C.F.R. » Title 42 » CHAPTER IV—CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES › SUBCHAPTER C—MEDICAL ASSISTANCE PROGRAMS › PART 433—STATE FISCAL ADMINISTRATION › Subpart B—General Administrative Requirements State Financial Participation

42 C.F.R. § 433.54

Bona fide donations

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(a) A bona fide donation means a provider-related donation, as defined in § 433.52, made to the State or unit of local government, that has no direct or indirect relationship, as described in paragraph (b) of this section, to Medicaid payments made to—

(1) The health care provider;

(2) Any related entity providing health care items and services; or

(3) Other providers furnishing the same class of items or services as the provider or entity.

(b) Provider-related donations will be determined to have no direct or indirect relationship to Medicaid payments if those donations are not returned to the individual provider, the provider class, or related entity under a hold harmless provision or practice, as described in paragraph (c) of this section.

(c) A hold harmless practice exists if any of the following applies:

(1) The State (or other unit of government) provides for a direct or indirect non-Medicaid payment to those providers or others making, or responsible for, the donation, and the payment amount is positively correlated to the donation. A positive correlation includes any positive relationship between these variables, even if not consistent over time.

(2) All or any portion of the Medicaid payment to the donor, provider class, or related entity, varies based only on the amount of the donation, including where Medicaid payment is conditional on receipt of the donation.

(3) The State (or other unit of government) receiving the donation provides for any direct or indirect payment, offset, or waiver such that the provision of that payment, offset, or waiver directly or indirectly guarantees to return any portion of the donation to the provider (or other parties responsible for the donation).

(d) CMS will presume provider-related donations to be bona fide if the voluntary payments, including, but not limited to, gifts, contributions, presentations or awards, made by or on behalf of individual health care providers to the State, county, or any other unit of local government does not exceed—

(1) $5,000 per year in the case of an individual provider donation; or

(2) $50,000 per year in the case of a donation from any health care organizational entity.

(e) To the extent that a donation presumed to be bona fide contains a hold harmless provision, as described in paragraph (c) of this section, it will not be considered a bona fide donation. When provider-related donations are not bona fide, CMS will deduct this amount from the State's medical assistance expenditures before calculating FFP. This offset will apply to all years the State received such donations and any subsequent fiscal year in which a similar donation is received.

[57 FR 55138, Nov. 24, 1992, as amended at 73 FR 9698, Feb. 22, 2008]
Notes of Decisions
Cited in 3 cases (1 in the last 5 years), 2010–2021 · leading case: United States Ex Rel. Baker v. Cmty. Health Sys. Inc., 709 F. Supp. 2d 1084 (D.N.M. 2010).
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United States Ex Rel. Baker v. Cmty. Health Sys. Inc., 709 F. Supp. 2d 1084 (D.N.M. 2010). · cites it 3× “” 42 C.F.R. §§ 433.54 (a), (b). 8 Plaintiff alleges that Defendants’ donations had a direct or indirect relationship to the Medicaid payments they received under the Sole Community, and consequently were non-bona fide donations.”
Kuzma v. N. Arizona Healthcare Corp. (D. Ariz. 2021). · cites it 6× “42 C.F.R. § 433.54 (b). Such an arrangement occurs where: (1) the state or 16 other unit of government provides for a direct or indirect non-Medicaid payment to the 17 provider or others making the donation, and the payment amount is positively correlated 18 to the donation; (2)…”
Kuzma v. N. Arizona Healthcare Corp. (D. Ariz. 2020). · cites it 5× “12 § 1396b(w)(1)(A); 42 C.F.R. § 433.54 . Provider-related donations are permitted if they 13 are “bona fide,” meaning they have no “direct or indirect relationship” to Medicaid 14 payments the provider receives from the state or local government.”
— 42 C.F.R. § 433.54(e) — 1 case
Kuzma v. N. Arizona Healthcare Corp. (D. Ariz. 2021). “42 C.F.R. § 433.54 (b). Such an arrangement occurs where: (1) the state or 16 other unit of government provides for a direct or indirect non-Medicaid payment to the 17 provider or others making the donation, and the payment amount is positively correlated 18 to the donation; (2)…”
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