Illinois Department of Public Aid, DAB No. 667 (1985)

GAB Decision 667

July 2, 1985

Illinois Department of Public Aid;
Ballard, Judith A.; Garrett, Donald F. Settle, Norval D. (John)
Docket No. 84-248; ACN 05-40205


The Illinois Department of Public Aid (Illinois or State) appealed a
decision of the Health Care Financing Administration (HCFA) which
disallowed $235,449 that Illinois claimed under Medicaid as the federal
share of costs of three drugs. The Food and Drug Administration (FDA)
had proposed an order finding that the drugs were ineffective, and HCFA
determined that the drugs were ineligible for federal Medicaid funding.
Illinois did not dispute the FDA position that the drugs were
ineffective; rather, Illinois argued that HCFA's notification process
did not give the State fair notice and enough time to stop use of the

Based on the analysis below, we uphold the disallowance in full for two
of the drugs. For the third drug, we overturn in part, based on our
determination that HCFA did not give Illinois the full ninety-day "grace
period" HCFA said it would give states for initial implementation of the
HCFA regulation for drugs found ineffective prior to the regulation.

Background: statutory and regulatory provisions.

Section 1903(i)(5) of the Social Security Act prohibits federal payments
under Medicaid for drugs which are not eligible for Medicaid payments
under section 1862(c) of the Act. Section 1862(c)(1) prohibits payment
for a drug which has all four of the following characteristics:

(A) . . . described in section 107(c)(3) of the Drug Amendments of
1962 (i.e., FDA had earlier approved the drug),

(B) . . . may be dispensed only upon prescription,

(C) for which the Secretary has issued a notice of an opportunity for
a hearing . . . on a proposed order of the Secretary to withdraw
approval of an application for such drug product under such section
because the(2) Secretary has determined that the drug is less than
effective . . . and

(D) for which the Secretary has not determined there is a compelling
justification for its medical need. . . .

It is not disputed that the drugs in question in this case were covered
by the provisions above. These provisions were added to the Social
Security Act by section 2103 of the Omnibus Budget Reconciliation Act of
1981 (Pub. L. 97-35). Under section 2103(b)(2), the prohibition on
Medicaid payments for ineffective drugs was to apply to "amounts
expended on or after October 1, 1981." On October 1, 1981, HCFA
published an "interim final rule" to implement the prohibition (section
441.25 of Title 42 of the Code of Federal Regulations); the provisions
basically repeated the statute. 46 Fed. Reg. 48554 (October 1, 1981).
A series of events resulted in a delay in implementation of section 2103
and its regulations until September 30, 1982. /1/

Of the four characteristics of an ineligible drug under section 1862(
c)(1) of the Act, the one important here is (C), which describes a
process in which the Secretary issues a notice of an opportunity for a
hearing on a proposed order to disapprove a drug because the drug was
determined to be less than effective. This notice--generally referred
to as an "NOOH"--is provided by FDA through publication in the Federal
Register under delegation from the Secretary. 46 Fed. Reg. 48551
(October 1, 1981). An example is found in Illinois Exhibit 6. Although
FDA's NOOH is a proposed action, under the Social Security Act it is
specifically determinative of a drug's Medicaid and Medicare
eligibility, apparently because the NOOH reflects an FDA finding of

The preamble to the HCFA regulation focused on the states' need for time
to phase in a determination that a drug in use was ineffective. The
preamble said that HCFA, "in the exercise of (3) (its) enforcement
discretion," would allow a one-time ninety-day grace period for initial
implementation of the regulation, followed by an on-going thirty-day
grace period following publication of each NOOH. 46 Fed. Reg. 40551-2.
The preamble also said that HCFA would "notify Medicare contractors and
Medicaid state agencies" when an NOOH was published in the Federal
Register. Id.

The drugs involved here and the related NOOHs.

The disallowance dealt with three drugs (vioform 3% hydrocortisone,
atropine/hyoscine/hyoscyamine c phenobarbital, and belladonna alkaloids
c phenobarbital). HCFA Exhibit 2. The latter two drugs, atropine and
belladonna, were the subjects of a NOOH published on May 6, 1983. Id.,
see also HCFA Exhibit 3, 4th and 6th (unnumbered) pages. Vioform was
the subject of a NOOH published on September 25, 1981; since HCFA's
regulations were not effective until October 1, 1982, "the auditors
assigned the latter date as the date of the NOOH." HCFA Brief, p. 9, fn.
4; HCFA Exhibit 2.

The timing of HCFA composite lists.

The HHS auditors' report, issued in June, 1984, covered the period
October 1, 1982 to December 31, 1983. HCFA Exhibit 2.

HCFA's first composite list of ineffective drugs was distributed in
October, 1981. According to the auditors, this list was fully
implemented. Apparently, it did not include the three drugs involved
here. HCFA Exhibit 2, p. 2. This list is not in the record.

The next list was dated September 30, 1982, and Illinois said it
received the list on November 3, 1982. Illinois Exhibit 4. This list
was not mentioned by the federal auditors, nor in the HCFA brief--
Illinois submitted it. Illinois acknowledged that this list included
vioform. Illinois Brief, p. 6; Illinois Exhibit 4, p. 15.

An April, 1983, HCFA State Medicaid Manual issuance specified that while
NOOHs "will be supplied to State agencies through revisions to the State
Medicaid Manual," as explained in the immediately following sentence,
"Payment for these drugs will be terminated on the date of publication
of the NOOH in the Federal Register." Illinois Exhibit 8, p. 2. The
issuance said it had attached to it a January, 1983, revision of earlier
lists. Id.

A State Medicaid Manual issuance dated September, 1983, transmitted
another list, which this time (apparently for the first time) included
atropine and belladonna. HCFA Exhibit 3; Illinois (4) Brief, p. 7;
Illinois Exhibit 5. On its first page, the issuance specified that
"Termination of payment for these drugs is determined by the date of
publication of the NOOH in the Federal Register."

The auditors found during their visit in early 1984 that Illinois had
been treating the three drugs involved here as eligible for
reimbursement, and had not acted to discontinue payment for any of the
three drugs until the State received the September, 1983 HCFA listing;
Illinois began terminating payments on December 1, 1983. HCFA Exhibit
2, p. 3.

The disallowance.

HCFA's disallowance letter repeated earlier statements that federal
reimbursement had to be terminated on ineffective drugs at the time of
publication of the NOOH in the Federal Register. Illinois Exhibit 1.
However, HCFA did not include in the disallowance the payments made for
the three drugs within the first sixty days after the NOOH publication
dates. HCFA Brief, p. 10; HCFA Exhibit 2, p. 3. /2/ Thus, for atropine
and belladonna, for which the NOOH was published on May 6, 1983, HCFA
disallowed expenditures beginning July 6, 1983. For vioform, for which
the NOOH date used was October 1, 1982 (the actual date having been
September 25, 1981), HCFA disallowed expenditures beginning December 1,
1982. Tape of telephone conference of May 16, 1985.

The dispute.

HCFA's position basically was that assistance had to be terminated as of
the date of the NOOH plus the applicable grace period. Illinois's
position basically was that HCFA should not take a disallowance until
HCFA had promulgated a separate rulemaking for Medicaid with respect to
each drug.

(5) Analysis.

A. The NOOH publication date is determinative.

The Social Security Act specifically requires that payments "shall not
be made" for "any amount expended for any drug product" for which a NOOH
has been issued. Sections 1903(i), 1903(i)(5), 1862(c). On its face,
the statute clearly makes the drugs ineligible if a NOOH has been

The HCFA regulations are equally specific, essentially repeating the
statutory provisions with minor modifications immaterial to this
dispute. /3/ The preamble to the regulations stated that the "statutory
provision takes effect when the NOOH is published. . . ." 46 Fed. Reg.
40552 (October 1, 1981).

(6) That there was any accommodation at all for the practical exigencies
of program administration, in the sense of acknowledging a need for lead
time, was due to HCFA's own exercise of what it termed "enforcement
discretion" to provide a one-time 90-day start-up grace period and grace
periods of 30 days from publication of each NOOH. 46 Fed. Reg. 40552
(October 1, 1981). For this practical approach, HCFA was promptly sued
by persons who objected to HCFA's accommodation. See fn. 1 on p. 2.

In this case, HCFA's indulgence for atropine and belladonna went even
beyond that which was afforded in the regulation's preamble: HCFA had
said it would give 30 days from the publication date of a NOOH, but here
HCFA gave Illinois 60 days. See fn. 2, supra. There is no question
that, in terms of the bare words of the statute and the regulation, HCFA
has been generous. /4/

A complicating factor is that HCFA indicated it would separately notify
Medicaid state agencies of NOOHs following their publication in the
Federal Register. In the preamble to the 1981 regulation, HCFA stated:

When an NOOH is published in the Federal Register, we will notify
Medicare contractors and Medicaid state agencies. We will expect them
to forward the information to their providers and suppliers.

We will also distribute and publish in the Federal Register a list of
all the drugs that have been the subject of an NOOH before the
publication date of these regulations.

46 Fed. Reg. 40552.

Notwithstanding this language, nothing elsewhere in the regulation or
the preamble reasonably suggests that anything other than the NOOH
publication triggered ineligibility; in fact, the preamble was quite
specific about the effect of the NOOH date:

(7) We will terminate Federal reimbursement under the Medicare Part B
and Medicaid programs for the affected drugs when FDA has published in
the Federal Register an NOOH . . .

Although the statute did not specify the length of time between the date
the NOOH is published and the date we would no longer reimburse for the
affected drug, we believe it would be virtually impossible to inform all
interested parties . . . of the FDA's action on the same day the NOOH is
published. We published a notice of proposed rulemaking (NPRM) in the
Federal Register on June 5, 1980 (45 FR 37858) that proposed some
restrictions in the Medicare and Medicaid policies of reimbursing for
less than effective drugs. Comments we received in response to that
NPRM indicated that it would be appropriate to allow at least 30 days
for notification of interest parties when FDA published a determination
in the Federal Register. We agree with these comments.

Therefore, although the statutory provision takes effect when the NOOH
is published, we will, in the exercise of our enforcement discretion,
grant a grace period of 30 days before we terminate reimbursement under
this provision . . . for Medicaid, the prohibition on Federal financial
participation (FFP) would be enforced with respect to drugs purchased by
or provided to beneficiaries after the 30th day following the
publication of the NOOH.

46 Fed. Reg. 40551-2 (October 1, 1981).

The preamble also said the following concerning the one-time ninety-day
grace period:

. . . we are granting a grace period of 90 days during which we will
not deny reimbursement for the affected drugs, nor will we audit or
disallow Federal funds for any of the affected drugs because they are
subject to an NOOH.

* * *

. . . For the Medicaid program, we are allowing 90 days to provide
States with sufficient time to make any necessary changes in their
claims processing systems to implement these regulations. In addition,
it will be necessary for Medicare contractors and Medicaid state
agencies to notify their providers and suppliers.

(8) On January 1, 1982, the prohibition on Federal reimbursement will
be enforced under . . . Medicaid for any drug that was the subject of an
NOOH published before December 2, 1981. For any NOOH published on or
after December 2, the 30-day rule will apply. For example, Federal
reimbursement for expenses incurred for a drug product that is the
subject of an NOOH published December 31, 1981, will be denied beginning
January 31, 1982.

Id., p. 40552.

It is unreasonable to draw any interpretation from these materials other
than than ineffective drugs were ineligible for federal funding from the
date of the NOOH plus the applicable grace period. HCFA did say it
planned to publicize NOOHs, but, in context, there is no reasonable
linkage between that promise of information and the substantive
determination of ineligibility: everything clearly stated that the
latter directly tied to the moment of publication of the NOOH. The
preamble's statement about HCFA's notification intentions is at best
only impliedly inconsistent with the rest of the preamble, and then,
only if read out of context. The rest of the preamble made it clear
that the NOOH publication date controlled. Moreover, while HCFA in fact
stated it would provide followup notification, it gave no guarantee that
notification would come at any particular time during the grace period
or even within the grace period at all. Thus, the State should have
known that the only certain way to assure Medicaid reimbursement was to
depend on the Federal Register NOOH, not the subsequent notification.
The State here was not dependent on some obscure form of notice;
rather, the Federal Register is a formal nationwide vehicle for
disseminating information related to federal programs. Finally, even if
the notification provision was inconsistent, Illinois would have been
unreasonable in relying on a questionable interpretation without further

Furthermore, we will not condone a dangerously passive approach to the
problem of ineffective drugs. Medicare and Medicaid beneficiaries' use
of ineffective drugs can be hazardous, and the State clearly had an
obligation to move as quickly as it reasonably could to stop reliance on
these drugs. The State itself recognized the importance of removing
ineffective drugs from use. Illinois Brief, pp. 17-22; Illinois Reply
Brief, p. 2. This obligation to Illinois citizens went beyond
accountability to HCFA for federal dollars. Drug effectiveness is a
technical matter controlled by a process outside routine HCFA/state
interactions related to administrative and fiscal issues. Illinois
acknowledged that it had a unit within its organization with the (9)
responsibility to oversee drug safety and effectiveness. Tape of
Telephone Conference. Indeed, the date stamp on several HCFA documents
Illinois submitted shows them received in the "Div. of Food, Drugs and
Dairies" of the Illinois Department of Public Health. See, e.g.,
Illinois Exhibits 4, 5. Illinois also surely had mechanisms in place
for reviewing Federal Register material relevant to its Medicaid and
Medicare programs. /5/ Unlike the typical HCFA dispute before this
Board, this one does not merely involve a question of allowability of
costs under HCFA criteria; here, the dispute also directly involves the
well-being of persons affected by an FDA determination of drug
effectiveness. Surely, Illinois needed to do more than sit by idly,
waiting indefinitely for publication of a notice from HCFA listing drugs
already listed in FDA's publication of NOOHs. HCFA arguably might have
done a better job of getting its composite lists out, but the lists were
only a way to gather together in one convenient place a description of
NOOHs issued to date. The use of delayed composite lists should not
divert attention from the clear linkage between NOOH dates and drug

B. No extra rulemaking was required.

Illinois's argument was that "FDA's NOOH is not HCFA's rule" and that
HCFA must also publish a rule to terminate payment for each drug for
which a NOOH is issued. Illinois Brief, p. 11. Illinois bases this
position on the requirement in the Administrative Procedure Act for
publication of rules, arguing that "each time HCFA proposes to terminate
payment for a less than effective drug, HCFA's action constitutes a
rule." Id., p. 9. We disagree. 42 CFR 441.25 is this Department's rule
of general applicability which controls this dispute, and that rule was
properly published in 1981. What the rule says is that no federal
funding is available for a drug which is the subject of a NOOH
(published in the Federal Register by FDA) which of course is precisely
what the underlying statute says. Indeed, there has been no
administrative embroidery on what Congress commanded; HCFA has simply
done nothing more than what the statute said it has to do. HCFA is not
engaged in any legislative rulemaking under the APA when it treats a
NOOH as dispositive, but rather HCFA is doing something almost
ministerial (10) in nature--the precise act specifically commanded by
statute. Illinois argued that HCFA's role is not ministerial because
discretion is involved in determining which drugs are ineffective.
Illinois Reply Brief, p. 4. We disagree, because the earlier
determination is FDA's, and once FDA publishes its NOOH in the Federal
Register, HCFA has no choice under the law but to stop payment for the
drug. Furthermore, to require a separate HCFA publication for each drug
in a NOOH would be unnecessarily duplicative and contrary to the public
interest. HCFA has no discretion to choose which NOOH drugs it will
treat as ineligible for funding; every NOOH drug is ineligible by law.
This duplication would also produce further delay in removing
ineffective drugs from use. See HCFA Brief, pp. 14-15. In fact,
Illinois argued that the extra HCFA promulgation it wanted should not
itself be effective for a further thirty days under the APA. Illinois
Brief, pp. 12-15; Illinois Reply Brief, p. 3. We also note that 42 CFR
441.25, although published as an interim final rule, did, in fact,
reflect earlier public comments on implementation timing received in
response to a notice of proposed rulemaking on restrictions on
ineffective drugs published before passage of Pub. L. 97-35. 45 Fed.
Reg. 37858 (June 5, 1980). HCFA specifically developed the thirty-day
grace period in response to those public comments. 46 Fed. Reg. 40552
(October 1, 1981).

C. Illinois could not reasonably rely on HCFA lists instead of NOOHs.

Illinois argued that HCFA had "indicated" that Illinois should rely on
the HCFA composite lists. Illinois Brief, p. 15. The State says,
however, that the notices were "not entirely clear" and "quite
confusing." Id., pp. 15 and 16.

We refer the reader to our decision above at pages 5 through 9, where we
discussed how the statutory and regulatory context clearly made the NOOH
determinative of eligibility. We will not repeat that analysis here,
but it is important here, because it shows that from the outset, any
interpretation to the contrary would at least be sufficiently
questionable so that a state should not implement it without further
inquiry--particularly if faced with later guidance it admittedly found

Beside the preamble to the regulation, the State Medicaid Manual
issuances with lists--the ones from April, 1983 and September, 1983--
both specifically stated that termination of payment for ineffective
drugs was determined by reference to the date of publication of the NOOH
in the Federal Register. HCFA Exhibits 3 and 4.

(11) The record also contains a January 11, 1984, guidance document
published by the Public Health Service which refers to use of a "HCFA/
NOOH" list to determine reimbursement for drugs. Illinois Brief, pp.
16-17; Illinois Exhibit 9; HCFA Exhibit 5. This document is outside
the period in question here. The audit involved here covered the period
October 1, 1982 to December 31, 1983, and this January, 1984 document
would be no basis for Illinois's actions in the earlier time frame.
Furthermore, the document is ambiguous, in that read as a whole, it may
as easily be interpreted as clarifying the use and effect thereafter of
earlier HCFA compilations. /6/ Whatever the case, we find that the
document is no basis to hold that Illinois could have ignored NOOH dates
during the audited period. Furthermore, a later list, dated November,
1984, again specified that termination of payment is determined by NOOH
publication. Illinois Exhibit 12.

D. The time Illinois needs to react to notices generally.

Illinois argued at length that it needs 60 days to respond to HCFA's
determinations that drugs are ineffective. Illinois Brief, pp. 17-22;
Illinois Reply Brief, pp. 10-12. While the State's argument is well
stated, it is not one to which the Board can respond. HCFA actually
gave Illinois 60 days here (albeit from the date of the NOOH). Illinois
actually is arguing that it needs 60 days from a different sort of
notice from HCFA, but, as discussed above, we conclude that HCFA took a
reasonable position in this case in tying drug ineligibility to the
NOOH. To the extent Illinois's argument raises a policy issue of how
HCFA should handle these matters in the future, the argument deals with
a matter beyond the Board's powers. Illinois may wish to submit its
views to HCFA management.

E. The special circumstances involving vioform.

Although we have determined that the provisions of the Act and
implementing regulations compel us to uphold the disallowance for costs
of atropine and belladonna, we conclude that part of the disallowance
for vioform was unreasonable under HCFA's own policy. Unlike the other
two drugs, vioform was the subject of a NOOH dated September 25, 1981,
prior to publication of HCFA's section(12) 441.25 regulation on October
1, 1981 (and, in fact, prior to the effective date of the law, which was
also October 1, 1981). HCFA had said in the preamble to its

We will also distribute and publish in the Federal Register a list of
all the drugs that have been the subject of an NOOH before the
publication date of these regulations. Although this regulation is
effective October 1, 1981, we are, in the exercise of our enforcement
discretion, allowing a 90-day grace period. Therefore, the prohibition
against Federal reimbursement will be enforced for these drugs beginning
January 1, 1982.

* * *

For the Medicaid program, we are allowing 90 days to provide States
with sufficient time to make any necessary changes in their claims
processing systems to implement these regulations. In addition, it will
be necessary for Medicare contractors and Medicaid State agencies to
notify their providers and suppliers.

46 Fed. Reg. 40552.

HCFA thus clearly stated it would allow a one-time, front-end
implementation period of 90 days from the moment its regulations became
effective for drugs whose NOOHs were published before the regulations.
There is no basis in the record here to argue that states needed less
than 90 days just because the effective date of the regulation was
delayed (and HCFA makes no such argument).

We note also that the audit report indicates that HCFA provided a list
of ineffective drugs in October, 1981 (presumably after the regulation
was published) but that this list did not include vioform. /7/

(13) The first list that included vioform was the list which HCFA issued
on September 30, 1982 and Illinois says it received on November 3, 1982.
While, as we have stated, Illinois had a clear duty to watch for and
implement NOOHs issued after the law and HCFA regulations became
effective (as in the case of atropine and belladonna), the circumstances
are different for vioform. HCFA specifically told the states that HCFA
would list pre-regulation NOOHs for them. Since the states were not
told to depend on NOOHs until the regulation was published, it was
reasonable for the states to rely on HCFA to provide a list of
pre-regulation NOOHs. Yet HCFA's first list after the regulation did
not include vioform, and a later list which did include vioform was not
distributed for about a year, roughly at the same time the HCFA
regulations became effective.

Furthermore, it appears arbitrary to allow Illinois a sixty-day
retroactive grace period while denying Illinois the ninety days it
appears entitled to under the preamble. HCFA never provided for any
such sixty-day period, but HCFA specifically did provide for ninety
days. The sixty-day period was an ad hoc creation, and was reasonable
as far as it went; but we can discern no reasonable basis in the record
for saying that Illinois may have sixty days but not ninety.

Based on the foregoing, we conclude that HCFA should recompute the
disallowance to exclude amounts related to vioform for the period of
ninety days from the effective date of the regulation, which was October
1, 1982. /8/

(14) Conclusion

Based on the foregoing analysis, we uphold the disallowance for atropine
and belladonna. We also uphold the disallowance for vioform, except
that we overturn that part of the disallowance which relates to charges
for vioform during the period of ninety days from October 1, 1982. HCFA
should recompute the disallowance accordingly. /1/ In response to a
lawsuit by the National Council of Senior Citizens, a court
found HCFA's promulgation invalid (primarily because of a "grace period"
allowed for initial implementation). Congress then passed a law (Pub.
L. 97-72) including a provision which prohibited implementation of
section 2103 and the regulations. A later law (Pub. L. 97-161)
extended the effective date of Pub. L. 97-72 through September 30, 1982.
Then, a provision of a third law (Pub. L. 97-248) required
implementation of section 2103 effective September 30, 1982. See 1
Medicare and Medicaid Guide (CCH) para. 4147, n. 26; Illinois Exhibit
4; HCFA Exhibit 4. /2/ The auditors' explanation of the
sixty-day exclusion was as follows: The (disallowance) excludes
payments for these drugs made within the first 60 days after the NOOH
dates. These payments were excluded to (i) allow for the 30-day grace
period and (ii) to prevent the inclusion of drugs paid, after the NOOH
date, with a date of service prior to the NOOH date. HCFA Exhibit 2, p.

Prohibition on FFP (i.e., federal financial participation) for certain
prescribed drugs. (a) FFP is not available in expenditures for the
purchase or administration of any drug product that meets all of the
following conditions: (1) The drug product was approved by the Food and
Drug Administration (FDA) before October 10, 1962. (2) The drug product
is available only through prescription. (3) The drug product is the
subject of a notice of opportunity for hearing issued under section
505(e) of the Federal Food, Drug, and Cosmetic Act and published in the
FEDERAL REGISTER on a proposed order of FDA to withdraw its approval for
the drug product because it has determined that the product is less than
effective for all its labeled indications. (4) The drug product is
presently not subject to a determination by FDA, made under its efficacy
review program (see 21 CFR 310.6 for an explanation of this program),
that there is a compelling justification of the drug product's medical
need. (b) FFP is not available in expenditures for the purchase or
administration of any drug product that is identical, related, or
similar, as defined in 21 CFR 310.6, to a drug product that meets the
conditions of paragraph (a) of this section. /4/ Cf.
Pennsylvania Department of Public Welfare, Decision No. 346, September
30, 1982, where HCFA argued that there was no choice under law and
regulation but to deny all Medicaid funding for medically necessary
abortions made ineligible by a statutory amendment, despite the State's
lack of opportunity to give recipients ten days prior notice required by
HCFA regulation. /5/ Counsel for Illinois acknowledged that
someone in the Appellant's organization likely saw the NOOHs. Tape of
Telephone Conference. It is common knowledge, and Illinois did not
deny, that state agencies have offices which regularly review the
Federal Register for relevant items. Id. /6/ This is
essentially what HCFA said it meant. HCFA also stated that it was and
continues to be HCFA policy to rely on the NOOH date. Undated letter
from HCFA Counsel to the Board (in response to a Board question),
bearing date of receipt of June 19, 1985; Tape of Telephone Conference.
/7/ The audit report says that Illinois reacted to the October, 1981,
list by removing the drugs from its authorized drug list by December,
1981, and stopping all payments for these drugs by October, 1982. The
audit report then says that a later list included several
less-than-effective drugs, including vioform, "which were not included
on the October 1981 listing." HCFA Exhibit 2, p. 2. /8/ Illinois asked
for the disallowance to be overturned through January 2, 1983, on the
basis that it should receive the benefit of sixty days from the date it
received HCFA's listing of NOOHs containing vioform (November 3, 1982).
Illinois Brief, p. 8. Although there may be little or no difference in
the amount as calculated the Board's way, it should be noted that we do
not agree with the State's position. As we have already discussed, we
do not consider receipt of the lists to be the operative notice point
under the law and regulations. Illinois conceded the portion of the
disallowance for payments for vioform after January 2, 1983. Id.

OCTOBER 04, 1985