DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Washington State Department of
Health and Social Services
Docket No. 86-87
Decision No. 803
DATE: November 4, 1986
DECISION
The Washington State Department of Health and Social
Services
(Washington/State) appealed a determination by the Health Care
Financing
Administration (HCFA/Agency) disallowing $226,807.79 in federal
funding
claimed by the State under Title XIX (Medicaid) of the Social
Security
Act (Act) for the quarters ending June 30, September 30 and December
31,
1985. Based on a validation survey, HCFA concluded that the State
did
not have an effective program of utilization control of long term
stay
services as required by section 1903(g)(l) of the Act.
Specifically,
HCFA found that Washington failed to conduct valid annual
medical
reviews in intermediate care and skilled nursing facilities within
the
state during those three quarters.
Based on documentation submitted by Washington during the course of
this
appeal, HCFA reduced the scope of the disallowance so that this
decision
concerns violations at one skilled nursing facility for the
quarter
ending September 30, 1985. The amount of federal funding
disallowed has
been reduced to $20,524.65. See HCFA Letter, October 8,
1986.
Washington conceded that the annual review in this one facility was
not
completed in a timely manner, but argued that no penalty should
be
assessed as this was a de minimis violation of the annual
review
requirement.
For the reasons discussed below, we uphold this disallowance in
the
revised amount of $20,524.65.
Facts
The remaining facility for which HCFA alleged a deficiency is the
Ocean
View Convalescent Center. HCFA found that Washington had failed
to
conduct annual medical reviews for two patients at this facility by
the
close of the quarter ending September 30, 1985. Washington
conceded
that it had not reviewed one Ocean View.- 2 -
patient in a timely fashion. 1/ However, Washington argued
that
"imposition of a penalty for an entire facility based on . . .
the
failure to review even one patient is unreasonable. Failure to
review a
single patient cannot mean the State failed to have an effective
program
for utilization control." Washington Reply Brief, p. 3, n.l.
Washington
recognized that the Board has taken a contrary position on this
issue,
but nevertheless asked the Board to address the issue in its
decision.
Applicable Law
The statutory authority for the Medicaid program is found at Title XIX
of
the Act. It provides that for each quarter in which a state
claims
federal funds under Medicaid, that state must make a
"showing
satisfactory to the Secretary" that it is operating an
effective
utilization control program for long-stay patients in
certain
facilities. See section 1903(g)(l). Specifically, section
1903(g)(l)
of the Act requires the state agency responsible for the
administration
of a state's Medicaid plan to submit a written, quarterly
showing
demonstrating that it --
has an effective program of medical review of the
care of patients
in . . . skilled nursing facilities
pursuant to paragraphs . . .
(31) of section 1902(a)
whereby the professional management of each
case is
reviewed and evaluated at least annually by
independent
professional review teams.
(Emphasis added)
A state's showing for each quarter must be "satisfactory" or FFP paid
to
the state for expenditures for long-stay services will be
decreased
according to the formula set out in section 1903(g)(5).
1/ Throughout these proceedings HCFA has cited two patients
at this
facility as not having been timely reviewed. See Washington's
Notice of
Appeal, Enclosure 1, and HCFA's Letter, October 8, 1986.
However,
Washington made its argument in terms of only one patient and did
not
discuss the second patient cited by HCFA. See Washington's Reply
Brief,
p. 3. Washington's documentation, however, has shown untimely
review
for two patients at Ocean View. See Washington's Notice of
Appeal,
Enclosure 2, and Washington's Reply Brief, Ex. A. Given our
finding
herein rejecting Washington's contention that a single violation is
an
insufficient basis for a disallowance, this inconsistency does
not
affect our holding.
- 3 -
Regulations implementing the statutory utilization control
requirements
are found at 42 CFR Part 456 (1978). In particular,
section 456.652
provides that --
(a) . . . [i]n order to avoid a reduction in FFP, he
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 . . . .
(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 . . . by the
end
of the quarter in which a review is required under
paragraph
(b)(2) of this section. 2/
Analysis
The Board has recently addressed the issue of de minimis violations of
the
annual medical review requirement in Delaware Department of Health
and Social
Services, Decision No. 732, March 21, 1986, and Pennsylvania
Department of
Public Welfare, Decision No. 746, April 28, 1986. In both
Delaware and
Pennsylvania, HCFA asserted that the language in section
1903(g)(l) and 42
CFR 456.652(b), which calls for a review of each
patient in every facility in
the state, clearly demonstrated that HCFA
had no discretion to waive the
imposition of a penalty for even a single
violation of the annual review
requirement. Therefore, HCFA contended,
a state is required to review
every recipient in every facility due for
2/ Section 1903(g)(4)(B) of the Act (implemented by 42 CFR
456.653)
provides two exceptions to the annual review requirements where a
state
meets certain threshold criteria and can show that it exercised
good
faith and due diligence in its effort to complete the reviews or
that
failings of a technical nature prevented timely completion of
the
reviews. Washington did not argue that either exception applied
to
these facts.
- 4 -
review. Further, HCFA reasoned that since Congress had not written a
de
minimis exception into the statute, the Agency could not be expected
to
apply one. Consequently, HCFA concluded, it was obliged to hold
that
failure to review any patient is tantamount to failure to review
the
facility.
In Delaware and Pennsylvania, the Board concluded that the
Agency's
interpretation is supportable under the terms of the statute
and
consistent with the implementing regulations, which the Board is
bound
to apply. Although section 1903(g)(l) requires a showing that
"there is
in operation in the State an effective program of control
over
utilization of" long-stay services, the statute specifies that such
a
program must include conducting annual medical reviews of the care
of
each Medicaid patient. See sections 1903(g)(l) and 1902(a)(26)
and
(31). The statute provides certain limited exceptions to
the
requirement for the annual review of each patient, but contains
no
indication that the Secretary has discretion, where those exceptions
do
not apply, to find that the State has made a valid showing if the
State
did not review patients who reasonably should have been identified
as
Medicaid eligibles in the facility. Here, Washington did not even
argue
that it was not reasonably able to identify and review the
omitted
patients.
The regulation at 42 CFR 456.652(b) states a general requirement for
an
on-site medical review in every facility for each Medicaid
recipient.
Here, there is no dispute that a review did not include one or
more
Medicaid recipients who were in the facility and who ought to have
been
included in the on-site review. We agree with HCFA's general
premise
that where such recipients are omitted from the medical review
performed
at the facility, such a facility is legally on a par with a
facility
which was entirely unreviewed. See generally Delaware, supra
at 6-9;
Pennsylvania, supra at 6-9.
Washington has presented no arguments which would cause us to
reconsider
our previous decisions on this issue. Consequently, we
uphold this
disallowance..
- 5 -
Conclusion
Based on the analysis above, we uphold the disallowance in the
revised
amount of $20,524.65.
________________________________ Norval D. (John) Settle
________________________________ Alexander G. Teitz
________________________________ Judith A. Ballard
Presiding
Board