GAB Decision 295
May 7, 1982 Hawaii Department of Social Services and Housing; Docket
No. 81-112-HI-HC Garrett, Donald; Settle, Norval Ford, Cecilia
The Hawaii Department of Social Services and Housing (State) appealed
from a determination by the Administrator of the Health Care Financing
Administration (Agency) dated June 30, 1981 disallowing $401,215.64
pursuant to Section 1903(g) of the Social Security Act (Act). The
disallowance was based on an on-site survey conducted by the Agency as
part of the validation procedures under Section 1903(g)( 2) of the Act.
The Agency found that the requirements for physician certification,
recertification, and updating of plans of care in Section 1903(g)(1)(A)
and (B) of the Act were not met with respect to a number of patients in
nine intermediate care facilities (ICF's) in the State for the quarter
ended September 30, 1980. The Agency subsequently recalculated the
disallowance, resulting in an increased disallowance of $494,927.39.For
the reasons discussed in this decision, we sustain the disallowance in
the increased amount.
Pertinent Statutes and Regulations
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 the State has an
"effective program of control over utilization of" long-term inpatient
services in certain facilities, including ICF's. 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 60 days in ICF's, or the FMAP will
be decreased according to the forumla set out in Section 1903(g)(5).
Specifically, Sections 1903(g)(1)(A) and (B) provide that the State
"must" show that --
(A) in each case for which payment is made under the State plan, a
physician certifies . . . (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;
and (2) (B) in each such case, such services were furnished under a plan
established and periodically reviewed and evaluated by a physician.
This statutory requirement is implemented for ICF's at 42 CFR 456.360
and 456.380, effective September 29, 1978. Section 456.360(c) requires
that recertification be made ". . . at least every 60 days after
recertification." Section 456.380(c) requires that an interdisciplinary
team of health professionals ". . . review each plan of care at least
every 90 days."
The Agency also issued an "action transmittal," SRS-AT-75,122, dated
November 13, 1975, to State Medicaid administrators to clarify ". . .
what is required in order for States to be considered in adherence with
the statute and regulation." The action transmittal defined
recertification as ". . . the process by which a physician attests to an
individual's need for continued placement at a specific level of care .
. . ." It also identified several conditions ". . . which must be
met in
order for the recertification to be considered valid": i.e., that it be
in writing, signed by a physician using his/her signature or initials,
and dated at the time it is signed or initialed. Several types of
documents are given as examples of acceptable recertifications: a
statement signed and dated by a physician that the patient needs a
particular level of care; signed and dated physician orders or progress
notes which indicate the need for continued care; or a medical
evaluation signed and dated by a physician (provided in each case that
the date of the signature meets the Agency's requirements for a timely
recertification, and the signature is identifiable as that of a
physician).
The penalty prescribed by Section 1903(g) takes the form of a
reduction of a state's FAMP. Section 1903(g)(5) specifies that the
percent amount of the reduction --
. . . is equal to 33 1/3 percentum 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.
This provision is implemented at 42 CFR 456.657, which further
provides in subparagraph (b) that -- (3) If any of the data required to
compute the amount of the reduction in FFP are unavailable, the
Administrator will substitute an estimate. If the agency determines the
exact data to the satisfaction of the Administrator, the estimate may
later be adjusted. If the number of the recipients in individual
facilities is not available, the . . . (penalty) will be estimated, for
each level of care, by dividing the number of facilities in which the
requirements were not met by the total number of facilities for which a
showing is required . . . .
Statement of the Case
The Agency found violations of the applcable statute and regulations
in nine of the ten ICF's surveyed. Specifically, it found one or more
of the following violations in the case of 87 patients in those nine
facilities: untimely physician's recertification; untimely update of
patient's plan of care; no recertification during the 60-day period
within the quarter; invalid physician's recertification; untimely
physician's initial certification and establishment of patient's plan of
care; and no patient's plan of care established. (Letter dated June
30, 1981, Attachment) The Agency subsequently withdrew its finding of a
violation in one facility (G. N. Wilcox Memorial Hospital and Health
Center), finding that the applicable requirements had in fact been met
with respect to the sole patient in question.The Agency also determined
that two of the seven patients for whom violations were found at another
facility (Kana Hospital) had been properly recertified, although the
facility was still included in the disallowance. (Response to Order to
Develop Record, dated April 8, 1982, pp. 4-5)
The State contested the agency's findings with resect to some, but
not all, of the 87 patients, providing documents from patient files as
evidence of compliance. It asserted that certain documents were
acceptable as certifications or recertifications although they did not
contain an explicit statement regarding the patient's need for continued
care at the ICF level on the ground that no such statement was required
by SRS-AT-75-122. /1/
(4) The State also contended that the entire disalloance should be
invalidated because the Agency had failed to follow its own procedures
for the conduct of validation surveys. In addition, the State disputed
the Agency's computation of the penalty. These arguments are addressed
below.
Adequacy of Validation Survey Procedures
The State contended throughout the proceedings before the Board that
the disallowance was invalid because the Agency failed to follow its
stated procedures for conducting validation surveys. (Application for
review, dated July 22, 1981, p. 1; Response to Order to Develop Record,
dated February 18, 1982, pp. 7, 8, 10) These procedures, which were
summarized in an Agency submission in an earlier appeal involving the
State of Hawaii, consist of notifying the state of each instance of
possible non-compliance identified in the on-site survey and giving the
state an opportunity to submit additional documentation before a
disallowance was made. (Docket No. 79-12-HI-HC, Motion to Withdraw
Disallowance, dated March 27, 1981, p. 3) The Agency argued that it
followed these procedures in this case, conducting exit interviews with
the individual facilities and the State and giving the State written
notice of its survey findings in a letter dated February 24, 1981.
(Response to Appeal, dated October 16, 1981, pp. 9-10) The State
contended, however, that the facilities were not given adequate
opportunity or information in the exit interviews to rebut the findings
on which the disallowance was based. The State also noted that the
February 24, 1981 letter differed in content from the June 30, 1981
notification of disallowance. (State's letter dated September 8, 1981,
p. 2) A comparison of the two documents shows that, in some instances,
different types of violations were found for the same individual. In
additin, the June 30, 1981 notification of disallowance identifies
violations with respect to numerous patients not named in the February
24, 1981 letter. Thus, it is clear that the State did not have an
opportunity to rebut all the findings on which the disallowace was based
prior to the issuance of the notification of disallowance.
An Order to Develop Record issued by the Presiding Board Member
tentatively indicated, however, that this was not a sufficient basis for
granting the appeal since the State could submit additional
documentation to rebut the Agency's findings during the course of the
proceedings before the Board. The Order noted that, inasmuch as less
than one year had elapsed since the validation survey was conducted, the
State should be able to obtain the pertinent documentation without
significant difficulty. The State in fact submitted documentation
regarding each disputed violation. It alleged no prejudice as a result
of the fact that the opportunity to rebut the Agency's findings was
given after rather than before the (5) issuance of the notification of
disallowance other than additional expenditures of staff time and money.
(Response to Order to Develop Record, dated February 18, 1982, p. 10)
Since the State's ability to marshall evidence to refute the Agency's
ultimate findings was not impaired, we must proceed to consider the
substantive questions presented by the case regardless of whether the
Agency followed its own procedures. (See North Carolina Department of
Human Resources, Decision No. 273, March 31, 1982, p. 3 of attached
Order)
We note, moreover, that the Act requires the State to show that it
has complied with the requirements with respect to certifications,
recertifications, plans of care, and plans of care updates. Section
1903(g)(1). The validation survey is intended only to verify the
accuracy of the State's showing. Section 1903(g)(2). Thus, the fact
that the State did not have an opportunity to respond to every finding
of a violation before the disallowance was taken does not act to relieve
the State of the burden of demonstrating its compliance with the
applicable requirements.
Adequacy of State's Documentation
As indicated previously, the State furnished documentation intended
to refute a substantial number of the Agency's findings of violations.
However, we do not find it necessary for purposes of this decision to
evaluate all of the documentation provided. This Board has previously
noted that, under the formula in Section 1903(g)(5) for computing a
penalty disallowance, the amount of the disallowance remains the same
regardless of the number of violations in a particular facility, as long
as there is at least one violation.
Virginia Department of Health, Decision No. 208, August 28, 1981, p.
2; North Carolina Department of Human Resources, Decision No. 273,
March 31, 1982, p. 4 of attached Order. This is so because Section
1903(g)(5) requires that the disallowance be based on the ratio of the
number of patients in the facilities in which violations are found to
the total number of patients in the facilities participating in the
State's Medicaid program during the period in question. Even if
facility data is substituted by the Agency for patient data, as
permitted by 42 CFR 456.657(b), the number of patients in a facility
with respect to whom violations are found remains irrelevant for
purposes of computing the disallowance. In the instant case, the State
concedes that there was at least one violation in six of the eight
facilities now in question. (Response to Order to Develop Record, dated
February 18, 1982, p. 9) Accordingly, we need only consider the
documentation submitted for patients in the two facilities in which the
State contended that there were no violations. (6) Hale Nani Health
Center
The notification of disallowance showed violations of Section 1903(
g)(1) for three patients in this facility. According to the Agency,
there were untimely physician's recertifications in all three cases, as
well as an untimely update of the plan of care in one of the three
cases. The Agency reviewed the documents submitted by the State but
contended that none of them constituted valid or timely
recertifications, and that the plan of care submitted for the third
patient was not updated within the required 90 days or properly signed
by a physician. (Response to Order to Develop Record, dated April 8,
1982, Exhibit F, p. 3)
The documents which the State claims are recertifications are
entitled "Physician Review" and list a diagnosis for the patient,
and
medications and treatments ordered. Each is signed by the attending
physician on several successive dates. (Response to Order to Develop
Record, dated February 18, 1982, Attachment IX, pp. 131, 134-135) We
agree with the Agency that these documents do not constitute valid
recertifications. This Board has previously held that, to be considered
a recertification, a document must evidence an actual assessment of the
patient's need for continued treatment at the particular level of care
involved. Ohio Department of Public Welfare, Decision No. 219,
September 30, 1981. That decision states, in pertinent part:
The Agency has provided the states with notice of a consistent set of
requirements about what constitutes a valid recertification. The
statute, regulation, and Action Transmittal (75-122) require that a
physician "recertify" (attest) to the continued need for care.
Accordingly, there must be a periodic assessment of a patient's need for
a level of care. We do not agree with the State that this required
recertification can be implied here from brief notes about the patients'
physical and mental state. We cannot equate a description of a
patient's behavior or physical condition, which may support a decision
that continued treatment at the mental hospital level of care is
medically necessary, with the actual determination that the mental
hospital level of care is, in fact, medically necessary. While we do
not conclude that any particular "magic" words are necessary, we do
conclude that to recertify, the physician's comments must evidence an
actual assessment of continued need. We agree with the Agency that it
is impractical and unreasonable to expect Agency reviewers during a
validation survey to make judgments about the patients' medical needs
from brief statements about patient behavior and physical condition. We
conclude that the physician orders do not indicate that a physician
attested to the patients' need for continued mental hospital care. (7)
We find that the "Physician Reviews" submitted by the State in this
case
are similarly defective in that they fail to contain an express
statement that continued care at the ICF level is necessary. The
State's argument that SRS-AT-75-122 does not require an explicit
statement of the patient's need for continued care at the ICF level is
not supported by an examination of the action transmital. As previously
indicated, the action transmittal specifically defines recertification
as " . . . the process by which a physician attests to an individual's
need for continued placement at a specific level of care at least every
60 days." (Emphasis in the original.) Thus, the Hale Nani Health Center
must be included in determining the amount of the disallowance. In view
of our conclusion that there were no valid recertifications for the
three patients, we need not reach the question of whether the
recertifications were timely, or whether the plan of care for the third
patient was updated in a timely fashion and properly signed by a
physician.
Maluhia Hospital
The notification of disallowance showed violations of Section 1903(
g)(1) for three patients in this facility. According to the Agency,
there were untimely physician's recertifications in all three cases.
The Agency reviewed the documents submitted by the State, but contended
that they constituted patients' plans of care and not the required
recertifications. (Response to Order to Develop Record, dated April 8,
1982, Exhibit F, p. 5) In all three cases, the documents are entitled
"Physician's Directions," and show orders for patient treatment, the
date of each order and the physician's signature for each order.
(Response to Order to Develop Record, dated February 18, 1982,
Attachment IX, pp. 95-99) We agree with the Agency that these documents
do not constitute valid recertifications, again on the basis that they
do not contain an express statement indicating that continued care at
the ICF level is necessary. Accordingly, Maluhia Hospital must be
included in determining the amount of the disallowance.
We thus conclude that all eight facilities were properly included in
determining the amount of the disallowance.
Computation of Disallowance
The State challenged the Agency's computation of the disallowance on
several grounds. First, it asserted without further explanation that
"(the) method of computation . . . is not in accordance with 42 CFR
456.657." Secondly, it asserted that the Agency improperly used patient
data which included all Medicaid recipients who received ICF services
during fiscal year 1979 instead of just those Medicaid recipients who
received care for more than 60 days. Finally, the (8) State asserted
that, notwithstanding the availability of patient data, the Agency was
required to base the disallowace on facility data if the use of facility
data rather than patient data was to the State's advantage. (Response
to Order to Develop Record, dated February 18, 1982, pp. 12-13)
The Agency indicated in response that it was modifying the
disallowance to exclude those Medicaid recipients who did not receive
"long-stay services." It stated that it was also modifying the
disallowance based on its determination that there were no violations in
one of the nine facilities (G.N. Wilcox Memorial Hospital) originally
identified.
Finally, the Agency stated that it was recalculating the
disallowance, which was originally based on facility data, using exact
patient data supplied by the State in its response to the Order to
Develop Record. (Response to Order to Develop Record, dated April 8,
1982, p. 5) Although the first two modifications alone would have had
the effect of reducing the amount of the disallowance, the use of
patient data rather than facility data resulted in a net increase in the
amount of the disallowance.
The Agency did not respond to the State's general allegation
regarding its failure to comply with 42 CFR 456.657, nor did it address
the State's contention that the disallowance should have been based on
facility data if that was to the State's advantage.
We find that the disallowance, with the modifications indicated
above, was properly computed. The State failed to indicate any specific
respects in which it believed that Respondent failed to comply with 42
CFR 456.657. Since the computation seems on its face to have been made
in accordance with the regulation, we believe that further inquiry into
this matter is not warranted. Further, we find no basis for the State's
position that it may choose whether the disallowance is computed using
facility or patient data. Section 1903 (g)(5) of the Act specifically
calls for the use of patient data. While this Board has previously
found valid the regulation (42 CFR 456.657(b)) which permits the Agency
to use facility data "if the number of recipients in individual
facilities is not available," (North Carolina Department of Human
Resources, Decision No. 273, March 31, 1982; Virginia Department of
Health, Decision No. 208, August 28, 1981), that regulation does not
authorize the use of facility data where patient data is available.
Accordingly, the Agency is entitled to use the patient data submitted by
the State in its February 18, 1982 response to the Order to Develop
Record (at p. 2). (9) Conclusion
We conclude that the disallowance in the increased amount should be
upheld because the State failed to comply with the requirements of
Section 1903 (g) of the Act with respect to patients in eight
intermediate care facilities. /1/ The State also argued that the Agency
erroneously applied the criteria contained in a later action
transmittal, SRS-AT-80-68, dated September 1980. (Response to Order to
Develop Record, dated February 18, 1982, p. 9) The October 1, 1980
effective date of SRS-AT-80-68 was after the end of the quarter for
which the disallowance was taken. The Agency asserted in response that
the surveyors applied the criteria in SRS-AT-75-122. (Response to Order
to Develop Record, dated April 8, 1982, p. 3) Since we apply
SRS-AT-75-122 in reviewing the State's documentation, it is not
necessary to pursue this matter further.
OCTOBER 22, 1983