GAB Decision 704
January 29, 1985
Kentucky Divisoin of Medical Assistance;
Ford, Cecilia S.; Teitz, Alexander G. Settle, Norval D.
Docket No. 85-17
The Kentucky Division of Medical Assistance (State) appealed a
determination of the Health Care Financing Agency (Agency) disallowing
$857,120.65 claimed for services provided in intermediate care
facilities for the mentally retarded (ICF/MR) and in institutions for
mental diseases (IMD) under Title XIX of the Social Security Act (Act)
for the quarters ending March 31, June 30, and September 30, 1984. The
disallowance was taken pursuant to section 1903 (g) (1) (D) of the Act,
which provides for the reduction of a State's federal medical assistance
percentage of amounts claimed for a calendar quarter unless the state
shows that during the quarter it had "an effective program of medical
review of the care of patients . . . whereby the professional management
of each case is reviewed and evaluated at least annually by independent
professional review teams." /1/
Based on a validation survey the Agency alleged that the State
had
failed to include in its annual reviews one patient in one IMD,
two
patients in a second IMD, and nineteen patients in a third IMD, as
well
as seven patients in one ICF/MR and one patient in another
ICF/MR.
During the course of the proceedings before this Board, the
Agency
revised its findings and reduced the number of patients which it
alleged
were not reviewed as required to nine, including one patient in one
IMD,
two in another IMD, five in one ICF/MR, and one in another ICF/MR.
As
to two of the remaining patients, the Agency also reduced the number
of
quarters for which the State was cited. Thus the total
disallowance
remaining at issue was reduced to $808,920.91.(2)
As discussed below, we conclude that these nine patients were not
required
to be included in the medical reviews from which they were
omitted and we
reverse the disallowance.
Applicable Law
The requirement in Section 1903 (g) (1) (D) for an effective program
of
annual medical reviews is amplified in section 1902 (a) (26) and
(31),
as follows:
Sec. 1902 (a) A State plan for medical assistance must --
(26) . . . provide . . . for periodic inspections to be made in
all .
. . mental institutions . . . within the State by one or more
medical
review teams (composed of physicians and other appropriate health
and
social service personnel . . .) of (i) the care being provided . .
.
(ii) with respect to each of the patients receiving such care,
the
adequacy of the services available. . . .
(31) provide . . . for periodic on-site inspections to be made
in all
. . . intermediate care facilities . . . within the State by one or
more
independent professional review teams (composed of physicians
or
registered nurses and other appropriate health and social
service
personnel) of (i) the care being provided in such intermediate
care
facilities to persons receiving assistance under the State plan . .
.
(ii) with respect to each of the patients receiving such care,
the
adequacy of the services available. . . . /2///
Implementing regulations are found at 42 CFR part 456. In
particular,
section 456.652 provides that --
(a) . . . (in) order to avoid a reduction in FFP, the Medicaid
agency
must make a satisfactory showing to the administrator, in each
quarter,
that it has met the following requirements for each recipient;
(4) A regular program of reviews, including medical evaluations,
and
annual on-site reviews of the care of each recipient, as specified in
.
. . Subpart I of this part.
(b) Annual on-site review requirements. (1) An agency
meets the
quarterly on-site review requirements of paragraph (a) (4) of
this
section for a quarter if it completes on-site reviews of each
recipient
in every facility in the State, and in every State-owned
facility
regardless of location, by the end of the quarter in which a review
is
required under paragraph (b) (2) of this section.
(2) An on-site review is required in a facility by the end of
a
quarter if the facility entered the Medicaid program during the
same
calendar quarter 1 year earlier or has not been reviewed since the
same
calendar quarter 1 year earlier. If there is no Medicaid recipient
in
the facility on the day a review is scheduled, the review is
not
required until the next quarter in which there is a Medicaid
recipient
in the facility.
(3) If a facility is not reviewed in the quarter in which it
is
required to be reviewed under paragraph (b) (2) of this section, it
will
continue to require a review in each subsequent quarter until the
review
is performed.
. . . .
Also relevant in this case is the regulation found at 42 CFR
Sec.
435.725:
Sec. 435.725 Post-eligibility treatment of income and resources
of
institutionalized individuals: Application of patient income to
the
cost of care.
(a) The agency must reduce its payment to an institution,
for
services provided to an individual specified . . . by the amount
that
remains after deducting(certain) amounts . . . from the
individual's
income.
. . . .
Other regulations are referred to as appropriate in the course of
this
decision.
Statement of Facts
The four facilities, two IMDS and two ICFs/MR, which remain part of
the
revised disallowance calculation, were timely reviewed with
the
exception of the nine patients at issue. All nine patients
were
institutionalized individuals who, prior to the medical reviews
which
the Agency claims should (4) have included them, had been
determined
eligible for Medicaid benefits generally. They had not,
however, been
determined at the time of the reviews to be financially
eligible to
receive Medicaid institutional benefits in particular. Each
of these
nine patients was later determined eligible for institutional
benefits,
and Medicaid reimbursement was paid retroactive to the time of
entry
into the institution or to the effective date of the determination
of
Medicaid eligibility, whichever had occurred last.
An individual in this State who is determined eligible for
Medicaid
benefits receives a Medicaid identification card, called a MAID
card,
which may be presented to a provider of noninstitutional
medical
services as proof of Medicaid eligibility. The
eligibility
determination necessary to receipt of a MAID card is not
sufficient,
however, to entitle the cardholder to Medicaid institutional
benefits.
A MAID cardholder who enters an institution, or an individual who
is
determined Medicaid-eligible after entering an institution, is
subject
then to a second determination before he can receive Medicaid
benefits
while institutionalized. This second determination, which is
reported
on state form MAP 552, "Notice of Availability of Income for Long
Term
Care," ascertains whether the individual has income available to pay
for
part or all of his institutional care. Depending upon the level of
his
available income, the individual may be eligible for full or
partial
Medicaid institutional benefits, or may not be eligible for any
Medicaid
benefits at all while he is institutionalized.
The State has claimed that the completion of the MAP 552 available
income
determination takes approximately 30-45 days. (State's response
to
questions, dated September 20, 1985, p. 3). The Agency has stated
that
the average time for completion is five months. (Agency's response
to
questions, dated September 20, p. 5).
The State has acknowledged that since 1980 it has not included in
its
annual on-site medical reviews patients who at the time of a review
were
determined generally Medicaid-eligible but whose available
income
determinations were not completed. (State's brief dated March
20, 1985,
p. 1-2)
The Agency has conducted several validation surveys of the State
since
then but has not alleged any violations arising from the
State's
non-review of such patients. The original Agency letter in
November
1984 to the State concerning the validation survey which gave rise
to
the disallowance in this case did not list any violations arising
from
non-review of such patients. (State's appeal file, Exhibit SS)
That
letter did list two non-reviewed patients, both since deleted by
the
Agency from the list of patients at issue in (5) this case, but
the
factual circumstances of the non-review of those two patients
had
nothing to do with determination of their eligibility for
Medicaid
institutional benefits.
In December 1984 the Agency issued a formal disallowance letter based
on
the same validation survey, citing the non-review of 28 patients
in
addition to the two noted above, all 28 of whom had been
knowingly
omitted by the State because their available income determinations
were
still pending at the time of the medical reviews in their
institutions.
(The Agency later reduced the number of patients cited to
nine.) The
Agency has since explained that a change in its validation
methodology
brought those patients to its attention, whereas it previously
had been
unable to detect the non-review of such patients. (Agency's
Exhibit A).
More specifically, the Agency stated that until 1984 it had
assumed that
the signature date on the form MAP 552 indicated the date of
the
Medicaid eligibility determination, rather than of the available
income
determination. In late 1984 the Agency began to include a review
of
State Medicaid payment lists in its validation procedures and noted
that
Medicaid benefits had been paid for some patients for time periods
prior
to the date on the MAP 552 forms. (If the MAP 552 available
income
determination shows that a patient is eligible for
Medicaid
institutional benefits, the benefits are paid retroactively.) The
Agency
then became aware that the MAP 552 date was the date of the
available
income determination rather than of the general Medicaid
eligibility
determination.
Parties' Arguments
On appeal to this Board, the State argued that the Act and
the
implementing regulations, as well as other directives from the
Agency,
do not require inclusion in medical reviews of patients whose
available
income determinations have not been completed and thus whose
financial
eligibility for Medicaid institutional benefits has not yet
been
certified.
The State contended that the language of sections 1902(a)(26) and (31)
of
the Act and of 45 CFR 456.650 et seq. excludes patients whose
financial
eligibility to receive Medicaid institutional assistance is
not yet
determined. The State contended further that the language of
the
Agency's Medical Assistance Manual, which states that "(a)made . .
." should
be obtained as part of the medical review team's advance
preparation,
indicates that patients whose eligibility for Medicaid
payments is
undetermined are not to be reviewed.(6)
The State also argued that the purpose of the medical review
requirement
is to ensure that federal financial participation (FFP) is not
expended
improperly, and that review of institutionalized patients for whom
FFP
may not be expended is "wasteful." (State's reply brief, p. 2.)
The
State presented a list of several Medicaid-eligible patients for
whom
Medicaid institutional benefits are not being paid to substantiate
its
claim that not all Medicaid-eligibles are eligible for
institutional
benefits. (State reply brief, Affidavit.)
The Agency argued that the statute and implementing regulations
require
medical review of all Medicaid-eligibles. The Agency noted the
language
in section 1903(g)(1)(D) of the Act requiring each state to have
"an
effective program of medical review of the care of patients" and
the
language in section 1902(a)(26) and (31) requiring that "each of
the
persons receiving such care" be reviewed, and maintained that
this
language made no exceptions for Medicaid-eligible persons
whose
available income had not yet been determined. The available
income
determination, according to the Agency, is not a test of eligibility
for
Medicaid benefits, but simply a post-eligibility determination under
42
CFR 435.725, intended only to ascertain how much an
institutionalized
patient may have to pay out of his own pocket, not whether
he will have
to pay at all.
The Agency also argued that the regulatory definition of "recipient" at
42
CFR Sec. 400.203 as "an individual who has been determined eligible
for
Medicaid" makes clear that the initial determination of general
Medicaid
eligibility requires inclusion of an institutionalized patient
in medical
reviews, regardless of whether he qualifies financially for
any Medicaid
institutional benefits.
The Agency acknowledged that it would not take a disallowance as to
a
non-reviewed Medicaid-eligible inpatient whose available
income
determination, completed after the review, showed him to be
financially
ineligible for Medicaid institutional benefits. (Telephone
conference
call, June 19, 1985.)
Discussion
The issue here is whether there is a violation of the section 1903(g)(
1)
medical review requirement where the State did not include in its
on-site
medical reviews institutionalized individuals who had been
determined
eligible for Medicaid generally but had not yet been
determined financially
eligible to receive Medicaid institutional
benefits in particular. The
Agency has argued that the statute and
regulations make clear that review of
such(7) patients is required,
although the Agency's statement that it would
not assess a disallowance
for a patient later found ineligible for
institutional benefits weakens
the argument that Medicaid-eligibility alone
is the only proper
determinant. The State has argued that the statute
and regulations do
not require review of such patients until after they have
been
determined financially eligible for institutional benefits.
The Board has concluded that it is not clear from the statutory
and
regulatory medical review provisions that the State was obliged
to
include the individuals in question in its on-site facility
reviews.
References in the relevant statutory language on the issue of to
whom
the medical review requirement applies include the following in
section
1903(g)(1) of the Act: "an individual (who) has received care
as an
inpatient" and "patients in mental hospitals, skilled
nursing
facilities, and intermediate care facilities;" and the following in
both
subsections (26) and (31) of section 1902(a) of the Act:
"persons
receiving assistance under the State plan," "patients receiving
such
care," and "patients receiving care in such facilities." Nothing in
this
language contradicts the State's reading that a
Medicaid-eligible
patient whose financial eligibility to receive
institutional benefits is
uncertain need not be reviewed. Nor is the
Board aware of anything in
the legislative history that would refute
this.
The regulatory provision for the medical review program states at 42
CFR
Sec. 456.652(a)(4) that "each recipient" must be reviewed, and
the
general regulation at 42 CFR 400.203, which sets out
definitions
applicable to all Medicaid programs, defines "recipient" as
an
"individual who has been determined eligible for Medicaid."
This
language is not conclusive, however, on the issue of whether
a
determination of general Medicaid eligibility is sufficient to deem
an
institutionalized person a "recipient" for purposes of the
medical
review requirement. Within the context of the medical
review
requirement, which applies to institutionalized patients only, it
is
reasonable to construe this definition to include only those persons
who
are in fact eligible for Medicaid assistance in their
current
circumstances.
The only Agency directive brought to the attention of the Board
which
bears upon the question of which patients need be included in
medical
reviews is a sentence in the Medical Assistance Manual under the
heading
"Advance Preparation for On-Site Review Visits." It states: "A
current
list of patients for whom payments are being made to a
particular
facility may be obtained from the unit in the State responsible
for
accounting for such payments." This sole bit of(8) guidance from
the
Agency provided no notice that the Agency expected review of
all
patients determined Medicaid-eligible; on the contrary, it
supported
the State's reading that medical review of a patient is not
required if
it is questionable whether payments will ever be made for that
patient.
While concluding that the State's reading of the statute and
regulations
is reasonable, the Board is also persuaded that the Agency could,
with
notice, reasonably require implementation of its reading. However,
the
usual deference to an agency's reasonable interpretation of laws
and
regulations within its purview /3/ is inappropriate here. The
reading
which the Agency presents as its interpretation has never before
been
articulated by the Agency.
Moreover, clear guidance as to the Agency's interpretation is even
more
needed in cases such as the instant one, because we are not
concerned
here with whether a particular expenditure meets the requirements
for
federal financial participation (FFP). Rather, the question here
is
whether FFP which would otherwise be paid to the State should be
reduced
due to the State's failure to implement satisfactorily the
medical
review requirement. The State could avoid a reduction only if
it had
known which individuals it was obliged to review. The record
here
supports the view that the State would have reviewed all
individuals
generally eligible for Medicaid had it known at the time of the
reviews
that this is what the Agency would claim the regulation meant.
We will
not hold Kentucky to an agency interpretation of section 1903(g)
which
is not immediately apparent from the face of the statute or
its
implementing regulations, where the State had no notice of the
agency
interpretation and the State's implementation of the medical
review
requirement was reasonable. See New Mexico Human Services
Department,
Decision No. 382, January 31, 1983, p. 16; cf.
California Department
of Social Services, Decision No. 158, March 31, 1981,
p. 7. Because
here there has been no notice to the State that the
Agency was
construing the medical review requirement to include inpatients
not(9)
yet determined financially eligible to receive institutional
benefits,
it would be inherently unfair to uphold the disallowance
assessed
against the State for reasonably excluding such inpatients. /4/
Conclusion
For the reasons stated above, we conclude that, under the circumstances
in
the instant case, the State did not violate section 1903(g)(1) in
not
including in its medical reviews nine inpatients who had been
determined
eligible for Medicaid generally but who had not yet been
determined
financially eligible to reeive Medicaid institutional
benefits.
Since we find no violation in the instant case for the quarter
ending
March 31, 1984, the disallowance imposed for that and two
succeeding
quarters is reversed. /1/ Amendments to section 1903 (g) as
contained
in section 2363 (c) of
the Deficit Reduction Act (DEFRA) of
1984, enacted July 18, 1984, Pub. L.
98-369, have eliminated all
utilization control requirements other than the
medical review
requirement as a basis for reductions in federal
financial
participation. /2//
DEFRA also amended the language of
subsections (26) and (31) of section 1902
(a). The statutory language
quoted here was the applicable law at the
time of the actions leading to
this
appeal. /3/ See Missouri
Department of Social Services,
Decision No. 468, September 30, 1983, p.
4, in which the Board stated
that "where the Agency's interpretation is
reasonable, the Board will
not overrule the Agency based on some alternate
interpretation which the
Agency might have adopted." The Board noted,
however, that in that case
the purpose of the regulation would have been
frustrated if the state's
interpretation had been
accepted. /4/ The Board is also
aware
that an interpretation of the law mandating review only after
a
determination of financial qualification could be abused to the point
of
undermining the purpose of the medical review program, if the time
taken
to complete the financial eligibility determination were
unreasonably
lengthy. We note that some degree of limitation on this
delay is
provided by 42 CFR 447.45(d), which requires a provider to submit
all
claims no later than 12 months from the date of service. In the
instant
case, the average delay between the nine patients' admission to
their
institutions and their determinations of financial eligibility
for
institutional benefits was between four and four-and-a-half months
which
we do not find sufficiently lengthy to undermine the purpose of
the
program. In any event, this would appear to be a problem
susceptible to
treatment in clarifying regulations or guidelines.
MARCH 28, 1987