DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Oregon Department of DATE: March 27, 1989 Human
Resources Docket Nos. 88-168 89-16 Decision No.
1030
DECISION
The Oregon Department of Human Resources (State) appealed determinations
by the Health Care Financing Administration (HCFA) disallowing a total
of $1,250,881 in federal financial participation (FFP) claimed by the
State under Title XIX (Medicaid) of the Social Security Act. The claims
were for housekeeper food and shelter payments made to Medicaid
recipients during the period December 23, 1984 through September 30,
1988. With the exception of $158,641 in FFP which the State admitted it
overbilled the Medicaid program, the State argued that the payments were
authorized under the State's 1984 waiver for home and community-based
services, as payment for "live-in companionship" services. HCFA
determined that housekeeper food and shelter payments were not payments
for a waivered service and were otherwise unallowable because they
constituted room and board costs and were made directly to recipients,
rather than to service providers. HCFA also questioned whether the
payments met requirements for fiscal accountability, finding that the
costs were not supported by invoices from providers who had Medicaid
provider agreements, as required by applicable program requirements.
For the reasons explained below, we uphold the disallowance. In
general, we find that federal funding is available under Medicaid only
for payments for covered services; that the waivered service category
"live-in companionship services" did not cover housekeeper food and
shelter; that approval of the State's 1984 waiver cannot reasonably be
read as approval for the State to claim Medicaid funding for these
payments; and that the costs were not supported by adequate
documentation.
Below, we first discuss the relevant federal requirements, including the
authority for home and community-based waivers. We then discuss the
scope of the service category "live-in companionship" as described
in
the State's 1984 waiver request, and other provisions of the 1984 waiver
request on which the State relied for its argument that HCFA had
approved Medicaid funding for the housekeeper food and shelter costs.
Finally, we discuss the documentation the State provided to show that
the costs were supported by provider agreements, provider invoices, and
other appropriate documents.
I. Relevant Federal Requirements
A. General Requirements
Title XIX of the Social Security Act (Act) provides federal funding for
medical assistance provided to needy individuals. In order to receive
such funding, a state must submit a state plan meeting the requirements
of section 1902(a) of the Act. Among other things, section 1902(a)
requires that a state plan --
(27) provide for agreements with every person or institution
providing services under the State plan under which such person
or institution agrees (A) to keep such records as are necessary
to fully disclose the extent of the services provided to
individuals receiving assistance under the State plan, . . . ;
(32) provide that no payment under the plan for any care or
service provided to an individual shall be made to anyone other
than such individual or the person or institution providing
such care or service, under an assignment or power of attorney
or otherwise; . . . .
See also 42 C.F.R. 431.107.
Section 1903(a) of the Act provides for payment to each state with an
approved plan for "an amount equal to the Federal medical assistance
percentage of the total amount expended . . . as medical assistance
under the State plan." The term "medical assistance" is defined
in
section 1905(a) of the Act. That section begins:
The term "medical assistance" means payment of part or all of
the costs of the following care and services . . . for
individuals, and with respect to physicians' or dentists'
services, at the option of the State, to individuals . . . .
Section 1905(a) then continues by specifying eligibility conditions for
Medicaid recipients and by listing services which either must be
included in a state plan or may be included at the option of the state.
HCFA regulations implementing section 1905(a) of the Act prescribe
requirements applicable to states making direct payments to certain
recipients for physicians' or dentists' services. These regulations
specify that no FFP is available for direct payments to individuals
receiving assistance under certain income maintenance programs and that,
if a state chooses to make direct payments for physicians' or dentists'
services, it must provide for them in the state plan, specifying the
conditions under which they will be made. 42 C.F.R. 447.25. These
regulations also specify that direct payments are subject to the same
conditions as payments to providers and "must be supported by providers'
bills for services." 42 C.F.R. 447.25(d).
HCFA regulations also require that a state maintain an accounting system
and supporting fiscal records to assure that claims are in accord with
applicable federal requirements. 42 C.F.R. 433.32.
In its disallowance letter, HCFA summarized the above provisions as
requiring that (1) payments must be for medical services; (2) the state
plan must specifically allow such payments; (3) there must be a provider
agreement; (4) there must be an "audit trail" or other acceptable
evidence of services purchased; (5) payments may not be made to
recipients, except in limited instances; and (6) all payments must be
supported by bills for services from providers.
The State challenged HCFA's reliance on section 1902(a)(32), arguing
that that section did not prohibit direct payments to individuals but
was intended to prevent assignment of claims to third parties. State's
brief, pp. 16-17. The State conceded, however, that in general the
statute and regulations do not permit payments directly to recipients
under a state plan. State's brief, p. 15. Indeed, Oregon's plan
specifically states: "No direct payments are made to recipients."
HCFA's Ex. 1. The State contended, however, that payments may be made
directly to a recipient under an approved home and community-based
services waiver. This contention was based on the State's view that
approval of such a waiver could overcome any prohibition in the section
1905(a) definition of "medical assistance." The State also argued
that
HCFA knew its waiver request included housekeeper food and shelter costs
as part of live-in companionship services and that the payment for these
costs was to be made to the recipients.
HCFA responded that the waiver authority was more limited, and that only
certain program requirements could be waived. We next discuss the
waiver authority, explaining why we conclude that HCFA is correct that
the direct payment provisions are not within the scope of that authority
(although the waiver can function to permit FFP in services which would
not otherwise be covered under section 1905(a)). We then discuss the
State's 1984 waiver request, stating why we conclude that approval of
that request could not reasonably be interpreted as including
housekeeper food and shelter costs as a waivered service or as providing
Medicaid funding for direct payments to recipients.
B. The Waiver Authority
Before 1981, the Medicaid program provided little coverage for long-term
care services in a noninstitutional setting, but offered full or partial
coverage for such care in an institution. Section 2176 of the Omnibus
Reconciliation Act of 1981, Public Law 97-35, added section 1915(c) of
the Act to permit states to offer an array of services in the home or
community that individuals need to avoid institutionalization. Section
1915(c) provides in part:
(1) The Secretary [of HHS] may by waiver provide that a State
plan . . . may include as "medical assistance" under such plan
payment for part or all of the cost of home or community-based
services (other than room and board) approved by the Secretary
which are provided pursuant to a written plan of care to
individuals with respect to whom there has been a determination
that but for the provision of such services the individuals
would require the level of care provided in a hospital or
[nursing facility] . . . .
To qualify for a waiver, a state had to provide assurances satisfactory
to the Secretary that the state's waiver program would meet requirements
related to the quality of and need for the services and the
cost-effectiveness of the program. Section 1915(c)(2). A waiver may
include waiver of state plan requirements related to statewide
availability of services and comparability of services and may limit the
services to individuals for whom the services would be cost-effective.
Section 1915(c)(3) and (4). Under a waiver, a state may --
provide medical assistance . . . for case management services,
homemaker/home health aide services and personal care services,
adult day health services, habilitation services, respite care,
and such other services requested by the State as the Secretary
may approve . . . .
Section 1915(c)(4)(B).
HCFA implemented this waiver authority in regulations published October
1, 1981 (46 Fed. Reg. 48532), and amended March 13, 1985 (50 Fed. Reg.
10013). State's Exs. 11 and 12. Under these regulations, a state's
waiver request must meet certain requirements, including that it
describe the services to be furnished under the waiver and provide
appropriate assurances. 42 C.F.R. Part 441, Subpart G. (These
regulations also provide that FFP for home and community-based services
is not available in "expenditures for the cost of room and board,"
except in specified circumstances. 42 C.F.R. 440.180. We discuss this
limitation as part of our discussion of the State's 1984 waiver
request.)
The State argued that section 1915(c) "allows the Secretary to greatly
expand the statutory definition of medical assistance" and that by
approving a waiver, "the Secretary, in effect, waives any prohibition
against payments being made directly to recipients, when the home and
community-based waiver provides for payments to the recipient." State's
brief, pp. 18-19. The State argued that the legislative history of the
waiver statute supported this conclusion since it shows that the purpose
of the waiver authority was to give a state an opportunity to create its
own system of services to meet the needs of recipients in that state and
to avoid unnecessary institutionalization. State's brief, p. 19, citing
H.R. Rep. No. 158, 97th Cong., 1st Sess., Vol. II, 322, 316-317 (1981),
State's Ex. 16. Specifically, the State quoted the following statement:
Because the needs of recipients of long-term care services are
varied and complex, the Committee intends for the States to
have flexibility in deciding which community-based services are
most relevant. Therefore, under this section, States would be
allowed, with Secretarial approval, to provide additional
services, not listed here, which would aid in the goal of
helping vulnerable elderly and handicapped persons remain in
the community.
Id. at 322 (State's emphasis). The State also relied on the following
statement made by HCFA in the preamble to the 1981 regulations:
The purpose of these regulations is to give the States the
maximum opportunity for innovation in furnishing
noninstitutional services to beneficiaries, with a minimum of
federal regulation. Basically, we will measure the State's
proposals against the statutory requirements rather than
against a detailed additional set of Federal guidelines or
criteria. That is, we will require the State requesting a
waiver to describe its proposals to explain how it satisfies
the statutory requirements of section 1915(c) and, with regard
to some specific requirements, to make assurances that those
requirements are met. However, we are not generally mandating
how the States must establish or implement their community care
programs.
46 Fed. Reg. at 48533, State's Ex. 11 (State's emphasis).
HCFA responded that section 1910(c)(3) does not authorize waiver of any
existing statutory Medicaid provisions other than the requirements
relating to statewideness and comparability. The State replied that,
while the statewideness and comparability sections are the only ones
expressly mentioned, "the entire concept of the home and community-based
waiver is to 'waive' the limiting requirements related to the definition
of 'medical assistance'" by substituting a new definition. State's
reply brief, pp. 2-3 (State's emphasis).
We agree with the State that, under a waiver, costs may be reimbursable
for services which would not otherwise qualify as "medical assistance."
Contrary to what the State argued, however, nothing in the statutory
language of the waiver provision or the related legislative or
regulatory history, authorizes waiver of those restrictions in section
1905(a) which relate to manner of payment, rather than to the types of
services which may be covered. The statutory language refers to
including certain additional services as medical assistance; similarly,
the flexibility and innovation to which the legislative and regulatory
history refers is to provide additional services. HCFA amended various
regulations to reflect the potential effect of a waiver, but did not
amend the regulation limiting direct payments to recipients.
We also note that the waiver provision authorizes including as "medical
assistance" under a state plan home and community-based services "other
than room and board." The State did not dispute HCFA's contention that
food and shelter are equivalent to room and board, but argued that this
phrase (as used in the statute and the implementing regulation) excludes
only payment for room and board provided to the Medicaid recipient, not
the cost of food and shelter attributable to a service provider. As we
discuss further below, this distinction is not supported by HCFA
regulations, contrary to what the State argued.
Even if the statute did authorize waiver of the direct payments
requirement and permit a state to include room and board for a service
provider as a waivered service, the State would not be entitled to
receive federal funding for direct payments for such room and board
unless these payments are part of an approved waiver program under
Medicaid. As we discuss next, approval of the State's 1984 waiver
request cannot reasonably be read as approval for the State to claim
Medicaid funding for such payments.
II. The State's 1984 Waiver Request
A. The Service Definitions
The State argued that housekeeper food and shelter was part of the
waivered service category "live-in companionship" services, one of
the
client-employed, in-home services offered under the waiver. The
definition of "companionship services" in the 1984 waiver request
is as
follows:
"Companionship Services" means those activities of daily living
and self-management activities provided by a companion for a
person.
State's Ex. 4, p. 217. The terms "activities of daily living" and
"self-management activities" are separately defined, and those
definitions contain no reference to housekeeper food and shelter.
State's Ex. 4, pp. 214-216, 220. A "companion" is simply someone "who
provides fellowship, care, and protection of a person who, because of
advanced age or physical or mental infirmity, cannot care for his or her
own needs." State's Ex. 4, p. 217.
The definition of "live-in services" provides:
"Live-in Services" means a service provided over a 24-hour
period, as opposed to provided during a period of the day, when
the provider lives in the client's home.
State's Ex. 4, p. 219. While this definition refers to the provider
living in the client's home, it does not add anything to the nature of
the service (here, companionship service) other than the time period
over which it will be provided.
B. Other Provisions of the Waiver Request
The State conceded that its service descriptions did not contain an
explanation of housekeeper food and shelter payments, but argued that
housekeeper food and shelter was integral to live-in companionship
services and that HCFA should have known that it was part of such
services. The State relied on a part of the waiver request which
stated:
When the client has a live-in companion, a standard amount for food
and shelter is added to the client's maintenance need in
determining the amount of his/her public assistance grant to
provide compensation for additional incurred expenses.
State's Ex. 4, p. 213.
HCFA said that it read this statement as meaning that, rather than
Medicaid paying for food and shelter costs, the means of reimbursing a
client for the additional expenses would be through an increased grant
under another program. HCFA also said that this statement had to be
read in light of other provisions of the waiver request, which affirmed
that the State would not make direct payments to recipients for waivered
services and that the State would not include room and board as part of
a waivered service.
The State reply was essentially based on assertions that Medicaid was a
public assistance program under Oregon law, that HCFA had required the
State to exclude from its waiver request any nonwaivered services, and
that, if the State had intended a program other than Medicaid to pay for
housekeeper food and shelter, it would have used different language in
this statement. The State supplied affidavits in support of these
assertions. The State also supplied affidavits in support of the
assertion that, in spite of the State's affirmation that no payments
would be made directly to recipients, HCFA should have known that some
payments would be made in this way because otherwise the State's
discussion in the waiver of its computerized Client Maintenance System
would have been unnecessary.
We first note that the statement on which the State relied appears under
the subheading "Food and Shelter Standard" and the general heading
"Payment Process." The first subheading is "Payment" and
applies to the
following provision:
[The State] will make the payment to the provider on behalf of the
client for all client-employed in-home services, . . . .
State's Ex. 4, p. 212. In other words, there is no indication in the
section that the food and shelter costs are part of the reimbursement to
the companion for providing in-home services. In light of this, we
conclude that the provision describing the food and shelter standard
cannot reasonably be read as including these costs as part of the
payments for services for which Medicaid funding would be provided under
the waiver.
The following additional considerations support this result:
o Although Medicaid is a public assistance program, it is not a
program providing funding for "grants" to meet recipients'
maintenance needs.
o On the other hand, a recipient's maintenance needs are relevant
to a waiver request under Medicaid because a recipient who has
income and resources in excess of maintenance needs would need to
apply this excess to pay part of the cost of services before
Medicaid would pay the rest. 42 C.F.R. 435.726, 435.735; State's
Ex. 4, p. 7. This adequately explains why the statement on
housekeeper food and shelter costs would have continued to be
relevant, even if HCFA had asked the State to remove references to
nonwaivered services as the State alleged. It also explains why the
waiver request would refer to the Client Maintenance System, since
information in that system would be relevant to determining what, if
any, part of the cost of a waivered service should be paid by the
recipient.
o The waiver request description of in-home services indicates that
some funding for the services would come from programs other than
Medicaid. State's Ex. 4, p. 218. Thus, HCFA could not be expected
to know, simply from the fact that the housekeeper food and shelter
payment may be integral to live-in companionship services, that the
State intended to charge Medicaid.
o The waiver request assures that "no services provided under the
waiver will contain room and board costs." State's Ex. 4, p. 12;
see also State's Ex. 4., p. 13. We do not agree with the State that
HCFA's regulation defining room and board clearly limits this
prohibition to room and board provided to a recipient; in any event,
in light of the explicit assurance in the waiver request (which is
not so limited), the State at the very least should have made it
clear if it intended to nonetheless claim room and board for a
live-in companion as a waivered service.
C. The State's Affidavits
The State's evidence regarding the intent of the waiver request does not
convince us that a different result is warranted here. This Board has,
in some instances, considered evidence of intent in determining whether
a state's interpretation of its state plan was a reasonable one, to
which the Board should defer. See generally South Dakota Dept. of
Social Services, DAB No. 934 (1988), p. 4. Here, however, the State is
advocating an interpretation which is not supported by the plain
language of the waiver and which would, in effect, override important
program requirements. While the states are given some flexibility to
design a home and community-based services program, a waiver request is
subject to HCFA's approval, so the state has an obligation to state
clearly what the waivered services are for which Medicaid will be
charged. See Arkansas v. United States, No. 150-85C (Cl.Ct., Feb. 20,
1986). Without clear information on the costs to Medicaid, HCFA cannot
fulfill its role of ensuring that a waiver will be cost-effective.
The affidavits submitted by the State do not aver that the State
communicated to HCFA that it intended to charge Medicaid, nor that the
estimated costs for Medicaid under the waiver specifically included the
costs of housekeeper food and shelter. The affidavits rely primarily on
assertions that the State would have written the waiver differently if
the State had intended to pay for the housekeeper food and shelter
payments itself. These assertions do not hold up under careful
analysis, however. For example, one State official who was involved in
developing the waiver request attested that the language that the cost
of housekeeper food and shelter would be "added to the client's
maintenance needs" was used because it was the intent that the
housekeeper food and shelter payment would be separate from the
maintenance needs paid with State funds; the affidavit asserts that this
"is why language such as 'included in as part of the client's
maintenance needs' was not used." State's Ex. A, p. 3. The affiant
further asserted: "By stating that the housekeeper food and shelter
payments were 'added to the client's maintenance need in determining the
amount of his/her public assistance grant,' [the State] was simply
explaining the method of making the payment to the recipient [i.e.
through the CMS system] and was not classifying the type of payment."
State's Ex. A, p. 3. The fact is, however, that the State's choice of
words did nothing to inform HCFA that the increase in the amount of the
public assistance grant, resulting from "adding" housekeeper food
and
shelter to maintenance needs, would not be treated as part of the grant
and charged to an income maintenance program, but would instead be
charged to Medicaid. Moreover, in pointing out a difference between the
client-employed services and services provided by contract, the waiver
request says that a client receiving services under a contract "will not
receive a food and shelter allowance for a provider of service in their
grant." State's Ex. 4, p. 213. This choice of words does not appear to
be consistent with the affidavit's assertion that food and shelter
payments were separate from the grant made to meet a recipient's
maintenance needs.
The State's supplemental affidavit further asserted:
[T]he Client Maintenance System (CMS) . . . was the system used
for making payments directly to recipients under several public
assistance programs, including Medicaid and other state funded
programs. It also provided a tracking system for individuals
who were eligible for Medicaid . . . [and] provided a method to
show financial accountability to HCFA by showing its payment
processes. Regardless of the varied functions that the CMS
provided, it was placed in the financial accountability section
of the 1984 Waiver to fulfill the financial accountability
requirements of HCFA. The determination of eligibility was not
a financial accountability issue, and thus, the detailed
explanation of the CMS would not have been required . . . if
its only function, as related to Medicaid recipients, were to
track eligible individuals.
State's Ex. C., pp. 1-2. What is noticeably missing from this statement
is any assertion that there could be no reason for including the CMS
description under financial accountability other than because the State
intended to charge Medicaid for housekeeper food and shelter costs. We
have found another reasonable explanation -- to assure HCFA that
recipients will pay for any part of the cost of waivered services for
which they are liable, before Medicaid is charged. Even if this were
not so, however, we would find that the State could not reasonably
expect HCFA to understand from mere inclusion of the CMS system in the
financial accountability section of the waiver request that the State
intended to charge to Medicaid direct payments for housekeeper food and
shelter.
Nor are we convinced that HCFA should have known that the State was
paying for waivered services through direct payments to recipients
because of the State's descriptions of how it would pay for adult foster
care and residential care facility services under the waiver. The
payment tracking system for these types of services does indicate that
the State would generate through its CMS system a grant to the client,
who would then pay the provider. State's Ex. 4, p. 80. This would not
have been sufficient to inform HCFA that grant amounts reflecting
housekeeper food and shelter costs would be considered part of the
payment for live-in companionship services, however. The payment
tracking system for in-home services (which includes live-in
companionship services) shows payment to the provider, but, unlike the
tracking system for adult foster care and residential care facility
services, does not state that such payment will be made through a cash
grant to the recipient.
In sum, we conclude that, notwithstanding what the State said that it
intended, HCFA's approval of the waiver request cannot reasonably be
relied on by the State as approval for charging housekeeper food and
shelter costs to Medicaid as part of a waivered service. We base this
conclusion on the service definitions the State used, the State's
unqualified assurances that it would not claim for direct payments to
recipients or for room and board costs, and the wording of the food and
shelter standard which HCFA reasonably interpreted as indicating that
income maintenance funds would be used to cover these costs.
III. The State's Documentation
As indicated above, HCFA's disallowance letter questioned whether the
State met financial accountability requirements under its 1984 waiver
and whether the State had adequately documented the housekeeper food and
shelter costs. The parties agreed that the State would submit
documentation related to five recipients of live-in companionship
services, as representative of the type of documentation the State
maintained to support its claim for housekeeper food and shelter costs.
State's Exs. 6-10. The State said that this documentation showed that
the housekeeper food and shelter costs were supported by provider
agreements, invoices for services, and the forms used as part of the
State's CMS.
The State's documentation does support the conclusion that the State had
provider agreements with providers of live-in companionship services and
that the State made grants to the recipients of these services which
included an amount for part or all of the costs of housekeeper food and
shelter. On the key question of whether these costs were the costs of a
waivered service, however, the documentation supports HCFA, rather than
the State.
The State submitted for each of the five recipients documents called
"AGREEMENT, AUTHORIZATION AND PROVIDER INVOICE IN-HOME SERVICES."
This
form contains an authorization section, specifying the number of hours
of service authorized during a specified period, and the authorized
"Rate Per Hour." The form contains certifications by the provider
and a
statement that the State will pay "AT AUTHORIZED RATES UPON RECEIPT OF
PROPER INVOICES" and that "NO ADDITIONAL CHARGES SHALL BE IMPOSED
FOR
SERVICE PROVIDED TO RECIPIENTS UNDER THIS AGREEMENT." The invoice
section contains space for the provider to fill in the number of hours
worked in the period and total wage due. The form also contains space
for the recipient to certify that the service was received and to
designate as agent for the recipient "the Division making payment to my
above-named employee . . . ." Nowhere on the form is there any
indication that, as part of the payment for the service, the provider
would receive food and shelter. To the contrary, the providers billed
only for the hourly wage times the number of hours of service provided.
As indicated above, Medicaid regulations specifically require that
payments be supported by providers' bills for the services.
The other relevant form is an "AUTHORIZATION OF AWARD" form which,
for
these recipients, identifies housekeeper shelter (HKS) and housekeeper
food (HKF) as needs of the recipient, which are added to other needs and
subtracted from resources to determine "GRANT AMOUNT." Nothing on
this
form indicates any treatment of housekeeper food and shelter as
different from any other maintenance needs of the individual; nor does
the form indicate that the amount paid to the recipient to recognize
this need is somehow considered part of the provider's charge for the
service.
Thus, on the whole, we find that the State's documentation supports
HCFA's view that the housekeeper food and shelter costs were not part of
the providers' charges for live-in companionship services.
Conclusion
For the reasons stated above, we uphold the disallowance on the ground
that the costs of housekeeper food and shelter were not part of the
documented providers' charges for services approved under the State's
1984 waiver for home and community-based services.
________________________________ Norval D. (John) Settle
________________________________ Alexander G. Teitz
________________________________ Judith A. Ballard Presiding
Board