SUBJECT: Arizona Health Care Cost Containment System

DECISION

The Arizona Health Care Cost Containment System (Arizona) appealed a determination by the Health Care Financing Administration (HCFA)⁽¹⁾ disallowing $2,517,942 in Medicaid claims for costs incurred by Arizona in the quarter ending March 31, 2001. In Arizona Health Care Cost Containment System, DAB No. 1779 (2001), we upheld HCFA's disallowance of similar claims for earlier quarters.

The disputes in both cases involved claims by Arizona for 100% Medicaid reimbursement for the costs of services provided to Native Americans by health care providers to which the patients were referred by an Indian Health Service (IHS) facility and which had contracts with IHS to provide such services to eligible Native Americans at reduced rates. HCFA asserted, and Arizona did not deny, that these non-IHS providers then billed Medicaid directly for services provided. Under section 1905(b) of the Social Security Act, the 100% federal medical assistance percentage (FMAP) rate is available only for the costs of services "received through" an IHS facility. HCFA found that the costs were for services not received "through" an IHS facility and were eligible only for Arizona's regular FMAP rate.

In DAB No. 1779, at 25, we reached the following conclusions:

(1) HCFA's reasonable and long-standing interpretation of the costs eligible for 100% FMAP was limited to those "received through" an IHS facility which offers, is responsible for and bills Medicaid for the services provided;

(2) Arizona was notified of and long operated consistently with this interpretation;

(3) HCFA did not change this policy in its memorandum of May 1997;

(4) Arizona did not reasonably rely on an alternative interpretation; and

(5) the costs disallowed here were not eligible for 100% FMAP rate under HCFA's interpretation.

Arizona filed the present appeal by a letter dated August 15, 2001. The decision in DAB No. 1779 was issued August 7, 2001. Since the appeal appeared to be based on the same grounds rejected in DAB No. 1779, the Board inquired whether Arizona contended that the present appeal raised any new material issue of fact or law that required briefing. Counsel for Arizona indicated by telephone on October 19, 2001, and confirmed by facsimile transmission on October 22, 2001, that no issues were presented beyond those resolved in DAB No. 1779, other than the later time frame involved. Therefore, counsel for Arizona agreed that the matter should be resolved by summary decision.

We therefore uphold the disallowance for the quarter ending March 31, 2001, for the reasons explained in DAB No. 1779 and incorporated here by reference.

Cecilia Sparks Ford

Marc R. Hillson

Judith A. Ballard
Presiding Board Member

1. Although HCFA has been renamed the Centers for Medicare & Medicaid Services (CMS), we continue to use "HCFA" below since that acronym was used to refer to the agency at the time many of the actions at issue here were taken. See 66 Fed. Reg. 35437 (July 5, 2001).