Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Florida Department of Health and Rehabilitative Services
DATE: February 20, 1992
Docket No. 91-82
Decision No. 1303
DECISION
The Florida Department of Health and Rehabilitative Services
(State)
appealed a determination by the Health Care Financing
Administration
(HCFA) to disallow $619,980 in federal financial participation
(FFP)
claimed under Title XIX (Medicaid) of the Social Security Act
(Act).
The disallowance resulted from a HCFA financial management
review. HCFA
determined that the State had failed to obtain required
prior approval
for six change orders exceeding $25,000 each to a fiscal agent
contract
for automatic data processing (ADP) equipment and services.
HCFA also
determined that one change order should have been combined as a
single
acquisition with another which exceeded $25,000, rather than
fragmented
to bring it below the threshold. In addition, HCFA
determined that the
State Medicaid agency impermissibly purchased equipment
for the State
Medicaid Fraud Control Unit (Fraud Unit) under two change
orders.
Finally, HCFA determined that three change orders for printing
inserts
and handbooks were incorrectly claimed at a 75% enhanced rate of
FFP,
and therefore disallowed the difference between the enhanced and
regular
rates. 1/
We agree with HCFA that prior written approval was required for six of
the
change orders, that the purchases for the Fraud Unit were
impermissible, and
that the printing orders should not have been claimed
at enhanced
rates. However, we find that the State did not improperly
fragment a
change order. We therefore reverse the disallowance based
on
fragmentation and uphold the balance of the disallowance, as
explained
below.
Background
On February 12, 1988, the State entered into a five-year
fixed-price
contract with a private contractor for fiscal agent services
relating to
operation of its Medicaid Management Information System
(MMIS),
including the acquisition of ADP equipment and services. The
contract
provided for change orders at prices to be negotiated and stated
that
"[e]xecuted contract change orders shall be considered to be an
integral
part of the contract." HCFA Exhibit (Ex.) 1 at 23. HCFA
approved the
contract by letter on January 26, 1988, but noted that
"contract
amendments and/or change orders where the change exceeds $10,000
will be
subject to prior HCFA approval." HCFA further noted "that
the
provisions of 45 CFR, Part 95 and 42 CFR 433 may also require an
advance
planning document." HCFA Ex. 2.
The State asserted that a State employee responsible for administering
the
Medicaid program, Thomas W. Arnold, contacted a HCFA official, Stan
Dickson,
on November 14, 1988, concerning the prior approval
requirements for change
orders to the fiscal agent contract. Mr. Arnold
provided an affidavit
alleging that Mr. Dickson told him that, when a
change order would be claimed
at 75% FFP, "no prior approval or
notification was required, regardless of
the amount of the proposed
change." When 90% FFP would be claimed, Mr.
Dickson was alleged to have
advised that notice by letter should be submitted
for amounts under
$25,000 and a new advance planning document for greater
amounts. State
Reply Br. at 2-3; Declaration of Mr. Arnold. Mr.
Dickson responded by
affidavit that, while he had had many conversations with
Mr. Arnold, he
could not remember the particular conversation involved.
Nevertheless,
he denied that he made the reported statement at any time,
because it
conflicts with the understanding he had at all times of the
prior
approval requirements. HCFA's Response to State Reply Br. at
1;
Affidavit of Mr. Dickson.
HCFA conducted a financial management review of change orders dating
from
March 1, 1988 through January 30, 1990. Twenty-nine change orders
to
the contract were
reviewed, of which 12 are at issue here. 2/ One of the 12 change
orders
was not actively contested by the State, however. The State's
arguments
addressed the remaining change orders at issue. 3/
The State contended that the standards for when prior approval is
required
are confusing, and that it was misled by oral advice from a
HCFA official
into believing that no prior approval would be required
for any change order
at a 75% FFP rate. Further, the State argued that
HCFA's approval of
the fiscal agent contract pursuant to which the
change orders were issued
constituted sufficient prior approval of the
change orders. The State
denied that it intentionally fragmented
related change orders and alleged
that the purchases involved were for
different purposes and based on
different workpapers. The State
asserted that its interpretation of
State Medicaid Manual (SMM)
provisions supported its claim for enhanced
funding of the three
challenged change orders. Finally, the State
contended that its
purchase of equipment for the Fraud Control conformed with
applicable
regulations. We discuss each of these issues in turn
below.
Discussion
1. Prior written approval was required for six change
orders
exceeding $25,000 each.
a. The regulations and the manual provisions
Much of the dispute here centers on the State's assertion that
federal
standards for when prior approval is required are
contradictory. The
applicable standards in the regulations and policy
manual are set forth
below.
Regulations at 45 C.F.R. . 95.611(a) provided throughout the period
at
issue, in relevant part, that prior written approval is required,
as
specified in 45 C.F.R. . 95.611(b), when the State:
(1) "plans to acquire ADP equipment or services with proposed FFP
at
the regular matching rate that it anticipates will have
total
acquisition costs of $200,000 [in one year], or $300,000 . . . for
the
total acquisition" or
(2) "plans to acquire ADP equipment or services with proposed FFP
at
the enhanced matching rate . . . regardless of the acquisition cost"
or
(3) "plans to acquire noncompetitively from a nongovernmental
source
ADP equipment or services that cost more than $25,000 . . . ."
Section 95.611(b)(1) specifies that written approval is required for
the
advance planning document (APD) before making any commitment to
acquire
ADP equipment or services. Section 95.611(b)(2) specifies that,
for
enhanced FFP, written prior approval is required at three points:
prior
to issuance of a RFP (request for proposal), prior to signing
a
contract, and prior to signing a contract amendment.
Section
95.611(b)(3) specifies that, for regular FFP, the Department will
notify
the State if prior approval is required at these points. (In
this case,
HCFA's letter approving the fiscal agent contract notified the
State
that prior approval was required for contract amendments and/or
change
orders exceeding $10,000.) 4/
Section 95.605 of 45 C.F.R. specifies that "enhanced" rate means
the
"higher than regular rate of FFP authorized" by the Act for
certain
categories of acquisitions. The regular rate of FFP for
Medicaid
administrative activities is 50%. Section 1903(a)(7) of the
Act. It is
thus clear that both 75% and 90% FFP rates would exceed the
regular rate
for these purchases and would be considered as enhanced rates
requiring
prior approval for purchases of any amount.
However, the State argued that the State Medicaid Manual (SMM)
created
ambiguity by its divergent treatment of enhanced rates. Section
11227
of the SMM (issued July 1986), regarding purchase of ADP equipment
and
services, provides:
For 90-percent FFP, prior approval of the APD is required
for
all purchases regardless of the dollar amount (42
CFR
433.112(b)). No FFP is available at 90-percent without
an
approved APD. . . .
For 75-percent FFP, a State must obtain written approval of
the
RFP . . . when it plans to acquire ADP equipment . . .
[with]
total acquisition costs of $100,000 or more . . . over
a
12-month period; or of $200,000 or more . . . for the
total
acquisition. A State must also obtain prior written
approval
when it plans to acquire noncompetitively, from a
commercial
source, ADP equipment or services that cost more than
$25,000 .
. . . These requirements are specified in 45 CFR Part 95
Subpart
F.
For contractual services, including fiscal agent contracts . .
.
, the prior approval requirements are also applicable . . .
.
No FFP (even at the 50% rate) would be available unless
the
appropriate prior approval is obtained.
The difference between the regulations and the SMM lies in the
treatment
of RFPs for acquisitions below the threshold amounts at 75% FFP,
which
would require prior written approval under the regulation but
would
apparently not require it under the SMM language. 5/ HCFA
conceded that
these provisions could "potentially cause some confusion in
other
cases," but argued that all of the contested change orders here
required
prior approval because they exceeded the non-competitive threshold
of
$25,000, which was the same in the regulations and the SMM. HCFA Br.
at
8. The State denied that the acquisitions were noncompetitive,
arguing
that the change orders were issued pursuant to a contract that
was
itself competitively bid and approved by HCFA. State Br. at
11-12.
We find that prior approval was clearly required in this instance,
based
on both the regulations and the SMM, because the change orders
were
non-competitive acquisitions above $25,000 which the State intended
to
claim at an enhanced rate. 6/ The critical trigger for prior
approval
requirements is the point at which a grantee incurs the obligation
to
pay the costs of an acquisition. South Carolina Dept. of
Social
Services, DAB No. 303 (1982) at 4. The regulations do not speak
to
whether a contract was competitively bid, but to whether
an
"acquisition" of equipment, etc. was competitive. We have
previously
held that prior approval was required for an amendment to a
contract
which had itself been approved, where the change was substantial
and
"tantamount to a new procurement." Missouri Dept. of Social
Services,
DAB No. 826 (1987) at 3. Since the State did not have an
obligation to
make these purchases from the contractor at the time the
original
contract was executed, prior approval was required for change
orders
which undertook new obligations and which met the regulatory
criteria.
7/ Otherwise, if all changes orders to a competitively-bid
contract
were treated as themselves competitively-bid, HCFA would effectively
be
forced to approve contracts without knowing how much Medicaid
business
is being committed to the contractor.
The State may well have had good reason to buy from its
established
contractor, and HCFA did not argue that the change orders should
have
been competitively bid. HCFA Br. at 6. Nevertheless, the
lower prior
approval threshold applies even to appropriate
non-competitive
purchases. Such purchases are subject to the very
potential for abuse,
such as overcharging, that HCFA could reasonably
fear. HCFA Br. at 5-6.
We conclude that the use of change orders to
acquire equipment and
printing services from a single source falls within the
plain meaning of
"acquir[ing] noncompetitively from a nongovernmental
source." 45 C.F.R.
. 95.611(a).
The State also quoted the contract provision that "[e]xecuted
contract
change orders shall be considered to be an integral part of
the
contract," in support of its position that HCFA must have
anticipated
and approved change orders as a normal part of the contract
process.
State Br. at 11-12; State Ex. 3 (State agency response to the
financial
management review) at 2; HCFA Ex. 1 at 23. However, change
orders only
become integral to the contract under this language once they
are
executed. The regulations specify that, when prior approval is
required
for contract amendments, it must be obtained before execution.
45
C.F.R. . 95.611(b)(2)(iii). Therefore, the contract language does
not
control here and prior written approval was required prior to
the
contracting officer signing the change orders. Moreover, as we
discuss
below, the contract approval letter clearly precludes
this
interpretation on the part of the State.
b. The contract approval letter
HCFA argued further that the contract approval letter gave express
notice
that prior written approval was going to be required for change
orders.
HCFA Br. at 6-7, 10. The State responded that the $10,000
threshold in
the letter did not constitute "legal authority" for
these
disallowances. HCFA did not rely on the letter as
independent
authority. HCFA Br. at 6. Rather, HCFA's position,
which we find to be
well-founded, was that the letter served two
purposes.
First, the approval of the contract itself was limited to its terms
and
any changes below $10,000 in cost. Since HCFA had authority to
grant or
deny approval of the contract, it also had authority to grant a
limited
approval. We see nothing unreasonable in HCFA limiting its
approval in
a particular case so as to monitor unexpected increases in costs
more
closely than the prior approval regulations would generally provide.
Second, regardless of whether the lower thresholds in the letter should
be
enforced, the letter at a minimum provided express notice to the
State that
change orders were not "pre-approved," so the State cannot
now reasonably
claim that it believed that prior approval of the
contract served to approve
all future changes. We thus conclude that
prior approval was required
for those change orders exceeding $25,000
because they were acquired
noncompetitively and were not approved as
part of the contract.
c. The oral advice
We turn now to the State's contention that it received oral advice
leading
it to believe that no prior approval was required for any change
order at 75%
FFP. The State argued that the alleged oral advice
evidenced that even
HCFA was confused about how to apply the prior
approval requirements.
8/ The State itself did not consistently claim
to have relied on the
oral advice. Rather, the State asserted that
because it "was uncertain
of the binding nature of the other
requirements," it "implemented" the
SMM. State Reply Br. at 3. 9/
We do not need to resolve the question of whether the State
actually
received the alleged advice, since the State could not prevail in
any
case. Any such advice would be directly in conflict with written
policy
in both the regulations and the SMM (which does require prior
approval
for RFPs for 75% FFP acquisitions above the thresholds). The
State
could not reasonably rely on oral advice contrary to written policy
and
regulations. Even where erroneous advice was given in writing, we
have
rejected State claims of reliance when, as here, the advice was
not
authorized or intended as a HCFA policy statement and was
directly
contradictory to the SMM. Minnesota Dept. of Human Services,
DAB No.
653 (1985) at 13-15. 10/ Therefore, we find that the alleged
oral
advice had no effect on the legal standards which determine when
prior
approval was required.
2. HCFA did not demonstrate that the State
improperly
fragmented a change order.
HCFA argued that change order 89-11 represented a single acquisition
with
89-12 and therefore should have been combined with it. The
State
responded that change orders were not intentionally fragmented, that
no
authority required them to be combined, and that the purchases
were
discrete and independent. Although the change orders were approved
on
the same date and involved the same contractor, the State asserted
that
difference in the purposes, amounts, and underlying
workpapers
established that they should not be treated as a unit. State
Br. at
14-15; State Reply Br. at 4.
Neither party identified specific guidelines detailing which
acquisitions
should be treated as a unit. Nevertheless, it is plain
that the
establishment of thresholds would be meaningless if any
purchase could be
broken down into components small enough to evade
them. We must
therefore consider whether the State acted reasonably in
deciding which
change orders constituted a single acquisition. 11/
We have held, in an analogous issue of what acquisitions should
be
aggregated for depreciation purposes, that the fact that purchases
are
made "at the same time may be an indication of interrelatedness, but
it
is by no means dispositive." Oklahoma Dept. of Human Services, DAB
No.
1292 (1992) at 10. We must therefore look at the specific
purchases
here.
Change order 89-11 was for moving two data communications lines of
a
particular network as a result of the relocation of the State's
data
center. State Ex. 7. The costs included installation and
related staff
charges; costs of duplicate lines during the move; and an
ongoing
differential for higher monthly costs at the new location.
Change order
89-12 was for an additional line to support the same network,
due to a
large number of terminals and high volume of transactions.
State Ex. 8.
Its costs included installation and testing and related staff
charges; a
monthly amount for line charges, maintenance and transaction
charges;
and purchase of modems. HCFA did not show that the relocation
was
related to the increased usage, so the purposes of the change
orders
appear to be distinct. The fact that the additional line
will
"presumably" be at the new location does not establish that it was
added
as part of the move. Cf. HCFA Br. at 13. The items of cost
covered
appear to be for different activities and purchases.
We conclude that change orders 89-11 and 89-12 did not
necessarily
constitute a single acquisition. Therefore, the
disallowance as to
change order 89-11, which was based only on this issue, is
reversed.
3. The State incorrectly claimed enhanced funding for
two
change orders.
HCFA argued that two change orders were improperly claimed at an
enhanced
rate of FFP. Change order 89-05 was for printing of a notice
to be
inserted in a mailing to recipients. Change order 89-13 was
for
printing of a listing of Medicaid information numbers to be
inserted
with termination notices. HCFA Br. at 14; HCFA Ex. 7.
The State relied
on section 11275.24 of the SMM, which states that 75% FFP is
available
for costs directly attributable to the MMIS' need for an
eligibility
data file. 12/ That section relates only to the "systems
effort" to
"generate this file." The State did not show how these
inserts were
part of a systems effort to generate an eligibility file for the
MMIS.
HCFA cited section 11275.32 of the SMM which lists the costs
reimbursable
at enhanced rates as directly attributable to MMIS.
Publications necessary
for the installation or operation of MMIS qualify
for enhanced funding, while
those "necessary for maintenance of the
Medicaid program" do not. The
State failed to show any basis for
concluding that these inserts were
necessary to the MMIS, as opposed to
the general need of the program to
assure "that Medicaid payments were
made only to eligible recipients."
State Br. at 17. Generally, the
burden of demonstrating that costs
qualify for special funding at
enhanced rates is on the State. See,
e.g., Missouri Dept. of Social
Services, DAB No. 395 (1983) at 5-6. The
State here did not meet that
burden.
We therefore conclude that both change orders should have been
claimed
only at the 50% FFP rate and the disallowance of the difference
between
the 50% rate and the 75% rate is upheld.
4. The State improperly claimed purchases of equipment for
the
Medicaid Fraud Control Unit.
The parties cited to two regulations concerning dealings between the
State
Medicaid agency and the Fraud Unit. Subpart C of Part 1002 of 42
C.F.R.
establishes the Fraud Units and, at section 1002.309, sets forth
their
relationship to the Medicaid agency:
(a) The unit must be separate and distinct from the
Medicaid
agency.
* * *
(c) The unit shall not receive funds paid under this
subpart
either from or through the Medicaid agency.
(d) The unit shall enter into an agreement with the
Medicaid
agency under which the Medicaid agency will agree to comply
with
all requirements of . 455.21(a)(2) of this title.
The regulation referred to in subparagraph (d) provides in relevant
part
that the Medicaid agency must "promptly comply with a request" from
the
Fraud Unit for:
(i) Access to, and free copies of, any records or
information
kept by the agency or its contractors;
(ii) Computerized data stored by the agency or its
contractors.
These data must be supplied without charge and in the
form
requested by the unit.
42 C.F.R. . 455.21(a)(2).
Change orders 89-09 and 90-04 involved purchases of ADP equipment by
the
State Medicaid agency for the Fraud Unit. HCFA Br. at 16-17; State
Br.
at 17-18. 13/ The State submitted correspondence evidencing that
the
purchases were made at the request of that unit for its use in
accessing
computerized data of the Medicaid agency. State Ex. 12.
The State
contended that it was complying with its obligation to provide the
Fraud
Unit with access to its records and its computerized data in
requested
form. 14/ HCFA argued that the Medicaid agency is only
required to make
its data accessible, not to buy the equipment that unit
needs in order
to receive the data. Rather, HCFA contended the use of
Medicaid agency
funds to make purchases for the benefit of the Fraud Unit
makes the unit
improperly dependent on the agency, and amounts to its receipt
of funds
through the agency in violation of the regulations.
The thrust of the regulations is to establish two separate
funding
mechanisms for the Fraud Unit and the Medicaid agency. The
clear intent
of the regulations is that financial support of the Fraud Unit
should
not be connected to or conveyed through the funds of the
Medicaid
agency, in order to assure the independence of the unit in
investigating
possible fraud. For that purpose, we see no distinction
in whether the
funds are channeled to the unit from the agency in cash or in
kind, and
the State did not point to any. Therefore, we agree with HCFA
that it
was improper for the Medicaid agency to purchase equipment for the
Fraud
Unit.
This result is not changed by the requirement that the Medicaid
agency
cooperate upon request with the Fraud Unit by providing data
in
accessible form. An obligation to provide accessible data does
not
imply purchase of equipment for the user's convenience, any more
than
the obligation to provide free copies of records implies
purchasing
filing cabinets for the user to store the records. We do not
decide
here whether it would be proper for a Medicaid agency to
purchase
equipment for a Fraud Unit if it were shown that the only reasonable
way
to provide the required access to the MMIS data was for the purchase
to
be made through the Medicaid agency, rather than by the Fraud
Unit
itself. The State did not make any such showing here.
Nor is the purchase justified because the request came from the
Fraud
Unit. The regulations do not say that the Medicaid agency shall
comply
with every request of the Fraud Unit, only specified requests.
Nevertheless, the State argued that the regulations are "silent" on
this
issue, "neither requir[ing] nor prohibit[ing] the purchase of
equipment"
by the agency for the unit. State Reply Br. at 5.
However, the State
is incorrect in this regard. The regulations
prohibiting the transfer
of funds to the Fraud Unit govern, absent other
authority to permit the
purchase as an exception. The costs of copying
records would be
permissible as an exception under 42 C.F.R. .
455.21(a)(2)(i). The
State identified no exception permitting the
purchase and transfer of
ADP equipment. Therefore, the disallowances
for these two change orders
are upheld.
Conclusion
The disallowance is reversed as to change order 89-11 for FFP in
the
amount of $7,650. The balance of the disallowance is upheld for
the
reasons discussed above.
_____________________________
Judith
A.
Ballard
_____________________________
Cecilia
Sparks
Ford
_____________________________
Donald
F.
Garrett
Presiding
Board
Member
1. The State dropped initial challenges to five change orders,
reducing
the amount in controversy from $754,642 to $619,980.
2. The details of the contested change orders presented below are
drawn
largely from the summary schedule of the financial management
review
report. State Ex. 3 at Exhibit I.
Number Total FFP Reason
for Description ______ Costs
Rate
Disallowance ______________
88-06 $43,292 75% No
approval Add ports/Lines 89-02
186,066
50% No approval Drug
UR Program 89-05 4,604 75%
Wrong
rate ID Card Insert
89-09 2,864 75% Fraud
Unit Add
Equip - AG 89-11
10,125 75%
Fragmented Move Gate Line 89-12
347,612
75% No approval Add'l Gate Line
89-13 4,680 75%
Wrong
rate SSI Term Insert 89-14
49,647 75% No approval
Interim Anes Pr
89-18 22,412 75% Wrong
rate Pro Handbooks
89-19
31,903 75% No approval Doc
Storage 89-20 132,098 75%
No approval
MMIS Mods - 3400 90-04 5,113 75%
Fraud Unit
Add Equip - AG (also fragmented)
3. HCFA argued in its brief that change order 89-18 was charged at
the
wrong rate. HCFA Br. at 14. However, the State did not
address this
change order in its briefing and had conceded in its response to
the
financial management review that it should have been claimed at the
50%
rate. State Ex. 3. Therefore, the disallowance as to 89-18 is
upheld.
4. The State did not argue that change orders differed from
contract
amendments in any material way affecting the application of
the
regulations.
5. The threshold amounts also differ, because the thresholds in
the
regulations were raised in 1986, but the SMM was not amended to
conform.
51 Fed. Reg. 45,321 (1986).
6. An alternative basis for the disallowance under the
regulations
would have been the requirement that all contract amendments for
which
an enhanced rate will be claimed must receive prior approval. 45
C.F.R.
. 95.611(b)(2)(iii). HCFA, however, did not specifically rely on
this
basis.
7. The financial management review reported that the tasks involved
in
the change orders might have been performed by others and that there
was
"no overriding reason to limit selection to the fiscal agent."
State
Ex. 3 at 6. The State did not point to anything in the contract
which
would require it to make these acquisitions from the contractor
nor
anything which would have informed HCFA that its approval of
the
contract would bind the State to make these future acquisitions
through
the vehicle of single-source change orders.
8. As noted above, Mr. Dickson strongly denies giving the
advice
attributed to him. The State also submitted an exhibit
purporting to be
contemporaneous notes of the conversation by Mr. Arnold
reflecting the
same advice. Since we find that the State could not
reasonably have
been misled by the erroneous oral statements, even if they
occurred as
alleged, we need not resolve the factual conflict in the
affidavits. We
note, however, that one plausible explanation is that
both affiants are
honestly reporting their understanding of the
conversation. Mr. Dickson
may well have said that no thresholds apply
to claims at 75% FFP,
meaning that under the regulations claims at enhanced
rates require
prior approval regardless of amount. Mr. Arnold may have
misunderstood
that statement to mean that if no threshold applied, then no
prior
approval is required for any amount.
9. It is difficult to understand how the State could have been in
doubt
about the "binding nature" of federal regulations. Nor is it
clear in
what sense the State "implemented" the SMM, since it did not
seek
approval even for two change orders claimed at 75% and exceeding
the
thresholds in the SMM. HCFA Br. at 11-12.
10. To the extent the State is claiming that HCFA should be bound
by
the content of the advice, its argument amounts to a claim of
estoppel.
Estoppel is not available against the government, if at all,
without at
least a showing of affirmative misconduct, which the State did not
even
allege. See, e.g., Office of Personnel Management v. Richmond,
110
S.Ct. 2465 (1990), reh. denied. 111 S.Ct. 5 (1990); Schweiker
v.
Hansen, 450 U.S. 785 (1981); Acadia-Vermillion Community Action
Program,
DAB No. 1201 at 8 (1990). Furthermore, the State failed to
show
reasonable reliance, which is required for the traditional elements
of
estoppel. See Heckler v. Community Health Services of Crawford
County,
467 U.S. 51 (1984).
11. The issue is not really whether the State
"intentionally"
fragmented the change orders, but rather whether the orders
constituted
a single acquisition.
12. The State claimed that its interpretation of the SMM provision
to
include these publication activities should govern and cited two
Board
decisions. First, it is not clear what interpretation the State
was
pressing since it never explained how the language of the SMM
provision
could be interpreted to cover these change orders. Second,
its reliance
on the two decisions is misplaced. Both dealt with when
deference to
the states' interpretations of their own regulations is
appropriate.
New York Dept. of Social Services, DAB No. 1112 (1989);
Illinois Dept.
of Public Aid, DAB No. 478 (1983). The SMM is published
by HCFA, not
the State, and the State's interpretations would not be entitled
to any
special deference under these decisions.
13. HCFA stated that change order 90-04 was challenged on two
bases,
i.e., that it represented improper purchases for the Fraud Unit and
that
it should have been combined with 90-02 and 90-04 to exceed the
$25,000.
However, HCFA briefed only the first ground for disallowance.
HCFA
indicated that, because the disallowances for 90-02 and 90-03
were
conceded by the State to be justified on other grounds and thus
those
change orders were no longer at issue, it would not discuss
further
whether 90-02 should have been combined with them. HCFA Br. at
3, n.3,
4, 16-17.
14. The State also asserted that the purchase of ADP equipment for
the
Fraud Unit was "included in a fiscal agent contract approved by
HCFA."
State Br. at 18. The State did not clarify whether the provision
was in
the contract at issue here and did not specify what provision in
the
contract it relied on in support of this assertion. HCFA pointed
out
that the State had not cited to any such provision. HCFA Br. at
17.
The State never cited to or provided the alleged contractual
provision
in its subsequent briefing. The portions of the contract in
the record
do not contain any such provision. We do not reach the issue
of what
effect HCFA's approval might have, in light of the State's failure
to
present any evidence of the inclusion of such a provision in
the