Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: West Virginia Department of Health and Human Resources
DATE: March 20, 1992
Docket No. 91-52
Decision No. 1316
DECISION
The West Virginia Department of Health and Human Resources
(State)
appealed a determination by the Health Care Financing
Administration
(Agency) disallowing $12,721,922 in federal financial
participation
(FFP) claimed for case management administrative activities
under Title
XIX (Medicaid) of the Social Security Act (Act) for the period
January
1, 1988 through December 31, 1990. The Agency based its
disallowance of
the State's entire claim for FFP on three reasons: (1)
case management
services may be claimed only as direct services costs, not
as
administrative activities, unless specifically listed as
administrative
activities in the State Medicaid Manual; 1/ (2) the State did
not
document a claim for either direct services or for
administrative
activities, because it did not segregate allowable activities
of its
social workers from unallowable activities; and (3) there was no
formal
agreement between the single state agency responsible for
administration
of the Medicaid program, the Office of Medical Services (OMS),
and the
agency that performed the activities, the Division of Social
Services
(DSS), as required for administrative activities performed by
other
agencies to qualify for federal funding. 2/
We reverse the Agency's disallowance for the following reasons: (1)
the
Agency's own policy permits the State to claim as
administrative
activities case management services other than those
specifically listed
in the State Medicaid Manual; (2) the State persuasively
rebutted the
Agency's evidence regarding the State's implementation of its
time study
of social worker activities and the nature of the activities
allocated
to Medicaid, so there is no basis in this record for finding that
the
time study results do not constitute adequate documentation of
allowable
activities; and (3) the State had the required formal
cooperative
agreement with DSS. As we note on page 12, however, nothing
in this
decision precludes further Agency review of the State's time
study
method.
Relevant Statutory Authority
The Medicaid Program authorizes FFP in a state's expenditures
for
providing medical assistance and related services to needy
individuals.
Section 1901 of the Act. To qualify for FFP, a state's
expenditures
must be in accordance with its state plan and other
federal
requirements. Sections 1902 and 1903 of the Act. The
Medicaid program
authorizes FFP in expenditures for "medical assistance" and
for
administrative activities found necessary by the Secretary for
the
proper and efficient administration of the state plan. Sections
1903
and 1905 of the Act.
On April 7, 1986, section 9508 of the Consolidated Omnibus
Budget
Reconciliation Act of 1985 (COBRA), Public Law 99-272, added a
new
section 1915(g) to the Act, entitled "Optional Targeted Case
Management
Services." This section defined case management as "services
which will
assist an individual, eligible under the plan, in gaining access
to
needed medical, social, educational and other services."
Section
1895(c)(3) of the Tax Reform Act of 1986 (TEFRA), Public Law
99-514,
later added case management as defined in section 1915(g) of the Act
to
the list of Medicaid covered services in section 1905(a) of the
Act.
The services are "optional" because states have discretion about
whether
to offer the services. The services are "targeted" because
states may
choose to offer them to a discrete part, or parts, of their
Medicaid
populations. Under these new laws, FFP became available for
targeted
case management services, rendered on or after April 7, 1986, at
a
state's Federal Medical Assistance Percentage (FMAP) rate, when
these
services were incorporated in a state plan. Based on the
State's
average per capita income, the FMAP for the State is 77%. Thus,
costs
claimed at the FMAP rate would receive 77% reimbursement, while
costs
claimed at the administrative FFP rate would receive only
50%
reimbursement.
In January 1988, case management under COBRA was incorporated into Part
4
of the State Medicaid Manual by Transmittal Number 30. The
State
Medicaid Manual established the guidelines as to how a state is
to
incorporate case management into its state plan. Specifically,
section
4302.2 of the State Medicaid Manual provided, in relevant part:
I. Documentation of Claims for Case Management
Services.--In order
to receive payment for case
management services under the plan
(i.e., at the FMAP rate), fully document
your claim as you would for any
other Medicaid service. . . .
[Y]ou must be able to document the
following:
o date of
service, o name of recipient, o name of
provider
agency and
person providing the service, o
nature,
extent, or
units or [sic] service, and o place of service.
Background
Following the passage of COBRA, the State amended its Medicaid state
plan
to include case management services. 3/ The Agency approved the
plan
amendment in April 1987, with an effective date of July 1, 1986.
The State
alleged that under Agency policies, substantial documentation
had to be
developed in order to receive FFP at the FMAP rate for case
management
services. Since the State admitted that it did not have in
place
sufficient systems to generate the necessary documentation, the
State did not
submit claims for FFP at the FMAP rate for case management
services.
However, the State determined that the activities embraced
within case
management services were also subject to FFP at the 50%
administrative rate
as activities necessary to the efficient
administration of the State's
Medicaid plan.
In January 1988, the State modified the cost allocation plan (CAP) for
DSS
social workers by replacing the health/medical related activities
category
with a new category known as "case management," using the COBRA
definition of
that term. 4/ The State acknowledged that its focus on
case management
was the result of COBRA and TEFRA. State's brief at 3.
The State
maintained, however, that the case management category
encompassed various
health-related activities of social workers that
overlapped to a substantial
extent with the health/medical related
activities defined by the earlier
version of the plan.
The method the State used to document its claim was a revised time
study
called the "ROSA [Report on Service Activity] IV Time Study."
State
social workers would use a ROSA IV form to record the time spent
on
social and health services programs. The Medicaid program is only
one
federal program administered by the State. The ROSA IV
system
established a method for allocating the State's DSS social worker
time
to the various programs administered by the State and, therefore,
for
allocating the related pool of costs, including social
workers'
salaries. 5/ The State's CAP was approved with the condition
that the
activities performed under the CAP conformed to statutory,
regulatory
and approved Medicaid state plan provisions. State's Ex. 20
at 4.
In March 1989, the Agency performed a review of the State's
case
management expenditures to determine whether the State was claiming
FFP
in "accordance with Federal regulations and the State Medicaid
Manual."
State's Ex. 7, Agency's Final Report at 2. Based on the Final
Report,
the Agency disallowed the State's claim at the 50% rate. While
the
Agency recognized that some allowable administrative activities might
be
included, the Agency said it could not separately identify
those
activities. Since the State lacks adequate documentation to claim
at
the FMAP rate, the State would not be reimbursed for any of
the
activities in question if the Agency's position is sustained.
Analysis
I. Case management services performed by the
State's DSS social
workers may be allowable as
administrative activities.
The Agency maintained that while some activities may be helpful to
an
individual who is Medicaid eligible, those activities are not
necessary
to the proper and efficient administration of the Medicaid state
plan;
they are direct services to a client and must be claimed as
case
management services at the FMAP rate. Further, the Agency asserted
that
activities which may be case management services but which are
unrelated
to administering the Medicaid state plan are not section
1903(a)(7)
administrative activities. Agency's brief at 10.
Further, the Agency alleged that only a limited amount of case
management
type activities have historically been claimed under
administration of the
Medicaid program, and it is only these
"administrative activities" that are
"found necessary by the Secretary
for the proper and efficient administration
of the State plan" and are
entitled to be claimed at the 50% administrative
rate. 6/
In essence, the Agency contended that a service could not be both
an
administrative activity and case management allowable under either
the
50% administrative rate or the 77% FMAP rate. We conclude that
the
Agency's position is inconsistent with its own published policy.
Section 4302.2(F) of the State Medicaid Manual provides:
3. Administrative Activities.--Case
management-type activities
associated with the
following are necessary for the proper and
efficient administration of the
State plan and cannot be included as
components of case management
services.
o Medicaid eligibility determinations and
redeterminations, o
Medicaid intake processing,
o Medicaid preadmission screening, o
Prior
authorization for Medicaid services, o Required
Medicaid
utilization review, o EPSDT [early
and periodic screening,
diagnosis, and treatment]
administration, and o Activities in
connection
with "lock-in" provisions under .1915(a) of the Act.
We agree with the State that the Agency incorrectly read that section
as
limiting allowable administrative activities to those listed in
the
Manual provision. Nothing on the face of section 4302.2(F) limits
the
case management activities that may be charged at the
administrative
rate. Instead, that section lists the types of
activities that may not
be charged at the FMAP rate.
This interpretation is further supported by section 4302.2(I) of the
State
Medicaid Manual. Section 4302.2(I), while discussing the
documentation
required to claim case management services at the FMAP
rate, provides, in
relevant part:
If you use other documentation (time studies, random
moment
studies, cost allocation plans, etc.) to
support your claims, the
FFP may be available at the administrative rate,
when the case
management activities are performed in support of the proper
and
efficient administration of the State plan.
This statement is clearly inconsistent with the Agency's position
here
that case management is allowable only as a direct service.
Further, in
the Board's Preliminary Analysis in Maryland Department of Health
&
Mental Hygiene, 7/ DAB Docket No. 88-192 (1989), at 13, we
said:
[The Health Care Financing Administration] suggested
that the scope
of case management activities
allowable as administrative costs may
be restricted to those types of
activities which could not be direct
services. [Citation omitted]
It is not clear that these statements
accurately reflect the written policy
expressed in the applicable State
Medicaid Manual. For example, these
communications appear to be based
on a State Medicaid Manual section
4302.2-F-3, which merely clarifies
that a State may not claim as a direct
service activities which are
primarily administrative. The State
Medicaid Manual provision by its
terms does not limit claims as
administrative costs for case management
activities, but limits only claims
as a direct service, at the medical
assistance rate, for these
activities.
Contrary to the Agency's assertions here, the State is not precluded
from
claiming case management services at the 50% administrative rate
merely
because, with different documentation, the services could have
been claimed
at the FMAP rate.
The State Medicaid Manual, however, describes (as allowable
administrative
activities) case management "performed in support of the
proper and efficient
administration of the State plan." Section
4302.2(I). Thus, we
discuss next questions raised by the Agency
concerning whether the State had
adequately documented its activities as
case management and whether those
activities were necessary for Medicaid
administration.
II. The activities performed by the social
workers were related to
the Medicaid program.
The State argued that a review of the nature of activities
actually
allocated to the Medicaid categories on the ROSA IV form confirms
that
they are legitimate administrative functions. State's brief at
11.
Further, the State asserted that seven categories of activities
were
included under the heading "case management" on the ROSA IV forms
and
that all of the categories fall within the traditional definition
of
administrative activities reimbursed by Medicaid. 8/ The
State
submitted an affidavit to support its position that case
management
categories on the ROSA IV form were designed to allocate to the
Medicaid
program health-related activities performed by social workers that
are
necessary to the proper and efficient operation of the Medicaid
state
plan. State's Ex. 2 at .. 9-19.
The Agency asserted that the Board's reasoning in the Preliminary
Analysis
of Maryland Department of Health & Mental Hygiene, DAB Docket
No. 88-192
(1989), does not suggest a result consistent with the State's
position that
case management services are necessary administrative
activities. The
Agency maintained that in Maryland, the Board
considered whether certain
activities called "health-related services"
could be considered
administrative activities and concluded that they
could. The Agency
argued that the activities at issue in Maryland were
quite unlike those at
issue in this case. The Agency alleged that the
activities here are
neither health-related nor necessary for the proper
and efficient
administration of the Medicaid state plan. In addition,
the Agency
alleged that, unlike the situation in Maryland where only
5.5% of social
worker time was charged to Medicaid administrative
activity, after
implementation of the ROSA IV system, the percentage of
the State's social
worker time charged to Medicaid "administrative
activities" quadrupled.
Prior to the implementation of ROSA IV, the
percentage ranged between 6.66%
and 11.63%. According to the Agency,
for the first four quarters after
the ROSA IV was implemented, the
percentage ranged between 42.61% and
46.70%. The Agency maintained that
it "fairly strains credulity" that
the social workers would spend almost
half of their time on one program.
9/
Although the Agency acknowledged that some of the social workers'
costs
might be allowable Medicaid administrative activities (even under
the
Agency's narrow interpretation rejected above), the Agency said that
the
State had failed to segregate these activities and therefore did
not
meet applicable record-keeping requirements. Agency's brief at
15,
citing 42 C.F.R. .431.15-17, State Medicaid Manual .2497.3.
The Agency's arguments raised questions concerning whether the
time
allocation pursuant to the ROSA IV was adequate documentation of
the
amount of time spent on case management activities by the social
workers
and whether the activities allocated to case management
were
health-related activities necessary for the proper administration of
the
Medicaid program. We address each of those questions here.
A. The time study as adequate documentation
The State Medicaid Manual recognizes that a time study may be
adequate
documentation of case management activities charged as
administrative
costs. State Medicaid Manual, section 4302.2(I).
The ROSA IV system
was an approved time study, and its validity as an
allocation method has
not been an issue in this case. 10/ While the
increase in the
percentage of time attributed to the Medicaid program by the
social
workers under ROSA IV could legitimately lead the Agency to question
the
time study, the increase is not in and of itself an indication that
the
time attributed is incorrect. First, the Agency overstated what
the
increased time percentage was. See note 9 above. Second, as the
State
pointed out, the increase could simply indicate that the State
was
underclaiming under the previous method because the
health/medical
related categories under that method were too narrowly
defined. See
State's Ex. 2 at .20. Nor can we find that the
difference in
percentages between the State and Maryland is significant,
absent any
evidence that the cost pools at issue involve social workers with
the
same duties, in a comparable organizational structure.
The Agency also submitted affidavits from the two reviewers who
performed
the review. Both reviewers were accountants for the Agency and
performed the
review by using a list of prepared interview questions.
See State's Ex.
5. The reviewers' affidavits assert that social
workers said in
the interviews that their supervisors told them to code
their time to case
management under ROSA IV for any activity involving a
Medicaid eligible
client. Agency's appeal file, declarations of Michael
Hubik and Joseph
Procopio. If true, this could raise a question about
whether the State
had properly implemented the ROSA IV. The State
persuasively rebutted
this evidence, however, and we would not find it
credible in any event.
The Agency did not produce any evidence to show that the
statements
attributed to the social workers were documented in any
contemporaneous
workpapers of the reviewers. Generally accepted audit
standards would
require that audit workpapers should normally include how any
unusual
matters were treated and a commentary on "significant aspects of
the
engagement." See Codification of Statements on Auditing Standards
at
.338.05. The affidavits do not identify any particular social
workers,
nor state how many social workers allegedly made such
statements. The
interview forms filled out by the reviewers at the time
they spoke with
the social workers contain no evidence of such statements, in
spite of
how important such statements would be to show that the State had
not
properly implemented ROSA IV. Something more than the
reviewers'
general, after-the-fact recollections is necessary in order to
undercut
the State's entire ROSA IV system, in the face of affirmative
contrary
evidence offered by the State.
The State submitted affidavits by two of its representatives,
present
during the interviews, who do not recollect any statements made
by
social workers regarding the charging of all their time the ROSA IV
case
management services category. Specifically, one of the State's
affiants
said:
To the best of my recollection, none of the social
workers told the
federal auditors during these
interviews that supervisors had
instructed social workers to "charge their
time to one of the ROSA IV
case management services categories any time they
performed any activity
to meet needs of a Medicaid eligible client," as
alleged on pages 6-7 of
the Brief of the Health Care Financing
Administration.
State's Ex. 31 at .4; see also State's Ex. 32.
Further, we note that the State maintained, and statements made by
the
social workers and recorded on the interview forms confirm, that
the
State provided training and instructions on the use of the ROSA
IV
forms. Instructions on how to complete the forms are provided and
the
social worker is asked to review them at the beginning of each day
for
which time is to be recorded. The ROSA IV instructions clearly
direct
the social workers to charge their activities to the case
management
codes only if the client is Medicaid eligible, the client is also
a
member of a target population (generally, individuals with
special
health needs), and the activity qualifies under the specified
definition
of case management (which tracks the definition for case
management as a
direct service). 11/ See State's Ex. 4. Given the
brief nature of the
reviewers' interviews with the social workers (and the
fact that the
reviewers were accountants, not program officials), the
reviewers may
have simply misunderstood social workers' statements about what
they
were instructed to do. See State's Ex. 2 at ..23-25 (regarding
the
length of the interviews).
Finally, the State provided evidence that none of the social
workers
interviewed allocated all of their time to Medicaid, even though one
of
them spent all her time serving Medicaid recipients. (The
State's
evidence showed she allocated only 48.25% of her time to case
management
activities.) See State's Ex. 27 at .10. 12/
In sum, the current record does not support a conclusion either that
the
ROSA IV was defective or that the State had not properly implemented
it.
Our decision does not, however, preclude the Agency from
further
examining these issues. The increased percentage under ROSA IV
could
partially result from some bias in the time study method; if
so,
however, the appropriate remedy would be to require the State to
revise
ROSA IV. The allocation method used has implications for other
programs
in addition to Medicaid, and is properly addressed in the context
of
amending the CAP. 13/
B. The nature of the activities allocated
As previously noted, the Agency maintained that the activities at
issue
here were not necessary for the proper and efficient management of
the
Medicaid program. 14/ The Agency arrived at this conclusion based
on
its reviewers' findings and relied on the reviewers' affidavits
here.
The reviewers' affidavits submitted by the Agency stated, at .9:
The social workers told us that they performed the
following
activities, among others, and indicated on
the ROSA IV that the
activities were case management services to be charged
to the Medicaid
program:
a) helping clients resolve problems relating to past
due mortgage
payments and utility bills; b)
contacting lending institutions
respecting financial
problems of clients and otherwise helping
people with financial difficulties;
c) providing assistance to the
homeless; d)
providing assistance to persons whose homes had
burned
down; e) helping clients get diapers; f)
investigating cases of
abuse and neglect of children
and adults; g) advising clients of
available social,
as well as medical services; h) placing juvenile
delinquents in homes and institutions; i) arranging foster care
for
adults; j) visiting a client's home to determine
what social
services are needed; k) providing, and
arranging transportation for
clients, including
driving them to doctor appointments.
Agency's appeal file, declarations of Michael Hubik and Joseph Procopio.
We first note that the Agency's argument does not amount to a
direct
challenge to the allowability of the types of activities coded on
the
ROSA IV forms as case management, nor did the Agency deny that it
had
approved allocation of those activities to Medicaid. The State
provided
with its initial brief an affidavit of a program official explaining
all
of the Medicaid case management codes listed on the ROSA IV form,
the
types of activities that in his experience social workers would
allocate
to these codes, and how these activities saved money for and
promoted
the proper operation of the Medicaid program. State's Ex. 2 at
..9-20.
The Agency's arguments, however, focused only on the
reviewers'
descriptions of the activities.
As the State asserted, many of the activities questioned by the
reviewers
were mentioned by social workers when they were asked about
their "basic
duties," and were not specifically related to how the
social workers
accounted for their time under the ROSA IV system. 15/ A
review of the
interview forms, which were all filled out by the
reviewers, show that five
of the activities listed by the Agency as not
necessary administrative
activities for Medicaid were all in response to
the question "currently what
are your basic duties?" 16/ See State's
Ex. 5. They were not
identified as activities charged to Medicaid under
the ROSA IV system.
With respect to other activities questioned by the reviewers (which
were
identified by the social workers as activities they allocated to
case
management), the State provided an affidavit from a program
official
explaining how they were health-related activities. Specifically,
the
affiant stated that (1) several of the activities mentioned by
the
Agency are appropriate administrative functions given the context
in
which they occurred; 17/ (2) the only reference to the homeless on
the
parts of the interview forms describing case management activities
was
described as "homeless health crisis"; (3) the only reference
to
"working with people in financial need" was to "medical or
financial
crisis"; and (4) the remaining activities cited by the Agency
are
appropriate case management activities. 18/ State's Ex. 2 at
..29-30.
The Agency's response was simply its conclusory arguments,
unsupported
by any analysis of specific activities or affidavits of
program
officials. The State program official's explanations for the
most part
are persuasive, especially when considered in the context of
the
populations served, such as individuals who might be
institutionalized
for mental illness if not supported in the community. 19/
We note,
moreover, that transportation to receive medical care is, in any
event,
specifically allowable under section 2113 of the State Medicaid
Manual
as an administrative cost. See State's Ex. 16. While there
are a few
notations on the interview forms which might raise questions
about
whether the activities were health-related, these notations are
simply
too few and too cursory to be a basis for discarding the entire ROSA
IV
results. This is especially so since the reviewers'
other
misinterpretations evident here call into question their ability
to
adequately reflect what the social workers said.
Thus, we conclude that the record here does not support a finding that
the
social workers' activities were not documented and were not
necessary for the
proper and efficient management of the Medicaid
program.
III. A valid agreement existed between the
single Medicaid state
agency and DSS.
It is uncontested that the Medicaid state agency is obliged by
statute
either to administer or to supervise administration of the
Medicaid
state plan. The Agency argued that the expenditures resulting
from
social worker activity in this case are not eligible for
administrative
activity FFP because OMS has no agreement with DSS for DSS to
administer
the Medicaid state plan under OMS supervision in any respect,
except as
to intake processing and eligibility determinations. Further,
the
Agency alleged that, with regard to the processing and
determinations
exceptions, the agreement in force specifies that DSS economic
service
workers, not social workers, will perform Medicaid intake processing
and
make eligibility determinations. Agency's brief at 16; Agency's
appeal
file, declaration of Michael Hubik at .14.
The State's cost allocation plan, approved on June 8, 1988, states,
in
part:
Described below are the four basic methodologies we
use in
allocating the cost of various divisions or
units. . . . * * * 3.
Allocated to the
appropriate program by the use of [ROSA IV], the
Report on Economic Service Activity (RESA) . . . .
a. The RESA method is used for allocating
Economic Service Worker
personnel costs, the ROSA IV
method is used for allocating Social
Service Worker personnel costs.
The costs for both service workers and eligibility workers are totaled
by
program, and the percentage of program costs in relation to total
area
services and eligibility costs are calculated. . . .
b. ROSA IV is used to allocate Social Service
Bureau Cost to the
appropriate programs.
c. RESA is used to allocate Income Maintenance
Bureau Cost to the
appropriate federal and/or state
programs.
State's Ex. 23.
Section 1.1 of the West Virginia State Plan is a preprint form
which
provides, in part:
(a) The Office of the Assistant Commissioner
of Medical Services
is the single State agency
designated to administer or supervise
the administration of the Medicaid
program under title XIX of the Social
Security Act. . . .
(b) The State agency that administered or
supervised the
administration of the plan approved
under title X of the Act as of
January 1, 1965, has been separately
designated to administer or
supervise the administration of that part of this
plan which related to
blind individuals. [The box checked under this
provision stated: "Not
applicable, The entire plan under title
XIX is administered or
supervised by the State agency named in paragraph
1.1(a)."]
* * *
(d) Determinations of eligibility for Medicaid
under this plan are
made by the agency (ies)
specified in ATTACHMENT 2.2-A. There is a
written agreement between the
agency named in paragraph 1.1(a) and other
agency (ies) making such
determinations for specific groups covered
under this plan. The
agreement defines the relationships and respective
responsibilities of the
agencies.
Agency's Ex. 4. 20/
The State's "Agreement for Cooperative Services between the Division
of
Social Services and Office of Medical Services" provides, in
relevant
part:
This Agreement includes the responsibilities of DSS
and OMS for
direction and coordination of case
management services . . . .
* * *
DSS will provide on a statewide basis case
management services . .
. .
* * *
OMS will reimburse DSS for case management services
rendered to
target Medicaid eligible recipients.
Activities under this Agreement shall be performed
in accordance
with the State . . . law and
regulations and in accordance with
Title XIX of the . . . Act of 1965 as
amended . . . .
State's Ex. 26.
The Agency did not allege that social workers may not
perform
administrative activities, which is the situation here.
Instead, while
not completely articulated, the Agency's position appears to
be that if
the case management services are not claimed at the FMAP rate,
the
agreement is not valid. This position is without merit. The
State
agreed that a valid agreement is required in this situation, and
the
State maintained that it has one. We agree.
The agreement provides that DSS will provide case management services
and
that OMS will reimburse DSS for those services. Nothing in
the
agreement indicates how the State must ultimately claim FFP for the
case
management services. Further, since the claims at issue do not
involve
the functions of Medicaid intake processing and
eligibility
determinations which are reserved for OMS workers, the Agency's
argument
that the State was limited to the use of economic service workers
in
this instance is without merit.
Finally, we reject the Agency's argument that the agreement would, in
any
event, conflict with section 1.1(b) of the State plan. First,
that
section does not state that only OMS administers the plan; it
leaves
open the option that OMS could, through an interagency
agreement,
supervise administrative activities performed by another
agency. This
is how the State interpreted the plan.
Moreover, the Agency's preprint, in allowing another agency to
determine
eligibility under section 1.1(d), does not interpret 1.1(a) to be
a
barrier to interagency agreements, even though it also designates
a
single state agency to administer or supervise administration of
the
plan. Finally, the State's interpretation is consistent with its
CAP,
which is also part of the State plan.
Therefore, we find that the State had a valid cooperative agreement
in
force.
Conclusion
Based on the foregoing, we reverse the Agency's disallowance.
However,
nothing in this decision precludes further Agency review of the
State's
time study method.
Cecilia Sparks Ford
Norval D. (John) Settle
Judith A. Ballard Presiding Board Member
1. Initially, the Agency's basis for the disallowance was that
the
activities covered by the claim represented direct services to
clients
and could not be reimbursed as administrative expenditures.
However,
the Agency changed its position during the course of this
appeal.
2. DSS was changed to OSS (Office of Social Services) in 1990.
Since
the Division of Social Services was the name during most of
the
disallowance period, Division of Social Services and its acronym
DSS
will be used for the Division of Social Services/Office of
Social
Services in the text.
3. The State's plan amendment ultimately approved for case
management
services stated, in relevant part:
The target group consists of individuals who are
Medicaid-eligible
and have DSM III-R diagnosis of
chronic mental illness, mental
retardation/developmental disability or
substance abuse and are
currently living in the community or will be placed
in the community
through discharge planning from a Medicaid-certified
institution (i.e.,
ICF/MR).
Agency's Ex. 1 at 3. Further, a second plan amendment, approved
on
January 12, 1990, with an effective date of July 1, 1989, stated,
in
part:
A. Target Group:
Medicaid eligible infants from 61 days to two years
of age, who
have been identified as high-risk for
poor medical outcome . . . .
Agency's Ex. 2 at 1. Originally, however, the State had proposed
to
cover a larger target population, consistent with the population
covered
by the agreement between OMS and DSS (as discussed later in the
text)
and the State's time study.
4. Prior to 1988, the State included in its claim for FFP
in
administrative expenditures under the Medicaid program the costs
of
various health/medical related activities performed by social
service
workers. Initially, the Agency also questioned the State's
pre-1988
claim. However, in response to the State's comments to the
Agency's
draft report, the final report deleted any reference to the
pre-1988
claims.
5. A cost pool is an accumulation of costs that benefit a number
of
programs. The costs are then allocated among the benefitted
programs
pursuant to an allocation method set out in a CAP. A state's
CAP must
be approved by the Regional Division of Cost Allocation
after
consultation with program agencies. See 45 C.F.R. Part 95,
Subpart E.
6. The Agency listed these services as:
- Medicaid intake processing - Medicaid eligibility
determinations
and redeterminations - Medicaid
preadmission screening - Medicaid
utilization review
- Prior authorization for Medicaid services -
EPSDT
[early and periodic screening and diagnoses and treatment
of
Medicaid eligible individuals under 21 years of
age] administration
- Client outreach - "Lock-in"
[which permit states to contract with
specified
individuals and entities to provide services to Medicaid
recipients]
activities.
7. The Board, in Maryland, sent out a preliminary analysis
which
discussed, in part, the claiming of administrative activities.
After
the preliminary analysis, the Agency withdrew its disallowance in
that
case and therefore no decision was issued.
8. The seven categories were: assessment, treatment/service
plan,
transportation, monitoring of overall service delivery,
linkage,
referral and/or advocacy, and crisis assistance planning.
9. The percentages quoted in the Agency's brief are higher than
those
quoted by one of the Agency reviewers in his affidavit. In
the
affidavit, the State's time charged to case management services
was
quoted as between 34.82% and 38.46%. See Agency's appeal
file,
Declaration of Michael Hubik at .12. Additionally, the State
provided
evidence that the percentage of time recorded under each activity
code
increased once the percentage of "general administration" time,
i.e.,
time on vacation, sick leave, flex time, breaks, and time that
was
unrelated to a specific service program, was included in the
overall
case management percentage. See State's Exs. 23 and 27 at
..2-8.
10. The Agency cited Colvin v. Sullivan, 939 F. 2d 153, 156 (4th
Cir.
1991) for the proposition that "a state must furnish
satisfactory
evidence of program expenditures regardless of what is in its
CAP."
Agency's brief at 15. This statement misconstrues Colvin, but, in
any
event, there is no basis in this record for finding that the State
did
not adequately document that it, in fact, incurred the
expenditures
included in the cost pool allocated by the ROSA IV.
11. The ROSA IV also had a code for non-case management
family
planning. The Agency did not claim that this was not a
Medicaid
administrative activity, yet apparently did not allow even the
costs
associated with time allocated to this code.
12. This evidence was provided with the State's reply brief, but
the
Agency did not ask for an opportunity to rebut it.
13. We note that, as time study methods become more
sophisticated,
their results are important for identifying time spent on
specific
activities (unlike, for instance, a simple caseload count used
to
allocate a proportion of all administrative costs among
benefitting
programs). Since the time study may evidence a choice among
more than
one program under which particular activities might be
reimbursable, it
is critically important that program agencies carefully
examine the
nature of the activities before approving the CAP. While
approval of
the CAP establishes only allocability of the costs, not whether
they are
allowable types of costs, approval at the least means that the
allocated
costs are of benefit to the program.
14. Although the Agency stated that some of the activities may
be
allowable, the Agency maintained that the State had not segregated
out
social worker time spent on what might be allowable
administrative
activities from time spent on those that are not.
Agency's brief at 15.
15. The State also argued that the persons interviewed did
not
represent a representative sampling of case management social
workers.
Since we find for the State on other grounds, we do not reach
this
argument.
16. The five activities were obtaining diapers, contacting
lending
institutions on behalf of clients, helping people whose houses
had
burned down, investigating cases of abused adults, and placing
juvenile
delinquents in appropriate settings.
17. As an example, the State cited the activity of "visiting clients
in
their homes periodically to check on their welfare," which was listed
by
the Agency. The State maintained that --
[i]n fact, the social workers who mentioned home
visits among the
activities they allocated to case
management services invariably
indicated that there was a health-related
aspect to the visit, such as
to do a medical evaluation, to discuss available
health services, to
draw up a service plan, or to check on medical equipment
in the home.
State's Ex. 2 at .29.
18. Specifically, the State argued that the activity of
"advising
clients of available social and medical services" is certainly
an
appropriate outreach activity for which states have always received
FFP
at the administrative rate. State's Ex. 2 at .30.
19. As noted above, the ROSA IV called for coding these activities
only
when provided to specified individuals, usually those with
obvious
health needs. One population, children in foster care, would
not have
obvious health needs (except perhaps for EPSDT services).
However,
since the ROSA IV contained numerous other codes for activities
related
to foster care children which were not charged to Medicaid, it
appears
that the social workers would understand that only
health-related
activities should be charged to the Medicaid case management
codes. If
not, this would be a defect in the time study, properly
corrected
through a CAP amendment.
20. The Agency did not submit a copy of attachment 2.2A. However,
the
Agency submitted an affidavit which stated in part:
The West Virginia State plan in section 1.1(b)
through (e)
specifically excludes agencies other
than [OMS] from performing any
Medicaid administrative activities except
determining eligibility and
doing intake processing.
Agency's appeal file, Declaration of Michael Hubik at T14.