New York State Department of Social Services, DAB No. 1099 (1989)

DEPARTMENTAL APPEALS BOARD

Department of Health and Human Services

SUBJECT: New York State DATE: September 18, 1989
Department of Social Services Docket No. 89-190 Decision
No. 1099

DECISION


The New York State Department of Social Services (New York/State)
appealed a determination by the Health Care Financing Administration
(HCFA/Agency) disallowing $217,437 in federal financial participation
claimed by the State under the Medicaid program of the Social Security
Act for the quarter ending March 31, 1989. The funding at issue
represented interest earned by the State on funds withheld from
providers because of suspected fraud and abuse activities. Instead of
disbursing the funds to the providers, the State deposited them in its
Short Term Investment Pool, where they earned interest.

The State took the position that the interest earned here did not belong
to the Agency since this was not a situation where a grantee earned
interest on an advance of federal funds. See 45 C.F.R. 74.47(a).
Rather, the State contended that the funds which it withheld were no
longer Medicaid funds. New York insisted that, in essence, those funds
had been given to the providers since the providers are given credit for
the payments and must report them to the Internal Revenue Service. New
York indicated the payments were intercepted for sound financial
reasons, i.e., to ensure repayment to the State and federal government
when a provider is suspected of fraud or abuse.

New York noted that the Board previously addressed this issue in New
York State Dept. of Social Services, DAB No. 1049, (1989). While the
State disagreed with that decision, New York conceded that there are no
material differences in this case from the facts or issues in DAB No.
1049. Consequently, the State asked the Board to issue a summary
decision based on DAB No. 1049. HCFA did not object to New York's
request.

Based on DAB No. 1049, which we incorporate here, we sustain the entire
disallowance of $217,437.


_____________________________ Cecilia Sparks Ford


_____________________________ Donald F. Garrett


_____________________________ Norval D. (John) Settle Presiding
Board