GAB Decision 172
April 30, 1981 Maine Department of Human Services; Docket No.
78-24-ME-HC Teitz, Alexander; Ford, Cecilia Settle, Norval
The Maine Department of Human Services (State) appealed a decision of
the Administrator of the Health Care Financing Administration (HCFA or
Agency), upholding a disallowance by the Regional Commissioner, Region
I, of $66,242 claimed by the State as Federal financial participation
(FFP) for "buy-in" premiums under Titles XVIII and XIX of the Social
Security Act for the period July 1, 1976 through December 31, 1976. /1/
Based on the parties' submissions and briefing, an informal telephone
conference, and the State's response to the Board's Order to Show Cause,
we uphold the disallowance.
Background
"Buy-in" premiums are premiums which a State pays to the Federal
government under Section 1843 of the Social Security Act (42 U.S.C.
1395v) on behalf of eligible persons for Supplemental Medical Insurance
Benefits (SMIB). The State may seek FFP for the premiums under Section
1903(a)(1) of the Act (42 U.S.C. 1396b(a)(1)).
HCFA based the disallowance on a regulation (45 CFR 249.41(c)(1))
which generally limits FFP in "buy-in" premiums to payments made on
behalf of "money payment" recipients; i.e., those individuals who
received payment in cash, by check, or by immediately redeemable
warrant, with no restriction on the recipient's use of the payment (see
45 CFR 234.11; this meaning of the term apparently dates to the
mid-1930's).
The record developed by the parties indicates that the disallowance
reflects "buy-in" payments by the State on behalf of residents of
Intermediate Care Facilities (ICFs) who are not "money payment"
recipients. Their care was paid for through payments under Title XIX of
the Act directly to the ICF. Apparently, for some of these persons,
care formerly was paid for under Title XVI (AABD). Record of
Reconsideration, item 8; Amended Application for Review, p.7;
Memorandum in Support of Appellant's Response to Order to Show Cause
(Appellant's Response), p.1.
During reconsideration, the State indicated that it had begun in
October, 1974, to "clean up the buy-in list" at all ICFs to comply
with
Sec. 249.41(c) (1), but that "technical problems involved around the
area of ID numbers" prevented a complete solution. Record of
Reconsideration, item 13. The State argued that, overall, expenditure
claims submitted to HCFA would have been the same even if the State had
fully met the requirement of the regulation. Id. /2/ The Agency
acknowledged that the State was correct that in most instances, Medicaid
costs overall would be the same. Reconsideration Decision, p. 2. The
Agency's position was that its intent was to assure that the proper
program bore its proper charge. Record of Reconsideration, item 12,
p.5.The State, in turn, responded that while "certainly a fair reading
of 45 CFR 249.41(c) would lead one to (the) conclusion" that FFP was
unavailable for non-money payment recipient premiums, "the statutory
language is a good deal more complicated and in fact may be at odds with
the conclusion that the regulations would lead one to reach." Record of
Reconsideration, letter from Robert W. McGraw to HCFA Administrator
dated May 3, 1978 (unnumbered item).
The State admitted that it "bought-in" for non-money payment
recipients, and that 45 CFR 249.41(c) on its face would prohibit FFP for
the premiums in question. Amended Application for Review, p.5;
Appellant's Response, p.1. The State argues that the regulation is
administratively irrational and inconsistent with the Act.
Major Applicable Provisions of Law and Regulation
Section 1903(a)(1) of the Act authorizes FFP in --
. . . expenditures for premiums under Part B of title XVIII, for
individuals who are eligible for medical assistance under the (Title
XIX) plan and (A) are receiving aid or assistance under any plan of the
State approved under Title I, X, XIV, or XVI, or Part A of Title IV, or
with respect to whom supplemental security income benefits are being
paid under Title XVI, or (B) with respect to whom there is being paid a
State supplementary payment and are eligible for medical assistance
equal in amount, duration and scope to the medical assistance made
available to individuals described in Section 1902(a)(10)(A) . . .
(emphasis added).
Section 1843 of the Act, which is the provision dealing with
"expenditures for premiums under part B of title XVIII" mentioned
in
Section 1903(a)(1), states in pertinent part as follows:
(a) The Secretary shall, at the request of a State . . . enter into
an agreement with such State pursuant to which all eligible individuals
in either of the coverage groups described in subsection (b) (as
specified in the agreement) will be enrolled under the program
established by this part.
(b) An agreement entered into with any State pursuant to subsection
(a) may be applicable to either of the following coverage groups:
(1) individuals receiving money payments under the plan of such State
approved under Title I or Title XVI; or
(2) individuals receiving money payments under all of the plans of
such State approved under Titles I, X, XIV, and XVI, and Part A of Title
IV. (emphasis added)
45 CFR 249.41(c), as codified during the period relevant here,
stated:
There will be no (FFP) in the monthly insurance premium under Title
XVIII, Part B of the Act which the Title XIX State agency pays on behalf
of nonmoney payment individuals eligible to receive medical assistance
under Title XIX of the Act, except for (individuals falling in
categories not alleged to be relevant here).
Discussion
The parties acknowledged that this case does, in fact, arise under a
"buy-in" agreement entered into under Section 1843(a). The Agency's
argument is that the regulation chiefly involved in this appeal, 45 CFR
249.41(c), was in fact based on both Sections 1843(b) and 1903(a)(1),
although HCFA's brief (styled a "motion to dismiss or in the alternative
for summary judgement" because it was largely directed to the earlier
dismissed action) mentioned only Section 1903(a)(1) as the basis for the
regulation. See Discussion in the Board's Order to Show Cause, p.4.
The State's arguments, the Agency's responses, and our analysis are
as follows:
1. The State's main argument was stated somewhat differently in its
original Application for Review (pp. 2-3) and the later Amended
Application for Review (pp. 5-7), but apparently can be summarized and
restated for clarification as follows:
-- A former Section 1121(a) of the Social Security Act, effective
January 2, 1968 but deleted from the Act effective January 1, 1972,
authorized assistance in the form of institutional services under Title
XVI(AABD) in ICFs to persons otherwise also entitled to "money payment"
assistance.
-- Section 1903(a)(1) does not specify the eligibility of only "money
payment" recipients. It authorizes FFP for Title XVIII "buy-in"
premiums for those persons who are eligible for medical assistance under
the Title XIX plan and ". . . (A) are receiving aid or assistance under
any plan of the State approved under title . . . XVI . . . ." Section
1903(a)(1) has been in the law in substantially its present form since
1965.
-- Reading the two provisions together, the State argued that the
statutory scheme originally laid out by Congress called for persons who
receive "aid or assistance" under Title XVI(AABD) (in the form of
institutional services) to qualify to have their "buy in" premiums
covered under Section 1903(a)(1), whether or not they are "money
payment" recipients.
We think there are two obvious difficulties with this position of the
State.
First, Section 1121 was repealed in 1972 and, so far as the record
indicates, has no bearing on the disallowance in this case (whether or
not the provision is relevant to disallowances for earlier periods
covered by the previously dismissed appeal is not a question before the
Board). In response to the Board's Order to Show Cause, the State
admitted that former Section 1121 was "not applicable to the time period
at issue in this appeal," yet argued that the provision "underscores
the
position that non-money payment recipients qualify to have their buy-in
premiums covered under the Medicaid program." Appellant's Response, p.2.
While that position might have been arguable prior to repeal of the
provision, it is unpersuasive for this disallowance.
Second, even if the provision were somehow applicable in this appeal,
the State originally failed to note the impact of the provisions of
Section 1843(b) which restrict the applicability of that provision to
"money payment" recipients. Any ambiguity arising from the relationship
of the general language of Sections 1121 and 1903(a)( 1) is resolved by
the express limitations of Section 1843(b), where there is a "buy-in"
agreement under that section.
When this was pointed out in the Board's Order to Show Cause, the
State responded by arguing that another provision of Section 1843 --
paragraph (h) -- permits coverage of all persons eligible for assistance
under the State's Medicaid program. Appellant's Response, p.2. Section
1843(h)(1) states:
The Secretary shall, at the request of a State made before January 1,
1970, enter into a modification of an agreement entered into with such
State pursuant to subsection (a) under which the coverage group
described in subsection (a) and specified in such agreement is broadened
to include individuals who are eligible to receive medical assistance
under the plan of such State approved under Title XIX.
By its express terms, this provision is not applicable in the absence
of a modified agreement requested prior to 1970, and neither party has
produced evidence of such a modification.
The State also pointed to 45 CFR 234.120 as support for the
proposition that assistance under Titles I, X, XIV, XVI, and IV-A of the
Act extends to payments of kinds other than cash payments (e.g., rent
payments to housing authorities, vendor payments, foster care payments).
But Sec. 234.120 is merely a general summary of what types of assistance
are available to individuals under various other provisions of that
chapter of the Code of Federal Regulations, and does not conflict with
the specific provisions of Sec. 249.41. More importantly, vendor
payments to ICFs under Sec. 234.120(e) are only considered vendor
payments "in a state that did not, as of January 1, 1972, have an
approved plan under Title XIX," and the State has admitted that as of
January 1, 1972, it was paying for ICF services under Title XIX.
Amended Application for Review, p.6. These vendor payments therefore
could not be assistance under Title XVI (see first paragraph of Sec.
234.120).
Furthermore, even if there were no specific legal basis for
differentiating between "money payment" and "non-money payment"
recipients, the Agency's argument tha it has to be concerned with
attributing expenditures to the proper program would deserve serious
consideration, even if charges to the Title XVIII or Title XIX programs
might, in the right circumstances, be the same.
2. The State also argued that ". . . the application of 45 CFR Sec.
249.41 was clearly intended to be confined solely to those ICF services
paid for under Title XIX, something Maine did not begin to do until
January 1, 1972." Amended Application for Review, p.7. Again, this
appears to reflect some confusion about the timing of the disallowances
in question in this case, where the disallowances were for expenditures
in 1976.
3. The State argued that the policy decision reflected in the
disallowances is unreasonable because it would impose undue
administrative burdens (e.g., a need to separately account for "buy-in"
ineligibles, nonparticipating eligibles, and eligibles; to constantly
update lists of names; to risk more errors). The Agency did not
address this argument on appeal, but during reconsideration, the Agency
responded to the argument by noting that it had offered procedures and
guidance to ameliorate administration and reduce processing errors
(Record of Reconsideration, item 12, p.4). The State alleged that an
informative manual was not developed until February, 1976 (Amended
Application for Review, p.9), but again this seems to have meaning only
for the earlier disallowances in the case not now before us. The State
acknowledged that the Agency, beginning in October, 1975, took some
administrative steps which "minimized the responsibility to the State
for dealing with removal of non-money payment recipients from the
"buy-in list." Record of Reconsideration, item 13, p.2. Overall, the
State's argument concerning administrative inconvenience is no more than
a collection of conclusory complaints, related primarily to the period
that preceded the disallowance in this case. Further, an argument of
administrative inconvenience would have to be addressed to Congress,
since the statute appears to require differentation between "money
payment" and "non-money payment" recipients for purposes of "buy-in"
agreements not modified in accordance with Section 1843(h).
4. The State also argued on appeal that the Agency assumed part of
the recordkeeping responsibility related to identification of the
categories of recipients beginning in 1974, but thereafter ". . .
disallowances . . . were based only on estimates of the number of
ineligible recipients and not on accurate figures." Amended Application
for Review, p.9. The Agency did not respond to this argument on appeal.
At the same time, the State referred to a mysterious "adjustment"
-- not
mentioned by the Agency -- which increased the disallowance by $2,178 to
$68,421, which the State argued ". . . reflects improvements in the
accuracy of Departmental records for the time period in question which
resulted from research undertaken at the invitation of the Defendants."
Id., p. 4. The record indicates that the Agency was forced to use
estimating techniques because the State ". . . was unable to furnish
the actual number of ineligible recipients." Record of Reconsideration,
item 8. Since the State contributed to the difficulty in determining
the disallowance amount, had a long-standing obligation to maintain a
related system of accountability under 45 CFR 249.41(c)(1), appeared to
acknowledge "improvements in the accuracy" of the disallowed amount
in
this case, and presented no evidence that the amount of the disallowance
is incorrect, there is no basis for overturning the Agency's
determination of the amount of the disallowance. The Agency did not
modify its disallowance to reflect the additional sum of $2,178,
although given an opportunity to do so in the Board's Order to Show
Cause, so the Board's decision addresses only the amount indicated in
the record (i.e., $66,242).
5. The State argues that even if 45 CFR 249.41(c)(1) does not exceed
statutory authority, it is arbitrary and capricious because it is
overboard and denies FFP "even where there is no difference between the
amount of expenditures actually claimed and the amount that would have
been claimed had the recipients bought in for themselves." Appellant's
Response, p.3. But we do not find it as easy as the State apparently
does to dismiss two considerations underlying the distinction: first,
the wide range of potential variations in individual circumstances of
eligible persons, and the questions of when and if each person would
apply for Medicare and how much money each would get, leads us to
conclude that there could reasonably be differences in the amount of
expenditures the State might claim and the amounts individuals might
claim. Second, it is not unreasonable for the Agency to demand separate
accountability for the two types of payments. More important, Congress
has dictated a specific requirement differentiating money payment from
non-money payment buy-in eligibility in the circumstances here, which
the Agency has implemented through a regulation which comports with the
statutory requirement; arguably the Agency was without authority to do
otherwise.
It should be noted that in response to the Board's Order to Show
Cause, the State concurred that there were no material facts in dispute,
and restricted its reiterated arguments to the matters discussed in
paragraphs 1 and 5 above.
Conclusion
For the reasons stated above, we uphold the disallowance in the
amount of $66,242. /1/ The record in this case also contains evidence
and argument presented by the parties in the appeal of an
earlier disallowance of $1,208,194 for the period from July 1, 1969, to
June 30, 1976 of FFP for "buy-in" payments (Board Docket No.
78-34-ME-HC). This appeal was dismissed on February 8, 1979, because
final action by the HCFA Administrator on reconsideration of that
disallowance was taken prior to the March 6, 1978 transfer to the Board
of jurisdiction over reconsideration cases. /2/ However, in the
right circumstances, the State can experience savings through "buy-in":
since Titles XVIII (Medicare) and XIX (Medicaid) both can result in
provision of essentially the same medical services to the aged poor,
payment by the State of premiums for services which are fully federally
funded means the State pays less than if it provided the same services
under Medicaid and received FFP. The State argues that there is no
difference between the amount of expenditures claimed here by the State
and the amount that would have been claimed by the individual recipients
had they bought-in for themselves, so that the Agency's decision to deny
FFP is arbitrary and capricious. Appellant's Response, p.3. We discuss
this argument infra, at p.7.
OCTOBER 04, 1983