District of Columbia Department of Human Services, DAB No. 833 (1987)

DEPARTMENTAL GRANT APPEALS BOARD

Department of Health and Human Services

SUBJECT: District of Columbia Department
of Human Services

Docket No. 86-115
Decision No. 833

DATE: February 5, 1987

The District of Columbia Department of Human Services (D.C.) appealed a
determination by the Health Care Financing Administration (HCFA or
Agency) disallowing $94,877.95 claimed by D.C. for services in
intermediate care facilities for the mentally retarded (ICFs/MR) under
the Medicaid program of the Social Security Act (Act) for the quarter
ending March 31, 1986. The Agency based the disallowance on its finding
that D.C. "failed to make a satisfactory and valid showing" that it had
"an effective program of medical review of the care of patients in . .
. intermediate care facilities . . . whereby the professional management
of each case is reviewed and evaluated at least annually by independent
professional review teams." Section 1903(g)(1) of the Act.

Upon review of the quarterly showing submitted by D.C. for the quarter
ending March 31, 1986, the Agency found that the State did not conduct
valid annual reviews in four ICFs/MR. The Agency further alleged that
D.C.'s showing failed to meet statutory and regulatory requirements
because it did not list the facilities for which valid reviews were not
completed by the close of the quarter and because D.C. failed to
indicate on that showing an acceptable reason for the missed reviews.

Our decision is based on the parties' written submissions. For the
reasons stated below, we uphold the Agency's disallowance.

Applicable Law

Section 1903(g)(1) of the Act requires that the state agency responsible
for administration of the Medicaid program make a quarterly showing that
the--

State has an effective program of medical review of the care of
patients in . . . intermediate care facilities pursuant to
paragraphs (26) and (31) of section 1902(a) whereby the
professional management of each case is reviewed and evaluated at
least annually by independent professional review teams.

Under section 1902(a)(31), a state Medicaid program which includes
ICF/MR services must provide--

(A) . . . for a regular program of independent professional
review. . . .

(B) with respect to each . . . intermediate care facility within
the State, for periodic on-site inspections of the care being
provided to each person receiving medical assistance, by one or
more independent professional review teams (composed of a
physician or registered nurse and other appropriate health and
social service personnel), including with respect to each such
person (i) the adequacy of the services available to meet his
current health needs and promote his maximum physical well-being,
(ii) the necessity and desirability of his continued placement in
the facility, and (iii) the feasibility of meeting his health
care needs through alternative institutional or noninstitutional
services;. . . .

The statute also provides that the Secretary shall find a state to have
satisfied the annual review requirements, even though it did not
complete the required reviews by the close of the quarter, where the
state reviewed not less than 98 percent of facilities requiring reviews,
including all facilities with 200 or more Medicaid beds, and was found
to have used "good faith and due diligence" in attempting to conduct the
reviews or was prevented from reviewing facilities due to technical
failings. See section 1903(g)(4)(B) of the Act; 42 CFR 456.652. See
also Delaware Department of Health and Social Services, Decision No.
732, March 21, 1986; Pennsylvania Department of Public Welfare, Decision
No. 746, April 28, 1986.

Background

Four ICF/MR facilities, Community Care Center, Quincy One, Sunshine
Multi-Services, and the Institute for Behavior Resources, were due for
annual review by the end of the first calendar quarter of 1986 (March
31). The Agency found that D.C.'s showing for that quarter was
insufficient: the showing did not indicate that these four ICFs/MR were
not reviewed by the end of the quarter nor did the showing indicate any
reason why the facilities were not reviewed by March 31st.

D.C. did not dispute that its quarterly showing lacked this information,
but, rather, argued that its failure to include this information in the
showing should not preclude D.C. from invoking the technical failings
exception. D.C. argued that it met the threshold requirements for the
technical failings exception because it met the 98 percent/200 bed
requirement for the four facilities within 30 days (April 30, 1986) of
the close of the quarter.

In giving its reasons for its inability to complete the reviews by March
31, 1986, D.C. alleged that key persons in charge of conducting the
reviews were being replaced during the review period and as a
consequence the timetable for completion and transmission of review
results became delayed during this transition.

In response to the Agency's alternative allegation that D.C. would not
qualify for an exception in any event because it did not conduct
simultaneous personal observations and record reviews of the patients in
these facilities, D.C. argued that its "bifurcated" review process,
whereby the reviews of patients' records were performed approximately
six to eight months prior to the personal observations of patients,
complied with regulatory requirements. D.C. argued that neither the
statute nor the regulations requires simultaneous review of both the
records and patients. D.C. contended that the only requirement is that
the inspection of care review be conducted annually.

Analysis

a. Unsatisfactory showing

We conclude that D.C.'s showing fell short of the statutory and
regulatory requirements in the instant case. Section 1903(g) provides
that a showing must demonstrate either full compliance with the medical
review requirements or compliance with the exception provisions of
section 1903(g)(4)(B). 1/ Moreover, section 1903(g)(4) precludes the
Secretary from finding a state's showing to be satisfactory if it is not
submitted within 30 days of the calendar quarter in question unless the
state demonstrates good cause for not meeting the deadline. Thus, the
statute provides notice that a disallowance will be imposed if a state
fails to meet requirements relating to the showing notification itself.

The regulations focus even more specifically on the showing
notification. The regulations require that the state must include, as
part of the content of the showing, a certification that it has
completed on-site reviews of each recipient in every facility in the
state by the end of the quarter in which a review is required. If the
state fails to complete reviews in any such facility, the state must
provide a certification of the reasons the review requirements were not
met in the facility. 42 CFR 456.654(a)(1). In addition to the
certifications, the state must provide a list of all facilities
participating in Medicaid (section 456.654(a)(2)); a list of all dates
of on-site reviews completed by review teams any time during the
12-month period ending on the last day of the quarter (section
456.654(a)(5)); and for all facilities in which an on-site review was
required but not conducted, a list of the facilities by name, address
and provider number. Finally, the regulations require that the showing
must be in the form prescribed by the Agency. The Agency has issued an
action transmittal to states participating in the Medicaid program which
provides explicitly that facilities reviewed in the 30-day period after
the close of the quarter must be included in the showing on the list of
facilities not reviewed. Moreover, states are specifically directed to
attach a full explanation of the circumstances for any missed facility
review. If a state believes that the exception clauses of section
1903(g)(4)(B) apply, "the state must explain its attempts to perform the
review and attach a copy of its original review team schedule showing
the planned dates of review." HCFA Action Transmittal 79-61, July 2,
1979, at paragraphs V and VI.

On the basis of the plain meaning of the foregoing authorities, we here
conclude, as we did in Ohio Department of Human Services, Decision No.
824, January 14, 1987, that the quarterly showing notification
must include at a minimum specific identification of facilities not
reviewed in any quarter as well as the reasons for each missed review.
If a state did not provide the appropriate certification and
accompanying lists, the Secretary would not be able to determine on the
face of the showing whether the state was in compliance with the full
requirements or the exceptions. If the Secretary did not perform a
comprehensive validation survey and the showing itself did not fully
identify the deficiencies and the reasons for the deficiencies, the
Secretary would have insufficient basis upon which to consider whether a
disallowance was justified and may be unable to detect instances where
the statute would require imposition of a disallowance. Moreover, such
a requirement furthers an important program purpose in that it obligates
a state to give contemporaneous reasons for any review deficiency at the
time the deficiency occurred, not a justification several months
after-the-fact in response to Agency inquiries.

In the instant case, D.C. admitted that it did not list these facilities
as not having been reviewed on time in a separate listing. D.C. offered
no reason on the showing why the review was late and did not claim that
a statutory exception excused the late review. Thus, based on the
showing alone, HCFA could not ascertain whether an exception would
apply.

In fact, D.C.'s only attempt to explain the circumstances for the late
reviews in these facilities came after this appeal was filed and in
response to HCFA's request for D.C.'s explanation of the review
deficiencies that allegedly occurred here. D.C.'s explanation was
extremely broad and provided this Board and HCFA with no explanation
other than to say that "key persons in charge of conducting reviews were
being replaced during the review period" and, therefore, completion and
transmission of review results were delayed. Contrary to the
requirements of the action transmittal, D.C. failed to explain when the
reviews of these facilities were originally scheduled, what key persons
were replaced, when the reviewers were replaced and what attempts, if
any, were made to reschedule timely reviews. Certainly, this
information was available to the State when it submitted its quarterly
showing. 2/ This situation is distinguishable from other cases where a
state was unaware of potential violations until well after its quarterly
showing and thus could not have included in its showing the deficiencies
and the reasons for not meeting the requirements. See Delaware, supra.
D.C. knew that four facilities had not been reviewed until the month
following the quarter in which the review was due and that it could not
be found in compliance unless it demonstrated that an exception applied.
The regulations clearly establish a prescribed course of action under
such circumstances which D.C. did not follow: D.C. was required to
include on its showing the four facilities in question here in a list as
unreviewed facilities and to provide a reason for not reviewing the
facilities on time.

Accordingly, we find that D.C. failed to meet the requirements for a
satisfactory showing with regard to the four facilities in question and
is precluded from claiming the technical failings exception.

b. Unsatisfactory reviews

Even if D.C. was not precluded from claiming the exception, we would
find that it would not have complied with the threshold requirements
because the reviews in question in at least three facilities did not
comply with the medical review requirements.

In three of the facilities, Community Care, Inc., Sunshine Multi-
Services I, and Institute for Behavior Resources, D.C. claimed it made a
bifurcated review, by examining patient records in September, October,
and November, 1985 and then observing the patients in April, 1986.
We do not agree with D.C. that the reviews here satisfy the regulatory
requirements. The regulations at 42 CFR 456.608 provide that the review
team's inspection must include personal contact with and observation of
the patient and review of each patient's medical record. The fact that
"inspection" is used in the singular suggests that both the personal
contact and record review was intended to be performed within a
reasonable period. Moreover, for practical purposes, the kind of review
here would frustrate the intent of the inspection of care process
because the population of the facility may change between the time the
record review and the time the personal contact review is performed.
This could result in failure to review all recipients. Furthermore, one
of the purposes of performing a combined review of medical records and
personal observation of the patient is to insure that the care specified
in the records is actually being given to the patient and is appropriate
for the patient's care. By performing separate reviews, almost eight
months apart, this purpose is completely frustrated because the records
from eight months previous may have indicated certain treatment which
may have changed drastically by the time the personal observation review
is performed. Moreover, although D.C. said it had a "bifurcated review
process," D.C. did not argue that HCFA had ever approved such a process
as satisfying inspection of care requirements. In fact, D.C.'s forms
indicate that the reviews of the patient records for these three
facilities were intended as "90-day evaluations" rather than as
inspection of care reviews. Consequently, we find that the bifurcated
reviews that occurred in these three facilities do not qualify as proper
medical reviews of recipients in the facilities. 3/

Therefore, even if we had not found that the D.C.'s showing was
unsatisfactory, D.C.'s reviews of the facilities at issue here were
insufficient.

Conclusion

For the reasons stated above, we find that D.C. failed to meet the
applicable medical review requirements and sustain the Agency's
disallowance in the amount of $94,877.95.

____________________________ Judith A.
Ballard

____________________________ Norval D.
(John) Settle

____________________________ Donald F.
Garrett

1. Section 1903(g)(4)(B) provides that the Secretary shall find a
showing satisfactory "if the showing demonstrates" that the 98
percent/200 bed, good faith and due diligence standard is met. The
section then continues "or if the State demonstrates . . . that it
would have made such a showing but for failings of a technical nature
only." While this latter language is not as clear in requiring that the
showing demonstrate compliance where the technical failings exception is
invoked, the Agency's longstanding interpretation is that a state should
at least provide as part of its showing an identification of
deficiencies and a statement of reasons.

2. In any event, the reason given by D.C. for its failure to make a
timely review of the four facilities does not appear to be sufficient to
meet the technical failings exception. While D.C. claimed that the
reason for the delay in the reviews was a change in key personnel, the
records show that the members of the review team in April 1986 were
essentially the same as in September, October, and November, 1985, the
only difference being that there was no social worker on the team for
the September, 1985 review. Consequently, D.C.'s records did not support
the stated reasons for claiming technical failings. Compare D.C.'s
Attachment I, p. 4 with p. 20; Att. II, p. 4 with p. 12; Att. III, p. 1
with p. 12; and Att. 4, p. 1 with p. 10.

3. While the Quincy I facility did not have a bifurcated review,
D.C. indicated that it failed to review three patients. One patient was
hospitalized at the time of the review and clearly, D.C. was not
required to observe that patient under prior Board decisions. North
Carolina Department of Health Resources, Decision No. 728, March 18,
1986. However, two other patients were not observed because they were
at their day program. The record in this appeal has not been developed
sufficiently for the Board to determine whether that factor would
justify the failure of D.C. to review these two patients since it would
appear that the review team apparently observed other recipients from
other facilities in their day programs, and since there are only eight
clients in this facility. See D.C.'s Att. 1, p. 20-23, Att. III, pp.
12-13, Att. IV, p.