Virginia Department of Medical Assistance Services, DAB No. 3051 (2021)

DECISION

The Virginia Department of Medical Assistance Services (Virginia) appealed an April 30, 2019 disallowance of $13,761,829 by the Centers for Medicare & Medicaid Services (CMS) for performance bonus payments claimed under section 2105(a)(3) of the Social Security Act (Act), enacted by the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), Pub. L. No. 111–3, 123 Stat. 8-111 (Feb. 4, 2009) (CHIPRA bonus payments).  As explained in detail later, CHIPRA bonus payments were offered on a temporary basis to incentivize states to adopt measures to simplify enrollment for children in Medicaid and to demonstrate effective implementation in increased enrollment.  Virginia claimed $60,316,957 in CHIPRA bonus payments for fiscal years (FYs) 2011 through 2013.  After an audit by the Inspector General (IG) determined that Virginia overstated the amount of CHIPRA bonus payments to which it was entitled, CMS issued the instant disallowance which Virginia disputes. 

We conclude that Virginia has not supported the higher amount of CHIPRA bonus payments originally claimed and therefore uphold the disallowance in full.

Applicable Legal Authorities

The Medicaid program is jointly financed by the federal government and states to provide medical assistance to individuals who meet certain eligibility categories under the statute and regulations.  Act §§ 1901-1903; 42 C.F.R. § 430.0.  Each state administers its own Medicaid program under broad federal requirements and the terms of its “plan for medical assistance,” which must be approved by CMS.  Act § 1902; 42 C.F.R. Part 430, subpart B.  Section 1115 of the Act authorizes the Secretary to approve an experimental, pilot, or demonstration project that is likely to assist in promoting the objectives of the Medicaid program and to waive compliance with certain specific requirements.  A demonstration project may, for example, “expand coverage to individuals not eligible for Medicaid, provide services not typically covered by Medicaid, or use innovative service delivery systems to improve care, increase efficiency, or reduce costs.”  N.J. Dep’t of Human Servs., DAB No. 2780, at 3 (2017).

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Congress created the Children’s Health Insurance Program (CHIP) in 1997 under title XXI to expand health care coverage to uninsured children in families whose income was too high to qualify for Medicaid.  Act § 2101, et seq.  States have flexibility to use CHIP funds to cover CHIP-eligible children through their Medicaid programs, to create stand-alone CHIP programs, or to implement combinations of both.  Act § 2101(a)(1), (2).  States are given flexibility to design their CHIP programs so long as they comply with broad federal requirements.  Act §§ 2101(b), 2102, 2103.

From FY 2009 through 2013, CHIPRA provided for incentive bonus payments to states that:  (1) implemented at least five of eight specified program features to simplify and retain children’s enrollment under CHIP and Medicaid1 ; and (2) showed enrollment of “qualifying children” in a given bonus payment year that exceeded its calculated baseline enrollment for that year.2   Act § 2105(a)(3), (4).  The term “qualifying children” means “children who meet the eligibility criteria (including income, categorical eligibility, age, and immigration status criteria) in effect as of July 1, 2008” for Medicaid enrollment, including those eligible based on waivers approved under section 1115 of the Act, but excluding lawfully-residing immigrant children and children enrolled after October 1, 2013.  Act § 2105(a)(3)(F)(i), (iii).

It is undisputed that Virginia implemented program features sufficient to qualify for CHIPRA bonus payments, so the present case focuses on how the baseline and bonus year enrollments were calculated to determine whether and by how much enrollment increased.  The statute provided that the “baseline number of child enrollees” for a state for FY 2009, the first year of the bonus payment program, was –

equal to the monthly average unduplicated number of qualifying children enrolled in the State plan under title XIX during fiscal year 2007 increased by the population growth for children in that State from 2007 to 2008 (as estimated by the Bureau of the Census) plus 4 percentage points, and further increased by the population growth for children in that State from 2008 to 2009 (as estimated by the Bureau of the Census) plus 4 percentage points . . . .

Act § 2105(a)(3)(C)(iii)(I).

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For FYs 2010 through 2012, the statute provided that the “baseline number of child enrollees” was –

equal to the baseline number of child enrollees for the State for the previous fiscal year under title XIX, increased by the population growth for children in that State from the calendar year in which the respective fiscal year begins to the succeeding calendar year (as estimated by the Bureau of the Census) plus 3.5 percentage points . . . .

Act § 2105(a)(3)(C)(iii)(II).  For FY 2013, the statute provided that the “baseline number of child enrollees was –

equal to the baseline number of child enrollees for the State for the previous fiscal year under title XIX, increased by the population growth for children in that State from the calendar year in which the respective fiscal year begins to the succeeding calendar year (as estimated by the Bureau of the Census) plus 3 percentage points . . . .

Act § 2105(a)(3)(C)(iii)(III).  Thus, the initial determination of the monthly average unduplicated number of qualifying children enrolled in FY 2007 will carry forward as a factor in determining the applicable baseline for all relevant fiscal years.  The applicable baseline enrollment will then be compared against each program year’s current enrollment figures to determine the state’s eligibility for bonus payments.

Two distinct, though interrelated, data systems (with confusingly similar acronyms) are involved in the enrollment calculations.  The Medicaid Statistical Information System (MSIS) is the system through which states report required Medicaid eligibility and claims data to CMS and is maintained by CMS.  The other system consists of state-based Medicaid Management Information Systems (MMIS), operated by each state Medicaid program as a claims processing and information management system.  Data collected by Virginia’s MMIS are uploaded to the CMS MSIS.  See Va. Br. at 2, 3.  Although the raw data in the federal MSIS are provided by the State MMIS, the data dictionaries, and specifically the categories into which the information is grouped, differ.  In addition, significantly in the present case, it is undisputed that a time lag exists between when information about individual recipients and their claims is available in the state MMIS and when that information is uploaded into and available in the CMS MSIS.

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Case Background

The IG audit that resulted in the instant disallowance was part of a series of audits which concluded that twelve states received more than $277 million in unallowable CHIPRA bonus payments.  CMS issued disallowances to the nine states that did not voluntarily return the identified overpayments.  All nine states appealed the disallowances to the Board.  Seven of the appeals were resolved in a consolidated decision issued on April 21, 2021.  Wash. State Health Care Auth., et al., DAB No. 3037 (2021).3   One case was settled and dismissed.  Alabama Medicaid Agency, DAB Dkt. No. A-19-95.  This case remains before us.

In its January 2019 audit report, entitled “Virginia Received Millions in Unallowable Bonus Payments,” A-04-17-08060, the IG concluded that Virginia systematically overstated its “current enrollments” for FYs 2011 through 2013 by improperly inflating them.  CMS Ex. 20, at 9.  The IG explained that Virginia used the proper data sources and the same definition of qualifying child as CMS did (unlike its findings as to other states), but that Virginia –

incorrectly inflated its current enrollments by approximately 7 percent to account for potential retroactive enrollment.  When the State agency tried to reconcile to its own data the baseline enrollment numbers provided by CMS, the State agency’s enrollment numbers were consistently under by approximately 7 percent.  The State agency believed that CMS added this 7 percent to account for retroactive enrollment. As a result, the State agency added 7 percent to its current enrollment numbers for estimated retroactive enrollment, instead of using the adjustment process established by CMS to account for actual retroactive eligibility determinations in its current enrollment.  The State agency neither obtained CMS approval to add the estimated figure nor resolved the discrepancy between its baseline enrollment calculations and CMS’s baseline enrollment calculations.  Because the bonus requests kept getting approved, State agency officials said that they assumed that there was no issue.

Id.  The IG rejected Virginia’s response, finding that CMS had provided specific guidance “that current enrollment calculations should be based on actual enrollment” and Virginia did not show that CMS knew of or approved its methodology.  Id. at 10-11.  Thus, the IG concluded, “[b]y definition, the State’s addition of 7 percent to its current enrollment numbers was not a reflection of the State’s actual enrollment.”  Id.  CMS agreed with the IG and issued the disallowance now on appeal.  Id. at 10.

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Analysis

On appeal, Virginia does not deny that it inflated its reported current FY enrollments each year by seven percent over the actual enrollment numbers in its data systems, but argues that doing so:  (1) actually made its calculations more accurate; and (2) was based on a reasonable interpretation of CMS’s ambiguous guidance.  Va. Br. at 9.  We find the record does not support either argument.

1. The current FY enrollments on which Virginia’s bonus payment claims were based were inflated and not accurate.

Virginia begins its explanation of how increasing its actual current enrollment figures each year by seven percent nevertheless resulted in more accurate numbers by pointing out, correctly, that –

To satisfy the December 31 payment deadline, states must send their current enrollment information to CMS by November 1 of that year.  The short turnaround between the end of the fiscal year (September 30) and the November 1 deadline, requires states to rely on preliminary enrollment information gathered in their MMIS system that they have not yet reported to CMS’ MSIS database.

Va. Br. at 5.  The use of the information from the State MMIS system from December for current enrollment calculations makes the count closer to the actual enrollment for the prior fiscal year but, Virginia points out, the enrollment numbers may still not be what it terms “mature and final” for several reasons.  Id.  For one thing, eligibility determinations and subsequent claims appeals may not have been finalized and input completely by the end of the fiscal year.  For another, by law states must provide up to three months of Medicaid coverage prior to the date of a recipient’s eligibility determination.  See Act § 1902(a)(34).  In other words, some recipients may not have been determined to be eligible until two months after the fiscal year ends on September 30 and yet turn out to have been eligible during part of the prior fiscal year and therefore need to be added to the enrollment counts for those months. 

Virginia made its first claim for a CHIPRA bonus payment in FY 2011, at which point it needed to compare its current enrollments with the baseline for that fiscal year.  The baseline, as explained earlier, was established by taking the monthly average unduplicated number of qualifying children enrolled in Medicaid in FY 2007 and trending that number forward by a percentage each year to reflect child population growth in the State plus a percentage set by statute (4% in FYs 2008 and 2009; 3.5% in FYs 2010 through 2012; and 3% in FY 2013).  According to Virginia, it was unable to “replicate the baseline number CMS had calculated” in order to “ensure that it used the same approach in determining its current year enrollment.”  Va. Br. at 7.  Specifically,

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Virginia asserts that, when it used “data from the MSIS and the methodology outlined by CMS, [it] found that CMS’ baseline number was 7% higher” than what Virginia’s calculations yielded for the baseline enrollment for FY 2011.  Id.

According to Virginia, when it could not resolve the “discrepancy,” it proceeded to “determine the current year enrollment data as best it could” using the same MMIS data source which it would use for reporting child enrollment data to CMS for its MSIS.  Id.  Using that data, Virginia “appropriately included the relevant populations of ‘qualifying children’ as defined by the statute” and calculated the current year enrollment figures.  Id.  However, Virginia then decided to “mitigate the discrepancy by adjusting its FY 2011 current enrollment by approximately 7% to ensure that CMS was accurately comparing apples to apples in assessing Virginia’s bonus payment eligibility.”  Id. at 8.

Virginia’s own description makes clear that the alteration of the current enrollment figures was not undertaken to correct any asserted error or deficiency in Virginia’s count of the qualifying child enrollees in FY 2011.  Instead, based on its concern that CMS’s baseline enrollment figures were higher than Virginia’s own calculations for the baseline, Virginia chose to inflate the current-year enrollment numbers to ensure the “growth” in enrollment would be large enough to provide the bonus payment to which Virginia believed it was entitled.4   The inflation factor Virginia used was apparently based on the size of the discrepancy between CMS’s calculation of the applicable baseline enrollment figures and Virginia’s calculation of those figures.  Virginia then applied that factor to the numbers it reported as current enrollment figures for each fiscal year.  Virginia thus made its current enrollment numbers less accurate, not more, because it believed CMS’s baseline enrollment numbers to be inaccurate or at least inconsistent with Virginia’s own calculations. 

Virginia claims that it “tried to engage CMS in discussions” and to get “additional information on CMS’ methodology for calculating the baseline,” but that these efforts were unsuccessful.  Va. Br. at 7.  Indeed, the State alleges it “repeatedly asked CMS for assistance in reconciling CMS’ baseline calculations” to its own but that CMS never provided “the explanations requested,” and that it was never able to make a reconciliation.  Id. at 10.  Yet Virginia offers no specific details about these alleged attempts to determine why the State was not able to reproduce CMS’s calculations of the baseline enrollment and cites no evidence of any particular contacts or communications about the issue.5  We have no basis on this record to credit Virginia’s unsupported

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assertions after-the-fact of having attempted to determine why it was not able to reproduce CMS’s results using the data provided by Virginia to the MSIS system.

Virginia’s argument that its seven percent adjustments increased accuracy really centers not on the accuracy of the current enrollment figures for each fiscal year but rather on the accuracy of the claimed bonus payment amounts.  Because each fiscal year’s baseline enrollment figure is derivative of the original 2007 baseline enrollment calculations, Virginia contends that a discrepancy in those calculations would result in inaccurate measurements of the growth in enrollment in the fiscal years under review absent its corresponding adjustments in each fiscal year’s current enrollment figures.  Id. at 10-11.

We agree that errors in the 2007 baseline enrollment could affect the determination of whether and to what extent a state’s child enrollment increased in succeeding fiscal years.  Virginia’s “solution,” however, was to presume its calculations correctly applied the methodology CMS communicated in various ways to the states rather than determine why it could not replicate the results CMS got for the FY 2007 baseline.  Virginia then manipulated the numbers over which it had direct control, i.e. the current enrollment counts for the later fiscal years that it reported to CMS, to obtain the same measurements of enrollment increases that would have resulted had the baseline enrollment figures for each year been those that Virginia calculated. 

Virginia identifies no authority, and we find none, that justifies providing CMS numbers that purport to reflect “current enrollment” of qualifying children when those numbers are intentionally inflated beyond actual child enrollment for the respective periods.  We discuss next Virginia’s suggestions that CMS was aware of its approach to resolving the supposed “discrepancy” and tacitly approved it.

2. Virginia failed to disclose its true methodology to CMS and never received approval to use the seven percent factor to inflate enrollment counts.

Virginia objects to CMS’s repeated characterization of the State’s actions as secretive.  Va. Reply Br. at 4 (citing CMS Resp. Br. at 2, 20, 27, 29, 29, 30 and 31).  According to Virginia, it was very explicit in its explanation that it had adjusted the MMIS data:

Each time [Virginia] applied for a bonus payment, it submitted its current year enrollment data with the following comment:

“Virginia obtained its FY 2011 Unduplicated Qualifying Children count from monthly MMIS Report number RS-O-264, Medical Assistance Case and Enrollment Count by Aid Category, adjusted to include retroactively enrolled members.”

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Id. (quoting CMS Ex. 11, at 26 (emphasis added) (also citing CMS Exs. 13, at 4; 15, at 3; and 16, at 3)).  This statement is indeed explicit, but it is also false or, at least, misleading.  Virginia’s “adjustments” to the data submitted in December of each relevant fiscal year were not made to include retroactively enrolled members for each fiscal year reported.  This comment to CMS, similar to Virginia’s response to the IG audit quoted earlier, implies that Virginia did some calculation (or estimate) of retroactive enrollments for the relevant fiscal year, but Virginia has offered no evidence that any such calculations were made.  On the contrary, as explained above, Virginia has stated clearly that the adjustments were in fact made in response to Virginia’s asserted difficulty reproducing the original 2009 baseline enrollment calculations by CMS.  In essence, Virginia is saying that, without determining why its baseline calculations differed by seven percent from those that CMS provided, Virginia simply altered its “actual” current enrollment calculations by the same proportion.  In short, far from constituting a disclosure of Virginia’s methodology, these statements at best provided no indication to CMS about either Virginia’s use of a seven percent inflation factor or its supposed concerns about the “discrepancy” between CMS’s baseline enrollment calculations and Virginia’s own calculations.  At worst, this statement could serve to deflect attention if CMS were to later discern that the data on the current fiscal year enrollments that was eventually submitted to CMS’s MSIS did not match what Virginia submitted for the bonus payment calculation process.

CMS argues that Virginia actually reported the same baseline figures as CMS calculated and therefore is being dishonest in even asserting that it ever disagreed with those calculations.  CMS Br. at 26 (comparing CMS Exs. 2 and 5).  This argument relies on a data collection form submitted by Virginia (for FY 2009) which included space for baseline and current enrollment figures and for State comments.  CMS Ex. 5.  Virginia asserts that the baseline number was pre-filled by CMS (which CMS does not deny) and not actually reported by Virginia.  Va. Reply Br. at 5.  This assertion is credible in light of the instruction on the form in the box for “FY 2009 monthly average unduplicated qualifying children,” which states specifically that this information is for the “state to

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ENTER.”  CMS Ex. 5.  In contrast, the form contains no such instruction for the baseline figures.  Id.  We therefore reject CMS’s position that Virginia affirmatively provided the same baseline enrollment figures as CMS had calculated.  We note that the State’s comments on this form again fail to identify to CMS any discrepancy or concern about CMS’s baseline enrollment figures or to notify CMS about any intention to use an inflation factor rather than reporting the true number of qualifying children.7

Virginia notes that states are permitted and expected to adjust their actual enrollment figures in some circumstances.  See, e.g., Va. Br. at 13 (“adjustments for certain enrollment conditions and requirements that were not in effect in the base year”).  It is certainly true that the initial figures for current-year enrollment may not reflect retroactive enrollment periods (which the State refers to as the data becoming “mature”).  Id. at 3-4.  As the State acknowledges, however, CMS provided a procedure for states to make late adjustments for these situations by April 30 of the following year for current enrollment data provided by December 31.  Id. at 6 (citing CMS Ex. 6, at 13).  The procedure was spelled out in the following communication to the states:

Under the Bonus Payment adjustment process, the Bonus Payments for a fiscal year may be revised, based on updated data as of the April 30 following the December of the calendar year after the end of the fiscal year for which the initial Bonus Payment was made.  In this regard, the initial FY 2011 Bonus Payment amount for your State that was calculated last December 2011 may be updated under the FY 2011 Bonus Payment adjustment process.  Accordingly, we are requesting that your State provide its review and any updates to the average monthly enrollment data under the FY 2011 Bonus Payment Adjustment Process by Monday, April 30, 2011. 

CMS Ex. 10, at 2 (bold in original, underlining removed).  CMS explained that the purpose of allowing bonus payment adjustment submissions by the states was to “ensure that the full/correct FY 2011 monthly average unduplicated number of Qualifying

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Children enrollment data be used . . . in calculating the amount of the Bonus Payments for FY 2011,” in particular in regard to the potential impact of retroactive eligibility determinations.  Id. (bold in original; italics added; underlining removed).  Virginia notified CMS in April 2012 that it had no need to revise its originally reported current enrollment numbers using this bonus payment adjustment process to account for retroactive enrollment adjustment process.  CMS Ex. 11.  Thus, Virginia again failed to notify CMS that its initial submission did not reflect the full and correct number for enrollment in FY 2011 but rather included a seven percent increase based on Virginia’s own disagreement with CMS’s baseline enrollment calculation.

Virginia objects that CMS did not provide an appeal process to specifically challenge the baseline calculation other than allowing states that did not receive bonus payments to seek review of such denials.  Va. Br. at 15.  As CMS points out, however, states were invited on multiple occasions to consult or comment on the development of baseline enrollment figures.  CMS Br. at 26-27 (and record citations therein).  For example, in a December 16, 2009, letter to all state health officials, CMS invited states “with questions about the calculation of the Bonus Payment or the process explained” in an appendix attached to the letter (which laid out how the baseline enrollment and current enrollment numbers were to be determined) to contact a named official “of the CMS Financial Management Group for additional information or assistance.”  CMS Ex. 6, at 4, App. II.  CMS also avers that it provided a dedicated inbox for state CHIPRA queries and held multiple conference calls to address the states’ questions. CMS Br. at 26 (citing CMS Exs. 3, at 1; 4, at 1; 8, at 1).

Virginia does not dispute that it received these communications from CMS or deny having access to the email box or conferences calls.  Virginia does not assert that it ever actually sought any change in the baseline enrollment figures when informed of CMS’s calculations.  (As noted earlier, Virginia does claim that it asked for clarification when it could not reproduce CMS’s results, but does not provide any documentation of any such request either.)  Moreover, CMS identifies at least one state (Wisconsin) which successfully sought a reduction in the baseline enrollment calculated by CMS (based on the effects of state law changes).  Id.  The example of Wisconsin undercuts any suggestion that it would have been futile to have sought a reduction had Virginia been able to show some basis for it.  Moreover, Virginia had an opportunity in the audit and before the Board to demonstrate that the disallowed bonus payment amounts were based on erroneous baseline calculations and has failed to do so.  Indeed, Virginia did not even provide any specific information before the Board to show how it arrived at its conclusion that a discrepancy existed.

When CMS did not question Virginia’s submission of its FY 2011 current enrollment figures, the State continued to increase its current enrollment counts in the next two fiscal years in the same way. Va. Br. at 8.  Using the current enrollment figures provided by the State, CMS disbursed CHIPRA bonus payments for each fiscal year.  Virginia implies

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that CMS should be considered to have somehow approved its inflation practice by inaction since CMS made bonus payments using Virginia’s figures.

Virginia further asserts that it could reasonably presume its methodology had been “validated” because the CMS letter approving the requested bonus stated that CMS had “reviewed the enrollment data” Virginia submitted.  Va. Br. at 14 (citing Va. Ex. C (CHIPRA Bonus Payment Approval Letter dated Dec. 28, 2011)).  The full sentence in the approval letter suggests, however, that CMS merely reviewed the data for purposes of using it to calculate the amount of the bonus to disburse with no indication that CMS reviewed the methodology Virginia used to arrive at the submission it made.  Va. Ex. C (“After determining that you met the required program features, CMS reviewed the enrollment data you submitted and determined the amount of the Performance Bonus for your State in accordance with section 2105(a)(3).”). 

Any presumption by Virginia that the acceptance of its data submission of current enrollment figures for purposes of determining the FY bonus payment implied validation of Virginia’s practice of inflating the enrollment figures by seven percent is further undermined by its knowledge of the reason the state submission was needed.  CMS explained to all states as early as 2009 that it had to use state-submitted figures, rather than its own MSIS system, to ascertain the current enrollment numbers in order to pay bonuses when required by law.  CMS Ex. 6, at 10 (“Because of timing, such data is not available directly from the MSIS (that is, such data would not be available by December 31 following the end of the fiscal year).  Therefore, this current enrollment data element needs to be obtained directly from a State prior to December 31 in order to make the Bonus Payments by that date.”).  Without having the actual numbers yet in its MSIS, CMS would have no way to know that Virginia submitted inflated figures absent disclosure of that fact by the State. 

We conclude no basis exists for the State to have presumed approval of its inflation practice merely based on CMS’s acceptance of and reliance on State-submitted enrollment figures.  Virginia has offered us no evidence of any explicit approval and failed to make any such demonstration to the IG during the audit.  CMS Ex. 20, at 11 (“After repeated requests, we were unable to obtain any evidence from the State agency that CMS approved the State’s approach to calculating its current enrollment (i.e., adding 7 percent).”).

We conclude that Virginia has not shown that it ever clarified why it could not reproduce CMS’s original baseline enrollment calculations, disclosed that it was adding a seven percent inflation factor to adjust for the discrepancy it claims to have found, or sought or obtained CMS approval for that inflation practice.

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3. Virginia has not shown that its systematic inflation of current enrollments reflected any reasonable interpretation of the applicable requirements.

Virginia points out that the Board will defer to an agency’s interpretation of the statute or regulations it implements, so long as it is reasonable and permissible, except when a state had no notice of the interpretation and can show it relied on a different reasonable interpretation.  Va. Reply Br. at 2; see Wash. State Health Care Auth., et al., DAB No. 3037, at 18 (stating the general rule concerning Board deference to agency interpretations).  While true, this summary of Board jurisprudence does not help Virginia here because it fails to show that it relied on any interpretation of the applicable statutory or regulatory provisions at all, much less a reasonable interpretation.  What Virginia claims to have interpreted “reasonably” is CMS’s guidance that it should follow the same “logic and basis” in providing current enrollment figures as CMS described using in developing the baseline enrollment figures.  Va. Br. at 11 (citing CMS emails referenced and quoted in the IG audit report at 13, in this record at CMS Ex. 20, at 18).  Virginia essentially theorizes that, because CMS used basis of eligibility (BOE) codes to identify children in the baseline calculation even while admitting those BOE categories would not fully track the statutory definition of qualifying children, CMS must have valued consistency between the baseline and current-year data sources more than accuracy in the actual enrollment numbers.  Id. at 11-12 (“CMS’ guidance, therefore, emphasizes both maintaining a consistent basis and logic across the baseline and current enrollment data, and accurately capturing the increase rather than absolute numbers.” (italics in original)).

Virginia’s theory is without merit.  First, it proposes no reasonable interpretation of any statutory or regulatory language that could support altering the actual current enrollment numbers by a fixed percentage each year.  Second, Virginia’s purported interpretation of CMS’s instructions to use the same “logic and basis” to calculate the current enrollment figures as CMS used in developing the base year enrollment figures is unsupportable.  The guidance provided in CMS’s emails plainly instructed all states to use the same data sources and methods as CMS used.  Virginia instead suggests that it failed to understand or replicate CMS’s methodology but that its approach was reasonable as long as it believed its own calculations of the baseline (with a seven percent discrepancy) were mirrored by its alteration of each year’s current enrollment by the same percentage.  This suggestion is unreasonable on its face.

Virginia further argues that, in the absence of clarification about how to apply the “logic and basis” guidance in the situation of a disagreement about the correctness of the baseline enrollment figures, for Virginia to use “unadjusted actual data would have undermined CMS’ repeated attempts through its guidance to ensure an accurate and consistent comparison of enrollment levels.”  Va. Br. at 13.  On that basis, Virginia asserts that it “applied the 7% adjustment to fulfill the logic and basis requirement, not in contravention of it.”  Id. (italics in original).  Virginia also contends its approach was consistent with CMS’s instructions because the guidance “never explicitly referenced

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the use of ‘actual’ enrollment data; it only specified the source of the data (the MMIS).”  Id.  In any case, according to Virginia, the State “did, in fact, use actual enrollment data,” but simply “adjusted the data” to suit its understanding of CMS’s logic and basis.  Id. 

Virginia’s position that CMS failed to clarify what a state should do if it was not able to reproduce the results of applying CMS’s methodology is undercut by Virginia’s failure to demonstrate that it sought clarification or consultation from CMS despite the invitations to do so which we cited above.  Virginia’s claim of consistency with CMS guidance rests in part on the fact that it restricted its data collection to children in the BOE categories that CMS used to develop the baseline enrollment data unlike other states that appealed disallowances of their bonus payments.  Va. Br. at 12-13.  It is true that Virginia’s methodology was consistent with CMS’s use of the BOE categories, but Virginia’s injection of a seven percent increase to actual enrollment is not consistent with any element of CMS’s methodology, logic, or basis for the baseline enrollment calculations.

We conclude that Virginia did not follow CMS’s guidance under any reasonable interpretation.

4. Virginia’s addition of seven percent to its current year enrollment figures is not justified by its claim to have ensured comparability with the baseline enrollments.

Virginia’s theory that its approach simply resulted in comparing apples to apples cannot survive scrutiny.  Virginia argued:

The 7% discrepancy between CMS’s baseline calculation and [Virginia’s] indicated that Virginia’s methodology for calculating the baseline differed from CMS’ in some significant way.  Had Virginia then used this same methodology—which was clearly not consistent with CMS’ methodology—to calculate and report FY 2011 enrollment data, the resulting enrollment growth would have been inaccurate and understated.  In order to ensure an apples to apples comparison between baseline and current year enrollment, the Commonwealth adjusted the current year enrollment to account for the methodological discrepancy.

Va. Br. at 10.  Asserting that CMS stressed the overriding importance of comparing apples to apples, Virginia thus seeks to justify departing from CMS’s methodology in order to ensure comparability.  This claim is analogous to the theory that the altered enrollment figures were more accurate than the actual figures because they would capture the increase more accurately.  We have already rejected that theory because it relies on the unsupported assumption that Virginia’s baseline enrollment calculations were more reliable than CMS’s and should be used to create a formula to similarly revise the later current-year enrollment figures.  We address the repeated reference to making an “apples-to-apples” comparison separately here, however, because the Board has indeed

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held that such a comparison is central to the correct determination of bonus payments.  We do not agree, though, that Virginia’s conduct here properly established an “apples-to-apples” comparison to justify its bonus payment claims.

In its consolidated decision, the Board determined that CMS’s interpretation of the term “qualifying child” to exclude children who met the statutory definition but were not captured in the MSIS BOEs defined by CMS was unreasonable and impermissible.  DAB No. 3037, at 22-23.  The Board further found that CMS’s guidance to the states was not entirely clear about whether the restriction of qualifying children to those limited BOEs (originally justified by administrative obstacles to obtaining fuller data in time for the 2007 baseline calculations) was to be reproduced in determining current-year enrollments.  Id. at 22-26.  Moreover, even clear guidance could not override statutory requirements.  Id.  Nevertheless, the Board did not simply reverse the disallowances explaining:

Because the baseline enrollments developed by CMS did not capture all of the groups of eligible “qualifying children” included in the States’ bonus payment year current enrollments, the numbers of “qualifying children” exceeding the States’ baseline enrollments were likely overstated, resulting in the States’ receiving excess, unauthorized bonus payments.  To put it in simple terms, CMS counted “apples” for baseline enrollments while the States counted “oranges” for bonus payment year enrollments.  Although we determine that the statute required counting “oranges,” we cannot simply require CMS to make bonus payments based on the differences between apples and oranges.  Comparing baseline enrollments with the bonus payment year counts using different groups of qualifying child enrollees would be misleading as to the magnitude of any real increase in enrollment of qualifying children and thus defeat the entire purpose of the bonus payment statute.  In order to compare “oranges” to “oranges,” it would be necessary to redetermine the baseline enrollments using the same groups as the States used in their bonus payment year current enrollment counts.  We determine that the States should be given an opportunity to produce verifiable documentation of the monthly average unduplicated numbers of “qualifying children” not assigned BOE codes 4, 6, or 8 who were enrolled in their Medicaid programs during FY 2007 and each year for which they received a bonus payment; and CMS should use the data to recalculate the bonus payments and correctly identify the amount of any overpayment. 

Id. at 4-5 (bold in original).  Thus, where appropriate, the Board provided an opportunity for states to provide accurate data to correct CMS’s erroneous interpretation of the statute which distorted its baseline enrollment calculations for the relevant years for those states.

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Virginia concludes its reply brief by requesting a somewhat similar alternative remedy:  “If the repayment demand is upheld, [Virginia] requests the Board remand to CMS to recalculate the Bonus Payment amounts including a comparison of the CMS baseline with [Virginia’s] baseline data and adopting any necessary modifications to the current year data to ensure both are determined using the same logic and basis.”  Va. Reply Br. at 7.

We do not find it appropriate to provide such a remedy in the present case.  Virginia, unlike the states covered by the Board’s consolidated decision, has shown no error by CMS in the methodology used to calculate the relevant baseline enrollment numbers.  In the absence of such a showing, Virginia has not demonstrated that the baseline enrollment figures for each year should be compared to Virginia’s altered baseline numbers.  Comparing Virginia’s actual enrollment figures to the baseline enrollment figures computed by CMS using actual enrollment data would be comparing apples to apples.  Virginia’s claims for bonus payments based on comparing Virginia’s revised – inflated – enrollment figures to the original CMS baseline calculations amounted to comparing oranges to apples.  Virginia has not shown that it is entitled to any relief – alternative or otherwise.

Conclusion

For the reasons explained in our analysis, we sustain CMS’s disallowance in its entirety.

1. The program features were:  (i) Continuous Eligibility; (ii) Liberalization of Asset Requirements; (iii) Elimination of In-Person Interview Requirement; (iv) Use of Joint Application for Medicaid and CHIP; (v) Automatic Renewal; (vi) Presumptive Eligibility for Children; (vii) Express Lane; and (viii) Premium Assistance Subsidies.  Act § 2105(a)(4).
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2. The amount of the bonus a state received depended on whether the increase of enrollment over a baseline measurement was greater or less than 10% (defined as first or second tier bonuses).  Act § 2105(a)(3)(B), (C).  Virginia does not dispute the tier level for which it qualified.
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3. Because the consolidated decision involved different, and broader, issues arising under the CHIPRA bonus payments program, the Board included more extensive information on the operation of the program there which may be consulted for additional background.
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4.  Virginia does assert that, if the discrepancy had been in the opposite direction, the same sort of adjustment would have been called for to prevent overclaiming.  Va. Br. at 10-11.
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5. Virginia offered similar assertions in its response to the IG audit but again with no indication of any supporting documentation.  CMS Ex. 20, at 21.
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6. The full text of the “comment” field in which Virginia provided information to CMS about its current enrollment submission reads as follows:



Virginia obtained its FY 2011 Unduplicated Qualifying Children count from monthly MMIS Report number RS-O-264, Medical Assistance Case and Enrollment Count by Aid Category, adjusted to include retroactively enrolled members.  The number of eligible children for each month was calculated based on those recipients with active enrollment and a basis of eligibility of "Child" (in the Virginia MMIS, this is identified as having an Aid Category of 072C - 099C).  For clarification, Virginia did include its Title XXI Medicaid Expansion population (Virginia MMIS Aid Category 094) and exclude its Refugee children who are paid for with 100% federal funds (Virginia MMIS Aid Category 078C and 079C).

CMS Ex. 11, at 2.

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7. Virginia’s comments on the form read in full:

Virginia obtained its FY 2009 Unduplicated Qualifying Children count from our current (11/15/2009) MMIS Recipient Eligibility extract file accessed via SAS.  For each month in Federal Fiscal Year 2009, eligibility was determined as of the last day of the month.  The number of eligible children for each month was calculated based on those recipients with active enrollment and a basis of eligibility of "Child" (in the Virginia MMIS, this is identified as having an Aid Category of 072C ‐ 099C).  For clarification, Virginia did include its Title XXI Medicaid Expansion population (Virginia MMIS Aid Category 094) and exclude its Refugee children who are paid for with 100% federal funds (Virginia MMIS Aid Category 078C and 079C).

CMS Ex. 5.
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