GAB Decision 168
April 30, 1981 Utah Department of Health; Docket No. 80-160-UT-HC Ford,
Cecilia; Garrett, Donald Teitz, Alexander
This decision involves an appeal by the State of Utah Department of
Health (State) from a penalty disallowance of $114,789.24, made by the
Health Care Financing Administration (Agency) pursuant to Section 1903(
g) of the Social Security Act (the Act) for the quarter ending December
31, 1979. The penalty disallowance was made after the Agency conducted
a validation survey, as required by Section 1903(g)(2) of the Act, and
determined that the State was unable to establish that timely reviews
were conducted at four facilities, as required by Section 1903(g)(1)(D)
of the Act. The Agency examined the documentation submitted to the
Board by the State at the time of its appeal, found it satisfactory for
two of the facilities under the utilization control requirements of
Section 1903(g), and modified the disallowance to $57,394.62. We
conclude that the disallowance, as modified, should be reversed because
the State's showing meets the requirements of Section 1903(g)(4)(B),
which provides an exception to the requirements of Section 1903(g)(1)(
D) for purposes of a satisfactory showing under the Section.
This decision is based on the State's application for review, the
Agency's response to the appeal, and the parties' responses to the
Board's Order to Show Cause, issued January 27, 1981. We have
determined that there are no material facts in dispute which a
conference or hearing would help resolve, and the State waived the
opportunity for an informal conference, extended by the Board in the
Order to Show Cause.
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 recieved 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" the State has an effective program of medical review of
the care of patients in these facilities (Section
1903(g)(1)(D)).Independent professional review teams must review and
evaluate the professional management of each case at least annually,
including the care provided to the patients, the adequacy of available
services, the necessity and desirability of the patients' continued
placement in the ICF, and the feasibility of meeting the patients'
health care needs through alternative services. The teams' findings and
recommendations are to be put in full reports (Sections 1903(g)(1)(D)
and 1902(a)(31) of the Act).
The State's independent professional review reports normally consist
of three separate forms: (1) Form H-12, a listing of Medicaid patients
in a facility, with notations concerning the appropriate level of care
for each patient, (2) Form 15, "Medical Review Team's Nursing Facility
Report," which identifies deficient areas of service in a facility, and
(3) Form 5, Patient Care Profile, a 7-page review of individual patients
and their care.
During the quarter ending December 31, 1979, a special study was
conducted by the State's Division of Aging. The Division was aided in
this study by the members of the independent professional review team
that conducts the medical reviews. The record does not show the total
number of facilities included in that study, but both parties state that
the two facilities concerned in this appeal were included in the special
study. An experimental form (10-A) was completed during this study for
the two facilities, but Forms 5 and 15 were not completed during that
quarter. Independent professional reviews were conducted in these two
facilities on February 19 and 27, 1980, and the three forms regularly
used were completed at that time.
The Agency conducted an onsite survey in March 1980 to verify that
independent professional reviews had been prformed at least annually in
facilities whose reviews were due during the quarter ending December 31,
1979. The Agency determined that the State had not established that
timely reviews had been performed in the two facilities with which this
decision is concerned.
DISCUSSION
The issues here are whether the studies performed in December 1979 in
the two facilities and the resultant reports meet the statutory and
regulatory requirements for independent professional reviews and
reports, and, if not, whether the State's showing is satisfactory under
the provisions of Section 1903(g)(4)(B).
Sufficiency of the December 1979 Review and Report
Both the statute and the regulations require that an inspection be
made at least annually. Action Transmittal HCFA-AT-77-106, dated
November 11, 1977, notified the states that the Agency's previous policy
regarding the timing of annual reviews was changed by the enactment of
Pub. L. 95-142 on October 25, 1977. Thus, HCFA-AT-77-106, at pages 3-4,
stated:
P.L. 95-142 relaxes the previous standard of timeliness. Under
1903(g) as modified by P.L. 95-142, effective with quarters beginning on
or after January 1, 1977, a MR or PR will be timely if it is conducted
by the end of the anniversary quarter of the facility's entry into the
program or of the last prior review. /1/
According to the record, the two facilities had last been reviewed on
December 4 and 18, 1978. Thus, the reviews were due by the end of
December 1979.
The record does not reflect the exact amount or nature of the input
that the independent professional review team had into the special
study. The Agency phrases the issue of whether the study performed in
the two facilities in December 1979 constituted an independent
professional review as two question -- the intent of the State that the
study be an independent professional review, and the sufficiency of the
forms constituting the alleged independent professional review report
(Response to the Appeal, January 9, 1981, page 11). Neither the
statutory provision nor the regulations refer to the intent of the State
in conducting reviews; however, the key elements of a review appear to
be the composition of the review team, as set out in 42 CFR 456.602 and
456.614, and the findings and recommendations of the team, as reflected
in their report. Thus, the issue here is whether the team's report,
which consists solely of the experimental Form 10-A, sufficiently
reflects the findings and recommendations of the team, and, therefore,
establishes that timely reviews of the facilities were made.
The requirements of Sections 1903(g)(1)(D) and 1902(a)(31) have been
discussed above. Among the specific findings the team must make are
whether the services are adequate to (1) meet the health, rehabilitative
and social needs of each recipient, and (2) promote his maximum
physical, mental and psychosocial functioning (42 CFR 456.609, 456.610).
The team must report its observations, conclusions and recommendations
concerning the adequacy, appropriateness, and quality of all services
provided in the facility or through other arrangements, including
physician services to recipients, and must also report specific findings
about individual recipients in the facility (42 CFR 456.611). There are
no written requirements pertaining to the use of particular forms or to
the modification of forms. Whatever forms are used, it is their content
that is important. The question is whether Form 10-A provides the
requisite information.
It is the Agency's position that Form 10-A does not contain
information necessary to determine the adequacy of individual patient
care nor the facility's success in providing the necessary care. We
agree. Form 10-A contains almost no information about the adequacy of
individual patients' care. The form (unlabelled) completed by the
Division of Aging (Exhibit A) contains information about the patient's
functional and mental status, but not about the care received. Although
the State maintains that Form 10-A, "when read along with the
attachments referred to . . . as Exhibits C through F, (of the State's
Response to the Order to Show Cause) demonstrates that services
available to each patient were adeuqately inspected" (Response to the
Order to Show Cause, March 2, 1981, page 9), there is little specific
information about individual patients in those attachments. Exhibits C
and F are general guidelines developed in the special study referred to
above and concern services provided at various levels of care; they do
not provide any information about specific patients or facilities.
Exhibits D and E are Forms H-12 completed for the two facilities. Form
H-12 merely lists the Medicaid patients in a facility, with a notation
of the appropriate level of care for each patient. There is no other
information on the form regarding individual patients or individual
facilities. Therefore, we conclude that the report made by the review
team in December 1979, consisting only of Form 10-A, does not meet the
statutory and regulatory requirements for a report of an independent
professional review, and therefore, that timely and satisfactory
independent professional reviews of the facilities were not made.
Sufficiency of State's Showing Under the Statutory Exception Provided
in Section 1903(g)(4)(B)
Section 1903(g)(4)(B) says:
The Secretary shall find a showing of a State with respect to a
calendar quarter under paragraph (1), to be satisfactory under such
paragraph with respect to the requirement that the State conduct annual
onsite inspections in mental hospitals, skilled nursing facilities, and
intermediate care facilities under paragraph (26) and (31) of section
1902(a), 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. /2/
Under Section 1903(g)(4)(B), if the State shows that it conducted a
timely inspection in 98% of the facilities requiring inspection and in
every facility having 200 or more beds, its showing is satisfactory if
it shows with respect to the facilities not inspected that it exercised
"good faith and due diligence in attempting to conduct such inspection(
s)." The Agency's interpretation of the "good faith and due diligence"
exception, expressed in HCFA-AT-77-106, dated November 11, 1977, pages
6-7, referred to situations "clearly beyond the State's control."
This
interpretation was codified at 42 CFR 456.653(a)(3), effective December
31, 1979. In the preamble to this, published at 44 FR 56336, October 1,
1979, the Agency notes that such an exception would be available where a
state failed to review some facilities "because of circumstances beyond
the State agency's control which could not have been anticipated." Under
such a construction of "good faith", the circumstances of this appeal
do
not meet the good faith exception.
On the other hand, the State's action does fall within the "technical
failings" exception. Ohio Department of Public Welfare, Decision No.
66, October 10, 1979, interprets the statute so that a state need not
meet the 98% requirement in order to be excused by a technical failing.
The Agency's statement of the exception, as expressed in the preamble to
the final regulation, 44 FR 56336, October 1, 1979, also makes this
interpretation of the provision, although it further confines that
interpretation by requiring that the 98% standard be met within 30 days
after the close of the quarter.
For the quarter in question, here, however, it was possible for the
State to make a satisfactory showing even though it did not meet the 98%
standard by the end of the quarter if it were excused by a technical
failing because the Agency's regulation was not yet in effect (see the
discussion below). Neither party has pointed to a statutory or Agency
definition of technical failings. HCFA-AT-77-106 cited the only
pertinent legislative history, which stated that technical noncompliance
would include instances where a state reviewed patients in most
facilities on time with the remaining facilities reviewed "several weeks
after the deadline for completion of all reviews" (S. Rep. 95-453,
September 26, 1977, p. 41). The Action Transmittal went on to say:
This provision thus gives the Secretary some limited discretion to
find satisfactory a showing that indicates that all facilities have been
reviewed since the beginning of the annual period ending on the last
date of the showing quarter, although some facilities were not reviewed
until after the end of the showing quarter.
Here the State actually performed a review but was unsuccessful in
complying with some aspects of the reporting requirements. There was a
follow-up review that met all requirements several weeks after the end
of the quarter in which a review was due. We conclude that these
circumstances can be construed as a "technical failing." Within several
weeks of the close of the quarter, the State had not only met the 98%
standard, it had performed 100% of the required reviews.
The Agency invokes its regulation, 42 CFR 453.653(b), which provides
that where a state does not meet the 98% standard due to technical
failings, its showing will be considered satisfactory if it meets the
standard "within 30 days after the close of the quarter." This
regulation did not become effective until December 31, 1979, however,
and did not apply during the quarter for which the reduction was made.
The Agency argues that it had previously expressed this policy
concerning the thirty-day limit in its Notice of Proposed Rulemaking (43
FR 50925, November 1, 1978) and in HCFA-AT-77-106. We do not find this
argument persuasive. HCFA-AT-77-106 simply says "For example, the
Secretary could find satisfactory a showing for the quarter ending
December 31, 1977 which showed that all facilities had been reviewed
since January 1, 1977, although some reviews had not been completed
until January 1978." This statement is, by its own words, merely
exemplary. It can hardly be taken as a statement of the maximum amount
of time allowable to complete a missed or unsuccessful review under the
exception. As for the Notice of Proposed Rulemaking, the language in
the paragraph concerning the technical failings exception, which is
phrased in terms of proposals and future application, shows that the
thirty-day limit was simply a proposal of future policy until finally
promulgated. There is no basis for concluding that such a restriction
would be effective prior to final promulgation of the rule, particularly
because the statutory language does not mention a time limit by which
the 98% standard must be met. The preambles to both the NPRM and the
Notice of a Final Regulation (44 FR 56335, October 1, 1979) quote the
legislative history's phrase "several weeks." The word "several"
is, of
course, indefinite. Webster's Third New International Dictionary
defines it as "being more than two but fewer than many." This does
not
mean, of course, that the State could meet the "technical failings"
exception by completing a review any time it wished. Clearly it was
bound to a reasonable standard. In the absence of an effective
regulation or other definitive statement of currently applicable policy
by the Agency, this Board will look to Congressional intent and reason
to determine the standard.Where the State conducted a review within the
quarter but was technically unsuccessful in its attempt to meet the
reporting requirements, satisfactory review of the facilities, within
several weeks of the end of the anniversary quarter, should be deemed a
compliance with the statute, in the absence of a promulgated regulation
or other requirement binding on the State during the period in question.
Thus, we conclude that the State has met the requirements of the
exception provided in Section 1903(g)(4)(B).
Further support for this conclusion is provided by the possibility of
a finding that the State actually met the 98% standard within the
required time period, since the percentage of reviews made was 97.6%
(Agency's Response to the Order to Show Cause, March 2, 1981, page 7).
It is standard practice in a variety of contexts to round off a fraction
to the nearest whole number. See e.g., M. R. Spiegel, Schaum's Outline
of Theory and Problems of Statistics, page 2. The Agency admits that
the State's rate of success was very close to 98% (Response to the Order
to Show Cause, March 2, 1981, page 7). Where the Agency has not
articulated a policy on whether a fractional variance of 98% may qualify
a state for the exception, and because a penalty statute should be
construed in favor of the party against whom the penalty is to be
imposed, it is possible to conclude that 97.6% is the functional
equivalent of 98%.Such a conclusion is supported by the legislative
history of the provision which says:
This provision was included because HEW has announced penalties on
States which failed to review only two or three homes out of hundreds of
homes subject to review within the annual time limit. In the light of
the Secretary's position that HEW has no discretion in determining that
the requirements of the law have been met, the Committee has provided a
standard of reasonableness in the bill. (H. Rep. 95-393, Part II, 85,
July 12, 1977, reprinted in 1977 U.S. Code Cong. & Ad. News 3088.)
Conclusion
We conclude that the State failed to meet the regulatory report
requirements for a timely independent professional review; however, we
also conclude that the review which failed to meet the statutory
standard, combined with the successful review completed in February
1980, falls within the statutory exception expressed in Section 1903(
g)(4)(B). Therefore, the disallowance should be reversed. /1/ This
policy was codified at 42 CFR 456.652(b), effective December 31,
1979. /2/ The Agency published its final regulation implementing
this provision at 44 FR 56338, October 1, 1979. The regulation became
effective December 31, 1979 and is codified at 42 CFR 456.653. The
regulation states: The Administrator will find an agency's showing
satisfactory, even if it failed to meet the annual 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; (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 by the close of the quarter 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.
OCTOBER 04, 1983