DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: New Mexico Human Services Department
Docket No. 87-128
Decision No. 907
DATE: October 15, 1987
DECISION
The New Mexico Human Services Department (State) appealed a decision
by
the Health Care Financing Administration (HCFA) disallowing
federal
financial participation (FFP) in the amount of $13,484 claimed by
the
State under title XIX (Medicaid) of the Social Security Act (Act)
for
payments for services to two long- term care facilities, Ruidoso
Care
Center (Ruidoso) and Lovington Good Samaritan Center (Lovington).
The
basis for the disallowance was that FFP was not available for
payments
to the two facilities during periods when they did not have
valid
provider agreements with the State.
We uphold the disallowance for Ruidoso for the entire period from
February
1, 1984 through March 31, 1984, because the State purported to
extend the
provider agreement with it for those 60 days without meeting
the requirements
of the regulation for such an extension.
We uphold the entire disallowance for Lovington because the
State
certified the facility and entered into a provider agreement with
it
before the life safety code survey was completed, in violation of
the
pertinent regulation.
Background
A long-term care facility (nursing home) seeking to participate in
the
Medicaid program must first be inspected by the state survey
agency,
usually the state health department, to see if it meets federal
(and
state) requirements. If the state survey agency is satisfied,
it
certifies the facility to the state Medicaid agency, using
a
Certification and Transmittal (C&T) form. The state Medicaid
agency
then enters into a provider agreement with the facility. Only if
there
is a valid provider agreement, after certification by the state
survey
agency, may the state receive FFP in its payments to the facility
for
services.
I. Ruidoso
The provider agreement with Ruidoso was due to expire on January
31,
1984. According to the State's own submissions, the State survey
and
Medicaid staffs met with the facility's owners on February
1st.
Immediately following this meeting, the State survey agency
verbally
issued approval to the State Medicaid staff for the 60-day
extension,
and said that paperwork would soon follow. Everyone at the
meeting was
satisfied that no conditions existed that would jeopardize
patient
health or safety. (State Letter to Board dated August 24, 1987
and
affidavit, Exhibit E)
The written extension agreement for the facility was not submitted to
the
State Medicaid agency until February 8, 1984, and even then no
certification
as to patient health or safety was included.
The pertinent regulation is 42 CFR 442.16:
A Medicaid agency may extend a provider
agreement for up to 2
months beyond its
original expiration date if it receives
written
notice from the survey agency,
before the expiration date of the
agreement, that extension will not jeopardize the
patients'
health and safety. . . .
The State admitted that the Medicaid agency did not receive the
required
written notice from the survey agency before the expiration date of
the
agreement. However, in a telephone conference on September 16,
1987,
the State contended that HCFA was elevating "form over
substance,"
citing a Board decision from the same State involving the
same
regulation, namely, New Mexico Human Services Department, Decision
No.
708, December 6, 1985. In that case the State survey agency had
placed
an "x" on the C&T in a block which read "in compliance with
program
requirements." The Board found that HCFA was unreasonable in
asserting
that this did not meet the precondition for an extension under 42
CFR
442.16 that there be written notice from the survey agency
that
extension would not jeopardize the patients' health and safety.
The
Board there stated that HCFA's position was elevating "form
over
substance," and reversed that part of the disallowance based on
the
extension of the provider agreement. (Decision No. 708, p. 9)
There
was no question that the notice was in writing and timely.
In this case the very block on the C&T form on which we based
our
finding in New Mexico was not checked, and there was no other
statement
on the form having any reference to patients' health and
safety.
(Exhibit A)
The State also argued that no written notice at all was necessary, and
the
written notice of February 8 was merely a formalization of the prior
verbal
agreement, which fulfilled all the possible purposes of the
regulation.
The regulation required written notice from the survey
agency before the
prior agreement expired. 1/ There may well be good
reason to
require written notice to avoid problems of proof. The Board,
in any
event, is bound by the language of the regulation requiring
notice in
writing. The State by its own admission did not comply with
the
regulation, and therefore the disallowance for this facility must
be
upheld.
II. Lovington
The State certified and granted a provider agreement for this facility
for
the period beginning March 1, 1984. The State survey agency
completed
the facility's health survey on March 1st, but the life safety
code survey
was not completed until March 8th. HCFA therefore
disallowed FFP for
the seven days from March 1 until March 8.
The pertinent regulation is 42 CFR 442.13(c)(1). This provides that
if
all federal requirements are not met on the date of the survey,
the
provider agreement cannot be effective until the date on which
the
provider meets all requirements.
Here, again, the State admits that the life safety code survey was
not
completed until seven days after the starting date of the
provider
agreement. The State argued that, as part of an
austerity budget, HCFA
cut funding in the years 1982-1983 for State life
safety code surveyors
from two to one, and the Regional Office approved
limited State life
safety code surveys for that period. When the second
surveyor was
restored in October 1983 a backlog had developed, and
therefore,
according to the State, the delay in completing the survey was a
direct
result of action taken by the Regional Office of HCFA. The
State
stated, however, that it was not arguing that the Agency should
be
estopped from taking the disallowance. (Telephone Conference
of
September 16, 1987)
The State in the telephone conference also referred to the provisions
in
42 CFR 442.323 permitting waivers by the State survey agency of
fire
protection provisions of the Life Safety Code, and certain waivers
of
space and occupancy requirements permitted under 42 CFR 442.325.
There
is nothing in the record to show that the State survey agency
ever
attempted to grant any such waiver, or that the conditions in
the
regulations for a waiver were met or even considered.
The State admitted that it did not comply with the requirements of
the
regulation when it issued a provider agreement seven days before
the
life safety code survey was completed. There was no approval of
any
limited survey at the time. We must uphold the disallowance for
the
seven-day period.
CONCLUSION
The State admitted that it did not comply with the requirements of
the
relevant regulations pertaining to either entering into or
extending
provider agreements with the respective facilities. 2/ The
Board is
bound by.all applicable laws and regulations. 45 CFR
16.14. The
disallowance as to each facility is upheld for the periods
and in the
amounts stated in the disallowance notice.
________________________________ Donald
F.
Garrett
________________________________ Norval
D.
(John) Settle
________________________________ Alexander
G.
Teitz Presiding Board Member
1. Even if verbal notice were adequate, it is doubtful if
this notice
would meet the timeliness requirement of the regulation. The
provider
agreement expired on January 31. Any notice on February 1st
would not
be "before the expiration date of the agreement."
2. The State during the appeal asked the Board to rescind
the
disallowance for failure of the Agency to file its appeal documents
on
time. The State withdrew this request in the September 16th
telephone
conference. Even if we had issued a decision on the basis of
the record
without the Agency briefing, using the sanction specified in 45
CFR
16.15(c), we would be constrained to sustain the disallowances on
the
State's own