DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Massachusetts DATE: December 8, 1988
Commission for the Blind Docket No. 88-79 Decision No.
1001
DECISION
The Massachusetts Commission for the Blind (MCB, State) appealed a
determination by the Health Care Financing Administration (HCFA, Agency)
disallowing $5,588.67 in federal funds claimed by the State under the
Medicaid program of the Social Security Act (Act) for the quarters
ending June 30 and September 30, 1987. The disallowance was taken
pursuant to section 1903(g)(1) of the Act, which provides for reduction
of a state's federal medical assistance percentage of amounts claimed
for a calendar quarter for long-stay services unless the state shows
that during the quarter it had "an effective program of medical review
of the care of patients . . . whereby the professional management of
each case is reviewed and evaluated at least annually by independent
professional review teams."
MCB contracts with the Massachusetts Department of Public Health to
perform reviews of MCB patients. HCFA found that for the June 30, 1987
review quarter the Massachusetts Department of Public Health (DPH) (1)
failed to conduct an annual review at Birchwood Manor, a long-term care
facility certified as both an intermediate care (ICF) facility and a
skilled nursing (SNF) facility, until ten days after the close of the
quarter; and (2) failed to conduct an annual review of one SNF patient
residing at Kimwell Nursing Home until November, 1987. MCB admitted
that these errors occurred, but argued in part that the reasons for the
review failings fall within the exceptions to the annual review
requirement. The technical failings exception applies where a state
demonstrates that it reviewed 98% of all facilities (including all
facilities with 200 or more beds) within 30 days of the end of the
showing quarter and that its failure to timely review all facilities was
a "technical failing." HCFA did not deny that the threshold 98%/200
bed
standard was met here, but argued that the reasons the State did not
perform the required reviews did not constitute "technical failings."
As explained below, we find on the basis of the record here that the
State demonstrated that the "technical failings" exception applies
to
both of the State's review failings and HCFA's contentions to the
contrary are not substantially supported by the record.
Accordingly, we reverse the disallowance.
Applicable Authority
Section 1903(g)(1) of the Act establishes the requirement that a state
make a quarterly showing that it has an effective program of annual
medical review of the care of each Medicaid recipient in a long-term
care facility. The annual review requirements applicable to ICFs and
SNFs are in sections 1902(a)(31)(B) and (C) of the Act. The Act further
provides, at section 1903(g)(4)(A), that a state must submit its
quarterly showing within 30 days of the close of the quarter, unless the
Secretary finds good cause for missing that deadline. Section
1903(g)(4)(B) provides two exceptions under which the Secretary shall
find a state's quarterly showing satisfactory, even though the State did
not conduct all the required reviews by the close of the quarter.
Specifically, the Secretary shall find a state's showing satisfactory --
. . . if the showing demonstrates that the State has conducted such
an on-site inspection during the 12-month period ending on the last
date of the calendar quarter -- (i) in each of not less than 98 per
centum of the number of such hospitals and facilities
requiring such inspection, and (ii) in every such
hospital or facility which has 200 or more beds, and
that, with respect to such hospitals and facilities not inspected
within such period, the State has exercised good faith and due
diligence in attempting to conduct such inspection, or if the State
demonstrates to the satisfaction of the Secretary that it would
have made such a showing but for failings of a technical nature
only.
The statutory exceptions are implemented by the regulation at 42 C.F.R.
456.653 (1986) titled, "Acceptable reasons for not meeting requirements
for annual on-site review." This regulation states:
The Administrator will find an agency's showing satisfactory, even
if it failed to meet the annual review requirements . . . if--
(a) The agency demonstrates that --
(1) It completed reviews by the end of the quarter in at least
98 percent of all facilities requiring review by the end of the
quarter;
(2) It completed reviews by the end of the quarter in all
facilities with 200 or more certified Medicaid beds requiring
review by the end of the quarter; and
(3) With respect to all unreviewed facilities, the agency
exercised good faith and due diligence by attempting to review
those facilities and would have succeeded but for events beyond
its control which it could not have reasonably anticipated; or
(b) The agency demonstrates that it failed to meet the standard
in paragraph (a)(1) and (2) of this section by the close of the
quarter for technical reasons, but met the standard within 30
days after the close of the quarter.
The requirements for the content of a state's showing and procedures for
submitting the showing are set out at 42 C.F.R. 456.654. In pertinent
part that regulation provides that --
(a) An agency's showing for a quarter must --
(1) Include a certification by the agency that the requirements
of section 456.652(a)(1) through (4) were met during the quarter
for each level of care or, if applicable, a certification of the
reasons the annual on-site review requirements of 456.652(a)(4)
were not met in any facilities; . . . .
Additionally, HCFA issued to states participating in the Medicaid
program an action transmittal (HCFA Action Transmittal 79-61, July 2,
1979) addressing quarterly showing requirements. General Background
In Massachusetts, MCB and the Department of Public Welfare (DPW) each
administer separate medical assistance programs, and claim federal
Medicaid funds for their program recipients receiving SNF or ICF
services. Both MCB and DPW contract with DPH to conduct annual reviews.
As a result, when a facility is found to be subject to 1903(g) penalty
provisions, HCFA assesses a disallowance on both DPW and MCB.
In this instance, HCFA made separate disallowance determinations against
MCB and DPW based on the same review failings. The DPW disallowance is
the subject of Board Docket No. 88-83. HCFA assessed these penalty
disallowances according to the formula in 45 C.F.R. 457.657, with the
calculation of the penalty reflecting the same proportion in which MCB
and DPW share Medicaid funds.
Although both disallowances share the same factual background, both
appeals have proceeded separately. An informal conference was held in
Massachusetts Department of Public Welfare, Board Docket No. 88-83. MCB
was invited to participate in that conference but declined the
invitation, stating that it would rely on its briefs and documents as
well as DPW's presentation at the conference. We have incorporated the
transcript and evidence presented at that informal conference into the
record here. Our analysis and findings here are essentially the same as
in Massachusetts Department of Public Welfare, DAB No. 1000 (1988).
Birchwood Manor
A. Facts
The penalty for this facility arises from HCFA's validation survey of
the State's compliance with the annual inspection of care (IOC) reviews
for the quarter ending June 30, 1987. DPH conducts the IOC reviews for
MCB. The Agency determined that this facility was not reviewed until
July 10, 1987, ten days after the close of the quarter in which the
review was due. The State's quarterly showing, however, indicated that
the review for this facility was completed on June 30, 1987.
The undisputed reasons for the delay in this facility's review, and for
the discrepancy between the completion date recorded on the quarterly
showing and the actual completion date, are as follows:
o A master list of the facilities to be reviewed in the quarter was
prepared, as was the usual practice, by DPW and sent to DPH when the
quarter began. The record shows that Birchwood Manor was included on
the master list as a facility to be reviewed during the quarter.
Transcript (Tr.), pp. 18-19; Notice of Appeal, Exhibit (Ex.) B.
o After the master list was received, the Field Operations Supervisor
for the Division of Health Care Quality of DPH reviewed the list and
divided the facilities by geographical regions. Once this was done, he
then compiled a list of facilities by each geographical region for the
regional supervisor in order that the regional supervisor would know
which facilities must be reviewed in that region before the end of the
quarter. Notice of Appeal, Exs. C & D; Tr., p. 19.
o Birchwood Manor was in Region 2 and should have been on the Region
2 list. The Field Supervisor, however, apparently made a transcription
error when he transcribed the facilities from the master list to the
separate regional list. Rather than put Birchwood on the Region 2 list,
he instead mistakenly put the facility Blair House on the Region 2 list
(Blair House was listed right underneath Birchwood on the master list).
Blair House should have been, and subsequently was put on the Region 5
list. Notice of Appeal, Exs. A & D; Tr., p. 20.
o As a result of this transcription error, Birchwood Manor was not on
the Region 2 list. Consequently, the Region 2 supervisor did not have
notice that this facility required review in this quarter, and did not
send an IOC team to Birchwood before the quarter ended. Notice of
Appeal, Exs. A & D.
o The customary practice of DPH was to forward to the Survey
Processing Office, a section of DPH, the reports of the IOC teams on
their completed reviews. While the packet submitted contained all the
documentation of the on-site review, the Survey Processing Office
generally was concerned only with the cover sheet to the packet, which
has the date of the review. The Survey Processing Office records this
date on its list of facilities which needed review during the quarter.
Tr., p. 21. Once the Survey Processing Office has completed its list,
it forwards the list to DPW (and presumably to MCB) to make up the
quarterly showing for HCFA. Tr., p.21.
o On July 6, 1987 the Survey Processing Office noticed that there was
no information for Birchwood Manor and asked the Field Supervisor to
find out what the review date was. Tr., p. 22;
o In reviewing his files, the Field Supervisor discovered his
transcription mistake and realized that Birchwood had not been reviewed
because he did not include it on the Region 2 list. He informed his
supervisor and DPH assigned a review team. The Field Supervisor, an RN,
was a member of the team. The review started July 8 and was completed
July 10, 1987. Tr., p.22.
o The reason the quarterly showing indicated Birchwood was reviewed
on June 30, 1987, rather than July 10, 1987 when the review was actually
completed, was that the Field Supervisor, after realizing his mistake,
told the Survey Processing Office that the review had occurred on June
30, 1987. The Field Supervisor, as a member of the review team, also
backdated the cover sheet of the IOC review packet to indicate that the
review date was June 30, 1987, although the forms inside the packet
showed the correct dates. Tr., pp. 23-24; Supplemental Affidavit of
Charles Shishmanian.
The State argued that the Board should reverse the penalty with respect
to Birchwood because the State's error constituted a "technical
failing."
B. Analysis
1. The Error On The State's June 30, 1987 Quarterly Showing
Does Not Preclude The State From Invoking The Technical Failing
Argument.
We conclude that, under the circumstances, the error on the State's June
30, 1987 quarterly showing does not, as a threshold matter, make the
technical failing exception unavailable to the State. The Agency argued
in its brief that the State's quarterly showing was inadequate because
it listed the review date for Birchwood Manor as June 30, 1987, rather
than the actual date of July 10, 1987, ten days after the close of the
review quarter. The Agency contended that the Board had previously
required that states must indicate a late review by separate listing, as
well as supplying an explanation of the missed review in their quarterly
showing, in order to invoke the technical failings exception.
Both Ohio Dept. of Human Services, DGAB No. 824 (1987), and Illinois
Dept. of Public Aid, DGAB No. 930 (1988), which were cited by the
Agency, however, are distinguishable from the factual situation here.
We stated in those cases that where a state knows at the time of
submission of the quarterly showing that a review has not been
performed, the statute and regulations require, at a minimum, that the
quarterly showing must include identification of any facilities not
reviewed as well as the reasons for any missed reviews. The Board
distinguished the type of situation discussed in Ohio and Illinois from
those cases where a state was unaware of potential violations until
after its quarterly showing was submitted and, thus, could not have
included in its showing the list of deficiencies and reasons for not
meeting the requirements. See Delaware Dept. of Health and Social
Services, DGAB No. 732 (1986). The facts here are analogous to the type
of situation discussed in Delaware where a state was unaware of
potential violations until after its quarterly showing was submitted.
In this instance, the Field Supervisor, acting inconsistently with State
regulations and policy, provided the wrong date to the Survey Processing
Office and also backdated the cover sheet on the IOC packet in order to
cover his transcription mistake. The Survey Processing Office of DPH
was informed after the end of the quarter both verbally and in writing
that the IOC review was completed on June 30, 1987. Consequently, MCB
was unaware of the potential violation until after its quarterly showing
was submitted.
MCB did not condone the Field Supervisor's action, nor do we, but we do
not think that this type of action by this level employee should
foreclose the State from showing that it has a satisfactory annual
review program. Indeed, at the informal conference, Agency counsel
indicated that the mere listing of the June 30 date would not be enough
to preclude the State from claiming an exception. Tr., p. 43.
Thus, we conclude that the error on the quarterly showing does not
preclude the State from invoking the technical failings exception.
2. The State Provided Evidence To Show That It Met The
Technical Failings Exception.
In previous decisions, the Board has examined the "technical failings"
exception. See, e.g., Delaware, supra; Utah Dept. of Health, DGAB No.
843 (1987); Arkansas Dept. of Human Services, DGAB No. 923 (1987); and
Illinois Dept. of Public Aid, DGAB No. 930 (1988). The Board noted that
there is little guidance on what constitutes a technical failing. Based
on the legislative history of the exceptions, however, the Board
concluded that Congress intended that a state should aim for 100%
compliance. Therefore, the Board has found that an unexplained failure
to attempt a review or a review deficient for no apparent reason would
not qualify as a technical failing. While the Board agreed with the
general principle underlying HCFA's position that poor administration or
bad record keeping should not be considered a technical failing, the
Board also made it clear that not every failure on the part of a state
can be considered poor administration or bad record keeping. This would
render the regulation meaningless since a technical failing is defined
as "circumstances within the State's control." In Utah, the Board
stated that the concepts of poor administration and bad record keeping
connote a systemic problem resulting in failings on a regular basis (or
at least more than a singular occurrence) in a state's system of
reviews.
The Agency contended that the error in the review of Birchwood cannot be
considered a singular error but must be taken together with the error
discovered at Kimwell, thus connoting systemic problems. The Agency
submitted that the errors that occurred, while the result of human
error, were within the State's control and the result of poor management
and record maintenance.
We find that the State demonstrated here that the reason it failed to
conduct an adequate review of Birchwood by the close of the quarter was
due to a singular occurrence rather than a recurring problem inherent in
the State's system for performing IOC reviews. The failure to review
Birchwood occurred as a result of the Field Supervisor's transcription
mistake which resulted in Birchwood's omission from the Region 2 list.
This was a one-time error and one such error does not indicate that the
State poorly administered its system or that the error was caused by bad
record keeping. Birchwood was listed on DPH's master list as a facility
due for review during the quarter. It was only because of the singular
human error that Birchwood was omitted from the regional list. The fact
that the omission was discovered within six days of the close of the
quarter, and a review of the entire facility was completed within ten
days of the close of the quarter, indicates the State's system was
working since the error was discovered and remedied in an expeditious
manner.
Thus, we find the transcription error was a technical failing.
Moreover, as we find below, the Birchwood and Kimwell errors, even if
taken together, do not evidence a systemic problem. Kimwell Nursing Home
A. Background
The penalty for this facility arose also from HCFA's validation survey
of the State's compliance with the annual IOC surveys for the June 30,
1987 quarter. The Agency determined that one SNF patient was not
reviewed during the quarters ending June 30 and September 30, 1987.
The State's procedures for determining which patients must be reviewed
in a particular facility are as follows:
o Two weeks before a facility's IOC review begins, DPH sends the
facility a patient profile list from the previous year.
o The facility updates the profile by eliminating any patients no
longer in the facility and adding any new Medicaid patients admitted
since the last review.
o On the first review day, the IOC team walks through the facility to
ensure the updated profile is complete.
o The team then uses the updated profile to prepare on-site review
forms.
o The team's social worker and nurse prepare separate on-site review
forms by transcribing patient names and social security numbers from the
patient profile and filling in review findings as the IOC survey
proceeds.
o After completion of all patient reviews, the on-site review forms
are checked by comparing them against the updated patient profile, i.e.,
the number of patients listed on the on-site review forms is compared
against the number of patients listed on the updated patient profile
list.
The error in this instance occurred as a result of the following:
o The initial patient profile list contained 50 names, including the
SNF patient (R.M.) who was not reviewed.
o Subsequently, two other patient names were deleted from the patient
profile list with white-out, leaving 48 names. One name was deleted
because it was a duplication, and the other name was deleted for other
reasons. R.M.'s name immediately preceded one of the whited-out names
on the list.
o In transcribing the names from the patient profile list to the
on-site review form, the social worker's form did not include R.M., but
his list still showed 48 names.
o The nurse's on-site review form included R.M. but the nurse's list
contained 49 names.
o When the on-site review forms were checked against the patient
profile, since the profile contained 48 names and the social worker's
on-site review form contained 48 names, R.M.'s name was deleted in error
from the nurse's form (although the nurse had reviewed R.M.). It was
assumed R.M.'s name should have been deleted because that name appeared
in the same position on the social worker's form as the name on the
social worker's form which was deleted.
o After the validation survey discovered that R.M. was not completely
reviewed before the quarter ended, the State immediately sent an entire
team out.
B. Analysis
1. The State Provided Evidence To Show That It Met The Technical
Failings Exception.
The Agency submitted that the State cannot take advantage of the
"technical failings" exception because the error in reviewing patient
R.M. was not a singular event but, rather, that the error taken together
with the error at Birchwood evidences a systemic problem in the State's
system for medical review.
In accordance with the standards we discussed above, we find that the
State demonstrated that the reason for its failure to conduct a review
of one SNF patient in the Kimwell Nursing Home was due to a singular
occurrence rather than a recurring problem in the State's system. The
State had anticipated that a team member might err in copying the
patient profile onto the review form and had established a method of
checking that both team members had reviewed the number of patients on
the patient profile. This double-check did not work here because the
social worker had both failed to include R.M. and had also mistakenly
included and whited-out another name (which happened to appear on the
list in the same place as R.M.'s name appeared on the nurse's list) and
because both the social worker and nurse had included a name later
deleted from the patient profile. As HCFA pointed out, the error might
have been avoided if the social worker had not used white-out, but had
simply drawn a line through the name he deleted. To elevate this
failing to a basis for finding the State's annual review system
unsatisfactory would render the technical failings exception totally
meaningless, however. This is especially so here where the record shows
that the patient was reviewed by the nurse member of the team in a
timely manner, so the substantive purposes of the review were at least
partially met.
Furthermore, we agree with the State that the Birchwood and Kimwell
errors, even if taken together, do not evidence a systemic problem in
the State's procedures. As the State correctly pointed out, each error
is traceable to entirely different circumstances. The only similarity
is that both were singular unique occurrences caused by human errors
which by chance took place during the same quarter.
We recognize that one might ask, if two unrelated errors do not evidence
a systemic problem, whether three, or four, also would not qualify. We
by no means intend to imply that multiple errors -- even unrelated
errors -- may not be evidence of systemic failure. Rather, our
determination is restricted to the facts of this case, where we find
that the two specific errors were unrelated and otherwise insufficient,
independently or together, to show there was a systemic failure.
Therefore, the record does not support the Agency's allegation. We
conclude that the error which led to the State's failure to review only
one patient in an entire facility is reasonably considered a "technical
failing," just as the key-punch error constituted a technical failing in
Utah Dept. of Health, DGAB No. 843 (1987). Both are the result of a
one-time human error which could not be anticipated by the State.
Conclusion
We find that the State has demonstrated that it met the technical
failings exception and HCFA's contentions to the contrary are not
substantially supported by the record. Therefore, we reverse the
disallowance of $5,588.67.
________________________________ Donald F. Garrett
________________________________ Alexander G. Teitz
________________________________ Judith A. Ballard Presiding
Board