GAB Decision 598
December 4, 1984
Washington State Department of Social and Health Services;
Ballard, Judith; Teitz, Alexander Settle, Norval
Docket No. 84-74
The Washington State Department of Social and Health Services
(Washington, State) appealed a disallowance of $511,909 federal
financial participation (FFP) in the cost of services to Medicaid
recipients provided by 15 intermediate care facilities for the mentally
retarded (ICFs/MR) under Title XIX of the Social Security Act. The
Health Care Financing Administration (HCFA, Agency) based its
disallowance on its finding that the provider agreements (between the
State and the various facilities), which are prerequisite to the payment
of FFP, were invalid during periods from the dates of the original
certification surveys by the State in May and July 1982 until the dates
the State resurveyed the facilities in December 1982. /1/
(2) Background
Since 1971, the Secretary has been authorized to pay FFP in the cost
of services to Medicaid recipients in ICFs/MR. The Social Security Act
(Act) defines an ICF/MR as an institution which provides health or
rehabilitative services for mentally retarded individuals and which meet
such standards as may be prescribed by the Secretary. Moreover, the Act
makes it a condition for the payment of FFP that the mentally retarded
individual be receiving "active treatment." Section 1905(d).
Medicaid is a federally-funded program administered by the states
pursuant to standards set forth by the Secretary. In order to qualify
for FFP, the states must apply the specified standards in certifying
facilities as ICFs/MR and in executing provider agreements with ICFs/
MR.
The Medicaid regulations authorize FFP for services to Medicaid
recipients rendered by a facility which has been duly certified, as
evidenced by a provider agreement with the State. The State certified
the 15 ICFs/MR involved in this case even though its surveyors found
that those facilities were deficient in meeting some of the Medicaid
standards.
Under the regulations, the State is authorized to certify a facility
with deficiencies, provided:
1) the State finds acceptable the facility's written plan for
correcting the deficiencies;
2) the deficiencies do not jeopardize the health and safety of the
patients;
3) the defidiencies do not limit the facility's capacity to give
adequate care; and
4) the State maintains a written justification of its findings.
42 CFR 442.105.
Here the State certified on the basis of the facilities' plans of
correction, which the State found acceptable. The State did not make
findings contemporaneous with certification that the deficiencies did
not jeopardize the health and safety of the patients or limit the
facilities' capacity to give adequate care, but the State employee
responsible for the surveys testified at the hearing that in her
judgment the health and safety of the patients were not in jeopardy.
HCFA is authorized to "look behind" the provider agreement and
question whether the State applied the required standards and followed
the required procedures for certification. (3) 42 CFR 442.30. When HCFA
reviewed the State's certification of the 15 ICFs/MR, HCFA questioned
whether the standard for fire protection had been met, although the
State surveyor had marked it "met" on the survey form.
The State had applied the fire protection standard for "residential
occupancy" instead of the standard for "institutional occupancy"
required by 42 CFR 442.507. That regulation requires a facility to meet
the more stringent provisions of the Life Safety Code of the National
Fire Protection Association that apply to institutional occupancies
unless it qualifies for an exception under 42 CFR 442.508 or a waiver
(not involved here) under 42 CFR 442.509. Pursuant to 42 CFR 442.508,
the State is authorized to apply the exceptional "residential occupancy"
standard to ICFs/MR with 15 beds or less if a physician or psychologist
who meets the definition of qualified mental retardation professional
(QMRP) under 42 CFR 442.401 certifies that each resident is:
(a) Ambulatory;
(b) Receiving active treatment; and
(c) Capable of following directions and taking appropriate action for
self-preservation under emergency conditions.
The following facts were not disputed:
1. Each of the 15 ICFs/MR had 15 beds or less.
2. The State surveyor who marked the fire protection standard "met"
is a QMRP but not a physician or psychologist.
3. The certification required by 42 CFR 442.508 was not executed for
any of the facilities during the period of the disallowance.
Analysis
HCFA argued that the provider agreements were invalid because the
State had qualified the facilities under the "residential" fire
protection standard applicable to smaller ICFs/MR without requiring the
necessary certification by a physician or psychologist for each
resident. The State admitted that there was no certification but relied
on 42 CFR 442.105, which authorizes a state to qualify a facility with
deficiencies where there is a plan of correction.
The State also relied on the testimony of its surveyor, a nurse who
is a qualified mental retardation professional but not a physician or
psychologist, that the fire protection (4) standard had been marked
"met" because the surveyors found that each resident was ambulatory;
that each was receiving an "acceptable" level of active treatment;
and
that each had participated in fire evacuation drills which demonstrated
the resident's capacity for following directions for self-preservation.
She added a statement to that effect to each survey report after HCFA
questioned the previously undocumented conclusion that the standard was
met. Tr. 30-32.
As mentioned above, the Medicaid regulations authorize FFP only if a
facility has been duly certified, as evidenced by a provider agreement.
HCFA does not have to accept a provider agreement or the certification
on which it is based if it finds in the exercise of its "look behind"
authority under 42 CFR 442.30 that the State did not proceed according
to federal regulations.
The plan of correction approved by the State for each facility did
not address the fire protection standard because the State had marked
that requirement "met" and thus did not acknowledge that the facility
was deficient in meeting the standard. HCFA asked the State in
September 1982 to document that the elements specified in 42 CFR 442.508
were present to justify use of the residential fire protection standard.
The State did not document that the standard was met and did not secure
the necessary physician/psychologist certification until the resurveys
in December 1982.
Even if the facilities had included in their plans of correction a
timetable for obtaining the necessary physician/psychologist
certification, HCFA still might have been justified in issuing a
disallowance. The "institutional" fire protection standard is more
stringent than the "residential" standard and the State did not contend
that the facilities could have met the "institutional" standard, nor
is
it likely. It is questionable whether the State could have validly
qualified the facilities until the physician/psychologist certification
was actually obtained. Medicaid regulations specify that during the
period allowed for correction of deficiencies, the ICF/MR must meet
applicable State fire safety codes and regulations. 42 CFR 442.113(e);
see Nebraska Department of Public Welfare, Decision No. 111, July 16,
1980. /2/
(5) The State contended that its certification based on a plan of
correction implied a finding and constituted the necessary written
justification that a facility's deficiencies did not jeopardize the
health and safety of the patients, nor interfere with the facility's
capacity to give adequate care. Tr. 83. /3/ The State's surveyor also
testified that in her judgment, based on the surveys, the health and
safety of the patients were not in jeopardy. Tr. 32-33.
We agree with HCFA that the lack of a necessary prerequisite for the
exception to the fire safety standard for institutional occupancy -- i.
e., the physician/psychologist certification -- is inconsistent with the
State's conclusion that the health and safety of the patients was not in
jeopardy. That inconsistency is not resolved by after-the-fact
statements by the surveyor responsible for the incorrect finding that
the standard was met. See Mississippi Medicaid Commission, Decision No.
504, January 31, 1984, p. 8. The requirement for certification by a
physician or psychologist is specific and unambiguous. The State is not
entitled to apply fire safety requirements incorrectly without accepting
the consequences. If the State did not want to obtain the certification
of a physician or psychologist, it should have applied the standard for
institutional occupancy.
The testimony at the hearing also supported HCFA's view that there
was some question whether the statutory requirement of "active
treatment" was met. A mental retardation rehabilitation consultant to
HCFA testified that the information on the survey report indicated that
the required active treatment was not being provided. Tr. 129. The
State's surveyor concluded that the treatment provided, while minimal,
was acceptable, although she noted that it could not be called "good."
Tr. 29-30. The said that the shortcomings were dealt with in a plan of
correction. Tr. 31.
Active treatment is defined at length in the Medicaid regulations and
includes many elements. Tr. 27; 42 CFR 435.1009; 42 CFR Part 442
Subpart G. The record here is not sufficient for us to find whether or
not the State considered the multiple and complex system of regulations
dealing with "active treatment" in a meaningful manner when it
supposedly determined that the patients were receiving active treatment
for purposes of the fire safety exception and we do not address that
question. See n. 1, supra. We cite this (6) testimony because it
further strengthenes our conclusion that when the State found that the
deficiencies which existed in these facilities during the period at
issue did not jeopardize the health and safety of the patients nor limit
the facilities' capacity to render adequate care, the State's
determination was so superficial that it could not be meaningful.
Contrast, Connecticut Department of Income Maintenance, Decision No.
562, August 17, 1984 (showing the voluminous record related to a
determination of whether there was active treatment for 27 persons in a
single ICF/MR; the decision itself is 182 pages long).
It appears that there were two additional factors which motivated the
State to press this case. One was that the State, and its personnel
present at the hearing, were proud of their record of managing the
program of aid for the mentally retarded, and the other was that the
State was irritated at what it considered to be vague and obtuse
development of the grounds for the Agency's position during this appeal.
As to the former, we note that the State surveyor was not only a QMRP,
but someone whom HCFA called upon to train those who performed the kind
of fire safety certifications at issue in this case. Moreover, we find
nothing in the record, nor in the testimony of HCFA personnel,
inconsistent with the general points the State of Washington made about
its program management; but, whatever the situation, this does not
change our conclusion about the specific failure which is the subject of
this case. Concerning the latter, we note that the record has been
developed during the course of this appeal to the point that the State
clearly has had both notice of HCFA's precise problems with regard to
these 15 facilities and full opportunity to address the issues.
Conclusion
For the reasons set forth above, we uphold the disallowance. /1/ The
disallowance letter also stated that "as a separate matter",
under sections 1902(a)(33) and 1910(c) of the Social Security Act, the
State's approval of these 15 facilities for participation in Medicaid
had been cancelled because HCFA determined that the requirements of
section 1905(c) and (d) had not been met by these facilities. In that
cancellation HCFA acted under its so-called "substantive look-behind"
authority whereby it proceeds directly against the facilities themselves
to terminate their participation in the Medicaid program. This
termination authority is available notwithstanding certification by the
State survey agency and the provider agreement entered into between the
single State agency and a facility. Proceeding against the facilities
themselves is distinguished from the basis of the disallowance here,
where HCFA moved to deny FFP to the State for the particular facilities
during the time period in question because under 42 CFR 442.30 the State
did not follow the proper procedures in certification of the facilities.
This is sometimes referred to as the "procedural look-behind" authority.
/2/ The Washington State fire safety codes and regulations are
not in the record, but the State's witness testified that the standards
for boarding homes (i.e., the "residential" standards) were used here
and that they required that residents be ambulatory and capable of
functioning for their own self-preservation. Tr. 23, 24. /3/ A
HCFA Survey and Certification Program Specialist testified that the
certification must be supported by contemporaneous documentation that
there is no jeopardy to the patient's health and safety or to the
capacity to give adequate care. Tr. 114.
MARCH 19, 1985