Arkansas Department of Human Services, DAB No. 959 (1988)

DEPARTMENTAL GRANT APPEALS BOARD

Department of Health and Human Services

SUBJECT:  Arkansas Department of Human Services

Docket No. 87-192
Decision No. 959

DATE:  May 26, 1988

DECISION

The Arkansas Department of Human Services (State) appealed a
determination by the Health Care Financing Administration (HCFA or
Agency) disallowing $405,552 in federal financial participation (FFP)
under the Medicaid program for the State's alleged failure to properly
perform a "certification of need" for individuals under age 21 receiving
inpatient psychiatric services during the period July 1, 1985 through
December, 31, 1985.  Section 1905(h)(1)(B) of the Social Security Act
(Act) requires that, in order to establish eligibility for Medicaid
reimbursement, a team consisting of physicians and other qualified
personnel must make a determination for each psychiatric patient under
21 that services are necessary on an inpatient basis and can reasonably
be expected to improve the patient's condition so that inpatient
services will eventually no longer be necessary.  The Agency randomly
selected 39 patients from nine facilities in the State to determine
whether the State had performed a valid certification for these patients
and found that it had for only three of them.  The State appealed the
Agency's findings with regard to all 36 patients which the Agency found
lacked valid certifications.

We uphold the disallowance in full.  After considering the State's
arguments and the documentation submitted in the State's appeal file, we
conclude that the Agency's determination was correct concerning all 36
patients.  For six of the 36 patients, the State offered no
documentation whatsoever, despite its general position that it disputed
the Agency's findings on all 36 patients.  We therefore uphold the
disallowance with regard to these six patients without further
discussion.  For the remaining patients, we find that the State's
documentation is insufficient to establish that a team certified need as
intended by the statute and regulations, contrary to the State's
position that the compilation of notes and correspondence which the
State submitted for those patients constituted proper certification.  We
treat in a separate section of this decision four patients at the
Rivendell Hospital for whom the Agency had separate grounds for
disallowing costs.  We uphold the Agency's disallowance for the patients
at Rivendell (even though generally appropriate certification forms were
used for several of these patients) because the State did not establish
that the forms were signed by an "independent team," as required by the
regulations, and because there are other unexplained discrepancies in
the documentation.

Statutory and Regulatory Background

Section 1905(a)(16) of the Act authorizes Medicaid payments for
"inpatient psychiatric hospital services for individuals under age 21,"
defined in section 1905(h) as requiring, in part, that:

     a team, consisting of physicians and other personnel qualified to
     make determinations with respect to mental health conditions and
     the treatment thereof, has determined [that psychiatric services]
     are necessary on an inpatient basis and can reasonably be expected
     to improve the condition, by reason of which such services are
     necessary, to the extent that eventually such services will no
     longer be necessary. . . .

Section 1905(h)(1)(B)(ii).  Implementing regulations describe more
specifically the required determinations which must be made and the
composition of the specialized team which makes the determination.  The
regulation at 42 C.F.R. 441.152 provides:

       (a)  A team specified in section 441.153 must certify that -- (1)
       Ambulatory care resources available in the community do not meet
     the treatment needs of the recipient; (2)  Proper treatment of the
       recipient's psychiatric condition requires services on an
     inpatient basis under the direction of a physician; and (3)  The
       services can reasonably be expected to improve the recipient's
     condition or prevent further regression so that the services will
     no longer be needed.  *  *  *  * Section 441.153 specifies the
teams which must perform the certifications under section 441.152.  The
composition of the certifying team varies depending on when the patient
starts receiving Medicaid coverage:

       (a)  For an individual who is a recipient when admitted to a
     facility or program, certification must be made by an independent
     team that -- (1)  Includes a physician: (2)  Has competence in
       diagnosis and treatment of mental illness, preferably in child
     psychiatry; and (3)  Has knowledge of the individual's situation.

       (b)  For an individual who applied for Medicaid while in the
     program, the certification must be -- (1)  Made by the team
       responsible for the plan of care as specified in section 441.156;
     and (2)  Cover any period before application for which claims are
     made.

       (c) For emergency admissions, the certification must be made by
     the team responsible for the plan of care (section 441.156) within
     14 days after admission.

Section 441.156 requires development of an individual plan of care by
"an interdisciplinary team of physicians and other personnel. . . ,"
whose composition and purpose is defined in specific detail.

The Arkansas state Medicaid plan in effect during the period in dispute
itself required a certification of need for individuals under 21
receiving inpatient psychiatric services, referencing sections 42 C.F.R.
441.152 and 441.153.  Agency's Ex. A.  The Agency also submitted a
section of the Arkansas Medicaid Manual which essentially tracks these
two regulatory provisions.  Agency's Ex. B.

Analysis

     A.  The 26 patients other than those at Rivendell Hospital

The State submitted as its appeal file the documentation which it relied
upon in arguing that it had complied with the certification of need
requirements for each of the inpatient psychiatric patients under age
21.  For each child, the State included a "summary" page, apparently
prepared for purposes of this appeal, as well as notes, correspondence,
and other documentation for that child. Most of the summary pages are
organized according to the three certification requirements of 42 C.F.R.
441.152(a): ambulatory care services in the community are insufficient
to meet the patient's needs, proper treatment of the patient's condition
requires inpatient services under the direction of a physician, and
inpatient services can reasonably be expected to improve the patient's
condition so that services will no longer be needed on an inpatient
basis.  For each of the three requirements, the State quoted excerpts
from the attached documentation which, according to the State,
demonstrate that each requirement has been satisfied.  The State thus
maintained that it fully met the regulatory requirements for these
children. 1/

The Agency, on the other hand, maintained that such a compilation of
documents could not meet the requirements of the statute and
regulations.  According to the Agency, the relevant legislative history
and regulatory language require that "certification cannot be inferred
from notes but should be an explicit, affirmative statement that
Medicaid statutory and regulatory requirements are met." Disallowance
letter, p. 2.  The Agency also observed that the State's documentation
provided no evidence that a team, as required by the statute and
regulations, performed the certification.

We agree with the Agency that the State's documentation is insufficient
to show that a "team" certified the need for the inpatient services in
question here, as specifically required in the statute and regulations.

The Agency's view of what is required is supported by the legislative
history of the certification requirement in section 1905(h) of the Act,
which explicitly states that an "independent review team" must formally
certify the patient's need for the services.  The House Conference
Report states:

     Federal matching would not be available with respect to any
     otherwise eligible individual unless such individual is formally
     certified to be in need of the institutional care and services
     authorized under the Senate amendment by an independent review team
     consisting of medical and other personnel qualified to make such
     determination. . . .

H.R. Conf. Rep. No. 1605, 92nd Cong., 2nd Sess. (1972), reprinted in
1972 U.S. Code Cong. and Ad. News 5398 (emphasis added).  The Agency's
longstanding interpre- tation in its policy guidance is that to be valid
a certification of need must be the result of a process through which
the appropriate persons with knowledge of the case attest, in a signed,
written statement, to a determination that an individual needs a
specific level of institutional care.  See Agency's Exs. D-F.  2/
Indeed, the State's own Medicaid Manual indicates that it understood the
statute and regulations to require identification of a team which would
be provided with information about the patient, make a decision about
need, and notify the State about that decision.  Agency's Ex. B
(sections 213 to 220 of the Arkansas Medicaid Manual).

The State objected to the Agency's emphasis on the need for an
"explicit, affirmative statement" on the apparent basis that this
approach was overly formalistic and not specifically required by the
statute or regulations. Whether or not the State used some particular
process or form to certify need, however, the State still needed to have
the certification performed by a team (including a physician), which
would make the requisite determination and communicate the result of its
review in some explicit manner.  Use of the word "team" in the statute
and regulations, would, at a minimum, suggest a discrete group of
individuals charged with evaluating the need for inpatient services.  An
obvious advantage of having a team perform the review is that a team
would have the benefit of various professional opinions and could
specifically evaluate the patient's condition according to each of the
regulatory elements, avoiding the problem here of the State seeking to
infer from notes and other documents whether the regulatory criteria had
been met.

The State explained in its brief that:

     The State of Arkansas made the management decision to accept the
     individual case plans in admission documents of facilities for
     psychiatric services under 21 which meet the statutory and
     regulatory criteria requirements in the formalized team referenced
     in the regulations.  If a hearing is necessary in this matter,
     testimony will be that this decision was made on the basis of
     monetary considerations of setting up a team.

State's Brief, fifth page (unpaginated).  While the State may indeed
have been affected by "monetary considerations" which influenced the
choice of whether to establish a qualified team, this would not absolve
the State of its obligation to comply with the legal requirements.
Neither the statute nor the regulations provide an exception from the
certification of need requirements based on the State's fiscal
considerations.  Indeed, an apparent purpose of the certification
requirement is to ensure that public funds are being prudently expended
for hospital services which have been verified as necessary.

Even assuming that the State did not have to specifically designate a
team to perform a certification of need, the State nevertheless would
still be required to show that a group of professionals, including a
physician, had considered the regulatory elements and determined that
inpatient psychiatric services were needed.  An examination of the
documentation submitted by the State (with the possible exception of the
cases at the Rivendell Hospital discussed separately below) shows not
only that the State failed to have a qualified team perform a
certification for the patients, but that the elements of 42 C.F.R.
441.152 were not satisfied.

Although most of the files were organized with a standard "summary"
sheet, the underlying documents reflect no particular pattern that would
indicate an effort to comply with the regulations, but instead appear to
include whatever papers the State incidentally had in its files for the
children.  None of the documents indicate that their authors
specifically considered each of the elements as required by the
regulation, nor do the documents' substance show that the child's
situation met all the elements.  While some comments might incidentally
have addressed one or two of the required elements, for none of the
children do they satisfy all three elements.

Most of the documents submitted by the State provide only a general
diagnosis of the patient's condition, rather than an unequivocal
statement of need for care in an inpatient psychiatric facility, and
many of the documents bear no apparent relationship to the specific
institution- alization and time period involved here.  A few of the
compilations include an evaluation signed by several individuals
referred to as a treatment or counseling team, but these evaluations do
not include a physician's signature and/or were performed as much as
seven years prior to the disallowance period, with no apparent
connection to the facility admission at issue here.  See, e.g., State's
Exs. B-F.  Others contain documents signed only by a physician, with no
indication that the physician consulted with anyone else.  Exs. L, O.
In a few instances, there is a document signed by a physician as well as
a document signed by another professional for the same child, but their
recommendations for that child are unclear or even conflicting.  Exs. I,
J, and Q.  The last nine of the files submitted (State's Exhibits V -
DD) contain no source documents at all, but only a summary sheet
relating various comments and recommendations concerning the children
from persons apparently involved with their care.

In summary, for those patients other than those at Rivendell Hospital,
we conclude that the documentation submitted by the State does not
satisfy the statutory and regulatory requirement that a team certify the
need for inpatient psychiatric services under the elements as described
in 42 C.F.R. 441.152.

     B.  The cases at the Rivendell Hospital

The Agency's disallowance treated separately seven cases at the
Rivendell Hospital, where the Agency found there to be a specific form
signed by a physician that specified each of the three certification of
need (CON) elements. The Agency accepted certifications for three of
these patients, but rejected the forms for the remaining four on the
basis that they "were determined not to meet CON requirements since they
were non-emergency cases admitted with Medicaid, requiring an
independent team (not the facility staff) to complete the CON."
Disallowance letter, p. 2.

The State did not dispute the Agency's conclusion in the disallowance
letter that 42 C.F.R. 441.153 requires a team other than facility staff
to certify need.  The State simply relied on its general position that
the documentation it submitted was sufficient to show proper
certification and on its specific summary statements for each patient.

The Agency's interpretation that use of facility staff is precluded for
non-emergency admissions is reasonable given the structure of the
regulation, which mentions independent teams separately from plan of
care teams.  3/ The Agency appears to have a legitimate concern that
facility staff might be more inclined to find a prospective patient to
be in need of inpatient services in their facility than a team which was
independent of the facility.  The State's own manual appears to
contemplate a process for certifying need for non-emergency patients
different from that used for emergency admissions and for patients who
apply for Medicaid while in the facility. Agency's Ex. B.  In any event,
we find the State's documentation for the Rivendell patients to be
insufficient for reasons in addition to the questioned status of the
team.  We discuss below the documentation submitted for these four
cases, addressing the team status where relevant, as well as our
additional reasons for rejecting the documentation as proper
certification.

For one of the four individuals at Rivendell, Michelle S.  (State's
Exhibit T), the exhibit as submitted by the State contains no signed
certification form at all; thus, we do not need to reach the question of
which team performed the review.  The case record presented for this
child is deficient for reasons similar to those discussed in section A.
The documentation consists of "progress notes" and a "discharge summary"
from an organization called "Counseling Clinic, Inc.," all signed by a
person giving his qualifications as "M.A."  The State summary alleged
that these notes showed that ambulatory care resources available in the
community did not meet the recipient's treatment needs because they
indicated that the mother thought that she and the daughter should live
apart for awhile and the child had been threatening to run away. The
regulation, however, clearly contemplates an evaluation of placement
options by professionals with knowledge of community resources.  The
"M.A." indicated on the discharge summary that he was "referring" the
child to Rivendell, but the progress notes do not indicate that he
considered other alternatives; in fact, the notes suggest that the
mother and child may have independently sought placement at Rivendell.
Thus, we find that these documents do not meet the regulatory criteria
for certification of need.

For two cases at the Rivendell Hospital, Birk N. (State's Exhibit R) and
Donovan P. (State's Exhibit S), the files submitted by the State contain
a form headed "Medicaid Under 21 -- Facility
Certification/Recertification of Need for Inpatient Hospitalization."
(The form does not indicate whether it was designed by the State itself
or by another authority.)  The form tracks the requirements of 42 C.F.R.
441.152, with a space to check off whether the child is certified based
on the three elements of the regulation.  Each of the forms was checked
off in the designation for "[t]hese services are required on a non-
emergency basis" i.e., that "the above-named individual's psychiatric
condition requires inpatient services under the direction of a
physician."  At the bottom of the form are three signature lines headed
by the statement "approved by team responsible for plan of care."  The
forms each contain signatures by the following facility staff:  the
admitting or attending physician (also identified as Medical Director),
a psychologist, and another "mental health professional" (also
identified as an "MSW").  The forms contain a space for indicating
whether the patient has a valid Medicaid card on the day of admission,
but these spaces are blank for each of the patients here.  Handwritten
notes on each of the forms indicate that the cases were non-emergency
cases admitted with Medicaid.  There is also a notation indicating that
the forms were each signed "retrospectively" from 9-3-85 although Birk
N. was admitted to Rivendell on 6-5-85 and Donovan P. was admitted on
7-5-85.

As indicated above, the State did not dispute the Agency's conclusion
that these patients should have been certified by a team other than the
plan of care team.  The State also did not contest for these two
patients the Agency's finding that they were eligible for Medicaid when
admitted on a non-emergency basis.  The handwritten notations on the
forms support the Agency's findings on these points. Given these
findings, a question arises not only about whether the appropriate team
certified need but also whether they certified need at the appropriate
time.  For patients admitted on a non-emergency basis, certification
should occur on or before the date of admission.  4/ Here, the forms
were apparently filled out two or three months after admission.

For one of the cases at Rivendell Hospital, identified by the State's
summary as Anthony P. (State's Exhibit U), the State did allege the
following in its summary: "Anthony applied for Medicaid 9-12-85.  His
admission was certified by the team responsible for the plan of care."
The documents submitted contain a number of unexplained discrepancies,
however, and do not clearly support this assertion.  All but one of the
attached documents refers to a "Mark P.," rather than Anthony P. (both
with the same surname.)  One of the documents is a certification form
like the ones for Birk N. and Donovan P., with the same handwritten
notations (and a 7-10-85 admission date).  The signatures are also the
same, but the treatment plan for Mark P., which was also submitted,
shows signatures for Medical Director and Social Worker which are
different from those on the certification form.  The last document in
the file for Anthony P., a computer printout apparently submitted to
show a date of application for assistance of 9-12-85, names a "Bertha
S." with no explanation of Bertha's connection to either Anthony or Mark
P.  The address is the same as that given on the certification form for
Mark P., and the Medicaid number appears to bear some relationship to
the number listed after the patient's surname in an attachment to the
disallowance letter, but the State provided no explanation of how this
document showed that the patient was not eligible at the time of
admission.  The State also failed to explain why the certification would
have been done retrospectively from 9-3-85 if the application date was
9-12-85.  In light of the numerous discrepancies, and the complete
absence of any explanation by the State, we find that the State has
failed to show that the proper certification was performed for the
proper individual at the proper time.

Accordingly, we uphold the disallowance for all four patients at
Rivendell, even though a form addressing the requisite elements was
submitted for three of the patients.

We also note that the use of a standard certification form for the
patients at the Rivendell Hospital, including the three case files which
the Agency accepted, lends support to our conclusion above that the
State failed to satisfy the regulatory requirements for the other
children.  If the State customarily used (or had its providers use) a
form specifically designed to track the federal regulation in order to
formally certify the child's need for inpatient services, this indicates
that the State understood what it needed to do to comply with the
statutory and regulatory requirements regarding certifications of need.

Conclusion

For the reasons set forth above, we conclude that the State failed to
perform a valid certification of need for the 36 children in question
and therefore uphold the disallowance in full.

 

                         ________________________________ Donald F.
                         Garrett

 

                         ________________________________ Alexander G.
                         Teitz

 

                         ________________________________ Judith A.
                         Ballard Presiding Board Member

 


1.   In the background section of its brief, the State offered that, in
addition to the submitted documentation, "[a] hearing is requested if
the Board considers it necessary."  A Board staff attorney informed
State counsel by telephone that, since the case appears to concern
issues of documentation and the interpretation of the statute and
regulations, the Presiding Board Member did not consider a hearing
necessary.  In this light, State's counsel withdrew the request for a
hearing.  The State also specifically declined to file a reply brief,
relying on its original submission rather than providing a response to
the Agency's analysis of the deficiencies in the State's documentation.

2.   These guidance documents refer to certifications required as part
of a utilization control system.  The specific certification
requirements for inpatient psychiatric services for individuals under
age 21 are more stringent, but were designed to satisfy the utilization
control requirements as well.  See 42 C.F.R. 441.152(b).

3.   The regulation permits a plan of care team to certify need within
14 days for patients admitted on an emergency basis.  42 C.F.R.
441.153(c).  The State did not allege that this section applied,
however, and the record supports the Agency's finding that these were
non- emergency cases.

4.   The regulations addressing inpatient psychiatric services for
individuals under age 21 do not specifically state when the initial
certification must be done for non-emergency cases, but they do refer to
general certification of need regulations at 42 C.F.R. 456.160. Those
regulations require that the initial certification be performed "at the
time of admission," which the Agency has interpreted as being prior to
or on the date of admission.  See Agency's Exs. E,