GAB Decision 757
June 6, 1986
Wyoming Department of Health and Social Services;
Docket No. 84-204
Ford, Cecilia S.; Settle, Norval D. Teitz, Alexander G.
The Wyoming Department of Health and Social Services (State) appealed
a determination by the Health Care Financing Administration (Agency)
disallowing $47,496.12 in federal financial participation (FFP) claimed
for services provided in intermediate care facilities (ICFs) under title
XIX of the Social Security Act (Act) for the quarter ending December
1983. The disallowance was taken pursuant to section 1903(g)(1)(A) of
the Act, which provides for the reduction of a state's federal medical
assistance percentage of amounts claimed for services in ICFs for a
calendar quarter unless the state shows that during the quarter it had
"in operation . . . an effective program of control over utilization of
such services." /1/
Based on a validation survey, the disallowance stated that the State
had
untimely or invalid initial certifications for two patients admitted
to
the Michael Manor Health Care Center (Michael Manor), and for
one
patient each in the Niobrara Country Memorial Hospital Nursing
Home
(Niobrara) and the Pioneer Manor Nursing Home (Pioneer
Manor).
Additionally, the Agency found that the State failed to do a
timely
update of a plan of care for one patient at Pioneer Manor.
During the
course of the proceedings before the Board, the State conceded
that
physician certifications had not been signed on the day of admission
for
the patients at Michael Manor and Pioneer Manor. (See letter of
State
Attorney to Board, March 6, 1986) Further, the State(2) conceded
that
the update of a plan of care of the patient at Pioneer Manor was
not
timely. (See State Response, February 8, 1985, p. 2)
The sole remaining issue therefore concerns one patient in one
facility
for one quarter. As discussed below, we uphold the
Agency's
disallowance.
Statutory and Regulatory Framework
Section 1903(g)(1) of the Act requires the state agency responsible
for
the administration of a state's Medicaid plan to submit a
written
quarterly showing demonstrating that --
(A) in each case for which payment is made under the State plan,
a
physician certifies at the time of admission, or, if later, the time
the
individual applies for medical assistance under the State plan
(and
recertifies, where such services are furnished over a period of time,
in
such cases, at least every 60 days, and accompanied by such
supporting
material, appropriate to the case involved, as may be provided
in
regulations of the Secretary), that such services are or were
required
to be given on an inpatient basis because the individual needs or
needed
such services;
* * * *
Regulations implementing the statutory utilization control
requirements
are found at 42 CFR Part 456 (1983).
Section 456.360 provides that a physician must certify that ICF
services
were needed at the time of admission (unless the individual applies
for
assistance while in an ICF), and recertification must be made at
least
every 60 days after certification.
Question Presented
In the disallowance letter, the Agency assessed a penalty against
the
Niobrara facility because the certification of patient H.J. /2/
was
untimely. The patient had been admitted to Niobrara on October 21,
1983
and the Agency found documentation of a physician's certification
on
October 22nd. During the appeal process, the State submitted
further(3)
documentation which the Agency accepted as showing a timely
physician's
certification. However, the Agency also stated that the
patient
required recertification within sixty days and none was
performed. The
Agency stated that the recertification was due in the
same quarter for
which the penalty was assessed; thus, the penalty
remained the same.
The State took exception to this and argued that the
Agency was
essentially issuing a new disallowance. The State argued
that the
Agency should be required to cite all the bases for its disallowance
and
"live or die" with what it sends out initially. The State contested
the
disallowance only on the issue of the notice given by the Agency.
The question before the Board is whether the disallowance should
be
overturned on the basis that the Agency was issuing a new
disallowance
because the disallowance letter cited the violation for this one
patient
as an untimely certification, when in fact the initial certification
was
timely, but there was no recertification within 60 days.
Discussion
When this issue arose the Board convened a telephone conference
and
requested that the parties be prepared to discuss, in addition to
any
other arguments, whether the notice requirement of section
1903(g)(3)(
A)(iv) might apply. The Board cited the pertinent part of
this section
which states that:
No reduction in the Federal medical assistance percentage of a
State
otherwise required to be imposed under this subsection shall take
effect
. . . (iv) due to the State's unsatisfactory or invalid showing
made
with respect to a calender quarter . . . unless notice of such
reduction
has been provided to the State no later than the first day of the
fourth
calendar quarter following the calendar quarter with respect to
which
such showing was made.
Arguments of the Parties
The Agency argued that it adhered to the letter of the law and that
notice
had been provided to the State within the statutory time period
since the
recertification was required in the same quarter as the
original
certification. Further, the Agency maintained that what the
notice
contained must be reasonable under the circumstances. In this
case, the
Agency argued that, since the Agency found that there was no
valid initial
certification, it was not reasonable to have(4) expected
the Agency to
continue to inspect for a recertification when it had no
valid initial
certification from which to measure.
The State argued that the difficulty with the Agency's position is
that,
once notice is given, that notice would qualify for any disallowance
the
Agency may come up with at a later time. Further, the State argued
that
under the Agency's interpretation all that the Agency would have to
do
is send out a blanket notice for a disallowance and then look
for
defects at a later time. The State argued that the position taken
by
the Agency is not a reasonable one. Further, the State maintained
that
the courts have interpreted an agency's responsibility
differently. The
State cited SEC v. Chenery, 318 U.S. 80 (1943),
for the proposition
that "an administrative order cannot be upheld unless the
grounds upon
which the Agency acted were those upon which its action can
be
sustained." The State contended that the Agency's actions can not
be
sustained on the grounds cited in the disallowance letter. The
State
argued that the Board should reverse the disallowance for this
facility
based on the Chenery standard.
Analysis
The State's major argument, that it was without any notice of
a
recertification defect, is without merit. In its appeal file, the
State
submitted, at tab H, a letter dated May 21, 1984, from the
Associate
Regional Administrator, Health Care Financing Administration, to
the
Director of Medical Assistance Services, Wyoming Department of
Health
and Social Services. The Associate Regional Administrator stated
that
the survey was completed, and that a listing for each
facility
containing the Agency's preliminary findings was enclosed.
Further, the
Associate Regional Administrator stated that "these findings are
being
presented in order for you to provide any additional information
that
may not have been available during the visit at the facility."
Page
eight of the enclosure contained the information regarding the
patient
at issue in this case. The information stated for patient H.J.
was as
follows:
The patient was admitted 10/21/83. We could not find a
certification
for the level of care dated 10/21/83. The level of care
was not
indicated on the admission. The discharge plan indicating level
of care
was signed by the physician on 10/22/83. The patient record
showed no
recertification in the quarter. (Emphasis added)(5)
Therefore, the State had actual notice of the Agency's preliminary
finding
regarding recertification.
The notice of disallowance cited a violation for Niobrara for the
patient
in question on the ground that the certification requirements of
section
456.360(a)(2), which required a physician's certification on the
day of
admission, had not been met. As noted above, during the
appeal
proceedings, the State presented documentation which the Agency
accepted
as evidence of a timely initial certification. Consistent with
its
earlier preliminary finding, the Agency had informed the State that
the
penalty was unchanged since the patient had not been recertified
during
the quarter in question.
The purpose of the statutory notice requirement at section
1903(g)(3)(
A)(iv) is to ensure that the State will not be subjected to
uncertainty
as to whether a reduction will be imposed (H. Rep. No. 95-393,
Part II,
July 12, 1977, p. 85; and S. Rep. No. 05-453, September 26,
1977, p.
41). In Colorado Department of Social Services, Decision No.
218,
September 30, 1981, the Board found timely under the statutory
provision
a far more general notice of the Agency's intent to take a
reduction
than the notice of disallowance issued here. We conclude then
that the
notice of disallowance here, which listed specific facilities
and
patients, was sufficient notice of an intended reduction under
the
statutory provision.
Moreover, we find that the State was not prejudiced because the
section
1903(g)(1)(A) violation ultimately established for the quarter was
the
absence of a physician's recertification during the quarter. The
State
was given the opportunity to present documentation to show that a
valid
recertification was performed both in response to the
Agency's
preliminary findings and before the Board. The State admitted
that it
could not find any documentation to indicate that a recertification
had
been performed (Telephone Conference, April 10, 1986) and conceded
that
a recertification was due in the same quarter as the
certification. We
do not regard the circumstances here as analogous to
the issuance of a
new notice of disallowance. The State has the
ultimate burden of
demonstrating compliance with the section 1903(g)
requirements.
Oklahoma Department of Institutions, Decision No. 318, June 28,
1982.
The State can not avoid a reduction including the Niobrara
facility
simply because the notice of disallowance noted a
certification
violation but did not go on to specify the recertification
violation as
well.(6)
Conclusion
Based on the foregoing reasons, we uphold both the portion of the
Agency's
disallowance pertaining to patient H.J. in the Niobrabra
facility and the
portion of the disallowance conceded by the State
pertaining to Michael Manor
and Pioneer Manor. /1/ Amendments
to
section 1903(g) as contained in
section 2363 of the Deficit
Reduction Act (DEFRA) of 1984, enacted July 18,
1984, Pub. L. 98-369,
have eliminated all utilization control requirements
other than the
medical review requirement, formerly at section 1903(g)(
1)(D), as a
basis for reductions in FFP. The DEFRA changes have no
effect on the
issues here where the disallowance was for the last quarter of
1983.
/2/ The patient is identified by her initials to protect her
privacy.