Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: New York State Department of Social Services
DATE: December 20, 1991
Docket No. 91-50
Decision No. 1287
DECISION
The New York State Department of Social Services (State) appealed
a
determination by the Health Care Financing Administration
(HCFA)
disallowing $364,986 in federal financial participation (FFP) claimed
by
the State under Title XIX (Medicaid) of the Social Security Act
(Act).
The disallowed amount represented two categories of costs claimed by
the
State at the enhanced FFP rate of 75 percent available for
certain
training costs. First, for one category of training costs
HCFA
disallowed $182,028 FFP, which was the difference between the
generally
available administrative 50 percent rate and the State's claim at
the 75
percent rate. Second, HCFA disallowed $182,958 FFP for five
contracts
the State awarded to provide training primarily to staff
in
institutional facilities. The disallowed claims were submitted by
the
State for the period April 1, 1988 through September 30, 1989.
As discussed below, the State has appealed disallowances raising
these
issues to this Board in the past. At the State's request and
with
HCFA's consent, we will summarily resolve the State's appeal for most
of
the disallowance amount on the basis of prior Board decisions. As
to
the remaining contested amount, $93,049 FFP claimed for a contract
with
the State University of New York at Albany, we sustain the
disallowance
for the reasons discussed below.
Relevant Statutes and Regulations
Title XIX authorizes federal grants to aid in financing state
programs
which provide medical assistance and related services to
needy
individuals, in accordance with a state plan. Each state
participating
in the Medicaid program is paid "the Federal medical
assistance
percentage" (in New York 50 percent) of the amounts expended as
"medical
assistance under the State plan" and 50 percent of the amounts
expended
which are "found necessary . . . for the proper and
efficient
administration of the State plan" and which are not subject to
any
enhanced reimbursement rate for administrative costs.
Section
1903(a)(1) and (a)(7) of the Act.
Title XIX authorizes an enhanced reimbursement rate of 75 percent of
"the
sums expended . . . (as found necessary . . . for the proper
and
efficient administration of the State plan) as are attributable
to
compensation or training of skilled professional medical personnel . .
.
." Section 1903(a)(2) of the Act. The implementing regulations
provide
that this enhanced rate is available for specified Skilled
Professional
Medical Personnel (SPMP) staffing and training expenditures,
i.e., for
salary and other compensation, fringe benefits, travel, per diem,
and
training. 42 C.F.R. 432.50(a) and (b)(1); 433.15(b)(5). The
75 percent
rate is available only if "[t]he expenditures are for activities
that
are directly related to the administration of the Medicaid program,
and
as such do not include expenditures for medical assistance." 42
C.F.R.
432.50(d)(1)(i) (emphasis added). An enhanced FFP rate of 75 percent
is
also available in regard to a state's Medicaid Management
Information
System (MMIS) for the costs of training "personnel engaged
directly in
the operation of mechanized claims processing and information
retrieval
systems." 42 C.F.R. 432.50(b)(2).
The regulations define a training program as:
a program of educational activities based on the
agency's training
needs and aimed at insuring that agency staff acquire the
knowledge and
skills to perform their jobs.
42 C.F.R. 432.2.
Unlike the statutorily prescribed fixed rates for FFP in
administrative
costs, expenditures for medical assistance services in the
Medicaid
program are reimbursed in another way. For example, a state
Medicaid
plan must provide for payment for Medicaid services in hospitals
and
long-term care facilities through the use of rates determined
in
accordance with methods and standards developed by the state. The
state
must submit satisfactory assurances that its rates are reasonable
and
adequate to meet the costs incurred by efficiently and
economically
operated facilities. Section 1902(a)(13) of the Act; 42
C.F.R. Part
447, Subparts B and C.
I. The SPMP/MMIS training costs
In its disallowance determination HCFA found that $182,028 FFP claimed
by
the State for training was not eligible for the enhanced 75 percent
rate
because the training provided was general and administrative in
nature and
unrelated either to SPMP functions or to personnel engaged in
the direct
operation of claims processing and information retrieval
systems. HCFA
described the disallowed amounts as the difference
between the State's
application of the 75 percent rate and HCFA's
determination that the costs
were entitled to be reimbursed only at the
50 percent rate.
In accord with the State's request for a summary decision, we
therefore
sustain that part of the disallowance, $182,028 FFP related to
training,
on the basis of our analysis in New York State Dept. of Social
Services,
DAB No. 1008 (1989), which we incorporate by reference.
II. The training contract costs
HCFA disallowed $182,958 FFP for five contracts the State entered into
to
provide training primarily to staff in institutional facilities that
provide
Medicaid reimbursable services. HCFA determined that, under 42
C.F.R.
447, Subpart C, costs for the training of the facilities'
employees should be
reflected in the facilities' per diem rates and
claimed by the State to HCFA
as medical assistance payments.
The State contended that the costs paid by the State to the contractors
to
provide training to staff at institutional facilities were not
incurred
directly by the facilities, and therefore the costs were not
built into any
particular facility's rate structure. The State
maintained that the
current cost base for the facilities was developed
in prior years and did not
incorporate the costs of training. Moreover,
according to the State,
the training costs in dispute concerned
activities which were directly
related to the administration of the
Medicaid program.
In New York State Dept. of Social Services, DAB No. 1146 (1990), the
Board
reviewed a similar HCFA determination that the State's claim for
training
contract costs for personnel in county- and city-owned and
operated medical
facilities was unallowable. In affirming HCFA's
finding that the State
was required to treat the training costs as
medical services costs properly
claimed for FFP only through the
facilities' services rates, the Board
stated:
Although the disputed training costs were incurred
by the single
State agency administering the Medicaid program, the scope of
the
individuals trained and the nature of the training support
HCFA's
finding that the costs were not general administrative costs of
the
Medicaid program. . . . HCFA reasonably determined that these
costs
were costs of facility services since the training was intended to
fill
gaps in the in-service training and enhance the service
delivery
capability of the personnel only at certain public facilities.
Id. at 4. The Board, in examining the specific training
contracts,
noted that the State admitted that the training at issue was
furnished
to employees of publicly operated facilities providing direct
services
to recipients.
In New York State Dept. of Social Services, DAB No. 1252 (1991), the
Board
examined four contracts the State entered into to provide training
for
employees of various medical facilities. The State had claimed the
costs of
the contracts as state administrative expenses at the enhanced
FFP rate of 75
percent. Citing DAB No. 1146, the Board determined that
HCFA had reasonably
determined that the subject matters of the contracts
were not related to the
administration of the Medicaid program, even
though some of the trainees may
have been SPMPs or other Medicaid
administrative personnel. The Board
found that the contract costs were
related to service delivery rather than
program administration and could
be claimed for FFP only through the
rate-setting mechanism established
for reimbursement of the costs of facility
services.
Of the five training contracts at issue in this appeal, the State
conceded
that three contracts had been examined in DAB No. 1252. In this
appeal,
covering a later time period, the State claimed $29,226 FFP for
these three
contracts. The parties agreed that the availability of FFP
for these
three contracts would be decided on the basis of DAB No. 1252.
Therefore,
based on our analysis in DAB No. 1252, which we incorporate
here, we sustain
the disallowance of FFP in the amount of $29,226 for
the three contracts at
issue here that had been previously reviewed in
DAB No. 1252.
The two remaining contracts involved memoranda of understanding (MOUs)
the
State executed with universities in New York: a MOU with the
State
University College (SUC) at Buffalo in the amount of $60,683 FFP; and
a
MOU with the State University of New York at Albany (SUNY Albany) in
the
amount of $93,049 FFP. After presenting arguments why the
disallowances
for both these contracts should be reversed, the State in the
course of
this proceeding withdrew its appeal of the SUC at Buffalo MOU; the
State
announced that it would be reclaiming the costs of this contract in
the
future as part of regular training costs.
The MOU with SUNY Albany, therefore, is the only contract remaining
in
dispute. The disallowed amount represents the difference between
the
State's claim for FFP in the costs of the MOU at a 75 percent rate
and
HCFA's determination that the costs were reimbursable at only a
50
percent rate.
According to the State, the SUNY at Albany MOU supported the training
of
State Medicaid Agency staff and SUNY student interns in the
direct
operation of automated claims processing and information
retrieval
systems. The State asserted that the trainees included State
staff and
interns who were part of a Medical Assistance Intern Program
(MAIP), a
project sponsored jointly by the State's Division of Medical
Assistance
and SUNY Albany. During the period at issue, the State
claimed the
costs associated with six interns in the MAIP at the enhanced 75
percent
rate of FFP for the training of MMIS personnel as provided for in
42
C.F.R. 432.50(b)(2).
The stated goals of the MAIP were:
1. To improve the quality of care to Medicaid recipients.
2. To emphasize cost containment measures,
increase the efficiency
and effectiveness of the Medicaid Program, and
maximize the potential
for federal reimbursement.
3. To provide for graduate students,
university faculty, and
department staff
collaboration regarding ongoing policy issues or
research needs.
4. To allow graduate students, under the guide
of others, to
research about issues of concern to the Bureau of Program
Analysis and
Utilization Review.
5. To introduce SUNY graduate students to
state of the art
information hardware and software in the form of the
Bureau's Medicaid
Management Information Systems various information
retrieval systems.
State's Exhibit (Ex.) 1, at 1.
The stated specific MAIP objectives included:
1. To reduce the amount of time it takes to
respond to the average
request from 10 to 12 weeks to 8 weeks by utilizing
the Medical
Assistance Intern Program to train staff in microcomputer based
hardware
and software based information retrieval techniques. This
objective
will be reached within 24 months.
2. To increase the number of Policy Analysis
notes and reports by
utilizing the Medical Assistance interns to write one
proposal each
year. This objective will be reached the first year.
3. To increase the resources necessary to
support the format and
type of integrated data users expect by establishing a
capability for
pursuing research grants and developing a written policy for
charging
for reports. Such policies should be developed within 18
months.
4. To increase the proportion of requests
actually responded to
from 80 percent to more than 90 percent.
Id. at 3.
The State contended that the MAIP interns were involved in the program
as
both trainees and trainers. The State referred to a proposal by
SUNY
which formed the basis of the MOU and set forth the goals of
the
training:
The program is intended to provide State Medical
Assistance
personnel with job-related training in specific task areas such
as
medical systems analysis and Medicaid program management and
cost
containment. . . . The major areas of anticipated work include, but
are
not limited to: - training to support methods of lowering
costs and
cost containment; - training in Health Care
Systems Analysis, Large
Scale Systems Development, and Special
Topics in Advanced
Statistics; . . .
State Ex. 6 at 2. The State maintained that the MOU
contained
descriptions of training provided to interns that related to the
State's
MMIS, including the Surveillance and Utilization Review subsystem
and
date of services systems. State Ex. 3. The State supplied a
list of
the interns and the various projects they accomplished. State
Exs. 1,
Attachment A, 2, and 8.
HCFA contended that a review of the MOU with SUNY at Albany
demonstrates
that the activities of the MAIP interns did not meet the
regulatory
definition of training. HCFA pointed out that only the first
of the
MAIP's objectives specifically mentioned training. HCFA further
argued
that there is no evidence that any of the MAIP interns provided
any
training, within the meaning of 42 C.F.R. 432.50(b)(2), during
the
period at issue that merits the State receiving 75 percent FFP for
the
costs of the MOU. As for the projects performed by the interns
during
the period at issue, HCFA argued that none specifically referred to
the
training of State staff involved directly in MMIS operations.
Based on our review of the exhibits submitted by the State, we find
that
there is no readily apparent training connection between the
activities
of the MAIP interns and the State staff who operate the State's
MMIS.
The State has not identified any of its employees who received
training
under the auspices of the MAIP during the period at issue, or
the
specific dates and nature of any training received from the
MAIP
interns. It is worth noting that here the State is seeking an
enhanced
rate of FFP rather than the standard rate. An enhanced rate of
FFP is
an exception to the generally available reimbursement rates, and a
state
must accordingly meet a higher standard of proof to justify a claim
at
an enhanced rate. See Colorado Dept. of Social Services, DAB No.
1277
(1991) at 14, and DAB No. 1008, supra, at 3. Here the State has
not
provided evidence adequate to link the actual activities of the
interns
to training actually provided to State Medicaid Agency staff.
1/
Therefore, the State has not met that standard of proof here.
Furthermore, the State's claims for FFP here are clearly overbroad.
As
HCFA contended, the MAIP's listed goals and objectives covered
many
areas other than training. Assuming that some training did occur
(an
assumption unsupported by any direct evidence in the record before
us),
it is unreasonable for the State to claim the enhanced rate of FFP
for
all the costs associated with the MAIP. The writing of Policy
Analysis
notes and reports, for example, the second listed objective of the
MAIP
and the activity most interns performed as shown by the
State's
exhibits, clearly does not have any relationship to the training
of
State staff. From our reading of the record, at best only a
small
segment of the interns' possible activities were related to the
training
of State staff. Yet the State claimed FFP at the enhanced rate
for all
the costs associated with the MOU. Since the State failed to
provide
evidence to segregate what portion, if any, of the interns'
time was
spent training State staff engaged directly in MMIS operations, it
has
no basis for any claim of FFP at the enhanced 75 percent rate.
Conclusion
For the reasons stated above, we sustain the disallowance in the amount
of
$364,986.
___________________________ Judith
A.
Ballard
___________________________ Norval D.
(John)
Settle
___________________________ Cecilia
Sparks
Ford Presiding Board Member
1. Although interns may have received training, and may
ultimately
become staff, the State presented no evidence that the interns
were
considered State Medicaid Agency staff at the
time.