DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: New York State Department of Social Services
Docket Nos. 87-71 87-93 87-140
Decision No. 918
DATE: November 4, 1987
DECISION
The New York State Department of Social Services (State) appealed
a
determination by the Health Care Financing Administration (Agency)
to
disallow costs totaling $24,837 in federal financial participation
(FFP)
claimed under Title XIX of the Social Security Act (Act). 1/
As discussed below, we uphold the Agency's disallowance in full,
without
prejudice to the State's opportunity to resubmit a claim as
discussed
below.
Background
The facts leading up to the disallowance are uncontested. In
November
1985, the State submitted to the Agency for approval an Advance
Planning
Document (APD) for the development, design, and implementation of
the
Client Notices Subsystem (CNS) of the Welfare Management System
(WMS).
The WMS is a computer system used by the State in its administration
of
the Medicaid program. The automatic data processing (ADP)
regulations
for claiming costs of equipment and services are applicable to
the WMS
and its subsystems. See 45 CFR Part 95, Subpart F. The
applicable
regulations, which are not at issue, generally provide the terms
and
conditions under which the Agency will approve FFP for automatic
data
processing equipment and services. Specifically, a state must
obtain
written approval of its APD prior to entering into
contractual
agreements or making any other commitment for acquisition of
ADP
equipment or ADP services. Therefore, a state should not make
claims
for ADP services until its APD has been approved. The Agency has
not
yet decided whether or not to approve the APD for the CNS. See
Agency
appeal file, Ex. B. The State, however, claimed 75%
reimbursement for
CNS development by allocation of CNS costs to the Medicaid
Management
Information System (MMIS) operations. See Agency appeal
file, Ex. C.
The Agency disallowed the claims because the APD for the CNS,
and thus
the CNS itself, has not been approved.
The State does not contest the Agency's disallowance as applied to
its
original claims. Instead, for the first time, the State has argued
that
the disallowed costs were mislabeled as a result of a clerical error
and
should have been denoted as feasibility studies. Further, the
State
maintained that feasibility studies are not subject to any
prior
approval requirement and are reimbursable at a 50% FFP rate.
2/
Moreover, the State maintained that since the APD, which would
include
the approval of the feasibility studies, is not yet approved,
the
disallowance is premature and should, therefore, be reversed.
Finally,
the State maintained that since it submitted its APD in November
1985,
it would be eligible to receive a waiver of any prior
approval
requirement that may exist.
The Agency agreed that absent notice to the State, prior approval is
not
required for feasibility studies (although feasibility studies must
be
claimed within an approved APD), and that the Agency did not give
the
State such notice in this case. However, the Agency maintained that
it
could not view the State's appeal in this case as an appeal of
a
disallowance for costs incurred in conducting a feasibility study.
The
Agency argued that the State submitted cost reports
claiming
reimbursement for CNS development/operations and these were the
claims
which were disallowed. The Agency maintained that the State
cannot in
the course of the appeal before the
Board re-state the claims
made on
the cost reports. Instead, the Agency maintained that the Board
should
uphold the current disallowance for the claimed costs. Further,
the
Agency maintained that the proper procedure for the State to follow
is to
await the Agency's determination on the request for approval of
the APD.
3/ If the APD, and by it the overall project, is approved, the
State
may seek a waiver for costs incurred prior to the approval of the
APD since
the APD was submitted to the Agency before December 1, 1985.
See 45 CFR
95.623. If the waiver is granted, the State could, at that
time, submit
documentation showing that the costs claimed were incurred
in conducting a
study of the feasibility of CNS. Thus, the Agency
maintained that the
documents filed in the State's appeal file were
inappropriately
submitted. See State's appeal file, Exs. 1-3.
In light of the State's own admission that the Agency's disallowance
of
the costs as originally claimed was correct, because the claims
were
made as part of the MMIS operations of the unapproved CNS, we find
that
the total disallowance should be upheld. Further, we find that
the
procedure outlined by the Agency for consideration of the revised
claim
is a reasonable one and appropriate under the circumstances.
Moreover,
although the Agency has represented that the CNS project is
approved in
concept, if the Agency should ultimately reject the project, the
State
will have an opportunity to appeal that decision. Likewise, the
State
will have an opportunity to appeal the Agency's decision if the
Agency
ultimately rejects the State's claim for these costs as the costs
of
feasibility studies.
Conclusion
For the reasons stated above, we uphold the Agency's disallowance on
the
basis stated. This is, however, without prejudice to the State
to
refile its claim for the same costs but claiming them as costs of
a
feasibility study.
________________________________
Cecilia
Sparks Ford
________________________________
Alexander
G. Teitz
________________________________ Norval
D.
(John) Settle Presiding Board Member .
DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
REVISION OF DECISION
SUBJECT: New York State Department DATE:
February 8, 1988 of
Social
Services Docket Nos. 87-71 87-93 87-140 Decision No. 918
A letter from counsel for the Health Care Financing
Administration,
dated February 1, 1988, which has been added to the
consolidated record
of these cases, noted an error in Board Decision No. 918
concerning the
remaining amount of the disallowances. The letter stated
that the
appellant concurred in the respondent's request for correction of
the
amount. Therefore, the decision is amended to specify the
following
disallowance amounts subject to the decision: $8,345 in
Docket No.
87-71; $6,839 in Docket No. 87-93; and $24,837 in Docket No.
87-140
(total: $40,021).
_____________________________ Cecilia
Sparks
Ford
_____________________________ Alexander
G.
Teitz
_____________________________ Norval D.
(John)
Settle Presiding Board Member
1. By stipulation, dated October 14, 1987, the
parties agreed that
the total amount at issue in this proceeding is $24,837,
as follows:
$9,583 for October 1, 1985 through December 31, 1985; $7,081 for
January
1, 1986 through March 31, 1986; and $8,173 for October 1, 1986
through
December 31, 1986.
Originally, as with most disallowances under $25,000, the Board
designated
Docket No. 87-71 for adjudication through the Board's
expedited
process. See 45 CFR 16.12(a). However, when it appeared that
this issue
would cause continuing disallowances in other quarters, the
Board determined
that the most appropriate action would be to remove
these cases from the
expedited process. See 45 CFR 16.12(b).
2. In addition to the clerical error in labeling the
claim that it
allegedly made, the State acknowledges that the correct FFP
rate is 50%
instead of the 75% percent that it originally claimed.
3. The Agency noted that it has approved the CNS
project in concept;
however, funding for the project is contingent upon
receipt of certain
information relating to CNS. Agency supplemental
reply brief, n.