GAB Decision 476
Docket No. 83-166
November 16, 1983
Maryland Department of Health and Mental Hygiene;
Ford, Cecilia; Settle, Norval Teitz, Alexander
The Maryland Department of Health and Mental Hygiene (State) appealed
a determination by the Health Care Financing Administration (Agency)
disallowing $3,021,064 in federal financial participation (FFP) for the
quarter ended December 31, 1982. The State's claim represented advances
("working capital advances") made to hospitals participating in a
Medicaid reimbursement "experiment" being conducted by the State under
a
waiver contract between the State and the Agency. The State provides
funds to the participating hospitals in advance of services rendered and
in return receives a 2% discount in the cost of inpatient hospital
services for Medicaid patients.
The Agency disallowed the claim for FFP on the grounds that the
advances were not reimbursement for "medical assistance" under the
Social Security Act and applicable federal regulations, and that the
approved State plan did not provide for the advances or the 2% discount.
The Agency also noted in its letter of disallowance that the claim was
comparable to disallowed claims made in 1981, and that the Board had
upheld the Agency's disallowance of the 1981 claims in Maryland
Department of Health and Mental Hygiene, Decision No. 400, March 29,
1983. In that decision the Board concluded that the advances were not
specifically expenditures for "medical assistance," and that the Agency,
in approving the waiver contract, had not specifically agreed to
participate in the working capital advances. Therefore, the Board
concluded, the Agency was not bound to participate in their payment.
The State acknowledged in its submission of September 20, 1983 that
the claim appealed here is identical, in facts and applicable law, to
the appeal decided in Decision No. 400. The State noted that it wished
to preserve its rights for judicial review and stated its intention to
rely on the briefs and arguments submitted in the previous appeal. The
Board consulted with the parties, who agreed that the Board need not
conduct additional proceedings in this appeal but should issue a summary
decision based on the parties' presentations in the cases leading to
Decision No. 400. Accordingly, for the reasons stated in that Decision,
which (2) is incorporated here by reference, we uphold the disallowance
in the amount of $3,021,064. *
* The State supplemented its submission in this appeal with a recent
letter from the HCFA Administrator to the Executive Director of the
State's Health Services Cost Review Commission. That letter stated the
Agency's lack of objection to the possibility that the State would
discontinue providing working capital advances and would thereby forego
the 2% discount. The State argued that this lack of objection on the
part of the Agency has relevance to the appeal because the Agency has
refused to share in the working capital advances while at the same time
requiring that it receive the benefit of the 2% discount. We fail to
see the relevance of the Agency's lack of objection to the State
discontinuing an experiment which the State undertook without being
required to do so by the Agency. As noted above, the Board upheld the
Agency's position that it should receive the benefit of the 2% discount
because the State had not actually paid the 2% as "medical assistance."
If the State foregoes receipt of a discount and pays the full amount of
the cost of services, the Agency presumably would pay FFP in whatever
the State pays for "medical assistance." This is consistent, even
if it
is arguably not costefficient.
NOVEMBER 14, 1984