DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: South Carolina State
Health and Human Services Finance Commission
Docket No. 86-79
Decision No. 814
DATE: December 3, 1986
DECISION
The South Carolina State Health and Human Services
Finance Commission (State) appealed a
determination by the Health Care
Financing Administration (Agency) disallowing federal financial
participation (FFP) for services provided in long-term care facilities under
title XIX (Medicaid) of the
Social Security Act (Act) for the quarters
ending June 30, September 30, and December 31, 1985. The
disallowance
was taken pursuant to section 1903(g)(l)(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."
Based on a validation survey, the Agency initially found that the
State had failed to review two patients in
the Newberry Convalescent Center
(Newberry), an SNF/ICF (skilled nursing facility/intermediate care
facility), and one patient in Second Midlands, an ICF/MR (an intermediate
care facility for the mentally
retarded). During the course of this
appeal, the Agency reviewed documentation submitted by the State
and
reversed its finding for one patient at the Newberry facility, reducing the
amount of the disallowance
from $288,902.21 to $181,275.80. Two
patients, one in each facility, still remain in dispute.
As
discussed below, we conclude that the State's failure to review the patient at
the Newberry facility
constitutes a violation of the medical review
requirement and we therefore uphold that portion of the
disallowance.
Further, we find that the patient at the Second Midlands facility was not
required to be
included in that facility's medical review, and, accordingly,
we reverse the Second Midlands portion of the
disallowance.
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Statutory and Regulatory Framework
Section
1903(g)(1)(D) 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 mental hospitals,
skilled
nursing facilities [SNFs], and intermediate care facilities [ICF]
pursuant to section 1902(a)(26) and (31)
whereby the professional management
of each case is reviewed and evaluated at least annually by
independent
professional review teams.
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).
Section 1902(a)(26) requires in pertinent part that a
State plan provide:
(B) for periodic inspections to be made
in all skilled nursing facilities . . . within the State by one or more
medical review teams . . . of (i) the care being provided in such nursing
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 . . . .
Section 1902(a)(31) contains
similar language for ICFs.
Regulations implementing the statutory
utilization control requirements are found at 42 CFR Part 456
(1984).
In particular, section 456.652 provides that:
(a) . . . [i]n 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 . . . .
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Background
The South Carolina State Health and
Human Services Finance Commission is the successor to the South
Carolina
Depart- ment of Social Services (DSS) as the single state Medicaid agency.
The State's system
for determining patients medically and financially
eligible for Medicaid in long-term care nursing
facilities is a two-part
process.
The first part of the State's eligibility determination
process requires a patient to obtain certification of
medical necessity and
appropriate level of care by the State's Community Long Term Care (CLTC)
program or the State's Department of Mental Retardation. State's
Appeal File, Exhibit A. CLTC
assessments are done by regional offices
utilizing appropriate assessment criteria.
The second part of the
State's process requires a financial authorization for long-term care.
State's Appeal
File, Exhibit A. DSS is now under contract to the State
to perform the financial determination, which it
conducts through county DSS
offices. State's Appeal File, Exhibit D. The county office
calculates
recurring income and provides an authorization beginning date
(which may be retroactive) for providing
services. The county office
is under a general requirement to make the determination within forty-five
days from the time that it receives the application.
Once the
provider facility receives both eligibility determinations, it attaches the
medical certification and
the financial authorization to its claim for
payment and submits them all to the DSS central office to have
the patient
placed on the listing of Medicaid recipients eligible for long-term care
services.
On or about the tenth of each month, the DSS central
office generates for each provider a computer listing
of recipients who are
eligible for Medicaid and who were in the facility on the last day of the
previous
month. The claim listing is actually sent to each provider
about the 17th of each month. The provider is
required to note changes
of status on the form and to add new recipients to the list for whom it wishes
to
receive Medicaid payments. The form is returned to DSS with
additions and corrections for inclusion on
the next month's listing.
Once received at the DSS central office, the forms are reviewed for completeness
and correctness by DSS staff and by a representative of the CLTC program to
ensure that certifications are
not out of date and that the level of care
certification matches the county DSS authorization. The provider
claim
form with medical and financial authorizations are then forwarded to the data
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processing division for inclusion on the next monthly claims
list and payment of the provider. State's
Appeal File, Exhibit E.
The State's Inspection of Care (IOC) Office receives a monthly
claims listing for each facility in the state
in the same manner and at
about the same time as the providers. When the IOC team arrives at the
facility, it asks facility representatives to identify any additional
Medicaid recipients not on the list and
compares the list to any inhouse
nursing home list. It then performs a review of all patients on the list
as
updated. State's Appeal File, Exhibit F.
The IOC team
reviewed the Newberry facility on May 7-8, 1985. Patient N.M. 1/ was a
resident and
present in the facility at the time of the review. The
CLTC certification for N.M. was dated March 5,
1985, and sent on March 11,
1985 to the Newberry facility, which forwarded the certification to its home
office in Spartanburg, South Carolina. The home office marked the CLTC
form as received on April 30,
1985. State's Appeal File, Exhibit
G. The financial determination form was marked as received by the
Newberry County DSS office on March 18, 1985. The form was signed on
April 16, 1985, authorizing
Medicaid to begin retroactively on March 1,
1985. State's Appeal File, Exhibit H. The home office of the
facility received the financial authorization form on April 24, 1985, and
submitted both forms to the DSS
central office on or about April 30,
1985. State's Appeal File, Exhibit M. The provider claim list and
both eligibility documents for N.M. were received at the DSS central
office on May 1, 1985. The first
computer-generated listing of N.M. as
Medicaid eligible was the May listing generated on May 10, 1985.
The Second Midlands facility was reviewed on August 6-9 and 13,
1985. Patient W.G. was a resident and
present in the facility at the
time of the review. 2/ The financial determination form for W.G. was signed
on July 30, 1985. 3/ W.G.
1/Initials are used to protect the privacy of the patient.
The disallowance for the State's failure
to review W.G. was for the quarters ending September 30 and
December
31, 1985.
The Agency raised a question
with regard to this date. The State submitted two financial
determination forms for W.G. State's Appeal File, Exhibit K. It
is unclear from one of the forms whether
it was signed on July 20, or July
30, 1985. Since the other was clearly dated July 30 and since the medical
certification was not
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was certified medically eligible at least by July 30,
1985. State's Appeal File, Supplementary Exhibit B;
Agency's brief, p.
6. However, the original medical certification forms apparently were lost
in the
Department of Mental Retardation and revised forms for W.G. were not
received in the DSS central office
until September 3, 1985. At the
time of the review, W.G. was still listed in a pending status by DSS
central
office. State's Appeal File, Exhibit E.
Discussion
Patient N.M. at Newberry
With respect to N.M. at the Newberry
facility, the State contended that no review was necessary because at
the
time of the facility's review, the patient's eligibility status on the computer
list was described as
"pending." The State contended that it did not have
complete eligibility information until the provider
submitted all
documentation to the central office, which received it on May 1, 1985.
Further, the State
asserted that the approval for claims processing and
payment was not completed until May 3rd, the IOC
review occurred on May
7-8th, and the new monthly listing was generated on May 10, 1985.
The State argued that the IOC team had no reasonable method of
verifying N.M.'s eligibility prior to its
review without requiring the DSS
central office to do a manual search of claims submissions from
facilities
one week prior to the review. Appellant's brief, p. 12. Relying on
the Board's holding in Idaho
Department of Health and Welfare, Decision No.
747, April 28, 1986, supra. which stated that "Agency
guidance implies that
the State is entitled to reasonable lead time to prepare its list of eligibles
and to
make other preparations for the review based on [the computer] list,"
(pp. 7-8) the State maintained that
its system is a reasonable one,
and that the IOC team could have relied on the April computer listing.
While admitting that its process of requiring once a month submissions of
claims and updating the
computer listing of eligibles could result in some
delay, the State asserted that its system is designed to
operate in a
current and efficient manner when as here the listing was updated within two
weeks of
submission of
3/Cont.
received by the county
until July 29 (date faded), we will accept the State's assertion that the
financial
determination was signed on July 30, 1985.
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documentation. Further, since the IOC review fell
within a short period of time between the submission of
documentation and
the generation of a new list, the State maintained that it would be patently
unreasonable to expect identification of N.M. as Medicaid eligible in this
situation. Moreover, the State
argued that the April claim forms
completed by the provider adding N.M. were unavailable at the facility
since
the forms were submitted to DSS central office by the provider's home office.
The Agency argued that the State erred in its reasoning because
the determinative date in deciding when a
patient is subject to a review is
the date the individual was determined to be financially and medically
eligible for Medicaid long-term care, instead of the date a Medicaid claim
was filed by the facility and
printed out in the monthly computer run.
The Agency maintained that, since N.M. was certified by the
CLTC program on
March 5, 1985, and certified by the county DSS office on April 16, 1985, April
16th is
the determinative date for this patient. Further, the Agency
maintained that, since the Newberry's home
office received notice of N.M.'s
eligibility on April 24, 1985, the State would have known of N.M.'s
eligibility if it had asked the county or the facility's home office.
Finally, the Agency contended that the
State should have checked its own
central office records by means of a simple phone call.
The
statute and regulations establish a general requirement for an annual review in
every facility for each
Medicaid recipient. 42 CFR 456.652(b). A
state may not aim for anything less than completion of 100
percent of the
required reviews by the end of the showing quarter. Delaware Department of
Health &
Social Services, March 21, 1986, Decision No. 732. In our
view, then, it is incumbent on the State to take
reasonable efforts to
insure that its list of patients to be reviewed is current and complete.
While the
Board has found that a state was not required to review a patient
it could not reasonably have identified as
a Medicaid eligible at the time
of the review, (Idaho, supra), we conclude here that the State has not
demonstrated that it did not reasonably have access to updated
information. The Board has consistently
held that states have the
ultimate burden of demonstrating compliance with the utilization control
requirements of section 1903(g). Wyoming Department of Health and
Social Services, Decision No. 757,
June 6, 1985.
Here with
respect to patient N.M., both elements of the eligibility determination had been
completed by
April 16, 1985 and the DSS central office had been notified of
this by
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May 1, 1986, approximately one week before commencement of
the review on May 7. 4/ The State alleged
that it had no reasonable method
of verifying N.M.'s eligibility without requiring the DSS central office to
do a manual search of claims submissions from facilities one week prior to
the review. The State,
however, did not attempt to show that so many
patients would have had to be included in a manual search
as to make the
entire task an unreasonable one. Nor did the State explain why it could
not have requested
an update on the eligibility status of solely those
patients whose status had previously been listed as
pending. The
State, moreover, did not submit any evidence in response to the Agency
suggestion in its
response brief, page 5, that a simple telephone call to
the DSS central office or to the business office of the
nursing home would
have ascertained N.M.'s correct eligibility status. This could have
occurred at any
time during the week prior to the review.
The
issue in the Idaho case was whether the State reasonably relied on a computer
listing which was
updated on a weekly basis. There the Board held that
given the currency of the State's computer system
and the shortness of the
delay (only two days) that occurred between the eligibility determination and
the
IOC review, the State had demonstrated that it was reasonable for it to
rely on the computer listing alone.
Here, we conclude that the State,
which was under a mandate to review each "recipient," should have
undertaken
further efforts to update the monthly list, at least with respect to pending
cases. While
requesting an update from an official in the facility
itself might ordinarily be helpful to the IOC team in
view of the State's
system of eligibility notification, the responsibility for reviewing each
recipient
ultimately rests with the State, not the facility.5/ In the
instant case, the State has not
4/ Additional claims processing reviews occurred at
the DSS central office through May 3. Nevertheless,
as was fully
described earlier in the text, actual responsibility for determining eligibility
for this patient
rested with the CLTC office and the county DSS.
5/ The Board has previously held that states have the
responsibility of verifying information provided by
the facilities,
including information concerning the status and location of patients.
Kansas Department of
Social and Rehabilitation Services, Decision No. 782,
August 26, 1986; North Carolina Department of
Human Resources, Decision No.
728, March 18, 1986.
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demonstrated why it reasonably could not have reviewed a
patient when eligibility information was
available one week prior to the
review at the DSS central office. 6/
Accordingly, we uphold the
portion of the disallowance pertaining to patient N.M. at the Newberry
facility.
Patient W.G. at Second Midlands
The State also argued that it was
not required to review patient W.G. at the Second Midlands facility. The
State admitted that patient W.G. was a resident of the facility during the
IOC review which occurred on
August 6-9 and 13, 1985. However, the
State explained that W.G.'s medical certification had not at that
time been
received by the DSS central office. The State submitted that the
Department of Mental
Retardation (who was responsible for medical
certification of W.G.) sent substitute forms for the eligibility
period at
issue to the DSS central office on September 3 and surmised that the original
eligibility
certifications had been lost around the time that copies had
been sent to the DSS county office. The State
argued that the DSS
central office was not aware of medical eligibility of the individual until
September 3,
1985, several weeks after the IOC review. Therefore, the
State maintained that the patient was not
required to be reviewed, and that
the medical review program should not be penalized for the Department
of
Mental Retardation's failure to promptly advise the State of medical
certification.
6/ Cf. Missouri Department of Social Services,
Decision No. 801, November 3, 1986. In Missouri, the
State
presented evidence to show that the review teams did not have a readily
accessible means of
identifying the missed patients at the time of the
reviews. Moreover, the State presented evidence to show
that even
patients with pending Medicaid applications were reviewed when the facility was
inspected. In
Missouri, the Board noted that:
[w]hile the
State was not required by the regulation or statute to inspect a patient for
whom an
application was pending, the State indicated it did so to avoid the
possibility of any eligible recipient
"slipping through the cracks." p. 6.
Therefore, the State in Missouri provided
evidence to show that it made every reasonable attempt to
review all
Medicaid recipients.
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The Agency argued that the record clearly demonstrates that
W.G. was determined to be both medically
and financially eligible no later
than July 30, 1985, which was seven days prior to the start of the Second
Midlands review. The Agency relied on North Carolina Department of
Human Resources, Decision No.
728, March 18, 1986, for its position that
"[e]ven if [their] omission from the review was the fault of the
facility,
the State bears the responsibility since the statute requires the State to
provide for annual
reviews." The Agency argued that the State cannot avoid
liability in this case by surmising that the
original level of care
certification may have been lost in the claims process. p. 5. The
Agency argued that
the DSS county office had the necessary information at
the time of the review.
We find that the State was not required to
review W.G. at the Second Midlands facility. The eligibility
process
for W.G. was completed only one week prior to the August 6 commencement of the
review for this
facility. When the review was initiated, the IOC team
relied on the July computer listing from State DSS
and received an updated
list of Medicaid recipients from the facility. The Medicaid status of
patient W.G.
was still listed as "pending" by the facility. State's
Supp. Ex. A. The State alleged that it had no
reasonable access to
updated eligibility information for this patient since the Department of Mental
Retardation had not notified the DSS of medical eligibility at the time of
the review. The DSS central
office was the one place in the State that
was required to have complete information from the State's
eligibility
process. Central office DSS was the State's contractor agency for
eligibility and received and
reviewed the discrete parts of the eligibility
determinations made at the local level by DMR, county DSS
and CLTC. In
the absence of regulations or policy guidance holding the State responsible for
partial
eligibility information in possession of the local entities, we
conclude that under the particular
circumstances of this State's system, the
State reasonably should be liable only for information in
possession of
central DSS office. With respect to patient W.G., central DSS office did
not receive a
medical certification from DMR for this patient until
September 3. Thus, even if the IOC team attempted
to verify
eligibility directly with the agency responsible for knowing the results of
completed eligibility
determinations under the State's system, it would have
been unable to do so.
Accordingly, we conclude that unlike the
circumstances surrounding the missed review of patient M.N.
discussed
previously, the IOC team had no reasonable access to actual eligibility
information concerning
W.G. at the time the review commenced, and that the
State consequently was not obligated to review that
patient.
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Conclusion
Based on the foregoing reasons, we
uphold that portion of the disallowance pertaining to the patient in the
Newberry facility and reverse that portion of the disallowance pertaining to
the patient in the Second
Midlands facility.
________________________________
Cecilia
Sparks Ford
________________________________
Norval D. (John) Settle
________________________________
Donald F. Garrett
Presiding Board Member