GAB Decision 511
Docket No. 83-153
February 21, 1984
Louisiana Department of Health and Human Services;
Ballard, Judith; Settle, Norval Teitz, Alexander
The Louisiana Department of Health and Human Resources (State)
appealed a disallowance of $292,479.97 taken by the Health Care
Financing Administration (Agency) for alleged violations of section
1903(g) of the Social Security Act (the Act). Specifically, the Agency
determined that for the quarter ending September 30, 1982 there were
violations of the utilization control requirements (sections 1903(g)(
1)(A) and (B) of the Act) for patients in four intermediate care
facilities (ICFs) and one intermediate care facility-mentally retarded
(ICF-MR). We conclude that the disallowance should be upheld because
the State has not shown that it met the requirements set out in section
1903(g) and the implementing regulations with regard to the patients
included in the disallowance.
This decision is based on the written record and on a telephone
conference call held to discuss the record and the State's request for a
hearing. /1/
(2) Statutory and Regulatory Background
Section 1903(g) of the Act requires that the state agency responsible
for the administration of a 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. This showing must be made for each
quarter, or the federal medical assistance percentage (FMAP) requested
for amounts paid by the state for long-term care services will be
decreased according to the formula set out in section 1903(g)(5).
Section 1903(g) provides that the showing must include evidence that --
(A) 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 . . .
such services; and
(B) in each such case, such services were furnished under a plan
established and periodically reviewed and evaluated by a physician;
* * *
These statutory requirements are implemented at 42 CFR 456.360 and
456.380 (1981) for intermediate care facilities (ICFs). In addition,
section 456.652 specifies what states must do to make a satisfactory
showing. Section 456.655 provides for validation of the showings by the
Agency, as required by section 1903(g)(2), and states that the showing
will not be satisfactory if the validation survey demonstrates that any
of the requirements of section 456.652(a)(1) through (4) were not met
during the quarter for which the showing was made.
The Alleged Violations
The Agency conducted a validation survey in ten ICFs in the State
during February 1983. The purpose of the survey was to verify that
during the quarter ending September 30, 1982 a physician certified each
patient on or before the date of admission or authorization for Medicaid
payment and recertified each patient at least every 60 days thereafter,
and that a plan (3) of care was established by a physician for each
recipient upon admission and updated at least every 90 days thereafter.
The Agency determined that there were violations of these requirements
in four ICFs and one ICF-MR.
Discussion
The State admitted that it could not show that the patients
identified by the Agency had been properly recertified. /2/ Moreover,
(4) the State indicated that it did not dispute the violations of the
requirement for establishment and timely updates of plans of care.
Summary of Telephone Conference Call, p. 3. The State argued, however,
that the Agency's interpretation of the statute was too harsh and that
there was no need to strictly apply the requirement for recertifying
patients every 60 days. The State also argued that there were policy
reasons why the 60-day recertification requirement should be changed.
The State pointed out that the Agency had not alleged any substantive
problems in the facilities, e.g., that the patients did not actually
need the level of care they were receiving.
The Agency pointed to reasons why the Agency's strict interpretation
of the statutory requirements was a reasonable interpretation, and also
discussed the purposes of section 1903(g), particularly Congress'
intention to assure that states complied with requirements which would
discourage overutilization of long-term care in certain types ff
facilities. Finally, the Agency asserted that the State had not made
the requisite showing under the statute and implementing regulations,
and, thus, a disallowance is required by section 1903(g).
Reasonableness of the Agency's Interpretation
This Board has consistently upheld as reasonable the Agency's
interpretation of the statutory requirements under Section 1903(g).
This interpretation mandates 100% compliance with the 60-day
recertification requirement. The Board based its conclusion to uphold
the Agency's interpretation on the plain language of the statute, the
legislative history of the provisions, and the Agency's consistent
interpretation of the statute in this manner. Virginia Department of
Health, Decision No. 208, August 28, 1981; Kansas State Department of
Social and Rehabilitation Services, Decision No. 312, June 21, 1982.
The State argued that if the Board applied this strict
interpretation, it "would seriously jeopardize the rights of the
patients." Appellant's Brief, p. 5. The reasons offered by the State
were that it would endanger the patients' "freedom of choice," it
would
hamper the facilities' administration since the facilities cannot
require physicians to comply, and it would require the State to hire
physicians, which would result in higher costs. The State argued that
the 60-day recertification requirement was nothing more than a "paper
transaction." Brief, p. 6. The State pointed to proposed legislation in
which the period for recertifications was enlarged. S. 2062, introduced
as part of a reconciliation bill in the 98th Congress, 1st Session. The
State argued that the reason for the proposed legislation was that
Congress believed (5) the 60-day period imposed hardships on the states.
Summary of Telephone Conference Call, p. 1.
The State did not explain its argument that the patients' freedom of
choice would be restricted, and we do not see a relationship between
patients' choices and compliance with utilization control requirements.
The Agency pointed out that, if a state elects to participate in
Medicaid, it must comply with applicable federal standards and
regulations. Harris v. McRae, 448 U.S. 297 (1980). Moreover, even if
we agrred with the State's policy arguments, we are not free to alter
clear statutory and regulatory requirements. The only remedies for the
problems posed by the State are legislative amendments and regulatory
changes altering the Agency's interpretation of the statute. The
legislation offered by the State as evidence of congressional intent was
proposed but not enacted and, thus, has not altered the statutory
requirements.
Furthermore, although several states have argued to this Board that
they cannot require physicians to comply with the utilization control
requirements, we have repeatedly noted that there are methods which can
be adopted by the states to encourage compliance. Idaho Department of
Health and Welfare, Decision No. 250, January 28, 1982; Indiana
Department of Public Welfare, Decision No. 489, December 30, 1983. The
statute places responsibility for compliance on the states and penalizes
non-compliance. We are not free to alter that.
Finally, the State argued that there was no showing that the patients
did not need the level of care they were receiving. The State asserted
that the burden of deciding whether patients need the level of care they
are receiving is placed on the physicians, whose own professional code
of ethics requires them to make those judgments to the best of their
ability. We do not doubt the truth of these arguments; however, the
statute requires that the physicians show that they actually exercised
their judgment by placing in writing their conclusions about the level
of care needed. If there is no such written statement which complies
with the Agency's standards, then under the statute the Agency must
disallow federal monies for a violation in the facility in which the
patient resides, according to the formula set out in section 1903(g)(5).
Conclusion
We conclude that the State has not shown that it met the requirements
of sections 1903(g)(1)(A) and (B) for patients in five facilities. We
also conclude that the Agency's interpretation (6) of the statute is
reasonable; if patients are not recertified at least every 60 days, the
Agency must take a disallowance. Therefore, we sustain the disallowance
in the amount of $292,479.97. /3/
/1/ The State initially requested a hearing when it appealed the
disallowance. After the State waived its opportunity to submit a reply
brief, the Board asked whether the State still wanted a hearing. During
a telephone conference call, the State admitted the violations of the
recertification requirement which the Agency had alleged and stated
that, unless the Board believed a hearing would aid the resolution of
the appeal, the State did not think that an evidentiary hearing or oral
argument would substantially improve or change the State's position in
this appeal. Summary of Telephone Conference Call, January 24, 1984, p.
3. Therefore, the Board decided to close the record and proceed to
decision. /2/ The State submitted typewritten lists showing the
dates when certain documents were generated for patients in two of the
facilities. State's Exhibit 3. The dates were listed under labels such
as "physician orders," "progress notes," "review team
recertifications,"
"staffing sheets." The lists stated that these items were signed and
dated by physicians. However, the State did not submit any of the
documents, nor did the State submit certifications, recertifications or
plans of care to show that it had met the requirements. The State did
not allege that any of these documents referred to on the lists
contained the requisite certifications and recertifications that the
patients needed the level of care they were receiving. The Agency
asserted that the information submitted did not show that the proper
records had been generated. The State admitted that the information did
not show that it had met the requirements of section 1903(g). Summary of
Telephone Conference Call, p. 2. Thus, the record shows that the
information submitted (for patients in two facilities) does not support
findings that the utilization control requirements were met for these
patients. Furthermore, the State has not submitted any documentation or
other form of proof for the patients in the remaining three facilities.
Without some evidence that valid certifications, recertifications and
plans of care were signed and dated by the appropriate persons, we
cannot conclude that the State has made a satisfactory showing for the
patients in the five facilities included in the disallowance. The State
indicated that it could submit documentation to show that initial
certifications were made; however, the State elected not to submit the
information because it could not rebut any of the findings about
violations of the recertification requirement. Since there were
violations of the recertification requirement for at least one patient
in each of the four ICFs, and of the requirement for timely update of
the plan of care, in the ICF/MR, information about certifications would
not have altered the amount of the disallowance. See Colorado
Department of Social Services, Decision No. 169, April 30, 1981;
Virginia Department of Health, Decision No. 208, August 28, 1981. /3/
On February 2, 1984 the State counsel pointed out that there
might be an issue concerning whether the Agency correctly applied the
statutory formula for calculating the disallowance amount. Apparently
this issue has been raised with regard to the disallowances for a number
of states and the Agency is preparing a memorandum addressing the issue
as a general matter. Therefore, this decision is being issued with the
parties' consent and the understanding that if a genuine issue
concerning the calculation of this disallowance exists and the parties
cannot resolve it, they may bring the issue before the Board for
disposition.
NOVEMBER 14, 1984