Connecticut Department of Income Maintenance, DAB No. 562 (1984)

GAB Decision 562
Docket No. 83-125

August 17, 1984

Connecticut Department of Income Maintenance;
Ballard, Judith; Teitz, Alexander Settle, Norval D. (John)

The decision in this case is unusually lengthy (182 pages). We have
decided to routinely distribute only a portion of the decision
(attached). This portion contains the general legal and factual
analyses of the case, which concerned a disallowance for failure to
provide "active treatment" under Medicaid to certain residents of an
intermediate care facility for the mentally retarded.

The distributed portion should provide all information of interest to
most users. The remainder of the decision, which we are not routinely
distributing, consists of detailed reviews of the records of 27
residents of the facility in question. If you want part or all of this
undistributed material, please call me (202/475-0006) or Andrea Selzer
(202/475-0012).

(2) Connecticut appealed a disallowance of $523,158 of federal
financial participation in payments for residents of certain cottages at
the State's Southbury Training School ("Southbury" or "STS"). Each of
these cottages is certified as an intermediate care facility for the
mentally retarded (ICF/MR) under Title XIX of the Social Security Act
(Medicaid). The Health Care Financing Administration (HCFA) determined
that 27 STS residents did not receive "active treatment," as required by
the Act and regulations, during the period April 1, 1981 through March
31, 1982.

Based on our review of the record, which includes the transcript of a
hearing and extensive records on the individual residents, we have
concluded that (1) HCFA was justified in disallowing for individuals
based on the "active treatment" requirement, and (2) the disallowance
should be reversed with respect to payments for one resident and upheld
with respect to the remaining 26 residents.

The "active treatment" requirement.

Section 1905(d) of the Act, 42 U.S.C. 1396d(d), states in part:

The term "intermediate care facility services" may include services
in a public institution (or distinct part thereof) for the mentally
retarded or persons with related conditions if --

(1) The primary purpose of such institution (or distinct part
thereof) is to provide health or rehabilitative services for mentally
retarded individuals and which meet such standards as may be prescribed
by the Secretary;

* * *

(3) (2) The mentally retarded individual with respect to whom a
request for payment is made under a plan approved under this title is
receiving active treatment under such a program. . . .

The "active treatment" requirement is applicable only to ICFs/MR.
The Act does not define "active treatment," but HCFA has done so by
regulation. HCFA's regulations repeat the statutory requirement at 42
CFR 440.150(c) (1981), which refers to a definition of "active
treatment" at 42 CFR 435.1009 (1981). /1/ The latter section says:

For purposes of FFP (i.e., federal financial participation), the
following definitions apply:

"Active treatment in institutions for the mentally retarded" requires
the following:

(a) The individual's regular participation, in accordance with an
individual plan of care, in professionally developed and supervised
activities, experiences, or therapies.

(b) An individual written plan of care that sets forth measurable
goals or objectives . . . .

(d) Reevaluation medically, socially, and psychologically at least
annually . . . .

(e) An individual postinstitutionalization plan . . . .

As we stated above, section 1905(d)(1) of the Act requires ICFs/MR to
meet certain standards set by HHS. These standards, which are detailed
and lengthy, are set forth at 42 CFR Part 442, Subpart G (1981).

(4) The nature of the dispute and how it arose.

From June 22 to 24, 1981, a joint Federal-State survey team performed
an on-site review at Southbury. Based on the review, HCFA notified
Connecticut that funds were deferred pending receipt of documentation
demonstrating that there was active treatment at Southbury. The State
objected to HCFA's conclusions. The survey team revisited Southbury
from March 23 to 26, 1982, and selected records for 29 patients. The
team concluded that active treatment was not provided to 27 of the 29
patients.

In addition to challenging the review process and raising a
jurisdictional argument, the State's position basically was that, while
STS may not have been a model of perfection, it was providing care that
met at least a reasonable threshold of active treatment. The Agency's
position basically was that, while STS generally was providing good
custodial care, STS was not providing extra services of the quality and
quantity which met the standard of active treatment. The bulk of the
record in this case focuses on the details of day-by-day services
provided to the individuals involved.

The validity of the review process.

The States charged that HCFA's review was flawed because the
reviewers were at STS for only a short time, did not review all
available documentation, failed to consult adequately with STS staff,
and used a review form which did not reflect the nature of the client's
disabilities. As discussed below, there is little merit in these
objections, and on the whole we find the HCFA review adequate. HCFA did
review much or most of the available documentation on site (and it
should be kept in mind that it was the State's responsibility to
maintain complete records for the clients, 42 CFR 442.499, et seq.). In
any event, as the case developed, virtually everything available on each
client was produced - by the State - and both parties have seen,
analyzed, and reacted to the opposing analysis of a complete record
(which we have also examined in detail). Thus, even if there had been a
problem with the original scope of records review, the problem was cured
by the State's own submissions. We find that the length of time the
reviewers spent at the facility was sufficient to identify the problems
with active treatment discussed in the disallowance letter, which
largely have been upheld below with the benefit of our, and the
parties', generous hindsight. The reviewers were not alien to the issue
of active treatment; they were knowledgeable and professional, and key
survey team members (5) were already familiar with STS. See, e.g.,
Transcript (TR) II, pp. 309-322, 333-337, 351-352, 374-376, 408-414,
481-485, 488-489, 528-529; TR III, pp. 569, 616-617, 621-622.
Furthermore, the time spent on-site was comparable to the time typically
spent by the State's independent professional review teams on ICF/MR
on-site reviews. See, e.g., IPR/UR team summaries in HCFA's Ex. 2.
The allegation of failure to consult with cottage staff during the
review is not substantially supported by the record, as there was
evidence of interaction between survey team members and staff; but in
any event, such failure would not be dispositive, as (1) the primary
focus has been on the extensive record of written documentation of
treatment which the State had to keep, and (2) direct care staff had
extensive opportunities to present testimony in this proceeding (note
each of the witness statements in the Notebooks, and most of TR I).
Furthermore, the record does indicate substantial discussions of
problems identified by the review in post-review meetings. See, e.g.,
TR III, pp. 669-676. The form which HCFA used, whatever its merits or
failings, is simply not material in final analysis, given that our focus
below is on the findings in the disallowance letter and the analysis of
the State's evidence related to those findings.

The jurisdictional issue: does this case properly involve a
disallowance?

A. The authority to disallow individual payments.

Connecticut questioned HCFA's authority to disallow FFP for
individual residents of certified ICFs/MR based on findings that these
residents were not receiving "active treatment." The State argued that
the exclusive means for terminating payment to a facility under the
Medicaid statute is by decertifying the facility.

We do not agree. The Secretary is authorized under the Medicaid
statute to disallow FFP for any item or class of items for which payment
is claimed which the Secretary determines has not been expended for
"medical assistance." Sections 1116(d), 1903(a)(1), and 1903(d) of the
Social Security Act. The Act defines "medical assistance" as:

. . . payment in part or all of the cost of the following care and
services . . . for individuals (eligible for Medicaid) . . . .

Section 1905(a) of the Act.

(6) One of the types of care and services listed within section
1905(a) is "intermediate care facility (ICF) services." The Act then
provides a definition of "intermediate care facility" and provides that
ICF services may include services in a public institution for the
mentally retarded if certain conditions are met. Sections 1905(c) and
1905(d). /2/ Under section 1905(d), quoted in part above, for services
in a public facility for the mentally retarded to qualify as ICF
services, the facility must (1) meet the standards prescribed by the
Secretary for certification of the facility and (2) the Medicaid
eligible individual for whom a request for payment is made must be
receiving active treatment. The Act in section 1905(d) plainly
establishes active treatment as a separate and distinct condition from
the condition that a facility meet the standards for certification.
Unlike the first condition imposed, which focuses on the institution's
purpose and the standards the institution must meet, the second
condition focuses on the "individual with respect to whom a request for
payment is made" (emphasis added). The conditions are cumulative, not
alternative. One is institutional, and one is individual. /3/

If an individual has not received active treatment under section
1905(d)(2), then the services provided to that individual, even if
provided in a certified facility, do not fall within the meaning of ICF
services. Consequently, the amounts expended for those services are not
"medical assistance" within the meaning of sections 1905(a), 1905(
a)(15), and 1903(a)(1). The Secretary, therefore, may disallow any FFP
claimed in those amounts. Since section 1905(d)(2) imposes a statutory
condition precedent to payment in the case of each patient, the
Secretary has authority to disallow FFP in each instance where no active
treatment is provided.

(7) We recognize that normally the State has responsibility as
administrator of the Medicaid program to ensure the quality of care.
However, where active treatment is concerned, Congress has imposed a
certain overriding responsibility upon the Secretary to ultimately
determine whether federal funds are being used for their proper purpose.
/4/ HCFA acknowledged that it would not generally use the FFP
disallowance procedure as an enforcement mechanism against ICFs/MR
unless a problem demanded it. However, the fact that HCFA may not have
found it necessary to use this mechanism in Connecticut until now does
not mean that HCFA's actions constitute a substantive rule change. The
authority to enforce the active treatment condition by way of
disallowance is established by the Medicaid statute, as we described
above, as well as the regulations.

The regulations at 42 CFR 440.150(c) (1981), which have been in
effect in substantially the same form since shortly after section 1905(
d)(2) was enacted in 1972, repeat the statutory requirements, stating
that for services in an institution for the mentally retarded to be ICF
services, the facility, in addition to being certified for
participation, must provide active treatment as defined in 42 CFR
435.1009 (1981). That definition, quoted in part above, states what
active treatment is "(for) purposes of federal financial participation."
Thus, both the statutory and regulatory provisions clearly support the
use of a disallowance as an alternative remedy to decertifying an ICF/MR
which is not providing active treatment to all its residents.

B. The legal justification for determining the adequacy of treatment
provided.

In its posthearing brief, the State supplemented its earlier argument
that the Agency could not take a disallowance based on a finding of no
active treatment. The State contended that it had shown that a
"substantial number of individualized treatment services were provided
to the 27 residents of Southbury," and that, therefore, the "real
question is not whether there can be a disallowance when there is no
treatment." State's posthearing brief, p. 32. "Rather," the State said,
"the pertinent legal issue is (8) whether the Agency has authority under
Medicaid to base a disallowance on a determination that although
treatment services were provided, they were not sufficient in number and
frequency to qualify as 'active treatment.'" Id.

The State alleged that the Medicaid law and regulations did not
include any standards for determining the minimum programming for the
various types of ICF/MR residents and that this placed states in the
position of "making a substantial effort to provide appropriate,
individualized habilitation programs without knowing in advance whether
the services that have been provided will be sufficient to comply with
whatever after-the-fact standards of minimum performance federal
reviewers decide to apply." Id. (footnote omitted). In support of this,
the State cited several Board decisions for the proposition that a
disallowance will not be permitted based on an Agency's interpretation
of an ambiguous standard until states are given timely adequate notice
of that interpretation. Id., note 1.

The State contrasted the certification standards at 42 CFR Part 442,
Subpart G, with the active treatment requirement, arguing that the
existence of the elaborate and highly specific certification standards
"leaves no room for a further, essentially standardless review of the
adequacy of a provider's performance . . . ." Id., p. 33. The State
said that, if a facility meets procedural and structural certification
requirements applicable to living conditions and programming, "it is
assumed that the purposes of the program will be fulfilled, including
the provision of developmental treatment as distinguished from mere
custodial care." Id. The State characterized the disallowance as
"second-guessing" the adequacy of treatment, arguing that this was not
contemplated in the statute or regulations and that, therefore, the
Agency action lacked legal justification.

We disagree. We think that Congress established "active treatment"
as a separate and distinct condition for ICF/MR services precisely
because there is no basis for assuming that merely because a facility is
certified as meeting the standards in general, every individual in that
facility is receiving the kind of treatment Congress agreed to fund.
Congress specified "active" treatment, clearly implying that mere
"treatment" was not sufficient. In longstanding regulations, the Agency
has defined what "active treatment" is. While that definition is not as
precise as the certification standards, the State itself acknowledged
that (9) it would not be feasible to define active treatment in overly
specific terms, given the varying range of capabilities of individual
ICF/MR residents. State's posthearing brief, p. 8. In any event, the
definition is not as ambiguous as the State suggested. As we discuss
below, the definition has components which can be applied in individual
cases with reasonable certainty and the ICF/MR certification standards
add further specificity to the active treatment concept. What the State
was doing for most of the clients here cannot be considered active
treatment under any reasonable reading of the regulations. Since the
State had timely and adequate notice of the regulations, the Board cases
the State relied on are simply inapposite.

In our view, questioning whether active treatment was provided by
Southbury does not necessarily amount to mere "second-guessing" about
the number and frequency of programs sufficient to constitute active
treatment. The active treatment requirement goes to the quality, as
well as the quantity, of the services. For the most part, our findings
are based on violations of specific requirements in the regulations for
the professional planning and supervision of individualized programs, or
on substantial discrepancies between what Southbury itself determined
the client needed and what Southbury actually provided. Indeed, those
findings clearly demonstrate that certification of a facility is no
guarantee that individual residents are actually receiving active
treatment.

Therefore, we conclude that the Medicaid statute and the regulations
clearly authorize the Secretary to take a disallowance action based on a
determination that certain individual residents of certified ICFs/MRs
were not receiving services adequate to constitute active treatment. We
also note that a disallowance action here does not necessitate
decertifying the facility from the Medicaid program but instead is a
finding that costs claimed for these 27 individuals for a discrete time
period are not allowable as medical assistance under the Act.

The substantive issue: was active treatment provided to the 27
patients?

A. The nature of "active treatment" generally.

Three of the major components of "active treatment" as defined at 42
CFR 435.1009 are most relevant here. They (10) each relate to how an
individual plan of care must be developed and implemented for each ICF/
MR resident, and can be summarized as follows:

1. The staff involved in carrying out a resident's plan of care
must, at least annually, reevaluate the resident's medical, social, and
psychological needs. This must include review of the individual's
progress toward meeting the plan objectives and of the appropriateness
of the individual plan of care.

2. The plan of care must set forth "measurable goals or objectives
stated in terms of desirable behavior" and prescribe "an integrated
program of activities, experiences or therapies necessary for the
individual to reach those goals or objectives."

3. The individual must regularly participate in "professionally
designed and supervised activities, experiences, or therapies," in
accordance with the plan of care.

The ICF/MR certification standards also contain requirements about
how a plan of care must be developed, what evaluations must be
performed, what services must be provided, and what qualifications
persons providing or supervising various types of services must have.

HCFA said these standards "are, in effect, more detailed statements
of what active treatment incorporates" although "their applicability
necessarily will vary depending on the needs of each individual
patient." TR I, p. 47. We agree that there is a clear relationship
between the services a facility must provide and the services an
individual resident must receive and that the ICF/MR standards provide
additional guidance about the meaning of active treatment. Indeed, the
State appeared to acknowledge this by citing many of the standards. We
refer to some of the standards in the discussion of individual cases
below.

B. How HCFA applied the "active treatment" requirement.

HCFA's disallowance findings included that, because of staff
vacancies at STS cottages, cottage residents did not receive programs
designed and supervised by qualified professionals in service need areas
such as psychology, occupational therapy, or music therapy; that some
programs were not based on appropriate evaluations of an individual's
needs; that (11) some programs were not implemented as frequently as
scheduled; and that some residents simply had little or no meaningful
programming at all. At the hearing, HCFA's witnesses explained their
views of the concept of active treatment and how they felt the STS
programs fell short of that requirement. Based on this testimony,
Connecticut argued that HCFA interpreted the "active treatment"
requirement in a "highly idealized fashion," which "improperly
(minimized) the significance" of some of Southbury's efforts, and failed
to consider the severe nature of the clients' retardation and other
disabilities. State's posthearing brief, pp. 17-18. The State's
primary basis for this position was the testimony of a HCFA headquarters
policy analyst. TR II, pp. 451-521; State's posthearing brief, p. 17.

We recognize that the analyst's testimony contained instances of
eloquent abstraction which, while inspirational, seem somewhat academic;
but a review of the testimony as a whole shows that these instances were
accompanied by many insights that are important to understanding what
active treatment constitutes as a practical matter, within the ambit of
the regulation. Here are some examples.

The analyst described the importance of regularly reinforcing new
positive behavior in the mentally retarded in all the circumstances
where it may occur, and stated that "not to do that is not a neutral
act, but to do otherwise is an erosion to those times when it is done."
TR II, p. 462; see generally, pp. 459-463. The analyst contrasted mere
good custodial care with an "aggressive, accountable habilitation
program." Id., p. 465. The analyst described several practical reasons
for the frequent and on-going presence of professional caregivers, which
we do not repeat at length here (Id., pp. 465-468); we do note here
these comments about the continuous presence of professionals:

It is the on-goingness, as I have described active treatment to you,
it is the on-going need for that professional's knowledge and expertise
and judgment and suggestions and training and hands-on demonstration
that really makes the difference in whether or not a direct care staff
person is going to know what to do at 7:00 in the evening when the
opportunity to reinforce or practice a manual language program, for
example occurs . . .

* * *

(12) If you don't have the O.T. (occupational therapist) person
there, if you don't have the P.T. (physical therapist) there, if you
don't have a psychologist there, and if you don't have a speech and
hearing person there, you have covered practically the entire range of
the developmental and behavioral spectrum. Id., pp. 468-469.

We do not find these observations to be obscure abstractions; they
are practical, and arguably minimal, attributes of an active program of
treatment for the mentally retarded, and are quite the opposite of being
"highly idealized" as the State charged. The analyst's testimony
contains more such observations, which we will not detail here; for
example, other discussions concerned a general problem of overuse of
restraining devices (Id., pp. 476-481, 513-514), and the impracticality
of a nut and bolt threading program (Id., pp. 519-521).

Even if we had found that the analyst's testimony reflected an
"idealized" approach which the State should not be expected to observe -
and we do not - that would not be dispositive, for HCFA presented
another witness who testified at greater length, at least equally
persuasively, and perhaps less didactically. This witness, a
psychiatrist, was the regional division director responsible for, among
other things, monitoring performance of State survey agencies
responsible for certification of ICFs/MR. TR III, p. 619. The witness
was experienced in ICF/MR surveys, and apparently was closely involved
in the decisions leading to this disallowance. Id., pp. 619-622,
658-659. The witness provided an explanation of how the standard in the
regulation is applied in practice, and we find that general explanation
to be reasonable, practical, consistent with the language of the
regulation, and in places even generous. The witness explained the need
to determine whether a client's needs have been adequately evaluated
(diagnosed); whether the sequence and priority assigned to services to
meet those needs was rational; whether this planning was done
reasonably and professionally; whether a reasonable number of the high
priority needs are actually being met with services which help the
person develop; whether particularly severe fundamental needs are
receiving specific attention; and whether services are provided in an
integrated manner. TR III, pp. 634-682; in particular, pp. 677-681.
When asked to discuss the bare minimum allowable under the active
treatment regulations, the witness disclosed an approach which clearly
was less than "ivory tower:"

(13) . . . if somebody is behaviorally disturbed or if somebody has a
psychiatric impairment or somebody has a physical impairment that is so
severe that prevents them from receiving a whole bunch of other
services, that really becomes a necessary and sufficient condition, in
other words, that service had better be delivered and it'd better be
effective or they'd better demonstrate that they'd tried awfully hard to
meet that need, because without that being delivered, nothing else could
take place in a meaningful way. . . .

On the other hand, if there are 10 different needs, in some cases,
seven different services, are the majority of them being delivered in a
way that makes sense with each other? And I don't ask for seven out of
seven; I don't ask for, you know, even five out of seven.

So, if the service plan or the contractual agreement or . . .
individual service plan has been properly developed and you feel
comfortable with the range of needs has been identified, then you ask
for a reasonable number of the high priority ones and do they make sense
with each other. And there's no cookbook -- there's no cookbook about
five out of seven of this or that. Id., pp. 679-681.

"Active treatment" is a requirement which Congress clearly intended
to be a substantial extra condition for funding. "The provision would
not provide Federal participation in payments to institutions that are
primarily residential or custodial in character even though these may
provide some health or rehabilitation services." H.R. Rep. 92-231, p.
112. One of the sponsors of the provisions which contained the "active
treatment" requirement said:

Mental retardation is not, in most instances, a condition which
responds to treatment. However, there are public institutions whose
primary objective is the active provision of rehabilitation, educational
and training services to enhance the capacity of mentally retarded
individuals to care for themselves or to engage in employment. Public
institutions whose primary objective is the provision of health services
or rehabilitation services to the mentally retarded should be subject to
Federal participation under adequate safeguards. It (i.e., the
amendment adding section 1905(d)(2) to the Act) has accordingly defined
such facilities as intermediate care facilities if certain statutory
conditions are met . . . the second condition (14) is that the
individual in such an institution who is mentally retarded, has been
determined to need and is actually receiving the health or
rehabilitative services which the institutions sets forth as being
provided. This condition is necessary because of the shortage of
facilities, persons may be placed in such an institution even though
they are not actually involved in the institution's program or could not
benefit from it.

Statement of Sen. Bellmon, Cong. Rec., December 4, 1971, p. S20571.

"Active treatment" is a requirement oriented to individuals, while
the detailed certification standards for ICFs/MR in 42 CFR Part 442,
Subpart G, are oriented to institutions. An institution certified as
adequate under the detailed standards in Subpart G must also actually
provide services it is capable of providing to the retarded individuals
in the institution. Many of the individuals involved in this particular
case are severely and profoundly retarded. This does not mean there is
no active treatment that can be provided to them (the record here is
full of suggestions for activities appropriate for the profoundly
retarded); rather, it emphasizes the need for special, individualized
services designed to meet the unique needs of these individuals.
Furthermore, the fact that the State can seek FFP here is predicated on
the status of Southbury as an ICF/MR; if there was nothing the
institution could do for these individuals, then the individuals were
inappropriately placed, and should have been moved to a custodial care
facility.

We found the two quoted HCFA witnesses to be well-qualified and
expert concerning the subject of developmental services for the mentally
retarded. The State acknowledged as much. See, TR II, p. 497; TR
III, p. 701. The State offered no such individuals to testify on the
nature of active treatment; the State offered only the direct care
staff of Southbury, and presented no "professionals" of any kind. /5/

(15) We conclude that the definition of "active treatment" in the
regulation is a sound, reasonably definitive one which tracks statutory
intent and is sufficient on its face to indicate a minimal level of
effort reasonably required of a State ICF/MR. We find that HCFA's
general interpretation and implementation of the provision is
reasonable, and arguably even conservative; certainly, it was far from
obscure or idealistic.

C. How we approach the individual cases.

The State also raised a number of arguments about what was wrong with
the way HCFA approached its review of individual client programs and
about how we should approach our review. We address some of these
points in our discussion of individual cases. In this section, we
briefly summarize some points about our approach in general, or about
why we agree or disagree with the State on issues which apply to a
number of individual cases.

* Our examination of each individual client starts with the findings
in the disallowance letter, but the testimony and the client records
(drawn from the STS files and submitted by the State) frame the issues
in a manner which goes beyond the specific deficiencies noted by the
reviewers. The State asked us to look at the overall effort made by STS
for each client during the review period, and we have done so. We have
not, however, gone beyond this to consider the evidence HCFA presented
about changes made at STS following the HCFA review. The State argued,
and we agree, that merely because the STS improved its effort after
receiving guidance from HCFA does not necessarily mean that its previous
efforts did not constitute active treatment.

* The State asked that we take into account the severity of the
mental and physical handicaps of the clients in question here, and we
have done so. As we have noted above, however, that a client has severe
handicaps does not mean that no active treatment can be provided to the
client; rather, it emphasizes the need for special, individualized
services designed to meet the client's unique needs. At the hearing,
the State itself referred to a manual which indicates that, no matter
how profoundly retarded, an individual is trainable, with the proper
programming. TR II, p. 498, referring to "Program Issues in
Developmental Disabilities, A Resource Manual for Surveyors and
Reviewers," ed. by Gardner, Long, (16) Nichols, and Iagulli (1980).
HCFA's experts testified to this as well. Since STS was a facility
specializing in the field, with a staff which included highly qualified
and experienced professionals, it is reasonable to presume that STS also
knew this. Indeed, this view is reflected in the ICF/MR certification
standards, which state:

The ICF/MR must provide training and habilitation services to all
residents, regardless of age, degree of retardation, or accompanying
disabilities or handicaps.

42 CFR 442.463.

In other words, an ICF/MR cannot use the severity of an individual's
handicaps as an excuse for not providing any training or habilitation
services to that individual.If such services cannot benefit an
individual, this raises a serious question about whether that individual
should be in an ICF/MR at all.

* The State said that it had shown that individual clients made
progress in their skills and this was not questioned by HCFA. The State
pointed out that HCFA's policy analyst "agreed that individual progress
in habilitation skills is a positive consideration to weigh in finding
that an individual has received 'active treatment.'" State's posthearing
brief, p. 15, citing TR II, p. 506. We agree that, where the State has
demonstrated that an individual progressed in habilitation skills, the
progress may support a finding of active treatment. But we do not
consider progress by itself to be determinative. In many instances
where a client made some progress in meeting one or more habilitation
goals, the record also shows that this progress was made despite an STS
failure to provide programming with any regularity, or that the client
later regressed when a program was terminated due to a staff vacancy, or
that the client reached a plateau which could not be exceeded until
other services were provided to address a specialized need. Thus, we
would be remiss if we viewed the client's progress in isolation without
considering whether there is any clear indication that the client could
have made significantly more progress if it were not for deficiencies in
the STS program design or implementation.

* The State alleged that HCFA did not give sufficient weight to
programs designed to develop a client's skills in activities of daily
living such as toothbrushing, (17) eating, and bathing (ADL skills, also
called basic self-help skills). The State said that HCFA too readily
dismissed these programs as merely custodial services, failing to
consider that the severely retarded individuals at STS had their
greatest needs in these areas. While sometimes HCFA arguably did not
give sufficient weight to ADL programs provided by STS, we think that,
on the whole, HCFA's approach, as illustrated by the following statement
from HCFA's posthearing brief, was very reasonable.

Custodial services may be the focus of significant training programs,
but the reviewer should scrutinize the plan for a significant behavioral
component to the objective, and look for documentation of consistent
application of the explicit protocol.

p. 14.

We found that some of the State's programs in this area did not
establish behavioral goals for the client but instead merely had staff
taking some action for the client at a particular time. Moreover, the
State essentially acknowledged that to have merit as a component of
active treatment an ADL program had to be carefully developed, with
established protocols, and had to be monitored and evaluated. Although
the State alleged that its programs met these criteria, we found that in
many instances this was not so.

* The State further alleged that HCFA's treatment of ADL programs
showed a bias on the reviewer's part which affected the judgments made.
The State pointed out that, consistent with the concept of providing the
disabled with a normal environment, it was appropriate for the State to
provide these programs at the time the related custodial service would
normally occur, and argued that ADL programs should not be suspect
merely because they are provided at normal times. While we did not
always agree with the reviewers' evaluations of ADL programs, we do not
find that the reviewers were biased. There are valid reasons for
questioning whether active treatment is actually occuring at times when
there are many demands on the staff and the staff might be tempted to
forego following a step-by-step protocol with the client and perform the
activity without any meaningful training. In some instances, the lack
of documentation that the ADL programs were properly implemented
suggests that this is likely what actually happened. In other
instances, the (18) problem was not that the ADL programs were not
properly designed and implemented, but that they were the only programs
provided to a client, who had no structured programming for the
remainder of the day. /6/ Finally, we note that the reviewers'
evaluation of the ADL programs was often in response to the State's
allegation that these programs met a client need for occupational or
physical therapy. Yet, the State's own records showed that, for the
most part, these were standardized programs used for many clients,
rather that individual programs designed by a professional to meet
specialized needs.

* The State also said that HCFA's demands for documentation were
simply unrealistic and unattainable. As we detail below, in a few
instances, this may be so. But the ICF/MR certification standards
require that a facility keep specific and extensive records (See, e.g.,
42 CFR 442.423, 442.434, 442.487, 442.490, 442.492, 442.497, 442.499),
and STS itself had a policy of performing periodic reviews and reporting
on them. These are not mere technical requirements but go to the heart
of active treatment. As HCFA pointed out, it is important to document a
client's progress in a program to be able to properly evaluate,
supervise, and modify that program. We also found that some of the
program plans called for a specific type of data to be collected;
failure to collect the data in these circumstances clearly amounted to a
failure to properly implement the plan.

* The State said that the Board should rely on the oral testimony of
the direct care staff, which filled in, amplified, and supplemented the
basic written records available for each client. The State said that
these witnesses were not impeached, nor even fully cross-examined. As
explained below, we found some instances, however, where the witnesses'
testimony was contradicted by the written record. More important
overall, although we found the witnesses' testimony generally reliable
regarding the clients' characteristics and some of the programs planned
for the clients, for the most part the testimony was too vague and
general to support a finding that STS implemented the programs on (19)
any regular basis. Most important, in view of the role that
documentation must play in active treatment, the witnesses' testimony is
simply an unacceptable substitute for adequate written records.

* The State charged generally that HCFA failed to give adequate
consideration to the programs which direct care staff provided to
clients in the absence of programs directly developed and/or overseen by
professionals. There is no question that the direct care staff at STS
deserve a great deal of credit for their apparent dedication. But, as
we explain below, the problem is that the good services provided by
direct care staff simply did not amount in any given case to active
treatment: the services were not individualized, or not professionally
developed or supervised, or often amounted to "mere" custodial care of
the kind one would expect to see in a good nursing facility; or the
services were provided only sporadically, or only for short periods; or,
finally, the services by themselves, in the absence of other services
identified by STS as needed which were not provided, were simply not
good enough by themselves.

Having discussed the nature of active treatment in general and the
major points raised by the State, we next turn to the records for the
individual clients in dispute here. We first provide a general
background of what is contained in the files about each client and then
discuss each client separately.

(Remainder of decision - pages 19 through 182 - omitted here)

(20) DEPARTMENTAL GRANT APPEALS BOARD

Department of Health and Human Services

SUBJECT: Connecticut Department of Income Maintenance, Docket No.
83-125, Decision No. 562

DATE: August 17, 1984

DECISION

Connecticut appealed a disallowance of $523,158 of federal financial
participation in payments for residents of certain cottages at the
State's Southbury Training School ("Southbury" or "STS"). Each of these
cottages is certified as an intermediate care facility for the mentally
retarded (ICF/MR) under Title XIX of the Social Security Act (Medicaid).
The Health Care Financing Administration (HCFA) determined that 27 STS
residents did not receive "active treatment," as required by the Act and
regulations, during the period April 1, 1981 through March 31, 1982.

The "active treatment" requirement.

Section 1905(d) of the Act, 42 U.S.C. 1396d(d), states in part:

The term "intermediate care facility services" may include services
in a public institution (or distinct part thereof) for the mentally
retarded or persons with related conditions if --

* * *

(21) care. The State cannot blame the failure to provide adequate
treatment on the client's physical condition. Client 27 should have had
programming tailored to meet her individual needs.

Conclusion

Based on the above analysis, we conclude that the Agency's
disallowance findings are supported by the record for 26 of the 27
Southbury residents. For the other resident, Client No. 5, we conclude
that the Agency's disallowance was not supported by the record. /1/ We
cite to the 1981 Code of Federal Regulations for convenience.
There was no allegation, and it does not appear, that there was any
change in provisions affecting this case during the period in question.
The definition of "active treatment" was originally published in final
form at 39 Fed. Reg. 2220, January 17, 1974, and codified at 45 CFR
249.10(d)(1)(v). /2/ Section 1905(c) of the Act generally
excludes from the term "intermediate care facility" any "public
institution or distinct part thereof for mental diseases or defects"
(emphasis added), but refers to section 1905(d) for an exception to this
exclusion. We think it is significant that section 1905(d) does not
merely provide that a public institution meeting certain conditions can
qualify as an ICF but also focuses on when ICF services in such an
institution are reimbursable. /3/ This conclusion is also
supported by the legislative history of section 1905(d) which we quote
below. /4/ Moreover, while states generally perform
certification surveys, HCFA clearly has authority to review state
procedures and examine records of individual recipients to determine
whether a state is adhering to federal requirements. See, e. g., 45
CFR 201.10. /5/ The direct care staff, while "professional" in
the larger sense of being experienced and apparently dedicated, did not
possess medical or other doctorate-level degrees, and there was no
attempt by the State to offer them as knowledgeable generally about
standards of treatment of the mentally retarded. Rather, they provided
testimony about details of care of the individual patients involved.
The State presented no testimony of physicians, occupational therapy
(OT) or physical therapy (PT) specialists, or psychologists - even those
who had been associated with the particular clients here. /16/
The certification requirements provide that each resident must have an
activity schedule which does not allow periods of unscheduled activity
to exceed three continuous hours. 42 CFR 442.435.

MARCH 19, 1985