Kentucky Cabinet for Human Resources, DAB No. 849 (1987)

DEPARTMENTAL GRANT APPEALS BOARD

Department of Health and Human Services

SUBJECT: Kentucky Cabinet for Human Resources
Docket No. 86-207
Decision No. 849

DATE: March 17, 1987

DECISION

The Kentucky Cabinet for Human Resources (Kentucky) appealed a determination by the Health Care
Financing Administration (HCFA), disallowing $249,677 in claims for federal financial participation
(FFP) under Title XIX (Medicaid) of the Social Security Act (Act). The disputed claims were for the
proportion of Kentucky's costs of inspecting and certifying ambulances which Kentucky argued was
related to ambulance usage by Medicaid recipients.

The issue presented is whether FFP is available under the Medicaid program in Kentucky for the costs of
inspecting and certifying ambulances. The Medicaid program is a joint federal-state program under
which FFP is available in certain costs of state-administered health care programs for the needy. The
scope and amount of FFP available is fixed by statutory and regulatory guidelines and a HCFA-approved
state plan. As we discuss below, we find that Kentucky has not demonstrated that inspection and
certification of ambulances is within the scope of costs for which the federal government has agreed to
make FFP available to Kentucky.

Discussion

Kentucky alleged that ambulance inspections and certifications were conducted pursuant to federal
Medicaid requirements and the state plan for administering the Medicaid program. In its brief, Kentucky
cited the federal regulatory requirement that the state plan designate a state authority, the survey agency,
to determine "for the Medicaid agency if institutions and agencies meet the requirements for participation
in the Medicaid program." 42 CFR 431.610(e). The state Medicaid agency must have a written agreement
with the survey agency, delineating its responsibilities in determining that institutions and agencies meet
the requirements for participation in the Medicaid program. 42 CFR 431.610(f). Kentucky argued that
FFP is available in expenditures for inspecting and certifying




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ambulances because the expenditures were incurred by the survey agency "to carry out its survey and
certification responsibilities under the [written] agreement...." 42 CFR 431.610(h)(l).

In its reply brief, Kentucky also cited the statutory authority of 42 U.S.C. 1396a(a)(33)(A) and (B) 1/.
These sections require that the state plan provide (A) that the state survey agency shall give guidance to
the state Medicaid agency, consistent with regulations prescribed by the Secretary, on the appropriateness
and quality of care furnished to recipients of medical assistance, and (B) shall determine for the state
Medicaid agency whether "institutions or agencies meet the requirements for participation in the
[Medicaid] program."

HCFA argued that Kentucky claimed, in error, costs which were not related to federal requirements and
for which FFP is not available. HCFA argued that the costs were incurred to maintain standards required
by state law, not by the federal Medicaid program.

Both the statute and the implementing regulations refer to the responsibilities of the survey agency in
connection with "requirements for participation in the Medicaid program." FFP is available only for
survey and certification responsibilities related to the federal requirements for participation in the
Medicaid program. 42 CFR 431.610(h)(2). Although federal regulations contain requirements for
participation in the Medicaid program for nursing homes and rural health clinics, for example, we know
of no such requirements applicable to ambulance services. Cf. 42 CFR Parts 481 and 488.

In its arguments, Kentucky apparently confused federal Medicaid requirements with independent state
requirements. Although both types of requirements may apply to a provider of services under Medicaid,
FFP is only available for the expenses of surveying and certifying that providers meet federal Medicaid
requirements. Although the survey form indicates that some of the standards are participation
requirements of the Kentucky Medical Assistance Program, the survey form indicates that almost all of
these standards are






1/Although the authority was cited with a typographical error, these sections appear to be the only
relevant provisions.

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also required under other state regulations. Only the record-keeping section, listing information which
must be in an ambulance report form, appears to be based solely on Kentucky Medicaid Assistance
Program requirements, but Kentucky did not identify any specific federal requirements on which that
section might have been based. See Ex. A, p. 7. While these requirements may be related to some
federal documentation requirements for allowable medical expenditures, the federal requirements apply
only to individual claims, not to the survey and certification process. If Kentucky has chosen to
incorporate record-keeping requirements into the survey and certification process, it has created
independent state standards.

Kentucky asserted that there would be no state Medicaid requirements without a federal Medicaid
program and that, therefore, all Kentucky Medicaid requirements must be related to the federal program.
Telephone Conference, March 10, 1987. While we agree that Kentucky may not have drawn up an
integrated medical assistance program without federal incentives, under the federal Medicaid program
each state may design an individual medical assistance program as long as it meets minimum federal
criteria. Here, it appears that the Kentucky Medical Assistance Program went beyond the minimum
federal criteria by integrating some state requirements concerning ambulance surveys.

The ambulance survey and certification process appears to have concentrated on traditional state concerns
of vehicular safety and the licensing of professionals who operate the vehicle. Ex. A. Neither party
asserted that FFP is available for requirements related to the condition and equipment of the vehicle;
vehicular licensing is an ordinary state function. And neither the statute nor the regulations contemplate
that the federal government will financially participate in the traditional state activities of licensing
medical professionals. Indeed, the regulations specify that FFP is not available for survey activities
required only by state laws and regulations, at 42 CFR 431.610(h)(2):

FFP is not available in any expenditures that the survey agency makes that are attributable to the
State's overall responsibilities under State law and regulations for establishing and maintaining standards.

Although federal regulations require that certain professionals or other service providers hold licenses
from
state authorities to be eligible for payments made under the Medicaid program, FFP is not available for
the state
licensing process. See, e.g., 42 CFR 431.715; 42 CFR


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440.10(a)(3)(ii). Licensing of medical professionals is a traditional state responsibility.

.The evidence Kentucky presented did not show that the ambu- lance survey and certification process was
outside of the ambit of traditional state licensing activities pursuant to state requirements independent of
the Medicaid program. Kentucky presented no federal Medicaid requirements related to ambulance
services. Although neither party introduced specific state laws and regulations related to ambulance
services, Kentucky did not dispute that state requirements existed and formed the basis of the ambulance
survey and certification process.

Moreover, Kentucky did not cite any provisions of the federally-required state plan which contained
certification requirements for ambulances. Although Kentucky asserted that citations in the survey form
to the regulations of the Kentucky Medical Assistance Program were identical to the requirements of the
state plan, Kentucky provided no support for that statement, such as copies of the relevant state plan
provisions. Telephone Conference, March 10, 1987. Even if the state plan requires ambulance
certifications, those state expenditures may not be eligible for FFP in light of the specific regulatory
provision denying FFP for ordinary state survey and certification responsibilities. 42 CFR 431.610 (h)(2).

The Title XVIII agreement between the survey agency and the Secretary of HHS, which Kentucky
submitted, does not reference ambulance certification. Ex. G. Kentucky asserted that this agreement also
made the survey agency responsible for Medicaid certification, and that the survey agency had revised its
forms, subsequent to the execution of this agreement, to reflect federal Medicaid requirements. But
Kentucky provided no evidence of how those forms were revised, and what federal requirements were
involved. The survey form appears to concentrate on state licensure requirements, rather than any federal
Medicaid requirements. Ex. A. Although the survey form states that it is partly based on "participation
requirements of the Kentucky Medica


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Assistance Program," the form does not indicate the source of any such requirements. Ex. A, p. 1. 2/

Kentucky apparently alleged that its ambulance surveyors used the federal forms designed for Medicare
and Medicaid certification of hospitals and nursing homes, in addition to state forms, in the belief that this
was a requirement of 42 CFR 431.610(f)(l). Exs. B, C, D and E. This regulation requires that survey
agencies use federal standards, forms, methods and procedures that the Administrator designates to
determine provider eligibility and certification under Medicaid. It was not reasonable for Kentucky
officials to believe that this regulation applied to ambulance surveys and certification. As we discuss
above, neither party presented any specific federal requirements that states certify ambulances, and there
is nothing in the record to suggest that the Administrator designated any forms to be used for ambulance
certification. Furthermore, the federal forms submitted by Kentucky clearly were not designed for the
task; the forms reference several categories of providers and suppliers but do not include ambulance
services. Moreover, information needed to complete those forms is largely irrelevant to ambulance
services.




2/ The language of the survey form indicates that Kentucky considered .the primary purpose of the
survey to be state licensure. On the first page of the survey form, there are spaces for the surveyor to
recommend the type of licensure. On the second page, the following sentence prefaces the list of specific
requirements:

To be issued a license designated as "conforming" the ambulance service complies with the
following standards:

There are no references on the form to federal requirements.

Kentucky specifically asserted that Item VII on page 8 of the survey form reflected a federal Medicaid
requirement, but did not state the source of that federal requirement. HCFA specifically denied that there
was any relevant federal requirement. Since Kentucky has had ample opportunity to support its assertion
and has not done so, we must assume that there is no such requirement


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We are cognizant that Kentucky officials may have misin-
terpreted the regulations and may have erroneously believed that the ambulance surveys were required by
federal law and that federal forms had to be used, even if none had been designated. Kentucky surveyors
may have spent considerable time attempting to complete inappropriate federal forms. But there is no
reason to make the federal government participate in the costs of Kentucky's error.

Conclusion

For the reasons detailed above, we conclude that Kentucky failed to justify its claim for the costs of
ambulance surveys and certifications, and we uphold the disallowance in the amount of $249,677.


________________________________
Cecilia Sparks Ford

________________________________
Donald F. Garrett

________________________________
Norval D. (John) Settle
Presiding Board Member