Tennessee Department of Health and Environment, DAB No. 1060 (1989)

DEPARTMENTAL APPEALS BOARD

DEPARTMENT OF HEALTH AND HUMAN SERVICES

SUBJECT: Tennessee Department of DATE: June 13, 1989 Health
and Environment Docket No. 89-93 Decision No. 1060

DECISION

The Tennessee Department of Health and Environment (State) appealed the
disallowance by the Health Care Financing Administration (HCFA) of
$3,242,156 in federal financial participation claimed under Title XIX
(Medicaid) of the Social Security Act for the quarter ending December
31, 1988. Following a review of the State's use of contributions from
hospitals as the State share of Medicaid expenditures, HCFA determined
that the transferred funds could not qualify as the State share of
financial participation under standards set forth in 42 C.F.R. 433.45.
HCFA concluded that, rather than qualify as the State share, the funds
instead constituted a discount in claims from the hospitals for payments
that otherwise would be due. HCFA accordingly declared that these funds
must be deducted from the State's program expenditures as applicable
credits in accordance with Office of Management and Budget Circular
A-87.

The Board in Tennessee Dept. of Health and Environment, DAB No. 1047
(1989), recently resolved appeals from the State involving the same
issue for earlier quarters. There the Board determined that the funds
received from the hospitals by the State met the conditions set forth at
42 C.F.R. 433.45 for the State share of financial participation.
Accordingly, the Board reversed HCFA's disallowance.

In its notice of appeal here, the State asserted that DAB No. 1047
should be controlling and requested a summary decision to that effect
reversing the disallowance. In response to a Board order to show cause
why the Board should not issue a summary decision in the State's favor
based on DAB No. 1047, HCFA stated that the issues raised by this appeal
are identical to those decided in DAB No. 1047. June 7, 1989 letter
from HCFA counsel. In a June 9, 1989 telephone conversation HCFA
counsel confirmed that the Board could proceed to decision in this
appeal without additional briefing.

Conclusion

Accordingly, based on the analysis in DAB No. 1047, which we incorporate
here, we reverse the disallowance in the amount of $3,242,156.

Norval D. (John) Settle

Alexander G. Teitz

Donald F. Garrett Presiding Board