DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: New York State Department DATE: July 21, 1989 of
Social Services Docket No. 89-131 Decision No. 1075
DECISION
The New York State Department of Social Services (New York/State)
appealed a determination by the Health Care Financing Administration
(HCFA/Agency) disallowing $166,667 in federal financial participation
(FFP) claimed by the State under the Medicaid program of the Social
Security Act (Act) for the quarter ending September 30, 1988. The
funding at issue represents interest earned by the State on funds
withheld from providers because of suspected fraud and abuse activities.
Instead of disbursing the funds to the providers, the State deposited
them in its Short Term Investment Pool, where they earned interest.
The State took the position that the interest earned here does not
belong to the Agency since this was not a situation where a grantee
earned interest on an advance of federal funds. See 45 C.F.R. 74.47(a).
Rather, the State contended that the funds which it withholds are no
longer Medicaid funds. New York insisted that, in essence, those funds
have been given to the providers since the providers are given credit
for the payments and must report them to the Internal Revenue Service.
New York indicated the payments were intercepted for sound financial
reasons, i.e., to ensure repayment to the State and federal government
when a provider is suspected of fraud or abuse.
New York noted that the Board previously addressed this issue in New
York State Dept. of Social Services, DAB No. 1049, (1989). The State
conceded that there are no material differences in this case from the
facts or issues in DAB No. 1049. Consequently, the State asked the
Board to issue a summary decision based on DAB No. 1049. HCFA did not
object to New York's request.
Based on DAB No. 1049, which we incorporate here, we sustain the entire
disallowance of $166,667.
_____________________________ Cecilia Sparks Ford
_____________________________ Donald F. Garrett
_____________________________ Norval D. (John) Settle Presiding
Board