GAB Decision 229
November 30, 1981 Maryland Department of Health and Mental Hygiene;
Docket No. 80-29-MD-HC Ford, Cecilia; Settle, Norval Teitz, Alexander
On January 11, 1980, the Director, Bureau of Program Operations,
Health Care Financing Administration (HCFA, Agency), issued a
notification of disallowance to the Maryland Department of Health and
Mental Hygiene (State) denying $239,015 in Federal financial
participation (FFP). The disallowance concerned intermediate care
facility (ICF) services rendered at three nursing facilities under the
Medicaid program during the period March through May 1979. The
facilities involved and the amounts of the respective disallowances are
as follows:
National Lutheran Home $ 757 Western Maryland Center 230,497 Long
Green Nursing Home 7,761 $239,015
The notification of disallowance stated that the disallowed FFP
represented claims for ICF services provided during periods when these
facilities did not have valid provider agreements.
On February 8, 1980 the State submitted to the Board an application
for review, enclosing provider agreements executed with each of the
facilities and HCFA Certification and Transmittal Forms 1539 (C&T) for
the Long Green Nursing Home and the Western Maryland Center. In its
response to the State's appeal, the Agency reduced the disallowance for
the Long Green Nursing Home from $7,761 to $3,100, so that the total
disallowed amount is now $234,354.
There are no material issues of fact in dispute.We have, therefore,
determined to proceed to decision based on the written record and
beiefs, including the State's response to an Order to Show Cause issued
on August 13, 1981. The Agency was not required to respond to the Order
and did not do so.
Applicable Regulations
The Medicaid regulations in effect for the period in question are set
forth in 42 CFR Part 442 (1978), "Standards for Payment for Skilled
Nursing and Intermediate Care Facility Services."
(2) The regulations require generally that prior to the execution of
an ICF provider agreement and the making of payments, the agency
designated pursuant to 42 CFR 431.610 (the State survey agency) must
certify that the facility is in full compliance with standards
prescribed in the regulations. 42 CFR 442.12(a) and 442.101.
Generally, the term of a provider agreement may not exceed twelve months
and the agreement must be for the same duration as the certification
period set by the survey agency. 42 CFR 442.15. The effective date of
a provider agreement may not be earlier than the date of certification.
42 CFR 442.12(b).
Factual Background
A C&T for the National Lutheran Home, located in the District of
Columbia, was executed on March 2, 1979 for the period March 1, 1979
through February 29, 1980. A provider agreement for this same period
was executed by April 27, 1979. FFP is being disallowed for the one day
of March 1, 1979.
A C&T for the Long Green Nursing Home was executed on April 5, 1979
for the period January 1, 1979 through December 31, 1979. A provider
agreement for this same period was executed on september 10, 1979. FFP
is being disallowed for the period March 1, 1979 to April 5, 1979.
A C&T for the Western Maryland Center was executed on May 17, 1979
for the period September 1, 1978 through August 31, 1979. A provider
agreement for this same period was executed on October 17, 1978. The
State claims that this facility was surveyed for Medicare and Medicaid
participation on April 26-28, 1978. This survey covered both the
skilled nursing care and intermediate care portions of the facility.
The State claims that the skilled nursing care survey result, with an
accompanying C&T, was sent to the Agency's Regional Office on July 18,
1978. The intermediate care survey report, however, was accidentally
misplaced at the State survey agency. Consequently, as a survey report
provides the information for a C&T, the State survey agency did not
execute an ICF C&T. The State contends that the survey disclosed no
deficiencies for the intermediate care portion of the facility. The
State claims the error was not discovered until May 1979 when the
Regional Office requested the State survey agency to send the
intermediate care information. The survey agency then executed the C&
Ton May 17, 1979. FFP is being disallowed for the period March 1, 1979
to May 17, 1979.
Parties' Arguments
In its application for review the State argues that the provider
agreements it executed with the facilities are valid and comply with all
the requirements of the Medicaid regulations. The State contends the
(3) facilities were certified (Sec. 442.12 (a)), the provider agreements
were of the same duration as the certification periods (Sec.
442.15(b)), the provider agreements did not exceed twelve months (Sec.
442.15(a)), and the effective dates of the provider agreements were not
earlier than the dates of the certification of the facilities (Sec.
442.12(b)). The State argues that its survey agency can backdate
certifications and that the "date of certification" can only mean
the
effective date of a facility's certification, the beginning of the
certification period. The State further contends that HCFA approves
backdated certifications, and cites HCFA's policy on Medicare agreements
as support of this contention. * (State's April 3, 1980 letter, p. 3.)
With regard to the Western Maryland Center, the State claims that during
the period in question it had enacted a Dual Certification Program,
whereby a facility's beds would be approved for both Medicare-SNF and
Medicaid-ICF participation. The State therefore argues that as the
facility met the standards for Medicare certification and State
licensure, which the State claims are more stringent than Medicaid-ICF
requirements, it necessarily follows that a decision had in effect been
made that the facility met ICF certification requirements, even though a
C&T had not been executed. (State's April 3, 1980 letter, p. 1.)
The Agency's position is that the earliest date a facility can be
considered certified is the date of the execution of a C&T, the date the
State survey agency determined that the facility met all the program
requirements. The Agency further contends that while it allows a
backdated certification for a skilled nursing facility (SNF) in the
Medicare program, it has never authorized backdated certifications for
Medicaid-ICFs.
(4) In response to a Board inquiry as to whether the disallowance for
the Western Maryland Center could be forgiven because of the State's
apparently inadvertent administrative error, the Agency replies in the
negative. The Agency states that "when the State survey agency has
failed to perform its survey responsibilities pursuant to the federal
regulations..., a facility's compliance with the applicable federal and
state requirements has not been adequately documented for the purpose of
FFP." (Agency response, p. 6.) The Agency argues that the State survey
agency did not complete its licensure review of the facility until April
1979 and did not determine that the facility met federal requirements
until May 17, 1979. The Agency rejects the State's argument that the
satisfaction of Medicare-SNF standards means that a facility also meets
Medicaid-ICF standards. the Agency argues that the regulations require
that a facility meet additional, distinct ICF standards in order to
participate in the Medicaid program as an ICF.
Discussion
The central issue involving the disallowances for all three
facilities is when a facility becomes certified for participation in the
Medicaid program. The Agency has contended that it is when a C&T is
executed. The State has argued that a C&T and, therefore, a facility's
certification can be backdated to include an earlier period.
As was discussed in the Order to Show Cause, the Board has examined
this issue in several decisions, most fully in Washington Department of
Social and Health Services, Decision No. 176, May 26, 1981. The
analysis that follows is adopted from that decision.
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 (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 affective 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 decide whether
recertification could be effective prior to the execution of a C&T in
Maryland, which involved recertification of a facility. Maryland 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.
(5) The decision did not reach the issue of 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 find 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. It should be pointed out that neither under Maryland
nor under Washington may the "date of certification" of an ICF be
backdated. 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 an ICF provider agreement may be
backdated to be effective from the date of certification, but 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.
The Board's Order set forth the above analysis and directed the State
to show cause why the Board should not sustain the disallowance on the
grounds that there was no evidence that the facilities were properly
certified until the State survey agency executed the C&Ts. The Order
informed the State that if it could document that certification
decisions had been made and committed to writing before the C&Ts were
executed, part or all of the disallowance might be modified.
(6) In its response to the Order, the State submitted arguments
concerning only the Western Maryland Center. Consequently, as the State
had not provided us with any evidence that the National Lutheran Home
and the Long Green Nursing Home were certified by the State survey
agency prior to the execution of the C&Ts, we sustain the disallowances
for those two facilities.
With regard to the Western Maryland Center, the State repeated its
earlier assertion that the State survey agency's certification of the
SNF portion of the facility indicates that the facility also met ICF
certification requirements. In the Order the Board tentatively
concluded that the Agency was correct in its assertion that a facility's
meeting of Medicare-SNF standards does not mean that the facility also
meets Medicaid-ICF requirements. The Order noted that 42 CFR 442.254
sets out additional requirements which a Medicare-SNF must meet in order
to provide reimbursable ICF services.
In its response the State claimed that the SNF survey report form
(HCFA 1569) "covers in substance every item" on the ICF survey report
addendum (HCFA 3070D), which details the requirements set forth in 42
CFR 442.254. In support of this contention, the State supplied a
memorandum from a survey agency official "delineating the comparable
regulations" for ICF and SNF certification. This memorandum compared
the regulatory requirements in the 1569 and 3070D forms and concluded
that "a close examination of the Skilled Survey Report Form will
indicate quite clearly that it covers each and every component addressed
in the ICF memorandum."
Thus, according to the State, the State survey agency's certification
of the facility for Medicare-SNF participation meets the Washington
criteria because "as the SNF certification in fact indicated full
compliance with ICF certification requirements, ICF compliance approval
was communicated, by the State survey agency, to the single State
Medicaid Agency, when the SNF certification form was timely
transmitted." The State also repeated its assertion that under State
licensure regulations for comprehensive care facilities, all beds were
required to have dual certification for SNF and ICF services.
An analysis of the memorandum supplied by the State reveals that
while most of the ICF requirements are, in substance, duplicated in the
SNF certification requirements, others are not. For example, 42 CFR
442.254(a)(5) states that an ICF must meet the requirement for handrails
set forth in 42 CFR 442.324(b). The comparable SNF regulation cited in
the State's memorandum does not specifically refer to handrails.
Similarly, the ICF requirements for resident financial records, set
forth at 42 CFR 442.430, are not completely covered by the SNF
regulation cited in the State's memorandum. These differences (7) lead
us to question whether the State's Dual Certification Program
encompassed all the requirements for an ICF.
We have further difficulty finding that the facility's SNF
certification conveyed a determination that the facility qualified as an
ICF. There is no evidence before us that the facility was free of
deficiencies. Indeed, the State has supplied a document that indicates
that the Medicare-SNF survey report reflected deficiencies at the
facility and that the facility's SNF participation was based on the
submission of an acceptable plan of correction. (State's April 3, 1980
submission, Exhibit C.) While the 3070D survey report for the facility
does state, "NO HEALTH DEFICIENCIES," the ICF C&T that was ultimately
executed on May 17, 1979 nevertheless indicates that a plan of
correction was required and that an automatic cancellation clause was
included. This leads us to believe that, contrary to the State's
assertion that the facility was deficiency-free, deficiencies did exist
at the facility.We do not know the nature of these deficiencies or when
the plan of correction was accepted.
Moreover, the State failed to supply us with a copy of the facility's
SNF C&T to indicate when the survey agency determined that the facility
met SNF standards. Thus, there is nothing in the record, beyond
conclusory argument from the State, to indicate that the State survey
agency ever communicated a decision concerning the SNF standards to the
single State agency.
Furthermore, the 3070D survey report, while indicating that a survey
was conducted at the facility on June 20-21, 1978, was not actually
approved by a survey agency official until May 4, 1979.
The cumulative effect of these factors is to convince us that in this
case the certification of the facility as a Medicare-SNF was not
sufficient to convey to the single State agency a determination as to
the facility's certification as a Medicaid-ICF. The Medicaid
regulations are explicit in requiring both that a State survey agency
make a determination that a facility meets all the standards for an ICF
before certifying the facility for Medicaid participation and that the
State may not execute a provider agreement for ICF services unless a
facility has been certified to provide those services. The State has
not provided us with any clear and convincing evidence that such a
determination was made before the execution of the C&T on May 17, 1979.
Accordingly, we sustain the disallowance for the Western Maryland
Center.
Conclusion
For the reasons stated above, we sustain the disallowance in the
following amounts: $757 for the National Lutheran Home; $3,100 for (8)
the Long Green Nursing Home; and $230,497 for the Western Maryland
Center. (Total -- $234,354.) * In order to have Medicaid conform with
Medicare policy concerning the effective date of a provider agreement,
HCFA issued new regulations on April 4, 1980 (45 Fed. Reg. 22933).
Under the new rule, 42 CFR 442.13, the effective date a State Medicaid
agency enters into a provider agreement may be earlier than the date of
certification. If all federal requirements are met on the date of the
onsite survey, the agreement must be effective on the date the onsite
survey is completed, for a new certification. 442.13(b). If all
federal requirements are not met on the date of the survey, the
agreement must be effective on the date the provider meets all
requirements, or the date the provider submits a plan of correction
acceptable to the State survey agency or an approvable waiver request,
whichever date comes earlier. 442.12(c). There is nothing in the new
regulation to indicate that it was intended to be retroactive.
SEPTEMBER 22, 1983