Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Florida Department of Health and Rehabilitation Services
DATE: February 3, 1992
Docket No. 91-38
Decision No. 1299
DECISION
The Florida Department of Health and Rehabilitation Services
(Florida)
appealed the disallowance by the Health Care Financing
Administration
(HCFA) of $3,856,233 in federal funding claimed under title
XIX
(Medicaid) of the Social Security Act (Act). HCFA conducted a
financial
management review of provider agreements between Florida and
long-term
care facilities certified to participate in the Medicaid
program. See
HCFA Review, State Exhibit (Ex.) 3. The period
covered by the HCFA
Review was federal fiscal years 1987 through 1989.
The Review concluded
that Florida made funding claims based on invalid
provider agreements
with 13 intermediate care facilities for the mentally
retarded
(ICF/MRs). HCFA asserted that the provider agreements were
invalid
because of deficiencies in the underlying certifications of
compliance
prepared by the State's survey agency.
On appeal, Florida argued generally that the disallowance should
be
reversed because State surveyors had been confused about a recent
change
in HCFA policy, and that this confusion caused them to make mistakes
on
survey documentation related to the facilities in question.
Florida
also made specific challenges to the findings for seven of
the
facilities.
We conclude that Florida did not show how its alleged misunderstanding
of
HCFA policy would provide a basis for reversing the entire
disallowance
here. Nevertheless, in reviewing Florida's specific
challenges
concerning seven facilities, we find that the certification
documentation
relating to two of the facilities supports the State's
position that those
two facilities had been properly certified. We also
find that Florida
should be given an .additional opportunity to submit
documentation concerning
a third facility, although we uphold the
disallowance for that facility based
on the present record.
Accordingly, we reverse this disallowance with respect
to two facilities
equalling $933,936.75 and uphold the remainder (subject to
reduction if
Florida's documentation for the third facility is
acceptable).
Background
In order to participate in the Medicaid program and receive
Medicaid
reimbursement, an ICF/MR must adhere to specific conditions
of
participation. 42 C.F.R. 483.400 et seq. A state Medicaid
agency may
not execute a provider agreement with an ICF/MR unless the
facility has
been certified as being in compliance with these
conditions. 42 C.F.R.
442.12(a); 442.101(c) and (d).
Each condition of participation covers an area or system of the
health
care facility that is critical to the proper delivery of
services. Most
conditions have several component requirements,
denominated "standards,"
and often these standards are composed of various
"elements." A
facility is out of compliance with a condition of
participation where
the deficiencies jeopardize the patient's health or
safety or seriously
limit the facility's capacity to give adequate
care. 42 C.F.R.
442.105(a).
Where a provider has deficiencies at the standard level, the provider
may
be certified if the provider submits a plan for correcting the
deficiencies
("plan of correction" or "POC") within a reasonable time.
The facility may be
certified for a period that ends no later than 60
days after the last day
specified in the POC or it may be certified for
up to 12 months but with a
condition that certification will be
automatically canceled on a date no
later than 60 days after the last
day specified in the POC unless the survey
agency has found the
deficiencies have been corrected or that there has been
substantial
progress in correcting the deficiencies. 42 C.F.R.
442.110(b).
A state may enter into a provider agreement only with a facility that
is
currently certified. 42 C.F.R. 442.12(a). When determining
whether to
enter into an agreement with a facility, the state Medicaid agency
is
responsible for reviewing certifications to ensure that the state
survey
agency has adhered to procedural requirements. See State
Medicaid
Manual, section 2084.3.A, HCFA Ex. 7. Whenever the survey
agency has
.failed to follow proper methods and procedures in certifying
the
facility, the provider agreement is not valid evidence of
compliance
with the conditions of participation. 42 C.F.R.
442.30(a)-(c).
Review Findings
The disallowance at issue was based on four separate findings in
the
Review, relating to certification requirements for the 13
ICF/MRs.
These findings state:
FINDING 1: The survey agency certified facilities
with
conditions of participation out of compliance and allowed
a
lapse in certification for one facility. The Medicaid
agency
made payments to these facilities under invalid
provider
agreements.
FINDING 2: The survey agency performed revisit
surveys after the
automatic cancellation period to
determine correction of standard
level
deficiencies. The Medicaid agency continued to make
payments
to facilities whose provider agreements
expired on their automatic
cancellation dates.
FINDING 3: The survey agency performed a revisit survey of
one
facility after the time period for certifiability had
expired.
The Medicaid agency continued to make payments to this
facility
whose provider agreement was invalid due to its lack
of
certifiability.
FINDING 4: The survey agency failed to follow up on
all
standard level deficiencies cited during
recertification
surveys. The Medicaid agency made payments to
these facilities
after the period of prior certification expired.
Analysis
A. Primary Argument
Florida's primary argument on appeal was that the disallowance should
be
reversed because State surveyors were confused by HCFA's
Interpretive
Guidelines, which became effective October 1, 1988 (Florida Ex.
6).
Florida asserted that because of their confusion, State surveyors
made
mistakes in identifying deficiencies on survey documentation, and
that
the documentation consequently did not reflect what the
surveyors
actually intended. Florida Appeal Brief (Br.), pp. 9-10; cf.
.Florida
Reply Br., p. 3. Florida concluded that its confusion over
HCFA's
policy "should not be the basis for millions of dollars
of
disallowances." Florida Reply Br., p. 3.
We reject Florida's primary argument as a basis for reversing the
entire
disallowance. Although Florida argued generally that
confusion
concerning the Guidelines caused it to make mistakes in
the
certification process, Florida did not establish a causal
relationship
between the alleged confusion and the certification shortcomings
for
each and every facility at issue here. Indeed, Florida did
not
specifically challenge HCFA's findings regarding six of the
facilities
cited in the disallowance, and we must uphold the
disallowance
concerning those facilities without further discussion. 1/
Moreover, in
the seven instances where Florida did specifically challenge
HCFA's
findings, Florida did not allege confusion as the basis for
its
challenge in some instances. Thus, we find that Florida's
primary
argument cannot be a basis for reversing the entire
disallowance.
Nevertheless, to the extent that Florida did rely on confusion
by the
survey agency as a factor in its specific challenges, we do address
that
argument in the context of those particular challenges in the
next
section below. 2/ We also address in the section below
Florida's
requests in its briefs to "proffer" further evidence concerning,
among
other things, surveyor intent.
B. Specific Objections.
Florida raised specific challenges to HCFA's findings regarding seven
of
the 13 facilities involved in this disallowance. (In the case of
five
of the seven facilities, Florida chose not to reply in its Reply
Brief
to positions taken by HCFA in its Response although Florida did
not
withdraw its challenges for those facilities.) We discuss the
State's
specific arguments .from its Appeal Brief and from its Reply Brief
where
applicable and uphold HCFA's findings for five of the seven
facilities,
reversing its findings concerning Key Pine Village and Landmark
IV.
Our discussion of each of the seven challenged facilities follows.
Key Pine Village (cited in Finding 1 for a disallowance
totalling
$40,703.78)
HCFA determined that (1) a valid provider agreement had expired on
March
31, 1989, (2) a recertification survey conducted on February 16,
1989
showed that a condition of participation was out of compliance, and
(3)
the condition was found by the survey agency to be corrected on
April
21, 1989. HCFA alleged that the recertification survey had cited
a
condition out of compliance when the surveyor referred to a set of
menu
deficiencies by the prefix tag of "W459c," which under the
Guidelines
referred to the entire dietetic services condition. HCFA's
disallowance
for this facility extended from April 1, 1989 through April 21,
1989.
Florida alleged that the surveyor had meant to identify a standard
level
deficiency, and that the disallowance should be reversed because
the
facility would have been certifiable and the provider agreement
valid
for the 21- day period of the disallowance if the deficiency had
only
been a standard level deficiency.
We find that the documentation supports Florida's position that
the
surveyor here was citing a standard level deficiency in
the
recertification survey, not a condition level. First and foremost,
the
summary statement of the deficiency in the recertification survey
states
that the deficiency was standard level. The surveyor wrote in
the
summary:
STANDARD MENUS NOT MET. Refer to W-478, W-479,
and W-481 Ref:
483.480
This statement specifically indicates that the menu standard was not
met
and refers to three aspects of the menu standard represented by
W-478,
W-479, and W-481. Subsequent references to these prefix tags
discuss
the specific menu deficiencies noted by the surveyor. Thus,
the
surveyor here specifically indicated a standard level deficiency
and
cited only deficiencies related to the menu standard. The surveyor
did
not cite to deficiencies.under any of the other standards encompassed
by
the dietetic services condition.
Florida reasonably explained that the surveyor may have cited the
prefix
tag W459c, which relates to the entire dietetic services
condition,
because the Guidelines do not provide a prefix tag for the menu
standard
as such and the surveyor merely decided to cite the next
more
comprehensive prefix tag, which happened to be the tag for the
condition
of dietetic services.
Thus, we conclude that based on all of the information provided in
the
recertification survey, not merely the prefix tag alone, the
deficiency
identified for this facility was a standard level
deficiency. This
facility therefore was certifiable so long as it had
an acceptable plan
of correction (POC), and HCFA did not find that there was
no acceptable
POC here. Accordingly, we reverse the disallowance for
Key Pine
Village. This facility would have been certifiable during the
period
cited with a standard level deficiency and the provider
agreement
accordingly would have been valid.
Gulf Coast Facility II (cited in Finding 2 for a disallowance
totalling
$429,885.07)
HCFA concluded that the recertification survey established that there
were
numerous standard level deficiencies for this facility and that the
provider
agreement for the facility consequently expired on May 1, 1989,
following the
first 60 days of the provider agreement period (the period
of certifiability
the State could have established with an automatic
cancellation date).
HCFA further concluded that, until September 29,
1989, the survey agency had
not performed a revisit survey establishing
that all previously cited
standard level deficiencies had been
rectified.
Florida argued that many of the deficiencies cited in the
recertification
survey were not intended to be cited as standard level
deficiencies and that
all deficiencies that were intended to be standard
level were corrected prior
to May 1, 1989.
Florida failed to present any survey documentation relating to
this
facility in support of its position, including the
original
recertification survey which identified and described the
deficiencies
for this facility in the first place. HCFA submitted with
its response
brief a post-certification revisit report, which was a followup
to the
survey completed on January 6, .1989. This report indicated that
eight
deficiencies had not been corrected until September 29, 1989.
The
prefix tags relate to potentially significant standard
level
deficiencies under the Interpretive Guidelines, including for
example,
the standard relating to facility efforts to ensure that clients are
not
subjected to physical, verbal, sexual or psychological abuse
or
punishment. In view of this revisit report, which the State failed
to
address altogether in its Reply Brief, we conclude that this
facility
had not corrected standard level deficiencies until September 29,
1989.
There is simply no basis in the record to conclude that the
deficiencies
identified in the report were anything less than standard level.
3/
Further, as we discuss below with respect to two facilities where
the
State had presented pertinent survey documentation and made
identical
allegations concerning surveyor intent, the mere failure of the
surveyor
to identify a deficiency specifically as "standard" level during
the
recertification survey is an insufficient basis to assume that
the
surveyor intended them to be "element" level deficiencies.
This
conclusion is based in part on pertinent Guideline provisions
and
instructions on the relevant HCFA survey forms.
Mahan Cluster (cited in Finding 2 for a disallowance of $83,788.45)
HCFA concluded that the provider agreement for this facility had
expired
on the automatic cancellation date of February 28, 1990. HCFA
found
that the survey agency had not performed a revisit survey
establishing
that all previously cited standard level deficiencies during
the
recertification survey of September 7, 1989 had been rectified
before
April 13, 1990 (the date used by HCFA for resuming federal
funding).
Florida argued that its Certification and Transmittal Form (Florida
Ex.
8) clearly states that "all" deficiencies (meaning
standard-level
deficiencies) were found to be in compliance during the
surveyor's
revisit of November 27, 1989, although the State conceded that the
form
refers to a lower number of .standard level deficiencies than
had
originally been cited by the survey. Florida Br., p. 14.
Furthermore,
Florida in its Appeal Brief indicated the willingness to
"proffer" proof
of the surveyor's error and his intent to clear all
deficiencies.
HCFA submitted with its Response Brief copies of three letters it
mailed
to Florida requesting followup on deficiency W339, a deficiency
the
letters indicate was cited during the recertification survey for
Mahan
Cluster on September 7, 1989. See HCFA Exs. 4-6. Further,
HCFA
submitted a copy of a "Post-Certification Revisit Report," which
was
completed on June 27, 1990 and which was a followup to a
survey
completed on April 11-13, 1990. That report indicates that
standard
"W339" was corrected on April 13, 1990, the day the revisit survey
was
completed. HCFA Ex. 2.
We conclude that the documentation presented by HCFA, while
not
conclusive, raises reasonable doubt concerning whether this facility
was
in compliance with all standards cited by the recertification
survey
during the period of the disallowance and that Florida has not as
yet
presented the requisite evidence to demonstrate that all
cited
deficiencies had been corrected. Although the Certification
and
Transmittal Form does indicate that all deficiencies were corrected
by
November 27, 1989, the date of the first revisit survey, the State
did
not submit a copy of either the original recertification survey
report
of September 7, 1989 or the Post-Certification Revisit Report
relating
to the November 27, 1989 revisit. Thus, we are unable to
review the
status of any particular alleged deficiency on either of these
forms.
Florida moreover conceded that the Certification and Transmittal
Form
refers to a lower number of deficiencies than had originally been
cited
in the recertification survey. Thus, we find that there is
sufficient
basis to uphold the disallowance on the current record since
Florida has
not demonstrated that all previously cited deficiencies were in
fact
found to be in compliance during the November 27, 1989 revisit.
On the other hand, the documentation presented by HCFA does
not
conclusively demonstrate the status of any of the deficiencies
(much
less alleged deficiency W339) for the original survey or the
revisit,
and the Certification and Transmittal Form submitted by
Florida
indicates that "all" deficiencies had been corrected. The
revisit
report submitted by HCFA indicates that it is a followup to a
survey
performed on April 11-13, 1990, not the survey performed on September
7,
1989. In view of .Florida's request to proffer evidence on
this
facility, we find that Florida should be given one further
opportunity
to present the underlying documentation prepared by the
surveyor
concerning the original survey and the revisit that would
indicate
definitively whether all of the deficiencies cited in the
original
survey had in fact been corrected by the November 27, 1989
revisit.
Since this evidence should be conclusive one way or the other on
the
single deficiency cited by HCFA, it is unlikely that further review
by
this Board would be necessary.
Accordingly, although we uphold the disallowance for Mahan Cluster, we
are
providing Florida with a limited opportunity to present additional
evidence
for HCFA's review, within a reasonable time frame set by HCFA.
Skipper Road Cluster (cited in Finding 2 for a disallowance
of
$43,226.62)
HCFA concluded that Florida had not established that all standard
level
deficiencies had been corrected before the survey agency's revisit
of
March 24, 1988, which is the date HCFA used as the end of
the
disallowance period. Florida argued that on March 22, 1988,
HCFA
performed its own survey and found that all standard level
deficiencies
had been corrected and that the period of the
disallowance,
consequently, should be reduced by two days. We find,
however, that
HCFA records reflect that the federal monitoring survey of
March 22,
1988 found two standards out of compliance. See HCFA Ex.
3.
Consequently, the first survey to find all standards in compliance
is
the State survey agency's revisit of March 24th, which is the date
HCFA
used to end the disallowance period for this facility.
Accordingly, we uphold the disallowance for Skipper Road Cluster.
Laurel Hill Cluster (cited in Finding 3 for a disallowance
of
$71,228.27)
HCFA here concluded that (1) the survey agency identified standard
level
deficiencies without setting an automatic cancellation date for
Laurel
Hill's certification period, which ran from May 1, 1989 through
April
30, 1990; (2) the facility could have been properly certified as late
as
June 30, 1989 (60 days into the certification period); and (3)
because
the survey agency fulfilled the intent of the survey process
by
revisiting the facility on August 11, 1989, and verifying that
all
standard level.deficiencies were corrected, Florida was entitled
to
funding for the period following the revisit. Consequently,
HCFA
concluded that the disallowance period for Laurel Hill Cluster
should
begin on July 1, 1989, and end on August 11, 1989, when the
survey
agency determined that all standard level deficiencies were
corrected.
See Review (Florida Ex. 3), p. 8.
Florida argued that the surveyors had not specifically identified any
of
the facility's deficiencies during the recertification survey
as
standard level deficiencies and that HCFA in any event could have
given
the facility the benefit of a 60-day extension in its provider
agreement
and thereby could have avoided a disallowance for this
facility
altogether.
We find that HCFA was reasonable in concluding that the
survey
documentation for this facility demonstrates that this facility had
a
number of standard level deficiencies at the time of the survey.
See
HCFA Form 2567 (Florida Ex. 9). While the survey agency may not
have
specifically labelled each deficiency as standard level
deficiencies,
the survey agency identified by prefix tag number from the
Interpretive
Guidelines numerous standard level deficiencies, many of which
were
major subheadings under clearly marked standard headings.
The
accompanying summary statement described deficiencies that covered
the
full scope of the deficiency heading and description. Moreover,
each
deficiency was accompanied by standard level regulatory citations
and
the provider's proposals for correcting the deficiency under a plan
of
correction, along with a completion date. The State moreover pointed
to
nothing in the Interpretive Guidelines that would support its
position
that the surveyors were identifying element level deficiencies on
the
documentation it submitted.
We also agree that the State should not be able to claim the benefit of
a
60-day extension that was not in fact granted by State officials under
the
regulations. Although 42 C.F.R. 442.16 provides for an extension by
the
Medicaid agency of up to two months beyond the original expiration
date
specified in the agreement, that extension would only apply where
it receives
written notice from the survey agency, prior to the
expiration of the
agreement, that extension will not jeopardize the
patients' health and safety
and either is needed to prevent irreparable
harm or hardship or is needed
because it is impractical for the survey
agency to determine whether the
facility meets the certification
requirements. .Florida here presented
no evidence that it had granted
such an extension, and HCFA clearly is not
compelled to treat this
facility as though an extension had been
granted. See Louisiana Dept.
of Health and Hospitals, DAB No. 1116
(1989), pp. 14-16.
Accordingly, we uphold the disallowance for Laurel Hill Cluster.
Lakeview Court (cited in Finding 4 for a disallowance of $1,008,325.70)
HCFA found that the survey agency identified standard level
deficiencies
during its survey but proceeded to certify Lakeview Court for a
12-month
period without setting an automatic cancellation date and without
ever
verifying through a revisit survey prior to the next
annual
recertification survey that all standard level deficiencies had
been
corrected by the facility. HCFA found that the period of
disallowance
for this facility began on the day the valid provider agreement
had
expired and ended on the date of the next annual recertification
survey,
which did not cite any repeat deficiencies from the previous
year's
survey.
Florida argued for this facility, as it did for Laurel Hill Cluster,
that
none of the deficiencies cited were specifically characterized as
standard
level by the surveyors and that the surveyors had intended to
view the
deficiencies as element level deficiencies.
We find that HCFA reasonably concluded that the surveyors
identified
several standard level deficiencies on the recertification survey
report
for the reasons discussed at length with respect to Laurel Hill
Cluster.
Moreover, although Florida indicated that it could "proffer"
evidence of
surveyor intent concerning this facility in its Appeal Brief,
HCFA
questioned what form this evidence might take in its Response.
Florida
then failed to discuss this facility further in its Reply Brief and
did
not submit any evidence that would contravene what the documentation
on
its face indicates.
Accordingly, we uphold the disallowance for Lakeview Court.
Landmark IV (cited in Finding 4 for a disallowance of $893,232.97)
HCFA found that the survey agency identified standard level
deficiencies
during its survey but proceeded to .certify Landmark IV for a
12-month
period even though it failed to verify during its revisit survey
that
all of the deficiencies had been corrected by the facility. HCFA
argued
that three standards identified by prefix tags W469, W472 and W489
were
not referenced as having been corrected on the
post-certification
revisit report.
Florida argued that the three standards in question were cleared as
a
result of the clearing of other standards relating to the same
issue
during the revisit survey. These other standards had
been
cross-referenced with the three standards in question on the
original
survey's statement of deficiencies for Landmark IV.
We agree with Florida that the survey documentation in the
record
reasonably indicates that the standards in question were cleared
when
three other cross-referenced standards were cleared. The
original
survey's statement of deficiencies referred to two
cross-referenced
standards (or prefix tags) for each of three standard
deficiencies
described or summarized. It appears from the xerox copies
in the record
that each pair of prefix tags contained one tag that was
printed more
darkly. The State here consistently cleared the darker
prefix tag and
left the lighter prefix tag unreferenced in the revisit
report.
In each instance it appears that Florida was attempting to clear both
of
the referenced standards (or prefix tags) when it cleared the
darker
standard. In two of the three instances, the extra standard was
a more
general introductory or preliminary requirement that was not the
primary
focus of the State's concern as evidenced by the State's description
or
summary of the deficiency. In the third instance, the extra
standard
was a closely related and parallel deficiency that was
specifically
included in the State's description of the deficiency on the
original
survey statement. When the State cleared the related prefix
tag on the
revisit report it cited the program regulation for both of the
closely
related deficiencies.
Thus, we conclude that under a reasonable interpretation of
the
post-certification revisit report and the original
recertification
survey report, the State here was indicating the clearance of
each of
the three paired deficiencies in its revisit report. The
following
additional factors also support this conclusion:
o HCFA's Review indicates on page 12 that
HCFA's Division of
Health Standards and Qualify found the State's argument to
be
"reasonable," although the.Division still questioned the sufficiency
of
the documentation.
o The State's Certification and
Transmittal Form 1539 indicated
that the revisit surveys had cleared all of
the previously cited
deficiencies, suggesting that the surveyor had concluded
that no
standard level deficiencies remained.
o Although the revisit report expressly
cited only one of two
cross-referenced prefix tags, the report expressly
cited as being
cleared either the regulatory requirements for both
deficiencies or for
the more specific deficiency of the pair.
o In every instance the revisit report
cleared the full regulatory
requirement cited in the original survey for each
pair of
cross-referenced deficiencies.
o The purpose of this disallowance is to
identify facilities that
are truly out of compliance with program
requirements, not to penalize
the State for what are reasonably explainable
ambiguities in its survey
documentation.
Accordingly, we reverse the disallowance with respect to Landmark IV.
Conclusion
On the basis of the foregoing, we reverse this disallowance with
respect
to two facilities equalling $933,936.75 and uphold the
remainder
(subject to reduction if Florida's documentation for a third
facility is
acceptable).
Judith A. Ballard
Cecilia Sparks Ford
Donald F. Garrett Presiding Board Member
1. Those facilities are identified on page 11 of HCFA's response
brief.
The total amount disallowed for those facilities equals
$1,285,842.10.
2. In any event, as HCFA noted, HCFA here reviewed 165 facilities
out
of approximately 500 and found certification problems in only 13
of
them. The problems identified did not indicate widespread
confusion
among the surveyors, nor did they indicate any pattern of
confusion.
3. Although Florida proffered in its Reply Brief testimony of
an
official of the Office of Licensure and Certification, Department
of
Health and Rehabilitative Services, Florida did not allege, and it
would
not appear from the post-certification revisit report submitted by
HCFA,
that this individual had even performed the relevant survey and
revisits
for this