GAB Decision 356
November 8, 1982 Ohio Department of Public Welfare; Docket No.
82-134-OH-HC Ford, Cecilia; Norval, Settle Teitz, Alexander
The Ohio Department of Public Welfare (State) appealed the
disallowance by the Health Care Financing Administration (HCFA, Agency)
of $1,389,796 in federal financial participation (FFP) claimed under
Title XIX of the Social Security Act (Medicaid). HCFA disallowed the
federal share of payments made to five nursing homes for intermediate
care facility (ICP) services rendered from January 1, 1980 through June
30, 1981. The basis stated for the disallowance was that the nursing
homes had not been certified by the State during all or part of the
period in question and did not have valid provider agreements with the
State.
The major issue presented is whether the State, in order to receive
FFP, was required to certify independently for ICF Medicaid
participation a facility which was providing skilled nursing facility
(SNF) services in the Medicare and Medicaid programs. For reasons
stated below, we find that the State, in order to receive FFP, was
required to make its own ICF certification of a nursing facility
participating in both the Medicare and Medicaid programs, irrespective
of any delays by HCFA in the SNF certification of the facility. We
therefore sustain the di allowance.
There are no material issues of fact in dispute. We have determined,
therefore, to proceed to decision based on the State's response to an
Order to Show Cause. That response incorporated the record of a similar
prior appeal before the Board, Ohio Department of Public Welfare,
Decision No. 306, May 28, 1982. The Agency was not required to make any
submissions in this appeal.
Factual Background
An Agency review of the State's Medicaid nursing home program
disclosed that five nursing homes either did not have valid provider
agreements or were not certified by the State survey agency for ICF
services during all or some part of the period from January 1, 1980
through June 30, 1981. /1/ All of the facilities had previously been
dually certified to (2) render SNF services under the Medicare and
Medicaid programs, as well as ICF services under Medicaid. The detailed
background of each of the facilities, as stated in the notification of
disallowance and not contradicted by the State, is as follows.
1. Imperial Home signed an ICF provider agreement on May 4, 1981 for
the period May 1, 1980 to April 30, 1981. In a HCFA Certification and
Transmittal form (Form 1539) dated October 14, 1980, the State survey
agency certified Imperial Home to be in compliance with ICF program
requirements based on the July 11, 1980 submission of an acceptable plan
of correction and the September 25, 1980 submission of an approvable
life safety code waiver request. FFP in the amount of $133,549 was
disallowed for all ICF services rendered between June 1, 1980 and
September 24, 1980, the day before the approvable waiver request was
submitted.
2. Colonial Manor signed two ICF providers agreements on January 20,
1981 for the periods January 1, 1980 to June 30, 1980 and July 1, 1980
to June 30, 1981. In a HCFA Form 1539, dated August 6, 1980, the State
survey agency certified Colonial Manor to be in compliance with ICF
program requirements based on the July 21, 1980 submission of an
acceptable plan of correction and the May 5, 1980 submission of an
approvable waiver of life safety code requirements. FFP in the amount
of $184,604 was disallowed for all ICF services rendered between January
1, 1980 and July 20, 1980, the day before the acceptable plan of
correction was submitted.
3. Gillettes, The Country Place's ICF certification expired on
January 31, 1980. The State survey agency recertified Gillettes as
being in compliance on June 18, 1980. No provider agreement was
executed for the period February 1, 1980 to June 17, 1980. A valid
provider agreement was executed for the period beginning June 18, 1980.
FFP in the amount of $263,183 was disallowed for all ICF services
rendered between February 1, 1980 and June 17, 1980.
4. Little Forest Medical Center signed an ICF provider agreement on
February 17, 1981 for the period July 1, 1980 to April 30, 1981. In a
HCFA Form 1539, dated October 27, 1980, the State survey agency
certified Little Forest to be in compliance with ICF program
requirements based on the September 25, 1980 submission of an acceptable
plan of correction. FFP in the amount of $198,295 was disallowed for
all ICF services rendered between July 1, 1980 and September 24, 1980,
the day before the acceptable plan of correction was submitted.
5. Chateau Fairlawn Nursing Home signed an ICF provider agreement on
February 17, 1981 for the period January 1, 1980 to June 30, 1980, but
the State survey agency never issued a HCFA Form 1539 indicating the
facility was certified. Another provider agreement was signed on
February 13, 1981 for the period July 1, 1980 to June 30, 1981. The (3)
State agency issued two Form 1539's on July 24, 1980 and April 30, 1981
indicating the facility was not in compliance with ICF program
requirements. On August 13, 1981 another Form 1539 was issued,
certifying Chateau Fairlawn on the basis of a May 29, 1981 submission of
an acceptable plan of correction. FFP in the amount of $610,165 was
disallowed for all ICF services rendered between June 1, 1980 and May
28, 1981, the day before the acceptable plan of correction was
submitted.
Discussion
The five nursing facilities that are the subjects of this
disallowance were also the subjects of another disallowance for an
earlier period, July 1, 1977 through June 30, 1980. The prior
disallowance was sustained by the Board in Ohio Department of Public
Welfare, Decision No. 306, May 28, 1982. The Board determined from the
notification of disallowance accompanying the present appeal that none
of the disallowed sums from the prior appeal were duplicated in the
later disallowance.
Because the five facilities were the same as those in the prior
disallowance and because the Agency's rationale for the disallowance --
the failure of the State survey agency to have certified the facilities
for ICF services -- was the same in both cases, the Board departed from
its ususal procedures in reviewing an appeal and immediately issued an
Order to the State to show cause why the disallowance should not be
sustained on the basis of Decision No. 306.
In response to the Order, the State repeated its assertion, made in
its previous appeal, that ultimately it was HCFA's actions which were
responsible for the facilities' lack of ICF certification. In making
its arguments the State referred to the brief and documents it had
submitted in the previous appeal. Characterizing HCFA's actions as
"lackadaisical," the State contended that it was at the mercy of HCFA
because HCFA took an unreasonable amount of time in reaching its
decision on the certifiability of the facilities for Medicare purposes
and did not inform the State of its communications with the facilities.
(pp. 2-3) The State requested that the Board order HCFA to turn over to
the State all copies of its records and correspondence relating to the
Medicare certification of the facilities so that the State could
document HCFA's "unorthodox and untimely method of certifying" the
facilities. (p.2) The State also reminded the Board that, as in its
previous appeal, the State was under court order to continue Medicaid
payments to Colonial Manor, Gillettes, and Chateau Fairlawn during part
of the period covered by the disallowance. Finally, the State referred
to the case of Woodstock/Kenosha Health Center v. Schweiker, 542 F.
Supp. 1210 (ED. Wis. 1982), in support of its position.
(4) In reviewing the State's arguments we conclude that the State
misunderstood what the Board said in its prior Ohio decision. We
further believe that the documents sought by the State from HCFA would
not benefit the State's cause in any way in light of what was said in
Ohio. /2/ There the Board emphasized the explicit Medicaid regulations
requiring an independent State certification of an ICF Medicaid
provider, regardless of whether the provider is also a Medicare SNF
facility. Although the regulations in effect during the time period at
issue in Ohio have since been recodified, the regulations for the time
period at issue here, set forth at 42 CFR Part 442 (1979), remain
substantially the same.
In Ohio the Board noted "the cooperative nature of the Medicaid
program, a federal-state program which gives the states considerable
independence in administering their own Medicaid programs." (p. 5) Under
42 CFR 442.12(a), the responsibility for certifying an ICF for Medicaid
participation lies solely with the states. There is no regulatory
authority for the proposition that a state may delay issuing an ICF
certification pending a HCFA determination on the facility's Medicare
status.
In Ohio the Board explained the difference in treatment by HCFA of
the allowability of ICF and SNF services. Citing Maryland Department of
Health and Mental Hygiene, Decision No. 107, July 2, 1980, the Board
noted that regulatory distinctions exist between ICFs and SNFs,
reflecting the different services provided at each type of facility.
The Board stated that because HCFA certification is required for a joint
Medicare-Medicaid SNF, HCFA allows a Medicaid SNF provider agreement for
a joint facility to be backdated to the date of the facility's last
Medicare certification to protect a state from loss of Medicaid FFP
where there is a delay in HCFA's certification of the facility for SNF
services.
There is only one significant regulatory difference between the time
period represented by this disallowance and the time period covered in
the prior disallowance decided in Ohio. In the period (5) of the prior
disallowance the effective date of an ICF provider agreement was the
date of the facility's certification by the State survey agency,
typically by the execution of a Form 1539
In order to have Medicaid conform with Medicare policy concerning the
effective date of a provider agreement, HCFA issued new regulations on
April 4, 1980 (45 Fed. Reg. 22933). Under the new rule, 42 CFR 422.13,
the effective date of a provider agreement may be earlier than the date
of certification. If all federal requirements are met on the date of
the onsite survey, the agreement must be effective on the date the
onsite survey is completed for a new certification. 442.13(b). If all
federal requirements are not met on the date of the survey, the
agreement is not effective until the date the provider meets all
requirements, or the date the provider submits a plan of correction
acceptable to the state survey agency or an approvable waiver request,
whichever date comes earlier. 442.13(c).
HCFA correctly followed the guidelines set forth at 442.13(c) for all
five facilities here. In the case of Imperial Home, for example, once
an approvable life safety code waiver request was submitted on September
25, 1980, the facility became eligible for Medicaid participation and
for FFP for ICF services even though the State survey agency did not
formally certify Imperial Home until October 14, 1980. Similarly with
the other four facilities, the State received the benefits of earlier
FFP eligibility as a result of HCFA's implementation of 42 CFR 442.13.
Additionally, we conclude that here there is an even stronger case
for sustaining the disallowance than in the prior appeal. In Ohio the
State argued that it was unaware of the certification process for a
facility which provides both Medicaid ICF services and Medicare-Medicaid
SNF services until HCFA's Regional division of Survey and Certification
Operations issued, on March 3, 1980, its Program Memorandum No. 80-4.
That memorandum stated:
Providers certified to provide both SNF and ICF services and
participate in both XVIII (Medicare) and XIX (Medicaid) require two
separate certification determinations; one for SNF and one for ICF.
The Regional Office has authority for only the SNF determination. The
State agency must determine compliance for the ICF.
In Ohio the Board stated that this memorandum "was not an
announcement of a new Agency position on ICF certification, but merely
an explanation of the regulatory requirement . . ." (p.5) As to this
appeal, the State cannot now deny that is was specifically informed by
HCFA of its certification responsibilities for an ICF during some part
of the time period covered by this disallowance, January 1, 1980 through
June 30, 1981. Yet, (6) the State failed to certify the five facilities
in a timely manner so as to avoid the loss of FFP.
We further find no relevance in the State's reminder to the Board
that three of the facilities were the subjects of court orders during
some part of the disallowance period. As was stated in Ohio, under
guidelines set forth in prior Board decisions (see, e.g., Ohio
Department of Public Welfare, Decision No. 173, April 20, 1981) FFP is
available, once a facility has appealed the nonrenewal of its Medicaid
certification and a court has ordered payment to the facility, for a
maximum period of 12 months after the expiration of the term of its last
valid provider agreement. In Ohio the Board concluded that none of the
three facilities secured a court order with 12 months of the expiration
of its last provider agreement and that consequently the State was not
entitled to FFP for the period covered by the court orders. The State
has presented no evidence here that would lead us to depart from that
conclusion.
Nor do we find the Woodstock/Kenosha case relevant here. In that
case, currently being appealed by the Agency, the court held that the
Agency was estopped from recouping Medicaid payments made to a provider
by the State of Wisconsin during a period when the facility's status as
a Medicare provider was being disputed. The court ruled that the Agency
must be charged with the knowledge that Wisconsin was paying the
provider for furnishing services to Medicaid patients during the period
of the dispute.
While we question some of the reasoning used by the court in reaching
its decision and we realize that the decision is now under appeal, we
believe that Woodstock/Kenosha can be distinguished from the present
case on at least one significant point. The payments in dispute in
Woodstock/Kenosha were for Medicaid SNF services, while here the
question is one of ICF services. As we have indicated above, there are
significant differences between the two types of services and how a
facility is certified for the services. Due to Agency delays in the
review of a facility for Medicare services, the State survey agency
could be confused as to status of a facility for Medicaid SNF
participation, but HCFA allows a SNF provider agreement to be backdated
to the date of the facility's last certification to cover such a
contingency. For ICF services, however, it is the State, not HCFA, that
has responsibility for the facility's certification.
In summary, we find that during the period in question the
regulations were clear in requiring that the State had the sole
responsibility for certifying a facility for ICF services, even though
that facility was also an SNF joint provider.
(7) Conclusion
For the reasons stated above, we sustain the disallowance in the full
amount of $1,389,796. /1/ The review period ended with the May 1981
services that were paid in June and claimed on the State's June
30, 1981 quarterly report (Form HCFA-64). /2/ While no
provisions for discovery exist under the Board's regulations, the Board
can order the parties to submit relevant information (45 CFR 16.13) and
may draw a negative inference from the failure to produce requested
documentation. In this case, however, the State's request for all the
Agency's files on the five nursing homes, without any indication as to
what specific items may be found there to support the State's claim,
would place a burden on the Agency with no likely benefit to the State
and would unduly delay the Board's resolution of this case. As
discussed below, the fact that the documents might show that the Agency
was indeed "lackadaisical" in certifying the facilities for Medicare
participation is irrelevant in light of the explicit regulations
requiring State responsibility for Medicaid ICF certifications.
OCTOBER 22, 1983