Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: California Department of
DATE: May 15, 1990
Health Services Docket No. 89-155
Decision No. 1155
DECISION
The California Department of Health Services (State) appealed a
determination by the Health Care Financing Administration (HCFA)
disallowing $3,291,117 in federal financial participation (FFP) claimed
under Title XIX of the Social Security Act (Medicaid) during the period
July 1, 1981 through June 30, 1986. HCFA's disallowance was based on a
review of administrative costs for 34 counties' California Children's
Services (CCS) Programs. The dispute concerns: (1) whether certain
expenditures were properly claimed at the enhanced FFP rate of 75
percent available for compensation and training of skilled professional
medical personnel (SPMP) or supporting staff, or at the 50 percent rate
available generally for administrative costs (HCFA disallowed the
portion of California's claim which exceeded the 50 percent rate), and
(2) whether the State's claim for compensation of the San Diego CCS
Medical Director was completely unallowable even at the 50 percent rate
because it was inadequately documented. 1/
As explained more fully below, we uphold the disallowance of the
enhanced rate for physicians who served the State as administrators
under contracts that specified that they were not employees of the
State, because HCFA guidelines in effect at the time expressly provided
that employee status was essential for SPMP funding. We uphold the
disallowance of enhanced funding for certain support staff because the
State did not show that these positions directly supported SPMP
functions. We reverse the disallowance with respect to two medical
social worker positions because we find that the State satisfactorily
documented that their functions were those of SPMP. Finally, we uphold
in part and reverse in part the disallowance of the San Diego CCS
Medical Director. We find that the State submitted evidence which
adequately documented the apportionment of the Director's time to the
CCS Program for the 18 months for which the State produced records. We
also find, however, that the State failed to substantiate its claim for
this position for the rest of the 5-year audit period.
Applicable law, regulations, and guidelines
Section 1903(a) of the Act provides for payment of:
(2) . . . 75 per centum of so much of the sums expended . . . (as
found necessary by the Secretary for the proper and efficient
administration of the State plan) as are attributable to
compensation or training of skilled professional medical personnel,
and staff directly supporting such personnel, of the State agency
or any other public agency; plus
* * * *
(7) . . . 50 per centum of the remainder of the amounts expended .
. . as found necessary by the Secretary for the proper and
efficient administration of the State plan. 2/
HCFA's implementing regulations, 42 C.F.R. 432.50(b)(1) and
433.15(b)(5), provide 75 percent FFP for SPMP and support staff.
Sections 432.50(b)(6) and 433.15(b)(7) implement the 50 percent matching
provision generally applicable to FFP claims for costs of program
administration. 3/
The terms "skilled professional medical personnel" and "staff
directly
supporting such personnel" are not defined in the Act. HCFA regulations
in effect during the disallowance period contain the following
definitions at 42 C.F.R. 432.2:
"Skilled professional medical personnel" means physicians,
dentists, and other health practitioners; nurses; medical and
psychiatric social workers; medical, hospital, and public health
administrators, and licensed nursing home administrators; and other
specialized personnel in the field of medical care.
* * * *
"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 . . . .
The regulations are supplemented by Part 2-41-20 of the Medical
Assistance Manual (Manual), which was issued to state Medicaid agencies
in an Action Transmittal by the Social and Rehabilitation Service
(predecessor agency to HCFA) in July 1975, SRS-AT-75-50. Further
guidance concerning support staff was provided in an April 1976 Action
Transmittal, SRS-AT-76-66.
The Manual contains at Section 2-41-20(B) the following "principles"
which are used to assess claims for 75% FFP:
1. General
* * * *
a. The function of a "skilled professionalmedical" position
whether at the State or local level, is the principal basis for
determining eligibility for increased Federal matching. The
title of a position or its organizational placement in the
Medical Assistance Unit administering title XIX will be used as
subsidiary evidence to confirm that a staff function is
eligible for 75 percent matching.
Support positions derive their eligibility for increased
Federal matching from their direct association with and
supervision by skilled professional medical personnel whether
at the State or local level.
b. Staffing will normally include some employees engaged in
functions which are neither skilled professional medical
functions nor supportive of such functions.
Therefore, salaries and related costs of the total cadre of
personnel involved in the administration of the title XIX
program are not reimbursable at the 75 percent rate.
* * * *
d. Where the State has contracted with skilled professional
medical personnel . . . , 75 percent matching is available only
if the contract provisions establish that the physician is an
employee of the State, i.e. by stipulating the working hours,
manner of payment, and supervisory relationships.
* * * *
2. Specific
a. The function, rather than the title, of a position is the
significant factor. Staff classified as skilled professional
medical personnel must be in functions at a professional level
of responsibility in the administration of the title XIX
medical assistance program requiring medical subject area
expertise.
"Professional" and "medical" functions are defined as follows:
Professional -- the function is at a level which requires
college education or equivalent and it relates directly to
non-routine aspects of the program requiring the exercise of
judgment.
Medical -- the function is peculiar to medical programs and
requires expertise in medical services care delivered, studying
and evaluating the economics of medical care, planning the
program's scope, or maintaining liaison on the medical aspects
of the program with providers of service and other agencies
which provide health care.
As a class, these functions require knowledge and skills gained
from professional training in a health science or allied
scientific field. They involve overseeing the delivery of
medical care and services.
Staff positions in which the primary function is the
application of administrative practices and procedures
unrelated to the specialized field of medical care management
are eligible for 50 percent matching. For example, a physician
in charge of an accounting operation would be eligible for
staff reimbursement only at 50 percent FFP.
* * * *
c. Support positions claimed at 75 percent matching must
directly support skilled professional medical personnel
functions.
Support staff must be in work assignments related in an
immediate way to the direct completion of the work of such
professional medical personnel (e.g., secretaries, statistical
clerks, administrative assistants).
To be eligible for 75 percent matching all such support
personnel must report directly to the skilled professional
medical staff and be supervised by such skilled staff members.
Support functions not related in such direct manner to skilled
medical functions are eligible only for 50 percent matching.
Functional flow charts can provide documentation that support
positions claimed at 75 percent matching are in direct support
of skilled professional medical staff.
d. Where staff time is split among functions at different
levels of Federal matching, the portion of time in each
function must be documented.
Section 2-41-20(B)(2)(b) of the Manual provides that the official
position descriptions are the "basic substantiation" for a position's
professional medical status. This section also provides for
consideration of "[j]ob announcements emphasizing requirements at or
above the college level in medical care and medical care
administration." Further, its listing under an "appropriate medical
classification" in a dictionary or handbook of occupational titles is a
secondary indicator that a position is a skilled medical position.
The determination of whether a position is a skilled professional
medical one or support staff is not an exact science. Rather, the
determination is based upon the examination of information about the
actual tasks performed by questioned personnel and a reasonable
application of the guidelines set out in the Manual, implementing the
statute and regulations.
Background
The CCS Program provides services for persons under the age of
twenty-one who have physical defects or handicaps. In counties with a
population of 200,000 persons or less, the CCS Program may be
administered independently or jointly with the State, while larger
counties must administer their programs independently. The federal
review underlying this disallowance examined administrative costs from
both types of counties.
CCS Program beneficiaries include minors who are eligible for the
State's Medicaid program, Medi-Cal. Thus, the costs of medical services
for these clients are paid for by Medi-Cal, and the costs of
administering CCS are allocated by a complicated formula among the
counties, the State, and the federal government. As noted above, a 50
percent FFP rate applies to most Medicaid administrative costs, but a
higher, 75 percent rate is paid for compensation and training costs for
SPMP and directly supporting staff.
HCFA conducted a review of administrative costs in 34 counties for the
five-year period from July 1, 1981 through June 30, 1986. 4/ It
concluded that 75 percent FFP had been improperly claimed for some
physicians who worked by contract part-time on CCS administration in
certain small counties, because the applicable guidelines restricted
enhanced FFP to payment of compensation of employees of state or local
government agencies. HCFA also disallowed enhanced FFP for some
clerical and subprofessional personnel that had been claimed as support
staff for SPMP case management staff, because the positions in question
did not directly support the SPMPs. HCFA also found that some of the
positions the counties had designated as SPMP were supervisory or
management positions, not SPMP qualifying for enhanced funding. HCFA
therefore disallowed the difference between the 75 percent rate claimed
and the 50 percent rate for all of these positions.
HCFA also concluded that the State had failed to document its claim that
the San Diego CCS Medical Director, a physician whose SPMP status was
apparently undisputed, spent at least 50 percent of his time on CCS
administration. HCFA therefore disallowed all of the State's claims for
this position.
Analysis
I. Contractors who were not State employees did not qualify as SPMP.
HCFA noted that section 1903(a)(2) provides for 75 percent FFP for
"compensation or training of skilled professional medical personnel, and
staff directly supporting such personnel, of the State agency or any
other public agency. . . ." (Emphasis added.) HCFA contended that the
underlined phrase meant that enhanced funding was available only for
SPMP and support staff that worked for the Medicaid agency (or for
another public agency administering the state plan in the political
subdivision). HCFA noted that its Manual provisions explicitly set
forth this agency position as early as 1975. HCFA maintained that it
"ha[s] always interpreted this provision [section 1903(a)(2)] to
authorize the 75 percent FFP rate only for personnel who are employed by
the agency." HCFA Response at 7 (citing 50 Fed. Reg. 46650, 46656
(1985)). HCFA argued that this interpretation was entitled to deference
since it is consistent with the statute and the State had notice of it.
The State's position was that --
From the standpoint of practicality, it makes eminent sense for
a county which does not have a large enough CCS caseload to
require the services of a full-time medical director, to
contract with a physician in the community for services on an
as-needed, part-time basis.
Appeal Brief at 11. The State contended that there were no material
differences between the qualifications and duties of such personnel and
the qualifications and duties of full-time physicians employed in the
larger county CCS programs, so that FFP should be available for their
services as well. It argued that HCFA's interpretation of the SPMP
provision was not compelled by the statute nor its legislative history.
The State also noted that this interpretation was not expressly included
in the regulations in effect during the disallowance period, and argued
that this showed that this interpretation was not in effect until its
official adoption in the 1986 revision of the regulations. 5/ Although
the State tacitly acknowledged notice of the 1975 Manual provisions, the
State contended that HCFA's formal SPMP regulations, issued in 1978,
which did not include this contractor qualification, superseded these
prior "informal" guidelines. Since the formally adopted rules covered
the exact same ground as the previous informal interpretations, the
State reasoned, HCFA was sending at least an implicit message that these
formal rules superseded prior inconsistent statements of policy.
Moreover, the State argued, when an agency engages in formal
notice-and-comment rulemaking, the regulated community has a better
opportunity to become aware of regulatory requirements than when HCFA
disseminates its interpretation "as part of a handbook directed to the
Agency's own personnel and select staff of the states' Medicaid
programs." Appeal Brief at 13-14.
The State also argued, in the alternative, that a physician who is in a
position of "line" authority rather than in a consultant role should
be
considered a county employee. Appeal Brief at 14-15. The State
admitted, however, that its contracts with the physicians all
specifically provided that the physicians were not county employees,
with one minor exception. 6/
The issue here is not whether the State will receive any FFP for the
services of these physicians who would, if they were county employees,
presumably qualify as SPMP. HCFA recognized that these contractor costs
were CCS Program administration costs and allowed the regular 50 percent
FFP. While we can agree with the State that its method of staffing its
CCS administration offices in small counties may have been a practical
means of obtaining needed services, we cannot agree that the State was
justified in claiming 75 percent FFP in the face of an explicit,
contrary HCFA interpretation of which the State had notice. As we
discuss below, notwithstanding the State's arguments to the contrary,
the State did have clear notice of this requirement.
The State's contention that the Manual provision should not be applied
here does not withstand serious scrutiny. First, although it is true
that the language of the statute does not specifically refer to
"employees," HCFA's reading is based on the language of the statutory
provision, which refers to "personnel" of the State or other public
agency. "Personnel" implies employment. Webster's Third International
Dictionary, 1976 ed. at 1687. The purpose of this provision was to
encourage states to hire SPMP, who were likely to command a higher
salary than employees with less professional medical training, to assist
in the administration of state Medicaid programs. Manual section
2-41-20(A). The State's reading would give effect to neither the
language nor the purpose of the provision.
Similarly, the State's assertion that the explicit Manual provision
issued in July 1975 was somehow superseded when HCFA issued the formal
regulations in 1978 is without merit. The 1978 regulations were merely
an agency clarification of the regulations which served as the Manual's
underlying authority. The Action Transmittal which transmitted this
part of the Manual, issued in July 1975, cited 45 C.F.R. 250.120 as part
of its legal background and authority. Manual section 2-41-10(B). That
regulation remained unchanged in substance until HCFA revised the SPMP
regulations in 1986. 7/
The State pointed to nothing in the history of these changes that
indicated any intent on the part of HCFA to supersede the Manual
interpretations. In fact, the preamble to the 1978 regulations clearly
stated that HCFA intended no substantive policy changes in the existing
regulations. 45 Fed. Reg. at 45176. Moreover, HCFA's location of these
implementing regulations in 42 C.F.R. Part 432 of the regulations,
entitled "State Personnel Administration," gave the State notice of
HCFA's continuing interpretation that the personnel eligible for
enhanced funding were to be state personnel or comparable personnel
employed by local government agencies.
The mere fact that HCFA amended the regulations in 1986 to provide
explicitly that SPMP must be employees of the State or another public
agency does not indicate that HCFA had not been interpreting the
regulations in this manner under the 1978 regulations. The preamble to
the 1986 regulations specifically noted, in fact, that HCFA had
consistently interpreted the statute as requiring an employer-employee
relationship with the State. 50 Fed. Reg at 46656.
The State's characterization of the Manual as mere informal guidelines
is inaccurate. The Board has recognized these Manual provisions as
authoritative interpretation of the regulations. See, e.g., Michigan
Dept. of Social Services, DAB No. 773 (1986); West Virginia Dept. of
Health and Human Services, DAB No. 1107 (1989) 8/ Moreover, while the
State characterized the 1978 regulations as being inconsistent with the
Manual provision at issue here, the only inconsistency identified by the
State was the lack of detail. This was consistent with HCFA's intention
that the Manual provisions remain in effect as an interpretation of the
essentially unchanged regulation. Thus, we find that the Manual
provisions remained in effect until HCFA's 1986 substantive overhaul of
the SPMP regulations.
The State also propounded an alternative argument that a physician who
was in a position of "line" authority rather than in a consultant
role
should be considered a county employee, and thus eligible for 75 percent
FFP. The State was obliged to admit, however, that nearly all (see n. 6
above) of the contracts for the physicians at issue here expressly
provided that the physician was not a county employee, which seriously
undermines its position that it was of little import whether the
physicians had the status of being county employees. The State also did
not cite any statutory or regulatory authority to support its contention
that, since there were no material differences between the
qualifications and duties of such personnel and those of full-time
physicians employed in the larger county CCS programs, the State could
be reimbursed at the same level of FFP for their services. In our view,
there are significant differences between contractors and employees,
including the degree of policy control and the proper evaluation of the
positions by the administering agency. See, e.g., section 1902(a)(4)(A)
of the Act (calling for adoption by states of personnel standards on a
merit basis). While the State argued that its smaller counties did not
need the services of a full-time SPMP, it did not explain why it could
not have hired these physicians on a part-time basis, which would have
met the overall statutory policy that the program should be administered
by State or local government employees. A March 1981 organization chart
submitted by the State for Kern County, for example, indicates that the
State employed four part-time occupational or physical therapists, who
could have qualified as SPMP if their functions involved administration.
State Ex. 14-A.
We conclude that HCFA's limitation of enhanced funding to State and
other government employees is well-founded and of long standing, and the
State had ample notice of it. Consequently, we uphold this part of the
disallowance in full.
II. The State did not show that its case management positions provided
direct support to SPMPs.
HCFA denied 75 percent FFP for positions in county CCS programs whose
function was to perform routine case management. (The titles of these
positions varied among the counties; we will call them "case
coordinators," since that is how they are described in the State's CCS
program manual.) In the disallowance, HCFA cited the language of the
1978 regulations, specifically 45 C.F.R. 432.2, which define supporting
staff as staff whose activities are directly necessary to the carrying
out of the functions which are the responsibility of SPMP. In addition,
HCFA cited a Manual provision, issued by its predecessor as Action
Transmittal SRS-AT-76-66, on April 20, 1976, which explained that
supporting staff must be directly supervised by and associated with
SPMP.
At an early stage in this dispute, the State had contended that case
coordinators were either SPMP or support staff; during the proceeding
before the Board, the State revised its position to contend only that
these employees met the definition of supporting staff under the 1978
regulations. Appeal Brief at n. 6. The State again attacked the
applicability of the Manual provisions on the theories discussed
above--namely, that the 1978 regulations, which did not contain the
express requirement that support staff be directly supervised and
associated with SPMP, superseded the Manual provisions and that,
furthermore, the adoption of more specific regulations in 1986 showed
that the Manual provisions relied upon by HCFA were not in effect during
the relevant period. The State provided documentation and affidavits in
support of its position that the case coordinator positions met the
requirement that eligible support staff activities be directly necessary
to the SPMP's functions.
We reject the State's contentions regarding the applicability of the
relevant Manual provisions for the reasons stated above, which are
equally applicable to the provisions at issue here. Moreover, we note
that apart from the additional requirement that the SPMP be the support
staff's supervisor, the Manual provisions essentially parallel the 1978
regulations defining support staff, which the State recognized as
applicable and binding. That regulation included the requirement that
the support staff's activities be directly necessary to the SPMP's
functions. Based on our analysis of the evidence presented by the
State, we find that the case coordinator positions described here were
not supervised nor did they otherwise perform functions necessary to the
carrying out of functions of the SPMPs, and therefore these positions
were not eligible for 75 percent FFP.
The State provided a copy of the CCS case coordinator procedure manual.
See State Ex. 12. The procedures and organization described in this
manual were mandatory for dependent counties and advisory for
independent counties. The manual provides for a team approach to case
coordination whereby routine determinations and authorizations are made
by case coordinators, who follow detailed program guidelines regarding
eligibility, services available for specific physical handicaps, etc.
These case coordinators would refer to SPMP more complex cases that did
not fit into these guidelines.
The State noted that there were a variety of ways in which this team
approach could be and was implemented by the counties that were reviewed
in this audit, so it did not provide documentation for all of the
positions that were disallowed. Thus, the only state-wide evidence in
the record is the CCS procedure manual. We find that the procedures
reflected in that manual do not support the State's assertion that the
case coordinators directly supported SPMP functions. Among the duties
of the case coordinator are listed: determining medical and residence
eligibility; conducting financial eligibility reviews; acting as the
primary contact person with families, patients, and providers;
completing forms and original letters; coding medical diagnoses and
completing statistical reports; and editing claims. The CCS manual
provides that case coordinators must work within established policy and
procedural guidelines. State Ex. 12 at 14. There is no mention of any
contact with the SPMP; instead, case coordinators are directly
supervised by and have their work monitored by the supervising case
coordinator. Id. at 13. In fact, the CCS manual does not seem to
contemplate much direct contact between the case coordinator and the
SPMP medical consultant -- it calls for the supervising case coordinator
to try to resolve questions from case coordinators before passing them
on to the SPMP when appropriate. Id.
The State tried to qualify these positions as support positions by
arguing that if case coordinators did not perform these functions, it
would be necessary to have SPMP complete them. The record does not show
that these were clerical functions supporting particular SPMPS, however;
instead, the case coordinators' function was to substitute for SPMPs by
processing routine cases that did not require expert medical judgment,
using guidelines written by SPMPs. Thus, we conclude that while these
positions clearly supported the function of the overall program office,
and were thus eligible for 50 percent FFP for administration, they did
not directly support the SPMP's functions to qualify for 75 percent
funding.
These positions were reminiscent of the positions at issue in a previous
California case, DAB No. 646 (1985). There we found that--
. . . the work done [by the State administrative office] . . .
was the routine claims processing functions such as routine
error identification, . . . and flagging of claims that might
require fee adjustments or might indicate overutilization.
While these tasks were helpful, and maybe even an essential
first step, in identifying claims and providers that a SPMP may
later choose to examine further, they lack the "immediate" and
"direct" nexus that is required for 75% FFP. These functions
were performed prior to the SPMP's involvement in a SPMP
capacity. . . . The organizational charts submitted by the
State . . . [do] not indicate that the specific work
assignments were initiated by the SPMP in an SPMP role and that
the SPMP directly supervised the employee in the work
performed. To use a lesser standard would lead to the
conclusion that almost any function performed by an employee of
the State Medicaid agency would qualify for 75% FFP, and the
limited exception to the routine 50% FFP for administrative
expenditures would be rendered meaningless.
DAB No. 646 at 5.
As for specific counties where such positions were disallowed, the State
offered evidence regarding only Los Angeles and San Diego Counties. 9/
In Los Angeles, the case coordinators were called Senior Clerks. The
State apparently unwittingly conceded the propriety of disallowing these
positions for the period July 1, 1981 through March 1983 by its
admission that prior to April 1983 these personnel performed only
financial review of claims for services. See Appeal Brief at 23-24.
Beginning in April 1983, the County reorganized its program using the
team concept espoused by the CCS manual. The State provided
organization charts (State Exs. 13F, 13G, and 13H) and an affidavit from
the Head of Staff Services for the Los Angeles CCS Program (State Ex.
13) to support its contention that these positions were directly
necessary to the carrying out of SPMP functions.
We find that the Los Angeles-specific information merely confirms our
finding above that such positions support the function of the entire
program, not necessarily those of any specific SPMP or group of SPMPs.
The State's evidence included a letter saying that the Senior Clerks
followed pre-established and detailed procedures accessed from manuals.
State Ex. 13E. Furthermore, all of the State's evidence showed that the
Senior Clerks were supervised by an Intermediate Supervising Clerk who
was responsible for direct supervision of these positions. State Ex. 13
at par. 5. Taken with all of the other evidence, this leads us to
conclude that these positions got their guidance from policy manuals
compiled by SPMP, not from SPMP directly. That these positions were
part of a "team" headed by a SPMP is not sufficient by itself to make
them directly supportive of a SPMP. DAB No. 1149 at 16.
As for the San Diego positions, called "case clerks" by the State
in its
brief, the State introduced an affidavit from the Chief of the San Diego
CCS Program (State Ex. 15) describing the organization of the office in
question. According to the affidavit, the primary case managers were
public health nurses, recognized as SPMP by HCFA, who were assigned a
portion of the CCS caseload by alphabetical listing. Two case clerks
were also assigned to each portion of the program's caseload. These
case clerks typed and issued authorizations for medical care, requested
medical reports from physicians, answered telephone calls, opened and
closed cases, filled out eligibility and other forms, and performed
other tasks assigned to them by the nurses. State Ex. 15 at par. 3. The
affiant stated that although the clerks were supervised by a clerical
supervisor, they received their work assignments and instructions on
completing those assignments from the nurse and not from the clerical
supervisor. State Supp. Ex. 19. The State also provided a copy of a
current job description of the case clerks' duties (State Supp. Ex.
19B), and represented that these duties were the same during the period
that the affiant had been Chief of the San Diego CCS Program (since
February 1982). State Supp. Ex. 19 at par. 6.
HCFA provided a job description of a "Senior Clerk" which had been
submitted by San Diego County during the review and which showed that
the person holding that position was responsible for, among other
duties, "planning and assigning work" to the case clerks. HCFA Ex.
9.
HCFA contended that this flatly contradicted the noncontem- poraneous
affidavit of the State. Moreover, since this responsibility was
accompanied by authority for hiring, training, performance reviews,
disciplinary actions, establishing work standards, and monitoring
productivity of the case clerks, HCFA argued that its evidence
demonstrated convincingly that the clerical supervisor's supervision was
neither "minimal" nor limited to "a personnel reporting sense,"
as this
Board found in the cases of Utah Department of Health, DAB No. 1032
(1989), and New Jersey Dept. of Human Services, DAB No. 845 (1987).
HCFA also stressed that the duties listed for the case clerks were
routine case processing tasks, virtually identical to those of the
Senior Clerks in Los Angeles County, and it argued that these duties
paralleled those of positions in Michigan, supra. In Michigan, the
Board found that certain positions were not SPMP support positions
because there was nothing in the record to connect the positions' tasks
with a SPMP function, or to show that any position provided support to
any particular SPMP.
We conclude that, as in the case of the Los Angeles Senior Clerks, the
State failed to show the kind of nexus between the San Diego case clerks
and their SPMP co- workers needed to qualify the positions as SPMP
support. The State furnished no contemporaneous records for any of the
five-year period under review; the position description provided was one
from 1989, which was three years after the end of the audit period and
eight years after its beginning. Although the State provided sworn
testimony that this document accurately described the position's duties
as they existed during the audit period, the State did not provide any
documentation supporting this assertion, and it appears unlikely that
the program remained completely static during an eight- year period.
Moreover, the position description lists routine case processing tasks
that are related to maintaining case files in general, rather than to
performing tasks supportive of any particular SPMP. In addition,
although the State's affidavit claimed that the case clerks received
their work assignments from the nurses, the State never explained the
contradictory, contemporaneous position description provided to HCFA by
San Diego that indicated that it was the senior clerk who planned and
assigned work for these positions. This definitely contradicts the
State's assertion that the case clerks reported to a clerical supervisor
only in a technical, personnel reporting sense.
Finally, we have compared these positions to those examined in prior
Board cases that were cited by the parties, and we agree with HCFA that
they closely resemble the positions reviewed in the Michigan case. All
of the duties described appear to be routine case- processing tasks that
are not directly necessary to SPMP functions. The State in this case
has likewise failed to demonstrate a clear connection between these
positions and any particular SPMP. The State has not produced the same
type of evidence as in the New Jersey and Utah cases that the duties
performed were directly related to the completion of specific SPMP
functions. 10/ We therefore conclude that the State has not shown that
these positions should receive 75 percent FFP as SPMP support positions.
III. The State established that two social workers employed by San
Diego CCS were medical social workers qualifying as SPMP.
The State contended that the disallowance included two social workers
employed by the San Diego CCS program who qualified as medical social
workers. California first offered as support for this assertion an
affidavit by the Chief of the San Diego CCS Program, stating that,
during the review period, the CCS Program "employed two Social Workers
both of whom were qualified by training and experience as Medical Social
Workers." State Supp. Ex. 15 at par. 4. The affidavit further stated:
The incumbents in the social worker positions during this
period were both Masters level, trained Social Workers with
specialized training and experience in the medical field.
These persons performed medical social work duties as part of
the case management function, such as assisting families which
were not following a prescribed or recommended plan of care,
interacting with the medical community, assisting with hospital
discharge planning and planning for continuing medical needs,
and making referrals to children's protective services of
suspected cases of medical neglect or abuse.
Id. The affiant also stated that the federal reviewers had not spoken
with her, nor (as far as she knew) with other San Diego CCS Program
staff, during the course of their review.
The HCFA review report did not specifically address these social worker
positions; they were apparently encompassed in the general finding in
the report that some of the employees designated as being SPMP did not
meet the criteria because: "The employee was supervisory or management
and not SPMP." State Ex. 2 at 10. HCFA responded to the State here by
pointing to contemporaneous documents that listed the positions as
"social worker," rather than "medical social worker," and
noting that
the State had not provided position descriptions.
With its reply brief, the State submitted a supplemental affidavit by
the Chief of the San Diego CCS Program, with several attachments. State
Ex. 19. One attachment is a copy of a document entitled "The Role of
the Medical Social Worker in the CCS Program." State Ex. 19-D. The
supplemental affidavit states: "This document has been in effect at
least since I took over this program in February 1982, and it is an
accurate description of their job duties." State Supp. Ex. 19 at par.
8. The supplemental affidavit also states that the office created a new
civil service classification of Social Worker V (California Children's
Services) when they hired the second social worker in 1984; the
affidavit describes State Supplemental Exhibit 19-E as "a copy of a
recent examination announcement for this class," and State Supplemental
Exhibit 19-F as "a copy of the written examination we developed for
hiring the Social Worker V in 1984." State Supp. Ex. 19 at par. 9.
In response, HCFA rejected the State submission as merely "post hoc
opinion," rather than contemporaneous documentation. HCFA Supplemental
Response at 12. HCFA further noted that the affidavits did not specify
what training and experience the social workers had, that the job
announcement advertises an examination to be held in April 1989 (three
years after the close of the review period), and that the affiant
assumed her position as Chief only in February 1982.
As HCFA recognized, the regulations in effect during the disallowance
period specifically state that SPMP may include medical social workers,
and do not require any specific educational background (as the current
regulations do). Under the relevant provisions, the principal focus is
on the nature of the functions being performed. HCFA did not deny that
the functions described in the affidavit and the documents provided were
medical social work functions, but attacked the credibility of the
State's evidence.
While the State's evidence here is less than ideal, we find it is
adequate to establish the allowability of the enhanced rate for these
two workers. In this case, HCFA did not base its finding on any
examination of the functions performed, nor on any affirmative evidence
that the positions were not SPMP positions filled by qualified
personnel. We find that the affidavit establishes that, contrary to
HCFA's argument, the key documents are "contemporaneous." We find
the
affidavit to be reliable on this point because it is consistent with the
only contemporaneous documents which HCFA presented and with what the
record shows about the nature of the CCS Program and how it operated.
The specific reasons supporting our decision are:
o Contemporaneous documents in the record describe the CCS Program
as one of coordinating medical treatment and related services for
children with severe physical handicaps. See, e.g., State Ex.
12 at 1. This establishes a context which makes it likely that
program social workers were medical social workers.
o The supplemental affidavit states that "The Role of the Medical
Social Worker in the CCS Program" was in effect at least from
February 1982. While this document is not a position
description, there is no basis in this record to question the
affidavit's statement that it accurately describes the functions
performed by the social workers. This description is consistent
with how the CCS case coordinator guide describes the role of the
social work consultant in the program. State Ex. 12, att. 2.
o HCFA Exhibit 11, the organizational chart of the San Diego CCS
office for 1984, confirms that the individuals in the social work
positions each had an "MSW" and therefore were at the Masters
level as the affidavit states. The chart also shows a relatively
direct line of authority from the Chief to the social workers,
confirming her assertion that she had direct knowledge of those
individuals. Although one social worker was in her position at
the time the Chief assumed her duties, the Chief described the
worker's qualifications as a medical social worker as "previous
training and experience" (State's Supp. Ex. 19 at par. 8), and
there is sufficient basis in the record for assuming the role
remained the same during the entire period.
o Although the job announcement was from 1989, the affidavit
establishes that the position classification announced was
developed in 1984. The 1989 document shows that that position
required a social worker with a Masters and with experience in
physical health services programs. State Supp. Ex. 19-E.
Moreover, the organization chart from 1984 shows two social
workers, each functioning at the same level. HCFA Ex. 11.
o The supplemental affidavit states that the copy of the
examination provided was developed in 1984. That examination
indicates the need for a level of training/experience in a
medical context consistent with the State's other evidence.
State Supp. Ex. 19-F.
Accordingly, we reverse the disallowance of enhanced funding for the two
San Diego social workers in the CCS Program.
IV. The State only partially documented its claim for the San Diego CCS
Medical Director's salary.
The State claimed as a CCS at the 75 percent rate one- half of the
salary of the physician who acted as the San Diego CCS Medical Director.
It claimed that this individual actually spent as much as 80 percent of
his time on CCS administration, but that it claimed only 50 percent of
his salary because that was the amount budgeted during the relevant
period of time. The HCFA reviewer recommended disallowance of the
entire claim as an unallowable estimate, as it was not supported by time
sheets or other contemporaneous documentation.
The State admitted that it did not provide documentation of this claim
to the auditor, but it contended that it subsequently did furnish
substantiating records to HCFA prior to its issuing the disallowance
letter. This documentation, State Ex. 6, att. 2, consists of summary
time sheets for 18 months of the 5-year audit period and shows,
according to the State, "that Dr. Ooghie worked over 2,300 hours on CCS
business during that time period." State Reply Brief at 11. The State
also provided an affidavit of the Director of the San Diego CCS program
who stated that, based on her own observation and her regular review of
weekly time records, the Medical Director worked at least 80 percent of
the time for the CCS Program, and that these time summaries were
representative of the entire disallowance period. State Ex. 15 at par
2. Thus, the State contended, its claim for half of the salary of this
position "was an 'estimate' only in the very limited sense that it was
an extreme understatement of actual, and thus, reimbursable
expenditures." State Reply Brief at 12.
HCFA maintained that the State's proffered documentation was woefully
inadequate to document its claim, especially in light of the higher
standard that pertained to documentation of expenses that were to be
allocated among benefitting programs. HCFA's position was that Office
of Management and Budget Circular A-87 (OMB A-87) absolutely required
time sheets or some other contemporaneous accounting of how employees'
time was spent where the costs for these employees was to be charged to
more than one program. In other words, HCFA maintained that summary
documents such as those presented were inadequate to satisfy the State's
obligation to document its claims. HCFA noted that in any event, the
State had produced documentation for only 18 months of a 5-year period.
The OMB A-87 provision cited by HCFA provides:
Payrolls must be supported by time and attendance or equivalent
records for individual employees. Salaries and wages of employees
chargeable to more than one grant program . . . will be supported
by appropriate time distribution records.
OMB A-87, Att. B, section B.10 (made applicable to the Medicaid program
by 45 C.F.R. 74.171 and 42 C.F.R. 430.0(b)(ii)). We do not agree with
HCFA that this provision dictates that the only acceptable method of
documenting this claim was to produce contemporaneous time sheets for
this physician. We find that the State's summary documentation is, in
combination with the unrefuted sworn testimony that the summaries were
based on such time sheets, reliable enough to provide a sound basis for
a claim for FFP for the specific period which it covers. The language
of OMB A-87 cited by HCFA calls for time recording documents or their
equivalent. We note that in a recent case before the Board, Wisconsin
Dept. of Health and Social Services, DAB No. 1121 (1989), HCFA auditors
credited quarterly summaries of employee time sheets as a substitute for
a review of each employee's monthly time sheet for purposes of
allocating those employees' time among benefiting programs.
HCFA recognized here that the affidavit linked the summaries to such
time distribution records, but it did not analyze the records at all in
its briefs. Our examination reveals that these records, while they do
not show how all of the physician's time was spent, are sufficient to
show that during the period covered the State maintained time records
showing he spent more than the 50 percent of his time charged by the
State to CCS activities on CCS activities. 11/ HCFA's characterization
of this part of the claim as an "estimate" is therefore a misnomer
--
the State provided evidence that it documented the amount of the salary
paid and that the incumbent spent at least as much time as was charged
to the CCS Program on CCS activities. Consequently, we reverse the
disallowance for these 18 months.
On the other hand, the mere assertion by the State's witness that this
18-month period is representative of the entire 60-month period is
insufficient evidence upon which to base a claim for the months not
covered by the summary time sheets. Without some other support, this
unsubstantiated assertion simply cannot support a claim for FFP.
Accordingly, we uphold the disallowance for the 42 months for which the
State provided no documentation.
Conclusion
Based on the analysis above, we uphold the disallowance of the enhanced
rate for physicians who served the State as administrators under
contracts that specified that they were not employees of the State. We
uphold the disallowance of enhanced funding for case coordinators. We
reverse the disallowance with respect to two medical social worker
positions in San Diego. Finally, we reverse in part and uphold in part
the disallowance of the San Diego CCS Medical Director; we reverse the
disallowance for the 18 months for which the State produced records and
uphold the disallowance for the rest of the 5-year audit period.
_____________________________ Judith A. Ballard
_____________________________ Norval D. (John)
Settle
_____________________________ Cecilia Sparks
Ford Presiding Board Member
1. Parts of the disallowance were resolved by the parties during the
course of this proceeding, see, e.g., n. 4 below, so that the amount in
dispute is now approximately $1,444,598, plus the amount disallowed with
respect to the claim for the San Diego CCS Medical Director. State
Reply Brief at 4.
2. In paragraphs (1), (3), (4), (5) and (6), section 1903(a) sets the
rate of FFP for other types of expenditures for the Medicaid program.
3. Final regulations amending the requirements for SPMP at the 75
percent rate were published at 50 Fed. Reg. 46652 (1985) and effective
on February 10, 1986. The amendments substantially narrowed the
availability of FFP for SPMP positions. See Montana Dept. of Social and
Rehabilitation Services, DAB No. 1024 (1989) at 12; Oregon Dept. of
Human Resources, DAB No. 729 (1986) at 9-10. HCFA chose to deem these
amended requirements effective as of July 1, 1986. HCFA Ex. 3. The
prior regulations and implementing Manual provisions cited in this
decision thus apply to govern the FFP rate properly paid for the
expenditures at issue.
4. HCFA used a statistical sampling plan, which the State did not
challenge, to conduct the review of the 34 counties. It then
extrapolated the results of this audit to all of California's counties,
which produced a disallowance of $3,291,117. The State's appeal brief
criticized the statistical methodology employed by the reviewers for
this extrapolation, and HCFA subsequently determined to withdraw the
extrapolated portion of the disallowance. Instead, HCFA stated that it
would do a separate financial review of the previously unreviewed
counties. HCFA Response at 9-10.
5. The amended SPMP regulations (see n. 3 above) now explicitly
provide at 42 C.F.R. 432.2 that SPMP status is limited to those "who are
in an employer-employee relationship with the Medicaid agency." See 50
Fed. Reg. 46663.
6. The single exception to this was a contract entered into by Kern
County in March 1986, three months before the end of the audit period.
As the State pointed out, this contract did provide some benefits to the
physician that were similar to those of a regular State employee. This
contract also deleted the categorical denial of employee status found in
previous contracts in favor of language that said --
EMPLOYEE STATUS. PHYSICIAN is a special consultant to the COUNTY
pursuant to the terms of this Agreement and is not subject to the
provisions of the Civil Service Commission Rules or the benefits
of County employment not specifically enumerated herein.
HCFA Ex. 7 at 2. The gist of this provision is that the physician still
does not have employee status, even though other parts of the contract
give him some employee-type benefits. As for supervision of the
physician, the contract gives a State employee the right to establish
priorities for the physician, but no direct supervisory authority. On
balance, this contract's provisions do not make this physician a county
employee. In any event, as HCFA pointed out, the State admitted that it
had no time records to allocate this physician's time among the programs
for which he was obliged to serve as a consultant under the contract.
As discussed below, such records were required.
7. Section 250.120 was recodified without substantive change as 42
C.F.R. 450.120 effective October 1, 1977. 42 Fed. Reg. 52826 (1977).
That regulation in turn was deleted effective February 27, 1978, as part
of a clarification and recodification process, to produce 42 C.F.R.
446.175. 42 Fed. Reg. 60564 (1977). The Agency noted then that "No
substantive changes are made to current policies." Id. This section
was in turn reissued "with clarifying editorial changes" at 42 C.F.R.
432.50, as part of the 1978 regulations. See 43 Fed. Reg. 45176, 45199
(1978).
8. We note that in addition to the numerous post-1978 cases cited by
HCFA in which the Board recognized the continued viability and authority
of the Manual, California had direct notice during the review period
that HCFA continued to consider it authoritative. Board records show
that on October 18, 1983, HCFA issued a disallowance of certain
administrative costs of the State's Child Health and Disability
Prevention Branch which referred to the Manual's interpretation of the
SPMP regulations. See California Department of Health Services, DAB No.
646 (1985), and underlying record (Board Docket No. 83-264).
9. The State chose to discuss only Los Angeles County in detail
"[b]ecause of the number of county CCS programs involved in the federal
review and the variety of case management arrangements employed . . . ."
Appeal Brief at n. 9. It also specifically argued about two case clerks
working in the San Diego County CCS Program. Appeal Brief at 25-26.
California requested the opportunity to develop further the factual
record regarding the other counties should the Board accept its
arguments regarding the Los Angeles or San Diego models of case
management. In light of our conclusion that neither meet the
requirement of "directly supporting" SPMP, the State's request is
moot.
10. For example, in New Jersey the appellant submitted evaluation and
performance reports that described the tasks, actions, and
responsibilities of each of the positions at issue and listed the
specific SPMP for whom that clerical position performed tasks.
11. Dividing hours worked during the period July 1, 1983 through June
30, 1984 by 52, and comparing the result to his "current regular hours"
of 38 yields an 80 percent figure for time spent on CCS activities
during this period. A similar operation yields 73 percent for the
period July 1, 1984 through January 3,