DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Wisconsin Department of DATE: June 19, 1989 Health and
Social Services Docket No. 88-208 Decision No.
1062
Decision
The Wisconsin Department of Health and Social Services (Wisconsin/State)
appealed a determination by the Health Care Financing Administration
(HCFA/Agency) disallowing $55,183.48 in federal funds claimed by the
State under the Medicaid program of the Social Security Act (Act) for
the quarters ending March 31 and June 30, 1988. The disallowance was
taken pursuant to section 1903(g)(1) of the Act, which provides for the
reduction of a state's federal medical assistance percentage of the
amounts claimed for a calendar quarter for long-stay services where the
state fails to show 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 found that Wisconsin
failed to conduct a satisfactory on-site inspection of care review at
Golden Age Manor (Golden Age) because the State inspection team did not
include one Medicaid recipient in its review of that facility. Golden
Age is an intermediate care facility (ICF).
Generally, HCFA asserted that the State's system for identifying
Medicaid recipients due for review was unsatisfactory in that, at least
here, there had been a two month delay between the time a patient was
determined Medicaid eligible and the time when that information was
available to the State's inspection team. Wisconsin contended that
HCFA's determination of the recipient's Medicaid eligibility date was
incorrect. Accordingly, the delay in making the eligibility information
available to the inspection team was not as severe as portrayed by HCFA.
Wisconsin maintained that it had a reasonable system for identifying
Medicaid recipients and the failure to review this recipient was due to
an isolated breakdown in that system. Consequently, Wisconsin asserted
that it should not be held responsible for having to review this
individual. Alternatively, Wisconsin alleged that this disallowance
could be excused under either of the statutory exceptions to the annual
review requirement.
The record in this case consists of the parties' briefs and exhibits as
well as the tape of a telephone conference held on May 2, 1989. Based
on the following analysis we determine that the technical failings
exception applies to excuse the State's failure to review this
recipient. Accordingly, we reverse this disallowance.
Applicable Law
In pertinent part, section 1902(a)(31) of the Act requires that a state
plan provide:
(B) with respect to each . . . 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
. . . .
The regulations implementing this provision and section 1903(g)(1) are
found at 42 C.F.R. Part 456. In particular, section 456.652 provides
that:
(a) . . . [i]n order to avoid a reduction in FFP, the
Medicaid Agency must take a satisfactory showing to the
Administrator, in each quarter, that it has met the
following requirements for each recipient:
* * * *
(4) A regular program of reviews, including
medical evaluations, and annual on-site reviews
of the care of each recipient . . . .
(b) Annual on-site review requirements.
(1) An agency meets the quarterly on-site
review requirements of paragraph (a)(4) of this
section for a quarter if it completes on-site
reviews of each recipient in every facility in
the State, . . . by the end of the quarter in
which a review is required under paragraph
(b)(2) of this section.
* * * *
Additionally, 42 C.F.R. 456.652(b)(3) provides that a facility which is
not reviewed by the close of the quarter in which a review is due,
continues to require a review in each succeeding quarter until a
satisfactory review is performed.
The Act contains two exceptions to the annual review requirement.
Section 1903(g)(4)(B) provides --
The Secretary shall find a showing . . . to be satisfactory . .
. if the showing demonstrates that the State had 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.
Background
Approximately two to three months prior to the start of a facility's
annual review, the State generates a list of Medicaid recipients from
its Facility Licensure and Certification Information System (FL/CIS).
Three copies of this list are sent to the district office overseeing the
facility. The district office retains two copies and forwards the third
to the facility for correction and updating. Approximately one month
prior to the review the facility returns the corrected recipient list to
the district office which incorporates the corrections into its FL/CIS
and supplements this information to include newly eligible recipients
for whom a Physician's Plan of Care (PPOC) has been submitted. (The
PPOC must be reviewed and approved by a district nurse surveyor before
Medicaid payments are authorized.) Based on this updated information,
the FL/CIS generates inspection of care (IOC) forms for each recipient
and mails them to the district office two weeks prior to the start of
the review. District office support personnel are instructed to inform
the review team of any recipients who become eligible in the period
between production of the IOC forms and the start of a review. State
personnel either manually update the lists used by the review team or
telephone the team at the facility to add recipients identified after
the IOC forms are produced. At the facility, the review team seeks to
update its list of recipients prior to actually beginning the review.
After the review, the results of the review are entered into the FL/CIS
which produces a Notice to Provider which in turn is distributed to the
district office and sent to the facility to serve as a double-check for
the review's accuracy. Wisconsin Brief (Br.), pp. 3-5; Wisconsin
Exhibit (Ex.) 6.
On October 23, 1987 the State generated the first list of Medicaid
recipients at Golden Age in preparation for that facility's annual
review. Patient V.G. was determined financially eligible for Medicaid
on November 5, 1987. The supervising district office received V.G.'s
PPOC on December 14 and that document was reviewed and approved by the
Nurse Surveyor on December 21. The patient's eligibility information
was entered into the FL/CIS on January 15, 1988, four days prior to the
start of the review which ran from January 19-28, 1988. The eligibility
information was not placed in the FL/CIS in enough time for V.G.'s name
to appear on the computer list of Medicaid recipients due for review.
Consequently no IOC form was qenerated for this patient. See Wisconsin.
Ex. 6; HCFA Exs. 3 and 6.
The State employee (Program Assistant) responsible for updating the
FL/CIS with V.G.'s eligibility information had been instructed to inform
the review team about any eligible recipients at a facility not included
in the computer listing. The Program Assistant's affidavit stated that,
although the resident list had been updated to add 12 new residents,
including V.G.'s spouse, she had overlooked V.G. and failed to add that
recipient to the list. The Program Assistant also noted that
eligibility information for V.G. had not been entered into the FL/CIS
prior to January 15, 1988 due to a combination of staff shortages, an
end of the quarter workload, and seasonal leave by numerous employees.
Wisconsin Br., pp. 5, 10-11; Wisconsin Exs. 6 and 8; and Newton
Affidavit (submitted May 9, 1989).
Wisconsin noted that, in spite of the fact that V.G. was not identified
as a Medicaid patient, he was reviewed as part of Wisconsin's licensure
and certification survey which ran concurrently with the annual review
at Golden Age. Wisconsin indicated that this survey involves
observation of and interviews with as many patients (Medicaid and
private pay) as possible to select a sample for in-depth review.
Wisconsin contended that, but for the fact that the patient's medical
records are not reviewed in this process, the survey review is as
thorough as an annual review conducted for Medicaid. The State noted
that, since the nurse examining V.G. was not aware of his Medicaid
status, she did not target him for a full annual review which would have
also included his medical records. Wisconsin Br., pp. 6, 12-13;
Wisconsin Ex. 7; Tape of Conference (May 2, 1989).
HCFA alleged that Wisconsin's system for identifying recipients due for
review was deficient, and that, therefore, the disallowance was proper.
HCFA cited what it perceived as an extraordinary delay in the State's
system for entering Medicaid eligibility information into the computer
network. HCFA contended that, although V.G. was determined Medicaid
eligible on November 5, 1987, it took the State more than two months to
enter that information into the computer network. HCFA asserted that
this unjustified delay refuted Wisconsin's arguments regarding the
comprehensive nature of its Medical review system. HCFA theorized that
such a significant delay in processing this information increased the
likelihood that other Medicaid recipients were not reviewed. HCFA
argued that the State's deficient showing could not be excused under the
"good faith and due diligence" exception since the flaw in the State's
system was due to a circumstance within the State's control, i.e., the
identification of Medicaid recipients due for review. A failure to
complete an annual review due to circumstances beyond a state's control
is the basis for the "good faith and due diligence" exception. However,
the Agency contended that the technical failings exception was equally
inapplicable because of the systemic nature of the flaw in Wisconsin's
recipient identification process and the fact that the State did not
remedy the deficient review within 30 days of the close of the quarter
in which the review was due.
Analysis
I. Wisconsin's System of Recipient Identification
HCFA's argument that Wisconsin's system of recipient identification is
flawed was based on the Agency's assumption that V.G. had been
determined Medicaid eligible on November 5, 1987. That assumption gives
rise to what HCFA characterized as an extraordinary delay in processing
his eligibility information. However, the facts do not support HCFA's
position. While V.G.'s overall financial eligibility for Medicaid
benefits was established in November, his general eligibility for
institutional services covered by Medicaid was not determined until
almost six weeks later, on December 21, after the Nurse Surveyor
reviewed his PPOC.
Moreover, the record does not reveal any inherent weakness in
Wisconsin's system for recipient identification. Wisconsin employed an
updated computer listing, used to generate the IOC forms two weeks prior
to the review, supplemented by manual and telephone updates by staff to
add recipients identified just prior to the review. Wisconsin also
double-checked its recipient lists with the facility. Here, a number of
recipients were added just prior to the review, including V.G.'s spouse.
The reviewers had an up-to-date list, which happened to omit one
recipient. Wisconsin's system is distinguishable from those, which the
Board has found to be flawed, where the state relied on an out-of-date
computer list or simply on information provided by a facility to
identify recipients due for review. See New Hampshire Dept. of Health
and Welfare, DAB No. 756 (1986); and Pennsylvania Dept. of Public
Welfare, DAB No. 1014 (1989).
Although the facts do not support the conclusion that Wisconsin's
overall system of recipient identification was, in general, flawed, the
State was clearly required to review V.G., who had been determined
eligible almost one month prior to the on-site review. See North
Carolina Dept. of Human Resources, DAB No. 728 (1986). Having
determined that the State's overall system was not flawed, but that the
State ought to have identified and reviewed this recipient, we now turn
to whether the State's failure to do so could be excused under the
statutory exceptions.
II. The Technical Failings Exception
In order to qualify for the technical failings exception, a state must
have reviewed at least 98% of all facilities requiring review, including
all facilities with 200 or more Medicaid beds, either by the end of the
quarter or within 30 days of its close. Under the exception, a state's
failure to perform 100% of the required reviews by the close of the
quarter must be attributable to technical reasons, i.e., circumstances
within the state's control. Here, the State asserted, and HCFA did not
dispute, that it had reviewed at least 98% of all facilities due for
review by the close of the March 1988 quarter and that Golden Age, the
only facility in issue, had less than 200 Medicaid beds. Wisconsin Ex.
6. Since the State satisfied these prerequisites for application of the
technical failings exception, our analysis focuses on whether Golden
Age's review may properly be considered a technical failing.
In previous decisions, the Board has examined the technical failings
exception. See, e.g., Utah Dept. of Health, DAB NO. 843 (1987);
Arkansas Dept. of Human Services, DAB No. 923 (1987); Illinois Dept. of
Public Aid, DAB No. 930 (1988); and Massachusetts Dept. of Public
Welfare, DAB No. 1000 (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 is 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 State's system for identifying recipients relied on its computerized
recipient listing, updated and checked until the time of the review.
Ordinarily patient V.G. would have been included on the recipient list
and reviewed. The record shows that in December 1987, when V.G. was
determined Medicaid eligible, the State office responsible for
processing V.G.'s Medicaid information was beset by general staff
vacancies, seasonal staff shortages, abbreviated work schedules, and
heavy workloads. As a result, the process of entering Medicaid data
into the recipient lists, which Wisconsin indicated in the conference
normally took 10 days, took approximately three and one-half weeks.
Nevertheless, during this period 12 new patient names (aside from
V.G.'s) were manually added to the Medicaid recipient list prior to the
review. The Program Assistant who had added the other recipients stated
that she had mistakenly failed to also add recipient V.G. Consequently,
this recipient was not included in the review.
We find that the State demonstrated here that the reason it failed to
conduct a timely review at Golden Age was attributable to a singular
occurrence rather than a systemic flaw in its recipient identification
procedures. The failure to review patient V.G was due to an error by a
Program Assistant in manually updating the recipient list relied on by
the State review team. The evidence supports a finding that this was a
one time error and nothing in the record indicates that the State's
administration of its system in general or poor record keeping was to
blame for the error. Rather, the failure to review V.G. was solely
attributable to a specific human error and does not evidence a systemic
flaw in Wisconsin's process. This is a one-time error similar to the
key punch error present in Utah, supra. As we noted in Utah, if such a
one-time error cannot be deemed a technical failing, it is difficult to
fathom what circumstances would meet that exception.
Patient V.G. was ultimately reviewed in August 1988, after HCFA made the
State aware of his omission from the review originally due in the first
quarter of 1988. As we noted in Delaware, supra, a state may not be
precluded from attempting to apply an exception by the fact that it was
not aware of the missed review at the time it made its quarterly
showing. The State had reviewed 98% of all facilities requiring review,
including all facilities with 200 or more Medicaid beds, by the close of
the quarter. Therefore, the technical failings exception is available
to the State since it met the 98%/200 bed standard, contrary to HCFA's
assertion that the exception cannot apply because Wisconsin did not
actually review this recipient within 30 days of the close of the
quarter. As we found above, the exception applies to excuse this
untimely review.
In view of our conclusion that the technical failings exception applies,
we do not need to consider Wisconsin's assertion that the review of V.G.
as part of the State's licensure and survey process was satisfactory for
annual review purposes. Additionally, we do not address the State's
claim that this deficient review could also be excused under the "good
faith and due diligence exception" except to note that, as HCFA has
correctly pointed out, the same set of circumstances cannot support both
the technical failings and the "good faith and due diligence"
exceptions.
Conclusion
Based on the foregoing analysis, we reverse the entire disallowance of
$55,183.48.
Donald F. Garrett
Norval D. (John) Settle
Cecilia Sparks Ford Presiding Board