Skip Navigation



CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
IN THE CASE OF  


SUBJECT: South Dakota Department of Social Services

DATE: September 20, 2002
         

 


 

Docket No. A-01-98
Control No. SD 01/001MAP
Decision No. 1847
DECISION
...TO TOP

DECISION

On July 26, 2001, South Dakota Department of Social Services (South Dakota) appealed a determination of the Centers for Medicare & Medicaid Services (CMS) (1) disallowing $3,975,308 in federal financial participation (FFP) in Medicaid expenditures made during the period from October 1, 1998 through December 31, 2000. The disallowed expenditures reflected claims for certain services at an enhanced 100% rate instead of South Dakota's normal federal medical assistance percentage (FMAP). The enhanced rate is available for services received through Indian Health Service (IHS) facilities. The costs at issue were for services to Native Americans receiving Medicaid benefits who were treated at non-IHS facilities that had contracts to provide care on referral for IHS clients at reduced rates. South Dakota argued that, based on its interpretation of a CMS memorandum issued to the State of Arizona in May 1997, South Dakota reasonably understood such services to qualify as "received through" an IHS facility at the time it claimed these costs. According to South Dakota, it had received no notice to the contrary prior to the disallowances, and CMS was aware of and did not previously challenge South Dakota's interpretation.

We conclude that South Dakota's arguments are without merit for the following reasons:

  • South Dakota presented no basis to alter our prior holding that the 100% FMAP is available only for costs of services which are provided by IHS facilities, either directly on-site or under arrangement using a contractual agent of the IHS facility to provide its facility service, and which are claimed by those facilities. See Arizona Health Care Cost Containment, DAB No. 1779 (2001)(Arizona).

  • As we explained in Arizona, the statute provided for 100% FMAP when IHS facilities were made eligible for Medicaid reimbursement in order to avoid shifting costs previously borne fully by the federal government on to the states, but not to remove from the states their preexisting responsibility to participate in the medical costs of their Native American citizens for services obtained outside the IHS system.

  • South Dakota had actual notice of CMS's longstanding policy to that effect through communications it received from CMS in 1994 and 1996.

  • Neither South Dakota, nor any other state, attempted to expand claims for 100% FMAP to costs of services provided and claimed by non-IHS facilities prior to 1997.
  • South Dakota's purported interpretation of the 1997 Memorandum as reversing CMS's policy was not reasonable and sought to rely on a single phrase taken out of the context of the memorandum as a whole and of the statutory and regulatory history from which it arose.


  • Contrary to South Dakota's contentions, the disallowances at issue announced no new CMS policy and, hence, cannot be said to have applied a new policy retroactively.


  • South Dakota cannot plausibly buttress its interpretation by pointing to the cooperation of IHS staff in South Dakota's initiative to identify referrals to non-IHS providers.


  • South Dakota never sought any authoritative guidance from CMS to clarify the purported ambiguity which South Dakota read into the May 1997 Memorandum.

  • Where South Dakota officials interacted with lower-level CMS employees, they gave no clear information disclosing South Dakota's plans to expand its 100% FMAP claims.


  • South Dakota failed to show that it reasonably relied to its detriment on its own interpretation.

We conclude that South Dakota was well aware that referrals to non-IHS providers for services that were neither contracted for nor claimed by an IHS facility had never been reimbursed at the enhanced rate and did not have a reasonable basis to believe that the policy had changed as a result of the May 1997 Memorandum or to believe that CMS had endorsed South Dakota's interpretation. We therefore uphold the disallowance in full.

Legal Background (2)

Section 1905(b) of the Social Security Act (Act) states, in relevant part:

Notwithstanding the first sentence of this section, the Federal medical assistance percentage shall be 100 per centum with respect to amounts expended as medical assistance for services which are received through an Indian Health Service facility whether operated by the Indian Health Service or a tribe or tribal organization . . . .

(Emphasis added.) (3) This provision was first enacted in 1976. Indian Health Care Improvement Act (IHCIA), Title IV, Pub. L. No. 94-437 (1976). Prior to the IHCIA, eligible Native Americans were entitled to Medicaid benefits on the same basis as others, but those services which Native Americans received through IHS facilities were not eligible for Medicaid reimbursement.

The Indian Self-Determination and Education Assistance Act, Public Law No. 93-638, provided for certain tribal health care facilities (known as 638 facilities) operated under lease agreements with IHS to be treated as IHS facilities. Section 150(l) of the Indian Self-Determination Act Amendments of 1994, Public Law No. 103-413, then required that the Secretary (through IHS) lease tribal facilities on request. In December 1996, CMS and IHS executed a Memorandum of Agreement to avoid the administrative necessity of executing multiple lease agreements. Record Ex. 33 (1996 MOA). The MOA recognized that states would have a strong incentive under the new amendments to press tribes to request leases in order to maximize federal funding, and resolved instead to make the 100% rate available for costs of services furnished by facilities owned by tribes or tribal organizations that would have qualified as IHS facilities had the mandatory leases been issued. The 1996 MOA provided as follows:

To address state financing concerns, to encourage tribal self-determination in program operation and facility ownership, and to eliminate the processing of numerous leaseback requests, HCFA reevaluated its original interpretation of section 1905(b). In light of the above amendment to 638 and underlying Federal Indian policy, HCFA concluded that the statutory language in this context permits an interpretation that tribal facilities operating under a 638 agreement are functioning as IHS facilities in performing obligations set forth under that agreement. Thus, as of July 11, 1996, the Secretary approved HCFA's proposal to adopt an interpretation that section 1905(b) allows 100-percent FMAP for Medicaid services furnished to Medicaid eligible AI/ANs [American Indians and Alaskan Natives] by any tribal facility operating under a 638 agreement. This means that the state will be reimbursed for 100 percent of the amount it pays to any 638 facility for services provided to Medicaid eligible AI/ANs only . . . .

Arizona at 4, quoting 1996 MOA at 2. The outcome was that after the 1996 MOA all 638 facilities were treated as IHS facilities that could bill Medicaid for services that Native Americans received from them and be reimbursed with 100% federal funds, instead of on a federal-state shared basis like non-IHS facilities. This development did not address the question posed in this case of whether the enhanced rate may be extended to services of non-IHS providers to whom patients are referred by IHS or tribal facilities.

In addition to providing care directly through IHS facilities, IHS also operates a program that contracts with private providers to provide health care services to Native Americans at negotiated reduced rates which may not exceed Medicare allowable rates where applicable. See 51 Fed. Reg. 23,540 (June 30, 1986). The contract care program is governed by regulations in 42 C.F.R. Part 36 and provides funding, within limits based on priorities set by IHS and appropriations from Congress, for services on referral that IHS facilities may not be available, equipped, or licensed themselves to provide. See IHS Circular 91-7 (June 13, 1991). IHS funding for the contract care program is limited and distinct from the general funding for the IHS to operate its own facilities. See, e.g., IHS Manual, Ch. 3, §§ 2-3.4 and 2-3.7.

In May 1997, an inquiry from the State of Arizona triggered the issuance of a memorandum by CMS regarding the scope of services for which the enhanced rate was payable. The immediate question asked by Arizona was about enhanced rates for non-emergency transportation services, but the response was broader. The relevant part read:

Our position on this issue is that in order for IHS services to qualify for 100% FMAP, the service must be (1) provided by IHS, or a contractual agent of an IHS or tribal facility; (2) considered as a 'facility service'; that is, a service that would be within the proper scope of services which can be claimed by that facility; and (3) claimed by the IHS facility as a service of that facility. Those services are referred to in regulation at 42 C.F.R. 440.10 ("Inpatient hospital services") and 42 C.F.R. 440.20 ("Outpatient hospital services and rural health facility services").

Record Ex. 5, at 2 (May 1997 Memorandum). The May 1997 Memorandum went on to explain further about the applicability of this reasoning to the services directly in question (non-emergency transportation) and then stated that most 100% FMAP rate services would be provided on-site in an IHS facility but that-

[r]eferred services, provided through a contractual arrangement, can also be considered provided 'through an IHS facility' and reimbursed at the 100% FMAP rate as long as these are services that could be provided as a facility service, as referenced by regulation above. Any other type of services, such as non-emergency transportation, are not considered to be 'facility services', and therefore should be reimbursed [only at the normal FMAP].

Id.

Issues

South Dakota recognized that the Board already addressed in Arizona the interpretation of the statutory wording "received through" an IHS facility for purposes of the enhanced rate. South Dakota Br. at 1-2, 15. South Dakota offered no reason to question our analysis from Arizona, and we reaffirm and incorporate it here in full. (4)

After the issuance of Arizona, we asked the parties in the present matter whether any issues particular to this case remained unresolved by the analysis in that decision. South Dakota argued that Arizona did not fully control the outcome of the present case. South Dakota Br. at 15 et seq. The Board had found that CMS's interpretation was reasonable, but had not held that it was compelled by the statute or regulations. South Dakota contended that CMS's interpretation had never been published, that South Dakota had no actual notice of the interpretation at the time the expenditures at issue were made, and that South Dakota had relied on its own reasonable interpretation of the May 1997 Memorandum to its detriment. Thus, South Dakota essentially argued that it stood on a different footing than the State of Arizona in regard to notice. Further, South Dakota argued that its claims had already been knowingly paid by CMS and were being disallowed retroactively for quarters before CMS announced the policy barring them.

In addition, South Dakota pointed to the role of various federal officials in developing and reviewing its claiming practices as evidence that 1) no longstanding policy existed barring enhanced rate payment for IHS referrals to non-IHS facilities, and 2) some federal officials shared South Dakota's understanding of the May 1997 Memorandum as permitting such claims.

ANALYSIS
...TO TOP

1. The Board concluded in Arizona that CMS had a longstanding, and unchanged, policy of which Arizona had notice barring claims like those at issue here.

The Board has long held, and reiterated in Arizona, that it would defer to CMS's published interpretation of ambiguous statutory language where CMS's interpretation is reasonable and has been published in the Federal Register; otherwise, the Board defers only if a state had actual and timely notice of that interpretation or, in the absence of proof of actual notice, if the state cannot show that it relied to its detriment on its differing reasonable interpretation. See, e.g., Arizona, at 8, citing New Jersey Dept. of Human Services, DAB No. 1773 (2001); Louisiana Dept. of Health and Hospitals, DAB No. 1772 (2001); and Community Action Agency of Franklin County, DAB No. 1581 (1996), and decisions cited therein.

We reasoned in Arizona that the language of the statute referring to services "received through" an IHS facility was susceptible of more than one reasonable interpretation. We concluded that CMS had a longstanding interpretation of that language to mean that only services provided by a specific IHS facility within the scope of its permissible facility services and claimed by that facility were "received through" that facility. Arizona at 15-19. We found that this interpretation was consistent with the purpose of the statute to avoid burdening states with costs for services previously fully funded by the federal government (that is, health care provided by IHS facilities not previously eligible for Medicaid funding), without shifting to the federal government costs always borne by the states for normal Medicaid services to their Native American citizens. Id. at 10-11.

We further concluded that Arizona had notice of CMS's interpretation through a number of communications and had long acted in conformance with it. Id. at 13-19. Finally, we concluded that the May 1997 Memorandum did not, as Arizona asserted, represent a novel interpretation of the scope of services eligible for the 100% rate, but simply clarified that IHS services could be provided under contractual arrangement with a provider acting as an agent of the IHS facility, even off-site, so long as the services are claimed (that is, billed) as services of the IHS facility and are within the scope of facility services. Id. at 19-21.

2. South Dakota also had actual notice of CMS's policy prior to May 1997.

We concluded in Arizona that that State had actual notice of CMS's longstanding policy to reimburse at 100% FMAP only payments to IHS facilities for their Medicaid-eligible facility services. Arizona at 19. South Dakota attempted to distinguish its situation by arguing that it did not receive the same communications. South Dakota Reply Br. at 10, n.7. In fact, South Dakota described the May 1997 Memorandum as "the only policy document . . . that directly addresses the issue of IHS referral services received by non-IHS facilities, and thus . . . the only potential source of 'notice' as to" CMS policy. South Dakota Br. at 17. South Dakota did not deny, however, that it did receive timely notice of at least two documents: (1) Regional Identical Letter No. 94-066, dated March 9, 1994 (Record Ex. 38) and (2) the 1996 MOA between CMS and IHS. South Dakota contended that these documents did not put it on notice that CMS interpreted the statute prior to 1997 in the manner CMS now asserts. Effectively, South Dakota treated these documents as not on point, because their contents, as discussed below, contain no authority for reimbursement at 100% FMAP of payments to non-IHS providers for referrals from the IHS. We address each of these documents in turn, and conclude, as we did in Arizona, that CMS had a longstanding policy and had communicated it to South Dakota, as well as Arizona, in a timely and adequate (if not flawless) way. See Arizona at 13-19.

A. March 1994 Regional Letter

South Dakota attempted, as did Arizona, to read into this letter a meaning consistent with its later interpretation of the May 1997 Memorandum. We conclude, as we did in Arizona, that the effort is fruitless. (5) Arizona at 18-19. The letter responds to two questions about Medicaid coverage of services to Native Americans: (1) "What is meant by IHS facility?" and (2) "When can a State claim 100 percent match?" Record Ex. 38, at 1762, 1764. (6) At that time, tribes or tribal organizations often operated facilities owned by the IHS or leased to the IHS, but also sometimes owned and operated their own facilities. The law provided that IHS facilities could be eligible for Medicaid reimbursement for care and services provided in IHS facilities without meeting some of the requirements imposed on other providers. Sections 1911(a) and (b) of the Social Security Act. Hence, to the first question, the letter explained that an "IHS facility" means "an entity that is either owned or leased" by IHS and that IHS keeps a comprehensive list of IHS facilities, but they may be operated by either IHS or a tribe or tribal organization. Record Ex. 38, at 1762. Thus, the letter continued, it is "clear that only a 'facility of the Indian Health Service' is eligible to receive Medicaid reimbursement" under section 1911 of the Social Security Act and that that section "provides no authority for Medicaid reimbursement for facilities of Indian tribes or tribal organizations, rather than IHS facilities." Id.

South Dakota dismissed language from the definition portion of the letter as addressing a different section of the Social Security Act than that at issue in this case, section 1905(b). South Dakota Reply Br. at 10-11. However, the introductory paragraph to that portion also states that a facility not on the IHS list is not an IHS facility in the context of both sections. Record Ex. 38, at 1762.

The more directly relevant portion, in any case, is the response to the query about when the 100% FMAP is available. CMS explained that -

[i]f the operating body of the IHS-owned or leased facility, be it IHS, an Indian tribe or a tribal organization, enters into contracts to achieve the performance of services offered by the facility, the services may be considered to have been provided through the facility and therefore qualify for the 100 percent rate.

Exhibit 38, at 1764 (emphasis added). CMS thus communicated that the contracts must be more than mere referrals or negotiated rates in order to fit within the scope of services of an IHS facility, i.e, the contractor must be achieving the performance of the facility's services on its behalf.

Despite this, South Dakota offered a novel construction of this letter as establishing three distinct categories of services: those that are "offered by" an IHS facility, those where an IHS facility enters into a "contract to achieve the performance of services offered by" it, and, in addition, those "offered through" an IHS facility. South Dakota Reply Br. at 11, n.8, quoting Record Ex. 38. This theory appears to rest largely on the fact that the paragraph following the sentence from the letter quoted above, begins with the words "[i]n addition." We set out that paragraph in full here:

In addition to authorizing Medicaid payment for IHS facilities, the Indian Health Care Improvement Act, P.L. 94-437, also amended the statute to provide that the "Federal medical assistance percentage shall be 100 per centum with respect to amounts expended as medical assistance for services which are received through an Indian Health Service facility whether operated by the Indian Health Service or any Indian tribe or tribal organization." (Section 1905(b) of the Act.) This payment provision provides that, once the State Medicaid agency has made a payment for services provided through an IHS facility, the State may obtain reimbursement through the Medicaid program for 100 percent of the amount paid as medical assistance. Thus, unless the facilities are IHS facilities, no Medicaid reimbursement - much less 100 percent reimbursement - is available unless they meet the general Medicaid requirements for that type of facility.

Record Ex. 38, at 1764. The plain meaning of this language is that the statute not only authorizes (for the first time) Medicaid payments for IHS facilities, but also establishes a 100% FMAP for those payments. Nothing in the paragraph or the letter as a whole (or the purpose of the statute being interpreted) supports South Dakota's reading. Instead the term "provided through" is clearly used simply as an alternative to "received through," which the letter elsewhere explains means offered by the facility.

We conclude that, at least three years before the May 1997 Memorandum, South Dakota had adequate notice through the 1994 Regional letter that CMS interpreted sections 1905 and 1911 to preclude 100% reimbursement for payments by a state to non-IHS facilities.

B. 1996 MOA

South Dakota did not deny that it had notice of the 1996 MOA between CMS and IHS agreeing that CMS would treat as IHS facilities tribal facilities entitled to an IHS lease agreement on request under section 150(l) of the Indian Self-Determination Act Amendments of 1994, Public Law No. 103-413, without requiring that the leases actually be executed. Record Ex. 33. CMS argued that South Dakota understood the MOA as consistent with CMS's position here that 100% FMAP is not available for costs of services furnished by non-IHS (non-tribal) providers like those at issue here. CMS Br. at 23-24, relying on Record Ex. 19. South Dakota answered that CMS's argument was undermined by the evidence that IHS Regional Office staff helped develop and implement South Dakota's referral services initiative and hence must not have believed that the 1996 MOA "articulated a policy precluding 100% FMAP for IHS referral services furnished by non-IHS providers." South Dakota Reply Br. at 12.

The gravamen of the 1996 MOA is that tribes and tribal organizations which owned their own facilities rather than leasing from the IHS would henceforth be considered "IHS facilities." Nothing in the 1996 MOA suggests any expansion of the interpretation of the term "received through" as set out in the 1994 Regional Letter. As we noted earlier, how South Dakota understood the MOA is irrelevant. See fn. 5 supra. However, CMS's position that South Dakota should have understood that the MOA was not intended to change the interpretation of "received through" is buttressed by the fact that the 1996 MOA was forwarded to state Medicaid directors with a cover letter from CMS, dated January 3, 1997. That cover letter stated that the effect of the MOA was to expand the definition of IHS facilities to include tribally-owned facilities (known as "638" facilities). The cover letter also stated that IHS would provide a list of "its 638 facilities," and further advised states that "facilities providing Medicaid services that are not on this list . . . will continue to be reimbursed by [CMS] at your State's traditional FMAP rate." Record Ex. 33, at 1681. Furthermore, the letter instructed states to consult with CMS Regional Office State Representatives with any questions regarding the MOA. Id. South Dakota did not take this step in May 1997 (about four months later) when, South Dakota asserted, the policy was further revised (or, as South Dakota asserted alternatively, was "announced for the first time").

We disagree with South Dakota's assertion, moreover, that the cooperation of the IHS Office, which we discuss in more detail below, somehow implies that "the IHS also did not believe that its 1996 [MOA] articulated a policy precluding 100% FMAP for IHS referral services furnished by non-IHS providers." South Dakota Reply Br. at 12. Another inference is equally possible, i.e., that those IHS officials who accepted South Dakota's reading of the May 1997 Memorandum assumed that it represented a change in CMS policy after the time the 1996 MOA was executed. IHS's interest in that MOA lay in the administrative savings for IHS. Before the MOA, CMS would accept the tribal 638 facilities as IHS facilities only if IHS issued leases to them. IHS would have no reason to view South Dakota's reading of the May 1997 Memorandum as inconsistent with CMS's agreement with IHS regarding treating 638 facilities as IHS facilities.

We conclude that, prior to its receipt of the May 1997 Memorandum, South Dakota had been provided with actual notice, through the 1996 MOA, of CMS's policy with regard to whether 100% FMAP would be available for state payments to non-IHS facilities.

C. History of South Dakota's claiming practices

South Dakota admitted that it never made any attempt to claim 100% FMAP for services other than those provided in and billed by an IHS facility, prior to its receipt of the May 1997 Memorandum and discussions of that memorandum with other states' officials. South Dakota Br. at 4. CMS pointed to the many years during which neither South Dakota nor any other state put forth such claims, arguing that this proved that the states were well aware of CMS's longstanding policy. CMS Br. at 23-24. While inaction by states alone would not suffice to establish the existence of a CMS policy, in this case, we do find that the uniform compliance by the states, including South Dakota, further reinforces what we found in Arizona, i.e., that CMS indeed had, and had actually communicated, a longstanding policy that the 100% FMAP rate was available only for costs of services offered by an IHS facility (including those performed under contract and arrangement).

3. South Dakota's interpretation of the May 1997 Memorandum was not reasonable.

South Dakota stated that the May 1997 Memorandum lay "at the heart of this appeal," so the central issue before us is whether South Dakota could reasonably have read this letter as authorizing 100% FMAP for services provided by non-IHS facilities upon referrals from IHS. South Dakota asserted that CMS "never communicated its current interpretation of 'referred services' directly" to South Dakota nor published it in a regulation or policy document. South Dakota Br. at 16. South Dakota presented declarations from State Medicaid officials asserting that "referred services" meant to them merely any services "furnished by one provider pursuant to a referral from another provider." See, e.g., Declaration of Jerry C. Hofer, Record Ex. 2, at ¶ 3. South Dakota thus argued that the reference in the May 1997 Memorandum could reasonably be read, and was read by them, as permitting South Dakota to claim the enhanced rate for services furnished by a non-IHS provider after an IHS referral.

"Referred services" is not a term that appears in the Act. South Dakota derived this term from CMS's direct communication of its interpretation of that statute to the states by means of the May 1997 Memorandum. South Dakota's position thus depends not on an ambiguity in the statute but on its interpretation of an asserted ambiguity in a CMS communication to the states. As set out above, the Memorandum states that "[r]eferred services, provided through a contractual arrangement, can also be considered provided 'through an IHS facility' and reimbursed at the 100% FMAP rate as long as these are services that could be provided as a facility service . . . ." Record Ex. 5, at 2 (emphasis added). The context thus makes clear that the only services not provided in the physical confines of an IHS facility or its satellite that can nevertheless be considered for the enhanced rate are those where the referral is made to provide a facility service by contractual arrangement.

South Dakota acknowledged that the language "provided though a contractual arrangement" places some limit on the kind of referred services but disputed CMS's position that the restriction was to those services provided "under arrangement," as that term is used in Medicare law. South Dakota Br. at 18-19; contrast Arizona at 20-21. South Dakota admitted that that restriction, as defined by CMS, might be derived from the reference earlier in the same memorandum to the services having to be provided by "a contractual agent of an IHS or tribal facility." Id. at 18. South Dakota, however, argued that the May 1997 Memorandum could be read as creating two types of eligible non-IHS services: those provided by a "contractual agent," which might mean under arrangement, and those provided "under a contractual arrangement," which could include any referral to a non-IHS provider with which the IHS had a contract for referrals. Id. at 19. South Dakota based this claim on the fact that the Memorandum stated that referred services "can also be considered" as eligible for enhanced funding, so that they must constitute a distinct additional category beyond services provided by a contractual agent as described earlier in the Memorandum. See May 1997 Memorandum at 2 (emphasis added).

We find this strained construction unsupportable. The word "also" at that point plainly refers to considering as IHS facility services some services provided off-site by contractual arrangement in addition to on-site facility services. This is evident because the preceding sentences introducing the paragraph specifically state that most facilities furnish services within their own "physical confines" and that satellite facilities operated by IHS are "also considered to be within the physical confines" of an IHS facility. May 1997 Memorandum at 2. The rest of the paragraph thus merely elaborates on the nature of contractual agency that would permit off-site services to be treated as received through the IHS facility; it does not set up a dichotomy such as that suggested by South Dakota between contractual agents and referrals.

Furthermore, South Dakota ignored the other qualifying elements set out in the May 1997 Memorandum. Not only must the services be provided by IHS or a contractual agent of an IHS facility, but they must be of a type which that facility can properly claim (i.e., a "facility service") and they must in fact be "claimed by the IHS facility as a service of that facility." May 1997 Memorandum at 2. Contrary to South Dakota's claim that the requirement the services be billed through the IHS facility is "neither stated nor hinted at" in the May 1997 Memorandum, the requirements set out on the face of that memorandum plainly require the claiming of services provided by any non-IHS agent under contract with an IHS facility to be done by the IHS facility. Cf. South Dakota Br. at 20.

We conclude that the May 1997 Memorandum will not reasonably bear the construction South Dakota sought to place on it. Rather than setting out an unprecedented policy of 100% FMAP for all services received by IHS clients when sent to non-IHS providers, the May 1997 Memorandum is consistent with earlier guidance in making the enhanced rate available only for facility services of IHS facilities, provided either on-site or under arrangement.

4. By initially paying these claims CMS did not demonstrate approval of South Dakota's asserted interpretation.

South Dakota also contended that the funds at issue were "regularly and knowingly paid to the State for many quarters before the {CMS] interpretation was announced, and in the face of reasonable and open reliance by the State on prior advice from the Agency that was reasonably understood to permit the funding the Agency now seeks to withhold." South Dakota Reply Br. at 15 (7). In support of this sweeping assertion, however, South Dakota submitted only an excerpt of its June 30, 1998 quarterly report of expenditures (QER) form, in which it sought an upward adjustment of amounts claimed in the previous quarter to reflect additional amounts of 100% FMAP for IHS services. Record Ex. 15.

The notation explaining the upward adjustment read as follows:

To adjust for 100% IHS rate available for IHS services when the services are provided through an IHS contract, per federal guidance issued 5/15/97. The services in question were paid in the 3/98 quarter and were claimed at FMAP.

Record Ex. 15, at 1. Nothing in this explanation discloses that South Dakota's claims involved services not provided by IHS facilities under contractual arrangement with non-IHS agents, nor that South Dakota was interpreting the May 1997 Memorandum (to which the mention of "federal guidance" evidently referred) to allow such expansive claiming of 100% reimbursement. We therefore do not find that CMS's failure to reject this claim somehow evidences awareness and endorsement by CMS of South Dakota's interpretation of the scope of enhanced funding for IHS facilities' services.

5. These disallowances did not improperly announce and apply a new policy.

South Dakota also contended that CMS's policy was improperly being applied in a retroactive way. South Dakota Br. at 15. Citing Board precedent, South Dakota argued that, where statutory language is ambiguous, CMS is not permitted to "articulate a policy in a deferral or disallowance letter and then apply it retroactively to recover payments made to a state based on that state's contrary, but reasonable, interpretation of the law." Id., citing Hawaii Dept. of Social Services and Housing, DAB No. 779 (1986). CMS denied that the disallowances here were retroactive in nature. CMS Br. at 3-4.

We have already concluded that the policy being applied here has been unchanged for many years, was not altered by the issuance of the May 1997 Memorandum, and that timely, actual notice was provided to South Dakota. In that context, it is obvious that the disallowances did not in fact announce a new policy of which South Dakota had no prior notice. Hence, the factual premises of South Dakota's retroactivity argument are not present here. For that reason, precedent cited by South Dakota regarding retroactive application of an interpretation is inapposite here. Cf. South Dakota Reply Br. at 19, and cases cited therein.

It is inherent in the funding system for Medicaid's federal-state partnership that payments are made to the states initially based on estimates and then reconciled based on state submission of QERs. See 42 C.F.R. § 430.30(c). Only after review of the claims for expenditures made could the federal government become aware of improperly claimed expenditures and, even then, the bases for state claims may not be evident on the face of the QER. South Dakota pointed to no authority that precludes CMS from investigating and disallowing any claims that are discovered to be have been paid in error whether they come to its attention by audit or other means. Indeed, the regulations expressly provide for such disallowance and for implementation through adjustments to subsequent grant awards. 42 C.F.R. § 430.42. Such disallowances are all, in a sense, retroactive, since they recover payments already made, but are in no sense improperly so. We agree with CMS that they are best described as "corrections to prior erroneous grants and claims." CMS Br. at 20.

We find nothing improper in the timing of the disallowances here.

6. The opinions of and involvement of IHS Aberdeen Office staff in regard to South Dakota's claiming initiative do not provide support for the reasonableness of South Dakota's position.

South Dakota contended that the IHS Office agreed with South Dakota's interpretation of the May 1997 Memorandum endorsing 100% FMAP in claims for referrals to non-IHS facilities for services, even though not provided under arrangement with an IHS facility. South Dakota further argued that this opinion on the part of the IHS staff constituted an "independent marker" that South Dakota's interpretation was reasonable. South Dakota Br. at 20-21; South Dakota Reply Br. at 2-3. Further, South Dakota argued that its position that CMS never communicated a longstanding policy against 100% FMAP for services provided and billed by non-IHS facilities was bolstered by evidence that the IHS Aberdeen Office not only was not aware of such a policy, but actually worked with South Dakota in establishing the system to identify claims. See, e.g., South Dakota Br. at 20-21; South Dakota Reply Br. at 5. We do not find either argument persuasive.

South Dakota asserted that a State official contacted the then-Deputy Director of the regional IHS office, Daryl (K.C.) Russell, to request the cooperation of IHS in South Dakota's development of a tracking system to identify "IHS referral services." South Dakota Br. at 8; Record Ex. 1 (Christensen Declaration) at ¶ 14. Mr. Christensen reported in a memorandum dated November 3, 1997 that he thought that the Aberdeen office had "embraced the idea and will be working with us to enlist the support of" two IHS hospitals. Record Ex. 6, at 1-2. South Dakota described a meeting on January 16, 1998 at which IHS officials allegedly stated that they had reviewed the May 1997 Memorandum and "also concluded that it authorized 100% FMAP for IHS referral services furnished by non-IHS providers." South Dakota Br. at 9; Christensen Declaration at ¶ 15. South Dakota detailed the involvement of IHS in adopting procedures to identify referrals and participate in a pilot program. South Dakota Br. at 9-10, and record citations therein.

Emphasizing that IHS is a component of the Department of Health and Human Services (HHS) as is CMS, South Dakota asserted that IHS "was no stranger" to the Medicaid statute, while acknowledging that IHS is not the agency charged with administering that law. South Dakota Br. at 21; South Dakota Reply Br. at 14. Since the IHS staff did not protest that South Dakota's interpretation violated long-standing Medicaid policy and in fact agreed with South Dakota's reading of the May 1997 Memorandum, South Dakota argued that we should infer that the claims South Dakota identified under its initiative with IHS in 1997 and 1998 were in fact eligible for 100% FMAP. South Dakota Br. at 21.

The record establishes that the IHS staff involved did take an interest in Medicaid law and policy, but only as it affected IHS entitlement to collect third-party reimbursement under Medicaid for services IHS provides, which was paid using an "all-inclusive rate," negotiated between IHS and CMS. Transcript of June 4, 2002 Testimony of Daryl (K.C.) Russell (Tr.) at 12-16. Mr. Russell testified that his focus in following Medicaid policy on reimbursement rates was on the rate to be paid to IHS facilities, not on the FMAP rate for CMS's reimbursement to the states. Tr. at 14-15. Hence, there is little reason to think that IHS staff was closely following what payments the states would make to non-IHS providers or what rate of reimbursement the states would receive from CMS for such payments. Tr. at 23-24; Statement of Daryl (K.C.) Russell at 4 (Russell Statement) ("The IHS is not involved in Medicaid payment issues between the States and CMS"). Further, it is clear that Mr. Russell focused seriously on the May 1997 Memorandum only after South Dakota representatives brought it to his attention. (8) Tr. at 17. It is true that he agreed, after reading it, with the position taken on its meaning by South Dakota staff meeting with him. Russell Statement at 3; Tr. at 19-21, 23-25. It is also true, however, that Mr. Russell did not purport to have checked his opinion with CMS because it was not the role of IHS "to make a determination on whether it was right or wrong," and because his view was that South Dakota would discuss that with CMS. Tr. at 26. He stated that he assumed that South Dakota "had probably confirmed with CMS that such claims were proper" and did not have any reason to pursue it himself. (9) Russell Statement at 4-5. Mr. Russell's opinion of the meaning of the May 1997 Memorandum thus provides no evidentiary support for South Dakota's otherwise unsupported assertion that a knowledgeable source within HHS confirmed the reasonableness of South Dakota Medicaid officials' interpretation. For the same reason, we attribute no probative value to Mr. Russell's apparent lack of awareness of CMS's longstanding policy regarding this issue prior to May 1997.

7. Instances when CMS employees allegedly failed to raise CMS policy do not prove that no policy was in place.

In addition to its interactions with the IHS Aberdeen Office, South Dakota pointed to other occasions on which, it alleged, various CMS employees "could have been expected to invoke the Agency's 'longstanding policy'" but "did not do so." South Dakota Reply Br. at 5-8. South Dakota implied that such silence must evidence at least the absence of any policy or perhaps even the existence of a policy different from that underlying the disallowances here. Id.; South Dakota Br. at 22.

We find that, in all the instances raised by South Dakota, it does not appear clearly that the agency employees involved understood South Dakota to be representing that its claims for 100% FMAP would go beyond the parameters of referred services provided by contractual agents under arrangement with an IHS facility within the scope of its facility services as provided by the May 1997 Memorandum. Generally, South Dakota treated any references on its part to "referred services" or to the May 1997 Memorandum as constituting a clear representation that it planned to expand 100% FMAP claims to include non-IHS facilities which had negotiated rate agreements to receive referrals in the IHS contract care program. Since CMS employees cannot be assumed to have shared South Dakota's reading of the May 1997 Memorandum, we see no basis to assume that references to it would have been interpreted by them in accordance with that reading. In any event, in light of the earlier official statements by CMS of its policy, and lack of evidence that it had officially changed that policy, South Dakota could not reasonably rely on the actions of CMS employees as somehow ratifying its interpretation. We discuss the interactions in more detail below.

A. Inquiry to CMS Regional Office about state plan amendment option

South Dakota asserted, for example, that it "raised the issue of 100% FMAP for referred services directly" with the CMS Regional Office in the context of requesting guidance on whether a state plan amendment was required to implement South Dakota's "new initiative." South Dakota Br. at 21. South Dakota alleged that it "provided a full explanation of the new system to the . . . regional official" and was informally told that no amendment would be necessary. Id. South Dakota had reached that conclusion itself earlier, but Mr. Christiansen instructed another South Dakota official, Mr. Larry Iversen, to contact Bernadette Quevedo-Mendoza at the Regional Office to "get a handle on the question" after learning that Alaska had developed an amendment to its state plan on this subject. South Dakota Br. at 11, quoting Record Ex. 17; see also Christensen Declaration at ¶ 20 and Record Ex. 3 (Iversen Declaration) at ¶ 3. Mr. Iversen described the conversation as follows:

I contacted Ms. Quevedo-Mendoza of HCFA and explained that South Dakota had begun a new initiative for tracking and claiming at 100% FMAP services provided by non-IHS providers pursuant to an IHS referral. I asked whether she believed this required a new state plan amendment. After questioning me about South Dakota's IHS referral services initiative, Ms. Quevedo-Mendoza stated that she agreed that this did not require a new plan amendment.

Id. Nothing in this statement suggests that Ms. Quevedo-Mendoza was informed that the services to be claimed at 100% FMAP would not be referrals for facility services to be provided under contractual arrangement with an IHS facility (which would then claim them as provided by it under arrangement).

Ms. Quevedo-Mendoza confirmed that Mr. Iversen asked her "at some point, whether a state plan amendment was required to implement a new tracking system for IHS claims." Record Ex. 37 (Quevedo-Mendoza Declaration) at ¶ 5. She reported that she advised him "that no state plan amendment was required when the State was merely developing and implementing tracking systems unless the State was making changes to covered groups or services." Id. (10) Both Mr. Iversen's inquiry, as he described it, and Ms. Quevedo-Mendoza's response, as she described it, are consistent with CMS's interpretation of the May 1997 Memorandum. Hence, even assuming that Mr. Iversen sincerely believed he was asking and receiving an answer to a different question, we cannot infer from the interaction between him and Ms. Quevedo-Mendoza that CMS was apprized of or approved of South Dakota's expansive reading of which referred services were eligible for 100% FMAP.

B. On-site review visit

In mid-September, 1999, two Financial Management Specialists visited South Dakota to perform a site visit following a review of the QER submitted by South Dakota for the quarter ended March 31, 1999. Declaration of Eva E. Lopez (Lopez Declaration), Record Ex. 36, at ¶¶ 6-9. During that visit, the question of the scope of payments for which South Dakota was claiming 100% FMAP was discussed. South Dakota described this interaction as follows: " . . . [CMS] auditors examined the claiming methodology and [were] supplied with detailed information concerning it, and informed others in [CMS] about it. But no action was taken and no questions were raised about the methodology." South Dakota Br. at 21-22.

CMS denied that the site visit constituted an "audit" and asserted that the disclosures made to the reviewers were the first notice that CMS had that South Dakota had been making such claims for the preceding 15 months. We agree with CMS that, even had the review amounted to an audit, the fact that it concluded, as South Dakota stated, "without a solid finding on this issue" would hardly preclude CMS from taking these disallowances after additional review. CMS Br. at 34-36; see, e.g., New Jersey Dept. of Human Services, DAB No. 1549, at 15-16 (1995); Michigan Dept. of Social Services, DAB No. 1211, at 6 (1990). One of the reviewers reported that the Regional Office learned only days before that other states had been making improper claims for 100% FMAP and that her manager had specifically requested that she ask State officials if South Dakota was asserting such claims and to what extent. (11) Lopez Declaration at ¶ 8. She included the responses in a trip report which stated as follows:

South Dakota also presented with a list of Providers which received Indian Health Services payments for the quarter ended June 30, 1999. Total payments for the quarter ended June 30, 1999 was approximately $8.3M. The Providers on the list were either Indian Health Services Providers or referrals from Indian Health Services facilities.

Record Ex. 22. Ms. Lopez stated that she received no further instructions until October 13, 2000. Further, she reported that, in November 2000, she sought additional information from South Dakota and participated in an audit which determined that claims had been made for non-IHS facilities' services. Both parties agree that the reviewers did not issue any "audit findings" or make a determination that the claiming practices disclosed at the review were or were not allowable. See Lopez Declaration at ¶ 12; Christensen Declaration at ¶ 22.

South Dakota offered declarations from two Medicaid officials in North Dakota about a later site visit to that state by Ms. Lopez and another reviewer, and a copy of Ms. Lopez's trip report from that visit, in an effort to establish that the reviewers then suggested that North Dakota could at least claim 100% FMAP for IHS referrals to facilities that had a contract with IHS. South Dakota Reply Br. at 7-8; Record Exs. 45 and 46. Further, South Dakota asserted that Ms. Lopez told Sheldon Wolf of North Dakota that she "believed that North Dakota might be able to claim IHS-referred services at a non-IHS provider even if it did not have a contract with IHS." Record Ex. 45, at ¶ 2 (Wolf Declaration). However, a review of Ms. Lopez's trip report, attached as Exhibit B to the Wolf Declaration, does not entirely support this characterization. She reported that -

[w]e concluded that IHS referrals are only paid at the 100% level if the service is provided at an IHS contract facility. If the service is not provided by an IHS contractor, the service is paid at the Medicaid level of payment. Even if the recipient has been referred to a non-IHS provider by an IHS contractor, the payment is still at the Medicaid level of reimbursement.

Record Ex. 45, Ex. B at 1. The phrase "an IHS contractor" can reasonably be read to refer to the IHS facility providing a service by contractual arrangement. In any case, it is undisputed that the reviewers told North Dakota that they were going to seek further guidance on the issue after returning to the Regional Office. Record Ex. 45, at ¶ 6. Lack of clarity by one CMS reviewer in 1999 about how to apply CMS policy could not make reasonable South Dakota's extrapolations from the May 1997 Memorandum.

The reviewers' manager, Mr. Charles H. Crosley, also submitted a declaration denying that anyone on his staff represented to any state that "services other than those provided and billed by" IHS could qualify for 100% FMAP. Record Ex. 35, at ¶ 10. South Dakota moved to strike this testimony as not based on personal knowledge. South Dakota Reply Br. at 7, n.4. Mr. Crosley stated that he based his assertion on "information available to [him] in [his] official capacity" as well. Record Ex. 35, at ¶ 11. We decline to strike the statement, but we do not rely on it since it can add little to the direct reports of the reviewer. (12)

Finally, even if we were persuaded that the various CMS employees had been provided by South Dakota officials with sufficiently explicit descriptions of the breadth of payments South Dakota intended to claim or had claimed for 100% FMAP, the bare failure of those employees to volunteer a statement of CMS's policy can hardly alter South Dakota's independent responsibility to administer the Medicaid program in accordance with the law. In this regard, the situation is analogous to an earlier case in which the State of Missouri asserted that it had incurred overpayments in reliance on expected retroactive effect being given to a state plan amendment. There, we explained the federal-state relationship as follows:

Each state is the administrator of its own program, making the payments to providers and implementing its plan on a day-to-day basis. Moreover, as HCFA argued, because the responsibility of operating in compliance with its approved plan rests with Missouri, it would not be reasonable for Missouri to assume that it was in full compliance merely because HCFA had not notified it to the contrary. See HCFA Br., p. 9. Thus, Missouri cannot reasonably rely on HCFA's silence to mean that it was acting in compliance with its approved plan.

Missouri Dept. of Social Services, DAB No. 1229, at 7(1991.)

8. South Dakota did not demonstrate detrimental reliance on its interpretation.

South Dakota devoted a significant portion of its submission to an effort to establish harm to it as a result of its alleged lack of notice of CMS's policy. CMS treated this argument as an attempt by South Dakota to improperly rely on estoppel to seek payment of its claims, and contested both the availability of estoppel and the existence of the required elements. CMS Br. at 42-46. South Dakota pointed out that it was not claiming to have relied on the statements, or the silences, of CMS employees for the purpose of establishing a basis to estop CMS from denying its claims, especially since South Dakota had already begun submitting the claims long before the events involved. South Dakota Reply Br. at 6-7, nn.2 and 3. Rather, South Dakota asserted that its claim of detrimental reliance went to the question of whether, assuming South Dakota did not have notice of CMS's interpretation, the Board should defer to South Dakota's alternative interpretation on the grounds that South Dakota had reasonably relied on its interpretation to its detriment. Id.

In that connection, South Dakota raised the issues relating to CMS employees' actions to negative CMS's claim of a well-known and longstanding contrary CMS policy predating South Dakota claims. Therefore, we do not address further the arguments raised by CMS against estoppel. We turn instead to the question of whether South Dakota incurred harm that could be considered detrimental reliance on its own interpretation. Elsewhere, we have concluded that the purported interpretation advanced by South Dakota was not reasonable. Here, we conclude that, even had it been reasonable, no cognizable harm resulted to South Dakota from its attempt to employ its erroneous interpretation.

Clearly, South Dakota could not claim harm as a result of making expenditures for services that were entitled to Medicaid coverage, even if it originally expected to be reimbursed for them at a higher rate than proved correct. See, e.g., Arizona at 21; Wisconsin Dept. of Health and Social Services, DAB No. 1493, at 14 (1994). South Dakota argued, instead, that its initiative to identify claims that met the requirements which it understood to be imposed under the May 1997 Memorandum in itself required substantial expenditures of staff time and other state resources. South Dakota Br. at 22-23. These costs, according South Dakota, diverted funds that would have been available for other Medicaid projects had South Dakota had sufficient notice that the services being identified would not be considered eligible for 100% FMAP.

We note, first, that the federal government pays a share of administrative costs incurred by the states in the operation of the Medicaid program. South Dakota did not establish that it bore these costs alone, which reduces at least the magnitude of the asserted loss. In addition, South Dakota officials acknowledged that, by at least September 14, 1999, they knew of the deferral of similar claims in Arizona, so any costs incurred after that date cannot have been based on any reasonable reliance on South Dakota's on interpretation.

More importantly, South Dakota had the power to avoid any excess administration costs by the simple expedient of making a direct inquiry to the proper officials at CMS about the correctness of its interpretation of the payments newly claimed to be eligible for 100% FMAP before undertaking any expensive initiative to identify them. The long history of CMS policy and South Dakota's own historical practices (as well as the full context discussed earlier in this decision) should have served to alert South Dakota to seek authoritative guidance, before expending funds on an initiative premised on the idea that CMS had suddenly reversed course in a letter answering a different question from a different state. South Dakota well knew how to make a formal inquiry to officials at CMS Regional or Central Offices. Using proper channels to seek clarification would likely have deterred South Dakota from incurring the costs of setting up its identification system.

Conclusion

We conclude that South Dakota could not reasonably claim 100% reimbursement for payments to non-IHS providers receiving referrals from IHS, whether or not participating in the contract care program. Hence, we uphold the disallowances in full.

JUDGE
...TO TOP

Donald F. Garrett

Marc R. Hillson

Judith A. Ballard
Presiding Board Member

FOOTNOTES
...TO TOP

1. The Health Care Financing Administration (HCFA) has been renamed the Centers for Medicare & Medicaid Services (CMS). See 66 Fed. Reg. 35,437 (July 5, 2001). Since "HCFA" was used to refer to the agency at the time that many of the actions at issue here were taken, some references from documents use the old acronym.

2. Much of the general legal background to this dispute is the same as that discussed in greater depth in Arizona. We summarize it here as well for convenience and clarity but incorporate by reference the fuller discussion.

3. The first sentence of the section explains how each state's regular FMAP is calculated. South Dakota's FMAP during the relevant period was 67.75 percent. CMS Br. at 11; Record Ex. 16, at page marked 0715. (Exhibits submitted by both parties were numbered consecutively and are cited as Record Exhibits.)

4. In a footnote to its brief, South Dakota sought to preserve the correctness of that decision as an issue for possible court appeal while declining to reopen its merits before us. South Dakota Br. at 15, n.4; see also South Dakota Reply Br. at 20-21.

5. CMS pointed to a 1999 South Dakota memorandum memorializing the State's understanding of the history of this issue leading up to its implementation of its initiative after the May 1997 Memorandum as proof that State officials actually understood the meaning of the 1994 Regional letter and the 1996 MOA as CMS does. CMS Br. at 23-24, discussing Record Ex. 19. We find this memorandum to be of limited utility. It was prepared long after South Dakota had undertaken its initiative and submitted claims based on it, and hence tells little about South Dakota's pre-1997 understanding of CMS policy as opposed to the its retrospective interpretation of that policy with a view to explaining how it arrived at its initiative. In some of its comments, CMS strained to extract admissions from scattered phrases in the 1999 memorandum that are contradicted by a reading of the whole document. Cf. CMS Br. at 23-24. We do not rely on the 1999 memorandum to evaluate South Dakota's contemporaneous readings of the historical CMS documents. We focus here not on trying to discern the subjective understanding of particular South Dakota officials in 1994, 1996, 1997, or 1999, but rather on reviewing whether the official documents and communications from CMS objectively were timely and adequate to give notice of the policy.

6. We use the number stamps placed on exhibits by CMS where the internal pagination of the exhibit is inconsistent.

7. This assertion is premised on the position that the May 1997 Memorandum was a first statement of policy as to the scope of the 100% FMAP and that it was reasonably understood to permit the states to include non-IHS provider claims if they were based on referrals from IHS facilities. Hence, South Dakota treated the first Arizona disallowance as the announcement of a new policy. As we have explained above, we do not find this premise to be justified on the record.

8. We do not, by this finding, accept CMS's implications that South Dakota had engaged in some kind of bad faith effort to mislead Mr. Russell, which Mr. Russell's testimony does not support. Tr. at 17-22, 24-26. CMS made various comments in its brief that implied that South Dakota actively sought to mislead IHS officials or to avoid alerting appropriate CMS officials to the scope of the its claims. CMS Br. at 25-26, 28, and 37. South Dakota strongly objected to these allegations that it had acted in bad faith. South Dakota Reply Br. at 13-15. After reviewing the various documents and incidents cited by CMS, we find no evidence of bad faith.

9. We note that the testimony of Mr. Russell also cast some doubt on South Dakota's description of the claims at issue as involving services furnished by non-IHS facilities that actually had contracted with individual IHS facilities to provide facility services on their behalf. Mr. Russell testified that some contract care providers had area-level contracts and receive referrals from many different IHS facilities. Tr. at 30-32. He also testified that the contracts in the IHS contract care program deal primarily with establishing a payment rate at or below the Medicaid rate by negotiation between the IHS and the non-IHS facility for Native Americans referrals. Such contracts would not establish a contractor relationship by which a provider furnished services as an agent of a particular IHS facility. However, we need not resolve this factual question because it is uncontested that none of the disallowed amounts constituted payment for claims submitted by IHS facilities representing the services as provided by the IHS facility by use of a contractual agent.

10. Ms. Quevedo-Mendoza also stated that Mr. Iversen never asked her "whether South Dakota's tracking initiative was permissible under CMS policy" and she did not ever "independently consider or express any opinion as to whether the new initiative was permissible under CMS policy." Quevedo-Mendoza Declaration at ¶ 5.

11. The assertion that this last-minute intelligence triggered the reviewer's inquiries is corroborated by South Dakota's evidence that the issue was added to a prior list of topics just before the reviewers' arrival. Iversen Declaration at ¶ 4; see also Record Ex. 20.

12. South Dakota also pointed to a fax sent from CMS Central Office in October 1999 to Mr. Crosley with a cover note that "CO [Central Office] said that the referrals are not 100% reimbursable w/o a contract." Record Ex. 44, at 1. South Dakota called this statement "powerful evidence" that the "litmus test" for 100% FMAP was "the existence of a contract." South Dakota Reply Br. at 8. We do not attribute such force to a handwritten jotting on a cover sheet which states what is not reimbursable and is silent as to what is.

South Dakota argued finally that CMS Central Office learned "independently" of South Dakota's position, citing what appears to be documents relating to draft legislation which would have revised section 1905(b) of the Social Security Act to adopt that position. South Dakota Reply Br. at 8; Record Ex. 26, at 1761. South Dakota further implied that some question about CMS's policy arose from the time taken by CMS to issue deferrals after receiving this information. Id. We see no necessary connection between the confidence of CMS in the meaning of its policy and the passage of time in issuing the deferrals.

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES