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CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
IN THE CASE OF  


SUBJECT: Illinois Department of Public Aid

DATE: March 31, 2006
           

 


 

Docket No. A-04-10, A-04-83, A-04-92,
A-04-125, A-04-137,
A-05-9, A-05-38,
A-05-105,
A-05-115, A-06-15, and A-06-47
Decision No. 2021
DECISION
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DECISION

The Illinois Department of Public Aid (Illinois or IDPA) (1) appealed several disallowances of federal reimbursement issued by the Centers for Medicare & Medicaid Services (CMS). The disallowances concern expenditures by schools for "skilled professional medical personnel" (SPMP) that Illinois claimed as administrative costs of its Medicaid program.

Title XIX of the Social Security Act (Act) authorizes federal financial participation (FFP) in Medicaid program expenditures. For most administrative costs, the FFP rate is 50 percent. For costs of administrative activities performed by SPMP, however, the Act authorizes FFP at an enhanced rate of 75 percent if the Secretary of Health and Human Services determines that those expenditures are "necessary for the proper and efficient administration" of the Medicaid state plan. Medicaid regulations set out requirements for SPMP claims. In 1997, CMS issued guidance for claims for services and administrative activities performed by local education agencies under interagency agreements with a state Medicaid agency, indicating that FFP at the enhanced rate was available for school-based SPMP if the regulatory criteria were met. In November 2002, CMS stated in a State Medicaid Directors Letter that effective January 1, 2003, CMS would no longer allow FFP at the enhanced rate for administrative activities performed by school-based SPMP. Based on that letter, CMS disallowed FFP at the enhanced rate for [Page 2] expenditures on school-based SPMP Illinois claimed for quarters between January 1, 2003 and September 30, 2005. The disallowances represent the difference between the amount of FFP Illinois claimed for school-based SPMP at the 75 percent rate, and the amount of FFP that was payable at the 50 percent rate.

The claims at issue were based on time studies in which SPMP used "activity codes" to quantify the time they spent performing different activities. Illinois contends that CMS's categorical denial of 75 percent FFP for school-based SPMP costs is based on unsupported factual assertions and violates the Act and the regulations. Illinois also contends that, since CMS previously allowed costs of SPMP meeting the regulatory criteria in a school-based setting, CMS's change in policy should have been issued in accordance with the notice-and-comment rulemaking procedures of the federal Administrative Procedure Act (APA). Finally, Illinois contends that its claims should be allowed at the 75 percent rate because they are based on the use of claiming procedures and activity codes that are designed to ensure compliance with the SPMP criteria in the regulations.

CMS responds that it is merely applying an interpretative rule and that the Board may uphold the disallowance on the alternative grounds that the activity codes used by Illinois were overbroad and the claims excessive.

While we do not rely on the policy in the State Medicaid Directors Letter, we nonetheless uphold the disallowances based on some of the alternative reasons CMS gave. Contrary to what Illinois argues, the issues here include not only whether the code descriptions and procedures Illinois used were designed to capture only costs that meet the SPMP criteria, but also whether Illinois met its burden to show that its claims in fact qualify for the 75 percent rate. We find that Illinois did not meet that burden. The activity codes were not part of an approved cost allocation methodology and do not, on their face, adequately assure that all of the costs claimed satisfy the SPMP requirements. In particular, one SPMP activity code - code C2 -- includes activities that we have found (in a related appeal) are not, as Illinois contends, allowable Medicaid outreach costs or otherwise necessary for the proper and efficient administration of the Medicaid program. The other two activity codes at issue -- E2 and F2 - encompass case management activities beyond those that have been traditionally recognized as SPMP functions. CMS raises some legitimate concerns about whether the claims include costs that fail to meet the SPMP criteria. CMS also provided aggregate claims data indicating that the claims are excessive. While Illinois showed that the claims are not as excessive as CMS [Page 3] had alleged, Illinois produced no evidence that any costs claimed under its SPMP activity codes in fact met the SPMP criteria, even though the SPMP were required to document what they were doing and how they were using their medical skills for each increment of time allocated to the codes at issue.

Accordingly, we affirm the disallowances in full.

Background

Federal reimbursement of state Medicaid expenditures

Title XIX of the Act provides for grants to states to provide health care to low-income persons and families. (2) Each state operates its own Medicaid program in accordance with broad federal requirements and the terms of its Medicaid state plan.

The Act authorizes FFP for a designated percentage, known as the Federal Medical Assistance Percentage (FMAP), of the "total amount expended [by a State] as medical assistance under the State plan." Section 1903(a)(1) of the Act. "Medical assistance" refers to a state's expenditures for broad categories of medical services -- such as inpatient hospital services, physician services, diagnostic services, and rehabilitative services -- that a state is authorized to provide (and in some cases must provide) under its Medicaid plan to eligible individuals. Section 1905 of the Act.

The Act also authorizes FFP for a state's administrative expenditures. In general, FFP is available at a 50 percent rate for amounts "found necessary by the Secretary for the proper and efficient administration of the State plan." Section 1903(a)(7) of the Act; see also 42 C.F.R. § 433.15(a)(7).

The Act authorizes an enhanced FFP rate for expenditures on SPMP who help administer a state's Medicaid program. In particular, section 1903(a)(2)(A) of the Act states that the federal [Page 2] government "shall pay to each state with a plan approved under this title" --

an amount equal to 75 per centum of . . . the sums expended . . . (as found necessary by the Secretary for the proper and efficient administration of the State plan) as are attributable to compensation or training of skilled professional medical personnel, and staff directly supporting such personnel, of the State agency or any other public agency.

Section 1903(a)(2)(A) (emphasis added). Congress authorized 75 percent FFP --

to encourage State agencies to employ personnel who have the professional medical expertise necessary to develop and administer Medicaid programs that are medically sound as well as administratively efficient. Professional medical knowledge is needed to shape the medical aspects of the program, including the determination of which medical services should be included in a well-balanced medical benefit program, coordination of available medical resources, and establishment of working relationships with the professional medical community.

50 Fed. Reg. 46,652, 46,655 (Nov. 12, 1985).

CMS has issued regulations, codified mostly in 42 C.F.R. Part 432, that specify the criteria used to determine whether expenditures qualify for the 75 percent rate. These regulations, which were most recently amended in 1985, define SPMP to include "physicians, dentists, nurses, and other specialized personnel who have professional education and training in the field of medical care or appropriate medical practice[.]" 42 C.F.R. § 432.2. The regulations further indicate that the enhanced matching rate is available only if: (1) the SPMP expenditures are "for activities that are directly related to the administration of the Medicaid program, and as such do not include expenditures for medical assistance,"; and (2) the SPMP are "in positions that have duties and responsibilities that require" the professional knowledge and skills that enable them to be characterized as SPMP. 42 C.F.R. § 432.50(d)(1)(i), (iii); see also 42 C.F.R. § 433.15(b)(5) (indicating that the enhanced rate is available "if the criteria specified in § 432.50(c) and (d) are met").

[Page 5] The preamble to the 1985 final rule amending section 432.50 explains that the SPMP must qualify as having medical expertise, and that "the function performed by the [SPMP] must be one that requires that level of medical expertise in order to be performed effectively." 50 Fed. Reg. at 46,656 (emphasis added). The preamble lists examples of functions that meet the regulatory criteria. Id.; see also CMS Ex. 6, at 11.

2. School involvement in health care

Like schools in many states, Illinois schools play a significant role in delivering or facilitating the delivery of health care to their students. School involvement in health care is a consequence of (among other things) public health mandates, state participation in federally funded public assistance programs (including Medicaid), and federal requirements relating to the education of disabled children. CMS Ex. 1, at 13-17. To serve the medical and developmental needs of their students, Illinois schools employ various medical professionals, including registered nurses, audiologists, occupational therapists, physical therapists, medical social workers, school psychologists, and speech language pathologists. IDPA Ex. 6, at 13.

For eligible students, some school-based health care is covered by Medicaid's Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) program. The program covers, among other things, periodic health "screening services," which include the taking of a comprehensive health and developmental history, a comprehensive physical and mental health examination, appropriate immunizations, laboratory tests, and health education. Section 1905(r)(1) of the Act. Services covered under the EPSDT program are reimbursed as medical assistance. See section 1903(a)(4)(B) of the Act; 42 C.F.R. §§ 440.2(b), 440.40(b).

Medicaid also covers medical services provided to Medicaid-enrolled children who have been found disabled under the Individuals with Disabilities Education Act (IDEA), 20 U.S.C. § 1400. See CMS Ex. 1, at 16. The IDEA was enacted to ensure that disabled children have access to a "free appropriate public education" and to the developmental, medical, and other supportive services that enable them to acquire and benefit from that education. 20 U.S.C. § 1400(d)(1)(A).

As a condition of receiving federal funds under the IDEA, a state must engage in "child-find" activities. 20 U.S.C. § 1412(a)(3). The child-find requirement calls on a state to locate, identify, and evaluate all children with disabilities who are in need of [Page 6] special education and "related services." Id.; see also 34 C.F.R. § 300.125. (3) Related services include "developmental, corrective, and other supportive" services such as speech language pathology and audiology services, psychological services, and physical and occupational therapy. 20 U.S.C. § 1401(22).

For each child (three years and older) identified as disabled, the school must develop an "individualized education program" (IEP), which spells out the "special education and related services and supplementary aids and services to be provided to the child." (4) 20 U.S.C. § 1414(d). Medicaid pays for the Medicaid-covered services provided under an IEP to a disabled child who is Medicaid-eligible. Section 1903(c) of the Act.

According to Illinois, the disallowances concern activities associated with its "School-Based Health Services" (SBHS) Program." IDPA Br. at 6. Illinois says that, broadly speaking, the goal of the program "is to meet the healthcare needs and improve the healthcare status of all children in school, because the services are not limited just to those children who are Medicaid-eligible or who meet a disability definition." Tr. at 10. An August 7, 2000 IDPA "provider notice" states, however, that the SBHS Program "has enabled schools throughout Illinois to generate needed funds to meet the health care needs of children who are in special education programs." IDPA Ex. 3.

3. Claiming of school-based administrative costs

A state may receive FFP for Medicaid-covered services that a school provides directly to a student enrolled in Medicaid. CMS Ex. 1, at 2; IDPA Ex. 2. In addition, CMS has determined that some school-based activities may be reimbursed as Medicaid administrative costs. CMS Ex. 1, at 33-35; CMS Ex. 7, at 49.

Claims for school-based administrative costs, like the ones in dispute here, are typically based on periodic time studies. CMS Ex. 1, at 19. A time study identifies and measures time spent by a sample of employees on particular activities, and allocates the [Page 7] costs associated with those activities to different programs or FFP rates. Employees in the study record their time using activity codes. Each code typically has a title, a definition indicating when the code should (in general) be used to report an increment of work, and a list of examples of the activities to be reported under the code. See, e.g., IDPA Ex. 6, at 15-17.

To help schools develop appropriate and adequately documented FFP claims, CMS has developed extensive "administrative claiming" guidelines that inform schools about the requirements for Medicaid reimbursement of administrative costs, how to perform a valid time study, and other issues. See, e.g., CMS Ex. 1. In August 1997, CMS issued a publication entitled Medicaid and School Health: A Technical Assistance Guide (1997 Guide). CMS Ex. 7. The 1997 Guide states that activities for which administrative claims are made must "directly relate [to] and support the Medicaid state plan" or services provided under a Medicaid waiver. Id. at 51. In addition, the 1997 Guide states that expenses cannot be claimed as administrative costs if they are an "integral part or extension of a direct medical or remedial service." Id. The 1997 Guide predicted that most schools and school districts would "play a very small part in administrative claiming" because administrative costs are allowable only if directly related to the administration of the Medicaid program, and because the "majority of services provided by schools will most likely be covered under medical service matching funds[.]" Id. at 60.

In June 1999, the Government Accountability Office (GAO) issued a report documenting substantial growth in Medicaid reimbursement for school-based administrative costs during the previous five years. CMS Ex. 2. Suggesting that the increase was due partly to questionable claiming practices, GAO criticized CMS for weak oversight and for failing to provide "clear or consistent guidance to its regional offices regarding criteria for determining reasonable costs or appropriate methods for claiming administrative costs." Id. at 3, 10-11. The report noted that at least two CMS regional offices had disallowed an enhanced matching rate for all school-based SPMP costs, while other regions' claims may have been overstated because no distinction was made between skilled and unskilled activities. Id. at 13.

GAO reiterated its concerns about the growth of Medicaid reimbursement for school-based administrative costs in an April 2000 report entitled "Improper Payments Demand Improvements in [Page 8] HCFA Oversight." (5) CMS Ex. 3. The GAO found, among other things, that school districts in two states -- Illinois and Michigan -- had submitted SPMP claims for which there was inadequate documentation of the need for professional medical skills to perform the activity in question. Id. at 31. The GAO noted that the enhanced matching rate for SPMP "can be a strong incentive for those preparing and submitting claims, as it increases by 50 percent the amount of federal reimbursement that can be received." Id.

In response to the GAO findings, CMS undertook to clarify its guidelines regarding billing and reimbursement for school-based administrative costs. CMS Ex. 9, ¶¶ 2-5. This work resulted in the Medicaid School-Based Administrative Claiming Guide, which CMS issued in final form in May 2003 (2003 Guide). (6) Id., ¶ 3; CMS Ex. 1. Among other things, the 2003 Guide contains a set of model activity codes that identify the types of activities that CMS generally regards as necessary for the proper and efficient administration of a Medicaid state plan. CMS Ex. 1, at 19, 33-35. One type of reimbursable activity is "outreach," which involves informing eligible and potentially eligible persons about Medicaid and how to enroll in or obtain services under the program. Also reimbursable is "administrative case management" -- activities that help a Medicaid patient get access to needed medical care or monitor the delivery of that care. The 2003 Guide refers to administrative case management as "Referral, Coordination, and Monitoring of Medicaid Services." CMS Ex. 1, at 46-47.

The 2003 Guide urges states to adopt procedures that bar them from claiming, as a Medicaid administrative cost, activities that are an "integral part or an extension" of a direct medical [Page 9] service or activities that have been or will be paid for as "medical assistance." CMS Ex. 1, at 21.

4. CMS's SPMP reimbursement policy

In connection with its review of school-based administrative claiming practices, CMS issued State Medicaid Directors Letter (SMDL) #02-018. See CMS Ex. 1, at 1; CMS Ex. 10, at 2 ¶ 4; IDPA Ex. 7. The SMDL informed states that, "effective January 1, 2003, the enhanced Federal matching rate of 75 percent will no longer be available for the activities performed by SPMP school staff." IDPA Ex. 7 (emphasis in original). The SMDL provided the following rationale:

[A]lthough there are employees in schools who have the qualifications needed to be considered an SPMP, CMS has determined that their advanced skills and training are not necessary in order to perform the types of administrative activities that take place in school settings. Administrative activities provided in schools may include outreach, facilitating eligibility determination, program planning and coordination, training, and referral, coordination and monitoring of services. Many school employees conduct such activities, in addition to or instead of SPMPs. Since school employees without the advanced training of an SPMP are able to perform such administrative activities, performance of these activities does not require the use of an SPMP; nor is it not necessary for SPMPs that do perform such activities to utilize their professional training and expertise.

Activities that do require individuals with advanced medical skills and training are likely provided as part of a medical service, and as such are not reimbursable as administrative costs under the Medicaid program.

Id. The transmittal of the final version of the 2003 Guide referred to the policy in the SMDL as a "change in current policy" which was not contained in the draft guidance but was included in the final. CMS Ex. 1, at 1.

5. Case background

For several months prior to issuing SMDL #02-018, CMS was negotiating with Illinois about its claiming practices regarding school-based administrative costs. See IDPA Ex. 3. In July 2002, Illinois submitted to CMS for approval its own [Page 10] administrative claiming guide, entitled Illinois Guide for School Based Health Services Administrative Claiming (Illinois Claiming Guide). IDPA Ex. 6. This document contains the methodology Illinois uses for identifying, measuring, and allocating school-based administrative costs to the Medicaid program.

The Illinois Claiming Guide contains a set of activity codes that time study participants use to report their time spent on various activities. Costs associated with three of these codes are allocated to Medicaid at the 75 percent rate: C2, E2, and F2. IDPA Ex. 6, at 18, 22, 26. Code C2 is an outreach code. Codes E2 and F2 are "case management" codes. Code E2 is to be used "when making referrals for, coordinating, or monitoring the delivery of" Medicaid services for a child who does not have an IEP. Code F2 is for similar activities provided to a child with an IEP or IFSP. SPMP are supposed to use these three codes only when the activity in question qualifies for the enhanced rate. (The full text of all three codes is set out in an appendix to this decision.) Costs charged to codes E2 and F2 are allocated to Medicaid using the ratio of Medicaid eligible children in the schools to all children in the schools.

Apart from defining activity codes, the Illinois Claiming Guide instructs schools about the requirements for seeking FFP at the enhanced rate for SPMP activities. IDPA Ex. 6, at 6. The guide specifies the professional qualifications that school employees must possess in order to be classified as SPMP. Id. at 6-7, 13. The guide also states that SPMP expenditures may be claimed at the enhanced rate only if the activities require the use of medical expertise, relate directly to the administration of the Medicaid program, and do not constitute direct medical services. Id. at 7.

In March 2003, CMS approved the Illinois Claiming Guide with two relevant qualifications. CMS Ex. 8. First, CMS denied approval of codes C1 and C2, finding that the "definitions" associated with these codes "generally overlap the [IDEA] Child Find requirements to identify, locate and evaluate all children with disabilities." Id. at 1. CMS's decision to disallow claims for costs allocated to codes C1 and C2 is the subject of a subject of a separate but related appeal, Board Docket No. A-04-58 (et al.), which we refer to as the "outreach appeal." Our decision in the outreach appeal is being issued concurrently with this one.

The second qualification concerned the FFP rate under the three SPMP codes. CMS informed Illinois that, in accordance with SMDL #02-018, CMS would not pay the 75 percent rate for school-based SPMP after January 1, 2003, stating that the "regular 50 percent [Page 11] matching rate will apply to Medicaid-related activities of SPMPs in schools." CMS Ex. 8, at 2. Despite this condition, Illinois continued to submit claims at the 75 percent rate for school-based administrative activities reported under activity codes C2, E2, and F2.

On October 1, 2003, CMS issued a notice of disallowance informing Illinois that for the quarter ending March 31, 2003, FFP for the school-based SPMP costs would be allowed only at the 50 percent rate. IDPA Ex. 9. The notice of disallowance cited SMDL #02-018 as the basis for CMS's decision. Id.

Illinois appealed this disallowance to the Board. CMS subsequently issued identical disallowances for quarters after March 31, 2003. Illinois separately appealed each additional disallowance, and the resulting appeals were consolidated under Docket No. A-04-10. (7)

On May 11, 2005, the Board held an oral argument that addressed issues in both this appeal and the outreach appeal. A transcript ("Tr.") of that argument is in the records of both appeals.

[Page 12] The parties' contentions

Illinois contends that the disallowances must be reversed because SMDL #02-018 is substantively invalid. Illinois asserts:

CMS's decision to categorically prohibit FFP at the 75 percent rate for school-based SPMP activities is an attempt to read a non-existent limit into the governing statute. Section 1903(a)(2) of Act does not state that 75 percent FFP is available for the costs of SPMP "except for SPMP in schools." Moreover, that section contemplates that 75 percent FFP will be available for SPMP expenditures by public schools because it authorizes FFP for expenditures "of the State agency or any other public agency." IDPA Br. at 11-13 (emphasis in original).

CMS's application of section 1903(a)(2) in this context "violates the well-documented intent of the statute to broadly provide states with enhanced funding for SPMP due to recognition of the value of proper administration by trained medical professionals." IDPA Br. at 12. "SPMP claiming in the school context particularly furthers this intent because school personnel are often children's first and most ongoing contact with medical help. Thus, school-based SPMP are best positioned to develop appropriate programs for medically needy children, coordinate their access to medical resources, supervise the management of their care, and establish working relationships with the professional medical community." Id.

The Secretary effectively determined that the SPMP costs are "necessary" for the "proper and efficient administration" of the Medicaid program, by issuing the SPMP regulations in 42 C.F.R. Part 432. "In light of these criteria, the regulations clearly contemplate a case-by-case determination of whether the higher rate is permissible, not the blanket prohibition of enhanced school-based claiming that CMS has imposed." IDPA Br. at 13.

SMDL #02-018 is based on two conclusions: (1) that "advanced skills and training [of SPMP] are not necessary in order to perform the types of administrative activities that take place in school settings"; and (2) that school-based activities that do require the professional skills or training of SPMP are "likely provided as part of a medical service." The record contains inadequate factual support for either conclusion (or for the other reasons advanced by [Page 13] CMS to justify SMDL #02-018). IDPA Br. at 19-23; IDPA Reply Br. at 9-15.

The finding in SMDL #02-018 that SPMP are likely using their expertise to provide direct medical services is inconsistent with section 1903(a)(2). That provision reflects an understanding by Congress that SPMP use their professional expertise to perform administrative services as well to provide direct medical services. Although SPMP may use their professional skills most often when providing direct medical services, "that fact is no reason to preclude school-based SPMP from claiming the 75 percent federal match rate for the time, however small a portion of their total time, in which they are using their expertise in aid of administrative activities." IDPA Br. at 24.

Illinois also argues that the disallowances are improper because CMS did not follow APA notice-and-comment rulemaking procedures when it issued SMDL #02-018. Illinois asserts that the regulations do not make the availability of 75 percent FFP contingent on the setting in which the activities occur. Having promulgated regulations that indicate when a state is entitled to receive 75 percent FFP, CMS may not, Illinois argues, modify those circumstances or impose additional limits on a state's entitlement without using the notice-and-comment rulemaking procedures that were followed when the SPMP regulations were enacted and subsequently revised. Illinois asserts that SMDL #02-018 adds a new legal requirement or limit by dictating that the 75 percent rate is categorically unavailable when an SPMP activity is performed in a school. IDPA Br. at 24-27; IDPA Reply Br. at 15-19.

Finally, Illinois asserts that its claims for 75 percent FFP are appropriate because its school-based administrative claiming program "is carefully designed to ensure that it complies with all governing regulations, and particularly that it only claims the enhanced federal match rate for activities in which SPMP are using their professional training and skills." IDPA Br. at 13-19; IDPA Reply Br. at 2-9.

CMS responds that SMDL #02-018 is an interpretative rule, issued pursuant to CMS's authority to determine what costs are "necessary" for the "proper and efficient administration" of Medicaid. CMS contends that the policy of denying 75 percent FFP for school-based SPMP is a reasonable response to its regulatory experience, which is that professional medical skills and training are not needed to perform the type of Medicaid administrative activities typically performed in schools. CMS also contends that a bright-line or categorical denial of the enhanced rate is appropriate here because SPMP are pervasive in the school setting, are involved in providing direct medical services, and perform activities that help states comply with or implement various public mandates or programs, giving states a powerful incentive to shift SPMP costs from non-Medicaid programs to Medicaid, or to claim 75 percent reimbursement for costs that should instead be claimed as medical assistance at the FMAP rate. In addition, CMS contends that APA rulemaking procedures were unnecessary because SMDL #02-018 does not conflict with the statute or regulations and merely interprets and implements existing requirements.

CMS also contends that, regardless of SMDL #02-018, Illinois has not carried its burden of proving its entitlement to 75 percent FFP. CMS argues that the relevant activity codes "pervasively and systematically include activities that are not administrative in nature or are unrelated to Medicaid." CMS Response Br. at 45. For example, in CMS's view, codes E2 and F2 are written to capture activities that are "inseparable from the provision of health services" and thus cannot be claimed as a program administrative cost. CMS Br. at 49-52. Finally, CMS contends that the disallowances should be upheld because the relevant claims are "grossly unreasonable on their face." Id. at 52.

ANALYSIS
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1. The costs associated with the C codes are unallowable.

In the outreach appeal, we concluded that code C2 is written to capture activities that do not constitute allowable Medicaid outreach, and that even if some of those activities benefit Medicaid-eligible children, Illinois has not shown them to be necessary for the proper and efficient administration of the Medicaid program. For that reason, we upheld the disallowance of all of the costs claimed under code C2. In the outreach appeal, we considered and rejected the arguments made by Illinois in defense of its claims under code C2 in this (the SPMP) appeal.

Accordingly, we incorporate by reference here the findings from our decision in the outreach appeal. Based on those findings, we conclude that Illinois was not entitled to any FFP for activities reported under code C2, much less FFP at the 75 percent rate.

2. The methodology Illinois used to allocate the costs to 75 percent FFP was not an approved methodology.

Illinois does not deny that the cost allocation methodology at issue here was not approved by the HHS Division of Cost [Page 15] Allocation (DCA), and that CMS specifically disapproved allocation of the costs to the 75 percent rate. Regulations in 45 C.F.R. Part 95, subpart E, require DCA approval of public assistance cost allocation plans.

Allocating costs pursuant to an allocation methodology that is not approved constitutes a basis for disallowance. 45 C.F.R. § 95.519. Illinois was asked to address this issue in the oral argument, but gave no convincing reason why DCA approval was not required. Illinois points to the definition of "cost allocation plan" as including only the "State agency costs," but the latter term includes costs "allocated to" the State agency, even if not incurred by that agency. Moreover, the regulations specifically require that a state agency's cost allocation plan include a plan for any local government agency that administers a public assistance program (including Medicaid) under the supervision of the state agency. 45 C.F.R. § 95.507(b)(7); see also OMB Circular A-87, at Att. A., ¶ B.17. and Att. D, ¶ B.2; Tr. at 130-132. If local agencies perform administrative services for a Medicaid agency, they must do so under the supervision of the Medicaid agency. 42 C.F.R. § 431.10; see also CMS Ex. 1, at 31. In any event, Medicaid regulations provide that the "allocation of personnel and staff costs must be based on either the actual percentages of time spent carrying out duties in the specified areas or another methodology approved by CMS." 42 C.F.R. § 432.50(c)(3). Yet, Illinois did not attempt to appeal to the Board the disapproval by CMS of the Illinois plan to charge costs associated with some codes to the 75 percent rate. See 45 C.F.R. Part 16, App. at D.

The posture in which this case comes to us - as a disallowance, rather than as a cost allocation plan issue - has consequences for our analysis. A cost allocation case could include issues such as what programs benefit from certain activities, whether the proposed methodology equitably allocates the costs, and whether the activity descriptions for costs to be allocated to federal programs are sufficient to ensure that the costs are allowable types of costs under those programs and under the rate category to which they will be allocated. In a cost allocation case, therefore, we might parse through proposed activity descriptions under a code intended to be allocated to Medicaid to examine whether each activity is properly allocated to Medicaid and the specific rate category and to address whether any qualifying language is sufficient to ensure that costs that are not allocable and allowable are charged to a different (and appropriate) funding source. In a disallowance case, however, we need not parse through each of the separate activities included [Page 16] under the code. As discussed below, a state has the burden of documenting the allowability of the costs claimed.

Thus, we do not agree with Illinois that the only issue before us is whether its codes describe allowable costs, and not how the school personnel applied the codes or whether Illinois has documented their allowability. CMS has from its first brief in this case questioned the costs, not only based on the SMDL that led CMS to disapprove the codes, but also based on its questions regarding the need for SPMP to perform the functions at issue and other concerns, such as the amount of costs allocated to the questioned codes, which CMS says suggest excessive claiming.

3. Illinois did not meet its burden to show that the costs claimed under codes E2 and F2 met the criteria for reimbursement at the 75 percent rate.

We do not agree with Illinois that the disallowances directly conflict with the SPMP regulation. As Illinois argues, the regulation does not include in the criteria for SPMP any requirement about the setting in which the activities are performed. Instead, the regulation provides that "the 75 percent rate is available for the staff of other public agencies [i.e., public agencies other than the State Medicaid agency] if the requirements specified in paragraph (d)(1) of [section 432.50] are met and the public agency has a written agreement with the Medicaid agency to verify that these requirements are met." 42 C.F.R. § 432.50(d)(2).

Contrary to what Illinois argues, however, providing that FFP is "available" if the specified criteria are met does not mean that no other requirements apply. Reading the regulation to mean that only those criteria need be met for costs to qualify for the 75 percent rate is inconsistent with the provision read in context, including the rest of section 432.50 (such as the requirement for approval for allocation methods other than actual time spent on an activity), with the Medicaid regulations as whole, and with other regulatory requirements that apply to all grants to states, including general administrative requirements and the uniform cost principles of OMB Circular A-87.

In any event, Illinois had the burden to show here that the criteria in section 432.50(d)(1) were met. A state seeking FFP bears the burden of showing that its claims are "allowable" (satisfy applicable reimbursement requirements). New York State Dept. of Health, DAB No. 1636 (1997); West Virginia Dept. of Human Services, DAB No. 1107 (1989); Indiana Dept. of Public Welfare, DAB No. 958 (1988). The Board has held that this burden [Page 17] is especially heavy when FFP is being claimed, as it is here, at an enhanced rate, requiring a clear showing that all claimed costs meet applicable reimbursement requirements:

[A]n enhanced FFP rate is an exception to the generally available reimbursement rates, and a state must accordingly meet a higher standard of proof to justify a claim at an enhanced rate. Otherwise, a state might try to improperly shift costs to programs, or parts of programs, with enhanced funding.

Illinois Dept. of Children and Family Services, DAB No. 1530, at 43 (1995) (citations and internal quotations omitted); see also New York State Dept. of Social Services, DAB No. 1008 (1989) (indicating that "the 50 percent FFP rate [applicable to most program-related administrative costs] will apply unless enhanced funding is clearly available" (emphasis added)).

The criteria in paragraph 432.50(d)(1) include that the SPMP must meet certain qualifications for having medical expertise and must have duties and responsibilities that require medical expertise. The longstanding interpretation of these requirements is that the SPMP must not only qualify as having medical expertise, but "the function performed by the [SPMP] must be one that requires that level of medical expertise in order to be performed effectively." 50 Fed. Reg. at 46,656 (emphasis added).

There are substantial questions regarding whether Illinois' claims met these criteria, for the following reasons:

  • CMS points out, and Illinois does not deny, that other states have decided that they do not need to have SPMP perform school-based case management.


  • The code instructions for E2 and F2 admonish that the activities should be claimed under those codes only when the SPMP is "utilizing her medical expertise." IDPA Ex. 6, at 23, 26. An SPMP could be utilizing her medical expertise in a situation where her particular level of expertise was not required in order for the function to be performed effectively, however. (8)


  • [Page 18] The codes are not limited to the activities that the preamble to the final SPMP lists as examples of functions that meet the SPMP criteria, such as "[a]cting as a liaison on the medical aspects of the program with providers of services and other agencies that provide medical care," "[a]ssessing the necessity for and adequacy of medical care and services provided, as in utilization review," and "[a]ssessing, through case management activities, the necessity for and adequacy of medical care and services required by individual recipients." 50 Fed. Reg. at 46,656. The activities described under codes E2 and F2 go beyond this type of activity to include other referral, coordination, and monitoring activities, very similar to those activities that codes E1 and F1 describe for non-SPMP school-based personnel. The similarity at least raises a question about whether the activities are of a type requiring SPMP skills.


  • While some of the activity descriptions under codes E2 and F2 contain modifiers apparently intended to limit their use to activities that require medical knowledge and expertise, these modifiers are misplaced in some of the descriptions. For example, the description for the seventh activity under code E2 is: "Making specific medical referrals for and/or coordinating medical or physical examinations and necessary medical/mental health evaluations that require medical knowledge and expertise." IDPA Ex. 6, at 23. Since the modifier comes after the word "evaluations" instead of after the activities described (making referrals and coordinating examinations and evaluations), a person might misuse the code for a referral or coordinating activity not requiring medical expertise. Other activity descriptions are vague, such as the fourth activity under code E2: "Making determinations for referring students for necessary medical health, mental health, or substance abuse services covered by Medicaid/KidCare." Id. While this might conceivably encompass a proper Medicaid administrative activity (such as making a determination about medical necessity for a [Page 19] referral requiring prior authorization), the absence of any description of what type of determination is meant, of who can properly make such a determination, and of how it supports Medicaid administration subjects the description to potential misuse. Thus, we disagree with Illinois that it has carefully crafted its claiming codes to capture only allowable SPMP activities.


  • CMS's data show that non-school-based SPMP costs constitute only a small percentage of the Illinois Medicaid program's total non-school-based administrative costs. For example, the data show that in calendar year 2003, the amount claimed by Illinois for non-school-based SPMP activities was just 1.87 percent of total non-school-based Medicaid administrative costs for that year. CMS Ex. 10, ¶ 5.C; Id. at 6. In contrast, school-based SPMP administrative costs for 2003 (i.e., costs claimed under codes C2, E2, and F2) amounted to 18.99 percent of total school-based administrative costs. Id. Case management accounted for greater than half of the reported school-based SPMP costs. (9) Even assuming that, as Illinois suggests, the school-based SPMP are less isolated from Medicaid recipients and therefore more actively involved in Medicaid administrative activities than their counterparts in other Medicaid agencies, these percentages suggest the possibility that the claims are excessive.
  • CMS presented other data it says confirms significant disparities between amounts claimed for school-based and non-school-based SPMP activities. In 2003, school-based SPMP administrative costs accounted for 83.65 percent of the Illinois Medicaid program's total SPMP administrative costs, even though the federal share for medical assistance payments for school-based health services ($31,582,920 in FFP) was only .65 percent of the federal share of medical assistance payments for Illinois' Medicaid program as a whole ($4,840,561,680 in FFP). CMS Ex. 10, ¶¶ 5.A., 5.C. School-based SPMP administrative costs (over half of which was attributable to case management) amounted to 75.38 percent of the amount claimed for school-based medical assistance. Id. at 6 (parts 3 and 9). Illinois points out [Page 20] that CMS's comparison of school-based medical assistance payments to the school-based SPMP administrative costs is flawed since the total medical assistance payments for children in schools were far greater than the medical assistance provided by the schools, and CMS agrees that an adjustment should be made. Specifically, for calendar year 2003, the total amount of the medical assistance provided to the children was about $868 million (federal share about $434 million). Tr. at 86. This amount was still less than ten percent of the federal share of medical assistance payments for the program as a whole, however. Tr. at 89. Illinois did not satisfactorily explain why 83.65 percent of all SPMP claims would be for school-based activities if less than ten percent of all the covered services are provided to school children. Thus, even the adjusted figures raise a question about whether improper classification of school-based costs to the SPMP rate was occurring.

In spite of the burden Illinois had to support its claims and to respond to the concerns CMS raised about SPMP claims from schools, Illinois presented absolutely no evidence of what activities were in fact charged to codes E2 and F2 and resulted in the claims at issue, much less any evidence that those activities met the SPMP criteria.

Since the schools were required to document who the SPMP were and how the SPMP were using their expertise and since Illinois says it has provided oversight of the claims from the schools, we would have expected Illinois to provide at least a sample of the documentation available or affidavits of state officials who have reviewed the documentation, but Illinois did not do so. Illinois also failed to provide any evidence that the activities that were charged to the codes were part of the duties and responsibilities of the particular SPMPs who engaged in the activities, as evidenced by position descriptions, job announcements, or job classifications. The SPMP regulations and the provisions interpreting them make clear that duties and responsibilities of the SPMP must include duties and responsibilities requiring their level of medical expertise.

The criteria in section 432.50(d)(1) also include the requirement that the activities be "directly related to the administration of the Medicaid program." The phrase "directly related to the administration of the Medicaid program" has been interpreted to mean "activities that are necessary for the proper and efficient administration of the Medicaid State plan." 50 Fed. Reg. at 46,656. In the context of administrative activities performed by another public agency, the phrase has been interpreted to mean [Page 21] "performing duties that are necessary to the operation of the Medicaid program for which the State Administrator is accountable" and that are outlined in the interagency agreement. Id.; CMS Ex. 6, at 16. Thus, in general, CMS is applying the regulatory criteria when it determines whether particular activities are directly related to the administration of the program, not ignoring them as Illinois suggests.

Moreover, the SPMP criteria bar 75 percent FFP for activities that constitute medical assistance. 42 C.F.R. § 432.50(d)(1)(i); see 50 Fed. Reg. 46,652, 46,656 (Nov. 12, 1985) ("Provision of medical care and services would always be considered medical assistance rather than administration").

In this particular case, CMS argues that the activities were not directly related to Medicaid administration because they are services costs instead. CMS raises a concern that the instructions for codes E2 and F2, while admonishing that the codes should not be used for activities that are integral to a direct service, describe such activities differently from the description of those activities in CMS guidance. Specifically, the instructions in the Illinois Claiming Guide refer only to "preparation of service case notes, consultation with parents, and preparation of routine records, forms and reports" as examples of "integral functions of a direct service." IDPA Ex. 6, at 23. CMS guidance describes such integral activities as including "patient follow-up, patient assessment, patient education, counseling, development of the medical portion of an IEP or IFSP, or other physician extender activities." CMS Ex. 7, at 51. If SPMP are being reimbursed for a direct service, yet classifying activities that should have been included in that direct service to codes E2 or F2, this would mean that Medicaid was paying twice for the same activity.

CMS also presents evidence to support the conclusion in the SMDL that SPMP in schools are "likely" providing case management as a service, rather than as an administrative activity. Specifically, CMS presents an affidavit describing the role of schools in providing services and in the EPSDT and IDEA programs. CMS Ex. 9, ¶¶ 9-11. While Illinois questions whether CMS has adequate factual support for its assertion that case management is likely to be part of the direct provision of medical services, Illinois does not deny that some SPMP in schools might be claiming for case management activities either as a separate [Page 22] service or as integral to another service. (10) IDPA Br. at 24. Indeed, Illinois admits that "many of the LEA [local education agency] employees provide direct services as well as performing outreach and case management functions that are covered by the administrative claim." Tr. at 11.

Finally, CMS questions the appropriateness of school-based SPMP providing quality assurance or utilization control activities when the schools are also providing services, suggesting that there may be a conflict of interest. Id. at ¶ 13. Illinois argues that the school-based SPMP would not personally benefit from any duplicate claims or from the difference in the 75 percent and the 50 percent rates being paid. This hardly means, however, that they would have no incentive to try to increase the amount of Medicaid funds coming to the schools.

Illinois points out that, despite these stated concerns, CMS nonetheless approved payment of the 50 percent general administrative rate for the costs allocated to the E2 and F2 codes, disallowing only the difference between the 50 percent and 75 percent rates. This approval undercuts CMS's arguments about whether the activities were properly considered Medicaid administrative costs. (11) Thus, we base our decision here [Page 23] primarily on our conclusion that Illinois did not meet its burden to show that the other SPMP criteria in the regulation were met.

We note, however, that CMS's concerns were not adequately addressed by Illinois. Illinois provided only general information about its school-based health services program, the kind of medical services typically delivered under that program, how direct medical services are billed by schools, the extent to which school-based SPMP are engaged in delivering medical services, and how their administrative activities relate to the medical services they (and others) provide. Absent assurance that the SPMP in Illinois schools were performing appropriate case management activities under an interagency agreement as part of state plan administration, without duplicating services they were providing or raising potential conflicts of interest, there is a question about whether the claimed costs are in support of the "proper and efficient administration of the State plan," as required by the SPMP statute and regulations.

4. We do not need to resolve the issues regarding the SMDL since we do not rely on the policy in the SMDL for our decision.

CMS does not claim that the SMDL is tantamount to a regulation that would bind the Board. (12) We nonetheless want to make it clear that we do not rely on the CMS policy in SMDL #02-018 as a basis for our decision. While we are cognizant of CMS's role in administering the Medicaid program, the issues Illinois raises regarding the SMDL are primarily administrative law issues, not program issues. We found CMS's response to the issues Illinois raises inadequate, for the following reasons:

  • [Page 24] CMS acknowledges that the provision is a "rule" within the meaning of the APA, but says that CMS is merely interpreting the phrase "reasonable and necessary for the proper and efficient administration of the State plan." CMS does not, however, point to any part of the SMDL that provides any definition of any of those terms.

  • To the extent the SMDL implements the requirement that SPMP costs be "found necessary" for the "proper and efficient administration of the State plan," the SMDL is in the nature of a generalized finding for all state plans, rather than an interpretation of statutory or regulatory terms. Indeed, the SMDL refers to CMS having "determined" the rate is not available, not to CMS having interpreted the statute or regulation. IDPA Ex. 7, at 1; see also CMS Ex. 9 (Strauss Affidavit), at ¶ 6 ("CMS also more closely examined whether it was in fact reasonable and necessary to allow SPMP administrative costs at the school level."). (13)


  • CMS guidance had previously indicated that some activities in a school-based setting could be reimbursable at the 75 percent rate. CMS Ex. 7, at 54; see also CMS Ex. 3, at 55; Tr. at 72. Indeed, CMS itself described its rule denying 75 percent reimbursement for SPMP in a school-based setting as a "policy change." IDPA Ex. 7, at 2; CMS Ex. 5, at 7. This raises the question of whether CMS was effectively amending the regulation, and therefore required to use notice and comment procedures. See 5 U.S.C. § 551(5); Paralyzed Veterans of America v. D.C. Arena, L.P., 117 F.3d 579, 586 (1997). (14)


  • [Page 25] CMS argues that the SMDL is interpreting the EPSDT provision requiring that optional Medicaid services be made available to EPSDT children who need them (even if not covered under the state plan) to mean that case management provided by SPMP to a child may be claimed only as a service cost. (15) This argument is flawed because:


    • The SMDL does not deny FFP at the 75 percent rate for all case management activities for EPSDT children. Instead, the SMDL applies to such activities only when provided by schools.


    • Interpreting the EPSDT provision this way would appear to be inconsistent with other CMS policies. For example, CMS's policy on targeted case management states that some activities "may properly be claimed as administrative case management activities, but not as targeted case management services" and cites "prior authorization for Medicaid services" and "utilization review" as two examples. SMM § 4302.2.G.2.


  • CMS justifies the SMDL on the basis that schools have an incentive to abuse the system by allocating non-qualifying activities to the enhanced rate, but that direct oversight and inspection by CMS would be "extraordinarily expensive, time-consuming and impractical" because school-based claims are submitted by hundreds of schools throughout a state. CMS Ex. 9, at ¶ 14. In other words, CMS is concerned about the efficient administration of the program at the federal level, not at the state level. This may be a legitimate concern (although Illinois says it is unfounded), but there is a question whether an SMDL is the proper procedural mechanism to address it. See section 1102(a) of the Act.


  • [Page 26] CMS also argues that it is not reasonable to pay 75 percent for administrative case management provided by SPMP since the services could be obtained at the FMAP rate (50 percent for Illinois) if provided as a direct service. Tr. at 74. This statement, however, proves too much since it would apply not only to SPMP in schools, but to all SPMP providing case management. Also, some states have an FMAP rate of 75 percent or higher, so this rationale does not appear to justify a general rule, especially since it is not clear CMS analyzed all of the costs associated with providing case management as a service (such as claims processing, rate-setting, etc.), compared to providing administrative case management (which may be a narrower set of activities).


  • CMS also says that, based on its experience, the activities that "do require individuals with advanced medical skills and training are likely provided as part of a medical service." IDPA Ex. 7, at 1. A mere likelihood, however, is not a basis for determining that all of the activities are an integral part of a direct service.

Accordingly, we do not rely on the SMDL as a basis for our decision here. Thus, we do not need to resolve all of the arguments Illinois makes about the policy.

Conclusion

For the reasons discussed above, we sustain the disallowances at issue in Board Docket Nos. A-04-10, A-04-83, A-04-92, A-04-125, A-04-137, A-05-9, A-05-38, A-05-105, A-05-115, A-06-15, and A-06-47.

JUDGE
...TO TOP

Cecilia Sparks Ford

Donald F. Garrett

Judith A. Ballard
Presiding Board Member

FOOTNOTES
...TO TOP

1. Effective July 1, 2005, the Illinois Department of Public Aid changed its name to the Illinois Department of Healthcare and Family Services. Because the initial appeal was filed before July 1, 2005, we refer the appellant by its former name.

2. The current version of the Social Security Act can be found at www.ssa.gov/OP_Home/ssact/comp-ssa.htm. Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section. Also, a cross reference table for the Act and the United States Code can be found at 42 U.S.C.A. Ch. 7, Disp. Table.

3. "Special education" means "specially designed instruction, at no cost to parents, to meet the unique needs of a child with a disability[.]" 20 U.S.C. § 1401(25).

4. For disabled infants and toddlers, the school must develop a comparable plan called an Individual Family Service Plan (IFSP). 20 U.S.C. §§ 1435(a)(4), 1432(1).

5. The April 2000 report indicates that two states, Illinois and Michigan, accounted for 74 percent of school-based administrative claims nationwide, and that the amount of school-based administrative claims in these two states was approximately 45 percent of total Medicaid administrative expenditures. CMS Ex. 3, at 15, 21.

6. The 2003 guide states that it "does not supersede any statutory or regulatory requirements" but merely "clarifies and consolidates CMS' guidance on how to meet these statutory and regulatory requirements and explains the application of such requirements in the context of current practices." CMS Ex. 1, at 14.

7. The October 1, 2003 disallowance was for $810,888. The subsequent disallowances were for: (1) $2,005,946, reported in Illinois' Quarterly Statement of Expenditures (QSE) for the quarter ending June 30, 2003 (Docket No. A-04-83); (2) $1,809,071, reported in the QSE for the quarter ending December 31, 2003 (Docket No. A-04-92); (3) $ 2,098,556, reported in the QSE for the quarter ending September 30, 2003 (Docket No. A-04-125); (4) $ 1,586,784, reported in the QSE for the quarter ending March 30, 2004 (Docket No. A-04-137); (5) $ 1,755,041, reported in the QSE for the quarter ending March 30, 2004 (Docket No. A-05-09); (6) $2,066,117, reported in the QSE for the quarter ending September 30, 2004 (Docket No. A-05-38); (7) $1,049,671, reported in the QSE for the quarter ending December 31, 2004 (Docket No. A-05-105); (8) $2,486,699, reported in the QSE for the quarter ending March 31, 2005 (Docket No. A-05-115); (9) $2,045,721, reported in the QSE for the quarter ending June 30, 2005 (Docket No. A-06-15); and (10) $2,192,300, reported in the QSE for the quarter ending September 30, 2005 (Docket No. A-06-47).

8. The instructions go on to warn that "[a]ctivities that could be reasonably delegated to a non-SPMP must be recorded as Code E1 even if those activities are performed by an SPMP." CMS Ex. 6, at 23, 26. Nonetheless, use of different wording from that in the SPMP regulations and interpretative materials makes the code instructions subject to misunderstanding. Moreover, while the general instructions in the Illinois Claiming Guide say that the activities must "require medical expertise," they do not state that the activities must require the level of expertise of the particular SPMP performing the activity.

9. For calendar year 2003, Illinois' claims for school-based SPMP totaled $24,809,761. CMS Ex. 10, at 10 (line 4). Of this total, $11,430,475 was claimed under code F2, and $2,576,330 was claimed under code E2. The remainder ($10,802,956) was claimed under code C2.

10. We agree with Illinois that CMS's arguments to us in this appeal are in some respects inconsistent with its policy (including in the 2003 Guide) regarding state discretion to provide case management as either an administrative activity or a service. See State Medicaid Manual (SMM) §§ 4302.2.G. and H; CMS Ex. 1, at 47. The issue, here, however, is the concern that the schools may be claiming the activity as both a service and an administrative cost. We also note that the SMM provides that if a state expects to claim FFP for Medicaid administrative case management activities, these activities must be included in an approved cost allocation plan and "documentation must clearly demonstrate that the activities were provided to Medicaid applicants or eligibles, and were in some way connected with determining eligibility or administering services covered under the State plan." SMM § 4302.2.G.

11. Also, while we agree with CMS that administrative case management encompasses a different and narrower set of activities than case management as a service, we do not agree with CMS's apparent argument here that administrative case management can never be related to individual Medicaid recipients. This argument ignores the reference to "individual recipients" in the type of case management activities the preamble to the 1985 amendments to the SPMP regulations identify as meeting SPMP criteria, as well as statements to the contrary in other CMS issuances. See, e.g., 50 Fed. Reg. at 46,656; CMS Ex. 6, at 11. This argument is also inconsistent with the 2003 Guide, which includes referral to and coordination and monitoring of Medicaid covered services as activities that may be allocated to Medicaid when associated with Medicaid-eligible individuals. CMS Ex. 1, at 46.

12. The Board is "bound by applicable laws and regulations." 45 C.F.R. § 16.14.

13. The SMDL says that CMS "determined that [SPMPs'] advanced skills and training are not necessary in order to perform the types of administrative activities that take place in school settings," based on its experience and the agreement of some states during negotiations. IDPA Ex. 7, at 1; CMS Ex. 5, at 7; CMS Ex. 9, ¶ 6. As Illinois points out, however, CMS's further statements that "the allowability of SPMP claims for periods prior to the effective date of the policy change will be based on the specific aspects of such claims" is hard to reconcile with a determination that an SPMP's advanced skills and training would never be necessary in a school setting. IDPA Ex. 7, at 2; CMS Ex. 5, at 7.

14. In Shalala v. Guernsey Memorial Hosp., 514 U.S. 87 (1995), on which CMS relies, the Supreme Court specifically found that the manual provision at issue did not amount to a substantive change in the regulations and was an interpretative rule. The policies at issue in the Board decisions on which CMS relies are also distinguishable. See CMS Br. at 39-43.

15. A state is required under the EPSDT program to provide case management as a service only when it is medically necessary for the child "to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services." Section 1905(r) of the Act.

 

APPENDIX

Illinois Department of Public Aid
DAB Decision No. 2021

Activity Codes C1 and C2 (IDPA Exhibit 17, at 17-19)

C1. Identification and Referral to Access Medicaid/KidCare (non-SPMP)

All staff should use this activity code when actively identifying potentially at risk children in order to inform and assist the child and their family to access Medicaid/KidCare. This code should be used when specifically targeting outreach efforts to inform and enroll children with medical needs. Education-related activities required for Child Find or for the development of an Individualized Education Program (IEP) are to be reported in Code C3.

Examples include, but are not limited to:

    • Informing targeted children and their families about the availability of Medicaid/KidCare services.


    • Observing children who appear to be medically at risk and potentially Medicaid/KidCare-eligible by using the SPMP-designed medical protocol to recognize:

      a. A potential need for physical therapy based on an apparent deficiency in mobility, gait, muscle strength, or posture;

      b. A potential need for occupational therapy based on an apparent deficiency in perceptual, sensory, visual-motor, fine-motor, or self-care skills;

      c. A potential need for speech/language therapy based on an apparent deficiency in fluency, pronunciation and clarity, or strength of speech muscles.

3. Developing and presenting materials to explain Medicaid/KidCare services that are available to Medicaid/KidCare eligible children when such [Page 2] activities are a part of a Medicaid/KidCare targeted outreach effort.

4. Assisting the Medicaid/KidCare agency to target Medicaid/KidCare outreach efforts by fulfilling objectives of the EPSDT program. Such efforts may include:

      a. Informing children/parents of the benefits of preventative health care;

      b. Helping children and families use health resources;

      c. Assuring that health problems are referred for early treatment, before they become more serious and treatment more costly.

5. Performing clerical duties, paperwork, training, and travel required for Code C1 activities.

C2. Identification and Referral to Access Medicaid/KidCare (SPMP)

SPMPs should use this activity code when utilizing their medical expertise to identify medically at risk children, in order to direct outreach efforts to those who are most in need of medical services. This code should be used when specifically targeting outreach efforts to inform and enroll those children with medical needs.

Education-related activities required for Child Find or for the development of an Individualized Education Program (IEP) are to be reported in Code C3.

An SPMP may only use this code when she is utilizing her medical expertise and use of such expertise is clearly necessary and documented. Activities that reasonably could be delegated to a non-SPMP must be recorded as Code C1, even if those activities were performed by a SPMP. Activities that are integral functions of a direct service, such as preparation of service case notes, consultation with parents, and preparation of routine records, forms and reports, must be reported as Code H3.

[Page 3] Examples include, but are not limited to:

1. Designing strategies to identify children who have specific health care needs, or are potentially at high risk of poor health outcomes. A physical therapist may develop a medical protocol based on a checklist of symptoms and behaviors (deficiency in mobility, gait, muscle strength, or posture), which would be indicative of a child in need of physical therapy. The medical protocol would be used to identify students who are medically needy and possibly eligible for Medicaid/KidCare enrollment. Designing strategies to determine the need for educational services should be recorded as Code C3.

2. As part of a targeted Medicaid/KidCare outreach effort, when no relevant protocol exists, detecting and identifying medically at risk children who are potentially Medicaid/KidCare-eligible.

3. Assisting Medicaid/KidCare targeted outreach efforts by fulfilling objectives of the EPSDT program, including assuring that health problems are diagnosed and treated before they become more serious and treatment more costly. Such activities may only include time when identifying potentially chronic or severe medical conditions.

4. Training provided by skilled medical professionals to non-medical professionals to impart medical expertise necessary to identify medically at-risk children, or training of medical professionals new to the school district.

5. Travel related to this code is reported as Code C1.

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES