GAB Decision 605
December 12, 1984
Louisiana Department of Health and Human Resources;
Ballard, Judith; Ford, Cecilia Garrett, Donald
Docket Nos. 83-213, 84-18, 84-57, 84-102
The Louisiana Department of Health and Human Resources (State)
appealed four disallowances taken by the Health Care Financing
Administration (Agency). Docket No. 83-213 involves $1,530,486 in
claims made for Medicaid reimbursement on Quarterly Statements of
Expenditures (QERs) for the quarters ended September 30, 1981 and
September 30, 1982; Docket No. 84-18 involves $18,207 claimed on a QER
for the quarter ended March 31, 1983; Docket No. 84-57 involves $11,778
claimed on a QER for the quarter ended June 30, 1983; and Docket No.
84-102 involves $2,120,417 claimed on a QER for the quarter ended
September 30, 1983.
The primary issue raised in these appeals was decided in the State's
favor in Joint Consideration - Timely Filing of Claims, Decision 576,
October 5, 1984. The sole remaining issue is whether the State's claims
were timely filed under section 306 of Public Law 96-272.
Based on a preliminary review of the record, it appeared to the Board
that the claims fell within an exception to the section 306 filing
deadlines for an adjustment to prior year costs and, therefore, were
timely filed. The Board issued an order, dated October 19, 1984,
directing the Agency to show cause why the disallowance should not be
reversed based on the analysis set out in the order. The Agency
subsequently notified the Board that it agreed with the Board's
analysis. (Letter dated December 6, 1984 from Kermit Fonteno)
(2) Accordingly, for the reasons stated in the order, which is
attached to this decision and made part of it, we conclude that the
disallowances should be reversed.
(3) ORDER TO SHOW CAUSE
The primary basis for the disallowances here was that the State's
claims were not timely filed under certain appropriations act provisions
which the Agency interpreted as permanently barring payment for any
pre-fiscal year 1979 expenditures not filed within a one-year time
limit. In 83-213, the claim was on the Quarterly Statement of
Expenditures (QER) for the quarter ending September 30, 1981 and
September 30, 1982; in 84-18 on the QER for the quarter ending March
31, 1983; in 84-57 on the QER for the quarter ending June 30, 1983; and
in 84-102 on the QER for the quarter ending September 30, 1983. In
Joint Consideration-Timely Filing of Claims, Decision No. 576, October
5, 1984, the Board held that the appropriations act provisions relied on
by the Agency did not permanently extinguish claims for pre-fiscal year
1979 expenditures.
Given the Board's holding in Decision No. 576, the question of
whether a claim has been timely filed is governed by section 306 of
Public Law 96-272. Under section 306(b), claims for pre-fiscal year
1980 expenditures must be filed by May 15, 1981.
Section 306 provides, however, that the time limits should not be
applied so as to deny payment with respect to any expenditure involving
"adjustments to prior year costs."
HHS regulations define the exception for an adjustment to prior year
costs as follows:
Adjustment to prior year costs means an adjustment in the amount of a
particular cost item that was previously claimed under an interim rate
concept and for which it is later determined that the cost is greater or
less than that originally claimed.
45 CFR 95.4 (1981).
(4) The relevant preamble explained that this exception was "limited
to claims for services or medical assistance based on interim rates that
subsequently are determined to be higher or lower than originally
claimed." 46 Fed. Reg. 3528, January 15, 1981. The preamble also noted:
"It has been our experience that in these areas subsequent adjustments
are unforeseen and unavoidable." Id.
Here, the State alleged that its claims involved adjustments to prior
year costs and the Agency did not deny that allegation.
Thus, based on our preliminary analysis, it appears that the
exception applies and that the claims should be considered to be timely
filed under section 306(b).
We note that these cases raise the additional question of when the
expenditures were incurred. Various states have disputed the Agency
position that an expenditure related to a public provider of Medicaid
services is incurred when the provider agency incurs the costs, rather
than when the State agency adjusts the reimbursement rate as a result of
a cost settlement. However, in view of our preliminary analysis that
the costs in question here fall within the exception for "adjustment to
prior year costs," it does not appear at this time that it will be
necessary for the Board to reach the issue of when the expenditures were
incurred.
Accordingly, the Agency is directed to show cause, in writing, why
the Board should not proceed to decision in these cases, reversing the
disallowances on the basis of Decision No. 576 and the further
conclusion that the costs in question here fall within the exception for
an "adjustment to prior year costs" and, therefore, the State's claims
were timely filed under section 306 of Public Law 96-272 and the HHS
implementing regulations. If the Agency determines that the Board's
preliminary analysis is correct, the Agency may wish to simply notify
the Board and the State that it is withdrawing the disallowances on that
basis. Otherwise, the Agency's response to this order should be filed
within 30 days of the date the Agency receives this order. The Agency
representative may wish to note that the Board is issuing similar orders
in the Board cases identified on the attached list. The Agency may, if
it wishes, submit a coordinated response.
(5) The State is not required to respond to this order. If the
Agency's response to this order raises any new issue, the State will be
given an opportunity to reply, if fairness requires.
MARCH 19, 1985