GAB Decision 287
April 30, 1982 Colorado Department of Social Services; Docket No.
81-82-CO-HC Settle, Norval; Teitz, Alexander Garrett, Donald
The Colorado Department of Social Services (State) appealed a
notification of disallowance by the Health Care Financing Administration
(HCFA, Agency), denying $192,849 in federal financial participation
(FFP). The disallowance represented the federal share of payments made
to Atlantis Community, Inc. (ACI) for home health services provided
under the Medicaid program from January 1, 1979 through October 2, 1980.
The major issue presented is whether ACI met the federal requirements
for participation as a home health agency in the Medicaid program. For
reasons stated below, we find that ACI did not meet the program
requirements and that therefore the disallowance should be sustained.
There are no material issues of fact in dispute. We have determined,
therefore, to proceed to decision based on the written record and
briefs, including the State's response to an Order to Show Cause.
Regulatory Requirements for a Home Health Agency
Section 1905(a)(7) of the Social Security Act allows a state to
include in its Medicaid program payments for home health care services.
Home health services include medical supplies and equipment for use in a
patient's home, as well as nursing services, home health aide services,
and therapy services rendered by a home health agency. 42 CFR 440.70(b)
(1978). A "home health agency" is defined at 42 CFR 440.70(d):
"Home health agency" means a public or private agency or
organization, or part of an agency or organization, that meets
requirements for participation in medicare.
The conditions for participation for a home health agency in the
Medicare program are set forth at 42 CFR Part 405, Subpart L. The
certification process for a home health agency desiring to participate
in the Medicare program is set forth at 42 CFR Part 405, Subpart S.
Specifically, a state agency must survey each provider and certify as to
whether the provider is in compliance with the conditions or
participation. 42 CFR 405.1902(a). This certification represents only
a recommendation to the DHHS Secretary, who then makes the final
determination whether the provider is eligible to participate in the
Medicare program. 42 CFR 405.1902(c). (2) Factual Background
The State began making Medicaid payments to ACI in 1976, pursusnt to
ACI's application to participate in the Medicaid program. The Agency
first learned that ACI was participating in the Medicaid program on
February 9, 1979. At that time, from information supplied by ACI staff,
the Agency determined that ACI had not been certified as a Medicare home
health agency and did not meet requirements for participation in either
the Medicare or Medicaid program.
In response to the Agency's request for documentation to support its
claim regarding ACI, the State, on February 25, 1980 submitted four
survey reports for ACI. Three of the survey reports -- for the periods
August 1976 to July 1977, July 1977 to July 1978 and July 1978 to July
1979 -- were admitted by the State hot to have been based on actual
surveys of ACI, but rather on a review of available documents and
interviews with people connected with ACI. The fourth survey report was
based on an actual survey of ACI conducted in July 1979. As a result of
this last survey the State's Medical Care Licensing and Certification
Division concluded on May 15, 1980 that ACI was in "substantial
compliance with the regulations and certificate as of 1 July 1979." The
Agency, however, concluded that, based on a review of the survey
documents, ACI did not meet the conditions for participation for
Medicare and therefore was not certifiable for Medicaid participation.
The State conducted another survey of ACI on August 7, 1980.
Deficiencies were noted, but ACI submitted a plan of correction that was
accepted on October 3, 1980. The State then executed a Certification
and Transmittal form for ACI on October 7, 1980. On November 17, 1980
the State informed ACI that it had been accepted as a Medicare home
health agency, based upon an acceptable plan of correction, effective
October 3, 1980.
Discussion
The Board's Order directed the State to show cause why the
disallowance should not be sustained on the ground that, given the
deficiencies on the 1979 survey report pointed out by the Agency, ACI
did not meet the regulatory requirements for a home health agency until
its plan of correction was accepted on October 3, 1980.
The State argued, both in its initial appeal and in its response to
the Order, that it had determined that ACI had met the regulatory
requirements throughout the disallowance period and that the Agency had
no authority to question the State's determination. It is the State's
position that, while the Agency makes the ultimate determination on a
provider's eligibility as a home health agency for Medicare services,
(3) the State alone makes that determination for Medicaid participation.
The State argued that, absent specific regulatory language that
authorized the Agency to "look-behind" the State's certification of
a
nursing home provider, there is no regulatory basis for the Agency to
challenge the State's approval of a provider as a Medicaid home health
agency: "The professional determination of the single state agency and
survey should not be merely discarded by differences of opinion unless
clearly in error since the Medicaid regulations grant Colorado similar
discretion as given the (HHS) Secretary under Medicare." (State's
response to Order, p. 2) The State also asserted its belief that the
Agency's main objection to the State's actions regarding ACI was the
State's failure to use Medicare forms in the survey and certification
process.The State submitted documents which were not Medicare forms, but
which, the State claimed, nevertheless showed that the State discovered
and documented deficiencies at ACI and worked to correct those problems
with ACI.
It is the Agency's position that a provider, in order to qualify as a
home health agency, must, according to 42 CFR 440.70(d), actually meet
the requirements for Medicare participation. The Agency argued that ACI
failed to meet these requirements throughout the disallowance period,
even though the State survey agency may have determined that ACI met the
requirements. The Agency contended that it is not bound by the State's
determination because, while there is no specific "look-behind"
regulatory provision (as there is for nursing homes) that allows the
Agency to question the validity of a state's certification of a home
health agency, the home health agency regulations themselves require
actual compliance rather than a state determination of compliance. The
question of actual compliance is, according to the Agency, therefore,
open to Agency review.
Unlike the Medicare program which is administered by the federal
government, the Medicaid program is a cooperative federal-state venture,
with the states given primary responsibility for the administration of
their own programs.While the states have considerable discretion in the
operation of their Medicaid programs, they still must follow the
requirements of Agency regulations.
The regulations concerning home health agencies are not as detailed
as those for other providers of Medicaid services. In the Medicaid
regulations no specific conditions of participation for a home health
agency are listed, nor is a certification process described. Rather,
for the requirements of a home health agency one is referred to the
Medicare section of the regulations, wherein the ultimate determiner of
a provider's eligibility is the Secretary and not the State. While this
reference from one program to another may not be as clear as it might
have been concerning the certification process and the forms to be used
for a Medicaid-only home health agency, there is no question (4) that
such a home health agency had to be in full compliance with the Medicare
certification requirements.
The State is correct in its assertion that there is no "look-behind"
regulations for a Medicaid home health agency comparable to that for
nursing homes. We do not believe, however, that the absence of such a
provision effectively bars the Agency from over questioning the State's
determination of a home health agency's Medicaid eligibility. The
federal government contributes a significant share of the funding for
the Medicaid program, and it is unlikely that Congress intended that the
Agency not have some type of supervisory role in determining that the
states expend the funds for "proper" services. Moreover, for nursing
homes a "look-behind" provision is specifically needed because of
the
presumption of eligibility that arises from a state's execution of a
provider agreement with a facility. There is no basis in the
regulations for such a presumption here. We agree, therefore, with the
Agency that it may verify actual compliance with the regulations rather
than accept unquestionably a mere State declaration of compliance.
Even if we were to accept the State's position that only in examples
of clear error may a state's determination be questioned, our own review
of the documents submitted by the parties leads us to conclude that
clear errors existed in the State's determination of ACI's status.
There was no actual survey of ACI by the State until July 1979. The
survey report prepared by the State for the period July 1978 to July
1979 purporting to show that ACI was an eligible home health agency
during this period was not based on on-site findings, but rather was
reconstructed after the fact from interviews and documents. This
reconstruction was highly speculative, and consequently was an
insufficient basis for a conclusion that ACI was eligible to participate
in the Medicaid program. Furthermore, that survey report contained
several findings that ACI had not met certain Conditions of
Participation and numerous omissions as to whether ACI met other
provisions. The record does not indicate that any plan of correction
for these deficiencies was ever submitted or approved.
The fourth survey report, prepared on the basis of an actual survey
in July 1979, also showed deficiencies in Conditions of Participation
and other findings that were questioned by Agency personnel as being
inadequately supported. The documents submitted by the State in its
response to the Order do not support the State's contention that ACI was
eligible to participate in the Medicaid program during this period. One
document, unsigned and undated, is essentially only a duplication of the
comments typed on the survey form. Other documents submitted by the
State do indicate that discussions were carried on between the State and
ACI on how to remedy the deficiencies detected at ACI during the July
1979 survey. We do not think these documents are insufficient as a plan
of correction merely because they were not on the proper forms. They
are, rather, (5) insufficient because they do not indicate when and how
deficiencies would be corrected as required by the regulations.
Finally, we note that the plan of correction that was ultimately
accepted on October 3, 1980 listed at least one deficiency, the timely
review of records, which was cited by the Agency as a problem with the
1979 survey.
The 1979 survey revealed deficiencies at ACI. Nothing has been
presented to indicate that all these deficiencies were corrected. Yet
the State continued to make payments to ACI. We therefore conclude that
any determination by the State that ACI was an eligible home health
agency was clearly erroneous. The State has not submitted any
documentation that would cause us to depart from our tentative finding,
expressed in the Order, that it was not until October 3, 1980, after the
State had made another complete survey of ACI on August 7, 1980, a
statement of deficiencies had been prepared, and a plan of correction
had been approved, that ACI fully met the requirements of a home health
agency in the Medicare program, and hence was eligible to participate in
the Medicaid program.
Conclusion
For the reasons stated above, we uphold the disallowance of FFP in
the amount of $192,849.
OCTOBER 22, 1983