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Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Appellate Division |
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DATE: October 19, 2001 |
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Control No.
MN/00/04/A/01/MAP Docket No. A-01-47 Decision No. 1791 |
| DECISION | |
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DECISION The Minnesota Department of Human Services (Minnesota) appealed the January 31, 2001 determination of the Health Care Financing Administration (HCFA)(1) disallowing $1,116,518 in federal financial participation (FFP) for the cost of Medicaid services for which the two-year time limit for claims expired before submission by Minnesota. The bulk of the disallowed claims were for expenditures made under Minnesota's state health care program, known as General Assistance Medical Care (GAMC), and claimed in the quarters ending June 30, 1996 and September 30, 1996, on behalf of individuals retroactively determined to have been eligible for Medicaid at the time the services were rendered. Minnesota engaged in discussions with representatives of HCFA during 1994-1995 concerning Minnesota's April 1994 request for a health care demonstration project waiver under section 1115 of the Social Security Act (Act). Minnesota alleged that the waiver request originally sought authority to submit FFP claims for GAMC expenditures made within the preceding 27 months without reprocessing the claims through Medicaid, but that Minnesota did not pursue this component of its waiver request after repeated oral assurances that no waiver was needed for that purpose. Therefore, Minnesota sought on appeal to estop HCFA from disallowing the claims as untimely. As we discuss below, we conclude that estoppel is rarely, if ever, available to force the federal government to make payments from the federal fisc based on representations made by federal agents when the payments are not authorized under federal law. As a factual matter, we also conclude Minnesota has not shown the requisite elements for estoppel to apply in any case. We find the representations on which Minnesota claimed to have detrimentally relied, at best, ambiguous. We find no evidence of misrepresentation or misconduct by federal officials. Nor do we see any evidence that Minnesota reasonably relied on federal communications to change its position to its detriment. In addition, we conclude that the arguments Minnesota put forward as to the remainder of the disallowance, amounting to $13,950 in FFP claimed for payments to a particular hospital during the quarter ending September 30, 2000, are also without merit. We therefore uphold the disallowance in full. LEGAL BACKGROUND Section 1132(a) of the Act provides, in relevant part, as follows -
Section 1132(b) provides that the Secretary shall waive the above requirement "with respect to the filing of any claim if he determines (in accordance with regulations) that there was good cause for the failure of the State to file such claim within the period prescribed. . . ." Further, such a waiver may only be allowed for the time necessary to give the State a "reasonable opportunity to file such claim." Id. The Secretary is prohibited from deeming good cause to exist where the failure to file timely is "attributable to neglect or administrative inadequacies." Id. The implementing regulations provide that, for expenditures under title XIX made after September 30, 1979, claims will be paid to "a State for a State agency expenditure . . . only if the State files a claim with us for that expenditure within 2 years after the calendar quarter in which the State agency made the expenditure." 45 C.F.R. � 95.7. The expenditure is considered to have been made under title XIX of the Act in "the quarter in which any State agency made a payment to the service provider." 45 C.F.R. � 95.13 (emphasis added). "State agency" is defined, for purposes of expenditures under title XIX of the Act as "any agency of the State, including the State Medicaid agency, its fiscal agents, a State health agency, or any other State or local organization which incurs matchable expenses . . . ." 45 C.F.R. � 95.4. The only exceptions to the timely claims provisions permitted by the regulations are the statutory ones, i.e., cost adjustments, audit exceptions, court-ordered payments, and "[a]ny claim for which the Secretary decides there was good cause for the State's not filing it within the time limit." 45 C.F.R. � 95.19. The meaning of "good cause" is set out as follows:
45 C.F.R. � 95.22. Waiver requests should be submitted "in writing as soon as the State recognizes that it will be unable to submit a claim" within the time limit and must include documentation of good cause as defined above along with a "specific explanation, justification or documentation of why the claim is or will be late." 45 C.F.R. �� 95.25 and 95.28. ISSUES PRESENTED The disallowance here has two distinct bases. The first issue relates to $1,102,568 in retroactive FFP for GAMC payments claimed in the quarters ending June 30, 1996 and September 30, 1996 for services to individuals who were retroactively determined to be eligible for Medicaid. The amount disallowed was for claims that were submitted after the timely claims period expired. Minnesota argued that HCFA should be estopped from disallowing these claims. Minnesota contended that HCFA had expressly assured the State during negotiations on its demonstration waiver request that no waiver would be needed for Minnesota to claim 27 months of retroactive payments on this basis, and that, in reliance on this assurance, Minnesota dropped this portion of its waiver request. The second part of the disallowance was for $13,950 for FFP in three payments made to the Hennepin County Medical Center (Hennepin) and submitted during the quarter ending September 30, 2001. Below, we discuss each part of the disallowance in turn, setting out first the relevant factual background and then discussing our analysis of each dispute. |
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| ANALYSIS | |
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I. The GAMC Claims
We set out first the facts not in dispute here. In the discussion section, we analyze the areas of factual dispute.
GAMC is a fully state-funded program providing medical services to indigent persons not believed to be eligible for Medicaid. GAMC contains a more restrictive asset requirement and makes lower payments to providers than Medicaid. See Minn. Br. at 2-3 and cites therein to Minnesota state law. Those who apply for medical assistance are assigned to GAMC if they do not appear initially to qualify for Medicaid. Information obtained later or changes in circumstances of the GAMC recipients may result in a retroactive determination of eligibility for Medicaid. The claims here were for GAMC recipients who were determined retroactively to have been eligible for Medicaid at the time they obtained the services, most frequently because they were found to have been disabled at the time of service or because they had reached 65 or were pregnant when the services were provided. See Minn. Br. at 3. The State undertook ongoing efforts to increase the integration of Medicaid and Minnesota's own health care programs as much as possible, by consolidating their administration, using a single application form, and developing comparable benefit packages. See id. at 3-4; Minn. Ex. 6 at 2-1 to 2-7 and 2-23. One goal of Minnesota's broad waiver request submitted to HCFA in August 1994 was to implement this integration process. Id.; HCFA Br. at 4.
As part of the waiver request package, Minnesota explained how it planned to handle situations in which an individual was belatedly determined to be Medicaid eligible, as follows:
Minn. Ex. 6, at 2-9 to 2-10 (emphasis in original). The
proposal was based on the State's general plan under which the financial
eligibility and application requirements for GAMC were as strict or stricter
than Medicaid and the payments made under GAMC were no higher than Medicaid
would have allowed.
As an initial matter, the Board noted in its acknowledgment letter, dated March 7, 2001, that HCFA's disallowance letter did not make clear whether Minnesota had requested a waiver of the timely claims limits for good cause. Further, the disallowance letter did not explain whether, if such a request was made, HCFA had simply determined that the claims were barred as unallowable by the timely claims regulation or had also found that the good cause exception was not applicable. The acknowledgment pointed out that the Board itself does not have authority to consider in the first instance a request for a good cause waiver. See Montana Dept. of Social and Rehabilitation Services, DAB No. 1471 (1994). The Board asked HCFA to report whether Minnesota had requested and been denied a good cause waiver and give the reasons for any denial. HCFA responded that Minnesota had requested a good cause waiver only for the quarter ending September 30, 2000. HCFA Response, dated April 9, 2001, at 1. HCFA noted that it had expressly invited Minnesota to demonstrate that one of the timely claims limit exemptions (which included the good cause waiver) applied in regard to the deferred claims from quarters ending June and September 1996. See id. at 2-4; HCFA Ex. 3, at 1, HCFA Ex. 4, at 1. According to HCFA, no request for a waiver was forthcoming. However, in submitting its claim for expenditures for the quarter ending September 30, 2000 (for services provided and paid for by GAMC more than two years earlier), Minnesota argued that good cause to waive the timely claims limit existed because GAMC enrollees often do not report (and have no real incentive to report) changed conditions that may make them eligible for Medicaid and because the effect of a disallowance would be to punish those states that offer comprehensive medical coverage since their citizens have less incentive to apply for Medicaid promptly upon such changes. HCFA Ex. 5. HCFA asserted that its disallowance represented a rejection of these arguments for good cause and presented the bases for that rejection. HCFA Response at 5-7; HCFA Ex. 6, at 1-2. HCFA concluded that Minnesota failed to show any circumstances beyond its control, as opposed to its own inefficiency in tracking potential Medicaid eligibility of its state program enrollees, to explain why claims were delayed for more than two years. Further, HCFA concluded that the timely claims limit was a neutral provision with no punitive intent, and in any case, the assertion of inequitable effect is not a basis for a good cause waiver. In addition, HCFA stated that a request for a good cause waiver would itself be untimely at this point because the regulations required a state to make any such request "as soon as it recognizes that it will be unable to submit a claim within the appropriate time limit." 45 C.F.R. � 95.25, discussed at HCFA Response at 4. Minnesota indicated that, in light of the positions taken in HCFA's response, it had "decided to proceed with its appeal, rather than request a waiver that HCFA already indicated it would deny." Minn. Br. at 2. Since Minnesota does not allege that HCFA was arbitrary and capricious in its reasons for denying the waiver for the quarter for which it was requested and does not press any further waiver request, we find that the good cause waiver exception to the timely claims limitation does not apply.(2) Therefore, we proceed to the merits of Minnesota's argument that HCFA is estopped from enforcing the limitations because HCFA's actions caused the delay in filing the claims.
Much of the dispute in this case arises from differing interpretations by the parties of written and oral communications made as part of the dialogue between them about this broad waiver request. Therefore, we present here relevant portions of those communications in some detail. HCFA sent a memorandum dated November 7, 1994 to Minnesota with questions about the waiver proposal including an inquiry about what the rationale was for Minnesota's proposal that HCFA "pay to provide retroactive MA benefits" under GAMC "over a period of 2 1/4 years while traditional eligibility for MA is only retroactive for 3 months." Minn. Ex. 8, at 2 (emphasis added). Minnesota responded in writing on January 5, 1995. Minn. Ex. 9. Minnesota indicated that its proposal was based on its "finding that a significant percentage of the population served by the GAMC Program gain eligibility for MA upon verification of pregnancy or certification of disability." Id. Since their medical costs are already covered at a comparable rate by GAMC, GAMC recipients who become categorically eligible for MA have little incentive to, and often do not, promptly report that information. Id. Minnesota then explained that -
The State is refining the Medicaid management information system (MMIS) reports, system interfaces and county procedures to expedite the process of claiming Medicaid FFP upon a determination that a GAMC recipient satisfies all MA eligibility requirements. Once the backlog is eliminated it will seldom (if ever) be necessary to request FFP for extended periods of retroactive coverage. Id. at 18-19. On April 18, 1995, Minnesota forwarded to HCFA certain information required from it before approval of the demonstration waiver. Included in that communication was Minnesota's statement that expenditures under its Medicaid plan would include "coverage of GAMC expenditures within the past two years and one calendar quarter for GAMC recipients subsequently determined to have been Medicaid eligible beyond the three-month Medicaid retroactive eligibility period." Minn. Ex. 10, at 6-7. The divergence in interpretations apparently sprang from the language used by Minnesota in describing what it planned to do about payments made to GAMC recipients who are later found to have been Medicaid eligible when the payments were made. Minnesota asserted that these descriptions provided notice to HCFA of possible timely claims problems and obliged HCFA to pay the claims unless HCFA informed Minnesota that a specific waiver of timely claims provisions had to be added to the waiver request package. HCFA instead understood the description of exceeding the three-month period of retroactivity to refer to provisions requiring Medicaid eligibility to be made effective up to (but no longer than) three months before the date on which the Medicaid application was made. These provisions govern situations where an applicant has received services covered under the Medicaid state plan and would have been eligible for Medicaid at the time of the services, but had not yet actually applied for Medicaid. HCFA Br. at 5; Section 1902(a)(34) of the Act; 42 C.F.R. � 435.914(a). During April 1995, final negotiations on the waiver request were conducted between HCFA representatives and Minnesota officials, in person and by telephone. Minnesota relied on alleged oral communications in those discussions by which federal officials assured Minnesota that these claims would be handled outside the waiver process and would therefore be payable without the need to address them in the waiver package. Minnesota did not specify the individual(s) who supposedly made these representations and did not proffer any contemporaneous supporting documentation. Both parties, however, submitted declarations from individuals who participated in the waiver negotiations. The declarants directly conflict in their descriptions of relevant oral communications which occurred during that process. We discuss these declarations in some detail below in assessing whether Minnesota proved the elements required to assert estoppel.
Estoppel is an equitable remedy where one party has used dishonest means to lead the other to act against interest. The traditional elements required to assert estoppel are misrepresentation of fact, reasonable reliance, and detriment to the opposing party. Heckler v. Community Health Services of Crawford County, Inc., 467 U.S. 51, 59 (1984). Minnesota cited Office of Personnel Management v. Richmond, 496 U.S. 414 (1990), for the proposition that, while not subject to estoppel to the same extent as a private party, "[t]he federal government can however be bound by the mistaken representations of its agent when the misrepresentations are within the scope of the agent's authority." Minn. Br. at 12. According to Minnesota, estoppel is appropriate here because it relied on oral assurances from HCFA officials with authority to negotiate that misled Minnesota into dropping this issue from its demonstration waiver request and expending resources compiling claims for a 27-month (instead of 24-month) period. Minnesota misstated the governing law regarding estoppel against the federal government. The prevailing view in the federal courts is that equitable estoppel cannot lie against the federal government, if indeed it is available at all, absent at least a showing of affirmative misconduct by an authorized official. See, e.g., Schweiker v. Hansen, 450 U.S. 785 (1981); Long v. Area Manager, Bureau of Reclamation, 236 F.3d 910 (8th Cir. 2001). The OPM v. Richmond case did not relax the availability of estoppel against the federal government, but rather emphasized that such a remedy would be particularly inappropriate where the result would be a payment of monies from the federal fisc. The Board recently discussed the reason for this, as follows:
Lower Brule Sioux Tribe, DAB No. 1758, at 9-10 (2000). Minnesota recognized that estoppel could not be applied to compel payment of federal money in violation of appropriation law. Minn. Br. at 12, citing 496 U.S. 414. Minnesota argued, nevertheless, that the payments it sought would not violate federal law because HCFA would have had authority to permit them as part of the section 1115 demonstration waiver. Minn. Br. at 13. This argument begs the question. Whether or not HCFA would have had the authority to include an advance waiver of timely claims act provisions as part of the demonstration project, it is undisputed that HCFA did not do so, and that Minnesota did not even include in its final waiver package a specific request for HCFA to take such action. Absent such an express waiver by HCFA, the timely claims provisions of the statute and regulations indisputably bar payment. Speculation that HCFA might have acted as Minnesota now wishes if Minnesota had better understood the need to get advance approval to allow these claims to circumvent the effect of timely claims provisions cannot confer legal authority to pay these claims absent an exception (such as a good cause waiver) meeting the statutory requirements for avoiding timely claims limits. Hence, compelling HCFA to make payment of the untimely claims here would raise precisely the problem addressed in OPM v. Richmond. We conclude that estoppel cannot properly be applied here to overcome the timely claims limitations that triggered this portion of the disallowance, even were the factual predicates necessary to any estoppel claim present here. As discussed next, we further find that these elements were not present.
Even were estoppel ever available against HCFA to force payment of untimely claims, the record before us does not support the existence of the necessary factual predicates. At best, the material submitted by Minnesota, if credited, portrays events that amount to mutual misunderstandings and inadequate clarity in communications, not misrepresentations by federal officials (and certainly not any affirmative misconduct). A careful review of Minnesota's allegations arising from the course of federal-state communications summarized above fails to show any record of a specific assurance by a specific individual with authority at HCFA to the effect that these retroactive claims would be paid without regard to the timely claims limits if the subject was removed from the broad waiver request. In other words, not only did Minnesota fail to demonstrate any affirmative misconduct or even intentional misrepresentation on the part of the government, Minnesota did not even cite a clear representation that supports its present claims. Thus, in a letter to HCFA's Medicaid Bureau, dated December 18, 1996, Minnesota's Medical Director described the basis for Minnesota's claim of reliance as follows:
HCFA Ex. 2, at 1. The allegations made in Minnesota's briefs and supporting exhibits about HCFA's "oral assurances" that Minnesota could "proceed without a waiver" were, for the most part, similarly vague as to who assertedly said what exactly to whom, and when and in what context it was allegedly said. See, e.g., Minn. Br. at 12; Minn. Exs. 7, at 4 (Declaration of Jane Hardwick), and 10, at 7 (Memorandum by Jane Hardwick with an unidentified handwritten marginal note). Minnesota challenged HCFA's position that HCFA had understood the retroactivity issue raised by Minnesota in the waiver process to turn on whether retroactive reclassification would violate the three-month limit on retroactive eligibility for Medicaid payments. Minn. Reply Br. at 2-3. Minnesota emphasized that its descriptions of its plans to HCFA included references to the "two years plus three months" period, so that HCFA should have known that the timely claims provisions were involved. Even if we accepted that HCFA should have noted the ambiguity, having notice is not sufficient to trigger estoppel. At a minimum, estoppel requires that the party to be estopped have made affirmative misrepresentations. Furthermore, each of those descriptions also references the three-month retroactive eligibility period. HCFA offered three affidavits from individuals who participated on its behalf in the broad waiver negotiations, Mr. Mike Miller, Mr. Richard Strauss, and Ms. Penelope Pine, describing their understanding of the nature of the issue raised about "retroactive eligibility." HCFA Exs. 7, 8, and 9. Mr. Miller reported that the State inquired if retroactively claiming Medicaid coverage for GAMC recipients from the point they became eligible for Medicaid "would violate the three-month limit on retroactive eligibility set forth in Section 1902(a)," and "at no time claimed it was seeking a waiver of the two-year deadline for claiming FFP established by Section 1132(a) of the Act." HCFA Ex. 7, at 1.(3) He also stated that he specifically reminded the State that any claims would still have to be submitted within timely claims limits, and noted that those provisions and the retroactive eligibility rules were "distinct requirements." Id. at 2.(4) Mr. Strauss too averred that Minnesota never even raised with the HCFA team the possibility of a timely claims waiver. HCFA Ex. 8, at 1. As to whether retroactive reclassification of GAMC recipients would violate section 1902(a), Mr. Strauss stated that HCFA determined that no waiver of that section was necessary because, in Minnesota, a single unified application was made for GAMC and Medicaid. Id. at 2. The GAMC application would also constitute an application for Medicaid, even though Medicaid eligibility was determined later; hence, no retroactivity problem would arise. Finally, Ms. Penelope Pine was the Project Officer in charge of the HCFA team on the section 1115 waiver request and negotiations. HCFA Ex. 9, at 1. She agreed that Minnesota never asked if it needed a timely claims provision waiver, and discussion focused only on section 1902(a).(5) We thus conclude that Minnesota failed to make a persuasive showing that HCFA officials misled it. Nor is it at all evident that Minnesota took any action in detrimental reliance on a reasonable misconstruction of HCFA's position. Minnesota's arguments before us assumed that, had Minnesota not itself dropped the retroactive GAMC claims issue from the broad waiver request, these claims would have been payable. There is no evidence that HCFA would necessarily have approved waiving the timely claims limit, even had Minnesota continued to pursue it. After all, the principal reason given for the extension needed was administrative inadequacy, which is not "good cause" under the regulations. Minnesota could not reasonably rely on statements from HCFA employees that, even accepting Minnesota's versions of them, simply indicated that the question of the retroactive claims could be handled outside the waiver negotiation process, to substitute for express approval of an exception to otherwise-applicable statutory timely claims limits. The "detriment" to which Minnesota pointed is the trouble to which it went to collect the retroactive claims only to have the oldest rejected as untimely. First, these costs were within Minnesota's own power to minimize or avert, by means of, for example, a more frequent review for changes in the status of GAMC enrollees or prompt claiming of Medicaid once the State agency learned of the changes. Second, Minnesota did not show that significant additional effort was expended in collecting data on claims from the 25th through 27th month in the past beyond that involved in setting up processes to identify the claims from months one through 24, which HCFA has paid. Finally, since all the events that triggered Minnesota's responsibility for these medical costs occurred long before the waiver negotiations even began, it is obvious that Minnesota did not incur the liability for the payments in reliance on any statements made during the negotiations. Hence, we do not find proof of a misrepresentation, of reasonable reliance thereon, or of a consequent detrimental change in position. We conclude that, even if estoppel would ever lie against HCFA to compel payment, Minnesota failed to establish even the minimum requisite elements for its application in this case. In short, we find neither adequate legal authority nor factual predicate to support Minnesota's argument for equitable estoppel here.
We conclude that the disallowed claims were clearly time-barred. We further conclude that HCFA is not estopped from relying on the untimeliness of the claims to disallow them. Therefore, we sustain this portion of the disallowance. II. The Hennepin Claims
The portions of the disallowance relating to claims for services provided at Hennepin County Medical Center involve three individual patients,(6) who were hospitalized at Hennepin for different periods of time between January 18, 1995 and January 16, 1996. The specifics regarding each patient are not disputed and do not affect our decision, so we do not set them out here. See Minn. Br. at 5-8; HCFA Br. at 8-10; Minn. Reply Br. at 7-8; HCFA Ex. 11. Hennepin is a critical care hospital owned and operated by Hennepin County and is the largest public hospital in Minnesota. Minn. Br. at 5, n.2. Each hospitalization was originally paid for by GAMC for which each individual had been determined to be eligible. In each case, more than 27 months after receiving payment from the GAMC program, Hennepin learned that a retroactive determination had been made (either by the State's medical review team or the Social Security Administration) that the individual was disabled at the time of hospitalization. A determination of disability automatically qualified each individual for Medicaid. Hennepin then asked the Minnesota Department of Health Services to replace each GAMC payment with Medicaid payments at Medicaid rates. After verifying each individual's Medicaid eligibility, Minnesota recovered the GAMC payments and issued Medicaid payments. The Medicaid payments were all made on September 21, 2000. The claims thus differ significantly from those discussed above. The claims discussed in the first section were for payments made under the GAMC program which the State later concluded could have been made by Medicaid because the recipients were eligible at the time they received the services. The State sought federal participation in these payments more than two years after the payments were made. It was undisputed that the timely claims provisions would bar federal participation unless waived or estopped. In the case of the claims involved in this section, the State does not seek federal participation in the payments made under GAMC. Instead, the State recouped those payments and issued new payments to Hennepin under Medicaid. On this basis, Minnesota argued that the timely claims limits began to run only from the date of the Medicaid payment, not the initial GAMC payment.
Minnesota's core argument relied on statutory language providing for FFP only in "expenditures made . . . by the State . . . in carrying out a state plan." Section 1132(a) of the Act; Minn. Br. at 15-16. Minnesota argued that, when the Minnesota Department of Human Services (MDHS) made expenditures under the GAMC program, it was "not acting in its capacity as a 'State agency' as defined in 45 C.F.R. � 95.4, but rather acting only as "administrator of the wholly state-funded GAMC program, and was not incurring 'matchable expenses.'" Minn. Br. at 17. HCFA argued that this position is foreclosed by the regulation specifying that HCFA considers "a State agency's expenditures for [Medicaid services] . . . to have been made in the quarter in which any State agency made a payment to the service provider." 45 C.F.R. � 95.13(b) (emphasis added). The use of the term "any" implies a sweeping definition of the possible sources of payment that would trigger the timeliness limits, rather than the sort of parsing suggested by Minnesota in an attempt to make MDHS something other than a State agency making a payment to a service provider. In that context, we examine the specific definition from which Minnesota sought to derive its narrow construction of what agency's payments count as expenditures for this purpose. The definition of "State agency" is quite expansive on its face, encompassing "any agency of the State, including the State Medicaid agency, its fiscal agents, a State health agency, or any other State or local organization which incurs matchable expenses . . . ." 45 C.F.R. � 95.4 (emphasis added). The grammar of this statement supports HCFA's reading. The definition is again "any" agency of the state. The "including" clause broadens, rather than narrows, the concept of agency of the State to cover state or local organizations (which may not be "agencies" in the state structure) as State agencies if they incur expenditures matchable under Medicaid. In addition, the State Medicaid agency is expressly named as a "State agency". Nor is there any question that MDHS is an agency that incurs matchable expenses. Minnesota's attempt to recast this definition to exclude MDHS from the plain meaning of the definition of State agency when making some payments and not others is unpersuasive. Cf. Minn. Br. at 17-18. Minnesota questioned the fairness of the application of this definition where it asserted that the particular GAMC payments were not "matchable expenses," because Minnesota did not know at the time it made the payments that the patients were eligible for payment for those services under Medicaid. The practical result of this reasoning would be that states could go back in time as far as they wished looking for services that they could have paid for under Medicaid, had the patient's eligibility been determined at the time of the services, and then convert the payments into "new" Medicaid expenditures by rescinding the state program payments and reissuing payment under the state Medicaid program. The State is in the best position to take prompt action to determine whether its expenditures for health care were made on behalf of individuals eligible for Medicaid and to make any retrospective corrections in a timely manner.(7) To allow the State to choose a time to make a new payment in lieu of an original payment, without regard for when the service was provided and initially paid for, would undercut any finality in federal Medicaid payments. Both parties cited to Board precedents in support of their positions, but, to the extent that they are relevant to the dispute here, our prior decisions clearly establish that the State's approach is contrary to the goal and meaning of the timely claims provisions. The Board has repeatedly recognized the import and purpose of these provisions, holding that -
The purpose of the timely claims limitation is to prevent the states from coming in many years after expenditures are made, because such delayed claiming makes it difficult for the Department of Health and Human Services to plan its budget. The exceptions to the time limitations were intended to cover only extreme situations, where it would be patently unfair to a state to outlaw its claim merely because of the passage of time. New York State Dept. of Social Services, DAB No. 521 (1984). Alabama Dept. of Human Resources, DAB No. 1220, at 5 (1999). The Board held that FFP claims for indirect cost reimbursements made by Alabama to a county under title IV-D (which were made belatedly because of a state dispute with the county) were untimely because the relevant expenditures were incurred at the time the county paid the costs. The county was a "state agency" for these purposes under title IV-D based on a definition essentially the same as that used for Medicaid here. In Missouri Department of Social Services, DAB No. 1515 (1995), the Board explained the principles determining when the timely claims provisions are triggered, as follows:
Missouri at 6. In that case, the State made payments to a provider and claimed FFP in those payments. Later, the State made additional payments for the same services as part of a settlement. The Board concluded that the timely claims period for the additional payments began when those payments were made, and not when the first amounts were paid. In the present case, this principle serves to bar Minnesota's claim since the State agency incurred the expenditures when it paid the provider (Hennepin). Minnesota is not making new payments of added amounts. Instead, Minnesota rescinded one payment and then issued a replacement. Thus, Minnesota seeks to restart the clock by reissuing payment for these services, albeit under a different program, years after Minnesota first paid for them. This kind of manipulation has not been countenanced under the Board precedent cited by Minnesota. Minnesota argued that the Board "refined its earlier position" by holding that an expenditure only occurs for timely claims purposes when the state makes a payment to a provider under the state's Medicaid program. Minn. Reply Br. at 7, citing New Jersey Dept. of Human Services, DAB No. 1016 (1989). Minnesota incorrectly characterized this decision as invalidating our earlier decision in New York State Dept. of Social Services, DAB No. 521 (1984). The New Jersey case involved payments to state-run residential treatment centers. The Board held that where a public provider is reimbursed based on a rate, the expenditure occurs when the rate is set, not when the individual cost items (even if later included in the rate-setting process) are first made. That is, the treatment centers' individual payments for utility bills or salaries were not "expenditures" by a State agency and were not claimable as Medicaid expenses. The expenditure is for medical assistance to a certain number of patients at a certain rate per patient for a certain number of days. For a private facility, the distinction is easy to make, since no federal or state funds are expended until the facility bills and the state pays for a particular service provided. Public providers present a somewhat different conceptual problem, as reflected in the State Medicaid Manual (SMM), section 2560.4 G.1.a., which specifies that an expenditure is made to a public provider "when it is paid or recorded, whichever is earlier, by any State agency." Public providers are defined in the SMM as "those that are owned or operated by a State, county, city or other local government agency or instrumentality." In New Jersey, we found that the payments for medical assistance provided to Medicaid recipients by the public provider were in the form of accounting transactions in lieu of the private bill and payment scenario and that these paper transactions constituted the relevant expenditures. Id. at 6-13. Only at that point can an expenditure be said to have been made to a "provider." The New Jersey decision also served to prevent states from asserting that the two-year claiming period never began to run in the case of public providers because no "payments" were ever made to trigger it, where the state did not cut an actual check to the public entity. Id. at 12-13. Nothing in the New Jersey decision supports Minnesota's position that a payment actually made to a public provider by a state agency for medical services provided is not an "expenditure" if the payment was erroneously made under a state program because the patient was not timely determined to be eligible for Medicaid to pay for the services. The argument that reclassifying payments when it is realized that they could be made instead under a federally-reimbursable program payments can suffice to restart the time limits was rejected in New York State Dept. of Social Services, DAB No. 521, at 10-11 (1984).
Contrary to Minnesota's assertion, the New Jersey decision did not overturn DAB No. 521, and the reasoning there applies as well to Minnesota's protests here that it did not know it had Medicaid-eligible expenses until Hennepin requested replacement of the GAMC payments. Re-classifying the expenditure by rescinding the GAMC payment and issuing a new one tagged as Medicaid-eligible does not change the fact that the expenditure was already made by the State agency to the provider. The determination that the expense was federally reimbursable, and the filing of a claim for reimbursement, had to be accomplished within two years of the payment to the provider. Minnesota failed to meet that requirement. We therefore conclude that the date of expenditure was when Hennepin was paid by the State for the services provided.
We conclude that the claims in this portion of the disallowance are barred by the timely claims provisions. CONCLUSION For the reasons explained above, we uphold the disallowance in full. |
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| JUDGE | |
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Donald F. Garrett Marc R. Hillson M. Terry Johnson |
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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 that the actions at issue here were taken. See 66 Fed. Reg. 35437 (July 5, 2001). 2. HCFA also raised questions as to whether the Board may properly review denial of a good cause waiver, even under an arbitrary and capricious standard, and about whether Minnesota should have been permitted a further opportunity to indicate whether it sought such a waiver at this late date. HCFA Response at 4, n.1, and 5, n. 2. We do not address these questions because they are immaterial to resolving the case given Minnesota's position before us. 3. Minnesota argued that Mr. Miller was not a major participant in waiver discussion between HCFA and Minnesota. Minn. Reply Br. at 3-4; Minn. Ex. 19, at ��4-6 (Declaration of Jane Hardwick). Even if true, that neither detracts from Mr. Miller's reports about the contacts he did have nor discounts their corroboration by the other two declarants who were more actively involved. 4. Minnesota argued that Mr. Miller informed Minnesota that it "must comply with all federal requirements that were not waived," only after the waiver was approved. Minn. Ex. 19, at �7. As the function of a waiver is to lift specific federal requirements, Minnesota cannot contend that, prior to Mr. Miller's reminder, whenever delivered, it reasonably believed that it would not have to comply with requirements that were not waived. 5. Ms. Pine attached to her declaration written guidance from the Medicaid Bureau dated December 29, 1994, to the effect that no waiver would be needed for claims based on retroactive Medicaid eligibility, if filed within the timely claims limit. HCFA Ex. 9, at 3-5. She asserted that her team would have adhered to these instructions and not make any oral representation that the timely claims requirements could be disregarded. Id. at 2. Minnesota argued that this document was merely "internal" and that nothing indicates it was ever provided to "State staff." Minn. Reply Br. at 3. HCFA did not rely on this document as having been provided to the State to clarify its position, but rather as corroborating Ms. Pines's sworn statement that she relied on this guidance for the substance of what she and her team then communicated to State officials. 6. While only three patients are involved in the present claims, Minnesota asserted in a letter to HCFA dated November 1, 2000 that, if it obtained FFP in these claims, it intended to submit more claims in the future for "converted claims" for Medicaid payments made to replace GAMC payments which had been made more than two years before, for other Hennepin patients. HCFA Ex. 5, at 2. These claims would also be based on its position that the expenditure for timely claims purposes should be considered to occur at the date of the Medicaid payment. 7. This reality is illustrated here by Minnesota's response to inquiries from HCFA about when the State learned of the patients' eligibility for Medicaid. Thus, the county social service agency (and/or the state medical review teams) had information about the disability determinations documenting the three patients' Medicaid eligibility as early as 1995 or 1996. HCFA Ex. 11. Minnesota argued that it did not learn of each individual's disability status until after it paid the bills under GAMC, but did not deny that the information was available to it within the two-year period after each expenditure during which a timely Medicaid claim could have been made. Minn. Reply Br. at 7. Minnesota correctly pointed out that it would have had to verify the information in order to support an FFP claim, but did not explain why it did not timely seek such verification. |
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