Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Massachusetts Department
DATE: June 29, 1990
of Public Welfare Docket No. 90-18
Decision No. 1174
DECISION
The Massachusetts Department of Public Welfare (DPW, State) appealed a
determination by the Health Care Financing Administration (HCFA)
disallowing $101,427.02 in federal funds claimed under Title XIX of the
Social Security Act (Act) for the quarter ending September 30, 1989.
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 for long-stay services for a quarter unless a state shows
that 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 determined that the State failed to make a satisfactory showing for
the quarter in question since it had not conducted an annual review for
one intermediate care facility for the mentally retarded -- Fall River
ICF/MR. The State asserted that its quarterly showing was satisfactory
since its failure to conduct a timely annual review for this facility
resulted from a one-time, inadvertent transcription error and was thus
excusable under the technical failings exception at section 1903(g)(4)
of the Act.
As explained further below, we uphold the disallowance based on our
conclusion that the State's quarterly showing was unsatisfactory since
DPW did not present acceptable reasons for its failure to conduct the
required annual review. We find that the State's method for identifying
facilities due for review was subject to just this type of error, since
there was no provision for double-checking the accuracy of the facility
list. Moreover, the State's quarterly showing was deficient on its face
since the entry for this facility did not include a current annual
review date and the State did not, in accordance with HCFA's
requirements, list this facility as unreviewed and state reasons for
asserting that the statutory exception applied.
Applicable Authority
Section 1903(g)(1) of the Act establishes the requirement that a state
make a quarterly showing that it has an effective program of annual
medical review including on-site inspections of the care of each
Medicaid recipient in a long-term care facility. The annual review
requirements applicable to intermediate care facilities (including
ICFs/MR) are in section 1902(a)(31)(B) of the Act. Section
1903(g)(4)(B) provides two exceptions under which a state's quarterly
showing is found satisfactory, even though the state did not conduct all
the required reviews by the close of the quarter. Specifically, a
showing is 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. [Emphasis
added.]
The statutory exceptions are implemented by the regulation at 42 C.F.R.
456.653 titled, "Acceptable reasons for not meeting requirements for
annual on-site review." This regulation states in part:
The Administrator will find an agency's showing satisfactory, even
if it failed to meet the annual review requirements . . . if --
(a) The agency demonstrates that --
(1) It completed reviews by the end of the quarter in at
least 98 percent of all facilities requiring review by the end of
the quarter;
(2) It completed reviews by the end of the quarter in all
facilities with 200 or more certified Medicaid beds requiring
review by the end of the quarter; and
(3) With respect to all unreviewed facilities, the agency
exercised good faith and due diligence by attempting to review
those facilities and would have succeeded but for events beyond its
control which it could not have reasonably anticipated; or
(b) The agency demonstrates that it failed to meet the standard in
paragraph (a)(1) and (2) of this section by the close of the
quarter for technical reasons, but met the standard within 30 days
after the close of the quarter. Technical reasons are
circumstances within the agency's control.
The requirements for the content of a state's showing and procedures for
submitting the showing are set out at 42 C.F.R. 456.654. In pertinent
part that regulation provides that --
(a) An agency's showing for a quarter must --
(1) Include a certification by the agency that the
requirements of section 456.652(a)((1) through (4) were met during
the quarter for each level of care or, if applicable, a
certification of the reasons the annual on-site review requirements
of [section] 456.652(a)(4) were not met in any facilities . . . .
Additionally, HCFA issued to states participating in the Medicaid
program an action transmittal (HCFA Action Transmittal 79-61, July 2,
1979) addressing quarterly showing requirements. States are to include
in the quarterly showing a full explanation of the circumstances for any
missed facility review and support any assertion that a showing should
nonetheless be found satisfactory based on the exception clause of
section 1903(g)(4)(B). See HCFA Action Transmittal 79-61, at paragraphs
V and VI.
Background
The State's quarterly showing for the quarter ending September 30, 1989
was submitted to HCFA on October 26, 1989. Fall River ICF/MR is listed
on page 4 of 17 of the "Facility Listing For ICF/MR." There is no
entry
in the column headed "Reviews Completed In Prior 12 Months." The entry
in the column headed "Certification Status Change" reads "07/25/88
(beginning provider agreement)." State Exhibit (Ex.) E.
The State explained that it maintained a master facility list (a
duplicate of the prior quarterly showing) and noted on that master list
any changes concerning (1) providers which entered or left the program,
(2) levels of care, or (3) facility names. The State further explained
that "[A] Department [DPW] employee examines the master list, containing
information on more than 600 facilities, to identify those facilities
requiring . . . review in the upcoming calendar quarter." State's
Affidavit of M.T., p. 3. DPW then prepares a list of facilities for
review, which is sent to the Massachusetts Department of Health, which
conducts the annual reviews for DPW. The list of facilities (236) due
for review during the quarter ending September 30, 1989 did not include
Fall River ICF/MR. State Ex. B. The State attributed this to a
one-time, inadvertent transcription error made by the employee who
prepared the list.
The State discovered its failure to conduct a timely review of Fall
River ICF/MR after a HCFA employee contacted the State to inquire about
several facilities on the quarterly showing having untimely review
dates. According to the State, it determined during the week of November
6, 1989 that Fall River ICF/MR had not been reviewed and subsequently
conducted the annual review on November 16, 1989. See State's Affidavit
of M.T.
Analysis
The State asserted that it qualified for the technical failings
exception, one of the two statutory exceptions in section 1903(g)(4)(B).
The State did not assert that it qualified under the good faith and due
diligence exception, so we do not reference it in the analysis below.
I. The technical failings exception does not apply.
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. 1/ 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 September 1989 quarter and
that Fall River ICF/MR, the only facility in issue, had less than 200
Medicaid beds. Since the State satisfied these prerequisites for
application of the technical failings exception, our analysis focuses on
whether Fall River ICF/MR's untimely review may properly be considered a
technical failing.
In previous decisions, the Board has examined the technical failings
exception. See, e.g., Massachusetts Dept. of Public Welfare, DAB No.
1000 (1988); Illinois Dept. of Public Aid, DAB No. 930 (1988); Arkansas
Dept. of Human Services, DAB No. 923 (1987); and Utah Dept. of Health,
DAB No. 843 (1987). The Board noted that there is little guidance on
what constitutes a technical failing. 2/ 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 recordkeeping 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
recordkeeping. This would render the regulation meaningless since a
technical failing is defined as "circumstances within the state's
control." In DAB No. 843, the Board stated that the concepts of poor
administration and bad recordkeeping 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.
Here, the State asserted that it qualified under the technical failings
exception since its failure to conduct a timely facility review was
"caused by a single transcription mistake made by one Department
employee" which the Department quickly discovered and remedied. State's
Brief, pp. 1 and 3. HCFA pointed out that the State discovered that it
had not conducted a timely review only after HCFA had inquired about
five facilities listed on the quarterly showing without current review
dates. HCFA disagreed with the State's characterization that it had
discovered this error "itself." Moreover, HCFA asserted that alleged
transcription errors are not automatically technical failings.
We find that DPW did not demonstrate that the reason it failed to
conduct a timely review at Fall River ICF/MR was attributable to a
singular occurrence unrelated to any flaw in its system of identifying
facilities due for review. Such a finding must necessarily be premised
on a state having a process that under ordinary circumstances would
accurately identify the facilities due for review each quarter.
Instead, DPW relied on one employee to compile a quarterly facility list
from the master list without providing for any back-up or verification
of the accuracy of the resulting information. In light of the State's
explanation of its system, we would conclude that such errors would be
likely events, not unlikely (especially since, as noted above, the State
said that the master list contained over 600 facilities). In contrast
to cases where states showed they had systems for tracking individual
patients, which typically involve double-checking at least with the
facility during the review, DPW presented no evidence that there was a
procedure in place to assure that the facility list was reliable. We
find this significant since the failure to review an entire facility is
a more serious deficiency than omitting a single patient. While this
case is arguably analogous to some cases where we have found the
technical failings exception to apply in that human error was involved,
this error did not occur in the context of a process that in general
could adequately assure accuracy. See Wisconsin Dept. of Health and
Social Services, DAB No. 1062 (1989), and DAB Nos. 930 and 843, supra.
We distinguish this case from DAB Nos. 1000 and 1001 (1988), also
Massachusetts cases, where a regional field supervisor in the State's
Department of Health made a transcription error in preparing the actual
review schedule from an accurate list of facilities due for review. In
that case, DPW had no knowledge when it submitted its quarterly showing
that one facility review had been performed ten days after the close of
the quarter, since the review date it received was back-dated to reflect
the proper quarter. We found in DAB Nos. 1000 and 1001 that the error
was singular and not systemic in that the error was promptly discovered
and a review conducted.
We also distinguish this case from North Carolina Dept. of Human
Resources, DAB No. 1085 (1989), where we found that the failure to
conduct a timely quarterly review of one facility was attributable to an
isolated breakdown in the system of identifying facilities due for
annual review. There, the facility was identified as due for review,
but the state failed actually to conduct the review due to an error made
in the monthly spread sheet system used to schedule and reschedule the
reviews during the quarter. At the time the error occurred North
Carolina was attempting to implement a new, and subsequently abandoned,
protocol to coordinate a number of different review requirements. Also,
HCFA had set mandatory in-service training for state surveyors after the
review schedule for the month in question was made, which necessitated
the rescheduling of some facility reviews. In that case, HCFA agreed
that such circumstances were not likely to recur.
In sum, the State did not present acceptable reasons to qualify under
the technical failings exception to the quarterly showing requirement.
II. The quarterly showing was deficient on its face.
HCFA argued that only after it inquired about the facilities without
timely review dates did the State discover that this facility had not
been reviewed. HCFA further argued that only in response to the
disallowance itself did the State explain its failure to conduct the
required review.
We find that the quarterly showing was deficient on its face because the
entry for Fall River ICF/MR did not evidence that a timely annual review
had been performed. Simply reading the showing before its submission
would have revealed a possible problem with the facility. While the
State characterized HCFA's inquiry about timely review dates as "a
regular and accepted part" of the quarterly process, a state certainly
cannot rely on inquiries from HCFA to assure that a quarterly showing
contains accurate information.
We have stated that where a state knows at the time of submission of the
quarterly report that a review has not been performed, the statute and
regulations require, at a minimum, that the quarterly showing must
include identification of any facilities not reviewed as well as the
reasons for any missed reviews. Massachusetts Dept. of Public Welfare
and Commission for the Blind (companion cases), DAB Nos. 1000 and 1001
(1988), citing DAB No. 930, supra, and Ohio Dept. of Human Services,
DAB No. 824 (1987).
We have also distinguished those cases from the situation where a state
was unaware of a potential violation until after its quarterly showing
was submitted and, thus, could not have included in its showing the list
of deficiencies and reasons for not meeting the require- ments. See
Delaware Dept. of Health and Social Services, DAB No. 732 (1986). 3/
Here, there is a substantial question whether the technical failings
exception would have been available to the State even had we found that
there were acceptable reasons for the untimely review.
Conclusion
Based on the foregoing analysis, we find that the technical failing
exception does not apply to excuse the untimely review of Fall River
ICF/MR. In addition, we conclude that the State's quarterly showing was
deficient on its face in not identifying this facility as unreviewed
and certifying the reasons the requirements were not met, as required by
42 C.F.R. 456.654. Accordingly, we uphold the disallowance.
_____________________________ Judith A.
Ballard
_____________________________ Norval D. (John)
Settle
_____________________________ Cecilia Sparks
Ford Presiding Board Member
1. Here, HCFA misstated the technical failings exception to require a
state to correct a deficient review within 30 days of the close of the
quarter. HCFA Brief, p. 3. This misstatement is not significant in
this case since we determine that the exception does not apply to excuse
the untimely review.
2. From the legislative history we know only that the "technical
failings" exception would cover the situation where a state had
conducted reviews in most but not all facilities by the close of the
showing quarter, but completed the remaining reviews within "several
weeks." See S. REP. NO. 453, 95th Cong., 1st Sess. 41 (1977).
3. This decision was overturned on other grounds. Delaware Division of
Health and Social Services v. U.S. Dept. of Health and Human Services,
665 F. Supp. 1104 (D.Del.