Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: California Department of Health Services
DATE: March 18, 1991
Docket No. 90-185
Decision No. 1236
DECISION
The California Department of Health Services (State) appealed
a
determination by the Health Care Financing Administration (HCFA)
to
disallow $1,374,595 in federal financial participation (FFP) claimed
by
the State at the enhanced rate of 75 percent available for
compensation
of skilled professional medical personnel (SPMP) and supporting
staff of
SPMP under Title XIX of the Social Security Act (Medicaid).
For the
period July 1, 1986 through June 30, 1987, HCFA disallowed the
portion
of the State's claim which exceeded the 50 percent rate
generally
applicable to administrative costs for the Medicaid program.
For the reasons explained more fully below, we conclude that California
is
entitled to FFP only at the 50 percent rate for the
disputed
expenditures. Thus, we uphold the disallowance in full.
Summary Decision Based on DAB No. 1049
HCFA disallowed enhanced FFP in the State's expenditures for
Disability
Evaluation Analysts (DEAs) and clerical staff of the California
State
Programs Bureau, and expenditures for consultative examinations,
medical
evidence, and claimant transportation. In California Dept. of
Health
Services, DAB No. 1149 (1990), the Board upheld HCFA's disallowance
of
the same types of expenditures for earlier time periods,
determining
that: (1) DEAs did not function as SPMP; (2) DEAs did not
qualify as
support personnel to SPMP; (3) there was no basis in the record
to
substantiate enhanced reimbursement at the 75 percent SPMP rate for
all
the .clerical personnel in the State Programs Bureau, because the
State
did not demonstrate the required immediate and direct nexus between
SPMP
and the clerical personnel as supporting staff; and (4) there was
no
basis in the applicable regulations to support enhanced reimbursement
in
expenditures for consultative examinations, medical evidence,
or
claimant transportation costs. See also California Dept. of
Health
Services, DAB No. 1184 (1990).
In acknowledging the State's appeal here, the Board noted that the
State
appeared to be contesting the disallowance only with respect to
the
clerical personnel. Because the issues in this current appeal
were
addressed in DAB No. 1149, the Board advised the State that it
intended
to summarily uphold HCFA's disallowance of enhanced reimbursement
for
expenditures for the DEAs and expenditures for
consultative
examinations, medical evidence, and claimant transportation,
unless the
State showed good cause why DAB No. 1149 was not
controlling. The State
was asked to specify in what ways this appeal
might be different
factually or legally. See Acknowledgment of Notice
of Appeal and Order
to Show Cause dated September 7, 1990.
The State did not respond to the Board's September 7, 1990 order,
but
acknowledged in its opening brief that the only issue to be
determined
in this appeal was the disallowance of the enhanced funding for
clerical
personnel. State's Opening Br., p. 2. Accordingly, we
summarily uphold
HCFA's disallowance of enhanced reimbursement for the
expenditures for
the DEAs and the expenditures for consultative examinations,
medical
evidence, and claimant transportation based on DAB No. 1149, which
we
incorporate by reference.
Applicable Authority
Section 1903(a) of the Social Security Act (the Act) and the
implementing
regulations provide 75 percent FFP for SPMP and staff
directly supporting
SPMP. The applicable regulations are at 42 C.F.R.
Parts 432 and 433
(1986). 1/
Section 432.50(c)(1) provides that rates of FFP higher than the 50
percent
generally allowed under Medicaid "are applicable only to those
portions of
the individual's working time that are devoted to the kinds
of positions or
duties that qualify for those rates."
The regulations define staff directly supporting SPMP, as follows:
"Supporting staff" means secretarial, stenographic,
clerical,
and other subprofessional staff whose activities are
directly
necessary to the carrying out of the functions which are
the
responsibility of skilled professional medical personnel . . .
.
"Subprofessional staff" means persons performing tasks
that
demand little or no formal education; a high school diploma;
or
less than 4 years of college.
42 C.F.R. 432.2 (emphasis added).
Issue Presented
HCFA's disallowance was based on the determination that enhanced FFP
for
clerical support staff was not justified by sufficient documentation
or
evidence linking clerical support to SPMP functions. See State
Exhibit
(Ex.) 1, HCFA Final Report dated May 1990; DAB No. 1149. The
State
argued, however, that part of the total clerical support effort of
the
State Programs Bureau was directly in support of 13 Medical
Consultants
located in the Oakland and Los Angeles State Programs Bureaus,
which
HCFA had determined qualified as SPMP. State's Opening Brief
(Br.), p.
2. Thus, the State argued, it should receive enhanced
reimbursement for
a portion of this clerical staff time. State's
Opening Br., pp. 2-3.
Specifically, the State argued that clerical staff in the following
units
met the definitions of "supporting staff" under the regulations:
(1)
consultative exam unit; (2) word processing unit; (3) case
processing unit;
and (4) administrative services unit. See 42 C.F.R.
432.2. The
State also asserted that it could provide supplemental
evidence and
documentation demonstrating a cost allocation methodology
on which to base
its claim for enhanced funding for a percentage of
these clerical personnel
costs. See State Ex. 3, Notice of Appeal dated
August 27, 1990.
The State asserted that the .disallowance should be
reduced by $98,926,
representing the additional 25 percent FFP for
clerical costs for which the
State claims the enhanced rate. State's
Opening Br., p. 12.
The State has not demonstrated its entitlement to enhanced funding.
When considering the availability of enhanced reimbursement for these
same
clerical positions in DAB No. 1149, the Board noted that the
State's blanket
claim for enhanced reimbursement for its entire cadre of
clerical staff was
subject to close scrutiny, citing California Dept. of
Health Services, DAB
No. 646 (1985). We then specifically stated that
entitlement to
enhanced reimbursement for supporting staff depends on a
direct nexus with
SPMP functions. We examined documentation pertaining
to the State's
clerical staff and explained why the organization and job
specification
materials in that record were not adequate to establish
that clerical costs
were allocable to support staff functions with the
"immediate" and "direct"
nexus required for 75 percent FFP. Therefore,
in light of prior Board
authority, the State was well aware of what it
needed to show to support the
availability of enhanced reimbursement for
clerical staff.
The State submitted personnel organizational charts for the Oakland
and
Los Angeles Bureaus, arguing that "the work assignments for
clericals
are generated by the claims review team in direct support of
their
functions." See State Ex. B; State's Opening Br., p. 8. The
State
asserted that the adjudication units consist of teams of DEAs
and
Medical Consultants who are assigned to adjudicate specific claims
for
Medicaid eligibility. 2/ State's Opening Br., p. 8.
However, the same organizational chart for the Los Angeles Bureau
was
reviewed by the Board in DAB No. 1149 and determined to be
insufficient
to demonstrate that these clerical personnel provide clerical
services
that directly support the responsibilities of SPMP. That
determination
is equally applicable to the organizational chart for the
Oakland
Bureau.
The charts indicate that the clerical personnel are organized into
units
entirely separate from the SPMP (in this case Medical Consultants),
and
are not supervised by any SPMP. See State Ex. B; DAB No.
1149.
Moreover, although the State argued that clerical support staff in
the
case processing units provided direct support to adjudication
units
consisting of some SPMP staff, the organizational chart for the
Oakland
Bureau indicates that only one out of the four adjudication
units,
Adjudication Unit I, contains Medical Consultants. See State's
Opening
Br., p. 8; State Ex. B. Furthermore, the State's assertion that
"all of
the work assignments for clericals are generated by the
adjudication
units in direct support of their functions" (State's Opening
Br., p. 8)
was wholly unsupported by the record. 3/ This assertion is
conclusory
and does not support a finding that there are specific
clerical
functions initiated by SPMP in an SPMP role the completion of which
the
SPMP directly supervised.
The State also contended that the case processing clerk, word
processing
clerk, administrative services unit, and intake/closure unit
personnel
all perform duties in direct support of SPMP. See State's
Opening Br.,
pp. 8-11; State Ex. E. The evidence provided by the State
of the duties
of these personnel, however, does not indicate that these
individuals
perform assignments initiated by SPMP, nor do they link
specific
clerical functions to SPMP functions.
The State presented California State Personnel Board
specifications
describing general position duties and qualifications for
these
positions: Medical Transcriber; Word Processing Technician;
Office
Assistant/Technician; and Stock Clerk. See State Ex. C.
The State also
submitted other brief job descriptions for these types of
positions as
well as two lists related to paperwork used for
disability
determinations, all of which detail clerical support activities
for the
disability determination function. See State Exs. D and E.
.The State's exhibit captioned "Medical Transcriber State
Disability
Programs" describes this position as requiring the transcription
of
medical information, such as medical histories or physical
examinations,
from cassettes recorded from remote telephone equipment.
The Oakland
Bureau Word Processing Unit's organizational chart showed one
position
with this title. State Exs. B and E.
The State's exhibit captioned "Office Assistant (T) Case
Processing
Support Unit," describes some of the duties of these personnel
as:
(1) files and retrieves folders; (2) photocopies designated
case
material; (3) routes and associates incoming mail in
case
folders; (4) assembles case folder material in
chronological
order; and (5) provides follow-up for medical requests
and
resolves medical bill problems.
State Ex. E.
Other examples of the clerical staff's functions provided by the
State
include the duties of the personnel clerk:
(1) distributing and verifying monthly leave balances for
staff;
(2) insuring the accuracy and recording of attendance of
all
employees of the State Disability Program Bureau; and
(3)
assisting employees with health benefits and deductions,
the duties of the receptionist:
(1) greeting visitors and directing them to the
appropriate
staff; (2) answering telephones and delivering messages;
and (3)
providing back-up to other clerical staff.
and the duties of the Intake/Closure Units:
(1) assigning new claims to the adjudicative teams;
(2)
preparing weekly statistical reports; (3) mailing
the
determination notice after a final decision has been made;
and
(4) reviewing cases for technical errors requiring correction
by
the Medical Consultant or DEA.
State's Opening Br., p. 11.
As we found in DAB No. 1149, while the Medical Consultants might
require
some supporting staff functions, speculation is not sufficient.
These
descriptions of clerical duties show only general duties without
any
specific connection to SPMP functions. Some of the duties related
to
tasks performed for other employees of the State such as verifying
leave
balances, which have no substantive connection to SPMP functions.
Other
duties, such as follow-up for medical requests, assembly of case
folder
material, or transcription of medical data for disability
claimants,
were clerical functions which were clearly part of a process
for
determining medical disability but for which the State has
established
no direct or immediate connection to specific SPMP
functions. There is,
therefore, nothing in the descriptions of these
positions to connect
them to SPMP functions. In fact, the State has not
even submitted
documentation showing the Medical Consultants' SPMP
functions. Thus,
the State has not demonstrated that these clerical
services are directly
necessary for the completion of the professional
medical
responsibilities and functions of SPMP, as required by the
regulations.
See 42 C.F.R. 432.50(d)(1)(v).
The State has presumed in this appeal that because a portion of the
State
Programs Bureaus' professional staff is SPMP, a representative
proportion of
the clerical costs must therefore qualify for enhanced
FFP. See State's
Opening Br., pp. 2-3. As we have clearly stated in
our prior decisions,
the State has the burden to document that there are
clerical tasks with the
immediate and direct nexus with SPMP functions
to support its claim that some
part of its clerical costs qualified for
the enhanced rate. While the
State has provided additional information
about the clerical case processing
functions performed in the State
Programs Bureaus, it has not provided
documentation to support the
threshold question of whether there are in fact
clerical functions which
support SPMP functions. It is not enough for
us to determine, for
example, that medical data is transcribed, case files
maintained, and
appointments made with outside physicians for medical
examinations; this
simply outlines for us what the clerical functions are,
and does not
establish any connection with SPMP functions. We cannot
determine,
therefore, that these clerical units provide SPMP support.
Rather, it
appears more likely on this record that these units
function
independently and, as we noted in DAB No. 646 at 5, possibly
provide
helpful tasks or even "an essential first step" leading up to
the
Medical Consultants' SPMP functions. While we do not find the
absence
of any direct nexus simply by virtue of the State's
organizational
structure to "pool" its clerical units, this structure infers
that the
clerical case processing functions are a part of the
disability
.determination process not necessarily linked to SPMP
functions
performed by the 13 Medical Consultants. See State's Closing
Br.,
attached declaration.
In DAB No. 1149, the Board determined that in order to qualify as
directly
supporting staff under the Act and 42 C.F.R. 432.2, the staff
must perform
work under the substantive direction of SPMP, which
directly supports SPMP
functions. DAB No. 1149, p. 16. Moreover,
section 432.50(c)(1)
provides that rates of FFP higher than the 50
percent generally allowed under
Medicaid "are applicable only to those
portions of the individual's working
time that are devoted to the kinds
of positions or duties that qualify for
those rates." Thus, as noted
above, the State was fully aware that it
had the burden to provide
evidence to demonstrate the existence of the
immediate and direct nexus
between the duties of the clerical support staff
and SPMP, i.e.,
evidence "about specific work assignments initiated by SPMP
in a SPMP
role." DAB No. 1149. The State failed to meet that
burden to
substantiate its claim for enhanced reimbursement. Thus, FFP
is
available only at the 50 percent rate for the disputed clerical
staff
expenditures.
The State's methodology for allocation of costs contains serious
flaws.
Since we have determined that the State has provided insufficient
evidence
to demonstrate that the clerical personnel constitute
supporting staff for
SPMP, it is unnecessary to address the State's
second argument with respect
to its proposed methodology.
However, we note several serious flaws in the State's cost
allocation
proposal:
o The proposal would allocate clerical costs
based on SPMP
compensation but provided no evidence
of any correlation between
the compensation of the
SPMP and the amount of time spent on SPMP
work by
clericals in the State Programs Bureaus. The
personal
services costs for the SPMP in relation to
the total personal
services costs for the DEAs and
SPMP in the adjudication units
bears no logical
relationship to the percentage of time clerical
staff allegedly work in support of SPMP functions. See 42
C.F.R.
432.50(c)(1); State's Opening Br., p. 3.
o The State's proposal contains two untitled pages
containing
columns of figures and dates with no explanation of
their
significance. See State's Ex. A.
o Contrary to the State's argument (State's Opening Br., p.
4),
the Board did not approve a methodology for allocating costs
in
Oregon Dept. of Human Resources, DAB No. 729 (1986) which
was
"similar to and consistent with" the allocation proposed
here.
In Oregon, the Board concluded that certain clerical
personnel
were "support staff positions to the extent that they did
the
secretarial work for the SPMP in the section" and remanded
the
case to permit the parties to determine what portion of
the
personnel costs were allowable at 75 percent FFP. While
we
noted that it appeared that such a determination could be
based
on the percentage of people in the section who were SPMP or
on
the percentage of clerical work done that was for SPMP,
we
specifically stated that when staff time is split
among
functions at different levels of FFP, the portion of time
spent
in each function must be documented by the State. Here
the
State has not documented that any allocation of clerical
costs
would be appropriate and, in any event, proposed an
allocation
method unlike either approach merely suggested in
Oregon. See
DAB No. 729 at 31 and 32.
Conclusion
Accordingly, we uphold the disallowance in the full amount
of
$1,374,595.
___________________________
Judith A. Ballard
___________________________
Norval D. (John) Settle
___________________________
Cecilia
Sparks Ford Presiding
Board Member
1. The final regulations amending the requirements for SPMP
at the 75
percent rate were published at 50 Fed. Reg. 46663 (1985) and
effective
on February 10, 1986. HCFA chose to deem these amended
requirements
effective as of July 1, 1986. Thus, the amended
regulations apply to
the period at issue here. See Acknowledgment of
Notice of Appeal and
Order to Show Cause dated September 7, 1990.
2. Although it appears that the State uses the terms
"adjudication
units" and "claims review team" somewhat synonymously, the
claims review
team consists of DEAs and Medical Consultants within the
adjudication
units.
3. The State cited exhibit B in support of this
argument. However,
as HCFA pointed out, this exhibit consists of two
pages of
organizational charts and does not in any way substantiate the
State's
assertion. HCFA Br., p.