Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: New York State Department of Social Services
DATE: November 5, 1992
Docket No. A-92-131
Decision No. 1368
DECISION
The New York State Department of Social Services (New York,
State)
appealed a determination by the Health Care Financing
Administration
(HCFA) disallowing $1,062,411.40 claimed by the State under
the Medicaid
program (Title XIX) of the Social Security Act (Act) for the
quarter
ended June 30, 1991. The disallowance was taken pursuant to
section
1903(g)(1) of the Act, which provides for the reduction of a
state's
federal medical assistance percentage (FMAP) of amounts claimed
for
long-stay services for a calendar quarter unless the state makes
a
satisfactory showing that during the quarter the state had an
effective
medical review program.
HCFA determined that the State failed to make a satisfactory showing
for
the quarter in question because the State failed to conduct an
annual
inspection of care review for one Medicaid recipient in
Rochester
Psychiatric Center (RPC), a mental hospital with 733 Medicaid
certified
beds. HCFA Brief, n. 2, p. 6. The State argued that it
would be
fundamentally unfair to sustain the imposition of a penalty because
the
State could not have reasonably identified the unreviewed patient as
a
Medicaid recipient at the time of the review.
As explained below, we conclude that the State made a satisfactory
showing
that it had an effective program of medical review during the
quarter.
The State had a reasonable system for identifying recipients
for review, and
the failure to identify this particular patient was not
due to any flaw in
the system or to any failure to implement the system.
Therefore, we reverse
the disallowance..Statutory and Regulatory
Background
Section 1903(g)(1) of the Act requires that a State make a
quarterly
showing that it has an effective program of annual medical
review
including on-site inspection of the care of each Medicaid
recipient
residing in an inpatient mental hospital. The annual
review
requirements applicable to inpatient mental hospitals are in
section
1902(a)(26) of the Act.
The regulations implementing this provision and section 1903(g)(1)
are
found at 42 C.F.R. Part 456. In particular, section 456.653
provides:
(a) In order to avoid a reduction in FFP [federal
financial
participation], theMedicaid agency must make a
satisfactory
showing to the Administrator, in each quarter, that it has
met
the following requirements for each recipient: *
* * *
(4) A regular program of reviews, including
medical
evaluations, and annual on-site reviews of the care of
each
recipient. . . .
(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 review of each recipient in every facility
in
the State, . . . by the end of the quarter in which a review
is
required under paragraphs (b)(2) of this section.
Factual Background
The New York State Office of Mental Health (OMH) conducted a
medical
review of RPC on May 7 and 8, 1991. RPC is an institution for
mental
diseases (IMD) and has 733 Medicaid certified beds. The fact
that RPC
is an IMD is significant because Medicaid does not cover
services
provided to individuals between the ages of 22 and 64 who reside in
an
IMD.
OMH used information from its Department of Mental Hygiene
Information
System (DMHIS) in conducting its annual review. DMHIS is an
automated
data base maintained by OMH, which contains age information which
was
used to identify current Medicaid recipients to be
reviewed..HCFA
discovered during an on-site validation survey of RPC that the
State did
not review Patient A.M. for the quarter ending June 30, 1991.
Patient
A.M. was not identified as a Medicaid recipient because the
DMHIS
erroneously listed her date of birth as April 4, 1928 (i.e., at
the
start of the review on May 7, 1991, the DMHIS indicated that she
was
under 65 years of age and not age-eligible for Medicaid inpatient
mental
hospital services). The DMHIS information concerning Patient
A.M.'s
date of birth had been obtained from a Pennsylvania psychiatric
facility
where the patient had previously been admitted.
While the DMHIS incorrectly showed Patient A.M. as ineligible,
the
facility's Patient Resource Office correctly listed A.M.'s date of
birth
as January 6, 1923. The Patient Resource Office had verified
the
patient's age with the Social Security Administration in 1988 as part
of
its routine processing of Medicaid applications for patients
turning
sixty-five years of age. Patient A.M.'s initial Medicaid
application
was completed on January 15, 1988, and she had been a Medicaid
recipient
from that date. However, the Patient Resource Office did not
notify the
facility staff that Patient A.M. had turned sixty-five, because
it
assumed that since the patient had been admitted several times before
to
RPC, the appropriate staff members were aware of this information.
As a
result, the facility staff and the Patient Resource Office were
unaware
that the DMHIS contained inaccurate information concerning
Patient
A.M.'s birth date.
Analysis
The issue presented here is whether the State made a satisfactory
showing
that it met the annual on-site review requirements of the Act.
There is no
dispute that Patient A.M. resided in RPC on May 7, 1991 and
that she had been
determined Medicaid eligible several years before.
The determining factor
here is whether the State reasonably relied on
the DMHIS system or whether,
as HCFA charged, the State's system for
identifying recipients for review was
"significantly flawed." HCFA
Brief, p. 12. HCFA said that the
State was unreasonably relying on
"out-of-date" information. HCFA
Brief, p. 11.
The Board has found that while a state bears the ultimate
responsibility
for identifying patients subject to the annual review
requirement, the
State may only be responsible for reviewing those patients
that the
state could be reasonably expected to identify as Medicaid
recipients.
Texas Dept. of Human Services, DAB No. 1081.(1989) and cases
cited
therein at p. 3. Thus, we have found that a State could properly
rely
on a computer-generated list where the State's process appeared
to
operate efficiently in entering information about eligible
individuals
into the computer system and where the failure to identify a
particular
individual was not practically avoidable. Idaho Dept. of
Health and
Welfare, DAB No. 747 (1986), at 7-8.
The facts here are that the State reviewed all but one recipient in RPC,
a
facility with 733 Medicaid certified beds. 1/ The failure to
review
Patient A.M. was because RPC was provided with an erroneous date
of
birth. Generally one does not consider that a date of birth
requires
updating because it is not the kind of information that is subject
to
change. HCFA's arguments suggest that the State could have used
the
list of patients for whom the State was claiming federal funds,
and
would have thereby picked up Patient A.M., as HCFA did in its
validation
survey. However, by choosing here to develop a review list
based on age
of the patients in RPC, the State was using a method which was
generally
more reliable than a claiming list since it would include all
patients
in RPC who were age-eligible for Medicaid coverage (even if the
State
had not yet determined them eligible and authorized payment).
This
would prevent a State from missing patients because of the lag
time
between when a patient becomes age-eligible for Medicaid and when
the
State authorizes Medicaid payments for the patient. There is
no
evidence to suggest that the problem here of an incorrect birthdate
(and
the assumption by the Patient Resources Office that DMHIS had
the
correct date) is likely to recur..In making our analysis here, we
looked
at the purpose of the statutory provision. The Act requires that
a
state's FMAP be decreased unless the State makes a
"satisfactory
showing" that it has an "effective program of medical review of
the care
of patients in mental hospitals." Section 1903(g)(1) of the
Act.
Therefore, while the State must make reasonable efforts to
identify
Medicaid recipients, it should be able to rely on its existing
computer
information system if overall that system is "effective."
The
legislative history does not contemplate that a state be required to
go
to herculean efforts to look for every possible situation for
error.
Rather, Congress intended that a state should show that it had a
system
that worked. Thus, failure of a state to review one recipient in
a
facility does not automatically mean that the program or system
of
medical reviews is unsatisfactory.
Consequently, we find that the State made a satisfactory showing that
it
had an "effective program" of medical review. We agree with the
State
that failure to identify Patient A.M. as being Medicaid eligible
does
not evidence a reasonably avoidable problem with the State's system
for
identifying patients for review.
Conclusion
Based on the foregoing analysis, we reverse the disallowance in full.
_____________________________ Donald F. Garrett
_____________________________ Norval D.
(John)
Settle
_____________________________ Judith A.
Ballard
Presiding Board Member
1. Because RPC has over 200 beds, HCFA took the position that
neither
the "good faith and due diligence" exception nor the
"technical
failings" exception of section 1903(g)(4)(B) of the Act applies
here. A
few courts have recently held that the Department's
interpretation of
these exceptions is too narrow. Arkansas v. Sullivan,
969 F.2d 622 (8th
Cir. July 6, 1992); Pennsylvania Dep't of Public Welfare v.
United
States Dep't of Health and Human Services, 928 F.2d 1378 (3rd
Cir.
1991); and Delaware Div. of Health and Social Services v. United
States
Dep't of Health and Human Services, 665 F. Supp. 1104 (D. Del.
1987).
Although these decisions are not directly on point here, we are
mindful
of the courts' concern that overly stringent application of the
medical
review requirement is inconsistent with
congressional