GAB Decision 392
February 28, 1983
Illinois Department of Public Aid;
Garrett, Donald; Settle, Norval Ford, Cecilia
The State of Illinois Department of Public Aid (State) appealed a
decision by the Regional Director, Region V, Department of Health and
Human Services (Agency) disallowing $137,862 in federal financial
participation (FFP) claimed under Title XIX of the Social Security Act
(Act).
The State claimed 90% FFP in salary and fringe benefit costs incurred
during 1977 and 1978 for eight employees working on the pharmacy
subsystem of its Medicaid Management Information System (MMIS). The
State's claim was based on section 1903(a)(3)(A)(i) of the Act which
provides for 90% FFP in costs for "the design, development, or
installation (hereafter referred to as DDI) of . . . mechanized claims
processing and information retrieval systems." Based on an audit report,
the Agency concluded that the pharmacy subsystem was operational as of
January 1, 1977 so that FFP in costs incurred during 1977 and 1978 for
the pharmacy subsystem was available at the 50% rate set for
administrative costs generally by section 1903 (a)(7) of the Act rather
than at the special 90% rate for DDI activities. The Agency disallowed
the difference between the State's claim at 90% FFP and the 50% FFP it
considered allowable. The question here is whether DDI activities
reimbursable at 90% FFP continued throughout 1977 and 1978 for the
pharmacy subsystem.
The State initially claimed all salary and fringe benefit costs for
these eight employees at 90% FFP. During this appeal, however, the
State chose not to contest $49,814 of the amount disallowed. The State
decided, based on activity reports, that these personnel spent less than
full time on activities which the State asserted were DDI.
Consequently, the State now disputes only $88,048 of the disallowance.
This decision is based on the record which includes the parties'
submissions required by 45 CFR 16.8 of the Board's regulations and
various supplemental submissions made pursuant to conference calls
between the parties and the Board held on August 3, 1980 and October 25,
1982, as well as the Board's summary of the October 25, 1982 conference
call. As explained below, the Board upholds the disallowance.
(2) I. The State's implementation of its MMIS.
Mechanized claims processing and information retrieval systems are
used to process claims for medical care and services and to retrieve and
produce utilization and management information about such services. (45
CFR 250.90(a) (1976))
In 1975 the State received approval of its Advance Planning Document
for a MMIS patterened after the Agency's model system. The detailed
implementation plan for the MMIS which was approved by the Agency on
March 3, 1975 called for a thirteen month completion time. However,
during the design phase, due to staffing and other problems, the State
altered its original plan to implement the MMIS for all providers at the
same time. Instead, the State decided to implement its MMIS for
pharmacy providers first. The State chose to do this because of the
large number of claims from pharmacy providers; almost half of the
claims billed to Title XIX were drug claims. As of May 1976 the State's
schedule called for implementation of MMIS for pharmacy providers in two
phases in October and November of 1976, with implementation for other
providers, such as hospitals and physicians, to occur during 1977 and
January of 1978.
During the fall of 1976 the State began implementation of four MMIS
subsystems, Recipient, Provider, Claims Processing, and Reference File,
for pharmacy providers. /2/ These four subsystems were implemented by
geographic region: Southern Illinois in November of 1976, Upstate
Illinois (except Cook County) in December 1976, and Cook County as of
January 1, 1977. Because of an anticipated need for additional
hardware, Cook County pharmacy providers were given the option of
beginning to bill under MMIS as of January 1, 1977 or of waiting until
June 1, 1977 to begin.n3
(3) In a request for proposals anticipating the award of a contract
for the implementation of another MMIS subsystem, the State described
the function of these four subsystems as "an integrated unit with the
overall objective to process and pay each eligible provider for all
valid claims on any eligible recipient." (Tab F, Page 1 of Agency's
November 17, 1982 Submission)
The State's revised Advance Planning Document, dated January 11, 1978
contains this assessment of the pharmacy subsystem.
Assessment of Pharmacy Implementation
The implementation of the Illinois Pharmacy MMIS was, like most
large-scale system implementations, not without problems. Computer
programs which had functioned well on test data developed "bugs" when
confronted with real bills. Some manual procedures needed to be
refined. Some files had to be redesigned; for example, it was
discovered after implementation that the data elements contained in the
historical Drug Date Base records were inadequate. In some cases,
subsystem interfaces needed refinement. However, the system began
paying bills in December 1977, (should be December, 1976) and the
phasing of the rest of the state in December and January caused few, if
any, problems. Despite a hectic beginning, no major problems with the
system have occurred since February, 1977. Since that time, the payment
cycle has been reduced to around fifteen calendar days from receipt of
invoice to adjudication, and reaction from providers has been favorable.
It is hoped that the positive response from pharmacies will be of
benefit in gaining the cooperation of other provider types when the full
MMIS is implemented in Illinois.
. . . the Pharmacy portion of the Illinois MMIS is functioning well
and, in the opinion of the Department, provides a sound technical basis
for the inclusion of all other provider types into MMIS . . . /4/
(Pages 13 and 14 of Agency's October 29, 1982 Submission)
(4) II. The Agency's audit and disallowance of certain personnel
costs incurred in 1977 and 1978 for the pharmacy subsystem.
On March 31, 1981, the Agency issued its "Report on Audit of Public
Assistance Administrative Costs under Titles IV-A, XIX and XX of the
Social Security Act." The auditors reviewed $273.4 million in FFP
claimed during the period October 1, 1975 through June 30, 1979.
In reviewing the $4,634,227 in MMIS costs claimed for FFP at 90%, the
auditors questioned certain contract costs not at issue here and also
found:
. . . The personal services and fringe benefit costs claimed for FFP
at 90 per cent improperly included costs of individuals engaged in the
on-going maintenance of the pharmacy subsystem. . . .
The State Agency utilized time records that were submitted by
employees for each pay period to compute the percentage of time devoted
to MMIS. The methods used by the State Agency did not identify time
involved in maintaining an MMIS subsystem once it was implemented. All
time reported by employees as applicable to MMIS was considered to be
design, development, or installation oriented and claimed at 90 per cent
FFP during our audit period.
. . . FFP is available at 50 per cent in the cost of operating any
subsystem until the entire system is operational, at which the rate is
increased to 75 per cent. . . . We were . . . able to identify Bureau of
Information Systems (BIS) personnel who were assigned to the pharmacy
subsystem. Since the pharmacy subsystem was implemented in December
1976, that subsystem would be considered operational as of that date and
costs related to that system after that date would be eligible for only
50 per cent FFP.
(Audit Report, Page 50)
The auditors then concluded that $137,862 in personal services costs
had been improperly charged to Title XIX.
The Agency rejected the State's assertion that personnel charged to
Title XIX for the pharmacy subsystem were "engaged in activities that
expanded the functions and capabilities of the sub-system, . . . (and)
should be allowed at the 90% rate." The Agency noted that the State had
submitted no additional information about this assertion and disallowed
these costs stating:
. . . As of January 1, 1977, the pharmacy sub-system was fully tested
and operational. The Medical Assistance (5) Manual specifically
precludes participation at the 90% rate for periods beginning on and
after that date.
(Disallowance letter of January 21, 1982, attached to State's
February 24, 1982 Notice of Appeal)
III. Activities of the personnel claimed for 90% FFP during 1977 and
1978 for the pharmacy subysystem.
During 1977 and 1978 the State claimed 90% FFP for eight employees
who worked solely on the pharmacy subsystem. In its Appeal Brief the
State argued that:
. . . They were implementing adjustment transactions and restart/
recovery into the pharmacy subsystem. These activities expanded the
functions and capabilities of the claim subsystem and as such were part
of the design and implementation of MMIS.
((unnumbered) Page 5 of Appeal Brief)
These eight employees were responsible for the "preparation of
computer programs, debugging coded programs, testing programs, and
preparing documentation." ((unnumbered) Page 6 of the State's August 30,
1982 Submission)
In a later submission, quoted below, the State amplified its
description and revised its estimates of how much time the individuals
spent on DDI activities during 1977 and 1978. The State gave examples
of the types of development functions performed during this time period.
Checkpoint/Restart procedures
Debit Adjustments
Credit Adjustments
Resolution of problems in design or programming specifications that
surfaced after implementation and/or with volume processing. As of July
21, 1977 there was a backlog of approximately 100 of these problems.
Detail System Design Documentation
Specifications and programming for purging claim segments from the
Recipient Data Base Implementation of Date-of-Service and Document
Control Number edits. (6) Status reports of activities performed by
this Unit during the time period in question were reviewed. Based upon
information in these status reports we have estimated the percentage of
time devoted by staff to these developmental functions as shown below.
For the period January 1977 through June 1977 an estimated total of
90% staff time was spent on detail documentation, debit and credit
adjustments and problem requests. The problem requests alone totaled
about ninety during this six month period.
For the period July 1977 through December 1977 an estimated total of
75% staff time was devoted to the continuing problem requests and
Checkpoint/Restart and Recovery. Checkpoint/Restart was a major problem
during this period and problem requests to be resolved totaled about
one-hundred as of July 21, 1977.
For the twelve month period January 1978 through December 1978 an
estimated total of 45% of staff time was spent on the continuing
Checkpoint/Restart, detail documentation and miscellaneous problems.
(Tab A to State's December 8, 1982 Submission)
The State defined checkpoint and restart as:
Checkpoint is the ability at a designated point in the program to
take a copy of certain values in the program's memory and write this
information to a tape so that the job could be restarted if an error
condition occurred. Restart is the ability of the program to read in
the checkpointed information, reposition the files (input and output)
and to resume processing in a fashion that the interruption is not
noticeable to the user receiving the outputs.
(Footnote on (unnumbered) Page 4 of State's August 30, 1982
Submission)
IV. Agency site visit reports for MMIS implementation.
The Agency submitted copies of "Illinois Trip (Reports)" for site
visits to the State occurring on January 26-27, 1977, March 2-3, 19778
and April 19, 1977. (Tabs D, G, and H of Agency's November 17, 1982
Submission) These reports state the purpose of the site visits as
"Monthly review of MMIS." The January trip report included: (7)
Specific work accomplished January 26, 1977
3. Claims Implementation Problems
(a) Transaction errors caused erroneous updates-in process of being
resolved.
(b) MID Support problem will be resolved in March 1977 with arrival
of 360/168 computer - see Arthur Andersen Study.
(c) Provider Education/Enrollment
(1) Seminars on request
(2) Copies of letters to providers identifying problems are attached
5. Modifications in Progress
(a) Expanding dats elements (MAX-MIN qty, abuse codes) effective May
1977.
(b) Issuance of new manuals
(c) Fine tuning suspense file processing
8. System Problems
(a) State indicated they were experiencing no system problems with
any of the following MMIS subsystems.
(1) Recipient - none
(2) Provider - none
(3) Claims - only problem - solved
(4) Reference - none - however it is being enhanced.
(Tab D, Page 3 of Agency's November 17, 1982 Submission)
(8) In general these reports detail information about meetings with
State staff and tours of the MMIS, discuss implementation schedules for
the rest of the system, and give current data on the pharmacy subsystem.
Both the March and April reports specifically say that the State was
experiencing no problems with its processing of drug claims. An
attachment to the April report describes a tour of the claims processing
center and describes how claims are handled. This attachment stated
that the center received and average of 4000 claims per day and that the
time between receipt and payment was down to 18 days from a 30 day
turnaround time in January of 1977.
V. Applicable law, regulations, and guidelines.
The Act provides for payment of 90% FFP for "the design, development,
or installation of mechanized claims processing and information
retrieval systems as the Secretary determines are likely to provide more
efficient, economical, and effective administration" (section 1903
(a)(3)(A)(i)) and for payment of 75% FFP for the operation of such
systems upon approval by the Secretary (section 1903 (a)(3)(B)).
Section 1903 (a)(7) of the Act provides generally for the payment of 50%
FFP for necessary costs of administration of Title XIX.
Agency regulations at 45 CFR 250.90 (1976) and 45 CFR 250.120 (1976)
set forth the standard for approval for DDI activities and for operation
of such mechanized systems and reiterate the FFP rates provided for in
section 1903(a) of the Act. Section 250.90(a) of 45 CFR includes the
following definitions:
(4) Design and development means the definition of system
requirements, detailing of system and program specifications,
programming, and testing. This includes the use of hardware only to the
extent necessary for the design and development phase.
(5) Installation means the integrated testing of programs and
subsystems, system conversion, and turnover to operational status. This
includes the use of hardware only to the extent necessary for the
installation phase.
(6) Operations means the automated processing of claims, payments,
and reports on a continuing basis. Operations includes the use of
supplies, software, hardware, and personnel directly associated with the
functioning of the mechanized system.
The regulations further provide that 75% FFP is not available unless
"(the) system with all its component subsystems is (9) operating or has
been operating, on a continuing basis . . ." (45 CFR 250.90(b)(2)(iii)
/6/
The regulations are supplemented by Part 7-71-00 of the Medical
Assistance Manual (Manual). In its more than fifty pages, this part of
the Manual details the approval process and systems requirements for
mechanized claims processing and information retrieval systems. Section
7-71-10 I of the Manual states that, in general, MMIS (the model system)
is the system recommended by the Agency and tells how to obtain
information about MMIS.
Section 7-71-10 defines pertinent terms and includes the definitions
cited above from the regulation. Section 7-71-25 A(5) of the Manual
provides for approval of a detailed implementation plan which identifies
the costs allocated to DDI before work is started. Section 7-71-50,
"Questions and Answers Regarding FFP Under Section 235 of P.L. 92-603",
provides in response to Question 18, "When specifically does 90% FFP end
and 75% FFP begin," that 90% FFP is available for DDI for "each
subsystem in an approved system" and that 90% FFP (10) "terminates
on
the date the subsystem is fully tested and accepted." The response
further specifies that 75% FFP is available whent "entire approved
system is fully operational" and that 50% FFP is available for the
"operation of any subsystem until the entire system is fully
operational."
VI. Discussion.
There is no dispute that the State can claim FFP for the salary and
fringe benefit costs incurred during 1977 and 1978 for its pharmacy
staff. Rather, the question is whether the State can claim FFP at 90%,
the special rate for DDI activities, even though by January 1, 1977 the
pharmacy subsystem was used statewide for volume claims processing and
payment. As is explained below, the Board is not persuaded that the
State can claim 90% FFP for the activities in question.
As was explained above, there are shifting rates of FFP in costs for
mechanized claims processing and information retrieval systems. FFP at
90% is available for DDI, but once any subsystem(s) is operational,
associated costs are matched at 50% FFP. FFP at a special rate, 75%, is
again available once the system is fully operational and approved by the
Secretary.
Parties' Arguments
The Agency analyzed the regulatory scheme as precluding FFP at 90%
for the activities "'described as' design, development or installation
but conducted during the operational phase." (emphasis in original)
According to the Agency,
. . . the end of "installation" is "turnover to operational
status."
"Operations" is defined . . . as "the automated processing of
claims
payments, and reports on a continuing basis."
We think it clear that "design and development" . . . precedes both
"installation" and "operations." Moreover, an important
common thread is
that the use of hardware is expressly restricted in the design,
development and installation stages . . . while no such restriction is
made on "operations." . . . the regulatory scheme viewed design,
development and installation as done largely without "hardware" for
claims processing. (citations omitted)
(Page 2, Agency's October 6, 1982 Submission)
he Agency then acknowledged that while the State may be correct in
its assertion that distinct lines are difficult to draw between (11)
these phases, such a line had been drawn by the Secretary which, as the
Secretary's administrative interpretation, should control. The Agency
also asserted that:
Continuing modification and "debugingg" are parts of normal
operations and, as such, compensable at the 50% rate of FFP.
(Page 3, Agency's October 6, 1982 Submission)
The Agency argued further that as of January 1, 1977 the pharmacy
subsystem was fully operational statewide so that the personnel involved
were working on fully operational MMIS subsystems and were no longer
engaged in DDI activities. The Agency pointed to the various materials
in the record, such as the site visit reports, the RFP for the
Surveillance and Utilization Review subsystem, the revised Advance
Planning Document, and directives from the State to the pharmacy
providers concerning processing and payment of claims, and contended
that its determination that the pharmacy subsystem was operational as of
January 1, 1977 was based on substantial evidence. The Agency
contrasted the assessment of the pharmacy subsystem contained in the
revised Advance Planning Document with the State's assertion that DDI
activities continued through 1978. The Agency stated:
. . . substantial statewide operation of four major subsystems in
processing claims of one provider type -- Pharmacy, constituted very
good evidence that design, development and installation had ceased.
From such substantial operations, the Secretary's determination that the
IDPA (Sec.TATE) personnel were engaged in operation of a subsystem or
subsystems (and reimbursable at 50% FFP) follows naturally.
(Page 4 of Agency's November 17, 1982 Submission)
The Agency also pointed to the absence of documentation proving
continued DDI activities beyond January 1, 1977. The Agency asserted
that approval for DDI activities did not extend beyond January 1, 1977
since an approved detailed implementation plan is required for
reimbursement at the 90% rate under Section 7-71-25(A)(5) of the Manual
and the latest implementation schedule in the record (Tab B to Agency's
November 17, 1982 Submission) is consistent with the determination to
reimburse at 90% FFP until the pharmacy subsystem was operational on
January 1, 1977. The Agency also relied on the absence of detailed time
records or other documentation to support the claimed DDI personnel
costs.
The State argued that simply because the pharmacy subsystem was
processing and paying claims as of January 1, 1977, continued (12) DDI
activities were not precluded and Agency approvals for such activities
did not end. The State contended that there were a number of
developmental tasks remaining on January 1, 1977. The State said that,
for example, neither the eligibility determination nor the payment
function had been properly documented or thoroughly tested.
In the State's view, there are no distinct lines separating design
and development, installation, and operation of MMIS subsystems, so that
a system is not installed one day and operated the next. The State
cited the requirements that an operational system process claims,
payments, and reports on a continuing basis and asserted that it had not
regarded the pharmacy subsystem as fully operational until December of
1978.
The State argued that:
. . . The activities listed involve testing of the system,
programming and reprogramming, and revising and refining certain
elements of the system (e.g., debit and credit adjustments and date of
service and document control number edits). Until these functions were
completed, the system could not be considered operational; these
activities were necessary to turnover to operational status. They were
not general maintenance functions for the processing of claims.
Illinois has further divided these three general categories into 7
phases: system feasibility, general system design, detailed system
design, system construction, system tests, system implementation and
system audit. The activities of staff during the period of this
disallowance were part of detailed design, system construction and
system test phases. /7/
The State then asserted that although it was processing pharmacy
claims as of January 1, 1977, the subsystem was not fully tested and
accepted so that under the provision of Section 7-71-50 of the Manual
90% FFP could continue.
(13) Analysis
The regulations provide only for limited use of hardware during the
DDI phase in contrast to operations, where automated processing occurs
on a continuing basis. We agree with the Agency that the record
supports the determination that the pharmacy subsystem was operational
by January 1, 1977. The record shows that by January 1, 1977 the
pharmacy subsystem was fulfilling its overall objective of processing
and paying claims for as many claims as the available hardware could
handle. In addition, the assessment in the revised Advance Planning
Document would lead to the conclusion that the pharmacy subsystem was
operational and that any continued work was the fine tuning of an
operational system, not continued DDI. Although the State argued that
the system was not fully tested and accepted by January 1, 1977, the
State merely alleged this and did not explain why a relatively problem
free functioning system in statewide use would not be considered fully
tested and accepted within the meaning of the Manual. The State also
does not indicate what it did in December of 1978 to fully test and
accept the pharmacy subsystem that was not done in December of 1976.
/8/ On balance then, we agree that the facts show that the pharmacy
subsystem was operational as of January 1, 1977.
At one point, the Agency stated the question presented as:
. . . where operations have begun but changes and "debugging" are
continuing, what rate of FFP applies? (Page 3 of the Agency's October
6, 1982 Submission)
The Agency's characterization of the issue is particularly apt.
While we do not find it necessary to conclude, consistent with the
Agency's view, that DDI activities reimbursable at 90% would never
overlap operations or that prior approval for DDI is somehow
automatically revoked once a subsystem is operational, we see no basis
for concluding that DDI activities reimbursable at 90% FFP continued
once the pharmacy subsystem was operational.
(14) We do agree with the parties that there are no distinct lines
separating the phases leading up to a fully operational MMIS.
Accordingly, because the statutory and regulatory scheme provides for
changing rates of FFP, the Agency must make reasoned judgments to
distinguish the phases and determine the appropriate rate of FFP. The
regulation does not provide that each and every task which could be a
part of DDI is reimbursable at the special rate.
It is significant in our view that there is no contemporaneous
documentation specifically providing for certain continued DDI
activities. The brief implementation schedules in the record show no
continuing DDI activities for any function of the subsystems comprising
the pharmacy subsystem. In addition, we note that no time records were
submitted to support the State's estimates for the time spent on
activities claimed as DDI and that when asked to provide more detailed
descriptions of the activities of these eight employees than are now in
the record, it responded that "(no) specific descriptions are available
nor are there any specific records from which to create such
descriptions." ((unnumbered) Page 2 of State's December 8, 1982
Submission). The State asserted that some of its DDI effort during 1977
and 1978 was devoted to "problem requests". The Agency's site visit
reports and the revised Advance Planning Document, however, show that
there were no problems once the system had been operational for a short
time. From this we conclude that the "problem requests" were not major
difficulties with the implementation of the pharmacy subsystem requiring
continued DDI, but were problems such as would be normally experienced
by such a system when it was operational.
The Agency does not address particular activities mentioned by the
State in order to refute the State's characterization of them as DDI.
Nevertheless, from our review, we conclude that, even though there may
be certain tasks performed during 1977 and 1978 that if completed
earlier could have been claimed at 90%, these activities occurred in the
context of an operating system and were necessarily incidental to
ensuring that an operating system functioned properly.
We would be more sympathetic to the State's assertion that DDI
activities continued beyond January 1, 1977 were these activities not
alleged to have continued for two full years. Two full years of
activities such as checkpoint/restart and problem requests support a
conclusion that these activities were not part of the DDI phase. When
the issue concerns only the availability of an enhanced FFP rate, the
facts must clearly show that a special rate is appropriate. Here, this
is not the case. We think that the statutory and the regulatory scheme
requires that a line be drawn at some point; if not, given that the
highest reimbursement rate is (15) for DDI activities, there would be no
incentive to ever complete that phase. We conclude then that the State
is not entitled to receive FFP at the 90% rate for the activities in
question.
CONCLUSION
For the reasons set forth above, we uphold the disallowance. /2/
There are six MMIS subsystems. The two not involved here are
Surveillance and Utilization Review and Management and Administrative
Reporting. The term "pharmacy subsystem", as used throughout this
decision, refers to the four MMIS subsystems which were implemented for
pharmacy providers during the fall of 1976. /3/ Background
information in this discussion concerning the implementation of MMIS is
contained in the audit report, Audit Control No. 05-10251, dated March
31, 1981 (Tab A to Appellant's Appeal Brief), in the State's revised
Advance Planning Document dated January 11, 1978 (Agency's October 29,
1982 Submission) and in material at Tabs A, B and C to the Agency's
November 17, 1982 Submission. The record contains no document
identified as a detailed implementation plan but does contain a two page
revised implementation schedule which reflects the decision to implement
fir st for the pharmacy providers (Tab A to Agency's November 17, 1982
Submission). /4/ This portion of the revised Advance Planning
Document goes on to explain that due to the length of time it took to
develop the pharmacy subsystem and the State's conclusion that it lacked
sufficient technical staff, the State had decided to contract for the
design, development, and implementation of the rest of the MMIS.
/6/ Part 250 of 45 CFR was redesignated as 42 CFR Part 450 (42 FR 52827,
September 30, 1977). Effective February 27, 1978, 42 CFR 450.120 was
removed and replaced, with no substantive change, by 42 CFR
446.175(b)(2) and (3) (42 FR 60564, November 28, 1977). Section 450.90
of 42 CFR was removed (43 FR 45187, September 29, 1978) and Subpart C,
Mechanized Claims Processing and Information Retrieval Systems, of 42
CFR Part 433 was added (43 FR 45201, September 29, 1978). Section
446.175(b)(2) and (3) of 42 CFR was removed (43 FR 45187, September 29,
1978) and 42 CFR 432.50 (b)(2) and (3) was added (43 FR 45199, Sepgember
29, 1978). Section 433.111 of 42 CFR includes this definition: "Design"
or "system design" means the putting together of a new more efficient
automatic data processing system. This includes the use of hardware to
the extent necessary for the design phase. But for this addition, the
relevant definitions are essentially the same as those quoted above.
Changes to the requirements for approval of DDI and operational
activities are not relevant to this appeal. Subpart C also provided for
FFP at 90% for DDI activities for system improvements. The State did
not argue that the activities in question qualified as system
improvements and were thereby subject to 90% FFP on that basis.
/7/ . . . Examples of the activities include documentation of system
controls for security, audit trails, checkpoint restart, and recovery;
developing a program specifications package for each program; showing
the hierarchial (sic) structure of the data base from the root name
through the segment name. ((unnumbered) Pages 5 and 6 of State's August
30, 1982 Submission) /7/ Section 7-71-25(A)(8) of the Manual required
the Agency's prior approval before the State could accept any
system or subsystem as operational. We discussed this requirement with
the parties. The record contains no information that such approval was
granted for the pharmacy subsystem prior to January 1, 1977. Neither
party considered the lack of this approval to have any bearing on this
dispute.
OCTOBER 22, 1983