DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: New York State DATE: August 3, 1989 Department
of Social Services Docket No. 89-136 Decision No. 1080
DECISION
The New York State Department of Social Services (New York/State)
appealed a determination by the Health Care Financing Administration
(HCFA/Agency) disallowing $1,246,303 in costs claimed by the State under
the Medicaid program, at Title XIX of the Social Security Act, for the
period April 1, 1987 through March 31, 1988. This appeal involves two
cost categories. HCFA disallowed $714,623 in costs claimed by the State
under its Youth Opportunity Program (YOP). This program provides
employment opportunities for disadvantaged youths by placing them in
positions at State psychiatric facilities. HCFA asserted that the New
York's costs were not directly related to patient care and, therefore,
were unallowable charges to Medicaid. HCFA also disallowed $531,680 in
clothing costs incurred by the State for the purchase of
non-institutional clothing for psychiatric patients. HCFA asserted that
the clothing costs were not related to patient care and, thus, were not
allowable charges to Medicaid.
New York noted that these issues were identical to those previously
considered by the Board in New York State Dept. of Social Services, DAB
No. 1036 (1989). In DAB No. 1036, the Board upheld the disallowance in
full. The Board found that the clothing costs were not authorized by
Medicaid and that the costs of YOP as a whole were not demonstrated by
the State to be allowable. The State, however, was given a limited
opportunity to submit documentation demonstrating that it is entitled to
partial reimbursement for the YOP costs. Based on our holding in DAB
No. 1036, New York requested that we issue a summary decision on the
issue of clothing costs and that we delay consideration of whether New
York is entitled to any reimbursement for YOP costs until HCFA has
resolved the allowability of the YOP costs considered in DAB No. 1036.
HCFA agreed to New York's proposed disposition of this appeal.
Accordingly, we sustain the disallowance of clothing costs consistent
with our holding in DAB No. 1036, which we incorporate here. We also
reaffirm our holding in DAB No. 1036 that YOP costs, as a whole, are not
allowable.
New York, however, retains the opportunity to demonstrate that it is
entitled to partial reimbursement for the YOP costs by following
procedures permitted by the Board in DAB No. 1036. As soon as the
Agency has determined the State's entitlement for YOP costs for the
earlier period covered by DAB No. 1036, the Agency should establish
guidelines for submission and review of any documentation relevant to
YOP costs covered by this appeal. Then, after HCFA has reviewed any
State submission and made its decision concerning the instant YOP costs,
the State will have 30 days from the receipt of HCFA's decision to
return to the Board if it disagrees with HCFA on that limited issue.
Conclusion
Based on the above analysis we sustain the disallowance of $531,680 for
clothing costs. We also sustain, in principle, the $714,623 disallowed
in relation to the YOP costs. The disallowance related to the YOP is
subject to possible reduction to the extent that the State can document,
in accordance with the procedures set out above, the allowability of
those costs as appropriate charges to Medicaid.
_____________________________ Norval D. (John) Settle
_____________________________ Alexander G. Teitz
_____________________________ Donald F. Garrett Presiding Board