DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Wyoming Department of Health and Social Services
Docket No. 87-209
Decision No. 945
DATE: April 8, 1988
DECISION
The Wyoming Department of Health and Social Services
(Wyoming/State)
appealed a determination by the Health Care Financing
Administration
(HCFA/Agency) disallowing $22,269.07 in federal funds claimed
by the
State under the Medicaid program of the Social Security Act (Act)
for
the quarter ending 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."
HCFA alleged that Wyoming failed to conduct a timely annual review at
one
long-term care facility, Westward Heights Nursing Home (Westward
Heights),
which was certified as both an intermediate care (ICF) and a
skilled nursing
(SNF) facility. Wyoming conceded that Westward Heights
was not reviewed in a
timely fashion. The State indicated that the
untimely review was due to
a personnel shortage on one of its two review
teams, combined with a
scheduling conflict with a federal training
session. Given these
circumstances, Wyoming asked that the untimely
review be excused under the
statutory exceptions to the annual review
requirement. See section
1903(g)(4)(B) of the Act. HCFA asserted that
the statutory exceptions were
unavailable to Wyoming because the State's
quarterly showing was deficient.
Further, HCFA argued that, by
definition, the exceptions were inapplicable to
the facts of this case.
This appeal was heard under the Board's expedited process. See
45
C.F.R. 16.12. The record consists of the parties' briefs, a
joint
appeal file, and the tape of a telephone conference held March 22,
1988.
Based on the following analysis, we sustain the disallowance in
its
entirety.
Applicable Law
Section 1903(g)(1) of the Act establishes the requirement that a
state
make a satisfactory 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 review requirements applicable to ICFs
and
SNFs are in section 1902(a)(31)(B) and (C) of the Act.
Generally,
section 1903(g)(4)(A) of the Act provides that a state must submit
its
quarterly showing within 30 days of the close of the quarter.
The
requirements for the content of a state's showing and procedures
for
submitting the showing are contained 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
section
456.652(a)(4) were not met in
any facilities;
* * *
(b) The quarterly showing must be
in the form prescribed by the
Administrator.
The Agency also issued to states participating in Medicaid HCFA
Action
Transmittal 79-61 (July 2, 1979), which provides explicitly
that
facilities reviewed within 30 days after the close of a quarter must
be
included in the showing on the list of facilities not
reviewed.
Moreover, states are to attach a full explanation of the
circumstances
for any missed facility review. If a state believes that the
exception
clauses of section 1903(g)(4)(B) apply, the state must explain
its
attempts to perform the review and attach a copy of its original
review
team schedule showing the planned dates of review. See HCFA
Action
Transmittal 79-61, at paragraphs V and VI.
The exceptions to the annual review requirement are set out at
section
1903(g)(4)(B) of the Act and provide that--
The Secretary shall find a showing . . .
to be satisfactory . . .
if the showing
demonstrates that the State has conducted such
an
onsite 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 42 C.F.R. 456.653
which
provides in pertinent part --
The Administrator will find an agency's
showing satisfactory,
even if it failed
to meet the annual review requirements
of
section 456.652(a)(4), 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 for
technical
reasons, but met the standard
within 30 days after the close of
the
quarter. Technical reasons are circumstances within
the
agency's control. Section
1903(g)(1) of the Act provides that a
state's quarterly showing must be
"satisfactory" or the state's federal
funding for expenditures incurred in
connection with long-stay services
will be decreased according to the formula
at section 1903(g)(5) of the
Act.
FACTS
Due largely to the travel time involved, the average annual review
in
Wyoming is conducted over a four day period with the remaining time
in
any week devoted to processing the related paper work. Wyoming
Brief
(Br.), p. 5.
In March 1987, Westward Heights and another facility were scheduled
for
annual reviews to be conducted the week of September 14-18. There
is
conflicting testimony as to when the State's Health Services
Evaluation
Program Supervisor (Supervisor), the individual responsible
for
scheduling the annual review, became aware of the personnel shortage
on
the review team. In the State's brief and the Supervisor's
affidavit
there are indications that the Supervisor was aware of the
personnel
shortage when the review was first scheduled in March. Wyoming Br.,
p.
6; Exhibit (Ex.) 11, p. 6. However, during the telephone conference
the
State indicated that a dietician on the team resigned effective June
1,
1987, followed by a registered nurse resigning effective July 1.
Both
individuals apparently gave two weeks notice. The
Supervisor
anticipated filling the two openings on the survey team by
September 1,
1987. Ex. 11, pp. 2 and 6. In scheduling the reviews
for the September
quarter, the week of September 21-25 was left open to catch
any missed
reviews. Wyoming Br., p. 6.
By letter dated June 11, the Agency notified the State of a
"Training
Workshop" in Denver scheduled for September 22-23. The notice
provided
that the State could "send as many surveyors as you feel
appropriate."
HCFA requested that the states respond to the notice by June
22. Ex. 3.
In a letter dated August 11, the Agency confirmed the
State's nomination
of six individuals to attend the workshop and noted that
attendance at
the workshop was "mandated under Section 1864 of the . . .
Act." Ex. 4.
In the telephone conference, HCFA explained that this
training session
was mandatory in that the Agency was required by the Act to
provide and
fund training for State reviewers. Wyoming's
"understanding" of this
situation was that, due to the variety of review
functions performed by
its registered nurses, all the nominated individuals
were required to
attend this training session. Wyoming could not
provide any written
support for its position.
When the due date for the Westward Heights' review arrived, the State
had
not filled the vacancies on the understaffed review team. Thus,
only
one facility was reviewed and the Westward Heights' review was
simply
rescheduled for the week of October 20-23. Wyoming Br., p. 7.
The
State's original quarterly showing (submitted October 21) listed
Westward
Heights among the facilities for which a timely review had been
completed.
1/ Ex. 5. However, shortly after its submission, State
officials
detected an error in their showing and submitted a corrected
showing which
conceded that Westward Heights had not been timely
reviewed, but had been
reviewed October 20-23. In the corrected showing
Wyoming requested that
the late review be excused under the technical
failings exception. HCFA
received the corrected showing by October 30.
Wyoming Br., p. 7; Exs. 6 and
10. HCFA took a disallowance for the
September 30 quarter based on
Wyoming's failure to conduct a timely
review at Westward Heights. 2/
The disallowance also stated that
Wyoming did not qualify for the exceptions
to the annual review
requirement because it had not provided "an acceptable
reason which
would qualify . . . for the exceptions." Ex. 7.
Analysis
The parties' briefs have raised four issues --
1. Was Wyoming's quarterly showing satisfactory?
2. Did Wyoming meet the statutory 98% review requirement?
3. Does the technical failings exception apply?
4. Does the good faith and due diligence exception apply?
We consider each of these issues below.
1. Wyoming's Quarterly Showing
HCFA's argument that Wyoming's quarterly showing was unsatisfactory
is
based in large part on three recent decisions by this Board: Ohio
Dept.
of Human Services, DGAB No. 824 (1987); Texas Dept. of Human
Services,
DGAB No. 883 (1987); and Michigan Dept. of Social Services, DGAB
No. 885
(1987), Reconsideration denied, (1987).
In those decisions, the states' quarterly showings contained
either
misleading or no information regarding whether facilities had
been
reviewed (Ohio and Texas), or cursory explanations regarding the
failure
to review (Michigan). In Ohio, we concluded that at a minimum a
showing
must include specific identification of unreviewed facilities as well
as
the reasons for the missed reviews. Additionally, we noted that
the
showing requirements further an important program purpose in that
they
obligate a state to provide a contemporaneous explanation of its
failure
to review. Id. at 5.
Here, Wyoming's showing comports with the minimum requirements
discussed
in Ohio. The State's amended quarterly showing was received
by HCFA
within 30 days of the close of the quarter. It identified
Westward
Heights as a facility which had not been timely reviewed, noted that
the
review had been delayed due to a conflict with a federally
sponsored
training session and asked that the late review be excused under
the
technical failings exception. The amended showing also contained a
copy
of the original review team schedule. Ex. 6.
Given our holding in Ohio, we find that the State's showing provided
a
sufficient basis for the Secretary to consider whether a
disallowance
was justified. However, this finding does not necessarily
lead to a
conclusion that the State's explanations would satisfy either
statutory
exception. For while we find that Wyoming's showing was
procedurally
sufficient as is explained below, we nevertheless agree with
HCFA that
the statutory exceptions do not apply to excuse this untimely
review so
that the showing is not satisfactory on that basis.
2. The 98% Review Requirement
As noted above, the exceptions to the annual review requirement
are
established by section 1903(g)(4)(B) of the Act and implemented by
42
C.F.R. 456.653. The 98% review requirement is applied in a
different
manner depending upon which exception a state is attempting to
employ.
In terms of the good faith and due diligence exception, by the close
of
the quarter a state must have completed reviews in 98% of all
facilities
requiring review (including all facilities with 200 or more
Medicaid
beds) and must have exercised good faith and due diligence in
attempting
to conduct the uncompleted reviews and its failure to complete
100% of
the required reviews must be attributable to events beyond its
control
which it could not have anticipated. See Delaware Dept.
of Health and
Social Services, DGAB No. 732 (1986); 3/ and Pennsylvania Dept.
of
Public Welfare, DGAB No. 746 (1986).
In terms of the technical failings exception a state must meet the
98%/200
bed standard within 30 days of the close of the quarter
(possibly even
meeting that standard before the close of the quarter)
and there must have
been circumstances within the state's control which
prevented 100% of the
required reviews from taking place in the quarter.
See Delaware and
Pennsylvania.
Thus, a state's failure to complete reviews in 98% of facilities
requiring
review by the close of the quarter would bar access to the
good faith and due
diligence exception. On the other hand, a state need
only satisfy the
98% standard within 30 days of the close of a quarter
if it had technical
reasons for failing to complete 100% of the required
reviews.
Where a state has a small number of facilities due for review during
any
given 12 month period, the failure to review even a single
facility
could drop the state below the 98% standard. Wyoming contended that
this
was the predicament it was facing. Wyoming noted that it has but
30
long-term care facilities in the entire state and only nine were due
for
review in the quarter ending September 30. Consequently,
Wyoming
asserted that its failure to review one facility put it at the 89%
(8/9)
level, thereby rendering it ineligible for the good faith and
due
diligence exception. Wyoming contended that such a literal reading
of
the statute holds states in this situation to an impossible
standard.
Further, the State alleged that HCFA's literal interpretation
conflicts
"with the Congressional intention of allowing states 'some
tolerance
level for the on-site review requirements. . . .' 44 Fed.
Reg. 56336
(1979)." Wyoming Br., pp. 15-16. HCFA relied on our holdings
in
Delaware and Pennsylvania to argue that the good faith and due
diligence
exception was unavailable here because Wyoming did not meet the
98%
standard. HCFA Br., pp. 5-6.
As we explained during the telephone conference, we believe that
the
parties have made a fundamental error in their interpretation of the
98%
standard. The 98% requirement pertains not to the number of
facilities
in a particular level of care under review during a quarter, but
to the
completion of reviews in 98% of the combined total of all
facilities
where such a review was required by 1903(g)(1) during the
twelve-month
period ending with the close of the quarter in question.
See HCFA
Action Transmittal AT-77-106 (November 11, 1977), p. 5; 43 Fed.
Reg.
50925 (November 1, 1978); 44 Fed. Reg. 56336-56337 (October 1,
1979).
For example, assuming a state had a total of 100 ICFs, SNFs, and
mental
hospitals due for review during the annual period from September
30,
1986--September 30, 1987, the State would meet the 98%/200 bed
standard
for its showing submitted for the quarter ending September 30, 1987
if
it completed reviews during the annual period in 98 facilities
including
all those with 200 or more certified Medicaid beds. See also
Delaware,
p. 17; and Pennsylvania, p. 10.
Logically, it would follow that, since a dually-certified facility can
be
subject to violations at two levels of care, such facilities are
counted
twice (once at each level of care) in calculating whether the
98% standard
has been met. The State confirmed that the list of
facilities in its
quarterly showing (Ex. 5) represents all those
facilities where an annual
review was required by section 1903(g)(1)
during the twelve-month period
ending September 30, 1987. There were 66
facilities due for review
during that period. Since Westward Heights is
a dually certified
facility, and no review at either level of care was
conducted prior to the
close of the quarter, the State missed reviews at
two facilities.
Consequently, the State conducted reviews at 96.96%
(64/66) of the facilities
requiring review.
In Delaware, we asked HCFA how the statutory standard should be applied
to
states with small numbers of long-term care facilities. HCFA's
response
was that it would be willing to round off review percentages
such as 97.778
or 97.959 upward to 98%. As is evident from past
practice, the Agency
adheres to a strict application of the standard.
See Delaware, pp. 14, 17-18,
n. 9. HCFA maintained that position here
and argued that the State did
not meet the requirement to review 98% of
the facilities requiring review by
the close of the quarter. Wyoming
contended that we should consider the
circumstances of states with small
numbers of long-term care facilities in
applying the 98% standard.
The 98% requirement is a statutory one. We are bound by all
applicable
laws and regulations. 45 C.F.R. 16.14. We cannot
change the percentage
set in the statute, even by 1%, even though Congress
may not have taken
into consideration the problems the law could cause small
states. We
discuss below, however, our conclusion that the State could
not in any
event meet the requirements for the good faith and due
diligence
exception, even apart from the 98% requirement.
3. The Technical Failings Exception
There is no dispute that Wyoming completed 98% of the required
reviews
within 30 days of the close of the quarter in which they were
due. In
fact the State completed 100% of the reviews within that
time. The
issue is whether the State's reasons for not having completed
the
required reviews by the close of the quarter constitute a
technical
failing. The facts lead us to conclude that Wyoming's failure
to
conduct a timely review of Westward Heights was due to
poor
administration.
The concept of a technical failing has never been precisely defined.
The
implementing regulation defines technical reasons as "circumstances
within
the agency's control." 42 C.F.R. 456.653(b). However,
the
Agency has long asserted, and we have supported the notion, that
poor
administration cannot qualify as a technical failing. See Utah
Dept. of
Health, DGAB No. 843 (1987). Admittedly, we have previously
indicated
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 singular occurrences." Id. at 6. However,
our
conclusion in Utah, as it has been in other cases, was based upon
a
state's failure to review a single patient (or a small number
of
patients) in spite of a state's reasonable efforts to identify them
as
recipients for whom a review was due. See also, Texas Dept. of
Human
Services, DGAB No. 830 (1987); New Hampshire Dept. of Health and
Human
Services, DGAB No. 841 (1987); and Maine Dept. of Human Services,
DGAB
No. 857 (1987).
In spite of evidence that the State had adequate opportunity to attempt
to
modify its review procedures in such a way as to have completed all
its
reviews in a timely fashion, the record contains no indication that
the State
made any effort to do so. The State's review schedule for the
quarter ending
September 30, 1987 was prepared almost seven months
before the review was
due. While questions remain as to when the
Supervisor was first aware of the
staffing shortages, by the start of
the September quarter the State was aware
that it had only one fully
staffed review team. Ex. 11, p. 2. The
State argued that it was
prevented from conducting the review by a scheduling
conflict with the
mandatory federal training session. However, the
first notice of the
workshop (dated June 11) indicated that the State could
send as many
surveyors as it felt appropriate. Ex. 3. Given this
option, and in
spite of the fact that it already had one understaffed review
team, the
State nominated six persons (including one unnamed individual) to
attend
the training. The only evidence regarding the "mandatory" nature
of
this training is found in the Agency's August 6th letter confirming
the
State's nomination of the individuals it wished to send to the
workshop.
Ex. 4. The State's arguments regarding the "mandatory" nature
of the
workshop are conclusory and without support in the record. In
the
context of the evidence, the Agency's explanation of the
mandatory
nature of the training is more credible. Further, faced with
an obvious
problem the State made no effort to contact HCFA for advice
although the
notice of the workshop contained a general offer to answer
questions.
See Ex. 3. Additionally, there is no evidence that the State
made any
attempt to rearrange its review schedule in view of the
workshop. Even
though the State attempted to portray concern regarding
its inability to
conduct the review, its approach was so procedurally lax
that its
original quarterly showing apparently was not thoroughly reviewed as
it
offered Westward Heights' 1986 review date to show that the facility
had
been reviewed in the third quarter of 1987. See Ex. 5.
The State simply has not demonstrated that anything other than its
poor
administration prevented it from completing a timely review of
Westward
Heights. Wyoming set its review schedule and was aware of both
its
staffing shortage and the training workshop well in advance of the
due
date for the review. This situation is not one where the State
was
faced with an unexpected training session and a sudden loss of
review
personnel. Rather, the facts demonstrate that the State had
adequate
time to attempt to respond, but did not. Accordingly, we
conclude that
the technical failings exception cannot apply to excuse
Wyoming's
failure to timely review Westward Heights.
4. The Good Faith and Due Diligence Exception
In the alternative, Wyoming argued that if we were to find the
technical
failings exception inapplicable, the good faith and due
diligence
exception should apply to excuse its failure to review Westward
Heights.
The State relied primarily on the opinion of the District Court
in
Delaware. There the court invalidated HCFA's interpretation of
this
exception (at 42 C.F.R. 456.653) which the Agency applied
to
"circumstances beyond the [state] agency's control." Id. at
1125.
Rather, the court found that the Act must require a subjective
standard
because the question is whether there was a good faith attempt to
review
a facility. Id. at 1128.
As we have noted in another instance where that court's interpretation
has
been relied on--
. . . we believe the
District Court's conclusion concerning
good faith and due diligence exception is inconsistent with
the
statutory requirement. Section
1902(a)(31), which is
incorporated by
specific reference into section
1903(g)(1),
expressly requires that the
State Plan provide--
(B) with
respect to each skilled nursing or
intermediate
care facility within the State, for periodic
onsite
inspections of the care being provided to each
person
receiving medical assistance, by one or more
independent
professional review teams. . . .
In its analysis of the good faith and
due diligence exception,
the District
Court overlooked this specific statutory
requirement. As a result, we believe that the Court's
conclusion
that a State may satisfy the
good faith and due diligence
exception
if a review was conducted in a facility, even
though
not every patient in the facility
who reasonably should have been
reviewed
has been reviewed, is erroneous. . . .
Washington, at 7-8 (Emphasis in original).
Under either HCFA's or the District Court's interpretation, the good
faith
and due diligence exception cannot excuse Wyoming's failure to
timely review
Westward Heights. Unlike Delaware, where a handful of
patients "slipped
through the cracks" during reviews conducted at two
facilities, Wyoming never
conducted a review at Westward Heights. Thus,
the court's reliance on a
state's having attempted a review, even if
sound, would not aid Wyoming
here. As we have noted, short of
scheduling the review in March, there
was no attempt by the State to
actually conduct a timely review.
Further, under the definition of good faith and due diligence to which
we
subscribe, the State must have attempted to review a facility and
would have
been successful "but for events beyond its control." On the
other hand,
technical reasons are attributable to "circumstances within
the agency's
control." Thus, by pursuing the good faith and due
diligence exception, the
State is arguing that circumstances which it
contended were within its
control, for purposes of the technical
failings exceptions, were, in fact,
beyond its control. However
difficult a precise definition of these
exceptions might be, clearly
both cannot be applied to the same set of
facts. As we discussed above,
Wyoming's failure to review Westward
Heights was based on the State's
failure to act responsibly in organizing its
review schedule. The
State's failure was not due to circumstances
beyond its control.
Accordingly, the good faith and due diligence exception
cannot excuse
this violation, even if there was no dispute regarding the 98%
standard.
Conclusion
Based on the foregoing analysis, we conclude that although Wyoming did
in
fact submit a procedurally sufficient quarterly showing, the State's
failure
to review Westward Heights cannot be excused under the
statutory
exceptions.to the annual review requirement. Accordingly, we
sustain
the full disallowance of $22,269.07.
________________________________
Cecilia
Sparks Ford
________________________________ Norval
D.
(John) Settle
________________________________
Alexander
G. Teitz Presiding Board Member
CC/krk:Disk-CC2:4/11/88
FINAL/jj D87-209
DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Wyoming Department of
DATE: April 8, 1988 Health
and
Social Services Docket No. 87-209 Decision No. 945
DECISION
The Wyoming Department of Health and Social Services
(Wyoming/State)
appealed a determination by the Health Care Financing
Administration
(HCFA/Agency) disallowing $22,269.07 in federal funds claimed
by the
State under the Medicaid program of the Social Security Act (Act)
for
the quarter ending 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."
HCFA alleged that Wyoming failed to conduct a timely annual review at
one
long-term care facility, Westward Heights Nursing Home (Westward
Heights),
which was certified as both an intermediate care (ICF) and a
skilled nursing
(SNF) facility. Wyoming conceded that Westward Heights
was not reviewed in a
timely fashion. The State indicated that the
untimely review was due to
a personnel shortage on one of its two review
teams, combined with a
scheduling conflict with a federal training
session. Given these
circumstances, Wyoming asked that the untimely
review be excused under the
statutory exceptions to the annual review
requirement. See section
1903(g)(4)(B) of the Act. HCFA asserted that
the statutory exceptions were
unavailable to Wyoming because the State's
quarterly showing was deficient.
Further, HCFA argued that, by
definition, the exceptions were inapplicable to
the facts of this case.
This appeal was heard under the Board's expedited process. See
45
C.F.R. 16.12. The record consists of the parties' briefs, a
joint
appeal file, and the tape of a telephone conference held March 22,
1988.
Based on the following analysis, we sustain the disallowance in
its
entirety.
Applicable Law
Section 1903(g)(1) of the Act establishes the requirement that a
state
make a satisfactory 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 review requirements applicable to ICFs
and
SNFs are in section 1902(a)(31)(B) and (C) of the Act.
Generally,
section 1903(g)(4)(A) of the Act provides that a state must submit
its
quarterly showing within 30 days of the close of the quarter.
The
requirements for the content of a state's showing and procedures
for
submitting the showing are contained 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
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
section
456.652(a)(4) were not met in
any facilities;
* * *
(b) The quarterly showing must be
in the form prescribed by the
Administration.
The Agency also issued to states participating in Medicaid HCFA
Action
Transmittal 79-61 (July 2, 1979), which provides explicitly
that
facilities reviewed within 30 days after the close of a quarter must
be
included in the showing on the list of facilities not
reviewed.
Moreover, states are to attach a full explanation of the
circumstances
for any missed facility review. If a state believes that the
exception
clauses of section 1903(g)(4)(B) apply, the state must explain
its
attempts to perform the review and attach a copy of its original
review
team schedule showing the planned dates of review. See HCFA
Action
Transmittal 79-61, at paragraphs V and VI.
The exceptions to the annual review requirement are set out at
section
1903(g)(4)(B) of the Act and provide that--
The Secretary shall find a showing . . .
to be satisfactory . . .
if the showing
demonstrates that the State has conducted such
an
onsite 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 42 C.F.R. 456.653
which
provides in pertinent part --
The Administrator will find an agency's
showing satisfactory,
even if it failed
to meet the annual review requirements
of
section 456.652(a)(4), 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 for
technical
reasons, but met the standard
within 30 days after the close of
the
quarter. Technical reasons are circumstances within
the
agency's control. Section
1903(g)(1) of the Act provides that a
state's quarterly showing must be
"satisfactory" or the state's federal
funding for expenditures incurred in
connection with long-stay services
will be decreased according to the formula
at section 1903(g)(5) of the
Act.
FACTS
Due largely to the travel time involved, the average annual review
in
Wyoming is conducted over a four day period with the remaining time
in
any week devoted to processing the related paper work. Wyoming
Brief
(Br.), p. 5.
In March 1987, Westward Heights and another facility were scheduled
for
annual reviews to be conducted the week of September 14-18. There
is
conflicting testimony as to when the State's Health Services
Evaluation
Program Supervisor (Supervisor), the individual responsible
for
scheduling the annual review, became aware of the personnel shortage
on
the review team. In the State's brief and the Supervisor's
affidavit
there are indications that the Supervisor was aware of the
personnel
shortage when the review was first scheduled in March. Wyoming Br.,
p.
6; Exhibit (Ex.) 11, p. 6. However, during the telephone conference
the
State indicated that a dietician on the team resigned effective June
1,
1987, followed by a registered nurse resigning effective July 1.
Both
individuals apparently gave two weeks notice. The
Supervisor
anticipated filling the two openings on the survey team by
September 1,
1987. Ex. 11, pp. 2 and 6. In scheduling the reviews
for the September
quarter, the week of September 21-25 was left open to catch
any missed
reviews. Wyoming Br., p. 6.
By letter dated June 11, the Agency notified the State of a
"Training
Workshop" in Denver scheduled for September 22-23. The notice
provided
that the State could "send as many surveyors as [it] felt
appropriate."
HCFA requested that the states respond to the notice by June
22. Ex. 3.
In a letter dated August 11, the Agency confirmed the
State's nomination
of six individuals to attend the workshop and noted that
attendance at
the workshop was "mandated under Section 1864 of the . . .
Act." Ex. 4.
In the telephone conference, HCFA explained that this
training session
was mandatory in that the Agency was required by the Act to
provide and
fund training for State reviewers. Wyoming's
"understanding" of this
situation was that, due to the variety of review
functions performed by
its registered nurses, all the nominated individuals
were required to
attend this training session. Wyoming could not
provide any written
support for its position.
When the due date for the Westward Heights' review arrived, the State
had
not filled the vacancies on the understaffed review team. Thus,
only
one facility was reviewed and the Westward Heights' review was
simply
rescheduled for the week of October 20-23. Wyoming Br., p. 7.
The
State's original quarterly showing (submitted October 21) listed
Westward
Heights among the facilities for which a timely review had been
completed.
4/ Ex. 5. However, shortly after its submission, State
officials
detected an error in their showing and submitted a corrected
showing which
conceded that Westward Heights had not been timely
reviewed, but had been
reviewed October 20-23. In the corrected showing
Wyoming requested that
the late review be excused under the technical
failings exception. HCFA
received the corrected showing by October 30.
Wyoming Br., p. 7; Exs. 6 and
10. HCFA took a disallowance for the
September 30 quarter based on
Wyoming's failure to conduct a timely
review at Westward Heights. 5/
The disallowance also stated that
Wyoming did not qualify for the exceptions
to the annual review
requirement because it had not provided "an acceptable
reason which
would qualify . . . for the exceptions." Ex. 7.
Analysis
The parties' briefs have raised four issues --
1. Was Wyoming's quarterly showing satisfactory?
2. Did Wyoming meet the statutory 98% review requirement?
3. Does the technical failings exception apply?
4. Does the good faith and due diligence exception apply?
We consider each of these issues below.
1. Wyoming's Quarterly Showing
HCFA's argument that Wyoming's quarterly showing was unsatisfactory
is
based in large part on three recent decisions by this Board: Ohio
Dept.
of Human Services, DGAB No. 824 (1987); Texas Dept. of Human
Services,
DGAB No. 883 (1987); and Michigan Dept. of Social Services, DGAB
No. 885
(1987), Reconsideration denied, (1987).
In those decisions, the states' quarterly showings contained
either
misleading or no information regarding whether facilities had
been
reviewed (Ohio and Texas), or cursory explanations regarding the
failure
to review (Michigan). In Ohio, we concluded that at a minimum a
showing
must include specific identification of unreviewed facilities as well
as
the reasons for the missed reviews. Additionally, we noted that
the
showing requirements further an important program purpose in that
they
obligate a state to provide a contemporaneous explanation of its
failure
to review. Id. at 5.
Here, Wyoming's showing comports with the minimum requirements
discussed
in Ohio. The State's amended quarterly showing was received
by HCFA
within 30 days of the close of the quarter. It identified
Westward
Heights as a facility which had not been timely reviewed, noted that
the
review had been delayed due to a conflict with a federally
sponsored
training session and asked that the late review be excused under
the
technical failings exception. The amended showing also contained a
copy
of the original review team schedule. Ex. 6.
Given our holding in Ohio, we find that the State's showing provided
a
sufficient basis for the Secretary to consider whether a
disallowance
was justified. However, this finding does not necessarily
lead to a
conclusion that the State's explanations would satisfy either
statutory
exception. For while we find that Wyoming's showing was
procedurally
sufficient as is explained below, we nevertheless agree with
HCFA that
the statutory exceptions do not apply to excuse this untimely
review so
that the showing is not satisfactory on that basis.
2. The 98% Review Requirement
As noted above, the exceptions to the annual review requirement
are
established by section 1903(g)(4)(B) of the Act and implemented by
42
C.F.R. 456.653. The 98% review requirement is applied in a
different
manner depending upon which exception a state is attempting to
employ.
In terms of the good faith and due diligence exception, by the close
of
the quarter a state must have completed reviews in 98% of all
facilities
requiring review (including all facilities with 200 or more
Medicaid
beds) and must have exercised good faith and due diligence in
attempting
to conduct the uncompleted reviews and its failure to complete
100% of
the required reviews must be attributable to events beyond its
control
which it could not have anticipated. See Delaware Dept.
of Health and
Social Services, DGAB No. 732 (1986); 6/ and Pennsylvania Dept.
of
Public Welfare, DGAB No. 746 (1986).
In terms of the technical failings exception a state must meet the
98%/200
bed standard within 30 days of the close of the quarter
(possibly even
meeting that standard before the close of the quarter)
and there must have
been circumstances within the state's control which
prevented 100% of the
required reviews from taking place in the quarter.
See Delaware and
Pennsylvania.
Thus, a state's failure to complete reviews in 98% of facilities
requiring
review by the close of the quarter would bar access to the
good faith and due
diligence exception. On the other hand, a state need
only satisfy the
98% standard within 30 days of the close of a quarter
if it had technical
reasons for failing to complete 100% of the required
reviews.
Where a state has a small number of facilities due for review during
any
given 12 month period, the failure to review even a single
facility
could drop the state below the 98% standard. Wyoming contended that
this
was the predicament it was facing. Wyoming noted that it has but
30
long-term care facilities in the entire state and only nine were due
for
review in the quarter ending September 30. Consequently,
Wyoming
asserted that its failure to review one facility put it at the 89%
(8/9)
level, thereby rendering it ineligible for the good faith and
due
diligence exception. Wyoming contended that such a literal reading
of
the statute holds states in this situation to an impossible
standard.
Further, the State alleged that HCFA's literal interpretation
conflicts
"with the Congressional intention of allowing states 'some
tolerance
level for the on-site review requirements. . . .' 44 Fed.
Reg. 56336
(1979)." Wyoming Br., pp. 15-16. HCFA relied on our holdings
in
Delaware and Pennsylvania to argue that the good faith and due
diligence
exception was unavailable here because Wyoming did not meet the
98%
standard. HCFA Br., pp. 5-6.
As we explained during the telephone conference, we believe that
the
parties have made a fundamental error in their interpretation of the
98%
standard. The 98% requirement pertains not to the number of
facilities
in a particular level of care under review during a quarter, but
to the
completion of reviews in 98% of the combined total of all
facilities
where such a review was required by 1903(g)(1) during the
twelve-month
period ending with the close of the quarter in question.
See HCFA
Action Transmittal AT-77-106 (November 11, 1977), p. 5; 43 Fed.
Reg.
50925 (November 1, 1978); 44 Fed. Reg. 56336-56337 (October 1,
1979).
For example, assuming a state had a total of 100 ICFs, SNFs, and
mental
hospitals due for review during the annual period from September
30,
1986--September 30, 1987, the State would meet the 98%/200 bed
standard
for its showing submitted for the quarter ending September 30, 1987
if
it completed reviews during the annual period in 98 facilities
including
all those with 200 or more certified Medicaid beds. See also
Delaware,
p. 17; and Pennsylvania, p. 10.
Logically, it would follow that, since a dually-certified facility can
be
subject to violations at two levels of care, such facilities are
counted
twice (once at each level of care) in calculating whether the
98% standard
has been met. The State confirmed that the list of
facilities in its
quarterly showing (Ex. 5) represents all those
facilities where an annual
review was required by section 1903(g)(1)
during the twelve-month period
ending September 30, 1987. There were 66
facilities due for review
during that period. Since Westward Heights is
a dually certified
facility, and no review at either level of care was
conducted prior to the
close of the quarter, the State missed reviews at
two facilities.
Consequently, the State conducted reviews at 96.96%
(64/66) of the facilities
requiring review.
In Delaware, we asked HCFA how the statutory standard should be applied
to
states with small numbers of long-term care facilities. HCFA's
response
was that it would be willing to round off review percentages
such as 97.778
or 97.959 upward to 98%. As is evident from past
practice, the Agency
adheres to a strict application of the standard.
See Delaware, pp. 14, 17-18,
n. 9. HCFA maintained that position here
and argued that the State did
not meet the requirement to review 98% of
the facilities requiring review by
the close of the quarter. Wyoming
contended that we should consider the
circumstances of states with small
numbers of long-term care facilities in
applying the 98% standard.
The 98% requirement is a statutory one. We are bound by all
applicable
laws and regulations. 45 C.F.R. 16.14. We cannot
change the percentage
set in the statute, even by 1%, even though Congress
may not have taken
into consideration the problems the law could cause small
states. We
discuss below, however, our conclusion that the State could
not in any
event meet the requirements for the good faith and due
diligence
exception, even apart from the 98% requirement.
3. The Technical Failings Exception
There is no dispute that Wyoming completed 98% of the required
reviews
within 30 days of the close of the quarter in which they were
due. In
fact the State completed 100% of the reviews within that
time. The
issue is whether the State's reasons for not having completed
the
required reviews by the close of the quarter constitute a
technical
failing. The facts lead us to conclude that Wyoming's failure
to
conduct a timely review of Westward Heights was due to
poor
administration.
The concept of a technical failing has never been precisely defined.
The
implementing regulation defines technical reasons as "circumstances
within
the agency's control." 42 C.F.R. 456.653(b). However,
the
Agency has long asserted, and we have supported the notion, that
poor
administration cannot qualify as a technical failing. See Utah
Dept. of
Health, DGAB No. 843 (1987). Admittedly, we have previously
indicated
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 singular occurrences." Id. at 6. However,
our
conclusion in Utah, as it has been in other cases, was based upon
a
state's failure to review a single patient (or a small number
of
patients) in spite of a state's reasonable efforts to identify them
as
recipients for whom a review was due. See also, Texas Dept. of
Human
Services, DGAB No. 830 (1987); New Hampshire Dept. of Health and
Human
Services, DGAB No. 841 (1987); and Maine Dept. of Human Services,
DGAB
No. 857 (1987).
In spite of evidence that the State had adequate opportunity to attempt
to
modify its review procedures in such a way as to have completed all
its
reviews in a timely fashion, the record contains no indication that
the State
made any effort to do so. The State's review schedule for the
quarter ending
September 30, 1987 was prepared almost seven months
before the review was
due. While questions remain as to when the
Supervisor was first aware of the
staffing shortages, by the start of
the September quarter the State was aware
that it had only one fully
staffed review team. Ex. 11, p. 2. The
State argued that it was
prevented from conducting the review by a scheduling
conflict with the
mandatory federal training session. However, the
first notice of the
workshop (dated June 11) indicated that the State could
"send as many
surveyors as [it felt] appropriate." Ex. 3. Given
this option, and in
spite of the fact that it already had one understaffed
review team, the
State nominated six persons (including one unnamed
individual) to attend
the training. The only evidence regarding the
"mandatory" nature of
this training is found in the Agency's August 6th
letter confirming the
State's nomination of the individuals it wished to send
to the workshop.
Ex. 4. The State's arguments regarding the "mandatory"
nature of the
workshop are conclusory and without support in the record. In
the
context of the evidence, the Agency's explanation of the
mandatory
nature of the training is more credible. Further, faced with
an obvious
problem the State made no effort to contact HCFA for advice
although the
notice of the workshop contained a general offer to answer
questions.
See Ex. 3. Additionally, there is no evidence that the State
made any
attempt to rearrange its review schedule in view of the
workshop. Even
though the State attempted to portray concern regarding
its inability to
conduct the review, its approach was so procedurally lax
that its
original quarterly showing apparently was not thoroughly reviewed as
it
offered Westward Heights' 1986 review date to show that the facility
had
been reviewed in the third quarter of 1987. See Ex. 5.
The State simply has not demonstrated that anything other than its
poor
administration prevented it from completing a timely review of
Westward
Heights. Wyoming set its review schedule and was aware of both
its
staffing shortage and the training workshop well in advance of the
due
date for the review. This situation is not one where the State
was
faced with an unexpected training session and a sudden loss of
review
personnel. Rather, the facts demonstrate that the State had
adequate
time to attempt to respond, but did not. Accordingly, we
conclude that
the technical failings exception cannot apply to excuse
Wyoming's
failure to timely review Westward Heights.
4. The Good Faith and Due Diligence Exception
In the alternative, Wyoming argued that if we were to find the
technical
failings exception inapplicable, the good faith and due
diligence
exception should apply to excuse its failure to review Westward
Heights.
The State relied primarily on the opinion of the District Court
in
Delaware. There the court invalidated HCFA's interpretation of
this
exception (at 42 C.F.R. 456.653) which the Agency applied
to
"circumstances beyond the [state] agency's control." Id. at
1125.
Rather, the court found that the Act must require a subjective
standard
because the question is whether there was a good faith attempt to
review
a facility. Id. at 1128.
As we have noted in another instance where that court's interpretation
has
been relied on--
. . . we believe the
District Court's conclusion concerning
good faith and due diligence exception is inconsistent with
the
statutory requirement. Section
1902(a)(31), which is
incorporated by
specific reference into section
1903(g)(1),
expressly requires that the
State Plan provide--
(B) with
respect to each skilled nursing or
intermediate
care facility within the State, for periodic
onsite
inspections of the care being provided to each
person
receiving medical assistance, by one or more
independent
professional review teams. . . .
In its analysis of the good faith and
due diligence exception,
the District
Court overlooked this specific statutory
requirement. As a result, we believe that the Court's
conclusion
that a State may satisfy the
good faith and due diligence
exception
if a review was conducted in a facility, even
though
not every patient in the facility
who reasonably should have been
reviewed
has been reviewed, is erroneous. . . .
Washington, at 7-8 (Emphasis in original).
Under either HCFA's or the District Court's interpretation, the good
faith
and due diligence exception cannot excuse Wyoming's failure to
timely review
Westward Heights. Unlike Delaware, where a handful of
patients "slipped
through the cracks" during reviews conducted at two
facilities, Wyoming never
conducted a review at Westward Heights. Thus,
the court's reliance on a
state's having attempted a review, even if
sound, would not aid Wyoming
here. As we have noted, short of
scheduling the review in March, there
was no attempt by the State to
actually conduct a timely review.
Further, under the definition of good faith and due diligence to which
we
subscribe, the State must have attempted to review a facility and
would have
been successful "but for events beyond its control." On the
other hand,
technical reasons are attributable to "circumstances within
the agency's
control." Thus, by pursuing the good faith and due
diligence exception, the
State is arguing that circumstances which it
contended were within its
control, for purposes of the technical
failings exceptions, were, in fact,
beyond its control. However
difficult a precise definition of these
exceptions might be, clearly
both cannot be applied to the same set of
facts. As we discussed above,
Wyoming's failure to review Westward
Heights was based on the State's
failure to act responsibly in organizing its
review schedule. The
State's failure was not due to circumstances
beyond its control.
Accordingly, the good faith and due diligence exception
cannot excuse
this violation, even if there was no dispute regarding the 98%
standard.
Conclusion
Based on the foregoing analysis, we conclude that although Wyoming did
in
fact submit a procedurally sufficient quarterly showing, the State's
failure
to review Westward Heights cannot be excused under the
statutory
exceptions.to the annual review requirement. Accordingly, we
sustain
the full disallowance of $22,269.07.
________________________________
Cecilia
Sparks Ford
________________________________ Norval
D.
(John) Settle
________________________________
Alexander
G. Teitz Presiding Board Member
1. Both parties apparently misread the Westward
Heights review date
provided on the original Quarterly Showing. Wyoming
indicated that
"[t]he showing indicated that Westward Heights had been
reviewed as
scheduled." Wyoming Br., p. 7. HCFA asserted that the
showing
indicated that Westward Heights had been reviewed on September 25,
1987.
HCFA Br., p. 7. In fact, the date provided for the Westward
Heights
review was "9/25/86," the apparent date of the most recent
review
completed prior to the one due by September 30, 1987. Ex. 5, p.
5 of 6.
2. Of the $22,269.07 disallowed for this dually
certified facility,
$3,179.79 was attributed to the SNF level of care and
$19,072.28 to the
ICF level of care.
3. This decision was recently overturned in
part. See Delaware
Division of Health and Social Services v. U.S. Dept.
of Health and Human
Services, 665 F. Supp. 1104 (D. Del. 1987). We are,
however, not bound
by a district court opinion in cases arising in another
district. See
Washington State Dept. of Social and Health Services,
DGAB No. 940
(1988) at 7.
4. Both parties apparently misread the Westward
Heights review date
provided on the original Quarterly Showing. Wyoming
indicated that
"[t]he showing indicated that Westward Heights had been
reviewed as
scheduled." Wyoming Br., p. 7. HCFA asserted that the
showing
indicated that Westward Heights had been reviewed on September 25,
1987.
HCFA Br., p. 7. In fact, the date provided for the Westward
Heights
review was "9/25/86," the apparent date of the most recent
review
completed prior to the one due by September 30, 1987. Ex. 5, p.
5 of 6.
5. Of the $22,269.07 disallowed for this dually
certified facility,
$3,179.79 was attributed to the SNF level of care and
$19,072.28 to the
ICF level of care.
6. This decision was recently overturned in
part. See Delaware
Division of Health and Social Services v. U.S. Dept.
of Health and Human
Services, 665 F. Supp. 1104 (D. Del. 1987). We are,
however, not bound
by a district court opinion in cases arising in another
district. See
Washington State Dept. of Social and Health Services,
DGAB No. 940
(1988) at