DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Oregon Department of Human Resources
Docket No. 87-75
Decision No. 895
DATE: September 2, 1987
DECISION
The Oregon Department of Human Resources (Oregon/State) appealed
a
determination by the Health Care Financing Administration
(HCFA/Agency)
disallowing $455,622.05 in federal funds claimed by the State
under the
Medicaid program of the Social Security Act (Act) for the
calendar
quarters ending June 30, September 30, and December 31, 1986.
The
disallowance was taken pursuant to section 1903(g)(1) of the Act,
which
provides for reduction of a state's federal medical
assistance
percentage of amounts claimed for a calendar quarter for
long-stay
services 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, HCFA alleged that Oregon failed to
conduct
satisfactory annual reviews at four intermediate care facilities
(ICFs)
for the quarter ending June 30, 1986. These facilities
are: Fairlawn
Care Center, 1/ Midway Care Center, Rose Haven Nursing
Center, and
Sunnyside Care Center. HCFA also alleged that Oregon had
not
satisfactorily completed the reviews in these facilities during
the
quarters ending September 30 and December 31, 1986. Consequently,
HCFA
included those two quarters in the penalty calculation as well.
See 42
CFR 456.652(b)(3) and 42 CFR 456.657. Upon review of
documentation
submitted by the State, HCFA dropped the quarter ending
December 31 from
the calculation. Additionally, HCFA withdrew its
findings of violations
at Rose Haven and Fairlawn for the September
quarter. The revised
disallowance, which now encompasses violations at
Rose Haven and
Fairlawn for the June quarter and at Midway and Sunnyside for
the June
and September quarters, reduced the amount at issue to
$229,170.76.
Generally, Oregon argued that it was not responsible for
reviewing the
cited patients in the Sunnyside and Rose Haven facilities.
Additionally,
Oregon asserted that it had taken all the steps which it
could
reasonably be expected to take in attempting to complete the reviews
at
Midway and Fairlawn, so that its failure to review those
facilities
could be excused under the statutory exceptions to the annual
review
requirement.
Based on the following analysis, we reverse the disallowance in part
and
sustain it in part.
Applicable Law
Section 1902(a)(31) requires in pertinent part that a state
plan
provide:
(B) with respect to each . . .
intermediate care facility
within
the
State, for periodic onsite inspections of the care
being
provided to each person receiving medical assistance, by
one
or
more independent professional review teams . . . .
The regulations implementing this provision and section 1903(g)(1)
are
found at 42 CFR Part 456. 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 .
. . .
(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.
* * * *
The Act contains two exceptions to the annual review requirement.
Section
1903(g)(4)(B) provides --
The Secretary shall find a showing . . .
to be satisfactory . . .
if the showing
demonstrates that the State has conducted such
an
onsite inspection during the 12-month
period ending on the last
date of the
calendar quarter --
(i)
in each of not less than 98 per centum of the number
of
such
hospitals and facilities requiring such inspection, and
(ii)
in every such hospital or facility which has 200
or
more
beds,
and that, with respect to such hospitals
and facilities not
inspected within such
period, the State has exercised good
faith
and due diligence in attempting to
conduct such inspection, or if
the State
demonstrates to the satisfaction of the Secretary
that
it would have made such a showing
but for failings of a technical
nature
only.
The statutory exceptions are implemented by 42 CFR 456.653 which
provides
in pertinent part:
The Administrator will find an agency's
showing satisfactory,
even if it failed
to meet the annual review requirements
of
section 456.652(a)(4), if - -
(a) The agency demonstrates that --
(1)
It completed reviews by the end of the quarter in
at
least
98 percent of all facilities requiring review by
the
end of
the quarter;
(2)
It completed reviews by the end of the quarter in
all
facilities with 200 or more certified Medicaid
beds
requiring review by the end of the quarter; and
(3)
With respect to all unreviewed facilities, the
agency
exercised good faith and due diligence by attempting
to
review
those facilities and would have succeeded but
for
events
beyond its control which it could not have
reasonably
anticipated; 2/ or
(b) The agency demonstrates that
it failed to meet the standard
in
paragraph (a)(1) and (2) of this section for
technical
reasons, but met the standard
within 30 days after the close of
the
quarter. Technical reasons are circumstances within
the
agency's control.
Oregon's System of Identifying Recipients for Annual Review
Inspections of care in Oregon's ICFs were conducted by a review team
known
as the Client Care Monitoring Unit (CCMU). The process of
patient
identification consisted of four basic steps. The CCMU would
first
obtain a copy of the facility's most current billing document,
more
commonly known as a turn around document (TAD), and the
institution's
most recent update, bringing the TAD current to the end of the
month
preceding the review. Second, on the first day of an inspection
the
CCMU would request a list from the facility of all patients who
were
either Medicaid-eligible and had entered the facility after the
past
month's update or had newly applied or were recently accepted
for
Medicaid coverage. Third, the CCMU would contact the local
social
services agency responsible for processing Medicaid applications for
the
facility and request information on any recent applicants. Finally,
on
the last day of a review, the team would ask the facility for a list
of
any potentially Medicaid-eligible individuals whom the facility
had
become aware of during the course of the review. The CCMU team
would
routinely review potential, as well as actual, Medicaid
recipients.
Oregon Brief, pp. 4-6.
Facts and Analysis
We have long held that a patient who was not determined eligible
for
Medicaid as of the first day of a facility review was not required to
be
included in a review. South Dakota Department of Social
Services,
Decision No. 650, May 28, 1985. We have also held that a
patient not in
a facility at the time that the review team checks with
facility
authorities on the first day of the review to get a "census" of
patients
need not be reviewed. Vermont Agency of Human Services, Decision
No.
687, August 22, 1985. Similarly, a patient who had not been
determined
eligible for Medicaid as of that time would not be required to
be
reviewed. North Carolina Department of Human Resources, Decision
No.
728, March 18, 1986.
While a state bears the general responsibility to review all recipients
in
a facility, a state may only be held responsible for reviewing
those
recipients it could have reasonably been expected to identify.
Idaho
Department of Health and Welfare, Decision No. 747, April 28,
1986. In
Idaho, we found the state's computer assisted system for
recipient
identification reasonable even though the identity of a recipient
found
eligible two days prior to the start of the annual review was
not
available to the review team at the start of the review.
Accordingly,
we determined that the recipient cited by HCFA need not have
been
reviewed. In Missouri Department of Social Services, Decision No.
801,
November 3, 1986, we found that the state's system of review
was
reasonable even though patients identified as Medicaid eligible as
much
as three weeks prior to the start of review had not been
reviewed.
Finally, in Texas Department of Human Services, Decision No.
830,
January 27, 1987, we found that the state was not responsible
for
reviewing a recipient in a facility prior to a review where the
state's
failure to identify the recipient was attributable to the fact that
a
facility which had recently discharged the recipient had not
notified
the state of the patient's Medicaid status in a timely manner.
As we recognized in Idaho, supra, there is very little Agency guidance
to
assist a state in knowing how to formulate a list of patients to
be
reviewed. In that decision we noted that the Medical Assistance
Manual
(MSA-PRG-25, November 13, 1982) does little more than encourage
state
review teams to prepare in advance for an annual review by obtaining
a
current list of patients for whom Medicaid payments are being made at
a
facility. Idaho, at 7.
Given this general direction, the State has devised a system of
patient
identification whereby it develops a recipient list from its TADs
and
supplements that list with information from both the facility and
the
recipients' social services agency prior to the review.
Additionally,
even though there is no direction from the Agency to go any
further, the
State's system includes reviews of potential Medicaid recipients
and a
final check with the facility on the last day of the review to pick
up
any new applications or recipients who may not have been
identified
earlier.
In view of the limited direction given to the states and
Oregon's
exhaustive attempts to develop comprehensive patient review lists,
we
find that the State's system of patient identification is reasonable.
I. Sunnyside Care Center
The CCMU reviewed this facility from April 9-16, 1986. HCFA
alleged
that the CCMU review missed five Medicaid patients. Oregon argued
that
it had taken all steps reasonably available to identify all the
patients
whom it might have been required to review at Sunnyside.
Oregon
asserted that, in any event, it was not required to review these
five
individuals.
The Agency did not challenge Oregon's assertion that the CCMU followed
the
four step process designed to identify patients to be included in an
annual
review. In an affidavit, the CCMU team leader for the Sunnyside
review
indicated that on both the first and last days of the review she
contacted
the responsible individuals in the facility and the local
social services
agency in order to determine if there were any new
recipients who should be
reviewed. However, at no time was the team
leader informed of these
five individuals' eligibility. Oregon Ex. K,
p. 3. Oregon also
submitted an affidavit from the Sunnyside Business
Office Manager who was
responsible for updating the facility's files to
indicate a patient's status
as private pay or Medicaid. This individual
stated that it was her
practice to adjust the facility records on the
day the facility was notified
of a patient's Medicaid eligibility. She
indicated that on April 9th
she adjusted the facility's records to
reflect Medicaid eligibility for two
of the individuals cited by HCFA.
The affiant stated that, to the best of her
knowledge, the adjustment
occurred after her discussion with the CCMU team
leader. She made
similar adjustments for the remaining three
individuals on April 10th.
Oregon Ex. A, pp. 1-2.
HCFA did not directly challenge the statements made by either of
Oregon's
affiants, but asserted that Oregon's argument should have been
supported by
additional affidavits from the facility's Director of
Nursing and the local
social service agency responsible for notifying
the facility of the patients'
eligibility. HCFA Brief, p. 11.
We think that the rationale of our earlier cases addressing a
state's
ability to reasonably identify recipients applies here as well.
As
noted above, the State has offered evidence from a responsible
employee
at Sunnyside which supports a finding that the facility was not
notified
of these patients' Medicaid status until after the start of the
review.
3/ Further, the State's system of recipient identification is
far more
comprehensive than that required by the statute or
implementing
regulations. In spite of HCFA's arguments that more
affidavits were
necessary to prove the State's case, we see nothing further
that could
have reasonably been expected from the State. The State
acted
reasonably in attempting to identify these individuals and, at
best,
could not have been aware of their status until the final day of
the
review, a date on which the State was under no further obligation
to
look for additional recipients. Even though the State made that
extra
effort, the facility did not provide it with accurate information.
Based on the facts here and the rationale of cases cited above, we
find
that the CCMU team was not required to review these
patients.
Accordingly, we reverse the disallowance for Sunnyside Care
Center.
II. Rose Haven Nursing Center
Rose Haven was reviewed from April 14-18, 1986. HCFA alleged that
the
CCMU failed to review four Medicaid recipients. There is no
direct
evidence in the record from the CCMU team leader for Rose Haven as
that
individual is no longer a State employee. Oregon Brief, p. 7.
However,
the record indicates that the CCMU team followed its usual
procedures
with regard to compiling a list of patients to be reviewed, but
received
no information regarding these four patients. Oregon Ex.
E.
On April 13, 1986 the CCMU team leader informed the local social
services
agency of the impending Rose Haven review and of the need for
new recipient
information. The team leader followed that call with a
memorandum
reasserting the need for this information. Oregon Ex. 27.
Officials at
the social services agency misunderstood the CCMU request
and provided the
CCMU with the information as of the date of the team
leader's memorandum and
not for the two weeks prior to that period.
Oregon Ex. C.
HCFA did not dispute the facts. However, HCFA argued that the
State
should be held responsible for failing to review these patients
because
the CCMU team leader did not ask the social services agency the
proper
questions to obtain the necessary patient information. HCFA
Brief, p.
12.
As with the Sunnyside facility, we do not believe that the State
could
reasonably be held responsible for the review of these patients.
HCFA's
assertion that the team leader did not ask the social services
agency
the proper questions is not supported by any evidence in the
record.
Rather, the available evidence leads to a conclusion that it was
the
social services agency which contributed to this oversight.
The
affidavit of the individual at the social services agency with whom
the
team leader spoke indicated that the agency did in fact send the
CCMU
what was otherwise correct information. However, the social
services
agency incorrectly assumed that the CCMU already had the
requested
information for the previous two weeks. Oregon Ex. C.
The CCMU acted reasonably in compiling its list and reviewed
every
identified Medicaid recipient. We can find no basis for the
Agency's
assertion that the team leader did not ask the proper questions
to
obtain the information. The oversight in providing the information
was
due to confusion on the part of the social services agency.
Further, it
is not clear from the evidence if the Medicaid status of these
patients
would have been readily available to the facility. There is
an
unchallenged affidavit in the record indicating that the facility
was
not informed of the Medicaid status of these individuals until April
25,
one week after the review. Oregon Ex. B. Thus, there is a
further
question as to the necessity to review these patients as the
facility
was unaware of their Medicaid eligibility at the start of the
review.
In view of the facts surrounding the review at Rose Haven Nursing
Center,
we conclude that the CCMU acted reasonably in attempting to
review all the
Medicaid patients at this facility and that it was not
responsible to review
the four recipients cited by HCFA. Accordingly, we
reverse the disallowance
for Rose Haven Nursing Center.
III. Midway Care Center
Midway Care Center was reviewed April 11-15, 1986. HCFA
originally
asserted that the CCMU failed to review two recipients at this
facility,
patients M.H. and P.M. 4/ In its brief, HCFA indicated that
patient
M.H. was being deleted from the disallowance because he was admitted
to
Midway after the review was completed. HCFA Attachment A, pp.
4-5.
Recipient P.M. was transferred to Midway one day prior to the start
of
the review. Oregon Brief, pp. 7-8.
The team leader for the review could not specifically recall
contacting
the social services agency for pertinent patient
information. However,
she indicated that she routinely followed the
procedure outlined above
for identifying Medicaid recipients. The team leader
asserted that she
asked the facility for patient updates at the beginning and
end of the
review, but the facility did not inform her of this patient's
status.
Oregon Ex. H.
The State argued that its showing for Midway should have been
found
satisfactory under the "good faith and due diligence" exception to
the
annual review requirement as contained at 42 CFR 456.653(a)(3).
Oregon
asserted that its failure to review this patient was due
to
circumstances beyond its control which it could not have
reasonably
anticipated, i.e., the facility's failure to provide
accurate
information. Oregon argued that it could not have
reasonably
anticipated the facility's failure to properly respond to its
inquiries
on two separate occasions. Oregon Brief, pp. 15-20.
Further, Oregon argued that the technical failings exception of 42
CFR
456.653(b) should apply to excuse the disallowance at Midway for
the
September 30 quarter. Oregon indicated that its failure to correct
this
deficiency was due to the fact that, although the patient's name
was
eventually added to the TAD, no routine mechanism existed
for
cross-checking the TAD against the list of patients reviewed. Thus,
the
fact that this patient had not been reviewed was undiscovered
until
shortly before the remedial review was performed. Oregon insisted
that
these were clearly circumstances within its control
warranting
application of the technical failings exceptions. Id. at
21-22.
HCFA alleged that the "good faith and due diligence" exception should
not
apply because the State did not follow its established procedures
for
conducting an annual review. Specifically, the CCMU team leader did
not
contact the local social services agency to cross-check the
patient
list. Additionally, HCFA asserted that the technical failings
exception
could not apply to excuse the review for the September quarter
because
the State's failure to have a TAD cross-check mechanism "is not
a
technicality, but a flaw in the system." HCFA Brief, pp. 12-13.
We do not need to determine if the "good faith and due diligence"
or
technical failings exceptions apply here because we find that the
State
could not have reasonably been expected to review this patient.
As
discussed above, in the Idaho, Texas, and Missouri decisions, we
have
developed the principle that a state must review only those
recipients
it was reasonably able to identify. In those cases, as here,
states
with otherwise reasonable systems for recipient identification
were
unable to identify recipients who were either found Medicaid eligible
or
were transferred into a facility just prior to the start of a review.
Contrary to HCFA's assertion, there is no definite evidence that the
CCMU
team leader did not contact the local social services agency.
Although she
was not sure whether she did, she noted that it was her
practice to do
so. The evidence indicates that, in all other aspects,
the CCMU team
followed its standard practice for identifying patients
and reviewed all
identified patients. As we discussed earlier, there is
very little guidance
to assist states in developing patient review
lists. Certainly, there
is no requirement that the state contact a
facility at the end of a review to
determine if there are any patients
who have become Medicaid eligible during
the course of the review;
neither is there a requirement that the states
review pending Medicaid
applicants. Here, Oregon made these extra
efforts to try to conduct the
most complete review possible. Given its
system, the CCMU team could
reasonably expect the facility to provide
accurate information in
response to its inquiries.
As we noted in Missouri, the statutory review requirement is
concerned
with annual reviews of patient care. However, recognizing the
inherent
administrative difficulties in tracking individual patients,
HCFA
implemented this requirement through an approach tracking reviews
of
facilities and making a facility review due by the end of the quarter
in
which a previous year's review was performed. Thus, not including
a
patient determined eligible (or arriving) shortly before a
facility
review begins means, at most, that the patient will not be
reviewed
until the next review, which will be about a year after the
eligibility
determination. Id. at 8. Although this patient was
Medicaid eligible
upon arrival at the facility, the rationale of Missouri
applies here as
well. The patient would be reviewed, at most, about one
year after her
arrival at the facility. 5/
Additionally, considering the proximity of this recipient's admission
to
the start of the review, it is not even clear that information
regarding
P.M.'s Medicaid status could have been processed quickly enough to
be
made available to the CCMU team. Although there is no evidence in
the
record which would indicate how quickly information
regarding
transferred Medicaid patients could be processed and made available
to a
review team, it would be reasonable to assume that, even under the
best
circumstances, that process might take several days. Further,
although
this recipient would have clearly required a review had she
been
reasonably identifiable, from a practical standpoint it is hard
to
imagine how adequately the quality of a patient's care could be
assessed
based on one day's residence in a facility.
Given the circumstances at Midway and the State's system of review,
we
find that the CCMU team was not required to review this recipient.
We
reverse the disallowance for Midway Care Center.
IV. Fairlawn Care Center
Fairlawn was reviewed May 13-20, 1986. The CCMU did not review
two
Medicaid recipients in the facility. Unlike the circumstances at
the
other facilities, the CCMU team did not follow the four-step process
for
identifying Medicaid recipients at Fairlawn. The CCMU team
leader
indicated that she did not contact the social services agency
in
Fairlawn's area prior to the review. The team leader stated her
belief
that the most reliable source of patient information was the
facility
itself. She characterized efforts to obtain information from
the
agencies as "an unreliable and time-consuming process." Oregon Ex.
J.
The State offered evidence to justify the team leader's
decision.
Basically, the State indicated that there was a good deal
of
administrative turmoil in the responsible social services agency
and
that it was simply very difficult to get information from the
agency.
Oregon Reply Brief, pp. 6-7; Oregon Ex. E. As it had with
Midway,
Oregon argued that its failure to conduct a satisfactory review
at
Fairlawn could be excused under the "good faith and due
diligence"
exception to the annual review requirement. Oregon Brief,
pp. 15-20.
HCFA argued that the "good faith and due diligence" exception should
not
apply here because the CCMU did not follow its established
procedures
for identifying Medicaid patients. We agree.
In spite of the statements from various State officials regarding
the
practical problems inherent in attempting to obtain information from
the
social services agency, there is no evidence that the CCMU team
leader
did anything more than act on "her belief" that the agency would
not
have provided the necessary information. There was a reasonable
system
in place for identifying Medicaid patients. The evidence
submitted has
not indicated that there was an established exception to that
system for
dealing with this social services agency. While it is true
that some
blame must be placed on the facility for failing to identify
these
patients, the State's position here is changed by the omission of
the
social services agency from the chain of patient identification.
Had
the CCMU attempted to obtain information from the social
services
agency, even unsuccessfully, then its position would be similar to
that
taken in regard to the other facilities. The fact that only
two
patients were missed or that similar inquiries of other social
services
agencies might not have produced accurate information is
immaterial.
There was an established process within the State's control which
was
not followed. Whether as a consequence of that failure, or not,
two
patients were not reviewed. Having failed to follow its own
process,
the State cannot reasonably argue that it would not have made
any
difference if it had contacted the social services agency. Rather,
the
State could have reasonably anticipated that failure to follow
the
process might result in the omission of a patient otherwise
requiring
review. We find that the "good faith and due diligence"
exception to
the annual review requirement cannot apply to the circumstances
of the
Fairlawn review, where the State was not diligent in following its
own
prescribed procedures. Accordingly, we uphold the disallowance
for
Fairlawn.
Conclusion
Based on the above analysis, we reverse the disallowances at
the
Sunnyside, Rose Haven, and Midway facilities. We uphold
the
disallowance at Fairlawn. The amount of funding disallowed should
be
adjusted accordingly.
_____________________________ Donald
F.
Garrett
_____________________________ Norval
D.
(John) Settle
_____________________________ Alexander
G.
Teitz Presiding Board Member
1. In the notice of disallowance HCFA indicated
that Fairlawn Care
Center was certified as a skilled nursing facility (SNF)
and that Oregon
contracts with a Professional Standards Review Organization
to review
skilled nursing facilities, while the State retains responsibility
for
reviewing ICFs. However, HCFA indicated that Fairlawn houses
ICF
patients and that Oregon conducts inspections of care (annual
reviews)
at that facility for ICF patients. Oregon did not dispute
HCFA's
assertion that this practice, and the statutory direction to
conduct
annual on-site reviews, justified inclusion of Fairlawn in the list
of
unreviewed ICFs. HCFA Brief, pp. 14-15. We agree that
inclusion of
Fairlawn as an ICF was proper.
2. Oregon has endorsed the recent holding of the
United States
District Court in Delaware Department of Health and Social
Services v.
U.S. Department of Health and Human Services, No.
86-233-CMW (D.Del.
July 9, 1987), in which that court struck down the "good
faith and due
diligence" exception as we had applied it in Decision No. 732,
March 21,
1986. Oregon did not pursue that issue in this appeal because
of our
position that 45 CFR 16.14 precludes us from considering the validity
of
the Agency's regulations. Oregon did request an opportunity to
brief
the validity of the regulations if we were going to consider that
issue.
Oregon Reply Brief, p. 8. Since we believe that the court's
holding in
Delaware is limited to that case, and we affirm our position that
we may
not address the validity of the regulations, we see no need for
briefing
on this issue.
3. HCFA indicated that the patients in question were
Medicaid
eligible anywhere from 8 to 22 days prior to the start of the
review.
HCFA Brief, pp. 4-5. A patient's Medicaid eligibility is
often
retroactive to a fixed date preceding the date on which a facility
is
notified of the eligibility determination. The Medicaid effective
dates
for these patients were on or about the beginning of April 1986.
See
Oregon Exs. 3, 7, 15, 16, and 17. Consequently, there would be
no
billing documents available for these patients on which the CCMU
could
rely in the initial stages of developing its review list.
4. Patients are identified by their initials to
protect their
privacy.
5. Oregon indicated that P.M. had been reviewed at
her previous
residence in February 1986. Oregon Brief, p. 9. However,
that review
would have no bearing on the CCMU's need to review her at Midway
had she
been admitted at a time where she appeared on the list of recipients
to
be reviewed.