Michigan Department of Social Services, DAB No. 491 (1983)

GAB Decision 491
Docket No. 83-21

December 30, 1983

Michigan Department of Social Services;
Ballard, Judith; Teitz, Alexander Settle, Norval


The Michigan Department of Social Services (State) appealed a
determination by the Health Care Financing Administration (Agency),
disallowing $1,190,412.81 claimed under title XIX of the Social Security
Act (Act) for the quarters ended March 31, 1982, June 30, 1982 and
September 30, 1982 for services provided in ten institutions for mental
diseases (IMDs). The disallowance was taken pursuant to section
1903(g)(1)(D) of the Act, which provides for the reduction of a state's
federal medical assistance percentage unless the state shows that 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, the Agency determined that the State did not comply
with requirements at 42 CFR 456.602 (1981) regarding the composition of
the review teams. During the course of the appeal, the Agency accepted
documentation submitted by the State regarding eight of the ten
facilities in question, and reduced the disallowance to $212,664.45
($70,174.92 for the quarter ended March 31, 1982 and $142,489.53 for the
quarter ended June 30, 1982). Letter from Jaffe to Board's Executive
Secretary, dated October 4, 1983) /1/ For the reasons set out below, we
uphold the disallowance pertaining to the two remaining facilities.


Applicable Regulations

As indicated above, the Agency determined that the State failed to
comply with the regulatory requirements for the composition of review
teams making the annual medical reviews.

(2) Section 456.602 of 42 CFR provides as follows:

(a) A team, as described in this section . . . must periodically
inspect the care and services provided to recipients in each facility.

(b) Each team conducting periodic inspections must have at least one
member who is at (sic) physician or registered nurse and other
appropriate health and social service personnel.

(c) For an IMD other than an ICF, each team must have a psychiatrist
or physician knowledgeable about mental institutions and other
appropriate mental health and social service personnel.

(d) For an ICF that primarily cares for mental patients, each team
must have at least one member who knows the problems and needs of
mentally retarded individuals.

(e) For an institution for the mentally retarded or persons with
related conditions, each team must have at least one member who knows
the problems and needs of mentally retarded individuals.

(f) For ICFs primarily serving individuals 65 years of age or older,
each team must have at least one member who knows the problems and needs
of those individuals.

(g) If there is no physician on the team, the Medicaid agency must
insure that a physician is available to provide consultation to the
team.

(h) If a team has one or more physicians, it must be supervised by a
physician.

Facts

The State's quarterly showings for the quarters ended March 31, 1982
and June 30, 1982 showed that annual reviews were completed by the State
at Newberry Regional Mental Health Center and Birchwood Nursing Center,
the two facilities in question, on February 24, 1982 and February 26,
1982, respectively. In the case of Newberry, the quarterly showings
indicated that the team leader was a registered nurse.

(3) The State's report on the annual review at Newberry, /2/ however,
also listed an M.D. as a team member, followed by the notation
"Physician on call." In the case of Birchwood, the State's quarterly
showings indicated that the team leader was a registered nurse.
However, the State submitted a report on an annual review conducted at
Birchwood August 24 through September 4, 1981 which indicated that the
acting team leader was a social worker and, in addition, listed an M.D.
as a team member with the notation "Psychiatric Consultant (on call)."
(Agency's appeal file, Exhibits 1 and 2; State's brief dated October
14, 1983, Exhibits A and B) The Agency apparently would have accepted
either the September 1981 or February 1982 review of Birchwood as
timely.


Parties' Arguments

The State argued that having a physician "on call" met the
requirements of the regulation. (State's brief dated October 14, 1983,
p. 2) The Agency took the position that the regulation permits having a
physician "on call" only when the team is not required to have a
physician member, and that in the case of the facilities in question
here, the teams were required to have as a member a psychiatrist or
physician knowledgeable about mental institutions. (Agency's brief
dated November 15, 1983, pp. 9-10)

Discussion

We agree with the Agency that the review teams for the two facilities
were not properly constituted. The Agency argued, and the State did not
dispute, that subsection (c) was applicable to the two facilities. /3/
Subsection (c) requires that, for IMDs other than ICFs, "each team must
have a (4) psychiatrist or physician. . . ." For other types of
facilities, the more general requirement in subsection (b) that "each
team . . . must have at least one member who is a physician or
registered nurse . . ." applies. Thus, review teams for IMDs other than
ICFs must have a physician (or psychiatrist) member, whereas review
teams for other types of facilities may or may not include a physician
member. Subsection (g), on which the State relied, applies in the case
where "there is no physician on the team," and requires that a physician
be "available to provide consultation to the team." It logically applies
to the situation where the State has chosen pursuant to subsection (b)
not to include a physician on its review team for a facility other than
an "IMD other than an ICF." In that case, a physician must nevertheless
be available for consultation. The language of subsection (g) clearly
indicates that a physician who is merely available for consultation, or
"on call," is not considered a member of a team. Thus, having a
physician "on call" would not satisfy the requirement of subsection (c)
that "each team" reviewing an IMD other than an ICF "have a psychiatrist
or physician . . . ." /4/

We note that, while subsections (b), (d), (e), and (f) all require
that a review team "have at least one member" with particular
qualifications, subsection (c) merely requires that each team "have" a
physician (or psychiatrist). Arguably, one could imply from the
omission of the phrase "at least one member" in subsection (c) that a
physician need not be a member of the review team, but ned only be
available for consultation. However, we are not persuaded that this
lack of parallel construction is significant. To read subsection (c) as
requiring merely that a team have a physician available for consultation
is in our view more strained than reading it to require that a team
include a physician. Since the regulation specifies in subsection (g)
that a physician must be available for consultation if one is not on the
team, it is likely that the drafters of the regulation would have been
equally specific in subsection (c) if they intended the same thing.

(5) Additional Issues

1. Timely Notification of the Disallowance

The State also argued that it did not receive timely notice of the
disallowance in accordance with 42 CFR 456.656(c) (1981). This
regulation requires that the Agency notify the State of any reduction in
funding based on an attempt by the Agency to validate a state's
quarterly showings "no later than the first day of the fourth calendar
quarter following the calendar quarter for which the showing was made."
The State took the position that it should have been notified of the
disallowance, which (as modified) related to the quarters ending March
31, 1982 and June 30, 1982, no later than January 1, 1983. The State
did not receive the disallowance letter, dated December 28, 1982, until
January 3, 1983. (State's brief dated October 14, 1983, pp. 2)

We find the State's argument to be without merit. The Agency
asserted, and we agree, that timely notice was clearly given with
respect to the portion of the disallowance which relates to the quarter
ended June 30, 1982 since the fourth calendar quarter following that
quarter began on April 1, 1983 and notice was given substantially before
that date. Moreover, we agree with the Agency that with respect to the
portion of the disallowance relating to the quarter ended March 31,
1982, the disallowance was timely under a previous decision of the
Board. In Arkansas Department of Human Services, Decision No. 278,
dated April 13, 1982, the Board, in holding that receipt of notice of a
disallowance for the March 31, 1980 quarter by the State of Arkansas on
Monday, January 5, 1981 was timely, stated:

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.

(Id. at p. 6) In the present case, January 3, 1983 fell on a Monday,
the first business day of the fourth quarter, and notice of the
disallowance was thus provided in a timely fashion.

2. Permissibility of Disallowance in Successive Quarters

The State argued in addition that since the statute required that
reviews be performed annually, a disallowance based on the failure to
comply with this requirement could be assessed only once a year. The
State took the position without further explanation that the
disallowance for a second quarter (6) constituted "double jeopardy."
(State's brief dated October 14, 1983, p. 2)

We find that the State's argument is without merit. Although the
statute requires only an annual medical review, a showing must be made
in each quarter that such a review has been conducted. The statute is
clear that for each quarter for which a satisfactory showing is not
made, a disallowance must be taken. Section 1903(g)(1) provides that
the federal medical assistance percentage with respect to amounts paid
for long-term care must be reduced by a certain percentage--

unless the State agency responsible for the administration of the
plan makes a showing satisfactory to the Secretary that, with respect to
each calendar quarter for which the State submits a request for payment
at the full Federal medical assistance percentage for amounts paid for .
. . (long-term services), there is in operation in the State an
effective program of control over utilization of such services. . . .

The statute proceeds to state that the state's showing must include
evidence that, inter alia, the state has conducted an annual medical
review. Furthermore, section 1903(g)(5), which describes how the
reduction in the federal medical assistance percentage is to be
calculated, states that the reduction is to be taken "(in) the case of a
State's unsatisfactory or invalid showing made with respect to a type of
facility or institutional services in a calendar quarter. . . ." The
effect of these provisions is to continue to penalize a state in
successive quarters until the state performs a review in a manner that
complies with the applicable statute and regulations. Once the state
performs a satisfactory review of a facility, its "showings" for the
quarter in which the review is performed and the next three quarters may
rely on that review. We see no basis for the State's conclusory
argument that double jeopardy is involved here. Moreover, as noted by
the Agency, this statutory scheme has been upheld in Colorado Department
of Social Services v. Department of Health and Human Services, 448 F.
Supp. 337 (D. Colo. 1983). In that case, the Court stated that --

It was appropriate and administratively efficient for the agency to
invalidate the state's showings for the first two calendar quarters of
1978, because the showings relied in part on reviews performed in
certain facilities prior to October 1, 1977, and HHS had determined
already (in its validation survery for the quarter ending on December
31, 1977) that those reviews were inadequate.

(7) Id. at p. 353. Accordingly, we find that the Agency properly
assessed a disallowance for two successive quarters in which the State
relied on annual medical reviews which did not comply with the
applicable regulations.

Conclusion

For the foregoing reasons, we conclude that the State did not comply
with the requirement for the annual medical review of two IMDs for the
quarters ended March 31, 1982 and June 30, 1982, and that since the
State received timely notice of a disallowance based on its failure to
comply, the disallowance must be sustained. /1/ Although the Act
provides, at section 1903(g)(4)(B), that a state's quarterly
showing may be found satisfactory under certain circumstances even if
the state fails to review all facilities, the Stae did not argue that
the Agency's reversal of the disallowance with respect to eight of ten
IMDs brought it within the ambit of this exception. /2/ The
quarterly showings were made on an Agency form and included summary
information regarding the review of each facility. The only information
required regarding the composition of a medical review team was "Team
Leader and Degree." The State's report on the annual review of a
facility contained more detailed information regarding review team
findings. In the case of the two facilities here, the reports listed
"Review Team Members." /3/ Subsection (c) applies only to "an
IMD other than an ICF." The State's quarterly showings classified
Birchwood as an SNF/ICF, and did not indicate any level of care for
Newberry. However, it is clear from the notice of disallowance that the
penalty was not based on the ICF level of care. (Letter from Thompson
to Kheder dated December 28, 1982, enclosure: Michigan Penalty
Calculation) /4/ The Agency also relied on subsection (h), which
requires that a team which has one or more physicians must be supervised
by a physician, arguing that if a physician "on call" was considered a
member of a team, that physician or another physician would have to be
team leader. (Agency's brief dated November 15, 1983, p. 9) The record
clearly shows that the team leaders for the reviews of the two
facilities in question were not physicians. However, it is not entirely
clear that a physician would have to be a member of the review team in
order to be a supervisor.

NOVEMBER 14, 1984