GAB Decision 746
April 28, 1986
Pennsylvania Department of Public Welfare;
Docket No. 85-40
Settle, Norval D.; Teitz, Alexander G. Ford, Cecilia S.
The Pennsylvania Department of Public Welfare (Pennsylvania/
Commonwealth) appealed a determination by the Health Care Financing
Administration (Agency/HCFA) disallowing $716,112 in federal funding
claimed for services provided in long-term care facilities under Title
XIX (Medicaid) of the Social Security Act (Act) for the quarters ending
March 31, June 30, and September 30, 1984. The disallowance was taken
pursuant to section 1903(g)(1)(D) of the Act which provides for the
reduction of a state's federal medical assistance percentage of amounts
claimed for a calendar quarter unless the state shows that during the
quarter it had "an effective program of medical review of the care of
patients . . . whereby the professional management of each case is
reviewed and evaluated at least annually by independent professional
review teams." 1 Based on a validation survey HCFA determined that
Pennsylvania did not have an effective program of medical review in that
it failed to conduct valid annual reviews at various skilled nursing
(SNF) and intermediate care (ICF) facilities throughout the
Commonwealth.
Specifically, HCFA found that Pennsylvania's inspection of care
(IOC)
team had failed to review five SNF patients in the Valley Crest
Home,
and one patient at each level of care in Lock Haven Hospital, a
dually
certified facility. /2/ HCFA also determined that in two
successive
quarters the Commonwealth failed to conduct any review at all in
an
ICF(2) for the mentally retarded (ICF/MR), Ramsbottom Center,
Inc.
Additionally, HCFA found deficiencies in reviews performed at
the
Phoebe-Devitt and Lutheran Welfare Concordia Homes. However,
during
these proceedings, HCFA withdrew its findings of deficiencies for
those
two facilities. The parties have agreed to use exact patient data
to
recalculate the amount of federal funding to be disallowed.
See
Pennsylvania Reply Brief, p. 1; 42 CFR 456.657. Consequently,
the
federal funding in dispute is lower than the amount HCFA
initially
disallowed.
Based on our analysis of the Record, we uphold the disallowances
taken
for Valley Crest and the Ramsbottom Center in their
entirety.
Additionally, we sustain the SNF disallowance at Lock Haven, but
reverse
the ICF disallowance at that facility.
Applicable Law
The section 1903(g)(1)(D) requirement for an effective program of
annual
medical review is amplified with regard to SNFs at section 1902(
a)(26)
which requires that a State plan provide --
. . . for periodic inspections to be made in all skilled
nursing
facilities . . . within the State by one or more medical review teams
.
. . of (i) the care being provided in such nursing facilities . . .
to
persons receiving assistance under the State plan, (ii) with respect
to
each of the patients receiving such care, the adequacy of the
services
available. . . .
Section 1902(a)(31) contains similar language for ICFs.
Regulations implementing the statutory utilization control
requirements
are found at 42 CFR Part 456. In particular section 456.652
provides
that:
(a) . . . (in) order to avoid a reduction in FFP, the Medicaid
Agency
must make a satisfactory showing to the Administrator, in each
quarter,
that it has met the following requirements for each recipient;
* * * *
(4) A regular program of reviews, including medical evaluations,
and
annual on-site reviews of the care of each recipient. . . .(3)
(b) Annual on-site review requirements. (1) An agency
meets the
quarterly on-site review requirements of paragraph (a)(4) of
this
section for a quarter if it completes on-site reviews of each
recipient
in every facility in the State . . . by the end of the quarter in
which
a review is required under paragraph (b)(2) of this section.
The statutory exception at section 1903(g)(4)(B) /3/ states:
The Secretary shall find a showing . . . to be satisfactory . .
. if
the showing demonstrates that the State has conducted such an
onsite
inspection during the 12-month period ending on the last date of
the
calendar quarter --
(i) in each of not less than 98 per centum of the number of
such
hospitals and facilities requiring such inspection, and
(ii) in every such hospital or facility which has 200 or more beds,
and that, with respect to such hospitals and facilities not
inspected
within such period, the State has exercised good faith and due
diligence
in attempting to conduct such inspection, or if the State
demonstrates
to the satisfaction of the Secretary that it would have made
such a
showing but for failings of a technical nature only.
Section 1903(g)(4)(B) is implemented by 42 CFR 456.653 which
provides
that:
The Administrator will find an agency's showing satisfactory,
even if
it failed to meet the annual (medical) review requirements of
Sec.
456.652(a)(4), if --
(a) The agency demonstrates that --
(1) It completed reviews by the end of the quarter in at least
98
percent of all facilities requiring review by the end of the
quarter;(
4)
(2) It completed reviews by the end of the quarter in all
facilities
with 200 or more certified Medicaid beds requiring review by the
end of
the quarter, and
(3) With respect to all unreviewed facilities, the agency
exercised
good faith and due diligence by attempting to review those
facilities
and would have succeeded but for events beyond its control which
it
could not have reasonably anticipated; or
(b) The agency demonstrates that it failed to meet the standard
in
paragraph (a)(1) and (2) of this section for technical reasons, but
met
the standard within 30 days after the close of the quarter.
Technical
reasons are circumstances within the agency's control.
A state's showing for each quarter must be "satisfactory" or FFP paid
to
the state for expenditures for long-stay services will be
decreased
according to the formula set out in section 1903(g)(5).
Issues concerning the medical review requirement and the
statutory
exception as raised in an Order to Develop the Record.
We issued an Order to Develop the Record (Order) /4/ which set
out
preliminary analyses and questions on three general issues concerning
--
(1) the meaning of the statutory exception stated in section
1903(g)(
4)(B) whereby a state's quarterly showing is
satisfactory
notwithstanding a state's failure to(5) conduct a medical review
in one
or more facilities whee a review was required,
(2) under what circumstances a state'sshowing will be found
satisfactory
under the statutory exception in section 1903(g)(4)(B), and
(3) whether the Agency may properly find a violation of the
section
1903(g) medical review requirement for a facility where there was
an
on-site inspection under section 1903(a)(31), but the state team
failed
to review one or more Medicaid recipients and there were mitigating
or
unusual circumstances or reasons to find that the state's
program
substantially complied with the requirements.
.
The Order derived from the Agency's analysis of the effect of
the
amendments to section 1903(g) in Public Law 95-142 and how to
implement
them as set forth in an Action Transmittal, HCFA-AT-77-106,
November 11,
1977, and the preambles to the proposed and final regulations at
43 Fed.
Reg. 50922, November 1, 1978 and 44 Fed. Reg. 56333, October 1,
1979.
Given our findings below, we need not address all aspects of the
Order.
Therefore, we will refer to the analyses in the Order and the
parties'
responses to the extent they are relevant here.
Analysis
Below, we first address the general question of whether Pennsylvania
can
avoid a finding of a utilization control violation by
arguing
substantial compliance with the annual review requirements. We
then
discusss the meaning of the 98%/200 bed standard established by
the
statute and what a state must show to meed that standard. We
then
analyze whether there was a deficient on-site review at each
facility.
Finally, we address the question of whether a hearing is necessary
in
this case.
As explained further in the following analysis, we find that --
* In general, where a state fails to conduct an annual review of
even
a single Medicaid recipient who could have reasonably been
identified
and included in a facility review, HCFA must find the medical
review for
that facility deficient.(6)
* Pennsylvania was not required to review the recipient at
Valley
Crest who was hospitalized at the start of the review, but readmitted
to
the facility during the course of the review. However, this finding
does
not alter the fact that deficiencies existed in Valley Crest,
as
Pennsylvania was required to review the oither four patients cited
by
HCFA.
* Given the fact that Valley Crest, a facility with more than
200
Medicaid beds, was properly found out of compliane with the
annual
review requirements for the first three quarters of 1984, the
statutory
exceptions of "good faith and due diligence" and technical failings
are
unavailable with regard to the Lock Haven or Ramsbottom facilities.
* Pennsylvania was not required to review an ICF patient at
Lock
Haven or his medical records since that patient was hospitalized on
the
date of the review.
A Whether HCFA must take a disallowance when an annual review is
deficient
because a state failed to review a small number of recipients.
The Order posed the question whether the Agency must find a violation
of
the medical review requirement where a review is performed in
a
afacility but the review team fails to review one or more
Medicaid
recipients where there are mitigating or unusual circumstances or
where
a state's program substantially complies with the requirements.
Our
question was based on the statutory exception in section
1903(g)(4)(B),
the Agency's implementatio of the medical review requirement
as a
facility-based requirement so that the states need not track the
length
of care for any particular patient, and the Agency's recognition
that
there may be recipients who have received care for an annual period
who
are not reviewed because they had been transferred or were absent
from
the facility at the time of the review. See 43 Fed. Reg.
50924.
Pennsylvania argued that HCFA's interpretation of the annual
review
requirement which mandates that each recipient in a facility be
reviewed
produces a draconian result in that a facility with even a
single
unreviewed recipient is placed on a par with a facility which has
been
completely ignored by the State IOC team. Pennsylvania also
indicated
that it disagreed with our acceptance of the notion of a
"facility"
showing rather than a "patient" showing. However, the (7)
Commonwealth
noted that "given the Board's acceptance of a "facility"
showing, the
Board's analysis (asking questions about the Agency's discretion
to find
a showing satisfactory notwithstanding the failure to review one or
more
patients) was reasonable." Pennsylvania Response to the Order, p.
4.
See also Pennsylvania Brief, p. 2.
The Agency claimed that the language in section 1903(g)(1) and 42
CFR
456.652(b) clearly demonstrated that it had no discretion in this
area.
Thus, HCFA argued, a state is required to review every patient in
every
facility due for review. HCFA Response to the Order, pp.
6-7. The
Agency noted that the regulations interpreted the annual
review
requirement in terms of the anniversary review quarter by which time
all
recipients in the facility must be reviewed, rather than as
12-month
periods for each recipient. The Agency cited the preamble to
the final
regulations which provided that, "States would not be required to
track
the length of time each individual recipient was in a facility, and
the
review date would not relate to the length of stay of any
individual
recipient in that facility." 44 Fed. Reg. 56335. The Agency
maintained
that this interpretation did not relieve a state from the
requirement
that each recipient be reviewed during an annual review.
Further, HCFA
reasoned that since Congress had not written a de minimis
exception into
the statute, it could not be expected to apply one.
Therefore, HCFA
concluded, failure to review any patient is tantamount to
failure to
review the facility.
A Comptroller General Opinion (59 Op. Comp. Gen. 286), with
specific
reference to the certification, recertification, and plan of
care
requirements and the requirement for utilization review of
each
admission, (at former 1903(g)(1)(A), (B), and (C)), concluded that
HHS
did "not have authority under the circumstances presented (violations
of
1903(g)(1)(A) and (B)) to find that a State has satisfied the
Medicaid
utilization control provision." The Comptroller General discussed
the
"standard of reasonableness" set forth in section 1903( g)(4)(B)
and
reasoned that there was no indication that Congress intended to
lessen
the requirements in general, given the explicit statement of
the
exception for a state's showing for the medical review requirement.
The Board has previously held that total rather than
substantial
compliance with the utilization control requirements is
necessary.
Kansas Department of Social Services, Decision No. 312, June 21,
1982.
We have also upheld as reasonable the Agency's interpretation that
it
has no discretion to waive the reduction of FFP once there is
a
violation of the section 1903(g)(1) requirements. Colorado
Department
of Social Services, Decision No. 169, April 30, 1981. In
large part the
Agency based this interpretation on(8) the above discussed
Comptroller
General's Opinion. /5/ Upon considering the parties' arguments,
we
conclude that there is no reason to reverse our basic holdings for
the
medical review requirement. Thus, we have concluded that
substantial
compliance and mitigating circumstances cannot meaningfully be
applied
here. The Agency has clearly chosen not to approach the medical
review
requirement in this way. The Agency's interpretation is
supportable
under the terms of the statute and consistent with its own
regulations,
which we are bound to apply. Although the Agency has
issued little
guidance expressly on the medical review requirement, the
Agency's
longstanding strict application of the other utilization
control
requirements is well-known to the states. We cannot reasonably
conclude
that the Agency is obliged to implement the medical review
requirement
in a radically different or more liberal fashion than it
implemented the
other utilization control requirements.
Moreover, although section 1903(g)(1) requires a showing that "there
is
in operation in the State an effective program of control
over
utilization of" long-term care services, the statute specifies that
such
a program must consist, inter alia, of conducting annual medical
reviews
of the care of each Medicaid patient. (Sections 1903(g)(1) (D)
and
1902(a)(26) and (31)) The statute provides certain limited exceptions
to
the requirement for the annual review of each patient, but contains
no
indication that the Secretary has discretion to find that the State
has
a valid(9) showing if the State did not review patients who
reasonably
should have been identified as Medicaid eligibles in the facility
and
the exceptions did not apply.
The regulation at 42 CFR 456.652(b) states a general requirement for
an
on-site medical review in every facility for each Medicaid
recipient.
Furthermore, a state may not aim for anything less than completion
of
100% of the required reviews by the end of the showing quarter.
Order,
pp. 6-7. We agree with HCFA that where recipients who ought to
have
been included in a review are omitted from the medical review
performed
at a facility, such a facility is legally on a par with a facility
which
was entirely unreviewed. /6/ See also Delaware, supra, at 6-9.
B. Whether Pennsylvania's showing is satisfactory under the
statutory
exception at section 1903(g) (4)(B).
In the Order and in Delaware, we have examined the question of what
the
98%/200 bed standard in section 1903(g)(4)(B) means and what a
state
must show to meet that standard. In Delaware we interpreted 42
CFR
456.653 as follows--
Under section 456.653, the Secretary is to find a state's
showing
satisfactory if (1) the state met the 98%/200 bed standard by the
close
of the showing quarter and exhibited good faith and due diligence
in
that its failure to complete 100% of the required reviews was beyond
its
control or reasonable anticipation or (2) the state meets the 98%/
200
bed standard within 30 days of the close of the quarter (possibly
even
meeting the 98%/200 bed standard before the(10) close of the
quarter)
and there were circumstances within the state's control i.e.,
technical
reasons, which prevented 100% of the required reviews from taking
place
during the quarter. (footnote omitted)
Id. at 10-11.
Regarding the question of what a state must show to meet this standard
we
found --
The 98% requirement pertains not to the number of facilities in
a
particular level of care under review during a quarter, but to
the
completion of reviews in 98% of the combined total of all
facilities
where such a review was required by 1903(g)(1) during the
12-month
period ending with the close of the quarter in question.
AT-77-106, p.
5; 43 Fed. Reg. 50925; 44 Fed. Reg.
56336-56337. For example,
assuming a state had a total of 100
intermediate care facilities,
skilled nursing facilities, and mental
hospitals due for review during
the annual period from March 31, 1984-- March
31, 1985, the state would
meet the 98%/200 bed standard for its showing
submitted for the quarter
ending March 31, 1985 if it completed reviews
during the annual period
in 98 facilities including all those with 200 or
more certified Medicaid
beds. (footnote omitted)
Id. at 17.
Thus, notwithstanding one or more deficient facility reviews,
the
statutory exception obliges the Agency to find a state's showing for
a
particular quarter satisfactory where the state has both
conducted
annual reviews in 98% of all facilities requiring review including
all
facilities with 200 or more certified Medicaid beds, within certain
time
constraints, and qualifies for either the "good faith and due
diligence"
or technical failings exception with regard to the missed
reviews.
Unless a state has met the 98%/200 bed standard, the
statutory
exceptions cannot apply. We next examine whether Pennsylvania
has met
the 98%200 bed standard.
1. Valley Crest (SNF with more than 200 certified Medicaid
beds)
Pennsylvania provided an affidavit from the team leader for the IOC
team
that performed an on-site review from March 7, 1984 through March
19,
1984. The Agency found a violation for this facility because the
review
did not include one patient who had been "discharged to the
hospital(11)
and was not a patient in the facility at the beginning of( the)
review"
and four other patients "not on the list of leader stated that she
was
in frequent contact with the facility's Utilization Review
Coordinator
and "(at) no time" was she informed of the Medicaid status of the
four
missed patients or the return of the hospitalized patient on March
12,
1984. The Agency's finding covered the quarters ending March 31,
1984,
June 30, 1984, and September 30, 1984.
Pennsylvania admitted that the Valley Crest facility contained more
than
200 certified Medicaid beds. Pennsylvania Brief, p. 6.
Further,
Pennsylvania did not challenge the tentative analysis presented in
the
Order where we concluded that in order for the statutory exceptions
to
apply, a state must have first completed reviews in 98% of
all
facilities requiring review and all facilities with 200 or more
beds.
See Order, pp. 3-6.
Pennsylvania argued that four of the five patients not reviewed at
Valley
Crest were not "long term stay" patients and thus were not
required to be
reviewed. Further, the Commonwealth noted that the fifth
patient was
hospitalized at the start of the review and readmitted
several days after the
review was in progress. Pennsylvania contended
that the hospitalized
patient was not required to be reviewed under the
rationale in South Dakota
Department of Social Services, Decision No.
650, May 28, 1985.
Pennsylvania Response to the Order, pp. 6-7.
The Commonwealth attributed its failure to review four patients simply
to
the facility's not having informed the reviewers of their
Medicaid
status. The Commonwealth presented no evidence to show that
these
patients could not reasonably have been identified and included in
the
review. In this regard, the Board has held that "the State bears
the
responsibility since the statute requires the State to provide
for
annual reviews." North Carolina, supra, at 5; Arkansas Department
of
Human Services, Decision No. 735, March 28, 1986, p. 8.
In its Response to the Order, Pennsylvania provided documents
regarding
the four patients, labeled Attachments A-D. These documents
showed each
of the patients to have been admitted in early 1984, prior to the
IOC
review. Other than submitting this documentation for our
consideration,
Pennsylvania did not explain why these patients should not be
considered
long term stay and thus subject to review. We can only
speculate that
Pennsylvania either intended that we(12) conclude that the
patients had
not resided in the facility for one year and thus were not
required to
be reviewed, or meant to imply that these patients were not
recipients
of "long-stay services" within the definition of that term at 42
CFR
456.651 (i.e., "services . . . after a total of 60 days of
inpatient
stay"). As explained below, we have addressed both these
arguments in
past decisions and, accordingly, conclude that the State was
obliged to
include these patients in the annual review.
In Delaware, we noted that --
the premable to 42 CFR 456.652(b) clearly indicates that,
"States are
not required to track the length of time each individual
recipient was
in a facility, and the (facility's) review date would not
relate to the
length of stay of any individual recipient in that facility."
See 44
Fed. Reg. 56335. The same premable reiterates at a later point
that
"the regulatory scheme . . . is based on facilities, not the length
of
time individuals were in those facilities." Id.
Id. at 19.
Delaware's approach in that case, as does Pennsylvania's here,
suggested
that a patient must reside in a facility for one year prior to
being
subject to review. However, as we noted in North Carolina, the
statute
at sections 1902(a)(26) and (31) as well as the implementing
regulations
at 42 CFR 456.652 (a) and (b) state a general requirement for an
annual
review of all Medicaid patients in a facility regardless of the
length
of time a of the length of time a patient has been in a
facility. Id.
at 3. See also West Virginia Department of Human
Services, Decision No.
686, August 21, 1985, pp. 6-9. In North
Carolina, the state argued that
"it is inappropriate for HCFA to count as
unreviewed for penalty
purposes patients receiving lesss than 60 days of
care." Id. at 8.
Although we did not need to specifically reach that issue in
North
Carolina, we did address that point and noted that --
A similar argument was rejected by the court in Colorado
Department
of Social Services v. Department of Heakth and Human Services, 558
F.
Supp. 337, 335 (D. Colo. 1983), aff'd, No. 83-1395 (10th Cir., May
9,
1984), where the Court concluded:
For the calendar quarter in question, the state must have
submitted a
satisfactory and valid showing of an effective program of
utilization
control for all patients in all long-term care (13) facilities,
not
simply those patients whose stays have exceeded 60 days. . . .
Id. at 9, n.5.
Thus, we conclude that these four patients were Medicaid recipients
which
Pennsylvania was obliged to include in its on-site review.
Regarding the patient hospitalized at the start of this review,
then
readmitted, we note that HCFA has not offered specific argument on
this
issue. /7/ Given our conclusion that the on-site review at Valley
Crest
was deficient due to Pennsylvania's failure to review the other
four
patients cited by HCFA, the issue with regard to this patient does
not
affect the outcome here. However, we note that in North Carolina
we
recognized that even though two of the three patients cited by HCFA
were
readmitted to the facility before the review ended, HCFA had not
argued
that the IOC team should have had contact with them at that
point. We
determined that such a requirement would "clearly be very
difficult to
administer," since the IOC team would have to keep track of
readmissions
and might have to extend its stay in the facility indefinitely
in order
to review readmitted patients. Additionally, such a
requirement would
be inconsistent with the Agency's position that a state
need not review
those patients admitted to a facility following the first day
of the
review. Id. at 11-12. Moreover, we have concluded that a
state is not
obliged to review a patient who is absent from a facility when
the
review begins but who returns before the review is finished.
See
Colorado Department of Social Services, Decision No. 743, April
15,
1986.
Pennsylvania also argued that HCFA's policy of finding an
entire
facility out of compliance for a single violation denied the
states
access to the "good faith and due diligence" exception.
Therefore,
Pennsylvania contended, since Valley Crest had more than 200 beds,
the
only way it(14) could qualify for a waiver of the annual
review
requirements, would be under the technical failings exception of
the
statute. However, Pennsylvania asserted that it was precluded
from
qualifying under the technical failings exception because of
the
"additional" requirement in 42 CFR 456.653(b) that the omitted
reviews
be completed within 30 days. Pennsylvania Brief, p. 12.
Additionally,
Pennsylvania generally asserted that the Board is not bound by
the
implementing regulations at 42 CFR Part 456 and could exercise
its
discretion to detrmine that Pennsylvania had met the technical
failings
exception. Pennsylvania Reply Brief, p. 6. Pennsylvania
has
misinterpreted the manner in which the statutory exceptions are
applied.
As we have explained above, the statutory exceptions can only
apply
where a state has reviewed 98% of all facilities requiring
review,
including all facilities with 200 or more certified Medicaid beds
within
the applicable time constraints. Pennsylvania did not meet
this
requirement since its review of Valley Crest, a 200 bed facility,
was
deficient for each quarter at issue. Therefore, the technical
failings
exception is certainly inapplicable to the review in Valley
Crest.
Moreover, contrary to the State's assertion, we do not interpret
the
statutory and regulatory medical review requirements to permit the
Board
to go beyond the implementing regulations to decide for other
reasons
that a state's showing should be found satisfactory.
Since the statutory exceptions are unavailable for Ramsbottom and
Lock
Haven, our analysis will focus on the facts leading to the inclusion
of
those facilities in the disallowance to determine if the facts
support
HCFA's findings of deficient reviews at those facilities.
2. Ramsbottom Center, Inc. (ICF/MR with less than 200
certified
Medicaid beds) Pennsylvania did not perform an on-site review for
the
quarters ending March 31, 1984 and June 30, 1984. By affidavit,
the
Administrator of the Division of Nursing Home Operations stated that
no
on-site review had been performed for the quarter ending March 31,
1984
due to a clerical error in that his office was not informed until
June
of 1984 that this facility was in the Medicaid program and thus
they
could not schedule a review until the quarter ending June 30, 1984.
The
affidavit further stated that the on-site review was not done until
July
11, 1984. The Administrator attributed the failure to actually
review
the facility during the quarter ending June 30, 1984, when the
review
was scheduled, to reassignment of a Ramsbottom team member to
another
review team, to cover for an ill team member, and the need for
a
Ramsbottom team membr to attend certain fair hearing poceedings.
The
affidavit stated that the Ramsbottom team fell behind because of
fewer
staff.(15)
Pennsylvania argued that the technical failings exception should
excuse
its failure to review this facility. However, as noted above,
the
technical failings exception cannot be applied here since, for
the
quarters in question, Pennsylvania failed to review a facility with
more
than 200 certified Medicaid beds. There is no dispute that
the
Commonwealth was obliged to review this facility during the
quater
ending March 31, 1984 or that the facility was not reviewed during
that
quarter or the one ending June 30, 1984. Therefore, there was
a
violation of the 1903(g)(1)(D) requirement for this facility for
those
two quarters. Accordingly, we uphold the inclusion of Ramsbottom
Center
in the disallowance.
3. Lock Haven Hospital (ICF/SNF with less than 200 certified beds)
The
Agency found a violation because the medical review did not include
two
patients. The Agency's finding covered the quarters ending March
31,
1984, June 30, 1984, and September 30, 1984. Pennsylvania provided
an
affidavit from the team leader for the inspection of care review
team
that performed an on-site review on December 5, 1983. The team
leader's
affidavit stated that the facility had provided a list of
Medicaid
patients at the beginning of the review which did not include one
SNF
patient. The team leader stated:
I specifically checked with the Nursing Home Administrator and
other
nursing home staff to determine if my listing was up to date.
The
facility said it was.
I had no reason to doubt or question the accuracy of the
facility's
Medicaid patient listing.
Pennsylvania Appeal File, at A-10.
The Lock Haven medical review also did not include one ICF patient who
was
hospitalized in intensive care on the date of the review. HCFA
found
one SNF and one ICF violation at this dually-certified facility.
The SNF Violation
An annual review was not conducted for one patient at this level
of
care. Pennsylvania indicated that the patient was not reviewed
because
the facility did not list him as a Medicaid patient. The
patient
remained unreviewed during the first three quarters of 1984.(16)
Pennsylvania did not contend that this patient was not
reasonably
identifiable as a recipient requiring review. Consequently,
even if the
facility failed to inform the review team about this
patient,
Pennsylvania bears the responsibility since the statute requires
the
state to provide for annual review. See North Carolina, supra, at
5-9;
Arkansas, supra, at 8. Accordingly, we uphold HCFA's determination
of
an SNF violation at the Lock Haven facility.
The ICF violation
The ICF patient cited by HCFA was transferred from Lock Haven's ICF
unit
to its intensive cardiac care unit three days prior to the start of
the
annual review. HCFA noted that Pennsylvania's Medicaid State
Plan
contains a reserve bed policy permitting Medicaid payments at a
reduced
rate to a nursing home retaining a bed for a temporarily
hospitalized
resident. HCFA reasoned that this patient technically
remained a
resident of the Lock Haven ICF during the annual review and the
State
IOC team should have reviewed his medical records.
Pennsylvania maintained that reserve bed charges were not billed for
this
patient. Pennsylvania Response to the Order, p. 6.
Pennsylvania
argued that even if payment had been claimed under a reserve bed
policy,
a patient is, by definition, temporarily absent from a facility
when
reserve days are claimed. See 42 CFR 447.40. Pennsylvania
noted that
the preamble to the proposed implementing regulations provided
that an
individual physically absent from a facility was not subject to
review.
Further, Pennsylvania contended that it would be unreasonable to
expect
an IOC team to evaluate the professional management of a patient's
ICF
care while that individual is in a hospital. Pennsylvania Reply
Brief,
pp. 3-5.
We have addressed a similar issue in North Carolina. There, the
issue
was whether North Carolina was required to review several
patients
transferred to a facility's hospital unit after the start of an
annual
review. There HCFA argued that --
. . . the State could perform a review for patients no longer in
the
facility by reviewing the medical records for such patients. . .
.(17)
We disagreed finding that --
The regulations require that an on-site review of recipients in
SNFs
and ICFs (except in certain cases not relevant here) include:
(1) Personal contact with and observation of each recipient; and
(2) Review of each recipient's medical record.
42 CFR 456.608(a). Since a review of the medical records
alone would
not satisfy this requirement, we see no basis for penalizing the
State
for failing to review the medical records of patients with whom
personal
contact was not possible.
Id. at 11.
The circumstances here are even more compelling for Pennsylvania in
that
this patient was not present in the facility at any time during
the
review. Pennsylvania Appeal File, at A-10; HCFA Brief, p.
6. Based on
these facts and the rationale of North Carolina, we reverse
the ICF
disallowance at Lock Haven.
C. The necessity for a hearing.
In its response to specific questions in our Order to Develop the
Record,
Pennsylvania "suggests a hearing" if --
- it were necessary to determine if the State had another
reasonably
accessible method for identifying patients (for the Lock Haven
and
Valley Crest facilities where the deficiency alleged by HCFA was
based
upon the State's failure to review a small number of individuals
who
were not identified on the facility lists provided to the review
team).
- more information regarding the composition of review teams
and
procedures was needed (for the Ramsbottom facility which
Pennsylvania
alleged was not reviewed due to a clerical error which should
have been
"precisely what Congress had in mind as a failing of a
technical
nature").
Pennsylvania Response to the Order, pp. 6-7(18)
We conclude that a hearing /8/ is not warranted in this case.
The
Board's procedures at 45 CFR 16.11 (1983) specifically provide for
an
appellant to request a hearing "at the earliest possible time." /9/
The
Commonwealth filed its notice of appeal with the Board on January
28,
1985. The Board has granted several extensions of time (at the
request
of both parties) to submit documentation, issued a Request for
Comment
and an Order to Develop the Record, and supplied Pennsylvania
with
copies of Board Decisions and an Opinion of the Comptroller General
in
an effort to permit the parties to develop the facts and the record
as
completely as possible. At virtually the end of the appeals
process
Pennsylvania "suggests" a hearing.
Pennsylvania's suggestion was made in response to specific questions
posed
by the Board. Nevertheless, Pennsylvania did not allege the
existence of any
new relevant facts which could properly be the subject
of an inquiry at an
evidentiary hearing. Thus, the Commonwealth has
chosen to rest on the
facts as currently developed in the record.
Pennsylvania had a positive
obligation in response to the Board's
questions to develop any further facts
which it thought the Board should
consider prior to reaching a decision on
the merits of this case.
Instead, Pennsylvania invited the Board to engage in
a fishing
expedition. There is no basis in either the record or
Pennsylvania's
suggestions from which to conclude that useful development of
pertinent
factual information would result from an evidentiary hearing.
Conclusion
Based on our analysis above, we uphold the SNF disallowance at
Valley
Crest and Lock Haven for the quarters ending March 31, June 30,
and
September 30, 1984. We uphold the ICF disallowance at Ramsbottom
Center
Inc. for the quarters(19) ending March 31, and June 30, 1984. We
reverse
the ICF disallowance for Lock Haven for the quarters March 31, June
30,
and September 30, 1984.
As noted earlier the amount of federal funding to be disallowed will
be
based on HCFA's recalculation of the penalty using exact recipient
data.
If the parties are unable to agree on the manner in which
the
disallowance should be calculated they may return to the Board for
our
assistance on that specific issue. /1/ Amendments to section
1903(g)
contained in section 2363
of the Deficit Reduction Act (DEFRA)
of 1984, enacted July 18, 1984,
Pub. L. 98-369, eliminated all
utilization control requirements other
than the medical review
requirement as a basis for reductions in FFP.
/2/ In case of dually
certified
facilities, HCFA assesses a disallowance for each
level of care at which a
deficiency is found. /3/ Public Law
95-142
added section
1903(g)(4)(B), among other amendments, to section
1903(g). See section
20 of the Medicare-Medicaid Anti-Fraud and Abuse
Amendments of 1977, Pub.
L. 95-142, October 25,
1977. /4/ The
Order was
issued in this case as well as four other appeals -- Colorado
Department of
Health & Social Services, Docket No. 85-31; Delaware
Department of
Health & Social Services, Docket No. 85-33; New York
State
Department of Social Services, Docket No. 85-35; and
Arkansas
Department of Human Services Docket No. 85-42; these cases all
raised
substantially similar issues. The Orders also contained
specific
questions pertinent to the individual appeals. The Agency
submitted a
consolidated response to the Order on the cross-cutting
issues.
Additionally, orders raising similar types of questions and
concerns
were isssued in Idaho Department of Health and Welfare, docket No.
85-6;
New Hampshire Department of Health and Welfare, Docket No. 85-38;
and
Tennessee Department of Health and Environment, Docket No. 85-46.
/5/
In its last submission (January 16, 1986), Pennsylvania asked that
the Board
order further development of the record regarding the
Comptroller General
Opinion, with specific reference to whether the
opinion was binding on the
Board. Such development is unnecessary. The
Opinion dates from March 4,
1980 and has been cited in prior Board
decisions on section 1903(g)
violations. Thus, Pennsylvania should have
identified any pertinent
issues at an earlier point in the appeal
process. Moreover, as noted in
this decision, we have upheld as
reasonable the Agency's interpretation of
its discretion regarding the
utilization control requirements. We do
not regard the issue to be
whether the Opinion is binding on the Board, but
rather to be whether
the Agency's interpretation of the extent of its
discretion is
reasonable. This has been a well settled point with
regard to the other
utilization control requirements and has now been
resolved in a
consistent fashion for the medical review requirement.
Delaware
Department of Health and Social Services, Decision No. 732, March
21,
1986. Thus, we see no reason to further develop the record at
this
point in the appeal proceeding. /6/ We do not imply here that
the
retrospective identification
by the Agency of one or more
patients omitted from a medical review is
necessarily always a proper
basis for a finding that the State violated the
on-site medical review
requirement. We have found for various reasons
in other cases that the
patients identified by the Agency did not have to be
reviewed. See New
York State Department of Social Services Decision No.
744, April 21,
1986; Colorado Department of Social Services, Decision
No. 743, April
15, 1986; North Carolina Department of Human Resources,
Decision No.
728, March 18, 1986. /7/ In the Order, at page 12, we
asked HCFA to
confirm that it was
making a "reserve bed argument" for the
hospitalized patient at Valley
Crest. HCFA confirmed that it was
maintaining this argument for Valley
Crest although it referred to a
patient by name for whom no deficiency was
alleged. See HCFA Response
to the Order, p. 13, para. 2.
See discussion of the Agency's "reserve
bed argument" for a patient in
another facility on pp. 16 and 17, infra.
/8/ By this, we mean an in-person
opportunity for further development of
the record; obviously, Pennsylvania
has been given a full opportunity to
present evidence and argument in written
presentations, and so has been
"heard" before this
Board. /9/ In general, the Board
will
schedule a hearing if the Board determines that there are complex
issues
or material facts in dispute, or that the Board's review would
otherwise
be significantly enhanced by a hearing. See 45 CFR 16.4.
MARCH 28, 1987