GAB Decison 255
February 10, 1982 Pennsylvania Department of Public Welfare; Docket No.
80-121-PA-HC Ford, Cecilia; Settle, Norval Teitz, Alexander
The Pennsylvania Department of Public Welfare (State) appealed a
disallowance of $5,408,021 by the Acting Administrator of the Health
Care Financing Administration (Agency). The Acting Administrator's
decision upheld in part nine determinations made by the Regional
Commissioner.
This appeal involves federal financial participation (FFP) in the
costs of services provided by at least 70 skilled nursing facilities
(SNFs) and intermediate care facilities (ICFs) claimed under the
Medicaid program (Title XIX of the Social Security Act). One issue
involves the date a facility is considered to be certified where the
effective date of its provider agreement pre-dates the date the
Certification and Transmittal form is signed by the state survey agency.
The State asserted that certification of a facility could be effective
on the date that the facility submitted a plan of correction to the
State survey agency. The Agency asserted that the date of certification
was the date the state survey agency official signed and dated lines 18
and 19 of the Certification and Transmittal "or otherwise documented
that the facility was certified" (Notification of Disallowance, July 22,
1980, p. 4). As will be discussed in part 3 below, we have rejected the
State's contentions. The second issue involves the availability of FFP
during the pendency of an appeal by a facility whose Medicaid
participation has been terminated. As will be discussed in part 4
below, we have overturned in part the disallowance related to this
facility.
This decision is based on the Agency's records of reconsideration,
/1/ the State's application for review, the State's responses to
questions posed by the Board, the Agency's response, an Order to Show
Cause issued by the Board, the State's response to the Order, and
supplemental briefing by both parties.
(2) Background
In order for a state to obtain FFP for payments for Medicaid patients
in an ICF or SNF, there must be a valid provider agreement. This is an
agreement between the single state agency (designated by the state to
administer or supervise the administration of the state Medicaid plan)
and the facility. Before a provider agreement can be valid, the state
survey agency (ordinarily the state authority which licenses health
facilities) must certify the facility. A facility may be certified with
defects provided 1) the survey agency finds that the deficiencies do not
jeopardize the health and safety of the patients, and 2) the state
survey agency accepts a plan of correction or a waiver has been granted.
The plan of correction not only lists the deficiencies found but also
sets up a plan for correcting them within a definite time schedule. If
the state survey agency finds the plan of correction to be acceptable,
it then certifies the facility on a Certification and Transmittal form
(Form 1539, C&T). The last item to be completed by the state survey
agency is Line 18, state survey agency approval, with space for a
signature, and the title of the person signing. Line 19 has space for
the date of the state survey agency approval to the right of the
signature on Line 18. There is a separate line (11) for the period of
certification. The single state agency enters into the provider
agreement with the facility based upon the certification. The provider
agreement may have its effective date backdated, but no earlier than the
date of certification. The Agency accepts the date on line 19 of the
C&T as the date of certification, and the term of a provider agreement
is no more than 12 months, but the agreement can be continued in effect
for a longer period under certain circumstances. See, generally, 45 CFR
Part 249 (1974).
1. Facilities for Which There Were No Provider Agreements
In response to the Board's Order to Show Cause, the State conceded
that there were a number of facilities for which there were no provider
agreements in effect during the disallowance periods and agreed that the
disallowances for these facilities were proper. The facilities were
listed in Appendix A of the State's response to the order, and the
disallowances for these facilities total $2,243,660.
2. Facilities for Which There Were Valid Provider Agreements during
Part of the Disallowance Period
The State claimed that for five facilities (listed in Appendix B of
its response to the order) the Agency's disallowance indicated that
there were valid provider agreements in effect during part of the
disallowance period. The Agency reexamined its disallowances and stated
(3) that the disallowance amounts had already been adjusted to take into
account this fact. The State, in its January 28, 1982 submission,
stated that it accepted the Agency's findings as to these facilities,
for a total of $65,593.
3. Facilities for Which Effective Dates of Provider Agreements
Pre-Dated C&Ts Signed by Survey Agency
There are two groups of facilities discussed in this section: the
first is made up of facilities which were surveyed, which were found to
have deficiencies, and for which plans of correction were submitted to
the survey agency; the second is made up of four facilities which were
surveyed and were found to comply fully with Medicaid standards at the
time of the surveys. The State did not question the applicability of
the regulatory provision (45 CFR 249.33(a)(6)) under which the effective
date of the provider agreement may not be earlier than the date of
certification. It did question the policy of the Agency to limit
certification to the date the Form 1539 was signed by the state survey
agency.
The Board held in New Jersey Depatment of Human Services, Decision
No. 137, December 1, 1980, that the regulations do not require a state
survey agency to use a Form 1539 to certify and that other forms or
documents might be used. However, any certification document used by a
state survey agency must convey certain information in order for a
facility to be certified for Medicaid particiption. The Board found in
New Jersey that a handwritten note stating that the facility "now"
met
the standards for Medicaid participation was not "a reasonable and
adequate means of compliance with the regulations", and this was not an
"effective certification" (p. 5).
In Washington Department of Social and Health Services, Decision No.
176, May 26, 1981, the Board stated that 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.
The State argued that after a survey was done the surveyor would send
a plan of correction to the facility to be completed and returned and
that:
If the Plan of Correction returned by the facility was acceptable,
the surveyor then would initiate the (4) process to transmit the
certification package to the single state agency. If the Plan of
Correction returned by the facility was unacceptable, the provider was
so advised and the surveyor would not transmit a certification package
to the single state agency.
Supplemental Response to the State's Response to the Board's Order to
Show Cause, p. 4.
Yet in the same document, the State said that the plan of correction
itself represented written notification to the facility that it was
certified provided that the plan was adopted. "Once the provider
accepted the Plan of Correction, further communication between the
surveyor and the facility could serve no useful purpose." Id., p. 5.
The State seemed to be arguing that the date that the facility signed
the plan of correction should be considered the date of certification.
/2/
The State submitted evidence apparently designed to demonstrate that
a facility was certifiable when it signed a plan of correction. The
evidence provided by the State does not support this contention, but
bolsters the State's earlier statements that determinations as to
certifiability must be made by the survey agency after facilities return
plans of correction to it. Both affidavits attesting to the State
survey process (provided by the State in its supplemental response to
the order) assert:
. . . the surveyor would forward a Plan of Correction, where
necessary, to the facility and rquest that the Plan be completed and
returned to the surveyor promptly. If the Plan of Correction returned
by the facility was acceptable, the surveyor would initiate the process
to transmit a certification package to the single state agency.
(emphasis added)
The documentation pertaining to many of the facilities also indicates
that the survey agency scrutinized the returned plans of correction
before a decision on certification was made. For example, the letter
(5) to the Philadelphia General Hospital dated December 27, 1974 states
in part:
Enclosed please find form SSA-2567A listing the existing
deficiencies. Please enter your proposed plan of correction on form
SSA-2567A and an estimated date of completion beside each deficiency and
return to this office. . . . The continued participation in the
Medicaid program will be contingent on an approved plan of correction.
See also, letter to Palmyra Nursing Home dated February 25, 1975;
letter to Philadelphia General Hospital dated January 7, 1974; letter
to Regina Community Nursing Center dated August 145, 1975; letter to
Tel Hai Rest Home dated December 17, 1975; letter to Uptown Home for
the Aged (no visible date); letter to Mansion Nursing and Convalescent
Home dated April 24, 1974.
Therefore, under the Washington rationale, for those facilities for
which plans of correction had to be submitted, we cannot accept the
dates the acilities signed the plans of correction as the dates of
certification. After those dates, there still were at least two
necessary steps for the survey agency to take; it had to determine
whether the plans were acceptable and then notify the single state
agency or the facilities. /3/ There is no basis in the record for
overturning the disallowances pertaining to the facilities which
submitted plans of correction because the State submitted no evidence
that the survey agency actually made and communicated determinations
that facilities were certifiable prior to the dates on line 19 of the
C&Ts.
The State has provided documentation pertaining to four facilities
(Maria Joseph Manor, Leader Nursing Center-East, Little Sisters of the
Poor, Inc., and Williams Nursing Home) which indicate that the
surveyors, using SSA-2567A forms, had notified the facilities that they
complied with "all standards of participation." The Agency examined
the
documentation for these facilities and will adjust the disallowances to
provide FFP for claims for services provided during the periods covered
by the provider agreements after the dates of notification of
compliance. Exhibits II and III, Agency Response to State Response and
State Supplemental Response to Order to Show Cause.
(6) 4. Town Court Nursing Center
The disallowance for this facility covers the quarters that ended
December 31, 1974, March 31, 1975, September 30, 1975, and December 31,
1975. The State argued that since this facility timely appealed the
expiration of its provider agreement, under the Board's reasoning in
Ohio Department of Public Welfare, Decision No. 173, April 30, 1981 and
more particularly, Pennsylvania Department of Public Welfare, Decision
No. 217, September 30, 1981, FFP is available during the pendency of the
appeal.
The facility was notified on October 15, 1974 that there would be no
further Medicaid payments effective November 30, 1974. /4/ The documents
provided by the State as part of its December 28, 1981 submission
indicate that the facility appealed the decision on October 23, 1974.
Since neither side has cited to a specific Pennsylvania law under which
the appeal was taken, we assume that it was 71 P.S. Sec. 1710.31 which
was the relevant State law in Decision No. 217. /5/ The State admitted
in its January 28, 1982 submission that it could not locate any
documents relating to the eventual outcome of the appeal. The State did
provide an internal State memorandum dated September 9, 1975 from a
"Consultant; Medicaid Certification Programs (SNF); Nursing Homes,
Licensing and Certification" discussing problems with a June 16, 1975
survey of Town Court; the memorandum states at the end that "the
Facility is in appeal process in the Title XIX SNF program as a result
of termination . . ." The Agency's attorney stated in a telephone
conversation with a Board staff member on January 29, 1982 that she had
no objection per se to the introduction of the document as proof that
the appeal was still pending as of September 9, 1975. We will accept
the document as such evidence since it is contemporaneous, it is not
self-serving, and it apparently pertains to the appeal process in
question here.
MSA-PRG-11 (PRG-11), a December 1971 Program Regulation Guide issued
by the predecessor to HCFA, sets forth the basic rule that FFP is not
available if a facility does not have a currently effective provider (7)
agreement, but notes two exceptions:
1) (If) State law provides for continued validity of the provider
agreement pending appeal; or
2) (If) the facility is upheld on appeal and State law provides for
retroactive reinstatement of the agreement.
Here, we focus only on the first exception set forth in PRG-11 since
the State has neither provided evidence nor argued that the facility was
upheld on appeal. In Decision No. 217 we concluded that Pennsylvania
law met the requirement of a State law for the purposes of the first
exception set forth in PRG-11.
The Board held in Ohio that "the period of reimbursable services may
not exceed 12 months . . . except that if within the aforesaid 12 months
a state surveys the facility and makes a new determination on
certification, FFP may not be available beyond the date of that
determination . . ." (p. 14). We have no evidence in the record
indicating that there was a survey and determination made within the
year following the termination of Town Court from the Medicaid program.
Although it is possible that the appeal was pending after September 9,
1975, the State has not presented any evidence of continuation of the
appeal past that date. The disallowance for Town Court Nursing Center
therefore is overturned only for claims made for services rendered from
November 30, 1974 through September 9, 1975.
Conclusion
In summary, the disallowance is conceded, upheld, and reversed as
follows:
1. The validity of the disallowance was conceded for the facilities
listed in Appendix A to the State's response to the order (total:
$2,243,660).
2. The validity of the disallowance as adjusted by the Agency was
conceded for the facilities listed in Appendix B to the State's response
to the order (total: $65,593).
3. The Agency will reduce the disallowance for four facilities to
provide FFP for the periods covered by the provider agreements after the
dates of notification of compliance. For the remainder of facilities
for which plans of correction were required, the disallowance is upheld.
(8) 4. The disallowance is overturned for claims made for services
rendered by Town Court Nursing Center only for the period from November
30, 1974 through September 9, 1975. /1/
ME-PA7501/7502/7503/7504/7505/7601/7603/7606/7609. /2/ This
indeed is close to the interpretation of the Agency as expressed in 42
CFR 442.13, effective July 3, 1980, (the date on which the facility
submits a plan of correction acceptable to the survey agency) but the
Board has declined to rule that the regulation has retroactive effect.
Maryland Department of Health and Mental Hygiene, Decision No. 107, July
2, 1980, p. 4; Decision No. 176, supra, p. 8. /3/ Although the State
refers to "certification packages" being transmitted to the
single State agency, the State has provided no evidence of when the
transmittals took place. /1/ Since the State has not contended
otherwise, we assume that the disallowance for the quarter ended
December 31, 1974 does not encompass payments made for services provided
before November 30, 1974. /5/ For further discussion of the
state appeal process, see pp. 3-4 of Decision No. 217.
OCTOBER 22, 1983