GAB Decision 525
Docket No. 83-229
March 30, 1984
Wisconsin Department of Social Services;
Ballard, Judith; Garrett, Donald Ford, Cecilia Sparks
The Wisconsin Department of Health and Social Services (State)
appealed a decision by the Health Care Financing Administration (Agency)
disallowing $166,959.01 pursuant to section 1903(g) of the Social
Security Act (Act). The disallowance was based on a survey from which
the Agency determined that the State did not have an effective program
of utilization control in operation for the fiscal quarter ending
December 31, 1982. Section 1903(g) includes a formula for reducing
federal medical assistance payments for any quarter where a State has
not shown that its utilization control program is effective. The Agency
determined that there were utilization control violations based on a
finding that there were improperly certified patients in seven long term
care facilities.
This appeal involves the statutory and regulatory utilization control
requirements mandating timely and valid certification and periodic
(every 60 days) recertification of an individual's continued need for
long-stay services at either a skilled or an intermediate level of care.
The Agency said its survey revealed that five intermediate care
facilities (ICFs) contained Medicaid patients needing skilled nursing
care and that two skilled nursing facilities (SNFs) contained Medicaid
patients needing intermediate care. The Agency assessed a $108,199.42
penalty for the ICFs based upon regulations at 42 CFR 456.360 and
456.652(a)(1), which require certification and recertification that ICF
services are needed for each Medicaid recipient in an ICF. The Agency
assessed a $58,759.59 penalty for the SNFs based on the regulation at 42
CFR 456.260, which requires certification and recertification that SNF
services are needed for each Medicaid recipient in an SNF. (Although
both parties use the term "certify", the record shows that what is
involved is not initial certification but rather recertification of the
needed level of care.)
The State initially requested an evidentiary hearing in this matter,
but subsequently withdrew its request. For the reasons set out below,
we uphold this disallowance.
(2) Analysis
Skilled Care Patients in ICFs
The propriety of retaining, in ICFs, Medicaid patients determined to
need skilled care was previously addressed in Wisconsin Department of
Social Services, Decision No. 482, November 30, 1983. There, the State
argued that the retention of skilled care patients in ICFs was justified
by a State variance procedure which provided safeguards to insure that
SNF patients received appropriate care and which served the goal of cost
efficiency (which the State claimed was the primary purpose of
utilization control).
In Decision No. 482 we noted that the State-created variance
procedure was not part of the approved State plan. /1/ Further, in
sustaining the disallowance, we concluded that the Act clearly
differentiated between skilled and intermediate care based on concerns
for the quality of care provided, rather than solely on economic
considerations. Based on our review of the statute, its legislative
history, and supporting regulations, we concluded that the utilization
control recertification requirements are not met unless there is an
attestation of a patient's need for continued placement at a specific
level of care, i.e., the level of care which the facility is certified
to provide.
In presenting its case in this appeal, the State relied on its briefs
in the record for Decision No. 482. The State also submitted some
documentation for patients in each ICF where the Agency found there were
patients needing SNF care. /2/ The State did not dispute that patients
needing SNF (3) care were retained in these ICFs during the quarter in
question. Furthermore, the State provided no analysis or explanation,
based on the documentation, to distinguish the facts here from the facts
present in the earlier decision. Thus, the State has shown no reason
why we should not conclude that the utilization control requirements
were violated for five ICFs based on our conclusion in Decision No. 482.
Therefore, for reasons more fully explained in Decision No. 482, we
uphold the disallowance taken for skilled care patients in ICFs.
Intermediate Care Patients in SNFs
In appealing the disallowance pertaining to the Medicaid patients in
SNFs needing ICF care, the State again relied solely on the briefing
submitted in Decision No. 482. The Agency noted that this aspect of the
disallowance differed factually from Decision No. 482 and contended that
by not briefing this issue, the State was not contesting the Agency
decision to take the SNF disallowance.
The State submitted report forms for inspections performed in the two
SNFs in 1982. The forms contain patient lists which show patients
needing intermediate care. Appeal File, pp. 183-187. The State also
submitted patient records for three patients in one of the SNFs. Appeal
File, pp. 188-200. The State did not provide any analysis or
explanation of the relevance of the documentation or suggest what we
should conclude based on these records. The State did not deny that
patients needing intermediate care were in the two SNFs during the
quarter in question. In addition, our review of the patient records
revealed no document which either granted or referred to a variance for
any of the three patients. /3/
(4) Like the SNF patients retained in ICFs, discussed above and in
Decision No. 482, the ICF patients retained in SNFs needed a specific
level of care which was not the level of care that the facility was
certified to provide. The utilization control regulation for SNFs at 42
CFR 456.260 requires a recertification for each SNF patient "that SNF
services are needed." Here, there was no recertification that these
patients needed SNF care; instead, there was the determination that the
patients needed only ICF care. Yet, the patients were retained in the
SNFs. In our view, this is the very situation the recertification
requirement was intended to prevent.
Moreover, the State's argument concerning the cost efficiency of
retaining SNF patients in the presumably lower cost ICFs is neither
applicable or persuasive here. The record does not show that the SNFs
charged a lower rate for the intermediate care patients or that it would
cost more to place them in ICFs. There is no evidence showing that
retaining intermediate care patients in SNFs was cost efficient. At
best, the cost was the same because the State paid the lower ICF rates;
at worst, the cost was higher because the State continued to pay higher
SNF rates. Although the record does not show that the ICF patients in
SNFs in fact had variances, we note that the variance process which
appellant presumably relies on for retaining intermediate care patients
in SNFs was not a part of the approved State plan. Arguably, the
patients needing intermediate care who were in SNFs were receiving the
medical care they needed. However, this is not dispositive of the
question of whether there were utilization control violations. The
Agency has interpreted the recertification requirement to be met only if
there is assurance that the patient is receiving appropriate care. It
is axiomatic that when a patient needing intermediate care is in an SNF,
the patient either receives excessive services or does not make full use
of the services that the facility can provide. The State has made no
argument to persuade us that patients determined to need intermediate
care are properly placed in SNFs; we conclude that appropriate care
does not mean care at a higher level.
From the record, we conclude that patients needing intermediate care
were retained in the two SNFs. For the reasons more fully explained in
Decision No. 482, we conclude that it is a utilization control violation
to retain in a facility Mediciad patients determined to need a level of
care which the facility is not certified to provide. Therefore, we
uphold the disallowance for the SNF violations.
(5) Conclusion
The State has presented no argument or evidence which would convince
us that the analysis we set out in Decision No. 482 should not apply
here as well. Thus, for the reasons set out above and more fully
developed in Decision No. 482, we uphold the entire disallowance of
$166,959.01. /1/ Additionally, in Decision No. 482, the Agency
questioned whether the State had even adhered to its variance
process; the State did not respond directly to this allegation. While
we did not find it necessary to address whether in each instance where
the State alleged there was a variance the record showed that the State
followed its own variance process, we nevertheless recognized that there
was some question whether the record showed that the medical needs of
the variance patients were met. /2/ The record contains report
forms for inspections performed in the five ICFs during 1982. The form
for each facility lists patient names and levels of care. There was at
least one patient listed as needing SNF care for each ICF. Appeal File,
pp. 168-182. The patient records evidenced that variances had been
granted for the SNF patients in four of the ICFs. Appeal File, pp. 101,
110, 115 and 137. Patient records for one facility showed the denial of
a variance for its only SNF patient. Appeal File, p. 153. /3/ A
document for one patient shows that the State granted a thirty
day extension to April 17, 1982 so the facility could "effect suitable
placement at an ICF level". This document also noted the possibility of
a second thirty day extension and acknowledged that the facility may
continue to bill at the SNF rate. Appeal File, p. 189. There is an
unsigned notation on an annual review form from March of 1982 indicating
that this patient was transferred in April. Appeal File, p. 188.
NOVEMBER 14, 1984