GAB Decision 304
May 28, 1982 Utah Department of Heath; Docket No. 81-121-UT-HC Garrett,
Donald; Settle, Norval Teitz, Alexander
The State of Utah requested reconsideration of a disallowance of
$129,310.40 in federal financial participation (FFP) by the Health Care
Financing Administration (HCFA, Agency). The disallowance, under the
provisions of section 1903(g) of the Social Security Act (Act), was
based upon a finding that the requirements of the Act for physician
certification and recertification, and for updating plans of care, were
not met in ten of the 91 intermediate care facilities (ICFs) in Utah.
Based on the analysis below, we reduce the disallowance to $77,047.29.
Background
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 certain types of facilities, for each quarter that federal
medical assistance is requested for such services, or the federal
medical assistance percentage (FMAP) must be decreased by an amount
determined pursuant to the formula set out in section 1903(g)(5). 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
(B) in each such case, such services were furnished under a plan
established and periodically revised and evaluated by a physician;
(Sections 1903(g) (1) (A) and (B))
The Agency has implemented these statutory provisions for ICFs at 42
CFR 456.360 (1979). Section 456.360(a) requires that "(A) (2)physician
must certify and recertify . . . that ICF services are or were needed."
The State must make a satisfactory showing, in each quarter, that it has
met these requirements for each recipient in order to avoid a reduction
in FFP under 42 CFR 456.652(a).
The penalty prescribed by section 1903(g) takes the form of a
reduction of a State's FMAP which results in a reduction of federal
funds received by the State. Section 1903(g)(5) specifies the method of
calculating the reduction. This provision was implemented at 42 CFR
456.657.
Statement of the Case
Grantee made a showing of compliance with the utilization control
(UC) requirements for the quarter ended Spetember 30, 1980, which was
satisfactory on its face. In October 1980, the Agency issued Medicaid
Action Transmittal (AT 80-79). (Agency Exhibit 1) This identified Utah
as one of ten states in which a validation survey for ICFs for the
quarter in question would be conducted. This also stated what records
the states would have to furnish. By letter dated November 13, 1980,
the Regional Medicaid Director notified the State that ten out of the
State's 91 ICFs had been selected for review. (Agency Exhibit 2) In
December 1980, a Medicaid Regional Letter was issued (Transmittal 80-43,
Agency Exhibit 4), which gave detailed instructions for conducting the
validation survey.
In addition to these specific instructions for the validation survey,
two documents were issued pertaining to certification generally. There
were a Medicaid Action Transmittal 80-68 (AT 80-68) dated September
1980, which was a "clarification" of what constituted a valid
certification and recertification. (Agency Exhibit 13) This stated that
it replaced SRS Action Transmittal 75-122 (AT 75-122) (Agency Exhibit
15) dated November 13, 1975. The Regional Medicaid Director in turn
issued a Regional Memorandum No. 80-73, dated November 20, 1980, which
purported to summarize parts of AT 80-68 for the states in the Region.
(Agency Exhibit 14)
On June 30, 1981 the disallowance letter was sent to the State
informing it that it had failed to meet the requirements for
certification, recertification, and for plans of care, in all ten
facilities surveyed. A list was attached identifying the patients with
the particular discrepancy for each. An explanation was also given of
the method of calculating the penalty.
The State duly requested reconsideration by the Board. The Agency
then filed its Response. Due to some confusion as to the effect (3)of
the Board's new procedures, the State then filed a brief, the Agency
filed a Response, and the State filed a Reply to this. The State first
asked for a hearing or conference, but withdrew its request during a
telephone conference call on May 13, 1982. This decision is based on
the entire record including the conference call.
Discussion
I. Certification by a physician
The State did not contest the application of any of the survey
requirements for patient records except for the signature of a
physician.
The State argued that the recertifications questioned by the
reviewers were in fact made by a physician, even though the letters M.
D. did not appear after his name or initial. The statute requires that
certification and recertification be by "a physician"; no other
requirement or means of identificaton of a physician is stated. (1903
(g)(1)(A)) The regulation adds nothing on this point (42 CFR 456.360),
but the other documents referred to below do specify how reviewers
should determine whether certification was by a physician.
AT 75-122, dated November 13, 1975, defined the conditions which had
to be met in order for certification (and recertification) to be valid:
2. The certification must be signed by a physician using his/her
signature or initials . . . The certification must be dated at the time
it is signed or initialed by the physician.
AT 80-68, which stated it was effective October 1, 1980, was a
"clarification" of what constituted a valid certification, and replaced
AT 75-122. This was more specific on the conditions which had to be met
for valid certification. /1/
2. The certification must be signed or initialed by an individual
clearly identified as a physician. "M.D." (medical doctor) or "D.O."
(doctor of osteopathy) written after the signature or initials are the
only (4)acceptable acronyms. "P.A." (physician's assistant), "R.N."
(registered nurse), etc., are not acceptable.
Regional Memorandum 80-73 dated November 20, 1980 had substantially
the same language.
The only remaining relevant document is Transmittal 80-43, dated
December 1980. This letter from the HCFA Administrator to the Regions
gave detailed instructions for conducting the UC survey for the quarter
ended September 30, 1980. On page 10 the reviewers were told that the
federal certification requirements "are contained in AT-75-122, dated
November 13, 1975." Then followed language pertaining to signature of a
physician and the acceptable acronyms. The language quoted is, however,
not that of the 1975 action transmittal (AT 75-122) but that of AT 80-68
set out above. In addition, the following additional instruction is
given the reviewer, which also erroneously purports to be a verbatim
quotation from AT 75-122:
If initials appear without "M.D." or "D.O.," look to the
record to
identify the corresponding fully written signature with the appropriate
title. If you cannot positively identify that the initials are of a
physician, do not accept them. (Emphasis in original)
The State argued that the various transmittals, other than AT 75-122,
were not effective until after the quarter for which the validation
review was conducted, which ended September 30, 1980. AT 80-68 was by
its terms not effective until October 1, 1980, and the Regional Medicaid
letter 80-43 was not issued until December 1980. In fact, there is no
indication that the states had notice of 80-43. The Agency contended
that the action transmittals did not establish new criteria and no
criteria were applied retroactively. (Respondent's Response to
Appellant's Brief, p. 2)
Underneath all the rhetoric and classical allusions of the State's
attorney, his main contention was that at one facility, Sunshine
Terrace, the certifications were in fact signed or initialed by a
physician identified as such.
A. The factual situation
The only discrepancies found by the reviewers and disputed by the
State, which are at issue in this case, all pertain to one facility,
Sunshine Terrace.
This Board has held that, under the statute and regulations, if one
patient in any facility does not meet the certification requirements
under 1903(g)(1)(A), then all the patients in that facility make up the
numerator of the fraction used in computing the disallowance (5)under
1903(g)(5). Arkansas Department of Human Services, Decision No. 278,
April 13, 1982; Hawaii Department of Social Services and Housing,
Decision No. 295, May 7, 1982. The State admitted that, except for
Sunshine Terrace, at least one patient in every facility surveyed did
not meet the certification requirements. See, Respondent's Exhibits 3.1
through 3.8, and 3.10. As to Sunshine Terrace, the State contested all
17 patients found by the reviewers to have invalid recertifications or
plans of care. /2/
A preliminary question is the proof offered. The State argued that
the documentation in its Exhibit 3.9 is proof of valid certification.
The Agency contended that this added nothing to the actual documentation
of recertification forms in its Exhibit 8.9. The Agency is correct,
because Exhibit 3.9 states only conclusions. The State's Exhibit says
merely that the "title (was) not required," or an "initial was
permitted," citing AT 75-122 (referred to as 1975 A.T.) as authority in
either case. The Exhibit also states that the "face of (the form) shows
physician's name and title." This is not documentation; it is the
conclusion from the documentation that originally the Agency reviewers
were to make, and is now the basic question before the Board in this
case.
The actual certification forms for Sunshine Terrace in the record are
for only three patients. (Agency Exhibit 8.9) No explanation was
offered in any submission by the parties why this was done. In fact,
the State submitted a certification form (Exhibit 2) for only one
patient, which was a duplicate of one in Exhibit 8.9. In the conference
call the Agency explained that the documents it submitted were exemplars
and typical of the other patient's records; both parties had no other
documents available, so our decision is necessarily based on the patient
records before us.
The first forms submitted for Sunshine Terrace were recertification
forms for Patient A. (Attachment #1 to Exhibit 8.9) No contention was
made that they were improper recertifications, nor that they were
untimely. The defects were stated by the reviewer to be:
The signature (physician) on the recerts and POC does not contain
title (M.D./D.O.) and cannot be found elsewhere in the record.
All three recertifications are on a form which has a broken line for
signature, under which is printed "PHYSICIAN'S SIGNATURE DATE."
(6) On all three forms for Patient A there appears on each line a
signature, "M Daines" with the date immediately after it. At the bottom
left of the form, one of several spaces has the heading "PHYSICIAN."
In
this space there is typed "DR M. C. DAINES."
Attachment #2 of Exhibit 8.9 is the same form, signed the same, for
Patient B, for two recertifications dates.
Attachment #3 of Exhibit 8.9 consists of two similar recertification
forms for Patient C. The first, dated 8/4/80, has the initial "B"
above
the line with "Physician's Signature" printed below it. In the block
headed "Physician" is typed "Dr. R S. Budge". The second
form, dated
7/9/80, has on the physician's signature line the writing "R S Budge",
and again "Dr. R S. Budge" typed in the "Physician" space.
The reviewer
states that:
The signatures on 7/9/80 and 8/4/80 recerts are not titled; could
not locate full signature elsewhere at the facility.
B. Analysis
The first step in passing on these questioned recertifications is to
determine what Action transmittal or other policy statement should be
applied to them. Both parties agree that AT 75-122 does apply.
(Appellant's brief, unnumbered fourth page; Agency's Response to
Request for Review, p. 13)
AT 80-68, AT 80-79, and Regional Memorandum 80-73 do not apply
because they either came after, or were effective after, September 1980,
the end of the quarter under review here. AT 80-68 was issued in
September 1980 but stated that it was to be effective October 1, 1980.
AT 80-79 does not cover the particular situation here, but in any event
it was not issued until October 1980. Regional Memorandum 80-73 was
dated even later. (November 20, 1980)
The Agency did not contend that these later transmittals could in
fact be used to test recertifications in a prior quarter. In its first
response the Agency said that the Board need not address the issue
whether 80-68 and 80-73 were actually "new" criteria rather than
"clarification of the extant criteria." Response, p. 13. The reason
given was that the recertifications found invalid by the surveyors were
not reviewed against the "new" criteria. In addition the instructions
to the survey team in 80-43 required the use of 75-122. Id.
In its response to the appellant's brief the Agency relied on the
decision of this Board in Social Service Board of North Dakota, Decision
No. 166, April 30, 1981, and tried to extend to this case the criteria
of Field Staff Information and Instruction Series:
(7) FY-79-28, Nov. 30, 1978, referred to as Internal Memorandum.
After citing from the decision, the Agency claims simply that (A)
fortiori, this Appellant's contentions are without merit." (Response to
Appellant's brief, p. 4; emphasis in original)
There is considerable doubt whether the Internal Memorandum has any
connection with this case. There is of course no indication that the
State knew of it. In fact, there is nothing to show the reviewers here
knew of it, since they were told to follow AT 75-122. But there would
certainly seem to be no support in it for the Agency's position. The
citation from North Dakota closes with:
Therefore, we conclude that there is nothing in the Internal
Memorandum that is independently binding on the State, nor does anything
in it, standing alone, affect the validity of this disallowance.
We come then to measure to recertification documents for Sunshine
Terrace against the requirements of AT 75-122. These include:
1. The recertification must be in writing.
2. The recertification must be signed by a physician using his/her
signature or initials . . .
The recertifications in issue here are all clearly in writing. We
are therefore left with the single question of whether the
recertifications were "signed by a physician using his/her signature or
initials."
On the Patient A forms, there is written "M Daines" above a line
marked "Physician's Signature." The name "M C Daines" is
typed in the
block headed "Physician". This form is therefore clearly signed "
by a
physician using his signature", and identified as such.
The initial "B" on the Patient C forms actually poses no more problem
under the Criteria of AT 75-122. It is "signed by a physician using his
. . . initials." Since the initial is on a line which has "Physician's
Signature" printed under it, it meets on its face the requirement that
it is signed by that physician who used his initial.
This would even meet the requirements of the Internal Memorandum, as
set out in North Dakota.
The Agency's policy . . . is that if initials cannot be positively
identified as those of a physician, they are not acceptable. Means of
identification include (8)the abbreviations "M.D." or "D.O."
written
after the initials, or reviewing the patient's record in order to find a
fully written signature with the appropriate title corresponding to the
initials. (p.2)
While there is no "M.D." written after the initial "B",
reviewing the
patient's record would disclose a fully written signature, "R S Budge",
on the next page. True, there is no "M.D." written after the signature
either, but it is written above a line where "Physician's Signature"
is
typed under the line, and "Dr. R.S. Budge" is typed in the space marked
"Physician".
We have the additional factor of an affidavit by the Acting Director
of the Bureau of Facility Management Division of the State:
8. Physicians who signed or initialed certifications or
recertifications, but who did not have "M.D." or "D.O."
following their
name or initials were, without exception found to be licensed to
practice medicine in the state during the quarter of review. (State's
Exhibit 3.0)
The Board therefore finds that the recertification forms at Sunshine
Terrace were in fact signed by physicians, meeting the requirements of
the statute, the regulation, and the relevant Transmittal. (AT 75-122)
They would also meet the requirements of 80-68 and Regional Memorandum
80-73, if they were required to do so, since the recertifications are
"signed or initialed by an individual clearly identified as a
physician."
II. Calculation of the penalty
Grantee readily admitted that the Agency was "entitled to exact a
disallowance from Grantee" but maintained that the amount should be much
less than that claimed by the Agency. Appellant's Brief, p. 1.
The original amount of the disallowance was $129,310.40. In its
response to the Grantee's Request for Review, the Agency in footnote 1
stated that it would recalculate the amount of the disallowance, based
upon the statement in Board Decision No. 169 (Colorado Department of
Social Services, April 30, 1981), that utilization control requirements
do not apply to patients who receive medical services for less than 60
days. The disallowance was subsequently recomputed by the Agency and
reduced to $115,105.40. See Agency letter to the Board dated November
13, 1981.
The disallowance was computed by the Agency using the following
formula:
$3,530,174 x 1/3 x 10/91 x 4870/5471 = $115,105.40
(9) The first figure is the total amount of FFP paid to the State for
all ICF services for the quarter in question. The 1/3 fraction is that
specified by the statute. The last fraction has as its numerator the
total number of patients in the state receiving ICF services for more
than 60 days; the denominator is the total number of patients receiving
ICF services for any duration during the quarter. The State agreed with
the use of this fraction. (Appellant's Brief, pp. 2-3)
The appellant objected strenously, however, to the use of the
fraction 10/91 in the calculation of the penalty. The numerator, 10, is
the number of ICF facilities that did not meet the utilization control
requirements; the denominator, 91, is the total number of ICF
facilities in the State. The State's contention is that, if facility
data is used, the numerator should be 9, since on the State's argument
all the patients in Sunshine Terrace met all the requirements, and
therefore that facility drops out of the numerator. This would, by the
State's computation, bring the disallowance down to $103,553.
But the State is not satisfied with this, by any means. It first
argues correctly that the facility ratio is used in calculating the
penalty only where the patient number data is not available. (See, last
page (unnumbered) attached to disallowance letter) There is no dispute
that the denominator of the fraction using patient data is the total
number of ICF patients in all the State's 91 ICF facilities.
The parting of the ways on the computation comes from the State's
argument that the numerator of the fraction should be the actual number
of ICF patients for whom UC errors were found by the federal surveyors.
This numer was 150, which would bring the disallowance down to
$36,003.42. Or if all the cases where the error cited was either
initialing or signing without an "MD/DO" are dropped out, as being
improperly found invalid, the numerator would go down to 117, and the
disallowance would become $28,082.45.
There is just one thing wrong with this approach by the State. The
Board has held consistently that the statute and regulation require
that, in computing the penalty using patient data, the numerator of the
fraction is the total number of patients in those facilities in which
any violations are found. If one patient in a facility does not meet
the requirements, all the patients in that facility are added to the
numerator. This was spelled out in some detail in Arkansas Department
of Human Services, supra, and recently reaffirmed in Hawaii Department
of Social Services and Housing, supra.
The State admitted that, except for Sunshine Terrace, there was at
least one patient in each facility for whom the requirements (10)were
not met. Therefore, taking the figures from Agency's Exhibits 7.1
through 7.10, there were 375 ICF patients in the 10 facilities surveyed.
On the Agency's contention, the proper numerator is 375. Respondent's
Brief, pp. 6-7. Since the Board has found above that the State was
correct about Sunshine Terrace, then the 54 patients in it should be
deducted from 375, leaving the numerator as 321.
The denominator on patient data was not actually agreed upon in the
submissions (Respondent's Brief, p. 7), but in the conference call the
Agency agreed to 4,364 as the total number of ICF patients and the
denominator of the fraction. The parties agreed in the conference call
that if Sunshine Terrace was excluded, the correct computation using
this formula was $77,047.29. (Appellant's Reply, p. 13)
The Grantee states that this amount is the "maximum allowable
reduction under the methodology set forth in Part 456.6576(a)(1) (sic)
which Grantee maintains is invalid." Id.
The Board has consistently upheld the methodology in 42 CFR 456.657
(a)(1). See, Arkansas Department of Human Services, supra; North
Carolina Department of Human Resources, Decision No. 273, March 31,
1982.
We therefore find that the correct allowable reduction is $77,047.29.
III. Other State arguments
In its original reconsideration request dated July 31, 1981 the State
listed seven reasons for its appeal. The first, a claim of vagueness in
the survey findings, has been disposed of by the documents submitted.
The second, pertaining to retroactive application of criteria, has been
discussed at length above. The fifth ground, pertaining to
establishment of a patient plan of care through an interdisciplinary
team, is not an issue here, because no discrepancy was found by the
reviewers based on this requirement.
The third and fourth grounds are together a complaint that the State
cannot compel physician compliance. These have been answered by the
Board in Decision No. 250, Idaho Department of Health and Welfare,
January 28, 1982.
The sixth ground, that the Survey Instructions do not cite a relevant
regulation, is without merit, since there is no requirement that they do
so. So is the seventh, that the discrepancies have not been
demonstrated to have resulted in harm to the patients, because the
disallowance is based on a penalty provision for failure to comply with
a statutory and regulatory requirement.
(11) CONCLUSION
The disallowance is upheld, but in the reduced amount of $77,047.29.
/1/ The requirements for signature by a physician, and how the
reviewers should identify such a signature, are the same for original
certification and subsequent recertification in all the references
cited. /2/ The Agency does not contend that the recertifications
and plans of care failed to meet any other requirements than those for a
physician's signature.
OCTOBER 22, 1983