GAB Decision 219
September 30, 1981 Ohio Department of Public Welfare; Docket No.
80-72-OH-HC Garrett, Donald; Settle, Norval Ford, Cecilia
The Ohio Department of Public Welfare (State) appealed from a penalty
disallowance of $438,970.71 made by the Health Care Financing
Administration (Agency) pursuant to Section 1903(g) of the Social
Security Act (the Act) for the quarter ending June 30, 1979. The Agency
determined that the State violated the recertification requirement of
Section 1903(g)(1)(A) for four patients in two mental hospitals.
The Agency modified the amount of the disallowance twice during the
course of the appeal. The Agency made the first reduction because the
Agency's original calculation reflected State expenditures for services
in addition to mental hospital services. The Agency accepted the figure
submitted by the State as the correct amount representing mental
hospital services only and reduced the penalty to $115,990.84. The
Agency later determined that the calculation did not reflect the fact
that the Section 1903(g) penalty is limited to long-term services, i.
e., beyond 60 or 90 days, depending on the level of service. Therefore,
the Agency recalculated the penalty again and reduced the amount
further. We conclude that the disallowance in an amount to be agreed
upon by the parties must be upheld.
This decision is based on the State's application for review, the
Agency's response, the parties' responses to the Board's Order to Show
Cause, a supplemental memorandum submitted by the Agency concerning
modification of the penalty, and an informal conference in which the
representatives of both parties, a Board staff attorney and the
presiding Board member participated. We have determined that there are
no material facts in dispute.
Pertinent Statutes, Regulations, and Policy
Section 1903(g) of the Act requires that the State agency responsible
for the administration of the State's Medicaid plan under Title XIX of
the Act show to the satisfaction of the Secretary that the State has an
"effective program of control over utilization of" long-term inpatient
services in certain facilities, including "hospitals for mental
diseases." This showing must be made for each quarter that the Federal
medical assistance percentage (FMAP) is requested with respect (2) to
amounts paid for such services for patients who have received care for
90 days in "hospitals for mental diseases," or the FMAP will be
decreased according to the formula set out in Section 1903(g)(5). The
satisfactory showing must include evidence that "in each case for which
payment is made under the State plan, a physician certifies at the time
of admission, . . . (and recertifies, where such services are furnished
over a period of time, in such cases, at least every 60 days . . .) that
such services are or were required to be given on an inpatient basis
because the individual needs or needed such services" (Section
1903(g)(1)(A)).
This statutory requirement is implemented by 42 CFR 456.160,
effective September 29, 1978. This regulation states:
(a) A physician must certify and recertify for each applicant or
recipient that inpatient services in a mental hospital are or were
needed.
(c) Recertifications must be made at least every 60 days after
certification.
An Agency Action Transmittal, SRS-AT-75-122, dated November 13, 1975,
instructed the States about "what is required in order for States to be
considered in adherence" with the statute and regulation. It defined
recertification as "the process by which a physician attests to an
individual's need for continued placement at a specific level of care."
The Action Transmittal identified several conditions "which must be met
in order for the recertification to be considered valid." The
recertification must be in writing, it must be signed by a physician
using his/her signature or initials, and the recertification must be
dated at the time it is signed or initialed. Several types of documents
may be acceptable as recertifications, e.g., a statement signed and
dated by a physician that the patient needs a particular level of care,
signed and dated physician orders or progress notes which indicate the
need for continued care, or a medical evaluation signed and dated by a
physician. The date of the signature must meet the agency's
requirements for a timely recertification, and the signature must be
indentifiable as that of a physician.
Discussion
In September 1979, Federal reviewers conducted an onsite survey, in
accordance with Section 1903(g)(2), of ten mental hospitals in the
State, to detemine whether the requirements of Sections 1903(g)(1)(A)
and (B) were met for the quarter ending June 30, 1979. The reviewers
found that four recertifications were invalid. Thereafter, the Agency
issued a notice of disallowance, from which this appeal was taken.
(3) 1) The Validity of the Recertifications for Two Patients
The Agency determined that there were no valid recertifications for
two patients in one MH.The State submitted documentation, allegedly
constituting valid recertifications, for the two patients. The Agency
examined this documentation and responded that the documentation did not
establish that the two patients were recertified in accordance with
Federal requirements. The Agency stated that each document lacked some
aspect of a valid recertification. The State focused on the physician
orders (Doctor's Order Sheet and Patient Progress Note Sheet) submitted
for the two patients and argued that they were valid recertifications
(Response to the Order to Show Cause). The Agency had stated that these
orders could not qualify as valid recertifications because they "do not
indicate what level of care was under evaluation and therefore do not
perform a proper recertification function" (Response to the Application
for Review, page 14). At the informal conference, the Agency clarified
this statement, saying that the physician orders, which contained only
notes regarding drug prescriptions and brief descriptions of the
patients' behavior, did not constitute statements that the patients
continued to need inpatient mental hospital care; therefore, the
physician orders did not meet the recertification requirements. The
State had submitted written evaluations of the physician orders
(Response to Order to Show Cause); the evaluations were prepared
specifically for the appeal by two physicians who were, successively,
the Medical Director and Acting Medical Director of the institution in
which the two patients resided. The evaluations stated that the
physician orders constituted a clear statement of the patients' need for
"continuation at a hospital level of care." At the conference, the
State
emphasized the arguments made in its Response to the Order to Show
Cause, and indicated that the evaluations were submitted as those of
"expert witnesses." The Agency's written response to the State's
submission of these evaluations was that the physician orders did not
assess the patients' need for mental hospital services and that the
evaluations did not constitute a timely assessment of that need and
were, therefore, "irrelevant" (Response to Order to Show Casuse and
State Response, pages 5-7). At the conference, the Agency stated that
its position is that the recertifications must clearly attest to a need
for continued care at a specific level, without the reviewers' reference
to a professional evaluation of the documents; the recertification must
be obvious to a non-physician.
The Agency has provided the States with notice of a consistent set of
requirements about what constitutes a valid recertification. The
statute, regulation, and Action Transmittal require that a physician
"recertify" (attest) to the continued need for care. Accordingly,
there
must be a periodic assessement of a patient's need for a level of care.
We do not agree with the State that this required recertification can be
implied here from brief notes about the patients' (4) physical and
mental state. We cannot equate a description of a patient's behavior or
physical condition, which may support a decision that continued
treatment at the mental hospital level of care is medically necessary,
with the actual determination that the mental hospital level of care is,
in fact, medically necessary. While we do not conclude that any
particular "magic" words are necessary, we do conclude that to
recertify, the physician's comments must evidence an actual assessment
of continued need. We agree with the Agency that it is impractical and
unreasonable to expect Agency reviewers during a validation survey to
make judgments about the patients' medical needs from brief statements
about patient behavior and physical condition. We conclude that the
physician orders do not indicate that a physician attested to the
patients' need for continued mental hospital care.
This Board has previously concluded, on the basis of the statutory
language and the statute's legislative history, that the Secretary does
not have the discretion to waive or reduce the penalty once there is a
finding that a violation of Section 1903(g) occurred (Tennessee
Department of Public Health, Decision No. 167, April 30, 1981; Colorado
Depatment of Social Services, Decision No. 169, April 30, 1981.)
Therefore, we conclude that the portion of the disallowance based on the
violation of the recertification requirement for the two patients must
be sustained.
2) The Absence of Recertifications for Two Patients
The Agency determined that the State has not recertified two other
patients' need for continuing inpatient mental hospital level of care.
The State alleged, in its application for review, that the two patients
were not eligible for mental hospital services during that quarter, but
that FMAP was claimed for them because of an administative error. The
State asserted that because the patients were not eligible for the
services, no recertifications were necessary. The Agency alleged that
the patients received the services even though ineligible and that the
State received Medicaid payments for those services. At the informal
conference, the State clarified that its use of the term "ineligible"
refers to the need for mental hospital level of care rather than to
eligibility for Medicaid services in general. The State confirmed that
a medical detemination was made in May 1978 for both patients that they
no longer needed inpatient mental hospital care. The State claimed that
the patients remained in the institution, however, because of an alleged
difficulty in finding alternative care for them. The State continued to
claim Medicaid for the patients well into 1980. The State asserted
that, because FMAP was claimed for the patients due to clerical error,
the appropriate remedy is to disallow the FMAP claimed. The State
asserted, in its Response to the Order to Show Cause (page 7), "the fact
that the State of Ohio may choose to allow a patient to remain in one of
its mental (5) hospitals, following the termination of a patient's
eligibility for inpatient services . . . should not be grounds for the
imposition of a penalty under Section 1903(g) of the Act" (page 7).
The Agency argued that the "circumstances surrounding petitioner's
failure to appropriately recertify the two cited recipients . . .
present a classic example of an ineffective utilization control program"
(Response to Order to Show Cause, page 7). The Board concludes, and the
Agency does not dispute, that if the patients had either continued to
need mental hospital services but were ineligible for Medicaid, or had
been discharged from the mental hospital during the period for which
FMAP was paid, a simple disallowance of the claimed FMAP would be
appropriate.Also, if the State had supported those patients in full,
there would be no basis for Fedeal interference in State utilization of
long-term inpatient services.
Section 1903(g) requires a reduction in FMAP "with respect to amounts
paid for (any long-term inpatient care services) furnished under the
State plan . . . to such individual . . . unless the State makes a
showing . . . that (A) in each case for which payment is made under the
State plan, a physician . . . recertifies . . . that such services were
required to be given on an inpatient basis because the individual needs
. . . such services." (Section 1903(g)(1)(A)). The purpose of the
statute is to prevent "unnecesary and overutilization of costly
institutional care under medicaid, accompanied by insufficient usage of
less costly alternative out-of-institution health care . . . (and to)
place affirmative responsibility upon States to assure proper patient
placement." (S. Rep. 92-1230, September 26, 1972, page 44). The Agency
argued that the Section 1903(g) penalty would be nullified if "any State
could avoid the penalty by merely admitting its error and refunding the
Medicaid funds" (Response to Order to Show Cause, page 9).
We conclude on the basis of the statutory language and the purpose of
the Section as articulated in the legislative history that, where
Medicaid funds were paid for unnecessary utilization, the State may not
aovid the assessment of a penalty by merely characterizing payments as
in error during the administrative appeals process. We do not believe
that the issue presented here is whether a penalty must be assessed
where a State clearly demonstrates that there was a purely fiscal error.
Although a medical judgment was made in May 1978 concerning the two
individuals' need for inpatient mental hospital care, there is no
evidence in the record that a determination was made prior to the
quarter ending June 30, 1979, to cut off the availability of Medicaid
payments for such individuals. Here, the State admits that, although
the two patients did not need mental hospital level of care in May 1978,
they continued to receive it from that date without the necessary
recertification of the need for such care, and that Medicaid funds were
paid for this care over a long period of time. Therfore, we conclude
that the portion of the disallowance based on these patients should be
upheld.
(6) Conclusion
We conclude that the penalty disallowance should be upheld because
the State did not recertify two patients according to Federal
requirements, and because the State retained two patients in a mental
hospital and was reimbursed under Medicaid for these services, after a
medical determination that the patients no longer needed the level of
care provided in the institution.
OCTOBER 22, 1983