GAB Decision 220
October 21, 1981 Illinois Department of Public Aid; Docket Nos.
80-49-IL-HC, 80-154-IL-HC, 80-157-IL-HC, 81-153-IL-HC Ford, Cecilia;
Garrett, Donald Settle, Norval Settle, Norval
The Illinois Department of Public Aid (State) is appealing $6,249,149
in Federal financial participation (FFP) disallowed by the Health Care
Financing Administration (Agency) under Title XIX of the Social Security
Act. The claims disallowed were for services to Medicaid recipients by
facilities during periods when their provider agreements had expired and
not been renewed. The issue is whether, and to what extent, FFP is
available during provider appeals.
This decision is based on an Order to Show Cause issued to both
parties on August 21, 1981; the records in each case identified in that
Order; the Board's letter of correction dated August 27, 1981; the
Agency's response; and the State's letter electing not to submit
further arguments on its behalf.
In its Order to Show Cause, the Board indicated that it would uphold
the disallowance in part and reverse it in part, based on a December
1971 Agency Program Regulation Guide (PRG-11), and the decisions of this
Board in similar cases. The Board made tentative findings that Illinois
State law 1) mandated the continuation of a provider agreement pending a
provider appeal; and 2) for the facilities in these cases, required
continued reimbursement for the care of Medicaid recipients, pursuant to
the holdings of federal courts.
In the Order to Show Cause the Board proceeded on the assumption that
the periods of service involved were coterminous with the quarters
encompassed by the disallowances. In its response, the Agency pointed
out that this was not necessarily correct. The disallowance may include
payments for services rendered in a prior quarter. Because of this
possibility, the Agency suggested two other methods of calculating the
effect of the Board's proposed decision. The Agency stated its
willingness to accept any of the three or any reasonable method proposed
by the State.
The Agency also argued in its response that PRG-11 does not require
FFP for payments during the first 120 days of a provider appeal because
such payments are discretionary under Section 12-4.24(E) of the Illinois
Public Aid Code. The Agency did not attempt to refute (2) the State's
argument, noted in the Board's Order, that the State is bound by the
decisions of federal courts in Illinois to continue payments except in
an emergency, nor did the Agency offer to show that any of the provider
terminations involved here were such emergencies.
Conclusion
We find, in view of the State's allegations and in the absence of a
showing to the contrary, that there were no emergency situations created
by Medicaid patients remaining in the terminated facilities involved in
these cases. Thus, in view of the Agency's acquiescence in the State's
reasonable interpretation of Illinois law as construed by the federal
courts, we do not have to decide the effect of Section 12-4.24(E) of the
Illinois Public Aid Code in relation to PRG-11. The Order also noted
that PRG-11 looks to the continuation of provider agreements (mandated
by Illinois law) and does not specifically refer to payments. Even if
the Agency were correct that the substance of PRG-11 looks to the
continuation of payments, in these cases the State did have to continue
payments as well as provider agreements. Therefore, we uphold the
disallowance in part and reverse it in part as set out in the Board's
Order to Show Cause and Appendix dated August 21, 1981, incorporating
them into this decision.
We leave the computation of the effect of this decision to the
parties. Both have indicated acceptance of the solution set forth in
the Appendix to the Order, is corrected, but they are free to use any
other mutually agreeable method.
Enclosure
(3) DATE: August 21, 1981
ORDER TO SHOW CAUSE
The Illinois Department of Public Aid (Illinois, the State) is
appealing $6,249,149 in Federal financial participation (FFP) disallowed
by the Health Care Financing Administration (HCFA, the Agency) under
Title XIX of the Social Security Act. The claims disallowed were for
services to Medicaid recipients by facilities during periods when their
provider agreements had expired and not been renewed.
Background
The separate disallowances and their related appeals are:
Board Date of Date of Amount Quarter Docket No.
Disallowance Appeal at Issue Ended 80-49-IL-HC 2-21-80
4-23-80 $1,210,954 6-30-79 80-154-IL-HC 9-11-80 10-14-80
1,576,472 9-30-79 80-157-IL-HC 9-22-80 10-22-80 1,582,393
12-31-79 81-33-IL-HC 1-26-81 2-26-81 1,879,350 3-31-80
The record in the appeals to date consists of the following major
documents:
1. 80-49 -- the application for review; HCFA's response of November
12, 1980; and the administrative record filed August 12, 1980.
2. 80-154 -- the application for review; HCFA's response of
November 19, 1980; and the administrative record filed November 19,
1980.
3. 80-157 -- the application for review; HCFA's response of
November 21, 1980; and the administrative record filed November 21,
1980.
Common to all of the foregoing is an Order to Show Cause dated
October 16, 1980; the State's response of January 16, 1980; the
State's response of January 16, 1981; HCFA's response of that date; the
(4) transcript of the informal conference on February 11-12, 1981;
post-conference briefs by Illinois (April 6, 1981) and HCFA (April 7,
1981).
In 81-33 there is the application for review; HCFA's response of
March 26, 1981; and the administrative record filed March 26, 1981.
The parties agreed to join this case with the three preceding.
In An Appendix to this Order there are the names of the 44 facilities
involved in the disallowances. Also shown are the dates on which their
provider agreements expired (Column II), the total disallowance
attributed to each facility (Column III), the quarters in which the
disallowed claims were made (Column IV), and a column titled
"Disallowance Reversible" indicating the degree to which the
disallowances might be reversed based on the outcome indicated by this
Order (Column V) (see Discussion, infra). All but three of the
facilities (indicated by asterisks) appear to have appealed their
nonrenewals using an administrative process afforded by the State.
Although this information is not shown in the Appendix, some of the
facilities were recertified subsequent to the expiration dates in Column
II.
Discussion
As both parties know, the Board has recently issued decisions in
several of the cases which were discussed at the informal conference
conducted by the Board on February 11-12, 1981. Illinois participated
in that conference.
In Ohio Department of Public Welfare, Decision No. 173, April 30,
1981, p. 14, the Board held that MSA-PRG-11, a December 1971 Program
Regulation Guide issued by a predecessor of HCFA, was still in effect
and governed the availability of FFP during an appeal before an
administrative agency by a facility from the nonrenewal of its provider
agreement (provider appeal). PRG-11 authorizes FFP in payments to such
a facility where "State law provides for continued validity of the
provider agreement pending appeal." /1/
In Ohio payments were made to the facilities pursuant to court
orders, which the Board held had the effect of continuing the provider
agreement. Id. at 14. However, in Colorado Department of Social
Services, Decision No. 187, May 31, 1981, and Georgia Department of
Medical Assistance, Decision No. 192, June 30, 1981, the Board dealt
with state statutes and regulations similar to those in Illinois.
(5) In the instant appeals the parties have made various arguments
about the availability of FFP during a provider appeal. To the extent
that these issues may be governed by Ohio, the arguments are not
repeated here. The portions of the parties here were known and
considered at the time that Ohio was decided.
Illinois State Law
The Board will likely hold in this case that Illinois State law does
continue a provider agreement pending a provider appeal. Illinois
argued that "the clear mandate" of its statutes, regulations, and
case
law is that a provider agreement "cannot be terminated without prior
notice and an opportunity for hearing." January 16, 1981 Response to
Order to Show Cause, p.1; April 23, 1980 Application for Review in
80-49, pp. 2-5. HCFA contended that pre-termination hearings were not
required because a provider agreement was not a license and Illinois law
dealt only with licenses. August 12, 1980 Response in 80-49, p. 10.
Illinois relied on sections of its Administrative Procedure Act, its
Public Aid Code, a Rule of the Illinois Department of Public Aid (IDPA),
and several federal court decisions. Copies of some of the court
decisions and all of the statutory and regulatory material cited were
attached to one or both of the aforementioned Illinois filings.
A key provision appears to be section 1003.04 of the Illinois
Administrative Procedure Act (1975) (January 16 Response, Tab B), which
defines "license" to include any agency certificate "or similar
form of
permission required by law." Faced with similar provisions in Colorado
and Georgia, supra, the Board concluded that Medicaid certification --
and thus the provider agreement -- fell within such definition.
Section 1016 of the Illinois Administrative Procedure Act apparently
would continue a license (provider agreement) "in full force" until
final agency decision on an application to renew, and preclude an agency
from refusing to renew a license without notice and an opportunity for a
hearing. This section authorize summary suspension of a license where
the agency finds that "the public interest, safety or welfare
imperatively requires emergency action." April 23 Application,
Attachment 7.
Some of Section 1016 appears to have been added as a result of a
September 27, 1977 amendment to the Act.Although the provider agreements
of some of the facilities expired prior to that date (see Appendix), the
tentative proposal in this Order not to reverse the disallowance in the
instances of those facilities is not dependent on the effective date of
any part of Sec. 1016. This is explained in greater detail infra.
(6) Section 12-4.25(A) of the Public Aid Code apparently authorizes
the Illinois Department of Public Welfare (IDPW) to deny the eligibility
of a vendor (provider) in the medical assistance program if certain
findings are made after reasonable notice and opportunity for a hearing
(appeal). Section 12-4.25(E) apparently permits IDPW to withhold
payments to a provider during the pendency of an appeal for up to 120
days but not thereafter except under certain conditions. This provision
making the withholding of payment to a decertified /2/ facility
discretionary raises some question about the appropriateness of paying
FFP under such circumstances, but PRG-11 appears to be tied to the
continuation of the provider agreement -- not the voluntary nature of
state payments -- and this condition appears to be met by the
Administrative Procedure Act and Sec. 12-4.25(A). Also, the State
argues that it is bound by the decisions of federal courts in Illinois
to continue payments except in an emergency and indicates that none of
the decertifications involved in these disallowances were emergencies.
January 16 Response, p. 5.
Illinois also cites Sec. 12-13 of its Public Aid Code, applying its
Administrative Procedure Act to the rules and procedures of its
Department of Public Aid. January 16 Response, Tab A. Finally,
Illinois attaches IDPA Rule 4.1406, allegedly effective February 13,
1979, which states that if the Department of Public Aid continues to pay
for a recipient in a facility without a provider agreement, the terms of
the previous agreement shall continue in force as long as the recipients
remain in the facility. January 16 Response, Tab D. This would appear
to apply only to those facilities whose agreement expired subsequent to
February 13, 1979.
Effect of PRG-11
Illinois contends that FFP is available indefinitely pending a
provider appeal, or at least until a facility has been afforded a
hearing on its decertification. Illinois argues it is bound by the
decisions of federal courts in Illinois and the Seventh Circuit to
continue payments to a facility pending a provider appeal unless the
State can show the conditions at the facilities amounted to an emergency
situation. The State alleges it did not make such a showing for any of
the facilities here.
(7) As indicated previously, this Board may decide here that the
disallowance should be reversed in part because Illinois law appears to
meet the PRG-11 condition for FFP pending a provider appeal. However,
in Ohio, supra, pp. 8, 14, the Board held that FFP would be available
for services rendered within a maximum period of 12 months from the date
of expiration of the provider agreement, even if a court order directs
the State to continue payments for more than 12 months. Payments made
pursuant to court orders must be "within the scope of the Medicaid
program (45 CFR 205(10)(b)(3)) which we have held limits FFP to the
aforesaid 12 month period.
The information in the records before the Board indicates the dates
of expiration and the quarters in which the disallowed claims were made,
but not the periods of service on which the claims were based. Thus,
for the purpose of showing in the Appendix the probable effect of
PRG-11, it is assumed that the period of service is coterminous with the
quarter. If this is not correct, the parties are encouraged to jointly
stipulate what the corresponding periods are.
With the aforesaid assumption, the Appendix shows to what extent the
disallowance might be reversed, allowing 12 months of FFP subsequent to
expiration of a provider agreement, where a facility appealed. Ashmore
Estates apparently obtained a court order on June 12, 1979, staying its
decertification; but even if Illinois could link the court order to the
facility's provider appeal, the order came more than 12 months after
expiration of the provider agreement and thus has no effect under Ohio.
Date of Certification
In a number of instances, Illinois purported to renew the provider
agreements, using HCFA certification and transmittal Form 1539 (C&T).
For the purposes of this Order, it is assumed that provider agreements
were issued to cover periods coterminous with those shown on the G&Ts.
HCFA does not dispute this, but to the contrary in a number of instances
throughout these records refers to the C&Ts as though they were
accompanied by provider agreements.
On the other hand, HCFA argued, and the regulations provide, that a
provider (agreement) may not be made effective earlier than the date of
certification. August 12 Response in 80-49, p. 16; 42 CFR 449.33(a)(
6)(1977), recodified as 42 CFR 442.12(b).
The Board in Maryland Department of Health and Mental Hygiene,
Decision No. 107, July 2, 1980, has considered the applicability of 42
CFR 442.12 to the requirement for certification of an ICF prior to the
existence of a valid provider agreement for FFP purposes, and the use of
the C&T form for certification. The actual holding in Maryland is that
the Agency was not arbitrary in interpreting 42 CFR 442.12(a) and (8)
(b) as meaning that a provider agreement can be effective only from the
date of a facility's certification as meeting certain requirements, in
view of the Medicaid program's aim to ensure quality care in sanitary
and safe conditions. The decision also states that it is the Agency's
interpretation that this certification "becomes effective on the date
the survey agency indicates its approval by completing a HCFA Form 1539
(C&T)." It was not necessary for the Board to reach this issue in
Maryland, which involved recertification of a facility. The State was
there contending that when the survey agency signed the C&T forms it
could backdate them to the date the prior provider agreements expired.
There was no issue raised whether the date of certification had to be
the date the C&T form was signed, or whether it could be some earlier
date, if all the requirements for certification were then met and
certification was manifested in some other manner.
The Board has also said in New Jersey Department of Human Services,
Decision No. 137, December 1, 1980, that there was no requirement that a
particular form be used by a state survey agency in certifying a
facility for Medicaid participation. Thus, the Board concluded in New
Jersey that it is possible to have a facility certified without having
the C&T form signed. In order to do so, a state survey agency "must
communicate certain information in order that a facility be certified
for Medicaid participation and that other requirements of the Medicaid
regulations are met" (p. 5). If the C&T is used, the Agency has not
required that there be any actual communication to the single state
agency, or to anyone else, to make certification effective. When the
form is signed, certification is complete, before anything else is done.
While the date of the signature on line 19 of the C&T form is
presumptively the best evidence of the date a certification
determination was in fact made, the Board will accept the fact that the
certification determination was made on an earlier date, if established
by other clear evidence. This evidence must show convincingly that all
the requirements for certification are met, and the survey agency not
only so determines, but commits its determination to writing in the form
of notification to either the single state agency or the facility.
Washington, p. 5. If the State here can document and detail that
certification decisions had been made for specific facilities and
committed to writing before the C&T forms were signed (line 18) and
dated (line 19), part or all the disallowance may be modified.
It should be pointed out that neither under Maryland nor under
Washington may the "date of certification" be backdated, as the State
seeks to do here. Washington permits the "date of certification" to
be
earlier than the date the C&T is signed, under certain prescribed
conditions. Both Maryland and Washington state that provider agreement
may be backdated to be effective from the date of certification, but (9)
not any earlier.Since FFP is dependent upon a valid provider agreement
being in effect, FFP is not available in any case prior to the "date of
certification," whatever that may turn out to be for the particular
facility. Therefore even if the State is here able to document an
earlier date of certification than the date of signing of the C&T, it
would appear that the disallowance would not in any event be modified
for any period prior to the certification date.
Order
It appears that no material facts are in dispute and that this case
is ripe for decision on the existing record. It does not appear likely
that an evidentiary hearing will be required or that another informal
conference will be useful.
Accordingly, the parties are directed to show cause in writing,
within 30 days from receipt of this Order, why the Board should not
proceed to decision on the record already made, identifying the
respects, if any, in which the foregoing summary is materially
incomplete or inaccurate, and the issues of material fact, if any, which
are in dispute, and the reasons, if any, why the appeal should not be
decided as indicated in this Order and the Appendix thereto.
The parties may brief these or any other issues they consider
relevant. If the parties make new factual assertions, they should
either provide documentation or obtain a stipulation from the other
party. Documentation, if lengthy, should be tabbed, indexed, and
summarized. /1/ The complete text of PRG-11 is attached to the October
16, 1980 Order to Show Cause at Tab F. /2/ Although the
actions and documentation for Medicaid certification and the issuance of
a provider agreement are in practice separate and distinct, they are
linked together and usually share a common date of execution.
Certification is the basis for a provider agreement. Thus, for the
purposes of this Order, the terms are used interchangeably. This is not
meant to preclude the parties from showing that in a particular
instance, contrary to this assumption, the execution of a provider
agreement did not accompany certification.
SEPTEMBER 22, 1983