Missouri Department of Social Services, DAB No. 670 (1985)

GAB Decision 670

July 10, 1985

Missouri Department of Social Services;
Ford, Cecilia Sparks; Teitz, Alexander G. Ballard, Judith A.
Docket No. 84-221

DECISION

The Missouri Department of Social Services (State) appealed a
disallowance of $99,346.56 taken by the Health Care Financing
Administration (Agency) under section 1903(g) of the Social Security Act
(the Act). The Agency based the disallowance on its determination that
the State failed to meet the statutory and regulatory utilization
control requirements for certain Medicaid patients in three intermediate
care facilities (ICFs) during the quarter ending December 31, 1983. The
Agency alleged that there were violations of the requirements for timely
and valid physicians' certifications and recertifications and for plans
of care.

During the appeal, the State provided documentation that caused the
Agency to conclude that the State had complied with the plan of care
requirements for all patients involved in this appeal. The Agency also
reversed its findings for two patients originally found not to have had
valid or timely certifications and recertifications. These changes,
however, did not alter the amount of the disallowance because the number
of facilities in violation was unchanged.

The State maintained that the disallowance should be reversed because
physicians' orders, progress notes, or other documentation for the
patients evidenced the patients' need for the ICF level of care. In the
case of one patient whose recertification was three days late, the State
argued that the violation was de minimis and should be disregarded. The
State also argued that the Agency's penalty calculation for ICFs was
incorrect because it included figures for intermediate care facilities
for the mentally retarded (ICFs/MR). Finally, the State argued that the
enactment of the Deficit Reduction Act of 1984 (DEFRA), Pub. L. 98-369,
precludes the imposition of the disallowance because DEFRA amended
section 1903(g)(1) so that a state's utilization control showing no
longer has to include evidence that recertification requirements are
met.

(2) We have already concluded that the DEFRA amendments do not preclude
this disallowance. Effect of DEFRA Amendments on Utilization Control
Disallowances, Decision No. 655, June 7, 1985. (This decision addressed
arguments made by Missouri as well as arguments made by seven other
states on this question.)

This Board has also previously addressed Missouri's argument that ICFs/
MR should be excluded when calculating a section 1903(g) disallowance
for ICFs. Missouri Department of Social Services, Decision No. 658,
June 7, 1985. We concluded that the applicable statutory and regulatory
provisions supported the Agency's position that "level of care" includes
ICFs/MR for purposes of calculating a section 1903(g) disallowance. We
incorporate our analysis from that decision here.

Below, we first discuss the utilization control requirements in effect
during the quarter in question here. We then discuss the State's
general arguments about certifications and recertifications and why we
do not find them persuasive. Finally, we analyze the documentation
submitted for the patients in the three ICFs (Blue Hills Center,
Manchester and Chastain's of Lamar), stating why we uphold the Agency's
findings that there were utilization control violations in each of these
facilities.

Relevant Statutory and Regulatory Provisions

Under Title XIX of the Social Security Act, states which have an
approved Medicaid state plan receive federal financial participation
(FFP) in expenditures for medical services to needy individuals.
Services which qualify as "medical assistance" under section 1905(a) of
the Act, including ICF services, are reimbursed generally at the
"Federal medical assistance percentage" (FMAP) rate. Sections 1903(a)(
1); 1905(b). However, section 1903(g)(1) of the Act, as in effect
during the time period in question here, provided that, with respect to
amounts paid for certain "long-stay services," the FMAP "shall be
decreased . . . unless the State . . . makes a showing satisfactory to
the Secretary that there is in operation in the State an effective
program of control over utilization of such services. . . ." Section
1903(g) (1) further provided:

. . . such a showing must include evidence that --

(A) in each case for which payment is made under the State plan, a
physician certifies at the time of admission . . . (and . . .
recertifies, . . . at least every 60 days. . ) that such services are or
were required . . . ; and

(3) (B) in each case, such services were furnished under a plan . .
. ;

(C) such State has in effect a continuous program of review of
utilization pursuant to section 1902(a) (30) . . . ; and

(D) such State has an effective program of medical review . . .
pursuant to section 1902(a)(26) and (31) whereby the professional
management of each case is reviewed and evaluated at least annually by
independent professional review teams.

See also 42 CFR 456.652.

The Secretary was then to review the validity of the states' showings,
sometimes performing on-site surveys of institutions. Section 1903(g)(
2); see also 1903(g)(6)(B). In the case of a state's unsatisfactory or
invalid showing, a reduction was to be taken based on the formula set
out at section 1903(g)(5).

The statutory requirements for certifications and recertifications for
ICFs under section 1903(g)(1)(A) are implemented by HCFA regulations at
42 CFR 456.360. In addition, the Agency has issued Medicaid Action
Transmittal (AT) 80-68, effective October 1, 1980, clarifying what
constitutes a valid certification and recertification.

The State's General Argument

The State argued that it had an effective utilization control program
that satisfied the federal requirements that (1) patients receive the
appropriate level and quality of care and (2) there be no unnecessary
utilization of services. The State maintained that the Agency was
trying to hold the State to technical compliance even though the State's
program was effective. The State argued that the Agency's position was
contrary to Congressional intent; according to the State, Congress
intended a system that was "result oriented," that is, that ensured that
the patients receive the care they needed.

The State explained how it thought its program fulfilled the statutory
intent. The State pointed out that its utilization control system
applied a set of criteria to determine the level of care needed by each
patient by evaluating patients' needs and the treatment prescribed. The
State said that physician orders and progress notes, filled out
periodically when the physician visited the (4) patient, were sufficient
as recertifications if, when evaluated using the State's criteria, they
showed the patient needed ICF care. The State pointed out that orders
and notes were allowed for recertification compliance purposes by Action
Transmittal 80-68. The State contended that the notes and orders, and
other documents submitted, had the information necessary for making a
proper recertification determination, so it did not matter if the
physicians' statements do not specifically refer to the ICF level of
care.

The State explained that State inspection teams visited the facilities
and examined the patients' records to determine whether the physicians'
notations indicated that the patients continued to need the ICF level of
care. The State maintained that its Inspection of Care (IoC) reports
showed that these patients did, in fact, need ICF level of care.

Analysis of the State's General Argument

We agree with the State that Congress intended to ensure that patients
receive the appropriate level of care. But we do not think that this
requires the Agency to find that a State had an effective utilization
control program simply because patient documents do not indicate that
the patient was inappropriately placed. Rather, Congress specifically
provided that, to be satisfactory, a State's utilization control showing
had to include evidence that a physician (or other qualified person) had
certified the patient's need for inpatient services and recertified that
need at least every 60 days. Read together, the statute, regulations,
and action transmittal clearly contemplate that the physician actually
evaluate the patient's need for a specific level of care, and that the
State be able to show that this had been done. Thus, the Agency is not
merely being "technical" by requiring some evidence to show that the
physician made the requisite determination.

Action Transmittal 80-68 describes recertification as the process by
which a physician attests (in writing) to the patient's need to remain
at the particular level of care. While AT-80-68 indicates that
physician's orders or progress notes may be used for recertification
purposes, the action transmittal clearly indicates, when read as a
whole, that such documents are acceptable only if they evidence that the
physician attested to the patient's need for the level of care. /1/ If
these documents merely show the continuation of (5) the existing plan of
care, they are clearly not sufficient, since the requirement for
updating a plan of care is separate from the recertification
requirement.


Annual IoC reports are also responsive to a different requirement than
recertification. The IoC reports are compiled only once a year, during
the annual on-site review required by sections 1903(g)(1)(D) and 1902(
a)(31). During the period involved in this appeal, the recertifications
had to be performed every 60 days, and fulfill a different purpose.
There must be an indication that the physician actually evaluated the
patient periodically, not only to prescribe medication and treatment,
but to determine whether the patient required the ICF level of care.

The State implied that the attending physician could not do this
evaluation because it requires application of complex criteria with
which state inspection teams are more familiar. However, this
evaluation is precisely what Congress intended the physician to
undertake. Indeed, the record indicated that the State and facilities
knew that the physicians would have to make such an evaluation. At the
top of each of the Physician's Order forms used in two of these
facilities there is a certification statement (with the level of care to
be filled in). (State's Ex. J, pp. 6 and 105) The other facility used a
stamp which printed on the forms a statement: "In my opinion,
Intermediate Care is required in this case." (State's Ex. J, p. 92)
Further, the State's utilization control documents listed
recertifications as a requirement in addition to physician's orders and
progress notes. (State's Ex. G, p. 9) The difficulty the Agency's
reviewers found for most of the patients here was that statements
intended as recertifications either had not been properly filled in, or
were not timely signed. The State tried to compensate by pointing to
other documentation for the patient. While we agree with the State that
this documentation should not be rejected solely because it does not
specifically use the term "ICF" or "intermediate care," we find it
insufficient for other reasons, as we discuss below.

(6) Blue Hills

During the validation survey, the Agency found that the Blue Hills
Center facility was in violation of the utilization control requirements
with regard to eight patients. The Agency found that five of the
patients had either not been recertified within the quarter or had been
recertified in an untimely manner. The Agency subsequently withdrew its
finding with regard to one of these patients because the State
documented that the patient was a skilled nursing facility patient.

The other three patients were found to have not been certified upon
readmission. The Agency dropped its initial finding that these three
patients had been readmitted without having a plan of care established.

The forms relied on by the State for recertification evidence were
physician's orders and physician's progress notes. The physician's
order forms used by Blue Hills each had a box at the top of the form.
The adequacy of the forms as a recertification that ICF level of care
was required is called into question for the patients here because,
rather than the term "ICF" appearing after this statement, the boxes
contain the word "PRIVATE." The State's only explanation of this was
that the facility was behind in its recordkeeping and had not updated
its computerized records to show that the patients had been approved for
Medicaid.

In our minds, the fact that "PRIVATE" appears at the top of these forms
not only renders the statement at the top an invalid statement that ICF
care was required, but also is one circumstance to be taken into account
in evaluating whether the documents as a whole indicate that the
physician had determined that continued care at the ICF level was
required. When the form identified a patient as a non-Medicaid patient,
it is questionable whether the physician even knew that he was required
to make the attestation for that patient regarding the need for ICF
care.

Below, we discuss the documentation for each patient at Blue Hills for
whom a recertification violation was found, stating additional reasons
why we uphold the Agency's findings. We also discuss certification
violations where those were alleged. We discuss the patients in the
order they were addressed in the parties' briefs, identifying them by
initials only, to protect their privacy.

(7) Patient M.A.

The Agency accepted an Initial Assessment form dated September 20, 1983
as certification of the need for ICF level of care for this patient.

The State argued that a physician's progress note dated 10/14/83 was a
recertification for the need for the ICF level of care for this patient.
However, that progress note seems to say, "no complaints - DE stable
doing well." These brief comments do not evidence the physician's
attesting to the need for ICF level of care for this patient and,
indeed, could indicate that, in view of the patient's improved
condition, the need for that care should be re-evaluated.

Even if we found that the 10/14/83 progress note were a valid
recertification, however, another recertification would have been
required within the quarter by 12/13/83. There is no progress note for
this patient for 1983 after the 10/14/83 entry. Therefore, there would
be a violation for this patient on that basis.

Furthermore, on the physician's order forms for this patient, in the box
provided for the physician to fill in the level of care certified for
the patient, "PRIVATE" is typed. "PRIVATE" indicates that the
physician, who did not write in the level of care to be certified, may
have believed the patient was not a recipient under Title XIX for whom a
recertification would be necessary.

For these reasons, we conclude that there was a violation for Patient
M.A. for the quarter in question.

Patient E.C.

The Agency accepted the Initial Assessment form for Patient E.C.
(State's Ex. J, p. 10), dated August 23, 1983, as a valid, timely
certification for the previous quarter. The State has asserted the
signed and dated physician's progress notes for the patient constitute
valid recertifications for the patient's need for the ICF level of care.
The progress note for 9/12/83 indicates "stable . . . overall improved."
State's Ex. J, p. 12. The notes for 10/10/83, and 11/10/83 indicate "no
complaint . . . stable . . . continue orders."

We find that these notes do not indicate that the physician was
attesting to the patient's need for the ICF level of care rather than
merely updating his orders. The "continue orders" entries followed the
notation "(p)," which the State (8) indicated was related to the plan of
care for the patient. Telephone Conference Call, March 14, 1984.
Therefore, the record indicates that "continue orders" was not
envisioned as a means of recertifying the need for ICF level of care.

We also note that, on Patient E.C.'s physician's orders, in the box for
the physician's recertification of the need for level of care, the word
"PRIVATE" is printed. As discussed above, this notation indicates that
the physician may not have known that this patient needed a
recertification.

For these reasons, we find that there was a violation for Patient E.C.

Patient B.C.

The Agency found that Patient B.C. was not certified upon readmission
from a hospital on October 7, 1983. Though most of the discussion on
this patient in the record deals with this issue, we find that, even if
there were a valid certification on October 7, the State is in violation
with regard to this patient because there was no timely, valid
recertification within the quarter.

The State maintained that an Inter-Agency Transfer Form (State's Ex. J,
p. 21) contained the certification upon readmission for this patient's
need for the ICF level of care. This form, however, was not dated and
therefore not a valid certification on its own. The Admission and
Discharge Record (State Ex. J, p. 19), which the State maintained
contained the date of signing for the Inter-Agency Transfer Form,
contained only a "readmission date," which is not necessarily the date
of the physician's signing the related form.

Furthermore, as discussed above, physician's progress notes indicating
"no complaints," and "continue orders" do not evidence the physician's
recertification for the ICF level of care. This is especially true in
the case of this patient because the Inter-Agency Transfer form
indicated a certification for skilled nursing care. Ex. J, p. 21.
Therefore, "continue orders" could not have meant recertification at the
ICF level of care.

In addition, in the box on the physician's orders for recertification of
level of care, the word "PRIVATE" is printed. As discussed above, this
indicates that the physician may not have known that the patient needed
to be certified.

(9) For these reasons we find that there was a violation with regard to
Patient B.C.

Patient H.D.

The Agency accepted the Initial Assessment form for Patient H.D.
(State's Ex. J, p. 33), dated, July 28, 1983, as a valid, timely
certification.

The State asserted that physician's progress notes and orders satisfied
the recertification requirement within the quarter. The progress note
dated 10/1/83 stated, "Have surveyed previous orders, lab, and nurses
notes. No change in orders." As in the cases above, this note is not
evidence of the physician evaluating the patient and certifying the need
for the patient receiving the ICF level of care. These orders are
related to plan of care, not certification of the need for ICF level of
care. Even if the progress note had been seen as a recertification,
however, there is no evidence of a required recertification by November
30. The physician's order of 11/29 is not signed, and, in any event,
like the other documents, it fails to certify the patient's need for ICF
level of care.

For these reasons, we find that there was a violation for Patient H.D.

Patient E.P.

The Agency accepted the Initial Assessment (State's Ex. J, p. 54) for
Patient E.P., dated August 26, 1983, as a valid, timely certification
during the previous quarter and acknowledged that the patient was
validly recertified on October 16, 1983.

The State submitted physician's progress notes and orders to
substantiate its claim of another timely recertification within the
quarter. A progress note for 11/10/83 states: "no complaints,"
"stable," and "continue orders." As discussed above, these types of
comments relate to the plan of care for the patient rather than a
recertification of the patient's need for the ICF level of care. In
addition, the physician's orders have in the box for certification of
level of care the word "PRIVATE."

For these reasons, we find that there was a violation for Patient E.P.

Patient M.P.

Patient M.P. was readmitted to Blue Hills on October 22, 1983 from a
hospital. The State submitted a Discharge (10) Summary (State's Ex. J,
pp. 66-67) from the hospital and a physician's order for October 22,
1983 to substantiate the alleged certification. The Discharge Summary
stated merely that the patient was "going back to Blue Hills Center."
Since Blue Hills was certified for SNF as well as ICF patients, this
cannot constitute a certification for the ICF level of care.

The physician's order of 10/22/83 was not signed by a physician and the
box for the certification of level of care was left blank. This form is
not evidence of the physician attesting to the need for ICF level of
care. Another physician's order contained the certification for ICF
level of care but was not signed by the physician until November 8,
1983. This certification would be untimely and therefore invalid.

For these reasons, we find that there was a violation for Patient M.P.

Patient M.H.

Patient M.H. was readmitted to Blue Hills upon discharge from a hospital
on August 4, 1983. The State has submitted a discharge summary (State's
Ex. J, pp. 75-76) for the patient to demonstrate the initial
certification. The discharge summary, however, makes no mention of what
level of care the patient is supposed to receive. This failure prevents
this form from qualifying as a valid certification. On the bottom of the
discharge summary there is a handwritten note by a physician, dated
September 12, 1983, saying that the patient would be going to Blue
Hills. However, this note would be untimely as a certification upon
readmission and does not certify any specific level of care, given that
Blue Hills provided both ICF and SNF levels of care.

There is also a physician's order for this patient in the file dated
August 5, 1983 at the top. The level of care recertification box on the
form has been left empty, there is no attestation of the need for a
particular level of care anywhere else on the order, and the order was
not signed by the physician until August 12, 1983. Therefore, this form
is not sufficient evidence that a physician attested, in a timely
manner, to the patient's need for the ICF level of care.

Even if we found that there was a timely, valid certification upon
readmission, we would find a violation because of the lack of a timely,
valid recertification by October 3, 1983. The physician's progress
notes update the plan of(11) care but contain no statement that
indicates that the physician made the determination that the patient
needed the ICF level of care. A physician's order with the date
September 27, 1983 printed in the upper left corner (State's Ex. J, p.
83) contains in the box for certification of level of care "Medicaid
ICF." However, the physician's signature on the bottom of the
physician's order sheet is dated October 10, 1983. Therefore, this
recertification is untimely. /2/


For these reasons, we find that there was a violation for patient M .H.
for this quarter.

Manchester

The Agency found violations for ten patients at this facility for
untimely recertifications of the patient's need for the ICF level of
care. The State submitted physician's order forms for the patients,
each containing a blank where "ICF" should have been indicated in the
certification/recertification box, but also containing a handwritten
"ICF" in the general area of the box. The Agency charged that "ICF" had
been written on the forms after the federal reviewers had seen the forms
and, therefore, also after the physicians' visits to the patients. The
Agency submitted affidavits from two members of the review team stating
that the "ICF"s were not written on the form at the time of the review.
The Agency also pointed out that "ICF", if it appeared properly on the
form, would have been printed by a computer, like other historical
information on the form, not handwritten.

The State said that it did not know when the "ICF"s were put on the
forms, but acknowledged that the documentation was assembled after the
federal review. The State submitted no counter-affidavits or other
evidence that the "ICF" notations were on the forms when the physicians
signed them.

(12) In light of the questionable credibility of these "ICF" notations,
we find that we can not conclude that these forms evidenced
recertifications by the attending physicians of these patients' need for
the ICF level of care.

The only remaining question is whether other documents submitted by the
State might qualify as recertifications for these patients. The State
submitted physician's progress notes for these patients, some of which
contain the statement "continue care." In the context in which this
statement appears, however, it is more consistent with the physician
updating the patients' plans of care, rather than attesting to the
patients' need for the ICF level of care. Even if we found that
progress notes stating "continue care" were acceptable as valid
certifications, however, we would still uphold the Agency's disallowance
with regard to this facility because, in the case of three patients, the
progress notes containing the statement were more than 60 days apart
(State's Ex. J, pp. 104, 162, and 169). Required recertifications
would, therefore, be untimely for the three patients. The Board has
previously held that, if there is a violation for one patient in a
facility, the Board must uphold the entire disallowance for the
facility. See, e.g., New York State Department of Social Services,
Decision No. 531, April 23, 1984; Vermont Agency of Human Services,
Decision No. 599, December 10, 1984; and Washington State Department of
Social and Health Services, Decision No. 663, June 21, 1985.

Chastain's of Lamar

The one patient still at issue for this facility was one for whom the
Agency found the recertification made 63 days after the previous one.
The State admitted that the recertification was three days late, but
argued that the delay was de minimis and that the Agency was
unreasonable in assessing a disallowance for a facility that had one
recertification that was three days late.

The State's position was that, based on recent changes in the
utilization control requirements contained in amendments to DEFRA, there
should be no finding of violation for Chastain's of Lamar. See, DEFRA,
section 2363. The pertinent changes in the utilization control
requirements include the provision of a 10-day grace period in which
recertifications may be performed (providing the state shows good cause
for the delay), and a revised schedule for recertifications in ICFs.

(13) The Board addressed the question of whether the grace period should
be applied to recertifications untimely under the unamended requirements
in New Hampshire Department of Health and Welfare, Decision No. 669,
July 3, 1985. In that decision, the Board concluded that the DEFRA
amendments did not apply to the calendar quarter covered by that
disallowance (the same final quarter of 1983 dealt with in this appeal).
The Board based its determination in New Hampshire on Decision No. 655,
which states:

. . . there is no clear indication in DEFRA or its legislative
history that Congress intended to retroactively alter the State's
obligations to make a satisfactory and valid utilization control showing
under the requirements in effect during any given quarter. Rather, the
wording of section 2363(c) of DEFRA indicates that Congress intended the
amendments to apply to quarters beginning on or after October 1, 1984
and implies that the pre-amendment provisions would continue to apply to
previous quarters. Id. at 3.

Decision No. 655 also found that:

Although Congress acted through the DEFRA amendments to provide a
more liberal schedule for recertifications (and a grace period for late
recertifications in some circumstances) and to change the requirements
to which the section 1903(g) reductions would apply, Congress reaffirmed
its intention that utilization control requirements be met. Nothing in
the amendments indicates that Congress thought HCFA had misinterpreted
the previous requirements. Id. at 4.

Following the New Hampshire decision, we find that the grace period
contained in the DEFRA amendments does not apply to the quarter in
question. By DEFRA's own terms, the grace period applies only to the
recertification schedule as revised by DEFRA, which did not apply until
the quarter beginning October 1, 1984.

Even if we found that the grace period applied to the quarter involved
in this appeal, however, the State would be unable to avail itself of
the grace period unless it could show good cause for the delay in
recertification. The State did not allege that there was good cause for
the delay involved here.

For these reasons, we find that the Agency appropriately found a
violation with regard to Chastain's of Lamar.

(14) Conclusion

For the reasons stated above, we uphold the disallowance. /1/ In Hawaii
v. Heckler, Civ. No. 84-2244, May 17, 1985, the U.S. Court of
Appeals for the Ninth Circuit reversed a Board decision finding
physician orders and progress notes to be inadequate certifications.
However, that decision was based on an earlier Agency action
transmittal. The Court specifically noted that the requirements had
been clarified in AT-80-68. /2/ There is some question about
whether the Agency properly took a disallowance for the quarter ending
December 31, 1983 based on the lack of a proper certification in August
1983. However, we think that the record supports the disallowance for
the quarter taken, given that the physician's order form signed on
October 10, 1983 (a date within the quarter) is either an untimely
certification or, assuming the patient was properly certified on
readmission on August 4, an untimely recertification.

OCTOBER 04, 1985