the Act provides that any SNF certified to be qualified for Medicare
shall also be deemed to meet the standards for certification as a
Medicaid SNF.
It is through this common standard for SNFs participating in both the
Medicare and Medicaid programs that the HSQB becomes involved in the
Medicaid program. A SNF participating in Medicare must receive HSQB
approval. Since the SNF standards for Medicare and Medicaid
participation are identical, if the same SNF wishes to participate as a
SNF in the Medicaid program, the HSQB has the responsibility for
approving the state survey agency's certification of the facility as a
Medicare-Medicaid SNF provider. Under such circumstances, a state may
not execute a provider agreement with that SNF for Medicaid unless the
facility is approved by the HSQB for participation in Medicare. Thus a
delay, for example, by the HSQB in approving requests for waivers may
well prevent a State from executing a SNF provider agreement with a
facility.
The subject disallowance for Mount Sinai, however, was for ICF
services, not SNF services. ICF services are not available under
Medicare, but only under the Medicaid program. In its arguments to the
Board the State has overlooked a central characteristic of the Medicaid
program, namely that it is a cooperative federal-state program that
gives the states considerable independence. As an example of this
independent authority, the responsibility for certifying an ICF for
Medicaid participation lies solely with the states. 42 CFR 449.33(a)(
2). See Maryland Department of Health and Mental Hygiene, DGAB Docket
No. 79-157, Decision No. 107, July 2, 1980, page 5.
The HSQB has no responsibility in the process of the certification of
a facility for ICF services. Thus, if a facility wished to participate
as a SNF in the Medicare and Medicaid programs and as an ICF in the
Medicaid program, the HSQB would have to approve the SNF certification.
The state, however, would not have to await any HSQB action before it
could enter into an ICF provider agreement with the facility.
The State has maintained that because waivers of the Life Safety Code
for the facility were involved, it was reasonable to defer certifying
the ICF portion of the facility until the HSQB had made its decision on
the SNF portion of the facility. The State has cited 42 CFR
449.33(a)(2), which states that a Title XIX State Plan must "(provide)
that the single State agency will, prior to the execution of an
agreement with any facility (including hospitals and skilled nursing
facilities) for provisions of intermediate care facility services and
making payments under the plan, obtain certification from the agency
designated pursuant to Sec. 450.100(c) of this chapter that the facility
meets the definition set forth under Sec. 449.10(b)(15) . . ." (Emphasis
supplied by the State.) The State argues that its survey agency, noting
the reference to an institution that provides both ICF and SNF services,
withheld approval of the ICF portion pending HSQB approval of the SNF
portion.
The State has overlooked the fact that 42 CFR 449.33(a)(2)
immediately goes on to state, "However, (i) An intermediate care
facility . . . deficient under . . . the Life Safety Code (Sec. 449.12(
a)(5)) may be certified in accordance with paragraph (a)(4)(iii) of this
section for a period not exceeding 2 years following the date of
certification . . ." This indicates that there was no requirement for
the State to defer certification until the HSQB acted. In a similar
vein, 42 CFR 449.12(a)(5)(ii) also gives the states unilateral authority
to grant waivers of the Life Safety Code for an ICF facility:
In accordance with criteria issued by the Secretary, the State survey
agency may waive the application to any such facility of specific
provisions of such Code, for such periods as it deems appropriate, which
provisions if rigidly applied would result in unreasonable hardship upon
a facility, but only if such waiver will not adversely affect the health
and safety of the residents.
While it is true that the Agency has reserved the authority (42 CFR
449.10(b)(15)(vi)) to invalidate a provider agreement if it determines
that on the basis of an on-site validation survey or other reports that
the criteria for certification in 42 CFR 449.33 have not been met, the
sole responsibility for surveying an ICF, granting waivers if needed,
and certifying the ICF for Medicaid participation lies with the states.
Here the State took no action with respect to the ICF certification of
Mount Sinai after March 31, 1978. The facility's provider agreement had
expired on March 31, 1978. The Board has previously held that FFP is
not available for a facility with an expired provider agreement.
Delaware Department of Health and Social Services, DGAB Docket No.
78-108, Decision No. 87, February 29, 1980, page 9. During the period
of the disallowance, no provider agreement existed between the State and
the Mount Sinai Nursing Home.
IV. Conclusion
For the reasons stated above, we sustain the disallowance in the
amount of $55,571.
OCTOBER 04, 1983