GAB Decision 575
Docket No. 84-76.
October 25, 1984
Minnesota Department of Public Welfare;
Ballard, Judith; Ford, Cecilia Garrett, Donald
The Minnesota Department of Public Welfare (State) appealed a
decision by the Health Care Financing Administration (Agency)
disallowing $36,682.83 under section 1903(g) of the Social Security Act
(Act). The disallowance was based on a September 1983 validation survey
in which the Agency determined that the State had failed to show that it
had an effective program for controlling the utilization of services for
the calendar quarters ending June 30, 1983 and Spetember 30, 1983. The
Agency determined that a skilled nursing facility (SNF) had retained
patients who were recertified as requiring intermediate care (ICF)
services. The Agency determined that this violated section 1903(g) and
that a penalty should be assessed.
During the course of this appeal, the State proposed a recalculation
of the penalty using exact recipient data, rather than the estimated
facility data the Agency had used, and reducing the penalty by four
percent because federal financial participation had been reduced by four
percent during fiscal year 1983. The recalculated amount was
$19,071.40. The Agency accepted the State's calculation of the penalty.
Agency's Appeal File Exhibit and Summary of September 11, 1983
Conference Call.
Based on our analysis below, we uphold the disallowance as modified.
The record in this appeal consists of submissions by both parties and
the summaries of two telephone conference calls.
Pertinent Statutes and Regulations
Section 1903(g) of the Act requires that the state agency responsible
for the administration of a state's Medicaid plan under Title XIX show
to the Secretary's satsifaction that there is an effective program of
control over utilization of long-term inpatient services in certain
types of facilities, including ICFs and SNFs. This showing must be made
for each quarter that federal medical assistance is requested for such
services. A state must meet the specific requirements set (2) out in
sections 1903(g)(1)(A) through (D) or the medical assistant must be
decreased, for any quarter in which a violation occurred, by an amount
determined according to the formula set forth in section 1903(g)(5).
Specifically, section 1903(g)(1)(A) provides 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 . . . such services;
This statutory provision is implemented at 42 CFR 456.260 and
456.360, which provide that, for patients in SNFs (and ICFs),
recertification that the services are needed must be made "at least 60
days after certification." A state must make a satisfactory showing, in
each quarter, that it has met these requirements for each recipient in
an ICF or SNF in order to avoid a reduction in federal financial
participation. See 42 CFR 456.652(a).
Statement of the Case
The issue presented in this appeal is whether the State has satisfied
the recertification requirement where a facility certified to provide
only SNF services retained patients recertified as needing ICF services.
/1/
The State argued that the primary purpose of the Act's utilization
control requirements is to ensure that all Medicaid recipients are
properly recertified and receive a level of care appropriate to their
condition. The State contended that the recertification requirements
are met if each recipient receives treatment appropriate to his or her
needs, and alleged that the patients in question received ICF level of
care rather than SNF level, even though the patients were in an SNF.
The State also submitted documents showing that services provided were
billed at the ICF rate. State's Brief, pp. 6-7. The State argued that,
for each (3) fiscal year since 1964 (except the year beginning October
1, 1982), the facility has been approved, by means of an addendum to the
SNF certification, to provide intermediate level care for up to fifteen
percent of its patient days. State's Brief, p. 2. For the year
beginning October 1, 1982, however, the State conceded that the facility
was certified to provide only skilled nursing care. The State alleged
that an addendum to provide intermediate level care was not executed for
that year because of an oversight on the part of state surveyors. The
State showed that during fiscal year 1983 the facility again received
approval to provide intermediate level of care. State's Brief, p. 3.
The State also asserted that the minutes of utilization review
committee meetings and the medical records for each of the four persons
receiving intermediate care during all or part of the fiscal year
beginning October 1, 1982 demonstrated that the recipients received the
level of care appropriate to their needs (i.e., ICF). State's Brief, p.
8. In addition, the State argued that it had met the secondary
objective of the utilization control requirements, to ensure the
efficient and economical use of Medicaid funds, because the facility
only billed for ICF care for those patients. The State asserted that
the mere absence of an addendum to the facility's certification did not
have any impact on the care actually provided in the facility. State's
Brief, p. 9. The State asserted that the facility was licensed by the
State and that State licensure requirements for ICFs were as stringent
as federal certification requirements. Thus, the State argued, the
facility had in fact met the certification requirements even if it was
not officially certified. Summary of Telephone Conference Call, October
9, 1984.
The Agency argued that in order to meet the requirements for an
effective utilization control program there must be a certification or
recertification for each patient in an SNF that SNF services are or were
required. 42 CFR 456.260. Agency's Brief, pp. 5-6. It argued that if
an SNF retained patients who are not recertified as requiring SNF
services, the requirements for an effective utilization control program
have not been met, because there has been no recertifiecation that SNF
services are needed. The Agency pointed to 42 CFR 440.40(a)( 1)(ii),
which defines SNF services as services that are:
Provided by (A) a facility or a distinct part of a facility that is
certified to meet the requirements for participation under Subpart C of
Part 442 of this subchapter, as evidence by a valid agreement between
the Medicaid agency and the facility for providing skilled nursing
facility services and making payments for services under the plan. . .
.
(4) The Agency argued that, although the State was correct when it
recognized the requirement that patients be recertified at the level of
care of services which they need, the State failed to recognize an
equally significant aspect of section 1903(g), which is that the level
of care the facility is certified to provide correspond to the level of
care the patient needs. Agency's Brief, p. 6. The Agency disagreed
with the State that the patients here could be receiving services at the
ICF level of care when the facility was certified only to provide
services at the SNF level. Agency's Brief, p. 7. Moreover, the Agency
asserted that even if the State's ICF licensing standards were as
stringent as the federal ICF certification standards, the State had not
requested permission to equate them, as permitted by federal regulation.
Summary of October 9, 1984 Telephone Conference Call. The Agency also
argued that a facility is not necessarily qualified to provide ICF
services just because it was certified to provide SNF services, or just
because it was licensed to operate. The Agency asserted that
affirmative steps must be taken to certify a facility as a qualified
provider. Summaries of September 11, 1984 and October 9, 1984
Conference Calls.
Analysis
We conclude that the utilization control requirements are not met if
Medicaid patients requiring ICF level of care are in a facility not
certified to provide that level of care. The utilization control
regulations require, for patients in SNFs or ICFs, a recertification
that those services are deeded. The Action Transmittal interpreting the
certification and recertification requirements, Action Transmittal 80-68
(October 1, 1980), supports the Agency's position. That transmittal
defines recertification as "the process by which a physician attests to
an individual's need for continued placement at a specific level of
care. . . ."
We view this case as similar to Wisconsin Department of Social
Services, Decision No. 525, March 30, 1983, where we considered a
situation in which patients recertified as needing ICF care were
retained in SNFs. There, we concluded that it is a violation of the
utilization control provisions to retain in a facility Medicaid patients
who need a level of care which the facility is not certified to provide.
We stated, at p. 4.,
(Arguably), the patients needing intermediate care who were in SNFs
were receiving the medical care they needed. However, this is not
dispositive for the question of whether there were utilization control
violations. The Agency has interpreted the recertification requirements
to be met only if there is assurance that the patient is receiving
appropriate care.
(5) The State argued that this case is distinguishable from
Wisconsin, because, unlike the facilities in Wisconsin, the facility at
issue here had been approved to provide both ICF and SNF care for many
years. In addition, the State asserted that the facility provided both
levels of care during the year it was not certified as an ICF, while in
Wisconsin, the facilities provided only SNF care.
The record shows that the facility in which the ICF-certified
patients resided had been approved to provide ICF level of services in
the years before and after fiscal year 1982, but that state surveyors
failed to review for ICF certification standards for 1982. State's
Appeal File, p. A-2; State's Brief, Attachment F. The fact that the
facility was certified to provide ICF services in previous and
subsequent years does not change the fact that the facility was not
certified as an ICF during the relevant time period. As the Agency
argued, certification is required for the facility to be qualified as a
provider.
A basic prerequisite for receipt of ICF level of care is that the
facility be certified to provide that level of care. 42 CFR 440.150.
/2/ We cannot conclude that the facility was qualified to provide ICF
services to patients needing them when the facility was not certified to
provide them. Without such certification, then, the patients cannot
have received ICF level of care under the program.
Nor can we conclude that simply because a facility is certified to
provide SNF services or licensed under State standards, it is also
qualified to provide ICF services. Section 442.254 of 42 CFR requires
that if a SNF participating in Medicaid also provides ICF services, it
must meet (6) certain ICF standards (e.g., rehabilitation services,
social services) in addition. Here, State surveyors did not determine
that the facility met those standards during the period in question.
There can be no certification or provider agreement without such a
determination. See 42 CFR 440.150 and 442.12. Moreover, section
442.30(a)(1) and (4) states that a provider agreement is not evidence of
certification if the survey agency failed to apply certification
standards or failed to use federal standards, forms, methods and
procedures for determining the provider's qualifications. The State has
provided no evidence that state surveyors applied federal standards or
followed the certification process in any way, or that the State had
received permission to equate its licensing standards with federal ICF
certification standards. Therefore, we cannot conclude that the
facility was or should have been certified to provide ICF services
during fiscal year 1982.
The State also argued that utilization review committees have
responsibility for determining whether the appropriate level of care is
being provided, and that a utilization review committee had determined
that the ICF patients in the facility had received the appropriate level
of care. The State asserted that this was sufficient to meet the
purposes of utilization control. In this instance, however, even though
the facility asserts that it provided the level of care required, it
cannot show that it did so because it was not certified. A utilization
review committee determination cannot substitute for certification. The
utilization control requirements are not met when patients recertified
as requiring ICF level of care are residing in a facility not certified
to provide ICF care.
As the State pointed out, one aspect of the utilization control
requirements is that patients be recertified periodically at the level
of care appropriate for their needs. The parties agreed that a
redetermination of the patient's required level of care was made. A
further critical aspect of utilization control, however, is that
patients certified as requiring a particular level of care reside in a
facility which provides that level of care. Otherwise, a
recertification of the patient's need for a particular level of care is
rendered a meaningless paper exercise. Federal regulations set out the
principle that a facility cannot be qualified to provide a specific
level of care unless the facility is certified. We think it is obvious
that the statutory framework of section 1903(g) encompasses placing
Medicaid patients in appropriate facilities so that they receive the
requisite services.
(7) Conclusion
Since we conclude that it is a utilization control viclation to
retain patients needing ICF services in a facility that does not have
ICF certification, we uphold the disallowance in the amount of
$19,071.40. /1/ This appeal involves two separate types of
certification -- certifications and recertifications of
individual Medicaid patients under section 1903(g)(1)(A) (See 42 CFR
Part 456) and certification that a facility is qualified to provide a
specific level of services and is eligible for federal participation in
the cost of those services (See 42 CFR Part 442, Subparts B, C, E and
F). /2/ Section 440.150(a) provides in part - (a) 'Intermediate
care facility services,' . . . means services provided in a facility
that - (1) Fully meets the requirements for a State license to provide,
on a regular basis, health-related services to individuals who do not
require hospital or skilled nursing facility care, . . . * * * (2) Has
been certified to meet the requirements of Subpart C of Part 442 of this
subchapter as evidenced by a valid agreement between the Medicaid agency
and the facility for providing intermediate care facility services. . .
.
MARCH 19, 1985