GAB Decision 167
April 30, 1981 Tennessee Department of Public Health Docket No.
79-203-TN-HC Garrett, Donald; Teitz, Alexander Ford, Cecilia
The State of Tennessee Department of Public Health (State) appealed
from a penalty disallowance of $34,731 made by the Health Care Financing
Administration (Agency) pursuant to Section 1903(g) of the Social
Security Act (the Act) for the quarter ending March 31, 1978. The
penalty disallowance was made after an Agency validation survey,
required by Section 1903(g)(2) of the Act, determined that the records
for one patient in one facility did not meet the certification and
recertification requirements of Section 1903(g)(1)(A) of the Act. For
reasons stated below, we conclude that the disallowance should be
upheld.
This decision is baded on the State's application for review, the
Agency's response to the appeal, the parties' responses to the Board's
request for further information, dated January 15, 1981, a telephone
conference call between the parties' representatives and a Board staff
attorney, and the parties' written responses to questions and issues
raised in the conference call. We have determined that there are no
material facts in dispute which a conference or hearing would help
resolve, and that a conference or hearing would not assist the
development of the issues.
Statement of the Case
Section 1903(g) of the Act requires that the State agency responsible
for the administration of the State's Medicaid plan under Title XIX of
the Act show to the satisfaction of the Secretary that there is an
"effective program of control over utilization of" long-term inpatient
services in certain facilities, including intermediate care facilities
(ICFs). This showing must be made for each quarter that the federal
medical assistance percentage (FMAP) is requested with respect to
amounts paid for such services for patients who have received care for
60 days in ICFs, or the FMAP will be decreased according to the formula
set out in Section 1903(g)(5). The satisfactory showing must include
evidence that "in each case for which payment is made under the State
plan, a physician certifies at the time of admission, or, if later, the
time the individual applies for medical assistance under the State plan
. . . that such services are or were required to be given on an
inpatient basis because the individual needs or needed such services."
The patient must be recertified" at least every 60 days." (Section
1903(g)(1)(A)). These statutory requirements are implemented by
regulation. The applicable regulation for the period in question in
this appeal was 42 CFR 450.18(a)(2), which stated that certification
must occur "at the time (sic) admission or, in the case of an individual
who makes application for assistance while in an institution, prior to
authorization of payment . . . ." SRS-AT-75-122, dated November 13,
1975, contains statements that "define and clarify what is required in
order for States to be considered in adherence" with the regulatory
requirement. This Action Transmittal was addressed to State
Administrators and "other interested agencies and organizations."
A validation survey, for the quarter ending March 31, 1978, was
conducted during June and July 1978 in the State of Tennessee, involving
20 intermediate care facilities (ICFs). As a result of this survey, the
Agency determined that one patient in one facility did not have a valid
certification. Although the State's appeal to the Board was untimely,
the Board Chair accepted the Appeal on February 12, 1980, after a
determination that the State had good cause for the untimeliness of its
submission.
According to affidavits submitted by the State, the patient whose
records are in question here is a "profoundly retarded" individual
who
was already present in the facility when the facility qualified as a
Medicaid provider. The patient had been eligible for Medicaid since
October 1969, and the State, in an affidavit submitted to the Board,
indicates that her status, disability and income have at all times been
such that she retains her eligibility for Medicaid. (Affidavit by M.
Biddle, Reimbursement Officer, Greene Valley Development Center, March
25, 1981). The first certification made for the patient, as reflected
in the record, was dated June 11, 1976; the physician certified that
the patient needed intermediate care for her lifetime. In July 1976 the
patient was placed in a group home on an experimental basis, as part of
a program to determine the ability of low-functioning mentally retarded
adults to live in a group home setting outside an institution. The
group home was organizationally part of the institution and the level of
care received during her residence in this group home was the same as
she would have received in an ICF unit; the group home, however, was
not certified for Medicaid (Conference Call, March 3, 1981). Therefore,
even though the patient was eligible for Medicaid, no Medicaid monies
were expended for her during the time that she was in the group home.
On Janary 23, 1978, the patient was transferred to another unit in the
facility, which was certified for Medicaid. A physician certified that
the patient required ICF care on March 3, 1978; recertifications were
completed thereafter every 60 days. No certifications or
recertifications were completed for the patient between June 11, 1976
and March 3, 1978 (Conference Call, March 3, 1981; State's Response,
March 27, 1981, p. 2).
The State admits that, after it received notice of the violation and
consequent disallowance, it denied reimbursement to the provider for the
services provided to the patient and that the sole reason for this
denial of reimbursement was because of the violation (Conference Call,
March 3, 1981; Confirmation of Telephone Conference, March 6, 1981).
Discussion
The State's original allegation in its appeal was that no
disallowance should be imposed because "no State or federal Medicaid
monies . . . (were) expended for that recipient during . . ." the period
in question. The State admitted that the sole reason for this
non-expenditure was the violation and subsequent disallowance. This
admission led the parties to conclude that whether the disallowance
should be reversed on this basis was no longer an issue in the appeal
(Conference Call, March 3, 1981; Confirmation of Telephone Call, March
6, 1981).
Thus, the issue to be decided is whether certification was required
for the patient when she was transferred from a non-Medicaid certified
unit to a Medicaid-certified unit in the same facility on January 23,
1978, and, if not, whether recertification was necessary every sixty
days during any period following the June 11, 1976 certification, that
she was in a Medicaid-certified unit.
The State argues that a transfer within a facility is not an
admission and that, therefore, no certification for admission would have
been required upon the patient's transfer from one unit to another.
Furthermore, the State alleges that because the patient had been
previously certified as "profoundly retarded," her need for this level
of care could never change, and a certification upon transfer from one
unit to another would not be necessary to control unnecessary delivery
of services.
Both Section 1903(g)(1)(A) and 42 CFR 450.18(a)(2) require that each
patient for whom payment is made under the State plan be certified at
the time of admission and recertified at least every 60 days thereafter.
The Agency argues that a transfer from a non-certified unit to a
certified unit is the same as an admission for purposes of the
certification reqirement and that the patient should have been certified
on or before January 23, 1978. Furthermore, the Agency argues that even
if the transfer were not considered an admission, it would then have
been necessary for her to be recertified for the period between January
23 and March 3, 1978 because certifications are considered effective for
a period of only 60 days and, therefore, the certification completed in
1976 was not effective for the period January 23, 1978 through March 3,
1978 (Agency Response, March 30, 1981, page 6).
Neither the statute nor the regulation distinguish between patients
who are clearly in need of lifetime care and other patients requiring
longterm medical assistance. While it seems unnecessarily bureaucratic
to require that a physician recertify a "profoundly retarded" individual
every 60 days, the State has not pointed to anything in the applicable
law that requires the Agency to make an exception from the certification
and recertification requirements for this type of patient. Furthermore,
the intent of the utilization control requirements is to prevent
patients' institutionalization without periodic reassessment of the need
for that level of care. Patients whose medical assistance is paid
through Medicaid must be certified to show that their care was necessary
for all periods of time for which payment is made. Therefore, we
conclude that the failure to certify or recertify upon transfer to a
certified unit that the patient was in need of ICF care was a violation
of Section 1903(g) and 42 CFR 450.18( a)(2).
The State also alleges that its failure to certify this one patient
is not an indication that it does not have an effective program of
utilization control of such services and that the penalty should not be
imposed. The statute, however, does not provide the Secretary with the
discretion to waive or reduce the penalty once there is a finding that a
violation has occurred. The Secretary is required to impose a penalty
calculated according to the statutory formula set forth at Section
1903(g)(5) unless the State agency makes a satisfactory showing that
there are valid certifications "in each case." None of the waivers
or
exceptions specifically provided in the Act apply to this appeal. The
1977 amendment of Section 1903(g) (Pub. L. 95-1428 Sec. 20, 91 Stat.
1205 (1977)) altered the penalty formula from a rigid requirement that
33 1/3 percent of the federal medical assistance percentage be deducted,
to a more flexible formula that reflects the difference between
significant and nominal violations by adjusting the reduction in
proportion to the number of patients in only the facilities that were
found to have violations. Thus, the penalty formula builds in a sliding
scale that reflects the extent of the State's deviation from the
requirements (123 Cong. Rec. S16008, daily ed., September 30, 1977).
Furthermore, the Comptroller General issued an Opinion on March 4,
1980 (File No. B-164031(e).154), concluding that if the requirements of
Section 1903(g) are not met in every case, the Secretary has no
alternative but to consider the State's showing unsatisfactory or
invalid and impose the penalty according to the statutory formula. The
Comptroller General based this conclusion on the legislative history of
the Act and on the fact that amendments to the Act described specific
circumstances in which the Secretary could waive application of the
penalty, leading the Comptroller General to conclude that Congress did
not intend to permit waivers under any other circumstances.
This Board gives deference to the interpretation given a statute by
the Agency, in accordance with principles established by the courts.
New York Department of Social Services, Decision No. 101, May 23, 1980,
p. 6; California Department of Health Services, Decision No. 158, March
31, 1981, p. 7. The primary rationale for this practice is the
deference accorded agency expertise. Southern Mutual Help Assoc., Inc.
v. Califano, 574 F.2d 518, 526 (D. C. Cir. 1977). The Agency's
interpretation of the Act, based on the legislative history and specific
amendments to Section 1903(g), is that it does not have the discretion
to waive a penalty reduction once there is a finding that a violation
has occurred. The Comptroller General's Opinion confirmed this
interpretation. The Board concludes that such an interpretation is
reasonable and that the Secretary does not have the discretion to waive
the penalty for even one violation of the Act.
CONCLUSION
We conclude that the failure to certify or recertify the patient upon
transfer to a certified unit was a violation of Section 1903(g) and 42
CFR 450.18(a)(2) and that the Secretary has no discretion to waive the
penalty for the violation. Therefore, we sustain the disallowance.
OCTOBER 04, 1983