DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Pennsylvania Department DATE: May 1, 1989 of Public
Welfare Docket Nos. 88-100, 88-129, 88-169 and 89-9 Decision No. 1044
DECISION
The Pennsylvania Department of Public Welfare (State) appealed four
decisions by the Health Care Financing Administration (Agency)
disallowing a total of $2,317,266 in federal financial participation
(FFP) claimed by the State for Medicaid administrative expenses for the
period July 1, 1981 through June 30, 1988. HCFA disallowed the
difference between the State's claims for costs at the 75% rate
available for operation of an approved Medicaid Management Information
System (MMIS) and the 50% rate available generally for administrative
costs.
The State agreed that the types of costs disallowed in these four cases
are either the same as or analogous to the costs discussed in
Pennsylvania Dept. of Public Welfare, DAB No. 832 (1987). Accordingly,
the parties agreed that these appeals were appropriate for summary
disposition. Docket Nos. 88-129 and 89-9 are follow-on appeals to those
cases decided by DAB No. 832. The Agency applied DAB No. 832 in issuing
those disallowances and allowed FFP in certain costs consistent with the
remand agreed to in that case. Docket Nos. 88-100 and 88-169 concern
costs for the Division of Provider Enrollment, a division of the Bureau
of Provider Relations that was not part of the earlier disallowance.
Nevertheless, the State agreed that the costs in dispute for the
Division of Provider Enrollment are the same types of costs reviewed by
the Board in DAB No. 832 for other divisions of the Bureau of Provider
Relations and that the availability of FFP was controlled by the Board's
analysis in that decision.
In DAB No. 832, except for certain costs considered by the parties on
remand and limited postage costs, the Board sustained the Agency's
disallowance of the difference between the State's claims for costs at
the 75% rate available for operation of an MMIS and the 50% rate
available generally for administrative costs. The Board determined
based on section 1903(a)(3) of the Social Security Act, the regulatory
provisions at 42 C.F.R. 432.50 (b)(2), 433.111, and 433.116, and the
provisions of the State Medicaid Manual at Chapter 11 that the 75% rate
for operation of the MMIS may be paid only for those functions which are
of a direct benefit and attributable to the operation of an MMIS. The
Board indicated that mere use of information in the system does not
constitute "operation" of the system.
The Board also cited in DAB No. 832 the particular example in the Manual
for provider enrollment that "only the costs of entering data into the
computer system and processing computer exceptions would be reimbursed
at 75 percent FFP" and that "[o]ther functions, even if performed
by the
same unit or individuals, are reimbursable at 50 percent FFP." State
Medicaid Manual, section 11275.21, cited at p. 5 of DAB No. 832. It is
undisputed here that the costs for the Division of Provider Enrollment
were not costs of activities directly involved in operating the computer
system, such as making on-line data entries, which are specified in the
Manual as the type of provider enrollment functions reimbursable at the
enhanced 75% rate.
Therefore, we sustain the disallowance of $2,193,542 based on DAB No.
832, which we incorporate by reference.
________________________________ Judith A. Ballard
________________________________ Norval D. (John) Settle
________________________________ Cecilia Sparks Ford Presiding
Board