New Jersey Department of Human Services, DAB No. 941 (1988)

DEPARTMENTAL GRANT APPEALS BOARD

Department of Health and Human Services

SUBJECT:  New Jersey Department of Human Services

Docket No. 87-191
Decision No. 941

DATE:  March 7, 1988

DECISION

The New Jersey Department of Human Services (State)  returned to the
Board when the Health Care Financing Administration (HCFA, Agency) and
the State could not agree on a matter remanded in accordance with New
Jersey Dept. of Human Services, DGAB No. 845 (1987).  The parties
reached an impasse on the issue of what portion of the clerical staff
costs for Medicaid district offices could appropriately be claimed at
the enhanced rate of 75% federal financial participation (FFP) available
for skilled professional medical personnel (SPMP) support staff under
Title XIX of the Social Security Act (Act).  The Agency had disallowed
the portion of the State's claims for the period July 1, 1983 to
December 31, 1985 for support staff costs which exceeded the 50% rate
generally applicable to administrative costs.

In New Jersey, we determined that, because there were SPMP positions in
the district offices, the clerical support staff employed in the
district offices apparently did perform some functions directly
necessary to the carrying out of SPMP functions which were thus
reimbursable at the 75% rate when properly supported. 1/  New Jersey,
pp. 10-13.  The Board's decision was based on its review of the
documentation in the record describing the tasks, actions, and
responsibilities for the disputed clerical positions.  On remand the
State was given the opportunity to identify the particular clerical
duties having the .required direct nexus with SPMP functions and the
proportion of each clerical staff member's time spent on such duties.
In this proceeding, the State requested that the Board decide what
proportion of clerical support staff costs claimed by the State should
receive 75% FFP. 2/

The State's Position

The State contended that on remand it suggested to the Agency a
methodology based on the percentage of SPMP within each Medicaid
district office.  This methodology provided, for example, that if an
office had a staff of seven SPMP and three professional administrative
staff, 70% of the clerical support staff costs would be claimed for 75%
FFP reimbursement.  The State argued that its approach, which the Agency
refused to accept, was reasonable and consistent with cost accounting
principles.  The State claimed that the Agency insisted on employee time
records which identify the amount of time each clerical staff member
spent on SPMP related duties.  The State asserted that, since it
originally claimed all the district office staff as SPMP and SPMP
support staff, this kind of contemporaneous documentation did not exist,
as there was no reason to require staff to make this kind of
distinction.

The State argued that the Board has previously held that a reasonable
method of computing a disputed amount can be substituted for a detailed
review of every item in dispute or that a methodology like the one
suggested by the State here might be satisfactory.  See Oregon Dept.of
Human Resources, DGAB No.  729 (1986) at 32.  Moreover, the State
claimed that HCFA has approved cost allocation plans which use this same
method of staff-based calculation for distributing costs to the correct
federal program.

.Analysis

As we stated in New Jersey, the question of whether federal funding is
available at all is not an issue here.  Rather, the question is whether
federal matching is available at the 75% rate under section 1903(a)(2)
of the Act as opposed to the 50% rate generally available under section
1903(a)(7) for expenditures necessary for administration.  As we noted,
the Board has found that where a state is claiming reimbursement of
costs at a rate higher than 50%, the state has the burden to show that
the costs claimed are entitled to the higher rate of reimbursement. Our
decision was quite specific regarding what the State was to do on
remand.  However, the record reflects no effort by the State to identify
specific tasks with the requisite direct nexus to SPMP functions or to
analyze the portion of a clerical staff member's time spent on such
duties.  The State, the party clearly having superior access to
information about the disputed positions, failed to abide by the Board's
remand directive, instead proposing a wholly unsupported methodology.

Moreover, the State presented no evidence or analysis here to support
the proportional allocation it advanced.  The State never addressed
substantively the Agency's view that there is no basis for an assumption
that the SPMP positions in the office generated a proportional clerical
workload.  The State's proposal is similar in nature to an offer to
split the difference of a contested amount--not an appropriate basis for
the payment of federal funds.  Inasmuch as the State has not provided
any evidence or analysis to support its methodology, we determine that
the Agency reasonably rejected what the State proposed.

The State proposed this proportional allocation methodology to the
Agency by letter of April 27, 1987.  The Agency rejected the State's
proposal by letter of May 29, 1987.  The Agency rejection noted both
that the State had not provided the documentation required by the
Board's decision and that there was no assurance that the proportional
allocation accurately reflected the distribution of clerical staff time
between SPMP and non-SPMP. State's Appeal File, Exs. A and B.
Furthermore, the Agency did not state in this proceeding that it would
reject any documentation other than contemporaneous time records.  To
the extent there was any confusion on this point earlier, the Agency
response in this proceeding .clarified that the inquiry here is whether
proffered documentation in fact meets the State's burden to document its
claims.  Agency's February 1, 1988 letter.  The record shows that in the
absence of contemporaneous time records, the State did not offer to
present any other kind of documentation.  We find that the State had
ample opportunity to document an appropriate allocation during the
remand and now before the Board.  However, the State simply asked that
the Board now overturn the disallowance, without addressing
substantively how to best determine what proportion of its clerical
costs are eligible for 75% FFP. 3/  State's February 19, 1988 letter.
By failing to provide supporting documentation, the State has in essence
chosen to forego enhanced reimbursement for these positions.

While the State very generally averred that its suggested allocation
methodology is considered appropriate and is consistent with generally
accepted accounting principles, it also failed to support these
allegations.  When the Board suggested in Oregon, supra, that a
proportional methodology might be used, it also stated that the Medical
Assistance Manual provides that staff time which is split among
functions at different levels of FFP must be documented by the State as
to the amount of time spent in each function.  Consequently, while such
a methodology might sometimes be appropriate, there must be substantive
factual support for it.  Here, the record shows that the clericals were
performing a number of different functions, some which supported SPMP
and some which did not.

.Conclusion

Based on the above analysis, we conclude that the Agency's disallowance
for the clerical positions subject to the remand in New Jersey should be
sustained because on remand the State failed to support its proposed
allocation with documentation to identify the clerical duties having the
required direct nexus with SPMP functions and the proportion of each
clerical staff member's time spent on such duties.

 


                            ___________________________ Judith A.
                            Ballard

 


                            _____________________________ Donald F.
                            Garrett

 


                          _____________________________ Cecilia Sparks
                            Ford Presiding Board Member

 

 


1.     Although the disputed issues had narrowed substantially, we also
determined in New Jersey that the positions of Medicaid District Office
Director and Regional Director were not SPMP positions and, therefore,
were reimbursable only at the 50% rate.

2.     The record is unclear as to the amount in dispute.  The State
initially claimed all its clerical support staff costs at 75% FFP and
the Agency allowed FFP only at 50%.  The State's submission here gives
$619,947 as the "Total SPMP Clerical Support Costs"; presumably, the
State is asserting on remand that it is entitled to 75% FFP in this
amount.  State's Appeal File, Exhibit (Ex.) F.

3.     We noted in New Jersey that the documentation in the record
concerning the disputed clerical positions did not cover each position
for the complete time period at issue.  In the current proceeding, the
State submitted an affidavit from a State official stating that, "[t]he
list of job responsibilities for the position titles . . . were
consistently the same . . ." during the period in dispute.  Simply
averring that the disputed position duties remained constant for the
disputed time does not however speak to the matters which could not be
addressed on the prior record, i.e., which duties had the required
direct nexus with SPMP functions and what proportion of the clerical
staff member's time was spent on such functions.  The State provided no
more information to the Board with regard to what might be the proper
allocation than we had in the earlier