DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Kansas Department of
Social and Rehabilitation Services
Docket No. 88-131
Decision No. 993
DATE: October 24, 1988
DECISION
The Kansas Department of Social and Rehabilitation Services
(Kansas/State)
appealed a determination by the Health Care Financing
Administration
(HCFA/Agency) disallowing $232,948.86 in federal funding
claimed by the State
under the Medicaid program of the Social Security
Act (Act) for the quarters
ending December 31, 1987 and March 31,
1988.The disallowance was taken
pursuant to section 1903(g)(1) of the
Act, which provides for reduction of a
state's federal medical
assistance percentage of amounts claimed for a
calendar quarter for
long-stay services unless the state shows that during
the quarter it had
"an effective program of medical review of the care of
patients . . .
whereby the professional management of each case is reviewed
and
evaluated at least annually by independent professional review
teams."
HCFA alleged that Kansas' inspection of care review at Topeka
State
Hospital (Topeka), an institution for mental diseases, was
deficient
because the State omitted two patients from the review. While
conceding
that these recipients were "inadvertently" not reviewed, Kansas
argued
that the disallowance was improper because the patients were
ultimately
reviewed within one year of their admission to the facility.
The State
also asserted that, in any event, the deficient review for the
March 31,
1988 quarter could be excused under the technical failings
exception to
the annual review requirement.
The record in this case is based on the parties' initial briefs
and
evidentiary submissions. Kansas did not submit a reply brief.
For the
reasons set out below, we find that Kansas' review of these
recipients
within one year of their admission to Topeka, but outside the
context of
the facility review due in December 1987, did not satisfy the
statutory
annual review requirement. Additionally, we find that the
technical
failings exception does not apply to excuse the deficient review
at
Topeka for the March 31, 1988 quarter. Accordingly, we uphold
the
disallowance in its entirety.
Applicable Law
The general requirement for an effective program of annual medical
reviews
in section 1903(g)(1) is treated more specifically in sections
1902(a)(26)
and 1902(a)(31). Sections 1902(a)(26)(B) and (a)(31)(B)
establish the
requirement for a periodic inspection "of the care being
provided to each
person receiving medical assistance." (Emphasis added)
The statutory annual review requirement is implemented by regulation at
42
C.F.R. 456.652, which provides --
(a) In order to avoid a reduction in FFP, the Medicaid
agency
must make a satisfactory showing to the Administrator, in
each
quarter, that it has met the following requirements for
each
recipient.
* * *
(4) A regular program of reviews, including
medical
evaluations, and annual on-site reviews of the care of
each
recipient . . . .
(b) Annual on-site review requirements. (1) An agency
meets
the quarterly on-site review requirements of paragraph(a)(4) .
.
. for a quarter if it completes on-site reviews of
each
recipient in every facility in the State . . . .
(Emphasis
added)
Further, the regulations at 42 C.F.R. 456.606 and 42 C.F.R.
456.608
require that the care of each patient in a facility be reviewed at
least
annually (456.606) and that inspections include personal contact
with,
and observation of, each recipient (456.608).. Section 1903(g)(4)(B)
of
the Act establishes two limited exceptions to the annual
review
requirement. Specifically --
The Secretary shall find a showing of a State, with
respect to a
calendar quarter under paragraph (1),
to be satisfactory under such
paragraph with respect
to the requirement that the State conduct
annual
onsite inspections in mental hospitals, skilled
nursing
facilities, and intermediate care facilities
under paragraphs (26)
and (31) of section 1902(a),
if the showing demonstrates that the
State has
conducted such an onsite inspection during the
12-month
period ending on the last date of the
calendar quarter--
(i) in each of not less than 98 per centum of the
number
of such hospitals and facilities requiring
such
inspection, and
(ii) in every such hospital or facility which has 200
or
more beds,
and that, with respect to such hospitals and
facilities not
inspected within such period, the
State has exercised good faith
and due diligence in
attempting to conduct such inspection, or if
the
State demonstrates to the satisfaction of the Secretary that
it
would have made such a showing but for failings
of a technical
nature only.
The statutory exceptions are implemented by 42 C.F.R. 456.653,
which
provides --
The Administrator will find an agency's showing
satisfactory, even
if it failed to meet the annual
review requirements of section
456.652(a)(4), if
--
(a) The agency demonstrates that-- (1) It completed
reviews
by the end of the quarter in at least 98 percent of
all
facilities requiring review by the end of the quarter.
(2) It completed reviews by the end of the quarter in
all
facilities with 200 or more certified Medicaid beds
requiring
review by the end of the quarter; and
(3) With respect to all unreviewed facilities, the
agency
exercised good faith and due diligence by attempting to
review
those facilities and would have succeeded but for events
beyond
its control which it could not have reasonably anticipated;
or
(b) The Agency demonstrates that it failed to meet the
standard
in paragraph(a)(1) and (2) of this section by the close of
the
quarter for technical reasons, but met the standard within
30
days after the close of the quarter. Technical reasons
are
circumstances within the agency's control.
* * * *
Failure to meet the annual review requirement leads to a reduction in
a
state's federal medical assistance percentage in accordance with
the
formula at section 1903(g)(5) of the Act and 42 C.F.R. 456.657.
Background
Patient K.M. was admitted to Topeka on May 21, 1987; patient J.N.
was
admitted on July 8, 1987. Topeka was scheduled for review during
the
quarter ending December 31, 1987. The State conceded that these
two
patients were "inadvertently" not included in the Topeka review.
These
patients were ultimately reviewed on April 18, 1988, following
HCFA's
survey, which pointed out that they had not been included in
the
facility review. Kansas Brief (Br.), p. 2; Kansas Exhibits (Exs.) A
and
B.
The State asserted that since these patients were reviewed within one
year
of their admission to Topeka, the annual review requirement had
been
satisfied. In support of its position, Kansas relied on the
regulation
at 42 C.F.R. 456.606 which provides in part that a review
team "must inspect
the care and services provided to each recipient in a
facility at least
annually." Kansas argued that "annually" in terms of
this regulation
refers to each recipient. Kansas Br., p. 3.
In the alternative, Kansas indicated that it "completed all reviews
missed
for any technical reasons." Therefore, Kansas asserted, "the
exception
provisions of 42 C.F.R. 456.653(b) [technical failings] should
apply" to
exclude the March 31, 1988 quarter from the disallowance,
since Kansas
completed its reviews within 30 days of the end of that
quarter. Id. at
2.
Analysis
We have held on numerous occasions that the statute and the
implementing
regulations, state a general requirement for the annual review
of all
Medicaid patients in a facility during its required annual
review,
regardless of the length of time a patient has been in the
facility.
See, e.g., West Virginia Dept. of Human Services, DGAB No. 686
(1985);
North Carolina Dept. of Human Resources, DGAB No. 728
(1986);
Pennsylvania Dept. Public Welfare, DGAB No. 746 (1986).
The preamble to the final rule promulgating 42 C.F.R. 456.652(b)
clearly
indicates that "[s]tates are not required to track the length of
time
each individual recipient was in a facility, and the [facility's]
review
date would not relate to the length of stay of any individual
recipient
in that facility." See 44 Fed. Reg. 56335 (October 1,
1979). The same
preamble reiterates at a later point that "the
regulatory scheme . . .
is based on facilities, not the length of time
individuals were in those
facilities." Id. See Pennsylvania, at
p. 12.
The language on which Kansas relied cannot reasonably be interpreted
to
permit states to miss patients during an onsite inspection and
then
avoid a funding reduction simply because the patients had not been
in
the facility for a year at the time of the onsite inspection. As
a
whole, 42 C.F.R. 456.606 addresses generally the frequency of reviews
at
a long-term care facility. It provides a state with the discretion
to
establish the number of reviews at a facility so long as a review
occurs
at least annually. But it clearly provides that, when a review
does
occur, that review must include each recipient in a facility. In
other
words, while the goal is that each patient be reviewed at
least
annually, the means of ensuring this is through a system
of
facility-based reviews. This Department has consistently
interpreted
the annual review requirement to mean that each Medicaid
recipient,
reasonably identifiable by a review team and present in a
facility, must
be reviewed, regardless of the length of time the patient has
resided
there prior to the review. Kansas offered no reason why
this
interpretation is incorrect.
Additionally, we reject Kansas' argument that the technical
failings
exception would apply to excuse its failure to review these
recipients
during the March 31, 1988 quarter. While characterizing its
error as
inadvertent, Kansas presented no explanation of the
surrounding
circumstances, other than to remark that it "obviously completed
all
reviews missed for any technical reasons well within 30 days, . .
." of
the end of the first quarter of 1988. Kansas Br., p.
2. In effect,
Kansas' explanation is no explanation.
An unexcused failure to review, or a review deficient for no
apparent
reason, cannot constitute a technical failing. See, e.g., New
Hampshire
Dept. of Health and Human Services, DGAB No. 841 (1987), at p. 5;
Utah
Dept. of Health, DGAB No. 843 (1987), at p. 6; Arkansas Dept. of
Human
Services, DGAB No. 923 (1987), at p. 4. At the very least, the
statute
requires that some reason be given for a state's failure,
with
sufficient explanation to enable HCFA to evaluate whether the
exceptions
apply. The circumstances here, where Kansas has offered no
explanation
whatsoever for the missed reviews, fall squarely within the
rationale of
these decisions. Accordingly, we find that the
technical failings
exception to the annual review requirement does not apply
here.
.Conclusion
Based on the preceding analysis, we uphold the entire disallowance
of
$232,948.86.
________________________________ Judith A. Ballard
________________________________ Norval D. (John) Settle
________________________________ Alexander G. Teitz
Presiding
Board