GAB Decision 433
Docket Nos. 82-131 and 82-164
May 31, 1983
New York State Department of Social Services;
Settle, Norval; Teitz, Alexander Ford, Cecilia
The New York State Department of Social Services (State) appealed two
decisions by the Regional Administrator, Health Care Financing
Administration (Agency), disallowing expenditures claimed by the State
under title XIX of the Social Security Act. The claims were disallowed
on the ground that they were not supported by documentation. The appeal
docketed as No. 82-164 involved the disallowance of $1,205,814 of the
$24,310,597 claimed on the State's quarterly expenditure report (QER)
for the quarter ended September 30, 1980. The appeal docketed as No.
82-131 involved the disallowance of an additional $21,786,502 of
$27,500,000 claimed on the State's revised QER for the same quarter.
/1/ The amounts in both appeals were claimed as increasing adjustments
for prior period expenditures. During the course of the proceedings
before the Board, the amount in dispute in Docket No. 82-131 was reduced
to $12,008,420. This reduction resulted from the State's withdrawal,
without prejudice, of $5,399,387 in claims which the parties agreed
presented a substantive issue not relating to documentation (see, letter
from Glasel to Ford dated May 5, 1983, and Transcript of conference held
April 21, 1983 (TR), pp. 2078 288), and from the Agency's determination
that $4,378,695 was properly documented and allowable (see, letter from
Klein to Rahmas dated October 20, 1982). The total amount in dispute in
both appeals was later reduced by $576,675.50 as a result of the
Agency's agreement to review documentation for expenditures in that
amount and issue a new dissallowance with respect to some or all of that
amount if necessary. (Letter from Healy to Ford dated May 13, 1983)
Docket Nos. 82-131 and 82-164 were considered together by the Board
since they both involved the issue of lack of documentation for
retroactive claims made under title XIX. For the reasons discussed
below, we conclude that the disallowances should be sustained on the
ground that the claims were not adequately documented. This decision is
based on written submissions by the parties as well as on the
transcripts of a conference call held on December 20, 1982 and an
informal conference held on April 21, 1983.
(2) BACKGROUND
As indicated above, the claims were submitted on the original and
revised QERs for the quarter ending September 30, 1980. The original
QER identified the $24,310,597 claimed as an increasing adjustment as
"Retroactive Adjustments for the M.A. (medical assistance) program."
The
revised QER identified the $27,500,000 claimed as an increasing
adjustment as follows:
Retroactive adjustment of MA claims, submitted due to HR 3434
Restrictions for HR-ADC Case Category Changes; True date of Disability
Determinations; Title II Individuals and NYC 1977 (all payment files)
On receipt of these QERs, Agency auditors housed in offices at the
State Department of Social Services attempted to locate the first level
of supporting documentation for the claims which normally includes
documents such as MMIS reports, expense reports substantiating the
dollar value of the claims, claims submitted by other State agencies
which administer various aspects of the State's Medicaid program,
ledgers or other books of original entries on which expenditures are
initially recorded, and adjustment schedules relating to audits
conducted by the State itself. (TR, pp. 30-31) In lieu of providing
this type of documentation, the State gave to the Agency several
memoranda describing audit projects which had given rise to the claims.
(TR, pp. 41-42, 180) Those memoranda divided the claims made on the
original and revised QERs into six categories. The State consented (at
TR, p. 74) to the use, for purposes of this case, of summary
descriptions of those categories prepared by the Agency (Agency's brief
dated December 29, 1982, p. 4) and quoted below.
Docket No. 82-131 (revised QER):
1. HR/ADC Case Category Changes - $7.5 million FFP Retroactive
claims for Aid to Dependent Children (ADC) claims which were not
reclassified FP after cases changed from Home Relief (HR) to ADC
(November 1977 through December 31, 1979).
2. True date of Disability Determinations - $10.0 million FFP
Retroactive adjustments for SSI-AD eligibles to the date of onset of the
disability (January 1, 1974 through December 31, 1979).
3. Title II Individuals - $7.5 million FFP Retroactive adjustments
for HR individuals with Title II benefits due to disabilities (January
1, 1974 through December 31, 1979).
(3) 4. NYC All Payment Files - $2.5 million FFP Retroactive claims
for SSI cases for which only in-patient hospital services were claimed
(January 1, 1977 through December 31, 1977).
Docket No. 82-164 (original QER):
5. Retroactive adjustments for hospital expenditures previously
claimed as Federal nonparticipating and now determined to be Federal
participating.
6. Medical assistance services for SSI eligibles retroactive to the
date of SSI application.
The Agency subsequently deferred the total claim in both cases on the
ground that the claims were submitted "without adequate documentation."
Pursuant to regulations governing the deferral process at 45 CFR 201.15,
the State was requested to make available all related documents and
materials necessary to determine the allowability of the claims.In
response, the State provided documentation relating to part of the
claims which the Agency determined upon review to represent allowable
expenditures. The disallowances appealed from here were taken with
respect to claims totalling $21,786,502 in Docket No. 82-131 and
$1,205,814 in Docket No. 82-164 which remained undocumented. Part of
the $24,310,597 claimed on the original QER and deferred was not
addressed by the disallowance in Docket No. 82-164. (Letter from Toby
to Blum dated June 23, 1982, and letter from Toby to Webb dated August
9, 1982)
At the time the State filed its initial brief with the Board, it
submitted additional documentation which the Agency determined supported
part of the amount disallowed. Finally, in November 1982, the State
submitted documentation in these appeal proceedings which it alleged
supported the amounts remaining in dispute in Docket Nos. 82-131 and
82-164. The documentation consisted of three adjustment schedules /2/
for amounts totalling (4) $101,917,728.50 FFP, each of which included
the following description:
As a result of the HR-AD Audit, it has been calculated that New York
State could have categorized disabled individuals in receipt of Home
Relief as eligible for Federally funded Medical Assistance.
The three schedules covered expenditures made during the following
periods in the following amounts: 1/77-9/77, $50,994,418; fiscal year
'78, $63,608,877; fiscal year '79, $59,833,290; and 10/79 - 3/80,
$29,399,272. (State's brief dated November 15, 1982, attachments) In
response to a request by the Agency for an explanation of the
circumstances which necessitated these adjustments, the State indicated
that it had determined that significant numbers of disabled individuals
receiving Stae-funded public assistance (home relief) payments had been
improperly denied SSI payments under title XVI of the Social Security
Act. (Letter from Kinney to Ellowitz dated December 1l, 1982) The State
later qualified this explanation by noting that the adjustment schedules
did not pertain solely to disabled individuals improperly denied SSI.
(Letter from Kinney to Ellowitz dated December 21, 1982)
AGENCY'S ARGUMENTS
The Agency took the position that it was not required to review the
documentation submitted by the State in November 1982 on the ground that
it was not related either in subject matter or in amount to the claims
made by the State on its original and revised QERs for the quarter ended
September 30, 1982 and further described in the memoranda provided to
Agency auditors. (TR, pp. 21, 25-26, 34, 79, 173-174) The Agency
asserted that the documentation differed in subject matter from the
claims originally submitted by the State in that the latter pertained to
individuals who had been determined to be eligible for some type of
federally assisted payment (under title II, title IV-A, or title XVI of
the Social Security Act), resulting in eligibility for Medicaid under
title XIX, whereas the former pertained to individuals who had not, but
in the State's opinion should have been, determined eligible for such
payments. (TR, pp. 88-89, 101-102, 112, 115, 271, 276-277) The Agency
further asserted that the documentation was not readily reviewable
because there was no way to relate the gross amount represented by the
documentation (approximately $102 million FFP) to the claims at issue,
which totalled substantially less than that amount. (TR, pp. 100-101)
The Agency seemed to indicate at one point that the format of the
documentation also made it unreviewable, but later stated that the
format (i.e., adjustment schedules) was acceptable. (TR, pp. 25-26, 90,
173-174)
STATE'S ARGUMENTS
The State took the position that the documentation was related in
subject matter to the claims described on the original and revised QERs.
It argued (5) that it should not be bound by the six categories
described in the memoranda provided to the auditors since the memoranda
were not provided as part of a formal process and were not necessarily
accurate descriptions of the claims. (TR, pp. 125, 128 186-187, 238)
The State noted that the Agency had previously allowed some expenditures
which did not fall within the six categories in the memoranda. (TR, pp.
63-64, 99-100) The State also asserted, however, that the documentation
included expenditures, totalling at least the amount in dispute, which
fell into some of the six categories. (TR, pp. 65-66, 127, 249) In the
State's view, the Agency had no basis for determining that the
documentation did not relate to the original claims since it had not
reviewed the documentation.(TR, pp. 95, 115, 119, 270, 290) Finally, the
State asserted that it could, upon request, relate amounts represented
by the documentation to each of the six categories referred to above.
(TR, p. 266)
DISCUSSION
The first question presented here is whether it is sufficient if the
documentation is related to the descriptions of the claims appearing on
the original and revised QERs or whether the State is bound by the more
specific descriptions of the claims found in the memoranda provided by
the State to the Agency. We conclude that the State is bound by the
more specific descriptions. The memoranda were provided to the Agency
auditors in response to a request for information regarding the nature
of the claims. The State had dealt with the Agency auditors with
respect to prior claims, and therefore should have known that the
auditors' mission was ultimately to make a recommendation to program
officials regarding the allowability of the claims and that any
information requested was related to that mission. Thus, we see no
reason to believe that the memoranda did not reflect the State's best
understanding of the claims it had submitted, despite the fact that the
memoranda were not provided in the context of a formal process, such as
the deferral procedure under 45 CFR 201.15.
In holding that the State was bound by the more specific descriptions
in the memoranda, we do not necessarily find that the original and
revised QERs did not comply with the requirements for preparation of
QERs found in HCFA AT-78-95. The Agency did not in fact challenge the
State's assertion (at TR, pp. 248, 270) that the descriptions of the
claims on the QERs followed the format required by that action
transmittal. Normally, however, the first level of supporting
documentation available at the time a claim is submitted makes the
nature of the claim sufficiently clear that a vague description in the
QER does not render a claim inauditable. In this instance, the State
offered the memoranda in lieu of such documentation. Under these
circumstances, it is not inconsistent to say, on the one hand, that the
descriptions on the QERs met applicable requirements, and, on the other
(6) hand, that the State is bound by the further descriptions in the
memoranda. /3/
The second question presented is whether the documentation submitted
in November 1982 is related to the claims described in the memoranda.
We conclude that it is not related. The significance of this conclusion
lies in part in the fact that the documentation thus constitutes in
effect a new claim. If the State had formally filed a new claim in
November 1982 which was supported by this documentation, the claim would
most likely have been time-barred under section 1132 of the Social
Security Act, which bars payment of any claim not filed within two years
of the end of the calendar quarter in which the expenditures claimed
were made. (Agency's brief dated December 29, 1982, p. 8; TR, pp.
21-22) Thus, requiring the Agency to review unrelated documentation
would allow the State to circumvent this statute of limitations.
In arguing that the Agency cannot determine whether the documentation
is related to the original claims without first reviewing the
documentation, the State makes the case against itself. The point is
that the documentation submitted in November 1982 is not on its face
clearly related to the original claims. As noted previously, the
documentation is for amounts totalling about $102 million and is broken
down only by date of expenditure. Although the State made two distinct
claims, on the original and on the revised QER, the adjustment schedules
do not separately identify the amounts pertaining to each claim. The
amounts pertaining to each of the six categories described in the
memoranda are also not identified. We do not think that two distinct
claims, originally totalling about $52 million and representing six
different categories, can be considered adequately documented by these
schedules. What the State has done is tantamount to a taxpayer's giving
the Internal Revenue Service voluminous financial records in order to
support a particular deduction, when he should have supplied only those
records pertaining to the deduction. To document an expenditure means to
provide evidence of that expenditure, not evidence of all expenditures
of a related nature. Since the amounts shown on the adjustment schedules
do not even approximate the total amount of the original claims, /4/ we
find that they do not constitute adequate documentation.
(7) Our conclusion that the adjustment schedules do not relate to the
claims originally made by the State is bolstered by the fact that there
is no relationship between the way in which the original claims were
generated and the way in which the adjustment schedules were generated.
The adjustment schedules were based on an audit showing that 62% of the
individuals on home relief could have been determined eligible for
medical assistance by reason of disability. The State took 62% of the
home relief caseload, and multiplied that figure by the average medical
assistance expenditure for HR cases for 1982, arriving at the amount
shown on the adjustment schedules. (Letter from Kinney to Ellowitz
dated December 16, 1982, attachments; TR, pp. 138-139) The original
claims were based on several separate audit projects each of which
examined data files pertaining to a different class of individuals.
(See, Memorandum from White and Ives to Honig dated November 25, 1980,
attached as Exhibit B of Agency's brief dated December 29, 1982) The
fact that different approaches were used to generate the original claims
and the adjustment schedules decreases the possibility that adjustment
schedules are related to the original claims.
As noted above, the Agency also argued that the adjustment schedules
described a different class of individuals than was described in the
memoranda provided by the State to the auditors. The three adjustment
schedules indicate that the adjustments were taken because the State
"could have categorized disabled individuals in receipt of Home Relief
as eligible for Federally funded Medical Assistance." (Emphasis added.)
The Agency maintained that this referred to individuals whom the State
merely believed could have been found eligible for payments under title
II, IV-A, or XVI of the Social Security Act, and hence for medical
assistance under title XIX. The Agency contrasted this with the
categories in the memoranda, which, with one exception (item 5.), seem
to relate specifically to individuals who were actually determined
eligible for title II, title IV-A (ADC) of title XVI (SSI) benefits.
However, it is not entirely clear from the record that the language in
the adjustment schedules could not encompass some of the six categories
originally described. The State asserted that individuals in receipt of
State-funded public assistance (home relief) often also receive benefits
under title II, title IV-A, or title XVI. (TR, pp. 95-96) Thus, the
fact that the adjustment schedules do not indicate whether there had
been a determination of eligibility under these titles for the
individuals involved does not mean that no such determination was made.
Nevertheless, there is no apparent overlap in the individuals described
and we cannot conclude that the documentation submitted in November 1982
is clearly related in subject matter to the original claims. The
language in the adjustment schedules is so broad that the State itself
admitted that the Agency could not determine whether the schedules in
fact included the categories of individuals described in the memoranda
without looking at the underlying documentation. The fact that the
documentation submitted in November 1982 is not clearly related to the
original claims in subject matter is an additional reason for finding
that documentation inadequate.
(8) Our conclusion that the adjustment schedules do not adequately
document the original claims does not deny the possibility that, if the
underlying documentation giving rise to the adjustment schedules were
reviewed, expenditures within the scope of the original claims might be
found. /5/ Our holding here is essentially procedural, i.e., that the
Agency is not required to review the underlying documentation because
the State has not shown that the documentation actually submitted is
related to the original claims. If we were to require the Agency to
consider the adjustment schedules, we would essentially be giving the
State another opportunity to adequately document its claims. This is so
because the adjustment schedules are just summaries of State
expenditures for medical assistance and do not themselves purport to
constitute proof of such expenditures. Thus, in order to determine
whether the amounts shown on the adjustment schedules are allowable, the
Agency would have to examine some underlying documentation. The Board
has previously held, however, that "(o)nce the respondent has properly
deferred and disallowed a claim for lack of documentation, it is within
the respondent's discretion to allow additional time to the appellant to
document the claim." Massachusetts Department of Public Welfare,
Decision No. 345, September 29, 1982, p. 8. Since no documentation was
submitted to support the amounts disallowed in the instant cases until
after the State filed its appeals with the Board, it is clear that the
Agency properly deferred and disallowed the claims. The Agency did
accept for review documentation submitted by the State with its initial
brief, resulting in a reduction of the amount disallowed. The Agency
later agreed to accept documentation of the amounts remaining in dispute
if submitted by November 29, 1982. (Letter from Ford to Rahmas and
Klein dated October 29, 1982, p. 2) The Agency asserted, and we agree,
that the adjustment schedules submitted (9) within that time period do
not adequately document the claim. Under the circumstances of this case,
we think that it was not unreasonable for the Agency to refuse to
consider additional documentation.
The State argued, however, that it had offered at every juncture in
the history of these claims to provide the Agency with any additional
documentation the Agency deemed necessary. (TR, pp. 17, 59, 85) The
State thus implied that the Agency's failure to identify the
documentation which it deemed necessary excused its own failure to
provide adequate documentation. We do not find this argument
persuasive. As noted previously, the State provided documentation
supporting part of the original claims during the deferral process, with
its initial brief in these appeals and with the adjustment schedules,
all of which was deemed reviewable by the Agency.Thus, the State clearly
was aware of what type of documentation the Agency expected.
Furthermore, it is clearly established that the State carries the burden
of proof with respect to documentation of its claims. (Massachusetts
Department of Public Welfare, supra, p. 7) The State cannot shift this
burden merely by offering to provide whatever documentation the Agency
requests.
It should be noted here that the Agency stated that, although the
adjustment schedules were not related to the original claims and could
thus not be considered in the context of those claims, the Agency would
be willing to consider the schedules if they were presented in support
of a new claim. (Agency's brief dated December 29, 1982, p. 12, n. 5;
TR, pp. 21, 119-120) The Agency stated that, although a new claim might
be time-barred under section 1132 of the Social Security Act, it would
nevertheless proceed to determine the allowability of any new claim
since funds might be available at some future date. (TR, p. 120) Our
decision in this case does not precluded the filing of such a new claim.
/6/
CONCLUSION
For the foregoing reasons, we conclude that the three adjustment
schedules submitted by the State in November 1982 in support of the
amount in dispute in these appeals are not clearly related to the (10)
claims made by the State for the quarter ended September 30, 1982.
Thus, we sustain the disallowances because the State failed to provide
adequate documentation for these claims. /1/ The notice of disallowance
stated that $5,713,498 of the $27,500,000 claimed was not
payable due to funding restrictions. (Letter from Toby to Blum dated
June 23, 1982, p. 2) The Agency subsequently stated, and the State
agreed, that this was not part of the amount disallowed. (Letter from
Ford to Rahmas and Klein dated October 29, 1982, p. 1) /2/ In
addition to the three adjustment schedules, the State submitted
documents which it referred to as RF2's, which related to additional
expenditures totalling $576,675.50 FFP not covered by the adjustment
schedules. At the conference held in these appeals, the Agency agreed
to review the RF2's, which it had originally overlooked. (TR, pp.
174175, 241-243) The Agency subsequently indicated that it would issue a
written determination, appealable to the Board, regarding the amounts
found not to be payable. (Letter from Healy to Ford dated May 13, 1983)
All subsequent references to documentation submitted by the State in
November 1982 pertain only to the adjustment schedules. /3/ The
fact that the Agency may have allowed some expenditures which were not
related to the descriptions in the memoranda does not not alter our
conclusion that these descriptions were binding since the amount of such
expenditures identified by the State is small (TR, p. 101) and the
Agency's action may have been inadvertent. (TR, p 237) /4/ We
do not conclude, however, that an exact correspondence between the
amount of a claim and the amount represented by supporting documentation
is always required. Here, the magnitude of the difference between the
amounts in dispute and the amounts reflected in the adjustment schedules
helps persuade us that these schedules are not related to the claims
made. /5/ At the conference held in these appeals, the State
provided illustrative samples of the types of underlying documentation
that were available. They included: (1) a computer printout of New
York City inpatient hospital payments of $5,000 or more per case for
which no FFP was claimed, covering the period 1974-78; (2) a computer
printout giving more detail on ten of the cases in (1) above; (3) a
computer printout listing the total amounts paid during the period 4/79
- 12/80 for inpatient hospital care for the 500 cases in the State MMIS
system involving the largest amounts; (4) a computer printout listing
the amount of money involved with inpatient hospital stays paid for by
the MMIS system during the period 4/79 - 12/80 where the amount paid was
$5,000 or greater; (5) an example of detailed information available on
microfiche regarding MMIS payments; and (6) sample case records for
cases included in the listings above. (State's Conference Exhibits 1 -
on the adjustment schedules would be an estimated, and that, unless the
estimate was obtained using acceptable statistical sampling techniques,
it would only pay allowable expenditures contained in the sample itself.
(TR, pp. 153-154, 156, 158, 161, 163-164) The parties would have to
address this issue should a new claim be filed.
JULY 07, 1984