concatenating short noise sequences
Rather than generating a longer block of data, i would like to make a longer file by concatenating the block of 4096 samples. 


Bad idea. That means your noise becomes perfectly correlated with a period of 4096 samples, and that's definitely not white noise anymore, and you'll stand a realistic chance of noticing that audibly; depending on the sampling rate, that $\frac{f_\text{sample}}{4096}$ might be a directly audible frequency.

A lot of signal processing algorithms are sensitive to periodicity, so: really, don't do that.

By the way, you might be clipping. Gaussian noise amplitude is unbound, but your sound card's acceptable numeric range very much is.


  The output file is not smooth enough. There is an audible periodic pattern that indicates the multiple 'Y' segments. 


Which was predictable, because that's exactly what you've been asking it to generate. 


  I believed this could be due to the imperfect combination at the beginning and End of each Y segment. 


No, this was you; you introduced periodicity, and your human sound system notices that. Congratulations! Your hearing is functional :)

You using a "blend over" technique on white noise says you  haven't really thought about what white means: it means that there's no correlation between successive samples. Thus, if you concatenate two different, uncorrelated white noise sequences, you get a white noise sequence. 

If you concatenate the same sequence, you get something periodic.

What you need to do is  generate white noise of the desired length instead of concatenating short sequences. You forgot to mention why you would even want to do that, because (haven't benchmarked matlab) white noise generation should really be fast.