DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: New Jersey Department of Human Services
Docket No. 87-191
Decision No. 941
DATE: March 7, 1988
DECISION
The New Jersey Department of Human Services (State) returned to
the
Board when the Health Care Financing Administration (HCFA, Agency)
and
the State could not agree on a matter remanded in accordance with
New
Jersey Dept. of Human Services, DGAB No. 845 (1987). The
parties
reached an impasse on the issue of what portion of the clerical
staff
costs for Medicaid district offices could appropriately be claimed
at
the enhanced rate of 75% federal financial participation (FFP)
available
for skilled professional medical personnel (SPMP) support staff
under
Title XIX of the Social Security Act (Act). The Agency had
disallowed
the portion of the State's claims for the period July 1, 1983
to
December 31, 1985 for support staff costs which exceeded the 50%
rate
generally applicable to administrative costs.
In New Jersey, we determined that, because there were SPMP positions
in
the district offices, the clerical support staff employed in
the
district offices apparently did perform some functions
directly
necessary to the carrying out of SPMP functions which were
thus
reimbursable at the 75% rate when properly supported. 1/ New
Jersey,
pp. 10-13. The Board's decision was based on its review of
the
documentation in the record describing the tasks, actions,
and
responsibilities for the disputed clerical positions. On remand
the
State was given the opportunity to identify the particular
clerical
duties having the .required direct nexus with SPMP functions and
the
proportion of each clerical staff member's time spent on such
duties.
In this proceeding, the State requested that the Board decide
what
proportion of clerical support staff costs claimed by the State
should
receive 75% FFP. 2/
The State's Position
The State contended that on remand it suggested to the Agency
a
methodology based on the percentage of SPMP within each
Medicaid
district office. This methodology provided, for example, that
if an
office had a staff of seven SPMP and three professional
administrative
staff, 70% of the clerical support staff costs would be
claimed for 75%
FFP reimbursement. The State argued that its approach,
which the Agency
refused to accept, was reasonable and consistent with cost
accounting
principles. The State claimed that the Agency insisted on
employee time
records which identify the amount of time each clerical staff
member
spent on SPMP related duties. The State asserted that, since
it
originally claimed all the district office staff as SPMP and
SPMP
support staff, this kind of contemporaneous documentation did not
exist,
as there was no reason to require staff to make this kind
of
distinction.
The State argued that the Board has previously held that a
reasonable
method of computing a disputed amount can be substituted for a
detailed
review of every item in dispute or that a methodology like the
one
suggested by the State here might be satisfactory. See Oregon
Dept.of
Human Resources, DGAB No. 729 (1986) at 32. Moreover, the
State
claimed that HCFA has approved cost allocation plans which use this
same
method of staff-based calculation for distributing costs to the
correct
federal program.
.Analysis
As we stated in New Jersey, the question of whether federal funding
is
available at all is not an issue here. Rather, the question is
whether
federal matching is available at the 75% rate under section
1903(a)(2)
of the Act as opposed to the 50% rate generally available under
section
1903(a)(7) for expenditures necessary for administration. As we
noted,
the Board has found that where a state is claiming reimbursement
of
costs at a rate higher than 50%, the state has the burden to show
that
the costs claimed are entitled to the higher rate of reimbursement.
Our
decision was quite specific regarding what the State was to do
on
remand. However, the record reflects no effort by the State to
identify
specific tasks with the requisite direct nexus to SPMP functions or
to
analyze the portion of a clerical staff member's time spent on
such
duties. The State, the party clearly having superior access
to
information about the disputed positions, failed to abide by the
Board's
remand directive, instead proposing a wholly unsupported
methodology.
Moreover, the State presented no evidence or analysis here to support
the
proportional allocation it advanced. The State never
addressed
substantively the Agency's view that there is no basis for an
assumption
that the SPMP positions in the office generated a proportional
clerical
workload. The State's proposal is similar in nature to an
offer to
split the difference of a contested amount--not an appropriate basis
for
the payment of federal funds. Inasmuch as the State has not
provided
any evidence or analysis to support its methodology, we determine
that
the Agency reasonably rejected what the State proposed.
The State proposed this proportional allocation methodology to the
Agency
by letter of April 27, 1987. The Agency rejected the State's
proposal
by letter of May 29, 1987. The Agency rejection noted both
that the
State had not provided the documentation required by the
Board's decision and
that there was no assurance that the proportional
allocation accurately
reflected the distribution of clerical staff time
between SPMP and non-SPMP.
State's Appeal File, Exs. A and B.
Furthermore, the Agency did not state in
this proceeding that it would
reject any documentation other than
contemporaneous time records. To
the extent there was any confusion on
this point earlier, the Agency
response in this proceeding .clarified that
the inquiry here is whether
proffered documentation in fact meets the State's
burden to document its
claims. Agency's February 1, 1988 letter.
The record shows that in the
absence of contemporaneous time records, the
State did not offer to
present any other kind of documentation. We find
that the State had
ample opportunity to document an appropriate allocation
during the
remand and now before the Board. However, the State simply
asked that
the Board now overturn the disallowance, without
addressing
substantively how to best determine what proportion of its
clerical
costs are eligible for 75% FFP. 3/ State's February 19, 1988
letter.
By failing to provide supporting documentation, the State has in
essence
chosen to forego enhanced reimbursement for these positions.
While the State very generally averred that its suggested
allocation
methodology is considered appropriate and is consistent with
generally
accepted accounting principles, it also failed to support
these
allegations. When the Board suggested in Oregon, supra, that
a
proportional methodology might be used, it also stated that the
Medical
Assistance Manual provides that staff time which is split
among
functions at different levels of FFP must be documented by the State
as
to the amount of time spent in each function. Consequently, while
such
a methodology might sometimes be appropriate, there must be
substantive
factual support for it. Here, the record shows that the
clericals were
performing a number of different functions, some which
supported SPMP
and some which did not.
.Conclusion
Based on the above analysis, we conclude that the Agency's
disallowance
for the clerical positions subject to the remand in New Jersey
should be
sustained because on remand the State failed to support its
proposed
allocation with documentation to identify the clerical duties having
the
required direct nexus with SPMP functions and the proportion of
each
clerical staff member's time spent on such duties.
___________________________ Judith
A.
Ballard
_____________________________ Donald
F.
Garrett
_____________________________ Cecilia
Sparks
Ford Presiding Board Member
1. Although the disputed issues had narrowed
substantially, we also
determined in New Jersey that the positions of
Medicaid District Office
Director and Regional Director were not SPMP
positions and, therefore,
were reimbursable only at the 50% rate.
2. The record is unclear as to the amount in
dispute. The State
initially claimed all its clerical support staff
costs at 75% FFP and
the Agency allowed FFP only at 50%. The State's
submission here gives
$619,947 as the "Total SPMP Clerical Support Costs";
presumably, the
State is asserting on remand that it is entitled to 75% FFP
in this
amount. State's Appeal File, Exhibit (Ex.) F.
3. We noted in New Jersey that the documentation in
the record
concerning the disputed clerical positions did not cover each
position
for the complete time period at issue. In the current
proceeding, the
State submitted an affidavit from a State official stating
that, "[t]he
list of job responsibilities for the position titles . . .
were
consistently the same . . ." during the period in dispute.
Simply
averring that the disputed position duties remained constant for
the
disputed time does not however speak to the matters which could not
be
addressed on the prior record, i.e., which duties had the
required
direct nexus with SPMP functions and what proportion of the
clerical
staff member's time was spent on such functions. The State
provided no
more information to the Board with regard to what might be the
proper
allocation than we had in the earlier