Arkansas Department of Human Services, DAB No. 278 (1978)

GAB Decision 278

April 13, 1982 Arkansas Department of Human Services; Docket No.
81-20-AR-HC Garrett, Donald; Teitz, Alexander Ford, Cecilia


The Arkansas Department of Human Services (appellant) appealed a
disallowance by the Health Care Financing Administration (respondent)
under section 1903(g) of the Social Security Act, 40 U.S.C. 1396b(g),
for the quarter ended March 31, 1980. The basis for the disallowance
was the respondent's determination that the utilization control
requirements of sections 1903(g)(1)(A) and (B) for recertificattion and
plans of care were violated by the appellant for two patients in one
skilled nursing facility (SNF).

The issues in the appeal are (A) whether there was a timely
recertification and updated plan of care for one patient; (B) whether a
requirement that the appellant show 100% compliance or be subject to a
disallowance is unreasonable; (C) whether the notice of disallowance
was timely under section 1903(g)(3)(A)(iv); and (D) what the amount of
disallowance, if any, should be.

We sustain the disallowance in the amount of $10,419.99 because there
is no dispute over the respondent's determination that the records for
at least one patient in one facility were inadequate under federal
requirements. Further explanation of this conclusion and analysis of
the issues is provided below. We have determined that there is no need
for either a conference or evidentiary hearing.

Background

Section 1903(g) of the Act requires that the responsible state agency
show to the Secretary's satisfaction that there is an "effective
program" of utilization control of long-term impatient services in
certain types of facilities. The state must meet specific requirements
set out in sections 1903(g)(1)(A) through (D) or the federal medical
assistance percentage (FMAP) must be decreased, for the quarter in which
the violations were found, by an amount determined according to the
formula set out in section 1903(g)(5). The requirements involved in
this appeal are those of sections 1903(g)(1)(A) and (B), for a
recertification by a physician "at least every 60 days" that the
specific level of long - term care provided to each patient paid for by
federal funds is necessary, and for a plan of care, established and
periodically "reviewed and evaluated" by a physician. (2) The
recertification and plan of care requirements for SNFs are implemented
by 42 CFR 456.260 and 456.280 (1979), recodified effective September 29,
1978. In addition, the respondent had instructed the states about the
recertification requirement in Action Transmittal SRS-AT-75-122, dated
November 13, 1975.

Dicussion

A. Was there a timely recertification and updated plan of care for
one of two patients whose records were determined to be inadequate?

The respondent determined that two patients in one skilled nursing
facility (SNF) did not have a timely physician's recertification and
updating of the plan of care. The appellant did not refute the finding
for one patient, but submitted deocumentation to support its allegation
that the other patient did have timely recertification and updating of
the plan of care. The appellant did not refute the finding for one
patient. Accordingly, even if there is a violation for the second
patient, the amount of the disallowance would not change under the
formula set out in section 1903(g)(5). Therefore, the Board's decision
on the second patient would not affect the disallowance. We will,
however, briefly discuss the issues about the documentation submitted by
the appellant since the parties have themselves pursued this, and have
briefed them extensively before the Board.

The documentation submitted by the appellant consisted of the minutes
of the monthly meeting of the Utilization Review Committee, in which a
physician reviewed the status of nine patients and their need for a
particular level of care. The reference in the minutes to the patient
in question included a summary of the diagnosis for the patient and a
statement that the patient required "total skilled nursing care." The
minutes were signed by the members of the Committee, including two
physicians.

The requirements for a recertification set forth at 42 CFR 456.260
state that "a physician" must recertify at least every 60 days that SNF
services are or were needed.

The respondent argued that the Utilization Review Committee's minutes
did not constitute an acceptable recertification because they were not
intended to constitute a recertification (in an after-the-fact
recertification made in August 1980, the recertifying physician admitted
that the recertification was delayed due to an oversight) and were not
the result of the specific procedure which the appellant had developed
in regulations. Routine recertification ordinarily occurred through the
use of a computerized "tickle" system. (3) Federal regulations and
policies do not require that the certifying physician have a specific
intent to create a formal recertification. The minutes contain a timely
statement of the patient's need for skilled nursing care and are signed
by two physicians. We believe that the purpose of the statute, that is,
control of utilization of long-term care, has been met so long as a
physician has certified in a timely manner that the patient actually
needs the level of care she is receiving. Therefore, we do not find the
respondent's arguments about the minutes persuasive and believe that the
minutes could constitute an adequate recertification of the patient
under 42 CFR 456.260. /1/


The regulatory requirements at 42 CFR 456.280 describe what a plan of
care must include, and require that the "attending or staff physician
and other personnel involved in the recipient's care must review that
plan of care at least every 60 days." 42 CFR 456.280(c).

The respondent argued that the summary contained in the minutes does
not constitute either a plan of care or an update of a plan of care.
Furthermore, the respondent pointed out that 42 CFR 456.306 proscribes
any employee of the SNF or any person directly responsible for a
patient's care from being a member of the Utilization Review Committee.
Therefore, the respondent asserted, the minutes could not constitute a
review by the attending or staff physician or other personnel involved
in the patient's care. Finally, the respondent pointed out that no
updated plan of care was found in the patient's records, in violation of
42 CFR 456.281, which requires that the plan of care be entered in the
recipient's record.

There is no evidence that the Committee actually reviewed the
patient's plan of care; rather, the Committee listened to a physician's
summary of patients' diagnoses and need for particular levels of care.
The members of the Committee could not, under federal regulations,
review the plan of care for purposes of utilization control.Therefore,
we agree with the respondent that, under the regulations the Utilization
Review Committee's minutes could not constitute an updated plan of care,
and that this constitutes a violation of section 1903(g)(1)(B). (4) B.
Is it reasonable for the respondent to require that the appellant show
100% compliance with the statutory requirements?

The appellant argued that requiring 100% compliance with section
1903(g)(1) is unreasonable, unrealistic and violates "ordinary standards
of fair play." (Notice of Appeal, January 29, 1981, page 2) It stated
that since the requirements must be performed by physicians, over whom
states have no control, it is impractical to expect 100% compliance.

The respondent's position on this issue, in all the utilization
control questions before the Board, has been that section 1903 (g)
requires the imposition of a disallowance unless the requirements are
met for each patient, except where the statute specifically provides for
a waiver. The Comptroller General has confirmed that interpretation
(Comptroller General's Opinion, B-164031(3).154, March 4, 1980), and
this Board has upheld the interpretation based on the statutory language
and its legislative history (Tennessee Department of Public Health, and
Colorado Department of Social Services, Decisions No. 167 and 169, April
30, 1981; Idaho Department of Health and Welfare, Decision No. 250,
January 28, 1982) The purpose of section 1903(g) is to ensure that the
states maintain control over utilization of long-term inpatient care
paid for by federal funds. (Idaho Department of Health and Welfare,
supra) While it is perhaps difficult to exercise control over
physicians, there are means of ensuring compliance with the
recertification requirement. The respondent has pointed out that the
appellant uses a vendor payment penalty as a means of ensuring timely
recertifications.

We conclude that the respondent's position that section 1903 (g)
requires 100% compliance is reasonable and is supported by the specific
statutory language and the legislative history.

C. Was the notice of disallowance timely under section 1903(g)(3)(
A)(iv)?

Section 1903(g)(3)(A)(iv) provides that no reduction under the
section shall take effect unless notice "has been provided to the State
no later than the first day of the fourth calendar quarter following"
the quarter to which the reduction applies. The appellant alleged that
it received a telegram notifying it of the disallowance on January 5th,
1981, and a letter detailing the disallowance on January 7, 1981. Both
were dated December 31, 1980. The appellant stated that both notices
were mailed to the "wrong address," that is, the appellant's offices are
no longer located in the building named in the address. The appellant
argued that the provision requires knowledge by the addressee, that is,
receipt of the notice, by the first day of the (5) fourth quarter, and
that a notice sent on the latest possible date indicated bad faith on
the part of the respondent.

The respondent argued that the statute does not require that notice
be provided in writing, and asserted that the telegram and attempted
telephone delivery of the telegram constituted adequate notice under the
statute.

In a telephone conference call, the Board explored the facts about
mailing and delivery of both the telegram and the letter. The following
facts were entered into the record.

The respondent's usual practice is to mail letters giving notice of
disallowancs under section 1903(g) prior to the first day of the fourth
quarter and to accompany those letters simultaneously with a telegram.
Western Union is given instructions to confirm delivery of the telegram
and to include in that confirmation a copy of the message as sent.

In this instance, at 1:20 p.m. on December 31, 1980, the respondent
asked Western Union to deliver a message and provided Western Union with
an accurate telephone number for the addressee. The message was
transmitted to the Little Rock, Arkansas office of Western Union at 1:
22 p.m. EST. It is Western Union's stated practice that they first
attempt to deliver the message by telephone and subsequently physically
deliver the message. Western Union could not actually confirm that they
made the telephone call but a handwritten notation on the telegram,
apparently made by Western Union personnel, stated, "Said to be out city
till Monday." Western Union's confirmation to the respondent indicated
that physical delivery of the telegram was made at 1:45 p.m., Monday,
January 5, 1981, and that the building in which the addressee was
located was closed over the holiday. December 31, 1980 fell on a
Wednesday, and the State offices were closed Thursday and Friday,
January 1 and 2, 1981. The State's records show that the addressee was
not on leave or official travel on December 31, 1980 but do not
establish whether the addressee was out of the office for perhaps even a
brief period that afternoon.

The address to which the telegram and letter were sent was one in
which the appellant had not been located for 18 months. The respondent
stated that the official records kept at its central office reflected,
at the time in question here, the old address. Neither party could
state whether the respondent's central office had ever been notified of
the address change, although there is some evidence that the Regional
Office, with whom the State carried on routine business, had knowledge
of the appellant's current address, and had sent at least one letter to
the current address. Both the telegram and the letter, however, were
issued from the respondent's central office. (6) Apparently the
respondent has never prepared any written memoranda or guidelines
indicating how it would comply with section 1903(g)(3)(A)(iv).

Thus, the facts show that the respondent mailed notice on December
31, 1980, i.e., prior to the first day of the fourth quarter, and that
delivery of the notice is presumed to have been attempted over the
telephone by Western Union on that same day. The appellant's offices
were closed on the first day of the fourth quarter and for each day
thereafter until Monday, January 5, 1981, when physical delivery of the
notice was made to the appellant. The fact that the notices were
addressed to an old address did not prevent delivery of the telegram on
the first day of the fourth quarter on which appellant's offices were
open. Since the appellant actually received the notice on the first
possible business day of the fourth quarter, we conclude that, whether
the statutory provision requires that notice be mailed or received by
the first day of the fourth quarter, the statutory requirement that
timely notice be provided was met in this case.

D. Amount of the disallowance

The amount of disallowance originally calculated by the respondent,
based on facility data, was $12,251.34. The appellant submitted
recipient data for the number of Medicaid patients receiving skilled
nursing care in the entire state for the quarter in question, but did
not submit the data for the nursing home in question. The appellant
requested that the disallowance be recalculated using the data
submitted. Furthermore, the appellant proposed an amount of
disallowance which was derived from a formula which used the actual
number of patients for whom violations were found over the number of
Medicaid patients receiving skilled nursing care in Arkansas during that
quarter.

The respondent pointed out that the statutory penalty provision,
section 1903(g)(5), and te implementing regulation, 42 CFR 456.657,
state that the appropriate formula is the number of Medicaid patients
receiving SNF care in any facility in which violations were found over
the number of Medicaid patients in the State during the quarter. The
respondent requested from the appellant the number of Medicaid patients
receiving care in that quarter in the facility (Appendix M, respondent
submission, February 11, 1982); however, the appellant was unable to
provide the information. (Letter of February 5, 1982, from appellant's
attorney)

We conclude that the statute and 42 CFR 456.657 require that the
numerator of the penalty formula should be the total number of Medicaid
patients in the SNF in question. Furthermore, we uphold the (7)
respondent's use of facility data to calculate the penalty where the
appellant has failed to provide exact recipient data. (Virginia
Department of Health, Decision No. 208, August 28, 1981; Missouri
Department of Social Services, Decision No. 214, September 23, 1981)

The respondent submitted a recalculation of the disallowance because
it had erroneously calculated the original amount disallowed by
including all SNF expenditures for the quarter rather than only those
made for long-term care. The amount of the disallowance, as
recalculated by the respondent, was $10,419.99.

Conclusion

We conclude that the disallowance, reduced by the respondent to the
amount of $10,419.99, should be sustained because the appellant did not
meet the federal requirements for recertification for one patient and
the requirements for an updated plan of care for two patients. /1/
Medicaid Action Transmittal 80-68, which was issued September
1980 by the respondent and replaced SRS-AT-75-122, effective October 1,
1980, specifically states that utilization review committee minutes or a
form indicating that a patient's care was reviewed by a physician and
that continued care at a specific level is necessary are acceptable as
long as the physician's signature and date appear on the minutes or
form.

OCTOBER 22, 1983