GAB Decision 719
January 23, 1986
Department Of Health and Social Services;
Ballard, Judith A.; Garrett, Donald F. Teitz, Alexander G.
Docket No. 85-8
The Wyoming Department of Health and Social Services (State) appealed
a disallowance by the Health Care Financing Administration (Agency) of
$1,197,552.91 claimed for inter-mediate care facility (ICF) and skilled
nursing facility (SNF) services under Title XIX of the Social Security
Act (Act) for the quarters ending March 31, 1984, June 30, 1984, and
September 30, 1984. In a validation onsite survey of ten ICFs, and a
validation survey of patient annual review records in all ICFs and SNFs,
the Agency found that the State had failed to recertify properly
Medicaid patients in all of its facilities, and had failed to provide
annual review of the professional management of certain cases in some of
the facilities. Based on these findings, the Agency concluded that the
State had failed to meet the requirements of section 1903(g)(1) of the
Act, and took this disallowance pursuant to the provisions in section
1903(g) which require the reduction of a state's federal medical
assistance percentage with respect to amounts claimed for long-stay
services for any calendar quarter in which the state does not show
compliance with those requirements.
In its initial brief the State conceded its failure to have annual
reviews
of certain patients in four SNFs and three ICFs for the quarters
ending March
31, 1984 and June 30, 1984, and in one SNF and three ICFs
for the quarter
ending September 30, 1984. In a telephone conference
the State further
conceded that no valid recertifications, meeting all
federal standards, could
be documented for the quarters in question.
However, the State contended that
imposition of a disallowance based on
the lack of valid patient
recertifictions was improper because of the
impact of the Deficit Reduction
Act of 1984 (DEFRA), which eliminated
the provisions of section 1903(g)
requiring states to make showings
including evidence of recertifications and
plans of care.
As discussed below, we uphold the Agency's disallowance with the
exception
of that part of the disallowance attributable to the absence
of valid
recertifications in the quarter(2) ending September 30, 1984.
We reach this
conclusion, based on the State concessions and our
decision in Effect of
DEFRA Amendments on Utilization Control
Requirements, Decision No. 655, June
7, 1985. Accordingly, we uphold
the disallowance in part and reverse it
in part.
Background
The Agency based its disallowance on a finding that the
recertification
methods used by the State did not meet applicable federal
requirements,
and that all State recertifications, for the three quarters at
issue,
were invalid. The Agency argued that recertification must be
performed
by a physician with knowledge of a patient's case, and that the
State's
recertifications were inadequate because they were performed by a
staff
physician at the central office of the single state agency without
any
direct personal knowledge of the patient's case. In addition,
the
Agency found that, in certain facilities, annual patient reviews had
not
been performed for certain Medicaid recipients.
The State initially contended that State recertification methods
were
proper, either because personal knowledge of the patient's case was
not
a valid regulatory requirement, or because the desk reviews in
the
central office were, in fact, made with an adequate basis, or
because
the recertifications were supported by sufficient
underlying
declarations by attending physicians. After attempting to
show valid
recertifications by providing additional documentation to HCFA,
the
State withdrew these contentions in a telephone conference on January
9,
1986.
The State in its initial briefing conceded that annual reviews had
not
been performed on those patients specified by the Agency in
the
attachment to the disallowance. (Appellant's Brief, April 26, 1985,
p.
9: "Appellant 'confessed error'," and "continues to concede error";
p.
10: "Appellant will not contest the part of the disallowance
pertaining
to these patients.")
The State also argued that DEFRA withdrew the Agency's authority
to
disallow funds based on violations of the recertification and plan
of
care requirements formerly contained in section 1903(g)(1). The
State
argued that this withdrawal of authority should be applied to
all
disallowances not made final before the effective date of DEFRA, or,
in
the alternative, to all disallowances based on calendar quarters
after
the effective date of DEFRA. The State contended that the
effective
date of DEFRA should be accepted as July 1, 1984.(3)$% The
Applicable
Law
Prior to DEFRA, section 1903(g)(1) of the Act provided that
federal
medical assistance payments to a State would be reduced for any
calendar
quarter in which the state failed to make a showing that the state
had
"an effective program of control over utilization" of long term
care
services. The statute required that the state's showing
include: (A)
certification by a physician of each patient's need for
such services at
the time of admission (or if later, the time of application
for medical
assistance), and recertification at least every 60 days;
(B) plans of
care for each patient which are periodically reviewed and
updated; (C)
a utilization review program; and (D) an effective
program of medical
review under which the professional management of each
case is reviewed
and evaluated at least annually by independent professional
review
teams.
Section 2363 of DEFRA amended section 1903(g)(1) by deleting the
specific
requirements for the states' showing described in (A)-(C).
DEFRA substituted
language indicating that states' quarterly showing
need include only evidence
of a medical review program. DEFRA was
enacted on July 18, 1984, but
contained a "savings clause" which stated
that the amendments to section
1903(g) apply "to calendar quarters
beginning on or after the date of the
enactment" of DEFRA. Section
2363(c).
Discussion
The only issue in this case is the effect of DEFRA upon the
Agency's
disallowance. The State has conceded the underlying failures
to
recertify properly and to provide annual reviews for the patients
in
question.
In Decision 655, the Board addressed the DEFRA arguments raised by
the
State, along with the DEFRA arguments raised in several other
similar
appeals. The Board found that DEFRA was intended to have
prospective
effect only, and did not remove the Agency's authority to
take
disallowances for quarters prior to the passage of DEFRA, pursuant
to
the language of section 1903(g) then in force. The Board found that
the
Agency could not take disallowances based on the superceded language
of
secton 1903(g)(1) for showings for quarters beginning on or after
July
1, 1984.
In applying Decision 655 to this case, the Board upholds the
Agency
disallowance in full for the two quarters ended March 31, 1984 and
June
30, 1984. These disallowances were based on the State's
admitted
failure to show proper recertifications of patients as required by
the
language of(4)section 1903(g)(1) then in effect. The failure to
provide
annual reviews for certain patients would also justify a
disallowance,
although a lesser one; however, for these quarters we do
not consider
the annual review deficiencies in computing the disallowance,
since the
State admitted its failure to recertify for all patients in all
its
facilities.
For the quarter ended September 30, 1984, under Decision 655
a
disallowance may not be taken for a State's failure to
demonstrate
proper certification or recertification of patients.
Therefore, the
Board reverses the Agency's disallowance for that quarter to
the extent
that the disallowance is based on recertification
violations. To the
extent that the disallowance is independently
supported by admitted
annual review deficiencies, which remain a valid basis
for disallowance
even under the amended statute, the Board affirms the
Agency's
determination.
The disallowance for annual review deficiencies for the quarter
ended
September 30, 1984 must be recalculated pursuant to the formula
in
section 1903(g)(5). It should be recalculated only on the basis
of
facilities at which deficiencies were actually found during
the
quarter--one SNF and three ICFs. In keeping with the Board's
position
in past decisions, the State will be permitted an opportunity to
submit
actual recipient data to be used in this recalculation. See,
e.g., West
Virginia Department of Human Services, Decision No. 686, August
21,
1985. *
Conclusion
For the foregoing reasons, we conclude that the Agency's disallowance
for
the quarters ending March 31, 1984 and June 30, 1984 should
be
sustained. For the quarter ending September 30, 1984, we sustain
the
Agency's disallowance only to the extent that it is supported by
annual
review deficiencies identified at one SNF and three ICFs. To
the
extent(5) that the disallowance for that quarter was based solely
on
certification or recertification deficiencies, we reverse
the
disallowance, and leave the recomputation to the parties. //* We
at
first indicated during the
telephone conference of January 9,
1986 that the Board would itself
recalculate the disallowance for this
one quarter, since the computation
would involve changing only the
numerators of fractions for facilities.
However, since the State
requested permission to submit recipient data which
will in any case
require recomputation, we leave the determination of the
amount to the
parties.
MARCH 28, 1987