Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Louisiana Department
DATE: September 5, 1990
of Health and Hospitals Docket No. 90-162
Decision No. 1191
DECISION
The Louisiana Department of Health and Hospitals (State) appealed a
determination of the Health Care Financing Administration (HCFA)
disallowing $107,800 in federal financial participation (FFP) claimed by
the State under Title XIX of the Social Security Act (Medicaid) for the
quarter ended March 31, 1990. The State's claim represented FFP in
payment made by the State Medicaid agency for sales taxes on items
purchased for Medicaid recipients. The disallowance stated that payment
of sales tax is not an actual expenditure for medical assistance under
section 1903(a)(1) of the Act, since the State is collecting the tax
from itself. In addition, the disallowance relied on section 2493 of
the State Medical Manual, added by Transmittal No. 51 in August of 1987,
which prohibited FFP for taxes which would be paid by the Medicaid
recipient. Since the recipient would be liable for the tax under
Louisiana law, if it were not paid by the State, HCFA determined that
the tax payments were not eligible for FFP.
The Board dealt with identical disallowances in Louisiana Dept. of
Health and Hospitals, DAB Nos. 1109 and 1176. In DAB No. 1109, we held
that payment of the State sales tax in these circumstances is not an
actual expenditure for medical assistance and therefore is not eligible
for FFP. We further found that section 2493 represented a reasonable
interpretation of the statute and that its issuance was proper without
formal notice and comment, because it was an interpretative rule. We
rejected arguments by the State that section 2493 conflicted with the
program income regulations, OMB Circular provisions, or a Congressional
moratorium on certain regulatory changes. In DAB No. 1176, we
reaffirmed these conclusions, and further decided that a subsequent
extension of the Congressional moratorium did not undercut the validity
of section 2493.
In its Notice of Appeal, the State indicated that "the issues of this
appeal are the same issues raised by our previous appeals . . . ."
When the Board acknowledged the State's Notice of Appeal in this case,
we stated that we planned to issue a summary decision and we sent a
draft of a proposed decision to the parties. We informed the parties
that we would issue the draft decision as a final decision unless either
party objected; neither party objected within the time provided.
Therefore, we sustain the disallowance in full, based on DAB Nos. 1109
and 1176, which we incorporate here.
Judith A. Ballard
Norval D. (John) Settle
Alexander G. Teitz Presiding Board