GAB Decision 331
June 30, 1982 Pennsylvania Department of Public Welfare; Docket No.
81-170-PA-HC Ford, Cecilia; Settle, Norval Teitz, Alexander
The Pennsylvania Department of Public Welfare (State) appealed a
determintion of the Regional Administrator, Health Care Financing
Administration (Agency) to disallow $4,189,962.The sum represents the
federal financial participation (FFP) in payments made by the State to
more than fifty facilities under Title XIX of the Social Security Act
(Medicaid). During the pendency of the appeal the Agency withdrew
portions of the disallowance, and the State withdrew its appeal as to
some of the facilities. There are four groups of facilities still left
in dispute: (a) twenty facilities whose Medicaid certifications
expired, after which the State notified them that certification would
not be renewed, and the facilities promptly appealed under State law;
(b) two facilities which the Agency claimed had provider agreements
which were backdated since the agreements were executed after the
beginning dates of the agreements; (c) one facility which the State
claimed fits into both of the first two groups (it will be discussed as
part of the second group); and (d) a group of five facilities
presenting miscellaneous questions.
Background
In order for a state to obtain FFP for payments for Medicaid patients
in an intermediate care facility or skilled nursing facility, there must
be a valid provider agreement. This is an agreement between the single
state agency (designated by the state to administer or supervise the
administration of the state Medicaid plan) and the facility.
Before a provider agreement can be valid, the state survey agency
(ordinarily the state authority which licenses health facilities) must
certify the facility. A facility may be certified with defects provided
(1) the survey agency finds that the deficiencies do not jeopardize the
health and safety of the patients, and (2) the state survey agency
accepts a plan of correction or a waiver has been granted.
Certification with a plan of correction for a term of 12 months or less
may be subject to an automatic cancellation clause providing that the
certification will expire on a predetermined date unless the corrections
have been satisfactorily completed (2) or the facility has made
substantial progress in correcting the deficiencies. /1/
If the state survey agency finds the facility in compliance or finds
the plan of correction to be acceptable, it then certifies the facility.
The single state agency enters into the provider agreement with the
facility based upon the certification. The provider agreement may have
its effective date backdated, but no earlier than the date of
certification.
I. Facilities whose certifications expired, were then notified by
the State, and appealed under State law.
The 20 facilities in this Group all have several facts in common. In
all cases the provider agreements had expired, either because of
non-renewal at the end of the time period of the agreements or because
an automatic cancellation provision took effect. The State notified all
the facilities that their certifications would not be renewed. The
facilities all appealed promptly under the appropriate State law. The
varying factor in each case is the length of time between the expiration
of the provider agreement and the notice by the State to the facility
that it was no longer validly certified. (For specific details about
each facility, see Appendix A.)
As noted above, a State is not entitled to FFP for payments made to a
Medicaid facility when it did not have a valid provider agreement.
There is an exception to the principle that no FFP is available in
payments to a facility whose provider agreement has been terminated or
not renewed. This is based on the first part of MSA-PRG-11 and has been
discussed in several Board decisions, primarily Ohio Department of
Public Welfare, Decision No. 173, April 30, 1981.
In substance, this principle is that if a facility's provider
agreement expired and was not renewed, and under State law the provider
agreement is continued in effect pending a provider appeal, FFP is
available for a period of up to twelve months from the end of the
provider agreement. /2/
(3) There are two issues here:
(1) whether the State is entitled to FFP for the period between
expiration of the provider agreement and the State's notice to the
facility that the provider agreement was not being renewed; and
(2) whether the State is entitled to FFP for any part of the 12-month
period following expiration where it failed to notify the facility prior
to or shortly after expiration. /3/
The Board has previously dealt with the first issue in Tennessee
Department of Public Health, Decision No. 267, March 25, 1982. There
the Board held that the State was not entitled to FFP for a period of
approximately five months following expiration when the facility was
neither validly certified nor did it have an appeal pending contesting
the nonrenewal of its provider agreement. Id. at 4. See also, Michigan
Department of Social Services, Decision No. 290, April 30, 1982, p. 17.
Here the State argued that FFP should be available because the
facilities appealed timely after receving notice, and Pennsylvania law
required continued payments until there had been an appeal hearing.
Reply Brief, p. 2. However, we are not persuaded that there is any
basis in PRG-11 for FFP prior to the time that a facility is on notice
that it must appeal to prevent nonrenewal or termination, and thus,
consistent with the Tennessee decision, we uphold the disallowance to
this extent.
On the second issue, the Agency argued tha PRG-11 does not authorize
FFP during the pendency of an appeal where the State failed to give
notice in a timely manner. Response, p. 4. /4/
(4) The position taken by the Agency here is inconsistent with its
actions in Tennessee, where it voluntarily modified the disallowance to
pay FFP as of the date of notice even though there was a delay of
approximately five months between expiration and notice. /5/
In Michigan the Board held, in effect, that the State was entitled to
FFP pending appeal even though there was a delay of almost a month
between expiration and notice. Michigan, pp. 17, 18.
In this case four facilities were given notice more than 12 months
after expiration (Barley, Epler, Kenneson, North Hills). Appendix A.
In those instanes there is no basis for FFP because there was no appeal
pending within 12 months following expiration. In the remaining
facilities, the delays range up to eight months (Blue Hill). We do not
find (nor has the Agency pointed to) any basis in PRG-11 or elsewhere to
condition the availability of FFP pending appeal on the State having to
given notice within five, six, or even eight months after expiration, at
least where, as here, such an appeal is still timely under State statute
or regulation. /6/ Accordingly, we conclude that the State is entitled
to FFP from the date of notice of expiration to the end of the period of
12 months from the date of expiration.
II. "Backdating of Certification" Issue
There are three facilities in which the provider agreemnts raise an
issue of backdating: Regina Community Nursing Center, Stephen Smith
Home for the aged, and Polk Center -- ICF.
The Board has had occasion to consider the "backdating" issue in
several decisions. The underlying basic principle is that a provider
agreement may be dated back but not beyond the date (5) of
certification. This underlying principle, as well as the determination
of what is the date of certification, has been considered at some length
in Pennsylvania Department of Public Welfare, Decision No. 255, February
10, 1982. Since the legal principles are settled, it is necessary only
to examine the factual situation for each facility.
1. Regina Community Nursing Center.
The disallowance for this facility was for the period from July 1,
1976 through June 30, 1977. A purported agreement for the period from
June 26, 1975 to April 26, 1976 was executed on May 14, 1976, after the
entire term of the agreement had expired.
The State's argument attempts to extend the provider agreement to
cover most of the disallowance period by combining two principles,
backdating of a provider agreement and PRG-11. The first argument is
that the agreement is validly backdated to June 26, 1975, even though it
was not signed until almost a year later. Then, assuming a valid
agreement until April 26, 1976, when this was not renewed and the
facility appealed, the State argued, payments should continue under
PRG-11 until April 26, 1977, or one year after the expiration of the
agreement.
The State relied on a letter from the Director of the Office of Long
Term Care Standards Enforcement dated June 26, 1975 as conslusive
evidence that the provider agreement was validly issued. But this
letter itself is certainly not certification. It merely grants waivers
of certain Life Safety Code provisions. As the letter itself indicates,
a Supplemental Plan of Correction was required. There is no evidence in
the record that a plan of correction was submited and accepted as
required under the reasoning of the Board's prior Pennsylvania decision,
No. 255. Even if this letter itself were equivalent to certification,
which the Board does not accept, the State did not offer to explain why
it did not sign the provider agreement for almost a year thereafter, and
then about a month later advised the facility that is payments would
terminate within another month.
In addition, the Board cannot accept the contention that a provider
agreement can be backdated after its term has in fact expired. There is
nothing to backdate, because by its own terms the provider agreement has
ended. This facility did not have a valid provider agreement in effect
even for the year before the disallowance. There being no agreement,
there is no occasion for PRG-11 to operate. There was nothing from
which the facility could properly appeal, since it had no valid
agreement when the State purported to terminate it.
(6) 2. Stephen Smith Home for the Aged.
This facility has the same problems with its provider agreement that
was pointed out so carefully in Decision No. 255. It is not enough that
the survey agency indicated what was required in a plan of correction.
There must be an affirmative showing by the State that the correction
plans were acceptable, and a notification thereof to the facility or the
single state agency. (p.5) There is no showing in the documentation
(State's Reply to Agency's Response to State's Appeal, Exhibits C1-C6)
that this was in fact done. Therefore the disallowance must be
sustained.
3. Polk Center -- ICF.
This facility has the same deficiencies, as far as a valid provider
agreement, that pertain to Stephen Smith Home. It is not enough that a
facility is told that, as a result of a survey, it will be certified if
a plan of correction is submitted for certain deficiencies. It must be
shown not only that such a plan was submitted, but that thereafter it
was accepted by the State survey agency in the form submitted, and also
that the facility or the single state agency was informed of this
action. There is no evidence that this was done here, so the
disallowance must be sustained.
III. Miscellaneous Facilities
1. Lafayette Manor.
Attachment A to the notification of disallowance lists the dates and
amounts of the disallowance for each facility. The listing for
Lafayette Manor has expenditures disallowed for two quarters, that ended
3/31/77 and that ended 6/30/77. The State in its Reply to the Agency
Response (p. 4) contended that no payments were made to this facility
after December 31, 1976. The State offered to accept the disallowance
if it can agree with the Agency that payments were actually made by the
State for the two quarters in question. Under these circumstances, the
Board will reverse the disallowance as to this facility, but without
prejudice to the Agency reinstating the disallowance if the facts do not
turn out to be as stated by Pennsylvania.
2. Bair Convalescent Center, Cedars Nursing Home, Landers Nursing
Home, Mead Nursing Home.
Attachment A to the notification of disallowance (reproduced in
relevant part in Appendix B to this decision) indicates that while the
Agency took cognizance of the fact that Bair, Cedars, Landers, and Mead
were certified during periods of time for which disallowances have been
taken, the Agency still disallowed claims. The State argued (State's
Reply to Agency's, Response to State's (7) Appeal, pp. 10-11 that the
Agency did not take into account payments properly made to the facility
during the quarter when the facility was certified. The State also
stated that it believed it could resolve these problems with the Agency
without active Board involvement. We, therefore, remand this part of
the dispute to the Agency for further action. If the matter is not
satisfactorily resolved to the State's satisfaction, it may file a new
appeal with the Board.
Conclusion
For the facilities still remaining in dispute, based on the analysis
above, we find the following:
I. For Blue Hill, Crestvue, Crown, Fair Rest, Flickinger's, Gibbs,
Hill, Kearney, Manchester, Manley's Mount Sinai Holiness, Park Lane,
Pennsylvania Memorial, Sky Vue, Snyder, and Wetzler, the State should
receive FFP from the date of notice of expiration to the end of the
period of 12 months from the date of expiration. For Barley, Epler,
Kenneson, and North Hills, no FFP should be received.
II. For Regina, Stephen Smith, and Polk Center -- ICF, the State
should not receive any FFP.
III. For Lafayette Manor, the disallowance is reversed without
prejudice to the Agency reinstaing the disallowance if the facts do not
turn out to be as stated by the State. For Bair, Cedars, Landers, and
Mead, the disputes are remanded to the Agency. If there is not a
satisfactory resolution, the State may file a new appeal with the Board.
/1/ There is one exception to the 12 month maximum period, where
under certain specified conditions the provider agreement may be
extended for up to two months. 42 CFR 442.16. This exception is not
involved in any of the facilities in this appeal. /2/ This Board
has considered the Pennsylvania law as having this effect. Pennsylvania
Department of Public Welfare, Decision No. 217, September 30, 1981.
/3/ The term "expiration" as used here applies both to the normal
ending
of a provider agreement which is not renewed, and the ending of a
provider agreement before its normal expiration date because of the
operation of an automatic cancellation date. As pointed out in Decision
No. 217, supra, the 12 month period for FFP under PRG-11 ends either 12
months after the normal expiration date of a provider agreement, or 12
months after its earlier termination date by virtue of an automatic
cancellation date, whichever occurs first. /4/ The Agency does not
define "timely," but in agreeing to pay FFP in the case of Mount
Sinai Holiness Home from the date of expiration (February 29) where
notice was given four days later (March 4) it appears to agree (1) that
notice need not be given prior to expiration, and (2) that in such
instances FFP runs from the date of expiration, not notice. Response,
p. 4. It apparently overlooked Wetzler Convalescent Home, where notice
was given three days after expiration. Appendix A. /5/ In
Tennessee, the State claimed that it believed -- mistakenly as it turned
out -- that the facility was validly certified until three of the five
months had elapsed. The remaining time was spent preparing the notice.
Tennessee, p. 3. /6/ In Ohio, the Board indicated that where a court
order directing the State to make payments to a decertified
facility was issued long after the date of expiration, FFP might not be
available because the State might not be able to show the connection
between the court order and the provider appeal. To some extent, the
wording of the court order would be the determining factor. Ohio,
however, was not decided within the context of a State statute or
regulation requiring continued payments pending appeal.
OCTOBER 22, 1983