Opinion ID: 2653500
Heading Depth: 1
Heading Rank: 3

Heading: Patient Share Deduction

Text: ¶ 16. During the course of this case, DCF’s position seems to have shifted. The position initially taken by DCF and ultimately accepted by the Board in both cases is that our decision in Brett precluded petitioners from obtaining deductions from their patient shares for personal care services associated with ADLs or IADLs because those services are “coverable” under Choices, a Medicaid waiver program. The argument rests on our holding in Brett , in which we did not find compelling error in the Secretary’s interpretation of the word “ noncovered ” for Medicaid purposes to mean “not-coverable.” Id . ¶ 12. ¶ 17. Our holding in Brett must be considered in the context of the circumstances of that case. In Brett , the petitioner sought deductions for noncovered services that she never requested—the two additional days of personal care services rendered beyond the five days of personal care services that she had requested and received through the Choices program. We noted that if a Medicaid beneficiary could request a limited number of days of personal care services and then compel DCF to deduct from her patient share additional personal services that were never requested, the beneficiary, rather than the agency vested with such authority, “would become the architect of benefit administration.” Id . ¶ 13. ¶ 18. That is not the situation here. In these cases, petitioners requested the additional personal care services and were denied those services under Choices, the Medicaid waiver program. In Brett , we expressly left open the question of whether “coverable” services that are requested but denied through the variance procedure may be considered “ noncovered ” for purposes of allowing deductions from patient shares. Id . ¶ 17 n.3. That unresolved question is essentially before us here. ¶ 19. As we noted in Brett , id . ¶ 11, applicable federal regulations require deductions from the patient share for necessary medical care “recognized under State law but not covered under the State’s Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses.” 42 C.F.R. § 435.735(c)(4)(ii); see also 42 U.S.C. § 1396a(r)(1)(A)(ii) (providing that with respect to post-eligibility treatment of income of individuals receiving home-based services under waiver program, “there shall be taken into account amounts for . . . necessary medical or remedial care recognized under State law but not covered under the State plan under this subchapter, subject to reasonable limits the State may establish on the amount of these expenses”). DCF’s regulations expressly recognize this requirement in the context of its spend-down regulations. See Patient Share Regulations § 4452.3 (“The department will allow a deduction for noncovered personal care services provided in an individual’s own home . . . when they are medically necessary in relation to an individual’s medical condition.”). ¶ 20. A recent federal court decision supports petitioners’ position that they are entitled to deductions for medically necessary requested personal care services potentially coverable under the Choices program but not in fact covered under the program. The Fourth Circuit of the United States Court of Appeals examined the phrase “not covered under the State plan” in the course of reviewing the State of Maryland’s challenge to CMS’s disapproval of an amendment to the state’s Medicaid plan that would have eliminated deductions for medical expenses incurred by Medicaid recipients before they became eligible for benefits. Md. Dep’t of Health & Mental Hygiene v. Ctrs . for Medicare and Medicaid Servs . , 542 F.3d 424, 426 (4th Cir. 2008). After noting CMS’s longstanding policy of mandating consistent medical-expense deductions in both spend-down and post-eligibility processes, the court stated that CMS had traditionally interpreted the phrase “not covered under the State plan” to refer to “any medical service not paid for by Medicaid.” Id . at 434. Rejecting Maryland’s argument that the phrase referred only to “services that Medicaid never covers and for which it never pays,” id ., and after reviewing the legislative history of the applicable federal statute, the court concluded that CMS’s more inclusive definition was reasonable and within its administrative authority. Id . at 434-36. ¶ 21. DCF’s position before the Board is at odds with the interpretation of a federal law embraced by the federal agency responsible for administering that law. See id . at 428 (noting that deference to CMS in connection with interpretation of Medicaid statutes is “particularly warranted” given that the Medicaid statute is “a prototypical complex and highly technical regulatory program”) (quotation omitted). CMS takes the position that, for eligibility purposes, as required by 42 U.S.C. § 1396a(r)(1)(A), “services not covered under a State’s plan are any services not paid for by Medicaid for that particular individual, regardless of the reason for non-payment. These include services listed as covered services in the State plan, as well as services the plan does not cover.” Miller v. Morrish , No. 09-13683, 2009 WL 5201792, at  (E.D. Mich. 2009). If we embraced DCF’s initial interpretation of the post-eligibility patient share requirements, Vermont’s program would likely be out of compliance with the applicable federal law on the subject, as interpreted by CMS. ¶ 22. DCF shifts its focus, and distinguishes Miller and Maryland Department of Health by stating that those cases involved requested deductions from patient shares for uncovered but medically necessary services. According to DCF, DAIL has already made final unappealed determinations that the additional services requested by petitioners are not medically necessary. ¶ 23. Herein lies the shift in DCF’s position. DCF now concedes that it would allow a deduction from the patient share for medically necessary care beyond what Medicaid provides, without regard to whether the type of service in question is among the types of services covered by the program. Reinforcing this concession is DCF’s own regulation setting forth the sequence of permissible deductions in the context of eligibility determinations, which includes not only “[n] oncovered medical expenses” but also “[c] overed medical expenses . . . that exceed limitations on amount, duration, or scope of services covered.” Patient Share Regulations § 4442(b)-(c). ¶ 24. Based on the applicable federal statutes and regulations, the federal case law interpreting them, and DCF’s own regulations implementing the federal law, we hold that expenses for medically necessary, requested personal care services generally covered but not paid for under an individual beneficiary’s Choices plan are deductible from that beneficiary’s patient share, “subject to reasonable limits the agency may establish on amounts of these expenses.” 42 C.F.R. § 435.735(c )( 4)(ii). That is the case irrespective of whether DCF considers the services to be noncovered , see Patient Share Regulations § 4442(b), or covered but exceeding the limitations of the amount of the services covered under the plan, see id . § 4442(c). Unlike in Brett , here petitioners requested the services for which they were denied coverage. Thus, under DCF’s own regulations implementing federal law, the services are not covered under their Choices plans, and petitioners are entitled to deductions for those services as long as the services are medically necessary.
¶ 25. Although DCF no longer contests the above proposition, it argues that DAIL’s decision not to pay for the additional personal care services was tantamount to a determination that the services were not medically necessary. Given that petitioners did not appeal the respective DAIL decisions declining to provide the additional personal care services, DCF argues, they cannot now assert that the services are medically necessary. DCF’s position rests on the premise that DAIL approves all covered medically necessary expenses, and that its denial of the services in petitioners’ cases necessarily reflects a conclusion that they were not medically necessary. ¶ 26. There is no doubt that expenses for personal care services cannot be deducted from patient shares unless they are medically necessary. That is a stated condition under the Medicaid laws cited above. See 42 U.S.C. § 1396a(r)(1)(A)(ii) (requiring to be taken into account “necessary medical or remedial care . . . not covered under the State plan”); 42 C.F.R. § 435.735(c)(4)(ii) (requiring deduction for “[n] ecessary medical or remedial care recognized under State law but not covered under the State’s Medicaid plan”); see also Patient Share Regulations § 4452.3 (allowing deduction for noncovered personal care services provided in individual’s home “when they are medically necessary in relation to an individual’s medical condition”). ¶ 27. We are left then with DCF’s claim that, for purposes of determining deductions from patient shares, DAIL made final unappealed determinations that the requested additional personal care services were not medically necessary. In support of this argument, DCF cites three cases, one for the general preservation rule that matters not objected to in the proceeding below are not subject to review on appeal— Passion v. Dep’t of Soc. & Rehab. Servs . , 166 Vt. 596, 597-98, 689 A.2d 459, 462 (1997) ( mem .)—and the other two for the general principle that administrative remedies or procedures established by agreement or law must be exhausted before resort to the courts— In re Petition of D.A. Assocs. , 150 Vt. 18, 20, 547 A.2d 1325, 1326 (1988) and Ploof v. Village of Enosburg Falls , 147 Vt. 196, 200, 514 A.2d 1039, 1042-43 (1986). ¶ 28. This case is not comparable to those cited by DCF. Here, petitioners sought additional deductions from their patient shares pursuant to the administrative procedures set forth in DCF’s regulations. They raised in those proceedings the very same issues that they raise on appeal. DCF denied petitioners’ requests for the increased deductions, and petitioners were entitled to appeal from those decisions. There is no failure to preserve any issues or to exhaust administrative remedies within the context of these proceedings. More to the point, neither the applicable regulations nor the record in this case support DCF’s argument that DAIL’s rejection of petitioners’ request for additional personal care services reflects a determination that the services were not medically necessary. ¶ 29. DCF does not deny that under DAIL’s regulations, the services available through the Choices program, including the hours of personal care services available for assisting patients with specific ADLs and IADLs, are subject to caps that are tied to a patient’s determined category of clinical need. CFC Regulations § VIII. A separate provision allows DAIL to grant variances from the caps. Id . § XI. If the variance provision required that patients be afforded all medically necessary services within the categories of services provided in the Choices program, DCF’s argument that DAIL was the proper venue for litigating the medical necessity of the additional personal care services might have force. ¶ 30. But nothing in the variance regulation, nor the CFC regulations more broadly, expressly requires DAIL to provide program beneficiaries all medically necessary services within the categories of services available through Choices. The variance regulation provides: The Department may grant variances to these regulations. Variances may be granted upon determination that:
2. The variance is necessary to protect or maintain the health, safety or welfare of the individual. The need for a variance must be documented and the documentation presented at the time of the variance request. Id . § XI (A). Even assuming that the second prong of this test is functionally equivalent to a determination of medical necessity, the fact that the regulation, on its face, gives DAIL discretion as to whether to grant a variance undermines DCF’s claim that a denial of services is, as a matter of law, tantamount to a finding of no medical necessity. ¶ 31. Moreover, the records in these consolidated cases do not support—and in the McCool case actually contradict—DCF’s assertion that DAIL concluded that the additional services were not medically necessary. At the patient-share hearings before the hearing officer, both petitioners attempted to demonstrate through witness testimony and 288B forms from treating physicians that the requested additional personal care services were medically necessary. The hearing officer at times limited such evidence under the assumption that our decision in Brett precluded deductions from patient shares for services that could be covered by Choices. Nevertheless, Brett provided testimony from her Choices case manager, her caregiver daughter, and her treating nurse practitioner describing her medical condition and detailing the time necessary to assist her in each of the ADLs. ¶ 32. For its part, DCF presented the testimony of DAIL’s long-term clinical coordinator to explain the basis for denying Brett’s request for additional personal care services. Although she stated her opinion that Brett was receiving all medically necessary services under the Choices program, she acknowledged that she conducted her assessment based solely on a “paper review” of the case manager’s submission and that her denial of the additional requested coverage was based on the lack of any functional change in Brett’s condition since the last annual review. She explained that there were maximum amounts of time set for each ADL or IADL under CFC Regulations § VIII, and that additional time beyond those maximums is generally granted under the variance procedure only if there has been changes in the beneficiary’s condition since the most recent assessment. ¶ 33. The case manager testified that the DAIL coordinator had told her that she could not justify the additional hours because the case manager’s comments as to each of the ADLs did not show a change in Brett’s condition. According to the case manager, she concurred that Brett’s condition had not recently deteriorated significantly, but she explained to the DAIL coordinator that Brett was seeking coverage for additional medically necessary third-party personal care services because her expenses for those services, which had previously been provided by her daughter on weekends, were no longer being deducted from Brett’s patient share obligation. The DAIL coordinator acknowledged having this discussion with Brett’s case manager, but nonetheless denied the additional hours based on there being no significant change in Brett’s medical condition. In its decision, the Board did not address the medical necessity of the requested additional personal care services, but rather ruled that “ noncovered ” meant “non-coverable” under Brett and that Brett had failed to appeal DAIL’s determination of her needs. ¶ 34. Nothing in this record supports the assertion that DAIL concluded that the services were not medically necessary; its determination turned on the lack of sufficient deterioration in Brett’s condition since its prior assessment to warrant additional personal care services without consideration of the fact that the “additional” services had been provided all along by Brett’s daughter. Nor did the Board make a finding on the medical necessity of the services initially requested by Brett from DAIL, for which she subsequently sought a deduction in the calculation of her patient share. ¶ 35. Similarly, at McCool’s patient-share hearing, a DAIL representative testified that McCool could resubmit a request for additional hours under the variance procedure if she could show a “significant functional decline” from the last assessment. When McCool’s attorney attempted to pursue further the process underlying a reassessment review and variance procedure, the hearing officer stated that the case was really about whether McCool met the requirements for general supervision and that this was not the forum “to have a determination of whether the original calculation by DAIL was accurate or not because there are separate appeal rights from that that could have been taken at the time.” Nevertheless, McCool was able to present the testimony of her treating physician, her caregiver son, and her case manager. Those witnesses testified about the significant deterioration of McCool’s medical condition, and the son expressed frustration at DCF’s decision to no longer allow a deduction for additional personal care services provided by him. After making numerous findings regarding McCool’s significant needs, the Board concluded that the evidence did not support a finding that McCool needed general supervision services, but that the evidence did support “the need for additional time for ADLs.” The Board asserted that her “case is compelling” and “her need for care is evident” but concluded that she was “seek[ ing ] redress through the wrong mechanism.” ¶ 36. The record in McCool’s hearing not only fails to support DCF’s position that the requested services were not medically necessary; it flatly contradicts that position. The Board made an express finding that the evidence supported the need for additional time for ADLs. It did not specify how many additional hours of ADLs were medically necessary. ¶ 37. Accordingly, we reverse the Board’s orders in each of the consolidated cases and remand the cases to the Board. In Brett’s case, the Board should determine whether the additional personal care services for which petitioners sought a deduction were medically necessary, and, if so, how many additional hours of personal service care were medically necessary. Brett is entitled to deductions from her patient share for the reasonable additional personal care expenses to the extent they were medically necessary. In McCool’s case, the Board has already found that additional services for ADLs were warranted; it should determine the number of additional hours and calculate McCool’s patient share accordingly. [1]