New York State Department of Social Services, DAB No. 1052 (1989)

DEPARTMENTAL APPEALS BOARD

Department of Health and Human Services

SUBJECT: New York State Department of DATE: May 23, 1989 Social
Services Docket Nos. 89-48 89-67 Decision No. 1052

DECISION

The New York State Department of Social Services (State) appealed
determinations by the Health Care Financing Administration (Agency)
disallowing federal financial participation (FFP) claimed under title
XIX of the Social Security Act for the six months ending December 31,
1986. The costs claimed represented amounts originally paid under the
State-funded medical assistance program which the State later claimed as
payments for individuals eligible for Medicaid. The State's claim was
made using statistical sampling procedures, that is, the State estimated
the amount paid to Medicaid eligibles based on its review of the case
records for a sample of recipients of State-funded medical assistance
during the period in question. While the purpose of this review was to
identify individuals who were eligible for Medicaid on the basis of
disability, the State indicated that a small percentage of the cases
involved individuals who were eligible for Medicaid on a basis other
than disability. The State asserted that the amount relating to
non-disability-based claims was $106,426 of the $1,558,625 FFP claimed
for the quarter ended September 30, 1986 and $860,012 of the $10,312,589
FFP claimed for the quarter ended December 31, 1986 . Proceedings
concerning the non-disability-based claims are currently pending before
the Board. However, the State requested a summary decision upholding
the disallowance of the disability-based claims based on New York State
Dept. of Social Services, DAB No. 1012 (1989).

In DAB No. 1012, the Board held that the State was not authorized to use
statistical sampling as a basis for claiming Medicaid funds payable on
behalf of disabled individuals. The Board found that sampling was
impermissible because it was used in lieu of making the disability
determinations which the regulations, reasonably interpreted, require in
each case for which payment is made. Accordingly, the Board sustained
disallowances for the period July 1, 1985 through June 30, 1986 to the
extent that they represented extrapolations from cases in the sample
involving individuals eligible for Medicaid based on disability. The
Board remanded that part of the disallowances pertaining to the cases in
the sample to determine whether the disability determination in each
case was properly made.

The Agency stated that it agreed to the issuance of a summary decision
in the amounts indicated by the State based on DAB No. 1012; however, it
stated that "in so doing we make no concessions whatsoever regarding the
accuracy or validity of the statistical procedures employed by the State
either for developing the disallowed claims in the first place or for
identifying the amounts associated with disability and non-disability
based claims." Docket No. 89-67, letter from Novinski to Settle dated
5/8/89, p. 1.

The Agency's position, to which the State voiced no objection, is a
reasonable one. Clearly, since we find that the State could not
properly claim Medicaid funding for disabled individuals using
statistical sampling, we need not determine here whether or not the
statistical procedures on which the claims were based are valid. Thus,
this decision does not preclude the Agency from raising, in the context
of some other proceeding, any objection to the validity of the
statistical procedures nor from arguing that the amount which the State
identified as subject to this decision is incorrect because it was based
on invalid statistical procedures.

Conclusion

Accordingly, based on the analysis in DAB No. 1012, we uphold the
disallowances to the extent that they represent disability-based claims
calculated by extrapolation from a statistical sample. As in that
decision, we remand to the Agency that part of the disallowances which
pertains to the cases in the sample to determine whether the disability
determination in each case was properly made so that FFP is allowable.
The State may appeal the Agency's determination in the sample cases
pursuant to 45 C.F.R. Part 16.

________________________ Donald F. Garrett

________________________ Alexander G. Teitz

________________________ Norval D. (John) Settle Presiding Board