New York State Department of Social Services, DAB No. 1074 (1989)

DEPARTMENTAL APPEALS BOARD

Department of Health and Human Services

SUBJECT: New York State Department DATE: July 20, 1989 of Social
Services Docket No. 89-110 Decision No. 1074

DECISION

The New York State Department of Social Services (State) appealed a
decision by the Health Care Financing Administration (HCFA) disallowing
a total of $2,113,930 in federal financial participation (FFP) claimed
by the State under Title XIX of the Social Security Act (Act) for the
period from October 1, 1986 through March 31, 1988. The disallowance
was based upon a HCFA review report entitled "Follow-up Review of New
York City Personal Care Services Claims Processing Under the New
Procedure - Medicaid Management Information System (MMIS)." The
reviewers found that under the MMIS claims processing system, providers
of personal care services, instead of the State, collected any amount
due from a "medically needy" recipient who had surplus income. The
providers submitted claims to the State for the full cost of the
services (including the part that was the recipient's liability). The
providers reduced their claims only if they actually collected from the
recipient. HCFA found that the State did not reduce its claims for FFP
to account for payments made to providers for amounts which were a
recipient's liability but which the providers did not collect from the
recipients. HCFA found that this perpetuated the same deficiency HCFA
had previously found in the State's manual claims processing system, and
resulted in the State receiving an overpayment of FFP.

The State's procedure of reducing its claim only after collection was
the subject of a previous disallowance in New York State Dept. of Social
Services, DAB No. 1040 (1989). In upholding HCFA's disallowance in DAB
No. 1040, the Board stated:

[T]he disallowance is based on 42 C.F.R. 435.1002(b), which clearly
specifies that no FFP is available in expenses which are a
recipient's liability. Since the State claimed FFP in such
expenses, it is clear that the State has received an overpayment of
FFP which should be adjusted under section 1903(d)(2)(A). Section
1903(d)(2)(D) [which the State argued precludes this disallowance]
applies only "where the State is unable to recover a debt which
represents an overpayment . . . made to a person or other entity .
. . ." (Emphasis added.) Here, the only payments the State made
were to the providers of personal care services, and there is no
finding that those payments were in excess of what should have been
paid to the providers. Thus, as asserted by the Agency, section
1903(d)(2)(D) does not apply to the amounts at issue here.

pp. 5-6.

The State argued in its notice of appeal here that the disallowance
should be reversed as a matter of law and in the interest of fairness.
The State maintained that a good faith effort had been made to collect
the identified surplus income from recipients and that, despite this
effort, the $2,113,930 remains uncollected and must, at this time, be
viewed as uncollectible. Thus, the State argued that the Federal
Government is not entitled to be credited with the disputed amount,
citing section 1903(d)(2)(D) of the Act.

The State subsequently acknowledged that these issues had been addressed
and decided in DAB No. 1040, and that the instant controversy does not
present any material issues of fact or law which can distinguish it from
the earlier case. The State requested that the Board issue a summary
decision consistent with the findings and determinations we made in that
decision. The Agency agreed to this course of action.

We therefore sustain the disallowance of $2,113,930 based on DAB No.
1040; we incorporate that decision and its record here.

Norval D. (John) Settle

Alexander G. Teitz

Judith A. Ballard Presiding Board