GAB Decision 659
June 18, 1985
Ohio Department of Human Services;
Garrett, Donald F.; Settle, Norval D. (John) Ballard, Judith A.
Docket No. 84-233
The Ohio Department of Human Services (Ohio) appealed a decision of
the Health Care Financing Administration (HCFA) disallowing $1,154,706
claimed by Ohio under Title XIX (Medicaid) of the Social Security Act.
The claim related to certain services provided in Ohio's psychiatric
hospitals, and followed two other Board decisions which set the context
for this dispute. Background Originally, Ohio was one of several states
which appealed HCFA decisions disallowing claims for federal financial
participation in per diem rates for inpatient psychiatric services
provided by institutions for mental diseases to certain individuals
during their partial months of admission and discharge. The Board
upheld HCFA in a joint decision (Decision No. 436, May 31, 1983), with
the caveat that HCFA should reduce each disallowance to the extent that
a state could prove that a part of its rate represented allowable costs
of services separately covered in the state's Medicaid plan. Following
Decision No. 436, the states presented data to HCFA to show partial
allowability of their claims. HCFA then determined that services
"integral to inpatient psychiatric services" were not fundable, even
if
covered under the Medicaid plans. The states appealed, and the Board
reversed HCFA in another joint decision, holding that services
separately covered in a state plan were allowable under the partial
month eligibility provisions in HCFA regulations, even if psychiatric in
nature. Decision No. 535, May 9, 1984. This brings us to the current
dispute. After Board Decision No. 535, Ohio submitted a claim to HCFA
for $1,481,386, allegedly in accordance with the Board's two decisions.
HCFA allowed $326,680, but disallowed $1,154,706 based on six different
downward adjustments to Ohio's claim. Ohio again appealed to the Board
and, during the appeal, conceded four of HCFA's adjustments, leaving
only two in dispute. Appellant's Brief, p. 4. We discuss each below.(2)
Nursing Services Costs HCFA said that most costs claimed in Ohio's per
diem rate computations represented costs of nursing services, which were
not separately covered under the Ohio Medicaid plan. Disallowance
Letter, p. 4. Ohio did not disagree, but argued that these services
were a part of "inpatient hospital services" and "physicians
services,"
and as such should be considered separately covered under the plan.
Appellant's Brief, pp. 5-6. Ohio's argument on inpatient services must
be rejected because it is built on a false foundation. The Board
determined, in Decision No. 436, that the definitions in section 1905(a)
of the Act covering inpatient services in hospitals (as well as skilled
nursing facilities and intermediate care facilities) are modified by a
parenthetical phrase--" other than services in an institution for mental
diseases." This generally precludes coverage under a state's Medicaid
plan of "inpatient hospital services" in an institution for mental
diseases (IMD). /1/ Decision No. 436, pp. 5-11. We incorporate that
analysis here. Among other things, the Board said: . . . the Agency
(i.e., HCFA) really viewed the problem as the States claiming for a
service which is not covered in the state plans. Thus, the Agency
acknowledged that there was not an explicit prohibition on covering IMD
institutional services to individuals between 22 and 64. Instead, the
Agency pointed to the absence of any provision covering such services.
* * * . . . as a result of the services being defined as other than
in an IMD, there is no provision generally for coverage of such services
in an IMD. The States (including Ohio) did not deny that provisions in
their state plans for inpatient hospital services, SNF and ICF services
contained the limitation expressed in the parenthetical. Thus, the key
question becomes whether the services are covered elsewhere in the State
plan. Decision No. 436, pp. 8-9 (emphasis added)(3) In Decision No. 535,
the Board confirmed this holding and explained it further. We do not
repeat those determinations, which we incorporate here. Essentially, the
Board determined in the earlier decisions that the general category of
inpatient hospital services is not eligible for partial-month funding in
an institution for mental diseases; however, the general category may,
in a given situation, contain specific service elements which are
specified in the state plan and eligible for funding under the Act.
Ohio has done no more than claim nursing services as eligible because,
although not mentioned in the plan, they may come under the rubric of
inpatient hospital services. This argument constitutes a circularity
which misuses the Board's earlier holdings. Ohio argued strongly that
nursing services were part of inpatient hospital services, and for the
sake of argument, we might acknowledge that as true; but this merely
begs the question whether nursing services are separately described in
Ohio's plan. They are not /2/
(4) Ohio argued alternatively that nursing services should be fundable
because they are part of the separately-covered "physicians' services."
Appellant's Brief, p. 6. We observe at the outset that nurses simply
are not physicians, and so the argument is weak on its face.
Furthermore, HCFA regulations specify as follows: Sec. 440.50
Physicians' services.
'Physicians' services,' whether furnished in the office, the
recipient's home, a hospital, a skilled nursing facility, or elsewhere,
means services provided --
(a) Within the scope of practice of medicine or osteopathy as defined
by State law; and
(b) By or under the personal supervision of an individual licensed
under State law to practice medicine or osteopathy. (emphasis added)
Ohio argued essentially that we should infer physicians' control from
the fact that nurses in Ohio are limited by law in what they can do
without a physician's direction. Appellant's Reply Brief, pp. 2-3. The
argument is not persuasive. Ohio said practical nurses may perform
services only "at the direction of" of a licensed physician "or
at the
direction of a registered nurse." Id., p. 2. We are not inclined to
conclude lightly that "at the direction of" means the same thing as
"under the personal supervision of," and in any event the direction
of a
registered nurse is not the direction of a physician. Furthermore, Ohio
itself acknowledged that under its law, a registered nurse "can perform
acts requiring substantial judgment and specialized skill based on
knowledge and application of scientific principles" learned in nursing
school, although diagnosis and prescriptive services are prohibited.
Id. HCFA points out that certain nurses' job descriptions submitted with
Ohio's claim show that most of those nurses were supervised by a
"nursing or administrative superior" or a "higher level hospital
aid
supervisor" or "registered nurse." HCFA's Brief, p. 9. Ohio does
not
refute this, but instead argues only that the job descriptions were "not
submitted for the purpose of establishing what percentage of nurses are
supervised by physicians" so that reliance on them is "inappropriate."
Appellant's Reply Brief, p. 3. But since Ohio has not disputed the
substance of HCFA's observation about the examples of nurses, this
evidence does at least further support the proposition that, based on
the evidence in the record, it is unreasonable to find that nurses in
Ohio generally perform services only under the "personal supervision"
of
a physician. It may be true of some nurses, but the State has made a
claim for all nursing costs and this claim is simply not supported by
the evidence.(5) The State suggested in its appeal brief that it should
have the opportunity to make a further factual showing that specific
nursing services would fall under the heading of physicians' services or
"other separately covered services." Appellant's Brief, p. 8. The
State
also alleged that it had sought, and failed to receive, guidance on how
to revise its claim to show what nursing services were integral to
physicians' services or other services separately covered in its state
plan. But when HCFA pointed to the restrictions on physicians'
services, the State's reply was wholly inadequate, as we discussed
above. The State is the guardian of its state plan and can be presumed
to know how to demonstrate what services are within the scope of that
plan. Board Decision No. 535 (at page 11) clearly noted that states had
to show that all of the conditions of coverage were met for any service
claimed (and the state should have known this elemental principle in any
event). Although the state plan refers to the regulation requiring
"personal supervision," the State simply did not demonstrate that
this
condition was met. In view of the fact that the State has had
opportunity after opportunity to submit information in support of its
claim, we see no need to provide a further opportunity here. Use of 1982
Data The other HCFA determination that Ohio disputed was HCFA's
rejection of 1982 data in Ohio's revised claim. The disallowance letter
stated (p. 1): A. Incorrect Reporting Periods 1. Your submission
included data for State fiscal years 1980, 1981, and 1982. However, our
original disallowance included only patient days billed under 1980 and
1981 billing rates. Therefore, we disregarded the data submitted for
1982 . . . /3/
Ohio observed that this determination was "insignificant financially,"
but argued that the State nonetheless believed it was wrong because,
while the original disallowance covered a (6) period through only the
last quarter of 1981, the latter quarter "would be reimbursed from the
cost reports covering the period July 1, 1981 through June 30, 1982."
Appellant's Brief, p. 8. In response, HCFA stated: . . . the State has
not yet settled its 1982 cost reports and put final FY 1982 billing
rates in place. Pending the determination of such final rates the State
normally would bill at the final 1981 rates which were applied here by
the Region. Thus, instead of using interim data from 1982 cost reports,
the Regional Administrator simply followed the State's billing practices
and used the FY 1981 State billing rates upon which the State's original
$1.8 million claim was based. When FY 1982 costs are finally settled by
the State HCFA will have a basis for recomputing the State's claim for
July 1, 1981 through December 31, 1981. Therefore, the Region's
adjustment to disregard unsettled State data for 1982 was reasonable.
HCFA's Brief, p. 10. Ohio offered no reply to this position in its Reply
Brief. On its face, the HCFA position is reasonable, and since it is
unrebutted, we find no basis for disagreement. Conclusion Based on the
foregoing analysis, we uphold the disallowance. /1/ As discussed in
Decision No. 436, exceptions are made for individuals aged 65 or
over, or under age 21 (age 22 in some circumstances). The individuals
in question here did not qualify under these exceptions. /2/
Ohio also argued that HCFA had not earlier rejected these costs based on
the linkage to inpatient hospital cost categories, and that Ohio was
entitled to better notice. Appellant's Brief, p. 7; Reply Brief, p. 1.
The disallowance letter said: F. Service Not Covered in State Plan
(Nursing) The vast majority of costs claimed in your disaggregated per
diem rate computations represents the loaded costs of inpatient nursing
services. Our review of the Ohio State plan revealed that nursing
services are not separately covered under the plan. Therefore, we
disallowed the nursing services in our computations. p. 4. While it is
true that the disallowance letter did not mention inpatient hospital
costs, it did specify the lack of separate state plan coverage of
nursing services. The latter is the operative defect, and would have
been the defect in question no matter what "package" of services the
State claimed the nursing costs fit, so long as that package was
uncovered. Therefore, we find that Ohio was given sufficient
information by the disallowance letter to respond to HCFA's
disallowance. Furthermore, Ohio briefed its case in terms of inpatient
services, and had a further full reply opportunity once it received
HCFA's brief. /3/ Paragraph 2 of this element of the
disallowance letter explained HCFA's rejection lf the 1981 data for a
particular hospital. Ohio's appeal only dealt with the 1982 data
covered in Paragraph 1, and we therefore do not reach the issue of the
1981 data. The analysis would appear to be the same, however.
AUGUST 08, 1985