GAB Decision 214
September 23, 1981 Missouri Department of Social Services; Docket No.
80-69-MO-HC Ford, Cecilia; Garrett, Donald Norval, Settle
The Missouri Department of Social Services (State) appealed from an
estimated penalty disallowance of $132,943.88, made by the Health Care
Financing Administration (Agency) pursuant to Section 1903(g) of the
Social Security Act (the Act).The Agency determined that 60 violations
of the utilization control requirements of the Act existed in three
mental hospitals in the State during the quarter ending June 30, 1979.
The State submitted exact patient data to replace the facility data used
by the Agency in calculating the estimated disallowance; the Agency
recalculated the penalty on the basis of the data submitted by the State
and determined that the amount of the disallowance was $235,791.17. The
State has not challenged that recalculation and amount. The Agency has
indicated that the amount of the penalty will be adjusted downward
because the calculation did not reflect only FMAP paid for services over
90 days, as required by Section 1903(g). We conclude that the
disallowance in an amount to be agreed upon by the parties should be
upheld.
This decision is based on the State's application for review, the
Agency's response, the parties' responses to the Board's request for
clarification of the record, the Board's Order to Show Cause, and the
parties' statements that they had no further submissions to make.
The Board issued an Order to Show Cause on July 9, 1981, which
discussed the issues raised by the State in its application for review.
The State alleged that it met the Federal requirements but it submitted
neither documentation to substantiate the truth of its allegation nor
specific argument about how it had met the requirements. The Order to
Show Cause contained a preliminary conclusion that the Board had no
basis for reversing the disallowance on the State's mere allegation that
it met the requirements, and the parties have submitted no further
arguments or evidence concerning that conclusion. Therefore, (2) we
sustain the disallowance based on the analysis as set forth above and in
the Board's Order to Show Cause, incorporating that Order into this
decision.
(3) DATE: July 9, 1981
ORDER TO SHOW CAUSE
The Missouri Department of Social Services (State) applied for
review, on April 11, 1980, of a penalty disallowance determination made
by the Health Care Financing Administration (Agency), pursuant to
Section 1903(g) of the Social Security Act (the Act). The Agency
determined, based on a validation survey, that there were 60 violations
in three mental hospitals (MHs) of the certification, recertification
and plan of care requirements of Sections 1903(g)(1)(A) and (B) during
the quarter ending June 30, 1979. The Agency provided notice to the
State in a letter dated March 13, 1980, signed by the Agency's
Administrator. The Agency estimated the disallowance at $132,943.88;
the Agency used the number of mental hospitals rather than exact patient
data in the statutory formula because it lacked the patient data. The
State was informed by a memorandum enclosed with the notice of
disallowance that it could supply the Agency with exact recipient data
on which the penalty could be recalculated during the reconsideration
process. The State, on July 16, 1980, submitted exact data (Additional
Submission, pages 3 and 4), which the Agency used to recalculate the
penalty. In so doing, the Agency determined that the disallowance
amount should be $235,791.17 (Agency Response, October 10, 1980, pages
26 and 27).
Pertinent Statutes, Regulations, and Policy
Section 1903(g) of the Act requires that the State agency responsible
for the administration of the State's Medicaid plan under Title XIX of
the Act show to the satisfaction of the Secretary that there is an
"effective program of control over utilization of" long-term inpatient
services in facilities providing at least one of four named levels of
care, including "hospitals for mental diseases." This showing must
be
made for each quarter that the federal medical assistance percentage
(FMAP) is requested with respect to amounts paid for such services for
patients who have received care for 90 days in "hospitals for mental
diseases," or the FMAP will be decreased according to the formula set
out in Section 1903(g)(5). The satisfactory showing must include
evidence that "in each case for which payment is made under the State
plan, a physician certifies at the time of admission, . . . (and
recertifies, where such services are furnished over a period of time, in
such cases, at least every 60 days . . .) that such services are or were
required to be given on an inpatient basis because the individual needs
or needed such services" (Section 1903(g)(1)(A)), and that "such
services were furnished under a plan established and periodically
reviewed and evaluated by a physician" (Section 1903(g)(1)(B)). (4)
This statutory requirement is implemented by 42 CFR 456.160 and 456.180,
effective September 29, 1978. 42 CFR 456.160 says, in part:
(a) A physician must certify and recertify for each applicant or
recipient that inpatient services in a mental hospital are or were
needed.
(c) Recertifications must be made at least every 60 days after
certification.
42 CFR 456.180 says, in part:
(a) Before admission to a mental hospital or before authorization for
payment, the attending physician or staff physician must establish a
written plan of care for each applicant or recipient.
In addition, 42 CFR 456.181 requires that a written report of each
plan of care must be entered in the applicant's or recipient's record at
the time of admission or, if the recipient is already in the facility,
"immediately upon completion of the . . . plan."
An Agency Action Transmittal, SRS-AT-75-122, dated November 13, 1975,
instructed the States about "what is required in order for States to be
considered in adherence" with the statute and regulations. That Action
Transmittal defined certification and recertification as the process by
which a physician attests to an individual's need for a specific level
of institutional care. Several different types of documentation may be
accepted as valid certifications or recertifications, so long as they
indicate that the patient needs a particular level of care, and that the
certification or recertification is in writing, signed by the physician,
and dated at the time it is signed. The date must meet the requirements
for a timely certification or recertification and the signature must be
identifiable as that of a physician.
Statement of the Case
Federal reviewers conducted an onsite survey, as required by Section
1903(g)(2), in September 1979, in selected mental hospital facilities in
the State, to determine whether the requirements of Sections 1903(
g)(1)(A) and (B) were met for the quarter ending June 30, 1979. The
reviewers determined that two patients had no certification, 24 patients
had no recertification, five patients had an invalid certification, 26
patients had an invalid recertification, one patient had an invalid plan
of care and two patients had both invalid certifications and plans of
care. Thus, the records for 60 patients in three mental hospitals were
found to be in violation of federal requirements for utilization
control.
(5) The State alleged that "the plan of care and visits by a
physician to each patient setting out the visits and statement of
condition to each patient thereon with the diagnosis and other
information which does appear thereon is sufficient to and does show
that each patient was immediately, upon admission, diagnosed as eligible
for Title XIX services even though the words 'certified for Title XIX
payment' may not appear thereon." (State Application for Review, June
11, 1980, page 2).
Furthermore, the State asserted that the basis upon which the Agency
calculated the estimated penalty was incorrect. The State submitted
exact recipient data and explained its view of the correct method of
calculation of the penalty (Additional Submission, July 16, 1980).
Although the State indicated in its application (June 11, 1980, page
3) that it would submit documentation to support its allegations, it did
not do so. In response to the Board's request for clarification of the
record, dated June 9, 1981, the State responded that it had no further
submission to make (Letter to Board from Robert R. Northcutt, State
Office of General Counsel, June 19, 1981).
Discussiion
A) Violation of Certification and Recertification Requirements of
Section 1903(g)(1)(A)
The Agency alleged that the survey findings indicate that a number of
patients in the hospitals had invalid certifications or
recertifications, while others had no documentation in their records
than qualified as certifications or recertifications. Furthermore, the
Agency alleged that, under Section 1903(g), the State had the burden of
showing that the requirements were met (Agency Response, October 10,
1980, page 19).
From the record submitted by the Agency, it would appear that the
determination that violations existed was based on the Agency's
regulations and written policies as to what constitutes valid
documentation of an effective utilization control program. While the
State has alleged that it met the requirements, it has neither submitted
additional documentation that might qualify as valid certifications or
recertifications, nor pointed to any specific characteristics of the
documentation already examined by the Agency that might qualify that
documentation as valid. Furthermore, reviewers' notes for two of the
mental hospitals (Appendix F of Agency Response, October 10, 1980) state
that personnel in those facilities told the reviewer that they followed
a memorandum issued by a State official stating that recertifications
for patients over 65 did not have to be performed every 60 days, but
could be for variable periods. It would appear that the State has
failed to satisfy its burden of producing evidence that it has an
effective (6) program of utilization control and to persuade the Board
that the Agency has erred in its determination. While a specific set of
words such as "certified for Title XIX payment" need not be a
determining factor of compliance, it would appear that some statement
must be made that a patient needs the level of care which he is
receiving and that statement must be signed by a physician and dated in
a timely fashion. The Agency alleged that these requirements were not
met; the State has not provided any evidence to the contrary. The
State has not specifically challenged the Agency's determination
regarding the violations of one plan of care requirement; therefore, it
would appear that no issue exists with regard to plans of care.
Therefore, it would appear that the Agency's determination for the 60
violations should be upheld.
(B) Penalty Calculation
Section 1903(g)(5) provides:
(5) In the case of a State's unsatisfactory or invalid showing made
with respect to a type of facility or institutional services in a
calendar quarter, the per centum amount of the reduction of the State's
Federal medical assistance percentage for that type of services under
paragraph (1) is equal to 33 1/3 per centum multiplied by a fraction,
the denominator of which is equal to the total number of patients
receiving that type of services in that quarter under the State plan in
facilities or institutions for which a showing was required to be made
under this subsection, and the numerator of which is equal to the number
of such patients receiving such type of services in that quarter in
those facilities or institutions for which a satisfactory and valid
showing was not made for that calendar quarter.
The Agency's estimated penalty was based on a fraction using three
(the number of MHs in which violations were found) over eight (the
number of MHs in the State). The State alleged that only five of the
facilities provided Medicaid services during the quarter ending June 30,
1979. The State submitted exact patient data for these five facilites.
The State also alleged that the numerator of the fraction should be the
number of patients whose records were in violation rather than the
number of Medicaid patients in the facilities in which violations were
found.
The Agency accepted the reduction in the number of facilities
involved, and in fact, reduced the number of facilities to four (Agency
Response, page 27). The Agency did not accept the State's figures,
which averaged the number of patients present in the four facilities
during the quarter, stating that the denominator should (7) be the total
number of patients receiving the services in that quarter. The figure
used by the Agency was lower, however, than the one submitted by the
State because the Agency totalled the figures from only 4 MHs.
In Section 1903(g)(5), the modifying clause "for which a satisfactory
and valid showing was not made for the calendar quarter" comes after the
words "facilities or institutions", not after "patients."
Under common
rules of grammatical construction, it would appear that the formula
provides that the numerator consist of the number of patients in those
institutions in which violations were found. Therefore, it would appear
that the Agency's recalculation of the penalty is based on the statutory
method and exact data submitted by the State.
Order
No material facts appear to be in dispute. It does not apear likely
that an evidentiary hearing will be required. It appears tentatively
that this case should be decided on a written record and argument.
Accordingly, it is directed that, within 30 days of the receipt of
this Order, the State show cause in writing why the Board should not
proceed to decision, identifying the respects, if any, in which the
foregoing summary is materially incomplete or inaccurate and any issues
of material fact which are in dispute. The State should show cause why
the disallowance should not be upheld because the State has not produced
any evidence to support its allegations and should show cause why the
penalty amount should not be upheld because the Agency has used the
statutory formula and substituted exact patient data for facility data.
All further submissions or correspondence should refer to the Board's
docket number shown above and should be filed in accordance with 45 CFR
16.53 in an original and two copies (note that this is a modification of
the Board's current rules). The original should be accompanied by a
certificate showing service on the other party.
OCTOBER 22, 1983