DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Nebraska Department of Social Services
DATE: September 9,1994
Docket No. A-93-244
Audit No. NE/93/003/MAP
Decision No. 1494
DECISION
The Nebraska Department of Social Services (Nebraska) appealed a
disallowance by the Health Care Financing Administration (HCFA) under
title XIX (Medicaid) of the Social Security Act (Act). HCFA disallowed
$1,307,753 of Nebraska's claim for federal funding for costs incurred
under its home and community-based services (HCBS) waiver for the period
July 1, 1991 through June 30, 1992 (FY 1992). The amount disallowed
represents 10 percent of direct residential staff costs.
This disallowance presents the same basic issue which was resolved in
Nebraska Dept. of Social Services, DAB No. 1354 (Nebraska I), Nebraska
Dept. of Social Services, DAB No. 1389 (Nebraska II), and Nebraska Dept.
of Social Services, DAB No. 1449 (Nebraska III). This issue was whether
10 percent of direct residential staff costs must be excluded from
reimbursement under the terms of Nebraska's approved HCBS waiver.
Nebraska's original HCBS waiver was approved for a three-year period
beginning October 1, 1987. The waiver provided for a 10-percent
deduction in order to remove unallowable room and board costs from the
staff salary costs included in provider reimbursement claims. The
10-percent deduction was adopted as a means of eliminating the difficult
task of differentiating between room and board services and all other
aspects of staff duties and then allocating separate costs incurred in
every instance. After expiration of the original HCBS waiver, a renewal
waiver was approved by HCFA on January 15, 1991. This renewal waiver
was to cover a five-year period beginning October 1, 1990. The renewal
waiver differed from the original waiver in that it did not include the
10-percent deduction for room and board which had been in the original
waiver, nor any other means of deducting the portion of staff costs
attributable to room and board services.
The Board upheld the disallowances in all three cases. The Board found
that Nebraska was bound by the terms of the original waiver in effect
during the disallowance period in Nebraska I and Nebraska II and the
first three months of the disallowance period in Nebraska III. In
addition, the Board found that the 10-percent deduction provided for in
the original waiver remained a reasonable means of removing room and
board costs from direct residential staff salaries during the last nine
months of the disallowance period in Nebraska III, during which the
renewal waiver was in effect.
The renewal waiver was in effect throughout the period in question in
this appeal. HCFA disallowed the costs at issue on the basis of the
approved methodology in the original waiver, however, since the renewal
waiver did not provide a new methodology for implementing the room and
board deduction.
For the reasons explained below, we uphold the disallowance in full.
The renewal waiver specifically excluded room and board from
reimbursement and Nebraska did not allege any change in residential
staff responsibilities or otherwise substantiate that no room and board
services were performed. The 10-percent deduction proposed by Nebraska
in the original waiver and approved by HCFA thus remained a reasonable
means of removing room and board costs from direct residential staff
costs.
ANALYSIS
While Nebraska raised some of the same arguments here as it did in its
previous appeals, it did not offer any explanation of why the Board's
previous decisions were wrong. Nor did Nebraska offer any new evidence
for the Board's consideration, other than conclusory affidavits of the
type the Board had previously rejected and the evidence discussed in
section 1 below, which we find to be irrelevant. Thus, as we summarize
below, we find no reason to decide these issues differently here.
In view of the fact that the Board had addressed the central issue
raised by the current appeal in three previous Board decisions, the
Board issued an Order to Show Cause as to why the disallowance in this
case should not be upheld based on the analysis in the prior decisions.
In response to the Order Nebraska argued that a new standard for
defining room and board costs applied to the disallowance at issue here.
Nebraska asserted that this definition, adopted in August of 1991, is
found in the State Medicaid Manual published by HCFA. Nebraska
contended that HCFA should use this definition as the basis for a field
survey to determine whether unallowable room and board costs were
included in Nebraska's provider reimbursement rates. According to
Nebraska, HCFA has failed to demonstrate that any of the costs claimed
included unallowable room and board, and therefore the disallowance
should not be upheld. In addition, Nebraska asserted that because its
renewal waiver removed the 10- percent deduction methodology, there is
no basis for disallowing the costs at issue. We address each of these
points below.
I. Nebraska's reliance upon the definition of room and board in the
State Medicaid Manual does not prove that these costs
were eliminated from provider reimbursement rates.
Nebraska argued that because it adhered to the State Medicaid Manual's
definition of room and board, no unallowable room and board costs were
included in staff salary expenses. This definition provides as follows:
Board means three meals a day or any other full nutritional regimen.
Room means hotel or shelter type expenses including all property
related costs such as rental or purchase of real estate and
furnishings, maintenance, utilities and related administrative
services.
Nebraska Exhibit (Ex.) A at 1.
Nebraska's point appears to be that the actual cost of food and shelter
were removed from provider reimbursement rates. However, this ignores
the question of whether the cost of services relating to the provision
of food and shelter has been included in the cost of residential staff
salaries. As we stated in Nebraska I:
It strikes us as reasonable to assume that residential staff in
assisted residential living centers for the mentally retarded might
perform services relating to the provision of meals or the
maintenance of the centers. Any number of tasks could conceivably
be performed: shopping for food, food planning and preparation,
kitchen cleanup, housekeeping chores, building maintenance, etc.
DAB No. 1354 at 5.
Throughout all four of its appeals before this Board, Nebraska never
argued that the residential staff were not in any way involved in the
preparation of meals or the maintenance and cleaning of the residences.
Although the State Medicaid Manual definition does not specifically
include the tasks named above, such tasks are integral to the provision
of room and board. Nebraska has never provided the Board, either in
this appeal or the prior appeals, with a breakdown of the amount of
staff time spent performing different functions. Thus, we conclude, as
we did in Nebraska I, II, and III, that Nebraska failed to prove that
none of the services performed by the residential staff were
attributable to room and board.
Furthermore, Nebraska's argument that HCFA failed to prove that the
residential staff performed room and board functions or that room and
board costs were included in provider reimbursement rates is misplaced.
This Board has consistently held that a state has the burden of
documenting the existence and allowability all of its costs. West
Virginia Department of Health and Human Services, DAB No. 1257 (1991);
New York City Human Resources Administration, DAB No. 1199 (1990). The
only documentation Nebraska submitted here was an affidavit from a state
official which conclusively stated that unallowable room and board costs
were excluded from provider reimbursement rates. Nebraska Ex. B. This
affidavit also listed the room and board costs which the affiant stated
were "excluded from the calculation of allowable costs for all fiscal
years from FY89 thru FY92" and included the cost of "staff" in
his list.
Nebraska Ex. B at 2. It is unclear whether this is an admission that
the staff did perform room and board services and that the cost of
providing these services was excluded from Nebraska's claims under the
waiver. Such an admission would be inconsistent with Nebraska's
reliance on the State Medicaid Manual definition of room and board.
In any event, the affiant did not provide any persuasive explanation or
supporting analysis of services actually performed by the staff. Nor
did the affiant give any explanation as to how Nebraska removed these
costs from the reimbursement rates. Thus, we find that this affidavit
alone does not prove that any unallowable room and board costs were
removed from Nebraska's claims under the waiver.
As for Nebraska's argument that HCFA should use the definition discussed
above as the basis for a field survey of Nebraska's reporting practices
and provider reimbursement calculations, we conclude that HCFA had no
obligation to conduct such a survey. As we stated above, it is the
state's responsibility to document its costs. Indeed, it would have been
in Nebraska's best interest to have conducted such a survey before it
submitted the original 10-percent deduction methodology. The 10-percent
deduction was adopted as an expedient method of identifying that portion
of staff duties which constituted room and board functions. Thus, the
10-percent deduction was clearly only an estimate of the amount of staff
salary costs attributable to room and board functions. However, since
Nebraska originally proposed this deduction upon which HCFA relied,
Nebraska can not reasonably claim that HCFA should conduct a survey to
determine if the estimate was accurate.
II. HCFA's application of the 10-percent deduction for expenses
charged to the waiver from July 1, 1991 through June 30, 1992
was reasonable.
Nebraska argued that HCFA could not require it to implement the
10-percent deduction since HCFA approved the renewal waiver without any
provision for a room and board deduction. The renewal waiver did not
include the old Appendix J (which provided for the 10-percent deduction
requirement in the "Methodology Used to Determine Waiver Rates"),
but
included a new Appendix J which had nothing to do with calculating
waiver rates. See Docket No. A-93- 158, Nebraska Ex. 12, June 28, 1990
letter at 1-2. We addressed this argument in Nebraska III and concluded
that in the absence of a methodology for eliminating unallowable room
and board costs from provider reimbursement rates, it was reasonable for
HCFA to apply the original 10-percent deduction. Although the renewal
waiver lacked a specific provision for a 10-percent deduction, it does
not follow that no deduction for room and board costs was intended.
Thus, absent any evidence that staff duties had changed, we presume that
the 10- percent deduction remained an appropriate methodology.
CONCLUSION
On the basis of the foregoing analysis, as well as our analysis in
Nebraska I, Nebraska II, and Nebraska III, we uphold the disallowance in
full.
________________________________ M. Terry
Johnson
________________________________ Norval D.
(John) Settle
________________________________ Donald F.
Garrett Presiding Board Member