GAB Decision 307
May 28, 1982 New York State Department of Social Services; Docket Nos.
81-56-NY-HC, 81-152-NY-HC, 81-212-NY-HC Garrett, Donald; Settle, Norval
Ford, Cecilia
The New York State Department of Social Services (State) requested
reconsideration of three disallowances totaling $2,027,202 by the Health
Care Financing Administration (HCFA, Agency). The State had claimed
federal financial participation (FFP) under Title XIX (Medicaid) of the
Social Security Act (the Act) at a rate of 75% for certain personnel
costs which the Agency alleged were only eligible for 50% FFP. HCFA
disallowed the portion of the State's claims which exceeded 50% FFP.
Board Docket No. 81-56-NY-HC involves HCFA's disallowance of $365,331
for the period July 1, 1978 through September 30, 1978. Boad Docket No.
81-162-NY-HC involves HCFA's disallowance of $1,191,952 for the period
October 1, 1978 through June 30, 1979. Board Docket No. 81-212-NY-HC
involves HCFA's disallowance of $469,919 for the period July 1, 1979
through September 30, 1979.
Section 1903(a)(7) of the Act provides in general for 50% FFP in
necessary costs of administration of the Medicaid program. Section
1903(a)(2) of the Act provides for 75% FFP in costs necessary for the
administration of the Medicaid program that are "attributable to
compensation or training of skilled professional medical personnel." The
question raised in all three appeals is whether certain personnel
involved in setting reimbursement rates and auditing health care
providers were "skilled professional medical personnel" so that costs
attributable to these personnel were properly claimed at 75% FFP. The
State requested joint consideration of the appeals, and the Agency did
not object. Since the issue in the appeals is the same, the Board is
considering the cases jointly.
There are no material issues of fact in dispute. This decision is
based on the State's requests for reconsideration, and attachments, the
Agency's response for Docket No. 81-56, and attachments, (2) the State's
June 8, 1981 response to questions from the Board, an Order to Show
Cause and the State's response to the Order.
I. Applicable law, regulations, and guidelines.
As noted above, Section 1903(a) of the Act provides for payment of:
(2) . . . 75 per centum 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 . . . .
(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. /1/
Agency implementing regulations, 42 CFR 432.50(b)(1) and 433.15(b)(
5), provide 75% FFP for skilled professional medical personnel.
Sections 432.50(b)(6) and 433.15(b)(6) implement the 50% matching
provision generally applicable to FFP claims for costs for
administration. Section 432.50(c)(1) provides that rates of FFP higher
than 50% "are applicable only to those portions of the individual's
working time that are devoted to the kinds of positions or duties that
qualify for those rates."
The term "skilled professional medical personnel" is not defined
in
Title XIX. Agency regulations contain the following definition at 42
CFR 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.
The regulations are supplemented by Part 2-41-20 of the Medical
Assistance Manual (Manual). This Part was issued in an Action (3)
Transmittal by the Social and Rehabilitation Service (predecessor agency
to HCFA) in July, 1975, SRS-AT-75-50. The Acton Transmittal describes
Part 2-41-20 as an (implementation) and interpretation of the regulation
on Federal financial participation in State expenditures for staffing of
the medical assistance program." (Attached as Exhibit 2 to the Agency's
Memorandum in Support of Respondent's Position filed in Docket No.
81-56) (Agency Response) The State did not contest the applicability of
the Manual, and, indeed, the Manual was the primary focus of the
parties' briefing in this case. Relevant Manual provisions are cited
and quoted below.
II. Discussion.
A. Positions at Issue
All the positions at issue are under the New York State Department of
Health. The State categorizes its salary costs for employees in these
positions under "activity codes", three of which are involved here:n2
Code 068 -- Reimbursement Rate Setting
Code 069 -- Auditing for Allowable Medicaid Reimbursement Costs
Code 070 -- Field Investigaion for Medicaid Rate Appeal
Activity Code 068 Reimbursement rate setting is "primarily the
function" of the Health Care Fiscal Analyst (Analyst) position series
and includes "all aspects of the determination and promulgation of the
Medicaid rate of reimbursement for applicable providers of medical care
services." The State indicated that its "highly refined" rate
setting
methodology requires the exercise of a "high degree of independent
judgement" by position incumbents and involves "sophisticated studies
of
the economics of health care as well as health care cost trend
analyses." (Attachment A to State's Request for Reconsideration (RR)
filed in Docket No. 81-56, pp. 2-3; and (unnumbered) Supplemental
Justification to Support OHSM's Medicaid Claim For Administrative Costs
For The Period 10/1/78 -- 6/30/79 (Supp. Just.) Filed with the RR in
81-162, pp. 45). The reimbursement rates and subsequent filed
investigations to determine appropriate use of rates." ((unnumbered)
"narrative statement", p. 1, Agency Response, Exhibit 1). (4)$TIn
general, positions in this series require a bachelor's degree, including
12 semester hours of accounting, and several "years of health care
related experience with particular emphasis on fiscal operations in a
health department, hospital, hospital insurance organization, or a firm
doing accounting or fiscal auditing for a hospital". Also, "(a) masters
degree in business administration, public administration (health) or
accounting" is the equivalent of one year of experience. (Job
announcement for Principal Analyst and Chief Analyst, Exhibit A to
State's Response to the Order to Show Cause)n3
A "Duty Statement" for the Principal Analyst provides:
(1) Compute Medicaid . . . rates of payment for health facilities .
. . .
The analyst must evaluate the provider cost reports, CPA's opinions,
audit reports and operational survey reports as part of the rate
computation process. The judgments . . . in developing rates are so
intricate in nature, involving a knowledge of accounting principles as
well as health facility operations . . . . (Exhibit A to State's
Response to the Order)
A "Duty Statement" for the Associate Analyst provides:
(1) Evaluate the cost and statistical data submitted by the facility.
This evaluation requires a thorough knowledge of accounting as well as
the day-to-day operations of health facilities. The Associate . . .
would be responsible for an indepth and technical analysis of costs by
type and a determination of those costs allowable by the Medicaid
Program. (Exhibit A to State's Response to the Order)
Activity Code 069 The determination of allowable costs to be
reimbursed under the Medicaid program is the auditing function (5)
performed "primarily" by the Medical Facility auditor position series.
The State indicated that incumbents must have "specific knowledge of
medical care delivery systems." (Attachment A, pp. 3-4; and Supp.
Just., pp. 7-8). The auditing function "(includes) central office and
field investigations to determine whether services provided are as
claimed in activity #068; includes investigation regarding relative
worth, cost and value of services provided to the patient." An audit
"ensures that a provider only includes those costs that are allowable
for Medicaid reimbursement when reporting such costs for inclusion in
the facility's Medicaid reimbursement rate." ("narrative statement",
p.
2).
An announcement for "Professional Positions In Auditing And
Accounting" for New York State included Medical Facility Auditors for
the Department of Health. The announcement describes this position
series as responsible for the
"(Conduct) of field audits of providers of medical services for
reimbursable costs, management operations procedures, and/or compliance
with laws, rules, and regulations pertaining to preconstruction,
construction, and performance standards."
Minimum job qualifications are a bachelor's degree and 24 semester
hours of accounting (including auditing). (Job announcement, Exhibit A
to State's Response to the Order)
The more senior positions in this series require "deversified
professional field auditing experience" and, for some, experience in the
"supervision of a field auditing program of complex medical facilities."
(Job announcement for Medical Facility Auditors, Exhibit A to State's
Response to the Order) Typically, the Medical Facility Auditors (1)
audit health care facilities, (2) consult concerning adequacy of
accounting systems in health care facilities, (3) prepare complex
accounting and auditing reports, (4) review audit recommendations, and
(5) assist in development of accounting and auditing manuals. (Derived
from job description material for the Associate Medical Facility
Auditor, Exhibit A to the State's Response to the Order)n4
Activity Code 070 This activity code "(includes) investigations of
all facilities regarding rate appeals and investigations of (6)
incentive allowances (mechanism for promulgation of rates) of
proprietary nursing homes as required under Title XIX." Activities under
this activity code are related to those under activity codes 068 and
069. The State described the appeal process as a "re-analysis of the
financial posture of a given facility based upon additional financial or
programmatic information which may have a bearing on its Medicaid rate."
The State described the functions covered under this activity code as
requiring "a high degree of medical specialization as either a medical
cost research specialist or as a representative of a medical
discipline". This is required, according to the State, because the
appeals involve evaluation of whether the rate will support adequate
staff for the required level of care. The State requires a college
education or its equivalent but does not identify a particular position
series for the functions in this activity code. (Attachment A, pp. 5-6;
and "narrative statement", p. 3) All those performing duties under
this
activity code from July 1, 1978 through September 30, 1978 were in
medical positions. Position titles included are Consultant Physical
Therapist, Hospital Nursing Services Consultant, and Hospital
Administration Consultant. (June 8, 1981 letter from the State
responding to specific questions from the Board) The rate appeal
function is only one of many job responsibilities for these personnel,
not a sole position function.
B. Relevant Portions of the Medical Assistance Manual
The Manual contains the following "principles" which are used to
assess claims for 75% FFP:
B. Principles
1. General
a. The function of a "skilled porfessional medical" position whether
at the State of 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.
b. Staffing will normally include some employees engaged in
functions which are neither skilled (7) 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.
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 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 (8) charge of an accounting operation would
be eligible for staff reimbursement only at 50 percent FFP.
C. Examples of Organizational Functions
Following are examples of functions needed to operate State title XIX
programs and the expected level of Federal matching. . . .
6. Other Skilled Professional Medical Personnel -- 75 percent FFP.
Staff includes personnel such as physicians, dentists, pharmacists,
hospital administrators, medical economists, medical and psychiatric
social workers, and registered nurses who are responsible for activities
such as: providing liaison on professional medical matters, medical
services program development, medical care assessments, and research and
evaluation concerning all aspects of the delivery and economics of
medical services. Included would be members of medical review and
independent professional review teams.
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 "(job) announcements emphasizing requirements at or
above the college level in medical care and medical care
administration." Further, its listing in an "appropriate medical
classification" in a dictionary or handbook of occupational position.
The Agency supplied portions of such a document--the Department of
Labor's Dictionary of Occupational Titles (4th ed. 1977). (Agency
Response, Exhibits 3 & 4)
C. Parties Arguments
The State argued that in taking this disallowance the Agency,
hypnotized by job titles, ignored the expertise in medical care costs
and the delivery of medical services required by these positions. The
State asserted that experience in health care (9) and health care costs
was imperative, not merely "helpful" as the Agency had concluded,
and
that these positions are included in the definition of skilled
professional medical personnel at 42 CFR 432.2 by the phrase "other
specialized personnel in the field of medical care."
The State relied on 2-41-20(B)(2)(a) to establish that the positions
in question are properly matched at 75%. Briefly, this section
establishes that it is the function of a position that is key and that
functions reimbursed at 75% must be peculiar to medical programs and,
inter alia, require expertise in the delivery of medical care of concern
the economics of medical care. The State contended that the Agency
relied on the requirement for "medical subject area expertise" without
accounting for the definition of "medical" in 2-41-20(B)(2)(a). The
State further cited 2-41-20(B)(2)(b) of the Manual, which provides for
use of position descriptions to substantiate 75% matching, to dispute
HCFA's conclusion that health care and health care cost experience is
not required for these positions.
The State contended that 42 CFR 432.2 and the Manual provisions
should not be read as exhaustive listings of the positions appropriately
reimbursed at 75%. Rather, the State asserted that it is appropriate to
infer coverage of these positions from the Manual references to "experts
on medical costs" and "medical economists". (2-41-20(A) and
2-41-20(C)(6)) The State contended that these functions are peculiar to
medical programs as required by 2-41-20(B)(2)(a) since the auditing and
rate setting functions are performed only for medical care programs.
The State also contended that health care facility rate setting and
auditing experience is "professional training in a health science or
allied scientific field" as required by 2-41-20(B)(2)(a). The State
argued that the positions in question involve the study and evaluation
of the economies of health care delivery and cost trends in health care
and stressed the need for specialized health care facility experience.
The Agency argued that the State misunderstood the Medical Assistance
Manual in claiming the positions in these activity codes as skilled
professional medical personnel. The Agency stressed that under the
definition at 42 CFR 432.2 a common element in all such positions is
education and training at a professional level in a medical field, which
is not required by the positions in question. The Agency cited
2-41-20(B)(1)(a) and 2-41-20(B)(2) of the Manual, emphasizing that all
such functions require the knowledge and skills gained from professional
training in a health science or allied scientific field.
The Agency asserted that the positions in question here are not
specificailly related to the fields of health or medicine and (10)
pointed to 2-41-20(B)(2)(a) which states that a physician in charge of
an accounting operation would not be eligible for 75% matching. The
Agency concluded that the position descriptions do not require a
professional medical background and argued that work experience in
health care facilities is not professional experience involving medical
care. The Agency pointed out that these positions are not listed in the
Dictionary of Occupational Titles under a medical classification but
rather are included in the accounting and budget management divisions.
/5/ (Agency Response, Exhibits 3 & 4) Although the Manual specifically
includes medical economists in Section 2-41-20(C)(6), the Agency argued
that there is no basis for extending this to budget analysts, rate
setters, and auditors. The Agency argued that no positions are included
for 75% matching that do not have a medical or health related degree and
that the position functions at issue here are routine and narrow, not
involving research and evaluation of broad and varied matters related to
health care. The Agency concluded that although these may be "skilled
professional Medicaid personnel", they are not "skilled professional
medical personnel."
D. Analysis
Whether federal matching is available at all is not at issue here.
Rather the question is whether federal matching is available at the 75%
rate as opposed to the 50% rate generally available for expenditures
"necessary . . . for . . . administration" under 1903(a)(7). Since
section 1903(a) of the Act does not elaborate on the meaning of "skilled
professional medical personnel," we must look to the regulations and to
the implementing Manual provisions in order to determine whether 75%
matching is available. The definition of this term at 42 CFR 432.2
includes "other specialized personnel in the field of medical care."
The
definition specifically mentions personnel such as physicians, nurses,
and nursing home administrators. Neither this regulation nor the Manual
specifically mentions the personnel at issue here. The question then is
whether 75% matching can be based on the general principles set forth in
the Manual for the assessment of such claims. Both the State and the
Agency argue strenuously that application of the Manual principles
supports their respective positions concerning the availability of 75%
matching. (11) Under the above quoted Manual provisions it is the
function of a position that determines whether 75% matching is proper.
(2-41-20(B)(1) (a) and (B)( 2)(a)) The official position description,
organizational placement, job announcement, and a listing in a handbook
of occupational titles under a medical classification are the basis for
a determination that a position's function is in fact a skilled
professional medical function. (2-41-20(B)(1)(a) and (B)(2)(b)) Only
"professional" positions requiring "medical subject area expertise"
are
matched at the 75% rate. The Manual defines both "professional" and
"medical". To be "professional" a position must be non-routine
and
require a college education or its equivalent. "Medical" functions
are
"peculiar to medical programs". (2-41-20(B)(2)(a)) The Manual
specifically provides, however, that not all administrative personnel
will be eligible for 75% matching. (2-41-20(B)(1)(b)) The Manual
further provides that these functions as a class require "professional
training in a health science of allied field." (2-41-20(B)(2)(a))
The Board upholds the Agency's disallowances because the State failed
to show that it is entitled to 75% matching rather than 50% matching.
These positions involve the setting of reimbursement rates, the audit of
allowable costs, and the investigation of rate appeals. The State
characterized the positions in question as involving the study and
evaluation of the economics of medical care and for activity codes 068
and 069 relied on 2-41-20(c)(6). This part of the Manual describes the
functions of "other" personnel eligible for 75% and includes "research
and evaluation concerning all aspects of the delivery and economics of
medical services". There is no dispute that these are professional
administrative functions with a health care facility specialty.
The position descritpions for the personnel claimed under activity
codes 068 and 069 detail typical audit and accounting functions, such as
the analysis or preparation of cost and audit reports, and, for activity
code 068, they emphasize a knowledge of accounting. Job announcements
for these positions emphasize accounting course requirements and for
activity code 069 require field auditing experience. A New York State
general announcement for accounting and auditing positions included the
medical facility auditor position series. The State admitted that
activities under 070 are related to those under the other activity
codes, and described these activites as a "reanalysis of . . . financial
posture." From a review of Exhibits 3 and 4 to the Agency Response, we
conclude that the Agency correctly pointed out that the functions at
issue here are not included in the medical categories in the Dictionary
of Occupational Titles. There were no occupations listed under medicine
and health which involved a primary concern with auditing, accounting,
or rate setting and review. In contrast, however, to the State's
conclusion, we find that there were various (12) occupations listed in
the accounting and budget divisions which required the application of
accounting principles and the analysis of financial operations, trends,
and costs. (See, for example, the Accountant (Budget and Cost);
Auditor, Internal; and Budget Officer positions) Although performed for
health care facilities, there is nothing in the record to show that the
rate setting, auditing, and rate appeal functions at issue here
substantially differ from the accounting, auditing, and rate related
functions necessary for other types of organizations or institutions.
It is axiomatic that specialization in fiscal, accounting, or auditing
matters for a particular type of organization results in expertise in
the performance of such fiscal, accounting, or auditing duties. We
cannot conclude on this basis that such expertise determines how the
function is characterized. /6/ We find that these functions are not
commonly regarded as medical because of the emphasis on accounting and
auditing skills in the materials submitted by the State and because of
the similar position duties contained in the Dictionary's Accounting and
Budget occupations. We consider the requirements for experience in
health care facilities to be evidence of an accounting or auditing
specialty, not the existence of a medical occupation.
We find that the Agency did not misapply the Manual definition of
medical since we conclude that these audit and rate setting functions
are not "peculiar" to medical programs. Also, there is no indication
in
the provisions of the Manual that we should equate rate setting or
auditing experience in health care facilities with professional training
in a health science or allied field. Rather than being hypnotized by
job titles, the Agency correctly construed the Manual to include only
positions where professional training in a health science or allied
field is required and which involve oversight of the delivery of medical
care and services.
Despite references in the Manual to "experts on medical costs" and
"research and evaluation concerning all aspects of the delivery and
economics of medical services", application of the Manual principles
will not support 75% matching.The Manual states unequivocably that there
is no intent to cover "the total cadre" of personnel administering
the
Medicaid program. While we do not conclude that the listing of
positions in the Manual is exhaustive, this listing provides an
illustrative sample of the covered positions. We find it significant
that there is no direct reference (13) to any auditing or accounting
position. Given the emphasis on "medical subject area expertise" in
the
Manual principles, mention of medical economists or cost experts is
simply not persuasive. Economics is a separate field and the reference
to cost experts is too general. While it is clear that 75% matching is
not limited just to medical practitioners, we do not interpret the
Manual to be broad enough to include the positions in dispute here.
The Manual does not explicitly include the fiscal and accounting
operations necessary to set and monitor reimbursement rates. Since this
is a major administrative function for the Medicaid program, 75% rather
than 50% matching cannot be based on inferences drawn from various
phrases in the Manual which mention the costs or economics of medical
care. Because the Manual provisions do not clearly include these
functions, they are excluded and hence appropriately matched at 50% as
opposed to 75%.
Conclusion
On the basis of the above analysis, the disallowances are upheld.
/1/ 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. /2/ Board Docket No. 81-56 involves costs under all
three activity codes. Numbers 81-162 and 81-212 involve costs only in
codes 068 and 069. /3/ Job titles in this series, beginning with
the most senior positions, are Chief Analyst, Principal Analyst,
Associate Analyst, Senior Analyst, Analyst, and Analyst trainee. There
are job announcements for all Analyst positions in Exhibit A. There are
slight differences in the job announcements whihc are not relevant here.
For example, there is no work experience required to qualify for the
trainee position, and the oldest job announcement required 15 semester
hours of accounting for certain of the positions rather than the 12 hour
requirement in the later announcements. /4/ Exhibit A includes
materials on Chief, Principal, Associate, and Senior Medical Facility
Auditors. /5/ In its response to the Board's order the State
concluded, without elaboration, that "the functions at issue here are
definitely not included in that Dictionary under the accounting and
budget divisions mentioned." (page 6) /6/ We conclude that
employed involved in rate appeals (activity code 070) who were in
medical occupations should not be analyzed differently since the Manual
specifically states that a physician in charge of "an accounting
operation" is matched at 50%.
OCTOBER 22, 1983