DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Illinois Department of Public Aid
Docket No. 86-215
Decision No. 876
DATE: June 22, 1987
DECISION
The Illinois Department of Public Aid (State) appealed a decision of
the
Health Care Financing Administration (HCFA, Agency)
disallowing
$9,782,804 in federal financial participation (FFP) under title
XIX
(Medicaid) of the Social Security Act (Act). The claims disallowed
were
for the cost of services to Medicaid recipients rendered by 31
nursing
homes during periods in which the homes allegedly did not have
valid
provider agreements. The disallowance was taken following a
review of
the State's quarterly expenditure reports for the quarters
ending
December 31, 1983 through March 31, 1985.
This decision resolves most of the parties' disputes concerning
the
periods of time for which FFP was available. The State did not
contest
the disallowance for 20 nursing homes, and HCFA withdrew the
contested
portion of the disallowance for an additional nursing home.
In
addition, as indicated below, the State contested only part of
the
disallowance for some of the facilities discussed here.
The Board has determined that further proceedings are necessary before
it
can decide a legal issue raised by all or a part of the disallowance
for
three facilities. The issue is whether, under section 1910(c) of
the
Act, a skilled nursing facility (SNF) whose participation in
Medicare is
terminated by HCFA is entitled to Medicaid funding pending
an appeal by the
facility of HCFA's decision or the expiration of the
time allowed the
facility to appeal. The facilities affected are
Crestwood Heights
Nursing Home, Miranda Manor, and Westshire Retirement
and Health Care
Center. The Board is therefore severing this issue, and
will notify the
parties separately regarding further proceedings.
We have summarized our findings for the various time periods in
an
Appendix to this decision. As indicated there, we affirm in part
and
reverse in part. We discuss the reasons for our decision
below,
organizing our discussion generally by the facility in
dispute.
Pursuant to the State's request (which HCFA did not oppose), the
parties
will address any issues regarding the amount disallowed for any
facility
after receiving this decision.
Crestwood Nursing Home
The Agency disallowed FFP claimed for the period May 29, 1984
through
March 31, 1985 for SNF services provided in this facility. The
State
did not contest the disallowance for the period June 30, 1984
through
January 24, 1985. We discuss below the disallowance for the
period
January 25, 1985 through March 31, 1985, having severed for
further
consideration the remaining disallowance for the period May 29,
1984
through June 29, 1984.
On May 7, 1984, after receiving notice of termination of its Medicare
and
Medicaid certification, Crestwood requested reinstatement in
both
programs. It later withdrew its request for Medicare
certification.
The State conducted surveys of the facility in July, October,
and
November 1984 and January 1985, and certified Crestwood as an
SNF
Medicaid provider effective January 25, 1985. HCFA found that
the
facility was improperly certified and disallowed FFP claimed for
the
period January 25 through March 31, 1985. HCFA took the position
that
since several deficiencies which were cited in the termination
letter
were not corrected when the facility was recertified, the
requirements
in 42 CFR 442.20(c) for re-entry into the Medicaid program of an
SNF
which was previously terminated as both a Medicare and Medicaid
provider
were not met.
Section 442.20(c) provides that the Medicaid agency may not make
another
agreement with such an SNF until--
(1) the conditions causing the termination are removed; and
.
(2) The SNF provides reasonable assurance to the survey
agency
that the conditions will not recur.
The State argued, however, that the term "conditions" in the
regulation
referred to the Medicare "conditions of participation" in 42 CFR
Part
405, Subpart K. An SNF must comply with these conditions
of
participation, which consist of various "standards," in order to
be
certified as a Medicaid provider. 42 CFR 442.202. However,
section
442.105 provides that even if the state survey agency "finds a
facility
deficient in meeting the standards, the agency may certify the
facility
for Medicaid purposes" if the deficiencies are not serious and
the
facility has an acceptable plan for correcting the deficiencies.
The
State contended that the deficiencies here would not have prevented
the
State agency from initially certifying that the facility was
in
compliance with the conditions of participation and therefore should
not
be a basis for denying it certification following termination.
We are not persuaded by the State's argument. Although
section
442.20(c) uses the term "conditions," there is no reason to believe
that
it refers to the Medicare conditions of participation. The basis
for
this regulation is the provision in section 1910(c)(1) of the Act
which
states--
The approval of eligibility of any such facility to
participate in
such programs may not be reinstated
unless the Secretary finds that
the reason for
termination has been removed and there is reasonable
assurance that it will not recur.
(Emphasis added.) Since the statute uses the language "reason
for
termination," we conclude that the term "conditions" in the
regulation
was not intended as a term of art but rather in a more general
sense.
Thus, the regulation is properly read as requiring the correction of
any
deficiencies which were cited in the termination letter. A
facility
cannot re-enter the Medicaid program merely by correcting enough
of
those deficiencies to render the facility in compliance with
the
Medicare conditions of participation.
The State's argument is also flawed since it fails to note that under
42
CFR 442.105 (which applies except where, as here, the facility's
earlier
certification was terminated based on the Secretary's termination
of
Medicare participation), a facility cannot be certified if it has
the
same deficiency it had under the prior certification unless the
state
survey agency documents that the facility--
(1) Did achieve compliance with the standard at some time
during
the prior certification period;
(2) Made a good faith effort, as judged by the survey agency,
to
stay in compliance; and
(3) Again became out of compliance for reasons beyond
its
control.
It is unlikely that the Agency intended to permit a facility to
re-enter
the Medicaid program following a Medicare termination with no
questions
asked regarding repeat deficiencies--as long as the conditions
of
participation were met--when a facility requesting recertification
under
any other circumstances is required by 42 CFR 442.105 to make
certain
showings regarding repeat deficiencies.
In addition, the Agency's interpretation of section 442.20(c) as
requiring
the correction of all deficiencies which were a basis for the
termination was
furnished to the states in the April 1980 Provider
Certification State
Operations Manual. Section 3744, captioned
"Readmission to Program
After Involuntary Termination or Nonrenewal of
Provider Agreement," provides
in pertinent part that following a survey
of a facility requesting
readmission, the survey agency should--
prepare a comprehensive statement as part of the
Certification and
Transmittal, HCFA-1539, that
includes:
1. The basis for finding that the deficiencies which led to
the
termination of the provider agreement have (or have not)
been
corrected.
* * *
2. A description of any other deficiencies and an
explanation
of why the facility is nevertheless in compliance with
all
conditions of participation. . . .
This indicates that HCFA read section 442.20(c) as requiring
the
correction of all deficiencies which were the basis for
termination.
This provision of the State Operations Manual also indicates
that there
is no basis for the State's concern that it is "unrealistic" to
require
the correction of the "hundreds of specific requirements" in 42 CFR
Part
405, Subpart K. HCFA in the State Operations Manual interpreted
section
442.20(c), correctly in our view, as requiring only the correction
of
the deficiencies which led to the termination, and not any
new
deficiencies, as long as the facility was otherwise in compliance
with
the conditions of participation.
Accordingly, we find that since it still had deficiencies which were
cited
in the termination letter, the facility was improperly certified
as an SNF on
January 25, 1985. We sustain the disallowance of FFP from
that date
through March 31, 1985, the end of the review period. In
light of this
conclusion, we need not address the question raised by the
Agency whether the
facility had provided "reasonable assurance to the
survey agency" that
deficiencies which were in fact corrected would not
recur, as required by
section 442.20(c)(2).
Diplomat Healthcare Center
On October 1, 1984, the State certified this facility as in
compliance
with Medicaid program requirements. The Certification and
Transmittal
form prepared by the State survey agency noted that compliance
was based
on an acceptable plan of correction and waiver of a Life Safety
Code
requirement. HCFA took the position that the certification was
invalid
on the ground that the State had not complied with the requirements
in
42 CFR 442.105 for certification with deficiencies. HCFA disallowed
FFP
claimed for the period October 1, 1984 through March 31, 1985, the
end
of the review period.
Section 442.105 requires, as a condition of certification of a
facility
with deficiencies, not only that the facility have an acceptable
plan
for correcting the deficiencies, but also that the survey agency
find--
that the facility's deficiencies, individually or in
combination,
do not jeopardize the patient's [sic]
health and safety, nor
seriously limit the
facility's capacity to give adequate care. The
agency must maintain a written justification of these findings.
42 CFR 442.105(b). The State acknowledged that it "cannot
show
compliance with the specific technical requirements of 42 CFR
442.105."
(State's reply brief, p. 13) However, it contended that FFP
was
nevertheless available since "the State conducted surveys,
received
plans of correction, and conducted follow-up surveys pursuant to
the
standard procedures which are intended to fulfill the mandate of 42
CFR
442.105." (Id., p. 14)
We do not agree with the State that the specific requirements of
section
442.105 are "technical" and may be ignored. In New York
Department of
Social Services, Decision No. 616, December 31, 1984, the Board
upheld
disallowances pertaining to several facilities based on a failure
to
comply with subparagraph (a) of that regulation, stating--
There can be no argument about the reasonableness of
such a
condition. Of course the health and
safety of the patients is the
primary concern.
If a facility cannot meet this requirement it
should
not receive federal funding. Similarly, if a facility
is
not able to give "adequate care" the federal
government should not
be expected to contribute to
its costs.
(Decision No. 616, p. 10) Thus, the State's certification of
this
facility with deficiencies was improper. However, since the only
basis
for disallowing FFP is that there was no finding regarding the effect
of
the deficiencies on the patients, the regulation does not require
the
disallowance of FFP for services provided once the deficiencies
were
corrected. Here, the plan of correction shows two deficiencies,
one
with an anticipated correction date ("completion date") of September
14,
1984 and the other with a completion date of October 30, 1984.
(State's
appeal file, Ex. 13) Accordingly, within 30 days of the date
it
receives this decision, the State should give to the
Agency
documentation showing the date that these deficiencies were
actually
corrected so that the Agency may determine the period for which FFP
is
available.
In view of our conclusion that FFP was not available until
the
deficiencies were corrected, we need not address the State's
contention
that under 42 CFR 442.13, FFP was available beginning on September
18,
1984, the date on which the State alleged the request for the
Life
Safety Code waiver was submitted. (A similar issue was raised
with
respect to Miller Nursing Home and Polo Continental Manor, which
we
resolve in favor of the Agency.)
Margaret Manor
This facility had a provider agreement for the period December 1,
1984
through November 30, 1985. The Certification and Transmittal
form
indicated that the facility was certified as in compliance with
Medicaid
program requirements based on an acceptable plan of
correction. The
Agency contended that the State did not comply with the
requirements in
42 CFR 442.111 with respect to the certification period for
facilities
with deficiencies. That regulation provides in pertinent
part--
(a) Facilities with deficiencies may be
certified . . . for the
period specified in either
paragraph (b) or (c) of this section.
* * *
(b) The survey agency may certify a facility
for a period that
ends no later than 60 days after
the last day specified in the plan
for correcting
deficiencies. The certification period must
not
exceed 12 months. . . .
(c) The survey agency may certify a facility
for up to 12 months
with a condition that the
certification will be automatically
canceled on a
specified date within the certification period
unless--
(1) The survey agency finds and notifies the Medicaid
agency
that the facility has made substantial progress in
correcting
the deficiencies and has a new plan for correction that
is
acceptable. The automatic cancellation date must be no
later
than 60 days after the last day specified in
the plan for
correction of deficiencies. . . .
Pursuant to this regulation, the Certification and Transmittal form
should
have had an automatic cancellation (or expiration) date of no
later than June
8, 1985, since the last completion date in the
facility's plan of correction
was April 9, 1985.
The Agency took the position that since the State had not complied
with
this regulation, the provider agreement was invalid. The
Agency
therefore disallowed FFP claimed for the period December 1, 1984
through
March 31, 1985, the end of the review period. As authority for
its
action, the Agency cited 42 CFR 442.30(a)(1), which provides--
FFP is available in expenditures for SNF . . .
service only if the
facility has been certified as
meeting the requirements for
Medicaid participation,
as evidenced by a provider agreement
executed under
this part. An agreement is not valid evidence
that
a facility has met those requirements if the
Administrator
determines that--
(2) The survey agency failed to follow the rules and
procedures
for certification. . . .
The State argued, however, that since it could have properly certified
the
facility through June 8, 1985 and only FFP claimed for the period
ending
March 31, 1985 was at issue here, "[t]o invalidate the entire
provider
agreement would be to exalt form over substance." (State's
reply brief,
p. 16)
We find that the disallowance was not required by section
442.30(a)(1).
Under that section, FFP is available if a facility has been
certified as
meeting the requirements for Medicaid participation. The
execution of a
provider agreement is not valid evidence of proper
certification if
required procedures have not been followed. However,
the fact that a
provider agreement was not executed in accordance with the
required
procedures does not necessarily mean that a state's evidence that
the
facility met the requirements for Medicaid participation
is
insufficient.
Although here the State did not comply with the procedures in
section
442.111 for certifying a facility with deficiencies, this does
not
warrant a disallowance, under the circumstances of this facility.
The
purpose behind the provisions of section 442.111 is to ensure that
the
provider agreement will not extend more than 60 days beyond the
last
date of completion in the plan of correction without the
corrections
actually being made. In this case, the State met the
purpose of the
provision by performing a resurvey on April 24, 1985, which
found that
all deficiencies included in the plan of correction had been
corrected.
(State's appeal file, Ex. 19) If the State had provided an
automatic
cancellation date prior to the resurvey, the cancellation would
have
been rescinded. Thus, the defect in the provider agreement did not
have
any bearing on the facility's certifiability as a Medicaid provider,
of
which there was other evidence. This situation is distinguishable
from
cases involving procedural "look behind" where the procedural
defect
results in a lack of a specific type of documentation required to
show
that the requirements for participation were met. Compare,
e.g.,
Decision No. 616, supra; Diplomat Healthcare Center on pp. 5-7
above;
and Reisch Memorial Home on pp. 14-17 below.
Accordingly, we reverse the disallowance for this facility.
Miller Nursing Home
The State entered into a provider agreement with this facility for
the
period April 3, 1984 through April 2, 1985. The Certification
and
Transmittal form prepared by the State survey agency on April 2,
1984
certified that the facility was in compliance with Medicaid
program
requirements based on an acceptable plan of correction. HCFA
challenged
this certification on the ground that an acceptable plan of
correction
was not submitted until July 23, 1984 (in a "Summary of
Deficiencies Not
Corrected" accompanying the July 23, 1984
"Post-Certification Revisit
Report"). Under 42 CFR 442.13(c), a
provider agreement is effective
beginning on the date on which an acceptable
plan of correction (or
approvable waiver request) is submitted if all program
requirements are
otherwise met. HCFA rejected the State's contention
that an acceptable
plan of correction had been submitted on February 24,
1984. HCFA relied
on a letter from the survey agency to the facility
dated June 15, 1984,
which denied in part and granted in part the facility's
request for
waivers in the February 24, 1984 document. The June 15
letter concluded
by requesting that the facility "provide this office with an
acceptable
plan of correction for complying with those item [sic] for which
a
waiver has been denied." (State's appeal file, Ex. 26, p. 2)
The State
argued, however, that the June 15, 1984 letter merely sought
additional
information with regard to the February 24, 1984 plan of
correction and
did not reject it or require a new plan.
We conclude that the June 15, 1984 letter is not sufficient to show
that
the State improperly certified the facility. As discussed
later,
however, we find that FFP was available beginning on the starting
date
of the period of certification shown on the Certification
and
Transmittal form, not beginning on February 24, 1984 when the plan
of
correction was first submitted.
The first deficiency addressed by the June 15, 1984 letter was the
failure
to have the facility grounds graded to the same level as the
primary entrance
of the facility, so as to make it accessible to the
handicapped. In the
February 24, 1984 plan of correction, the facility
requested a waiver of the
applicable requirement, but stated with
respect to this deficiency that "Part
of plan of compliance in process
of being approved by State architect."
(State's appeal file, Ex. 28, p.
6) In a March 7, 1984 letter sent to
the survey agency, the facility
indicated that a ramp would be
installed. The survey agency's June 15,
1984 letter requested that the
facility "provide this office with a
completion date for installation of this
ramp." (State's appeal file,
Ex. 26, p. 1) The June 15, 1984
letter does not state that the earlier
plan of correction for this item was
not acceptable.
The second deficiency addressed by the June 15, 1984 letter was
the
failure to have resident toilet and bathing rooms which were
accessible
to the handicapped. In the February 24, 1984 document, the
facility
requested a waiver of this requirement, but stated that "all
structural
changes are being reviewed with State architect concerning
this."
(State's appeal file, Ex. 28, p. 5) The State survey
agency's June
15, 1984 letter advised the facility that only a first-floor
bathing
room need be made accessible, and that a waiver was granted with
respect
to the rest of the rooms in question. It did not find that the
earlier
plan of correction was unacceptable with respect to this item.
A third deficiency addressed by the June 15, 1984 letter was the
failure
to provide an isolation room. In the February 24, 1984 plan
of
correction, the facility requested a waiver of this requirement,
but
also stated, "Part of plan of compliance in process of being approved
by
State architect." (State's appeal file, Ex. 28, p. 6) The June
15,
1984 letter noted that in the March 7, 1984 letter sent to the
survey
agency, the facility indicated that an isolation room would be
provided.
Waivers of the remaining two deficiencies discussed in the June 15,
1984
letter were granted as requested in the February 24, 1984 document.
The evidence in the record indicates that the facility was proposing
two
alternatives: waiver of the requirements or correction of
the
deficiencies.
In this context, the request in the June 15, 1984 letter for
"an
acceptable plan of correction" may reasonably be read as simply
a
request for a revised plan of correction reflecting waivers granted
by
the survey agency as well as proposed corrections now approved by
the
State architect. Moreover, in view of the fact that waivers
were
partially granted, the request for a completion date may simply
have
contemplated earlier compliance than what was found acceptable
without
the waivers. We do not think the letter is sufficient to
overcome the
State agency's finding on the Certification and Transmittal form
that
the facility had submitted a plan of correction as of April 2,
1984
which was acceptable. Also, while the inclusion of the
same
deficiencies in the July 23, 1984 summary of deficiencies was
responsive
to the June 15, 1984 letter, this did not necessarily constitute
the
submission of the first acceptable plan of correction.
While we find the June 15 letter insufficient to show that no
acceptable
plan of correction had been submitted prior to that date, we
nonetheless
reject the State's contention that FFP is available as of
February 24,
1984. The Agency argued that the State was bound by the
starting date
of the period of certification shown on the Certification
and
Transmittal form, which was April 3, 1984. We agree with the
Agency
that this is the appropriate starting date in this case.
If the plan of correction was deemed by the survey agency to be
acceptable
as submitted on February 24, 1984, it would be reasonable to
expect that the
survey agency would have shown that date as the
beginning of the period of
certification. Since it did not, the burden
is on the State (1) to show
that the plan as submitted was deemed
acceptable without any further
information having been provided by the
facility, and (2) to explain why the
survey agency did not use this
date. The State did not even attempt to
meet that burden here;
moreover, the inclusion in the plan of ambiguous
references to State
architect's approval makes it likely that further
information was needed
before the plan could be deemed acceptable.
Also, although the document
was signed by the facility on February 24, 1984,
the document also
contains notations indicating that, at least as of March 2,
1984, the
proposed completion dates for the corrections were unknown.
(State's
appeal file, Ex. 28) In the absence of evidence to the
contrary, it is
reasonable to presume that the completion dates appearing on
the plan
were not added until April 2, 1984, the date the plan was approved
by
the State survey agency.
Accordingly, we find that FFP was not available until April 3, 1984,
the
date shown on the Certification and Transmittal form. (We note,
in
addition, that if we adopted the State's position that FFP was
available
beginning February 24, 1984, the period of certification would in
effect
exceed the 12 months permitted by 42 CFR 442.15(a). The State
did not
explain how its position was consistent with this regulation.)
The Agency also argued that FFP was not available after May 31, 1984,
when
an automatic cancellation clause took effect. The Certification
and
Transmittal form referred to above specifically stated that
"Sanitarian [sic]
deficiencies must be corrected by June 1, 1984 or
agreement will
terminate." (State's appeal file, Ex. 27) The Agency
asserted
that the sanitation deficiencies included in the plan of
correction were not
corrected until after that date. The State did not
respond to this
argument on its merits, but argued that the Agency had
not raised this issue
in the notice of disallowance and was barred from
expanding the disallowance
on this basis now.
Contrary to what the State argued, however, the notice of
disallowance
does bring up the cancellation clause, finding that FFP was
unavailable
until the sanitation deficiencies referred to in that clause
were
corrected. Thus, HCFA's brief did not raise a new issue. Nor
did the
brief seek to expand the disallowance beyond the period
originally
covered. The brief states that, based on the automatic
cancellation
clause, the Board "must rule FFP is unavailable after May 31,
1984."
(Agency's brief, p. 25, n. 12) Since the brief does not specify
the
last date as of which FFP was unavailable, we assume that HCFA
intended
the disallowance to cover only the period originally identified in
the
notice of disallowance. Accordingly, we find that the Agency did
not
expand the disallowance, and that this issue is properly considered
by
the Board.
We further find that FFP claimed for the period June 1, 1984 through
July
22, 1984 was properly disallowed based on the cancellation clause.
The Agency
alleged that a sanitation deficiency in the plan of
correction identified as
T-117, 12.03.12.00 was not corrected until July
23, 1984. The State did
not dispute this finding, and in fact the
Post-Certification Revisit Report
shows that the correction of this
deficiency was completed on July 23,
1984. (Agency's appeal file, Ex.
U)
For the foregoing reasons, we reverse the disallowance for this
facility
for the period April 3 through May 31, 1984, from the starting date
on
the Certification and Transmittal form to the automatic
cancellation
date. We uphold the remaining disallowance, for the period
October 1,
1983 through April 2, 1984 (the State did not contest that portion
of
the disallowance covering the period October 1, 1983 through
February
23, 1984) and the period June 1, 1984 through July 22, 1984.
Ora G. Morrow Nursing Center
The Agency disallowed FFP claimed at both the SNF and intermediate
care
facility (ICF) levels for this facility from July 1, 1984 (the day
after
the facility's Medicaid provider agreement expired) through March
31,
1985 (the end of the review period). The State argued that
under
section 1910(c) of the Act, FFP was available at the SNF level
beginning
July 19, 1984, when the facility's application for Medicare
SNF
certification was denied, until the expiration of the 60-day period
for
appealing that denial. The Agency took the position that
section
1910(c) was not applicable since it presupposes that a Medicaid
provider
agreement is in effect when the Agency's determination
regarding
Medicare eligibility is made. We agree. We therefore
need not address
here the Agency's contention that section 1910(c) does not
apply to a
facility that is dually certified to provide SNF services in both
the
Medicare and Medicaid programs.
Section 1910(c)(2) states that a Medicaid provider agreement "shall
remain
in effect until the period for filing a request for a hearing has
expired . .
. ," and further provides that "the agreement shall not be
extended if the
Secretary makes a written determination . . . that the
continuation of
provider status constitutes an immediate and serious
threat. . . ."
(Emphasis added.) Since the statute is clear on its
face that it
operates to extend only an existing provider agreement, the
State was not
justified in relying on this provision for a facility
which was not currently
certified. Accordingly, we sustain the
disallowance of FFP for this
facility.
Polo Continental Manor
This facility was certified by the State survey agency as in
compliance
with Medicaid program requirements based on an acceptable plan
of
correction. The Certification and Transmittal form shows the period
of
certification as March 22, 1984 through December 5, 1984. The
State
took the position that FFP was available beginning on August 4,
1983
under 42 CFR 442.13(c) because the plan of correction on which
the
certification was based was submitted on that date.
We do not agree. As we stated with respect to a similar
argument
involving Miller Nursing Home, there is a presumption that the
beginning
of the certification period shown on the Certification and
Transmittal
form is the effective date of certification absent a showing by
the
State that the plan of correction was found acceptable as submitted
and
an explanation why the survey agency did not use the original date
of
submission on the Certification and Transmittal form. The
State
asserted that the issue here "is when the provider agreement could
be
effective, and FFP available--not what dates were inserted on a
form."
(State's reply brief, p. 20) However, the dates inserted on the
form
are the best evidence of when an acceptable plan of correction
was
submitted, which, under section 442.13(c), is the date the
provider
agreement is effective.
Accordingly, we find that the Agency properly disallowed FFP for
this
facility from August 4, 1983 through March 21, 1984 on the ground
that
it was uncertified. The period prior to October 1, 1983 was
covered by
an earlier disallowance which the State did not contest.
(See Illinois
Department of Public Aid, Decision No. 724, February 27, 1986,
p. 2, n.
1) In view of our conclusion here, we need not decide whether,
because
of its posture in the prior case, the State is estopped from
here
asserting a claim for FFP beginning August 4, 1983.
Reisch Memorial Home
This facility was certified by the State survey agency as in
compliance
with Medicaid program requirements for the period April 22, 1984
through
April 21, 1985. Prior to the certification period, a survey had
cited
as a deficiency the facility's lack of a registered nurse on
weekends,
and the facility had written to the survey agency requesting that
it be
excepted from the requirement that an SNF have at least one
registered
nurse on the day tour of duty seven days a week. The
Certification and
Transmittal form indicated that there was an acceptable
plan of
correction, and in addition, that the State recommended a waiver of
the
seven-day registered nurse requirement.
Section 405.1911 of 42 CFR, implementing section 1861(j) of the
Act,
provides that the Secretary may waive the seven-day registered
nurse
requirement (which appears separately at 42 CFR 405.1124) based
upon
certain "documented findings of the State agency." However,
HCFA,
acting as the Secretary's delegate in this matter, denied the
waiver
recommended by the State on three separate occasions. The
November 16,
1984 denial stated that the State agency did not submit
the
documentation required in 42 CFR 405.1911(a)(3) and (4) that--
(3) Such facility (i) has only patients whose
attending
physicians have indicated (through physicians' orders
or
admission notes) that each patient does not require the
services
of a registered nurse for a 48-hour period or (ii) has
made
arrangements for a registered nurse or a physician to spend
such
time at the facility as is determined necessary by the
patient's
attending physician to provide necessary services on days
when
the regular full-time registered nurse is not on duty.
(4) Such facility has made and continues to make a good
faith
effort to comply with the more than 40-hour registered
nurse
requirement, but such compliance is impeded by
the
unavailability of registered nurses in the area.
The April 8, 1985 denial indicated that all the documentation required
by
the quoted provisions had still not been submitted, specifically
questioning
the facility's assertion that adequate care could be
provided by registered
nurses employed in an adjoining hospital. The
last denial on February
24, 1986 indicated that the requirement in 42
CFR 405.1124(c) that the
facility be "located in a rural area" was not
met, stating--
The Facility is located in a city with a population
of over 2500.
Lacking any other direction, this
facility would not qualify for a
waiver since the
Bureau of Census would not consider the area to be
rural since the population is more than 2500.
(State's appeal file, Ex. 49)
HCFA ultimately disallowed FFP claimed for the period April 22,
1984
through March 31, 1985, the end of the review period, based on 42
CFR
442.30. That section provides that a provider agreement is not
valid
evidence of certifiability where the survey agency fails to follow
the
procedures for certification. The procedures that HCFA had in mind
were
presumably those at 42 CFR 442.13(c), which states in pertinent
part
that a provider agreement is effective on "[t]he date on which
the
provider submits . . . an approvable waiver request . . . ," where
the
provider otherwise meets all requirements.
The State appealed the disallowance, claiming that HCFA acted
arbitrarily
with regard to the waiver in that it refused to provide
assistance sought by
both the State and the facility as to the
documentation required. The
State also contended that the waiver was
improperly denied since application
of the Census Bureau definition of
"rural" was not required and the area in
which the facility was located
could be considered "rural" under other
criteria. The State took the
position that this was the sole basis for
HCFA's final decision to deny
the waiver since the February 24, 1986 denial
did not mention any
documentation deficiencies.
We find that the facility's SNF certification was invalid during
the
period for which FFP was disallowed on the ground that an
"approvable
waiver request" was not submitted prior to the end of that
period, March
31, 1985. Section 405.1911(a)(3) of the regulations
specifically
requires written statements by the attending physicians of
patients in
the facility to the effect that the patients do not require the
services
of a registered nurse for a 48-hour period, unless
alternative
arrangements for such care have been made for days when a
registered
nurse is not on duty. Statements purporting to fulfill this
requirement
were not submitted by the provider to the survey agency until
August 1,
1985. (State's appeal file, Ex. 47) Thus, even assuming
that all other
requirements of section 405.1911 had already been met, there
would not
have been an approvable waiver request before that date.
Accordingly,
certification prior to that date violated section
442.13(c). Inasmuch
as this was not simply a procedural violation, but
involved the failure
to comply with a condition of participation, the Agency
properly
disallowed FFP at the SNF level for the period April 22, 1984
through
March 31, 1985 based on 42 CFR 442.30(c).
We are not persuaded by the State's argument that only the basis
for
denial of the waiver articulated on February 24, 1986--that the
facility
was not in a rural area--is properly considered here. As
indicated
above, the relevant inquiry here is when the facility submitted
an
approvable waiver request. The fact that HCFA may have
ultimately
determined that the regulatory requirements for documentation had
been
satisfied does not mean that an approvable waiver request was
submitted
in time to render the facility's certification valid for any
portion of
the period covered by the disallowance.
In addition, we are not persuaded by the State's argument that HCFA
did
not provide adequate guidance regarding the necessary
documentation.
The first two denials issued by HCFA cited specific parts of
the
regulation with which the State had not complied. The regulation
itself
is quite specific with regard to the requirement for
physicians'
statements. Thus, the failure to provide this documentation
before the
end of the review period is not attributable to any lack of
guidance by
the Agency.
The disallowance of FFP claimed at the ICF level would not appear to
be
justified on the basis stated by the Agency, however, since
the
requirement for seven-day registered nursing service is a condition
of
participation for SNFs only. Thus, absent any determination by
HCFA
that the failure to comply with this requirement also renders
this
facility uncertifiable for ICF purposes, the disallowance for
FFP
claimed at the ICF level must be reversed. If HCFA makes a
new
determination disallowing FFP for ICF services, the State may
appeal
such a determination to us.
Villas of Shannon Nursing Home
The provider agreement for this facility expired May 2, 1983.
HCFA
disallowed FFP claimed from May 3, 1983 until August 16, 1984, when
the
facility was recertified. The period May 3, 1983 through September
30,
1983 is covered by an earlier disallowance which the State did
not
contest. (See Decision No. 724, supra, p. 2, n. 1.) The State
here
appealed the disallowance for the period October 1, 1983 through May
2,
1984 based on MSA-PRG-11, a December 1971 Program Regulation
Guide
issued by a predecessor agency of HCFA. The Board has held that,
under
this issuance--
FFP is available subsequent to termination or
nonrenewal of a
provider agreement when a facility
contests the termination or
nonrenewal and by state
law or court order a state is required to
continue
payments pending the provider appeal. The availability
of
FFP in payments for services to Medicaid
recipients during a
provider appeal is limited to a
maximum of 12 months from the end
of the term of the
provider agreement.
(Decision No. 724, supra, p. 1, and cases cited therein.) The
State
contended here that the facility instituted an appeal (in response to
a
February 24, 1983 survey by the State, which found several
deficiencies)
by requesting a hearing in a letter accompanying a plan of
correction
dated March 15, 1983. The State further contended that the
appeal was
pending throughout the period in question.
We find that MSA-PRG-11 does not apply here since the facility's
appeal
was not taken pursuant to notice by the State that the
facility's
provider agreement (or its Medicaid certification) was not
being
renewed. The Board has held that--
Unless the State notifies the provider of its
decision to terminate
or not to renew a provider
agreement, no FFP is available under
PRG-11. . .
.
(Decision No. 724, supra, p. 5) It is clear from the record that
there
was no notice of non-renewal which gave rise to the facility's
appeal.
Internal State memoranda dated August 3 and August 31, 1983
indicate
that, as of those dates, the Department of Public Health had not
given
formal notice of a determination to decertify the facility.
(Agency's
appeal file, Ex. DD) Since the facility's March 15, 1983
request for a
hearing preceded these memoranda, there was no appeal within
the meaning
of MSA-PRG-11. (The notification of the earlier
disallowance for this
facility indicates that an appealable notice was sent
by the Department
of Public Health on November 18, 1983. However, the
March 15, 1983
hearing request was clearly not made in response to this
notice.)
The State in fact acknowledged that the hearing which was
docketed
pursuant to the facility's March 15, 1983 request "was not a
formal
termination hearing. . . ." (State's reply brief, p. 22)
However, the
State appeared to argue that MSA-PRG-11 was applicable since the
same
issues were involved as would have been raised if the State had
notified
the facility of a decision not to renew its certification.
This
argument has no merit. As this Board has indicated in
previous
decisions on PRG-11, a state's delay in providing a facility with
proper
notice necessary to end its participation in the program cannot
provide
a basis for FFP. (Pennsylvania Department of Public Welfare,
Decision
No. 331, June 30, 1982, p. 3; Michigan Department of Social
Services,
Decision No. 290, April 30, 1982, p. 17; Tennessee Department of
Public
Health, Decision No. 26, March 25, 1982, p. 4) The rationale
for
permitting FFP in the situation where a state must pay a
facility
pending an appeal because of state law or court order does not apply
to
a time period where a state is aware that a facility is not
in
compliance but does not act to end its participation.
Accordingly, we sustain the disallowance for this facility for the
period
October 1, 1983 through August 15, 1984.
Conclusion
For the reasons stated above, we uphold the disallowance in part
and
reverse it in part as specified in the text of this decision
and
summarized in the attached Appendix.
_____________________________ Norval D. (John) Settle
_____________________________ Alexander G. Teitz
_____________________________ Judith A. Ballard Presiding
Board