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[Federal Register: December 3, 2008 (Volume 73, Number 233)]
[Rules and Regulations]
[Page 73693-73727]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03de08-11]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 440
Medicaid Program; State Flexibility for Medicaid Benefit Packages;
Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 440
[CMS-2232-F]
RIN 0938 A048
Medicaid Program; State Flexibility for Medicaid Benefit Packages
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule will implement provisions of section 6044 of
the Deficit Reduction Act of 2005, which amends the Social Security Act
by adding a new section 1937 related to the coverage of medical
assistance under approved State plans. It also provides States
increased flexibility under an approved State plan to define the scope
of covered medical assistance by offering coverage of benchmark or
benchmark-equivalent benefit packages to certain Medicaid recipients.
In addition, this final rule responds to public comments on the
February 22, 2008, proposed rule that pertain to the State Medicaid
benefit package provisions.
DATES: Effective Date: These regulations are effective on February 2,
2009.
FOR FURTHER INFORMATION CONTACT: Donna Schmidt, (410) 786-5532.
SUPPLEMENTARY INFORMATION:
I. Background
Under title XIX of the Social Security Act (the Act), the Secretary
is authorized to provide funds to assist States in furnishing medical
assistance to needy individuals whose income and resources are
insufficient to meet the costs of necessary medical services, including
families with dependent children and individuals who are aged, blind,
or disabled. To be eligible for funds under this program, States must
submit a State plan, which must be approved by the Secretary. Programs
under title XIX are jointly financed by Federal and State governments.
Within broad Federal guidelines, each State determines the design of
its program, eligible groups, benefit packages, payment levels for
coverage and administrative and operating procedures.
Before the passage of the Deficit Reduction Act (DRA), States were
required to offer at minimum a standard benefit package to eligible
populations identified in section 1902(a)(10)(A) of the Act (with some
specific exceptions, for example, for certain pregnant women, who could
be limited to pregnancy-related services). Under section 1902(a)(10)(A)
of the Act, this standard benefit package had to include certain
specific benefits identified in the definition of ``medical
assistance'' at section 1905(a) of the Act. These identified benefits
include inpatient and outpatient hospital services, physician services,
medical and surgical services furnished by a dentist, rural health
clinic services, federally qualified health center services, laboratory
and X-ray services, nursing facility services, early and periodic
screening, diagnostic and treatment services for individuals under age
21, family planning services to individuals of child-bearing age,
nurse-midwife services, certified pediatric nurse practitioner
services, and certified family nurse practitioner services. Under
section 1902(a)(10)(D) of the Act, the standard benefit package is also
required to include home health services.
Section 6044 of the Deficit Reduction Act of 2005 (DRA) (Pub. L.
109-171), enacted on February 8, 2006, amended the Act by adding a new
section 1937 that allows States to amend their Medicaid State plans to
provide for the use of benefit packages other than the standard benefit
package, namely benchmark benefit packages or benchmark-equivalent
packages, for certain populations. The statute delineates what benefit
packages qualify as benchmark packages and what would constitute a
benchmark-equivalent package. The statute also specifies those exempt
populations that may not be included or mandated in the benchmark
coverages. To be eligible for funds under this new provision, States
must submit a State plan amendment, which must be approved by the
Secretary. On March 31, 2006, we issued a State Medicaid Director
letter providing guidance on the implementation of section 6044 of the
DRA.
II. Provisions of the Proposed Regulations
We published a proposed rule in the Federal Register on February
22, 2008 (73 FR 9714) that implemented the provisions of the DRA of
2005, which amends the Act by adding a new section 1937 related to the
coverage of medical assistance under approved State plans. Under this
new provision, States have increased flexibility under an approved
State plan to define the scope of covered medical assistance by
offering coverage of benchmark or benchmark-equivalent benefit packages
to certain Medicaid recipients. For a complete and full description of
the States' Medicaid Benefit Packages provisions as required by the
DRA, see the February 2008 State Flexibility for Medicaid Benefit
Packages proposed rule. In the February 2008 proposed rule, we proposed
to add a new subpart C beginning with Sec. 440.300 as follows:
A. Subpart C--Benchmark Packages: General Provisions Sections 440.300,
440.305, and 440.310 Basis, Scope, and Applicability
At proposed Sec. 440.300 (Basis), Sec. 440.305 (Scope), and Sec.
440.310 (Applicability), the regulations would reflect the new
statutory authority for States to provide medical assistance to
recipients, within one or more groups of Medicaid eligible recipients
specified by the State, through enrollment in benchmark coverage or
benchmark-equivalent coverage. A State may only require that
individuals obtain benefits by enrolling in that coverage if they are a
``full benefit eligible'' whose eligibility is based on an eligibility
category under section 1905(a) of the Act that would have been covered
under the State's plan on or before February 8, 2006, and are not
within exempted categories under the statute. The proposed regulatory
definition of full benefit eligible individuals would include
individuals who would otherwise be eligible to receive the standard
full Medicaid benefit package under the approved Medicaid State plan,
but would not include individuals who are within the statutory
exemptions, who are determined eligible by the State for medical
assistance under section 1902(a)(10)(C) of the Act or by reason of
section 1902(f) of the Act, or who are otherwise eligible based on a
reduction of income based on costs incurred for medical or other
remedial care (other medically needy and spend-down populations).
B. Section 440.315 Exempt Individuals
Proposed Sec. 440.315 would reflect statutory limitations on
mandatory enrollment of specified categories of individuals. A State
may not require enrollment in a benchmark or benchmark-equivalent
benefit plan by the following individuals:
The recipient who is a pregnant woman who is required to
be covered under the State plan under section 1902(a)(10)(A)(i) of the
Act.
The recipient who qualifies for medical assistance under
the State plan on the basis of being blind or disabled (or being
treated as being blind or disabled) without regard to whether the
individual is eligible for SSI benefits under title XVI on the basis of
being blind or disabled and including an
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individual who is eligible for medical assistance on the basis of
section 1902(e)(3) of the Act.
The recipient who is entitled to benefits under any part
of Medicare.
The recipient who is terminally ill and is receiving
benefits for hospice care under title XIX.
The recipient who is an inpatient in a hospital, nursing
facility, intermediate care facility for the mentally retarded, or
other medical institution, and is required, as a condition of receiving
services in such institution under the State plan, to spend for costs
of medical care all but a minimal amount of the individual's income
required for personal needs.
The recipient who is medically frail or otherwise an
individual with special medical needs (as described by the Secretary in
section 440.315(f)). For purposes of this section, we proposed that
individuals with special needs includes those groups defined by Federal
regulations at Sec. 438.50(d)(1) and Sec. 438.50(d)(3) of the managed
care regulations (that is, dual eligibles and certain children under
age 19 who are eligible for SSI; eligible under section 1902(e)(3) of
the Act, TEFRA children; in foster care or other out of home placement;
or receiving foster care or adoption assistance). We did not propose a
definition for medically frail populations but we invited public
comments to assist us in defining this term in the final regulation.
The recipient who qualifies based on medical condition for
medical assistance for long-term care services described in section
1917(c)(1)(C) of the Act.
The recipient who receives aid or assistance under part B
of title IV for children in foster care or an individual with respect
to whom adoption or foster care assistance is made available under part
E of title IV, without regard to age.
The recipient who qualifies for medical assistance on the
basis of eligibility to receive assistance under a State plan funded
under part A of title IV (as in effect on or after the welfare reform
effective date defined in section 1931(i) of the Act). This provision
relates to those individuals who qualify for Medicaid solely on the
basis of qualification under the Temporary Assistance for Needy
Families (TANF) rules (that is, the State links Medicaid eligibility to
TANF eligibility).
The recipient who is a woman receiving medical assistance
by virtue of the application of sections 1902(a)(10)(ii)(XVIII) and
1902(a) of the Act. This provision relates to those individuals who are
eligible for Medicaid based on the breast or cervical cancer
eligibility provisions.
The recipient who qualifies for medical assistance as a
TB-infected individual on the basis of section 1902(a)(10)(A)(ii)(XII)
of the Act.
The recipient who is not a qualified alien (as defined in
section 431 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996) and receives only care and services
necessary for the treatment of an emergency medical condition in
accordance with section 1903(v) of the Act.
C. Section 440.320 State Plan Requirements: Optional Enrollment for
Exempt Individuals
At proposed Sec. 440.320, we would allow States to offer exempt
individuals specified in Sec. 440.315 the option to enroll into a
benchmark or benchmark-equivalent benefit plan. The State plan would
identify in its State plan the exempt groups for which this coverage is
available. There may be instances in which an exempt individual may
benefit from enrolling in a benchmark or benchmark-equivalent benefit
package. States would be permitted to elect in the State plan to offer
exempt individuals a benchmark or benchmark-equivalent package, but
States may not require them to enroll in one. For example, in some
States the State employee benchmark coverage may be more generous than
the State Medicaid plan. Secretary-approved coverage may offer the
opportunity for disabled individuals to obtain integrated coverage for
acute care and community-based long-term care services. Additionally,
States may be able to better integrate disease management programs to
provide better coordinated care which targets the specific needs of
individuals with special health needs.
D. Section 440.325 State Plan Requirements: Coverage and Benefits
At proposed Sec. 440.325, we set forth the conditions under which
a State may offer enrollment to exempt recipients specified in Sec.
440.315. When a State offers exempt recipients the option to enroll in
a benchmark or benchmark-equivalent benefit package, the State would
inform the recipients that enrollment is voluntary and that the
individual may opt out of the benchmark or benchmark-equivalent benefit
package at any time and regain immediate eligibility for the standard
full Medicaid program under the State plan. The State would inform the
recipient of the benefits available under the benchmark or benchmark-
equivalent benefit package and provide a comparison of how they differ
from the benefits available under the standard full Medicaid program.
The State would document in the individual's eligibility file that the
individual was informed in accordance with this paragraph and
voluntarily chose to enroll in the benchmark or benchmark-equivalent
benefit package.
At proposed Sec. 440.325, a State would have the option to choose
the benchmark or benchmark-equivalent coverage packages offered under
the State's Medicaid plan. A State may select one or all of the
benchmark plans described in Sec. 440.330 or establish benchmark-
equivalent plans described in Sec. 440.335, respectively.
E. Section 440.330 Benchmark Health Benefits Coverage
At proposed Sec. 440.330, benchmark coverage is described as any
one of the following:
Federal Employees Health Benefit Plan Equivalent Coverage
(FEHBP--Equivalent Health Insurance Coverage). A benefit plan
equivalent to the standard Blue Cross/Blue Shield preferred provider
option service benefit plan that is described in and offered to Federal
employees under 5 U.S.C. 8903(1).
State employee coverage. A health benefits plan that is
offered and generally available to State employees in the State
involved.
Health Maintenance Organization (HMO) plan. A health
insurance plan that is offered through an HMO (as defined in section
2791(b)(3) of the Public Health Service Act) that has the largest
insured commercial, non-Medicaid enrollment in the State.
Secretary approved coverage. Any other health benefits
coverage that the Secretary determines, upon application by a State,
provides appropriate coverage for the population proposed to be
provided that coverage. States wishing to opt for Secretarial approved
coverage should submit a full description of the proposed coverage and
include a benefit-by-benefit comparison of the proposed plan to one or
more of the three benchmark plans specified above or to the State's
standard full Medicaid coverage package under section 1905(a) of the
Act, as well as a full description of the population that would be
receiving the coverage. In addition, the State should submit any other
information that would be relevant to a determination that the proposed
health benefits coverage would be appropriate for the proposed
population. The scope of a Secretary-approved health benefits package
will be limited to benefits
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within the scope of the categories available under a benchmark coverage
package or the standard full Medicaid coverage package under section
1905(a) of the Act.
A State may select one or more benchmark coverage plan options. The
State may also specify the benchmark plan for any specific recipient.
For example, one recipient may be enrolled in the FEHBP and another may
be enrolled into State Employee Coverage at the option of the State.
F. Section 440.335 Benchmark-Equivalent Health Benefits Coverage
At proposed Sec. 440.335, we would provide that if a State designs
or selects a benchmark plan other than those specified in Sec.
440.330, the State must provide coverage that is equivalent to
benchmark coverage. Coverage that meets the following requirements will
be considered to be benchmark-equivalent coverage:
Required Coverage. Benchmark-equivalent coverage includes
benefits for items and services within each of the following categories
of basic services and must include coverage for the following
categories of basic services:
+ Inpatient and outpatient hospital services.
+ Physicians' surgical and medical services.
+ Laboratory and x-ray services.
+ ``Well-baby'' and ``well-child'' care, including age-appropriate
immunizations.
+ Other appropriate preventive services, as designated by the
Secretary.
Aggregate actuarial value equivalent to benchmark
coverage. Benchmark-equivalent coverage must have an aggregate
actuarial value, determined in accordance with proposed Sec. 440.340
that is at least equivalent to coverage under one of the benchmark
packages outlined in Sec. 440.330.
Additional coverage. In addition to the categories of
services set forth above, benchmark-equivalent coverage may include
coverage for any additional services included in the benchmark plan or
described in section 1905(a) of the Act.
Application of actuarial value for benchmark-equivalent
coverage that includes prescription drugs, mental health, vision, and
hearing services. Where the benchmark coverage package used by the
State as a basis for comparison in establishing the aggregate actuarial
value of the benchmark-equivalent package includes any or all of the
following four categories of services: Prescription drugs; mental
health services; vision services; and hearing services; then the
actuarial value of the coverage for each of these categories of service
in the benchmark-equivalent coverage package must be at least 75
percent of the actuarial value of the coverage for that category of
service in the benchmark plan used for comparison by the State.
If the benchmark coverage package does not cover one of the four
categories of services mentioned above, then the benchmark-equivalent
coverage package may, but is not required to, include coverage for that
category of service.
G. Section 440.340 Actuarial Report for Benchmark-Equivalent Health
Benefit Coverage
In accordance with 1937(a)(3) of the Act, at Sec. 440.340, we
proposed to require a State as a condition of approval of benchmark-
equivalent coverage, to provide an actuarial report, with an actuarial
opinion that the benchmark-equivalent coverage meets the actuarial
requirements of Sec. 440.335.
At Sec. 440.340, we proposed to require the actuarial report to
obtain approval for benchmark-equivalent health benefit coverage and to
meet all the provisions of the statute. The actuarial report must state
the following:
The actuary issuing the opinion is a member of the
American Academy of Actuaries (AAA) (and meets Academy standards for
issuing an opinion).
The actuary used generally accepted actuarial principles
and methodologies of the AAA, standard utilization and price factors
and a standardized population representative of the population
involved.
The same principles and factors were used in analyzing the
value of different coverage (or categories of services) without taking
into account differences in coverage based on the method of delivery or
means of cost control or utilization used.
The report should also state if the analysis took into
account the State's ability to reduce benefits because of the increase
in actuarial value of health benefits coverage offered under the State
plan that results from the limitations on cost sharing (with the
exception of premiums) under that coverage.
The actuary preparing the opinion must select and specify
the standardized set of utilization and pricing factors as well as the
standardized population.
The actuary preparing the opinion must provide sufficient
detail to explain the basis of the methodologies used to estimate the
actuarial value or, if requested by CMS, to replicate the State's
result.
H. Section 440.345 EPSDT Services Requirement
At Sec. 440.345, we proposed to require States to make available
EPSDT services as defined in section 1905(r) of the Act that are
medically necessary for those individuals under age 19 who are covered
under the State plan. We expected that most benchmark or benchmark-
equivalent plans will offer the majority of EPSDT services. To the
extent that any medically necessary EPSDT services are not covered
through the benchmark or benchmark-equivalent plan, States are required
to supplement the benchmark or benchmark-equivalent plan in order to
ensure access to these services. Individuals mandated into a benchmark
or benchmark-equivalent plan and entitled to have access to EPSDT
services cannot opt out of the benchmark or benchmark-equivalent plan
just to receive these services. While individuals are required to have
access to such medically necessary services first under the benchmark
or benchmark-equivalent plan, the State may provide wrap-around or
additional coverage for medically necessary services not covered under
such plan. Any wrap-around benefits must be sufficient so that, in
combination with the benchmark or benchmark-equivalent benefits
package, an individual would have coverage for his or her medically
necessary services consistent with the requirements under section
1905(r) of the Act. The State plan would include a description of how
wrap-around benefits or additional services will be provided to ensure
that these recipients have access to full EPSDT services under 1905(r)
of the Act.
In addition, individuals would need to first seek coverage of EPSDT
services through the benchmark or benchmark-equivalent plan before
seeking coverage of such through wrap-around benefits.
I. Section 440.350 Employer Sponsored Insurance Health Plans
At Sec. 440.350, we proposed that the use of benchmark or
benchmark-equivalent benefit coverage would be at the discretion of the
State and may be used in conjunction with employer sponsored health
plans as a coverage option for individuals with access to private
health insurance. Additionally, the use of benchmark or benchmark-
equivalent coverage may be used for individuals with access to private
health insurance coverage. For example, if an individual has access to
employer sponsored coverage and that coverage is determined by the
State to be benchmark or benchmark-equivalent, a State may, at its
option, provide
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premium payments on behalf of the recipient to purchase the employer
coverage. Additionally, a State could create a benchmark or benchmark-
equivalent plan combining employer sponsored insurance and wrap-around
benefits to that employer sponsored insurance benefit package. The
premium payments would be considered medical assistance and the State
could require the recipient to enroll in the group health plan.
J. Section 440.355 Payment of Premiums
At Sec. 440.355, we proposed that payment of premiums by the
State, net of beneficiary contributions, to obtain benchmark or
benchmark-equivalent benefit coverage on behalf of beneficiaries under
this section will be treated as medical assistance under section
1905(a) of the Act.
K. Section 440.360 State Plan Requirement for Providing Additional
Wrap-Around Services
At Sec. 440.360, we proposed that a State may at its option
provide additional wrap-around services to the benchmark or benchmark-
equivalent plans. The wrap-around services do not need to include all
State plan services. However, the State plan would need to describe the
populations covered and the payment methodology for assuring those
services. Such additional or wrap-around services must be within the
scope of categories of services covered under the benchmark plan, or
described in section 1905(a) of the Act.
L. Section 440.365 Coverage of Rural Health Clinic and Federally
Qualified Health Center (FQHC) Services
At Sec. 440.365, we proposed that a State that provides benchmark
or benchmark-equivalent coverage to individuals must assure that the
individual has access, through that coverage or otherwise, to rural
health clinic services and FQHC services as defined in subparagraphs
(B) and (C) of section 1905(a)(2) of the Act. Payment for these
services must be made in accordance with the payment provisions of
section 1902(bb) of the Act.
M. Section 440.370 Cost Effectiveness
At Sec. 440.370, we proposed that benchmark or benchmark-
equivalent coverage and any additional benefits must be provided in
accordance with Federal upper payment limits, procurement requirements
and other economy and efficiency principles that would otherwise be
applicable to the services or delivery system through which the
coverage and benefits are obtained.
N. Section 440.375 Comparability
At Sec. 440.375, we proposed that a State may at its option amend
its State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to comparability.
O. Section 440.380 Statewideness
At Sec. 440.380, we proposed that a State may at its option amend
its State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to statewideness.
P. Section 440.385 Freedom of Choice
At Sec. 440.385, we proposed that a State may at its option amend
its State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to freedom of choice. States may restrict
recipients to obtaining services from (or through) selectively procured
provider plans or practitioners that meet, accept, and comply with
reimbursement, quality and utilization standards under the State Plan,
to the extent that the restrictions imposed meet the following
requirements:
(+) Do not discriminate among classes of providers on grounds
unrelated to their demonstrated effectiveness and efficiency in
providing the benchmark benefit package.
(+) Do not apply in emergency circumstances.
(+) Require that all provider plans are paid on a timely basis in
the same manner as health care practitioners must be paid under Sec.
447.45 of the chapter.
Q. Section 440.390 Assurance of Transportation
At Sec. 440.390, we proposed that a State may at its option amend
its State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to the assurance of transportation to
medically necessary services requirement specified in Sec. 431.53.
III. Analysis of and Responses to Public Comments
In response to the February 2008 proposed rule, we received over
1,100 timely items of correspondence. The majority of the commenters
represented transportation providers, medical providers, and Medicaid
beneficiaries, particularly Medicaid beneficiaries who rely on dialysis
treatments. Other commenters represented State and local advocacy
groups, national associations that represent various aspects of
beneficiary groups, State Medicaid agency senior officials, and human
services agencies. In this section, we provide a discussion of the
public comments we received on the proposed rule. Comments related to
the impact of this rule are addressed in the ``Collection of
Information Requirements'' section of this regulation.
Additionally, we published a proposed rule in the Federal Register
on February 22, 2008 (73 FR 9727) titled, ``Medicaid Program: Premiums
and Cost Sharing'' (CMS-2244-P). Comments on CMS-2244-P were also due
March 24, 2008 similar to this rule. Some comments for CMS-2244-P were
forwarded as comments to this rule (CMS-2232-P). Consistent with the
Administrative Procedures Act, CMS is not responding to those comments
in this regulation, but we addressed the issues raised by otherwise
timely comments in our publication of CMS-2244-F.
A. General Comments
Comments: A few commenters supported the rule. Some commenters also
requested a more restrictive interpretation of the statutory
provisions. However, most commenters oppose the rule. Many commenters
are concerned that the benchmark or benchmark-equivalent benefit
packages are inadequate benefit packages for, among others, individuals
with mental illness, children with serious emotional disturbance, the
disabled and elderly, individuals with end-stage renal disease, and
American Indians. Many of the commenters believed that to enroll
Medicaid beneficiaries in benchmark or benchmark-equivalent benefit
packages without the assurance of transportation could lead to poorer
health outcomes, costlier care because individuals will be forced into
hospital emergency rooms, and shifts in costs to the Emergency Medical
Services.
Response: We thank those commenters who supported the rule. Those
who opposed the rule generally raised concerns about the underlying
wisdom of the statutory provision at section 1937 of the Act, which
this final rule implements. CMS is charged with implementing the
statute as written. We address suggestions for restrictive
interpretations below in the discussion of specific proposed
provisions.
Comment: Several commenters believe that the accelerated pace of
this short comment period, given the broad implications, will lead to a
short-cited, onerous rule that has dangerous health impacts for the
poor. This rule was issued in the Federal Register on
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February 22, 2008. The deadline for submission of comments was March
24, 2008. Other rulemaking has taken a longer period. Given the impact
of the discussion, a longer time period is warranted.
Some commenters stated that the 30-day comment period was not
sufficient for Tribes to comment on a regulation that could potentially
have a significant impact on Tribal communities.
Other commenters noted that while the Department views the rule as
merely formalizing its earlier policy statements delivered only to
State Medicaid Directors, a 30-day public comment period is too short
for meaningful public review, analysis, and comment. Some commenters
believe that the 30-day comment period is discouraging of full review
and consideration by States.
One commenter requests that the public comment period be extended
60 days for a total of a 90-day comment period. Additional time is
needed to provide sufficient time for stakeholders to be able to
adequately assess the potential effects of the proposed rule.
Response: We disagree with the commenters suggesting that 30 days
is too short of a time period to respond to the regulation. Section
553(c) of the Administrative Procedures Act requires that after the
publication of a proposed rule, the Agency shall give interested
persons an opportunity to participate in the rulemaking. Neither the
Administrative Procedures Act nor the Medicaid statute specify a time
period for submission of comments. For Medicaid rules we allow 30 days
or 60 days based on the complexity and size of the rule, or the need to
publish the final rule quickly. We elected a 30-day comment period
because of the limited deviation from plain statutory requirements and
the interest of getting guidance quickly to States on the DRA
flexibilities contained herein. Since this provision of the DRA was
effective March 31, 2006 it made sense to provide guidance to States as
quickly as possible.
B. Section 440.300 Basis
Comment: One commenter believed that the proposed limitations on
eligibility groups who can be provided alternative benefit packages are
overly restrictive. The commenter suggested that the rule should allow
application to any eligibility category the State had the option to
implement on or before the date of enactment of section 1937 (February
8, 2006). The commenter reasoned that States are continually adding and
changing eligibility requirements and these program changes are
inherent in Medicaid programs. The commenter asserted that, if the rule
is considered beneficial for recipients in eligibility categories that
existed before February 8, 2006, it is logical to suppose it would also
be beneficial for those created after that date.
Response: The language in section 1937(a)(1)(B) of the Act
specifies that the State may only exercise the option to offer
benchmark or benchmark-equivalent coverage for an individual eligible
under an eligibility category that had been established under the State
plan on or before February 8, 2006. In an effort to provide States with
maximum flexibility, we have interpreted this statutory term to mean
any eligibility category listed under section 1905(a) of the Act. Thus,
all recipients within a category covered or potentially covered under
the State's Medicaid plan would be eligible to participate in a
benchmark or benchmark-equivalent plan at the State's option, unless
specifically excluded by statute, even when the State makes
modifications to the income and resource eligibility levels or
methodologies, ages covered, etc., for a group or category after
February 8, 2006.
C. Section 440.305 Scope
Comment: Numerous commenters believed that offering benchmark and
benchmark-equivalent benefit packages to certain Medicaid recipients
will deter those individuals, including children, from receiving
appropriate care. Commenters indicated that individuals with low
incomes are likely to forgo needed treatment if all medically necessary
services and transportation are not included in the benchmark program.
Most commenters believed that our most vulnerable populations, those
with chronic medical needs, will be required to choose to provide for
their basic needs like food and shelter rather than obtain necessary
medical health care because of the rigor created by following a private
health insurance model of benefits and the need to provide their own
method of transportation.
Response: We have developed these policies based on what is
provided for in statue. And, since the Medicaid program is administered
broadly by the States, they have the flexibility to determine how they
will design their programs. We do review and approve all State plan
amendments to assure continuity of and access to necessary medical
health care.
Comment: Other commenters indicated that the DRA does not require
that States offer the same Medicaid benefits statewide, meaning States
could design different benefit packages for rural and urban areas.
States may also ``tailor'' packages for different populations, although
the commenter acknowledges, certain groups are exempt from mandatory
changes to their Medicaid benefits package. In States where this has
already been done, behavioral healthcare advocates report the changes
have been unsatisfactory. Several commenters believed that allowing
States to ``tailor'' benefit packages would mean that individuals may
not have access to the services they need. Benefit packages designed
outside the important consumer protections in traditional Medicaid may
fail to meet beneficiaries' needs, and will not save money if these
individuals experience significant unmet needs that escalate into
problems that require treatment in emergency rooms.
One commenter mentioned that private health plans such as those
listed as benchmarks under the law, frequently have limited coverage of
mental health services. The commenter asserted that few cover any of
the intensive community services that are covered by Medicaid under the
rehabilitation category or the home and community-based services
option. The commenter noted that, under the DRA, these limited mental
health benefits can be further reduced by 25 percent of their actuarial
value. Other commenters expressed concern that the reliance on
commercial benefit plans is inappropriate for Medicaid recipients.
Those commenters are concerned that many private insurance plans do not
provide adequate mental health services. And other commenters noted
that benchmark coverage is likely to prove entirely inadequate for
individuals who need mental health services. They noted that children
with serious mental and/or physical disorders often qualify for
Medicaid on a basis of family income and are not, for various reasons,
receiving Supplemental Security Income (SSI) benefits or otherwise
recognized as children with disabilities and would not be exempt from
mandatory enrollment. In addition, they noted that many low-income
parents on Medicaid have been found to have serious depression, which
could not be adequately treated with a very limited mental health
benefit.
In a similar vein, many commenters believed that the proposed rule
has the potential to become the behavioral healthcare Medicaid Trojan
horse: it appears harmless but it will reverse hard-fought progress won
over years of struggle that brought about equitable, decent care for
Medicaid recipients experiencing mental illness or who have
[[Page 73699]]
a developmental disability. They asserted that, in the end, these rules
will have costlier results and not the desired economizing while also
negatively impacting peoples' lives, their well-being and care, and our
society.
Another commenter believed that it is critical for beneficiaries
with life-threatening conditions such as HIV/AIDS to maintain access to
the comprehensive range of medical and support services required to
effectively manage HIV disease. The commenter stated that allowing
States to ``tailor'' benefit packages in ways that essentially
eliminate coverage for critical health services places the health of
Medicaid beneficiaries with HIV/AIDS in serious jeopardy.
Response: The DRA was enacted in response to States' desire for
more flexibility in modernizing their Medicaid programs and adopting
benefit programs tailored to the needs of the varied populations they
serve. This regulation is consistent with Congressional intent and
reflects little interpretive policy by CMS. The DRA provides that
States can impose alternative benchmark or benchmark-equivalent benefit
packages at their option; that is, States are not required to implement
these provisions.
As a result, we believe that the concerns expressed by these
commenters on the sufficiency of potential alternative benefit packages
should be addressed to States for consideration in determining whether
to elect alternative benefit packages, and the scope of such packages.
We disagree that benchmark and benchmark-equivalent programs
necessarily lead to barriers to access and care. Benchmark and
benchmark-equivalent plans are simply tools that States can use to
contain costs and inhibit over-utilization of health care through
Medicaid, particularly through the emergency room, while at the same
time providing States new opportunities to provide benefit plans to
meet the appropriate health care needs of Medicaid populations. We
believe States may use this flexibility to create innovative Medicaid
programs that further strengthen and support the overall health care
system.
This new flexibility provides States the tools they need to provide
person-centered care to maximize health outcomes for individuals. These
tools may be used in conjunction with other Medicaid and State
Children's Health Insurance Program (SCHIP) authorities to
strategically align the Medicaid program with today's health care
environment and expand access to affordable mainstream coverage and
improve quality and coordination of care.
Regarding the coverage of mental health services, children and
adults with special medical needs, individuals with HIV/AIDS, and long-
term care and community-based service options, benchmark and benchmark-
equivalent plans must be appropriate to meet the health care needs of
the population being served, which may mean that benchmark coverage may
be more generous than a State's Medicaid plan. Benchmark coverage may
offer the opportunity for disabled individuals to obtain integrated
coverage for acute care and community-based long-term care services.
Additionally, States may be able to better integrate disease management
programs to provide better coordinated care, targeting the specific
needs of individuals with special health needs.
We also think it is important to note that children under the age
of 19 are required to receive EPSDT services either as a wrap-around
service or as part of the benchmark or benchmark-equivalent benefit
plan.
Moreover, certain Medicaid eligibility coverage groups cannot be
included in a mandatory enrollment for an alternative benefit package--
among others, pregnant women, dual eligibles, terminally ill
individuals receiving hospice, inpatients in institutional settings,
and individuals who are medically frail or have special medical needs.
These individuals may be offered a choice to enroll and, in considering
the choice, must be provided a comparison of benchmark benefits versus
the traditional Medicaid State plan benefit. Their decision to enroll
is voluntary and individuals must be provided the opportunity to revert
back to traditional Medicaid at any time. The law provides that States
can offer these alternative benefit packages and we do not believe this
rule poses a barrier to accessing health care.
Comment: One commenter noted that the preamble language refers to
meeting the ``* * * needs of today's Medicaid populations and the
health care environment.'' The commenter believed the preamble should
describe these needs in some detail so that there is a shared
understanding of the types of needs this new flexibility is intended to
address.
Response: We agree that it is important to understand the needs of
today's Medicaid populations and the health care environment. States
requested maximum flexibility in designing their Medicaid programs in
order to provide appropriate health care coverage to our Nation's most
vulnerable populations and to maintain growth and provide for the
sustainability of the Medicaid program over the long term. Congress, in
working with our Nation's leaders, responded and enacted the DRA of
2005.
In providing for benchmark benefit packages, several innovative
ways of providing coverage to the Medicaid populations have been
provided to States. Benchmark options include Federal Employees Health
Benefits Plan Equivalent coverage, State Employee coverage, Health
Maintenance Organization coverage, or Secretary approved coverage.
States have the option of considering Employer Sponsored Insurance
coverage as long as the Employer Sponsored Insurance coverage meets the
criteria of benchmark coverage. States can also consider benchmark-
equivalent coverage as long as the coverage includes basic services
consisting of inpatient and outpatient hospital services, physicians'
surgical and medical services, laboratory and x-ray services, well-baby
and well-child care including age-appropriate immunizations, and other
appropriate preventive services, such as emergency services.
Specifically, benchmark plans can be designed to address the specific
health care needs of specific populations, and a State may select one
or more benchmark coverage options. The flexibility granted to States
in considering these options provides that States can tailor benefits
to better meet the needs of their low-income populations.
Comment: One commenter stated that the proposed rule, read together
with other CMS rules like the citizenship documentation requirement and
CMS's SCHIP crowd-out directive of August 17, 2007, create major
barriers to access to appropriate health care, and that the proposed
rule has a devastating impact on the low-income populations. In
particular, some commenters raised concerns about requirements for
Native Americans to prove both citizenship and identity in order to
obtain Medicaid services. Commenters also raised concerns about the
SCHIP review strategy outlined in an August 17, 2007 letter sent to
State Health Officials. And commenters asserted that other proposed
rules released by CMS like the Rehabilitation Rule and the Targeted
Case Management Rule coupled with this rule will have a devastating
effect on individuals in need of transportation since these rules also
eliminate non-emergency medical transportation services.
Response: We disagree that providing States with benefit
flexibility creates
[[Page 73700]]
barriers to accessing appropriate care and instead contend that this
provides flexibilities to States in an effort to create benefit
packages that appropriately meet the needs of their Medicaid
populations. Citizenship documentation requirements, the August 17
State Health Officials letter, and the Rehabilitation and Case
Management requirements are not part of this rule and we do not address
them here. This regulation implements the statutory provisions of
section 1937, and CMS policy discretion was very limited.
Comment: Several comments were provided by organizations that have
an interest in how the benchmark and benchmark-equivalent benefit
packages impact American Indians and Alaska Natives (AI/ANs). The
commenters believed that alternative benefit packages serve as a
substantial barrier to AI/AN enrollment in the Medicaid program. They
noted that, because of the Federal Government's trust responsibility to
provide health care to AI/ANs, implementing benchmark and benchmark-
equivalent benefit packages have specific tribal implications that were
not addressed in these proposed rules. Several commenters believed that
AI/ANs should be exempt from mandatory enrollment in benchmark and
benchmark-equivalent benefit programs entirely.
Response: In Medicaid, there is no statutory basis to exempt AI/ANs
from Medicaid alternative benefit provisions. Section 1937 of the Act
does not provide for such an exemption. Section 1937 provides some
specific exemptions from mandatory enrollment into benchmark or
benchmark-equivalent benefit packages and it is possible that some AI/
ANs would fit into one of these exempt groups. Section 1937 does not
give CMS authority to identify additional exempt groups.
To address the unique needs of the AI/AN population, we recommend
working with States to ensure that alternative benefit packages
recognize the unique services offered by IHS and tribal providers, and
the unique health needs of the AI/AN population.
Comment: One commenter contended that there are no provisions to
require States to ensure that AI/ANs continue to have access to
culturally competent health services through the Indian Health Service
(IHS) or tribally operated health programs. The commenter stated that
the proposed rules allow States to offer coverage without regard to
comparability, statewideness, freedom of choice, the assurance of
transportation to medically necessary services, and other requirements.
There are large disparities between AI/ANs' health care status and the
health care status of the rest of the country. The commenter added that
for AI/ANs, the patient should always have the option of the provider
being an Indian Health Service or tribal health program.
Response: State Medicaid programs provide health care services to
many diverse populations including AI/ANs. We believe that culturally
competent services are important for all Medicaid beneficiaries and
access to care and facilities in remote parts of the country, where it
is especially difficult to find providers who will agree to participate
in the Medicaid program, is paramount. The Medicaid statute does not
provide any special protections for benefit packages applicable to AI/
AN recipients, but this does not mean that benefit packages will be
deficient. As noted above, to address the unique needs of the AI/AN
population, we recommend working with States to ensure that alternative
benefit packages recognize the unique services offered by IHS and
tribal providers, and the unique health needs of the AI/AN population.
Futhermore, AI/AN beneficiaries are not prevented from going to IHS or
tribal facilities for health care as a result of this rule.
Comment: Another commenter stated on behalf of AI/ANs, the Indian
and tribal health care system is woefully under-funded and tribal
providers rely on Medicaid revenues to supplement that meager funding.
Forcing AI/ANs into benchmark plans, which may have dramatically
reduced coverage or payments, would thus jeopardize Indian health,
injure tribal health systems, and thereby violate the Federal trust
obligation to care for the health needs of Indian people.
Response: CMS does not anticipate a dramatic decrease in services
furnished under benchmark plans versus traditional Medicaid benefits.
In fact, to date CMS has approved nine benchmark benefit programs, and
most offer State plan services plus additional services like preventive
care, personal assistance services, or disease management services.
Indeed, for individuals under the age of 19, section 1937 ensures that
all needed services will be available through the requirement that
EPSDT services must be provided either as wrap-around to, or as part
of, the benchmark or benchmark-equivalent plan.
Moreover, section 1937 does not provide a basis to exclude IHS or
tribal health providers from participation in the delivery system for
alternative benefits. In terms of the assertion of overall under-
funding for IHS and tribal health programs, CMS does not determine
those funding levels.
Comment: Some commenters believed that the proposed rule did not
comply with the Department of Health and Human Services' Tribal
Consultation policy, since CMS did not consult with Tribes in the
development of these regulations before they were promulgated.
These commenters noted that CMS did not obtain advice and input
from the CMS Tribal Technical Advisory Group (TTAG), even though the
TTAG meets on a monthly basis through conference calls and holds
quarterly face to face meetings in Washington, DC. They also noted that
CMS did not utilize the CMS TTAG Policy Subcommittee, which was
specifically established by CMS for the purpose of obtaining advice and
input in the development of policy guidance and regulations.
These commenters also noted that the proposed rule does not contain
a Tribal summary impact statement describing the extent of the tribal
consultation or lack thereof, nor an explanation of how the concerns of
Tribal officials have been met. Several commenters request that these
regulations not be made applicable to AI/AN Medicaid beneficiaries
until Tribal consultation is conducted, or be modified to specifically
require State Medicaid programs to consult with Indian Tribes before
the development of any policy which would require mandatory enrollment
of AI/ANs in benchmark or benchmark-equivalent plans. One commenter
suggested that this consultation should be similar to the way in which
consultation takes place with Indian Tribes in the development of
waiver proposals. And, a commenter urged that, after appropriate tribal
consultation and revision reflecting these and other comments, the rule
be republished with a longer public comment period.
One Tribe commented that the proposed rule does not honor treaty
obligations for health services that are required by the Federal
Government's unique legal relationship with Tribal governments.
Response: CMS currently operates under the Department of Health and
Human Services' Tribal Consultation Policy. The Departmental guidelines
provide information as to the regulatory activities that rise to the
level that require consultation (include prior notification of
rulemaking). We have considered the Departmental guidelines and believe
that there was no requirement for consultation on this rule, since the
effect on AI/AN
[[Page 73701]]
recipients results from the statute itself, and not this rule. The rule
itself does not have a direct effect on such individuals, or on the
relationship between the Federal government and Tribes. Therefore, we
have concluded that this rule does not reach the threshold of requiring
consultation.
We encourage States which decide to implement alternative benefit
packages to consult with Tribes and notify them whenever possible on
policies that will directly affect the Tribes. In terms of exempting
AI/ANs from benchmark plans, it is important to note that this
rulemaking was taken directly from provisions of section 1937 of the
Act, as added by section 6044 of the DRA. These provisions give States
increased flexibilities in the management of their Medicaid programs.
This regulation exempts from mandatory enrollment in an alternative
benefit package the groups specifically set forth in section 1937. The
statute provides no authority to mandate exemption of other groups. It
is possible that some AI/ANs fit into one of the exempt groups.
These regulations implement section 1937 of the Act, as enacted by
Congress, and do not address treaty rights of American Indians. These
regulations neither diminish nor increase such treaty rights.
Comment: Several commenters believed that States should not have
the ability to create benchmarks that allow for increases in cost
sharing. Specifically, States can establish a benchmark coverage
package that requires copays for health care access, whereby the cost
sharing will actually be a limitation on coverage. However, if the
selected benchmark plan indicates that it provides coverage for only
half of the cost of mental health services, CMS views that as a
coinsurance requirement rather than as a limitation on coverage.
Premiums and cost sharing act as a deterrent to those receiving health
care and may cause low-income populations to choose between health care
and basic needs such as food. The commenter indicated that Native
Americans and other low-income groups should be exempt from premiums
and cost-sharing requirements.
Response: This rule concerns new flexibility for States in
providing health care coverage through alternate benefit packages that
was authorized under section 1937 of the Act. To the extent that these
benchmark packages impose premiums or cost sharing, this final
regulation stipulates that any cost sharing and premiums for recipients
may not exceed cost-sharing limits applicable under sections 1916 and
1916A of the Act. Under section 1916A of the Act, there are tiered
individual service limits based on family income, and an aggregate cap
of 5 percent of family income. These limits protect individuals in
benchmark plans.
It is important to note, first, that alternative benefit package
programs are at a State's option. Second, numerous Medicaid eligibility
categories are exempt from mandatory enrollment in alternative benefit
packages and can be enrolled only voluntarily. Such individuals must be
provided a comparison of the benchmark option versus the State plan
option before they choose to enroll. That comparison would include
information on the cost-sharing obligations of beneficiaries. In
choosing the benchmark option over the State plan option, these
individuals would thus have made an informed choice. And if the
benchmark option is not meeting the exempt individual's needs, they may
revert back to traditional Medicaid at any time.
Comment: One commenter urged CMS to add provisions to provide
special protections for individuals with disabilities, dual-eligibles,
and persons with other chronic medical conditions to ensure access to
benchmark packages that are uniquely designed to address physical
impairments and rehabilitation needs.
Another commenter believed CMS should require State Medicaid
agencies to provide access to care management and care coordination
services to Medicaid recipients who are incapable of managing their
benchmark plan services. The commenter further believed that home
health services should be included in all benchmark plan packages.
Several commenters recommended that all State programs include
prevention services and promote health, wellness, and fitness. Physical
therapists are involved in prevention by promoting health, wellness and
fitness, and in performing screening activities.
One commenter is concerned that the managed care model is better
suited for a ``well'' population as opposed to children with chronic
special health care needs and adults with disabilities.
Response: To the extent that the commenter is concerned that
alternative benefit packages will result in a reduction in services, we
do not believe that will necessarily be the case. For the nine
benchmark State plan amendments approved to date, most offer
traditional State plan services as well as additional services like
prevention and disease management.
By tying benefit flexibility to benchmark plans, Congress ensured
that alternative benefit packages will be similar to those available in
the marketplace. This protects Medicaid recipients from significant
reductions in benefits. Benchmark options include Federal Employees
Health Benefits Plan coverage, State Employee coverage, coverage
offered by a Health Maintenance Organization in the State with the
largest commercial non-Medicaid population, or Secretary approved
coverage. States have the option of considering Employer Sponsored
Insurance coverage so long as the Employer Sponsored Insurance coverage
meets the criteria of benchmark coverage. States can also consider
benchmark-equivalent coverage as long as the coverage includes basic
services such as inpatient and outpatient hospital services,
physicians' surgical and medical services, laboratory and x-ray
services, well-baby and well-child care including age-appropriate
immunizations, and other appropriate preventive services. We have
determined that other appropriate preventive services should include
emergency services.
Benchmark equivalent plans may include care management, care
coordination, and/or home health services, but it is possible that some
plans will not include these services and we do not believe that a
requirement that States include these specific services would be
consistent with the statutory goal of increasing State flexibility.
Another important protection from benefit reduction is that the
alternative benefit package is required to include the EPSDT benefit
for children under the age of 19. If the services are not provided as
part of the benchmark or benchmark-equivalent plan, these services must
be provided by the State as wrap-around benefits. Further, States, at
their option, can provide for additional services or wrap-around
services to benchmark or benchmark-equivalent programs.
Another protection is that exempt individuals have the opportunity
to make an informed choice before enrolling in benchmark or benchmark-
equivalent plans. This includes the requirement that States must
provide exempt individuals with a comparison of the benefits included
in the benchmark or benchmark-equivalent plan versus the benefits
included in traditional State plan coverage. If the benchmark or
benchmark-equivalent is not meeting the exempt individual's health care
needs, the exempt individual has the option to return to State plan
coverage immediately. If the exempt individual is in need of these
services and they are not offered in the
[[Page 73702]]
benchmark plan, the individual can return to the regular Medicaid
benefit package.
Comment: One commenter believed current regulations governing
managed care in Medicaid that describe the information States must
provide and how that information should be provided should be
incorporated in the rule governing benchmark benefit plans. The
information should include a comparison of features between Medicaid
and the benchmark plan, whenever they differ.
Other commenters urged CMS to allow States to deviate from the
lock-in provisions of Medicaid managed care regulations at 42 CFR part
438. They assert that, if beneficiaries covered by an alternative
benefit package, rather than full Medicaid benefits, can pick and
choose benefits during an enrollment period by plan-hopping, plans will
have no way to establish cost-effective premiums tied to the limited
benefit package. The commenters requested that CMS allow States
providing alternate benefit packages to offer as little as a 30-day
change period after initial assignment, and that differences in covered
benefits be excluded as a justifiable cause for beneficiaries to switch
health plans after the change period.
Response: We have revised the regulation at Sec. 440.305 to
incorporate compliance with managed care requirements at section 1932
of the Act and at 42 CFR part 438 of Federal regulations, except when
the State demonstrates that such requirements are impractical in the
context of, or inconsistent with, methods of offering coverage that is
appropriate to meet the needs of the targeted population. This would
mean that, in providing information to beneficiaries who are offered
managed care plans to obtain alternate benefit coverage, States would
be required to comply with the requirements at Sec. 438.10, so that
States must provide all enrollment notices, informational materials,
and instructional materials relating to the enrollees and potential
enrollees in a manner and format that may be easily understood. This
informational material must include, among other things, information
concerning enrollment rights and protections; any restrictions on
freedom of choice among providers; procedures for obtaining benefits
including prior authorization requirements; information on grievances
and fair hearings procedures; information on physicians, the amount,
duration, and scope of benefits; and the process and procedures for
obtaining emergency services.
In order to maintain State flexibility, State plan amendments will
be reviewed on an individual case-by-case basis and could provide for
exceptions from managed care requirements when impractical or
inconsistent with the methods of delivering appropriate coverage to the
targeted population. This would mean that, if States can meet the
standard of offering benchmark or benchmark-equivalent coverage that is
appropriate to meet the health care needs of the targeted population,
CMS would consider State program designs that require flexibility in
this regard.
Comment: Some commenters believed that CMS should require that all
non-managed care plans ensure adequate access to providers that accept
assignment of benefits and bill benchmark plans directly.
Response: If States choose to offer benchmark or benchmark-
equivalent plans to Medicaid beneficiaries, States must assure that
access to providers and claims payment must be in compliance with
current Federal regulations.
Comment: One commenter raised potential problems of billing
alternate benefit insurers. The commenter believed CMS should ensure
that benchmark plan options should impose no additional administrative
burdens on participating Medicaid providers. Providers should not be
depended upon to refund payments and rebill plans in the event that a
plan is billed for a Medicaid recipient who is retroactively enrolled
into a different plan. Individual plan requirements should be
streamlined into the existing system to minimize complexity to the
already complex billing requirements.
Response: This rule does not address provider billing issues
because this is the kind of administrative issue that is more properly
handled on a State level. Provider billing procedures will vary among
the States based on the particular health care delivery system in the
State at issue. We do not anticipate that provider billing under an
alternative benefit program will necessarily differ from the way in
which providers currently bill for Medicaid services, or that providers
will have to establish new processes and systems to calculate, track,
bill, and report benchmark services. Moreover, because most States
already offer managed care enrollment, they already have experience
ensuring coordination of provider claims among different managed care
entities. Thus, we do not believe that the offering of alternate
benefit packages will impose significant administrative burdens on
providers.
Comment: One commenter asserted that the final rule should require
States to provide an exceptions process in which beneficiaries can
obtain services not covered by a benchmark plan when they are medically
necessary, and to educate beneficiaries about how to pursue this
essential safeguard.
Similarly, States should also be required to provide hardship
exemptions if beneficiaries are unable to meet cost-sharing
requirements in benchmark plans and should review each beneficiary's
eligibility category to ensure they meet statutory requirements for
assignment to benchmark plans.
Response: CMS agrees with the commenter that States should review
each beneficiary's eligibility category to ensure they meet statutory
requirements for assignment to benchmark plans. The requirements for
which mandatory enrollment can occur are outlined in Sec. 440.431 and
specify that only full benefit eligibles can be mandatorily enrolled in
benchmark benefit packages. We have required in Sec. 440.320 that
exempt individuals be fully informed regarding the choice for
enrollment in benchmark or benchmark-equivalent plans. We have also
required that States comply with the managed care regulations including
the information requirements for enrollees and potential enrollees.
We are not requiring that States provide a process for
beneficiaries to obtain services not covered by a benchmark plan when
they are medically necessary, because such a process is not authorized
by section 1937 of the Act. Benchmark or benchmark-equivalent plans
offered to beneficiaries constitute the individual's medical assistance
health care coverage and the services provided by the benchmark plan
are expected to be appropriate to meet the needs of the population it
serves.
It is important to note that for those who voluntarily enroll in
benchmark or benchmark-equivalent plans, if medically necessary
services are needed that are not provided as part of the benchmark
program, such individuals can revert to traditional Medicaid coverage
at any time to receive the services. Requests for individuals to opt
out must be acted upon promptly. Further, we included a requirement for
States to have a process in place to ensure continuous access to
services while any opt out request is being processed. See 42 CFR
440.320.
In terms of cost sharing, States are required to ensure that
benchmark or benchmark-equivalent plans comply with the cost-sharing
requirements at sections 1916 and 1916A of the Act, which includes the
provision that premiums and/or cost sharing not
[[Page 73703]]
exceed 5 percent of the family's income. These sections provide States
with the flexibility to consider individuals who are unable to meet
their cost-sharing obligations and establish a course of action that
will be taken in such an instance. Exemptions for individuals in the
case of undue hardship, however, are a state option and may not be
available in all States.
Comment: One commenter believed alternative plans should include a
provision for mandatory cost sharing, where applicable, in return for
treatment or services. Uncollected cost-sharing places an unfair
financial burden on providers.
Response: States are required to ensure that benchmark or
benchmark-equivalent plans comply with the cost-sharing requirements at
Sections 1916 and 1916A of the Act. These sections provide that States
can impose premiums and cost sharing on certain Medicaid beneficiaries,
and Section 1916A provides for enforcement of such premiums and cost
sharing on certain Medicaid beneficiaries (certain limitations do
apply). The enforcement of premiums and cost sharing is at a State's
option. CMS is not requiring that cost sharing be mandated in return
for treatment or services, since this would be inconsistent with the
statutory language provided by Congress in the DRA.
Comment: One commenter mentioned that because of the potential for
harm to beneficiaries, this rule should mandate strong requirements for
meaningful public input at both the Federal and State level when States
propose use of alternative benefit packages. Only a full open process
in which all stakeholders can participate will provide the thorough,
thoughtful analysis needed to determine whether specific changes will
foster genuine efficiency or threaten beneficiaries' access to
appropriate care.
These commenters noted that the State plan amendment process
provides almost no meaningful opportunity for public input. They
complained that States can implement changes the day after publishing a
notice, with no requirement to acknowledge or address comments.
The commenter suggested that meaningful opportunities for public
comment could include well-publicized and easily accessible public
hearings, ample opportunity for stakeholders to provide written
comments, and a requirement that State and Federal officials provide
written responses to comments.
Response: We agree that States should seek public input concerning
plans to offer alternative benefit packages. Thus, we are requiring in
Sec. 440.305 Scope that States secure public input prior to any
submission to CMS of a proposed State plan amendment that would provide
for an alternative benefit package. We are not requiring any specific
process to secure public input, in order to permit States flexibility
to design and use a public input process that meets State needs.
We note that there are already a number of Federal requirements for
States to provide public notice of, and seek public involvement in,
Medicaid program issues. CMS requires in Sec. 447.205 that States must
provide public notice of any significant proposed change in its methods
and standards for setting payment rates for services. There are public
process requirements for setting institutional payment rates at section
1902(a)(13)(A) of the Act. We also require in Sec. 438.50(b)(4) that
States offering benefits through a mandatory managed care program must
specify the process the State uses to involve the public in both design
and initial implementation of the managed care program and the methods
it uses to ensure ongoing public involvement once the managed care
program has been implemented. Additionally, States submitting a section
1115 demonstration proposal must provide a written description of the
process the State will use for receipt of public input into the
proposal. (See 59 FR 49249).
Comment: One commenter suggested that CMS require States to include
in Medicaid contracts with alternative benefit packages provisions that
require fair reimbursement for providers at rates no less than rates
paid under the traditional Medicaid program, including a reasonable
dispensing fee for pharmacy providers.
Further, the commenter believed that CMS should prohibit States
from procuring contracts that contain mail order prescription
requirements for Medicaid recipients. The commenter asserts that
Medicaid recipients who are required to enroll in benchmark plans
should have the option of receiving pharmacy services in a retail
pharmacy setting. CMS should also require that contracts contain an
assurance that allows extended quantities of medications from retail
pharmacies for Medicaid recipients receiving treatment for chronic
illnesses.
Response: Rate setting is a process that States undertake with
their contracted providers. It is outside the scope of this rule, and
was not addressed by the provisions of section 1937 of the Act. Nor did
section 1937 address or limit the use of mail order prescription
requirements, or otherwise address or limit the coverage of, or payment
for, prescription drugs. These issues are outside of the scope of this
rule.
Comment: One commenter recommended that CMS include in its rule an
evaluation of the impact on beneficiaries of the benchmark benefit
packages.
Response: CMS points the commenter to the ``Regulatory Impact
Analysis'' in section VI.B ``Anticipated Effects'' of this regulation.
D. Section 440.310 Applicability
Comment: One commenter disagreed that the medically needy
population should be exempt from participating in benchmark plans. The
commenter believed the rule should permit voluntary enrollment of
medically needy into benchmark plans in States such as Minnesota which
provide full benefits across the board to both categorically and
medically needy. Section 1937 of the Act only expressly prohibits
required participation by the medically needy but is silent as to
whether they can be voluntarily enrolled. It is illogical for CMS to
interpret Congressional intent to permit scaled back benefit coverage
for the categorically needy, while shielding the medically needy from
scaled back benefit packages.
Response: We agree with the commenter's suggestion that medically
needy populations may be offered voluntary enrollment in an alternative
benefit package. Thus, we have revised the rule at Sec. 440.315
``Exempt Individuals'' to indicate that benchmark and benchmark-
equivalent benefits can be offered as a voluntary option to medically
needy or those eligible as a result of a reduction of countable income
based on costs incurred for medical care.
E. Section 440.315 Exempt Individuals
Comment: One commenter believed that these alternative benefit
packages should provide exemptions to additional Medicaid coverage
groups. Other commenters suggested that CMS use its discretion to
expand the categories of exempt individuals to include adults with
serious mental illness and children with serious emotional
disturbances.
Some commenters believed that all people with mental illness should
be exempt.
Response: The statute does not authorize CMS to exempt additional
categories of individuals from alternate benefit package requirements.
We have included the medically needy with the
[[Page 73704]]
list of exempt populations because the medically needy population is
effectively exempted by exclusion from the definition of ``full benefit
eligible''.
We note that we have allowed States flexibility to define the
exempt group of ``medically frail and special needs'' individuals, and
States could include in this group, for example, children with serious
emotional disturbances and individuals with mental illness.
We encourage States to broadly define medically frail and/or
individuals with special medical needs to include these individuals.
Comment: One commenter requested a definition for exempt
individuals ``who qualify for Medicaid solely on the basis of
qualification under the State's TANF rules.'' The commenter noted that
no individual can qualify to receive Medicaid benefits solely on the
basis of their TANF eligibility, since TANF is not linked to Medicaid.
Response: We released a State Medicaid Director's letter on June 5,
1998 in which CMS provided guidance that Medicaid eligibility is not
tied under Federal law to States' TANF eligibility criteria.
The impact of this exemption in the context of alternative benefit
packages would be that only individuals receiving medical assistance
solely on the basis of the individual's TANF eligibility can be exempt
from mandatory enrollment into benchmark or benchmark-equivalent
packages. Because we believe linking does not currently occur in State
Medicaid programs, we believe there are no individuals affected by this
exemption. It is important to note that individuals eligible under
section 1931 of the Act can be mandatorily enrolled in benchmark or
benchmark-equivalent plans and are also not affected by this exemption.
Comment: A commenter stated the proposed rule defines the exempt
``special medical needs'' group to include two of the three groups that
are also exempt from mandatory enrollment in managed care plans under
section 1932(a)(2) of the Act, ``dual eligibles'' and certain children.
However, the proposed rule does not exempt the third group that is
exempt from mandatory enrollment in managed care plans, AI/ANs. Several
commenters believed that the same compelling policy reasons for
excluding AI/ANs from mandatory managed care support excluding them
from mandatory enrollment in benchmark plans, and request that we
revise the rule to be consistent with current policy described in the
Medicaid managed care rule of 2002.
Response: The commenter pointed out that we mistakenly confused two
distinct groups in our definition of ``individuals with special needs''
and included individuals eligible for Medicare as a special needs
population when it is identified in section 1937 as a separate exempt
population. That was a misreading of the statute and we have deleted
that reference. Section 1937(a)(2)(iii) of the Act exempts individuals
entitled to Medicare benefits (dual eligibles), regardless of medical
need, from mandatory enrollment in an alternative benefit package.
There is a separate statutory exempt category at section 1937(a)(2)(vi)
for individuals who are medically frail or have special medical needs.
This final regulation includes both of these groups separately.
Specifically, in the proposed rule, we specified that ``individuals
with special needs'' means the populations identified in Sec.
438.50(d)(1) and Sec. 438.50(d)(3). The reference to Sec.
438.50(d)(1) was the erroneous reference to the dual eligible
population discussed above. The reference to Sec. 438.50(d)(3) was
made because that population was a pre-existing definition of the
statutory term ``children with special medical needs'' contained at
section 1932(a)(2)(A) of the Act. We did not contain a separate
definition of adults with special medical needs.
After reviewing public comment, we have determined to allow States
flexibility to adopt reasonable definitions of ``individuals with
special medical needs'' as long as that definition includes the
children specified in Sec. 438.50(d)(3).
We recognize that Congress included special protections for
American Indians under the managed care provisions at section
1932(a)(2)(C) of the Act, but we must also recognize that those special
protections were not included under section 1937. It is possible that
the managed care protections were based on the fact that American
Indians have access to the IHS and tribal health care delivery system,
and there was concern about mandating enrollment in a managed care plan
that would not be consistent with that health care delivery system.
While AI/ANs are not a statutory group that is exempt from
enrollment in an alternative benefit package, they remain exempt from
mandatory enrollment in managed care. As a result, a State that
operates an alternative benefit package through managed care providers
must provide AI/ANs with a health care delivery system that is
consistent with the special protections related to managed care
enrollment contained in section 1932(a)(2)(C) of the Act.
Comment: One commenter believed that States may be discouraged from
pursuing the benchmark option because of the extra work required for
determining eligibility, along with the fact that potential savings may
be limited. The commenter asked that CMS not impose any additional
definition of sub-groups that must be identified and carved out of
benchmark plans.
Response: CMS does not believe there is extra work involved in
determining eligibility that would reduce potential savings. CMS
currently has approved nine State plan amendments offering benchmark
benefits to Medicaid beneficiaries. Some States have converted some of
their section 1115 populations into State plan populations covered
through benchmark benefit packages. CMS also has several benchmark
State plan amendments pending Federal review. We would like to point
out that this Medicaid State plan option was modeled partly based on
the success seen in separate SCHIP programs as well as in section 1115
demonstrations with similar flexibility. Additionally, CMS has
identified in section VI of the ``Regulatory Impact Analysis'' of this
regulation that savings can accrue if States choose to adopt
alternative benefit programs and that savings will be achieved through
cost avoidance of future anticipated costs by providing appropriate
benefits based on meeting a population's health care needs, achieving
appropriate utilization of services, and through gains in efficiencies
through contracting. We believe States will be able to take greater
advantage of marketplace dynamics within their State, and we anticipate
that a number of States will use this flexibility to create programs
that are similar to their SCHIP programs. We believe that because
States are no longer tied to statewideness and comparability, States
will be able to offer individuals and families different types of plans
consistent with their health care needs and available delivery systems.
Comment: One commenter asked for additional clarification of the
phrase ``or being treated as being blind or disabled'' in Sec. 440.315
of this regulation.
Response: This phrase needs to be interpreted by each State in
light of the particular eligibility conditions in that State. For
example, the phrase could refer to 209(b) States, since States with
this classification can have a more restrictive definition of blindness
or disability. The term could also refer to one of the working disabled
groups, since one group has a categorical requirement that the person
have a
[[Page 73705]]
medically determinable severe impairment, which does not exactly match
the criteria for a determination of ``disabled''. And the Territories
operate on a different definition of blindness and disability than the
50 States.
Comment: Some commenters stated that the proposed rule exempts from
mandatory enrollment the ``medically frail.'' Several commenters
suggested this term be given specific meaning in the rule. They
suggested it include anyone who is eligible for or is receiving
Medicare or Medicaid services for home health, hospice, personal care,
rehabilitation or home and community-based waivers, or who is at
imminent risk of need for these types of services.
Another commenter suggested this group be defined as individuals
with multiple medical conditions and/or a chronic illness.
Response: We have not defined this term in this rule and, after
considering public comment on the issue, have determined to allow State
flexibility in adopting a reasonable interpretation. CMS will require
that States offering alternative benefit packages to inform CMS as to
their definition of ``medically frail.'' States will be required to
include information regarding which population groups will be
mandatorily enrolled in the benchmark program and will need to ensure
that enrollment is optional for exempt populations, including
individuals defined by the State as ``medically frail.'' Additionally,
CMS intends to interpret the required public input process, to include
informing interested parties of the State's proposed definition of
``medically frail.''
Comment: Another commenter suggested CMS use the existing HHS
(Maternal and Child Health Bureau) definition of ``children with
special health care needs'': ``Children who have or are at increased
risk for a chronic physical, developmental, behavioral, or emotional
condition and who also require health and related services of a type or
amount beyond that required by children generally.''
Other commenters believed the ``special medical needs individuals''
should include adults who meet the Federal definition of an individual
with serious mental illness and children who meet the Federal
definition of children with serious emotional disturbance, as
promulgated by the Substance Abuse and Mental Health Services
Administration (SAMHSA). The SAMHSA definition would include some
individuals who, for one reason or another, are not eligible as persons
with a disability, but nevertheless are significantly impaired by their
mental disorder.
Response: In the proposed rule, we defined individuals with special
medical needs to be consistent with Sec. 438.50(d)(3), which
implements and interprets the term ``children with special medical
needs'' used in section 1932(a)(2)(A) of the Act. This definition
refers to children under age 19 who are eligible for SSI, section
1902(e)(3) of the Act TEFRA children, children in foster care or
receiving other out of home placement, children receiving foster care
or adoption assistance or are receiving services through a community
based coordinated care system.
We appreciate commenters' suggestions of additional populations for
inclusion in the definition of special medical needs. In this final
rule, we are allowing States flexibility to adopt a reasonable
definition of the term. CMS encourages States to consider all of these
individuals for inclusion in the definition of ``individuals with
special medical needs.''
To maintain maximum State flexibility, we are thus not imposing a
Federal definition other than requiring that the population include at
least those children identified in Sec. 438.50(d)(3). CMS will require
that States offering alternative benefit packages inform CMS as to
their definition of ``special medical needs.'' States will be required
to ensure that exempt populations, including individuals with ``special
medical needs'' are not mandatorily enrolled in alternative benefit
packages, but are instead offered an informed choice. Additionally, CMS
intends to interpret the required public input process to include
informing interested parties as to the proposed definition of ``special
medical needs.''
F. Section 440.320 State Plan Requirements--Optional Enrollment for
Exempt Individuals
Comment: One commenter supported our regulation at Sec. 440.320
and appreciated the willingness of CMS to provide for optional
enrollment of otherwise exempt individuals. Several other commenters
urged CMS to require States to provide more information and assistance
to exempt individuals who are given the option to enroll in alternative
coverage.
Response: We agree with the commenter that States should provide
information and assistance to exempt individuals who are given the
option to enroll in alternative coverage so they can make an informed
choice. We proposed in Sec. 440.320 that States must inform the
recipients that enrollment is voluntary and that the individual may opt
out of the benchmark or benchmark-equivalent benefit package at any
time and regain immediate eligibility for the standard full Medicaid
program under the State plan. We also proposed that States must inform
the recipient of the benefits available under the benchmark or
benchmark-equivalent benefit package and provide a comparison of how
the benefits differ from the benefits available under the standard full
Medicaid program. We also required that the State document in the
individual's eligibility file that the individual was informed and
voluntarily chose to enroll in the benchmark or benchmark-equivalent
benefit package.
After considering public concerns as to the importance of the
informed choice process, we have revised the proposed rule at Sec.
440.320(a)(1) to require that the State must ``effectively'' inform the
individuals. To the extent that the informed choice process continues
to raise concerns, we may issue guidance as to what processes are
necessary to insure that the informed choice process is effective.
Comment: One commenter believed the proposed rule was silent on the
requirement that the State provide information in plain language that
is understood by the individual, parent, or guardian including clear
instructions on how to access EPSDT services not provided by the
benchmark plan and how to opt out.
Response: We agree that it is important to provide information in
plain language and individuals should be provided clear instructions on
how to access EPSDT services not provided by benchmark plans. Further,
individuals should also receive information on how to opt out of
benchmark plans. We are requiring in Sec. 440.320 that States
effectively inform exempt individuals of the choice, and provide
sufficient information in order to make an informed choice, including a
comparison of benefits. Exempt individuals must be afforded the
opportunity to opt out of benchmark or benchmark-equivalent coverage if
it is determined that the coverage is not meeting their health care
needs.
In addition, when alternative benefit packages are furnished
through managed care contractors, all managed care requirements apply,
as indicated at Sec. 440.305(e). For managed care entities, pursuant
to Sec. 438.10, all informational materials and instructional
materials relating to enrollees and potential enrollees must be
provided in a manner and format that may be easily understood.
Comment: Some commenters stated that the rules should provide for
[[Page 73706]]
immediate revocation of any voluntary election at the discretion of
those excluded individuals who elect an alternative plan. They urged
that revocation be permitted through telephone, in writing, in person,
by electronic communication, or by a designee, so as to make revocation
as simple as possible and as quick as possible for beneficiaries. They
also asserted that the State should be required to provide immediate
notification to such individuals of the right to revoke their election
if they fall into an excluded category. And they urged that coverage
and payment should not be interrupted during changes in election and
marketing should not be permitted by alternate plans to excluded
groups.
These commenters asked that the disenrollment process from
benchmark plans allow a seamless transition to and from the selected
program and minimize the administrative burden on the provider while
ensuring care delivery is not interrupted.
Response: We agree that coverage and payment should not be
interrupted during changes in election. It is important that
coordination of care continue during any time of transition either from
one Medicaid eligibility group to another or from one benefit program
to another. Thus, in considering the commenters' suggestions, we have
provided in Sec. 440.320 that, for individuals who voluntarily enroll
and later determine it necessary to revert to traditional Medicaid and/
or for individuals who are later determined eligible for an exempted
group, opt out requests must be acted upon promptly and States must
have a process in place to ensure continuous access to services while
opt out requests are being processed.
Comment: Some commenters recommended that CMS enhance the proposed
rule to include a section on CMS oversight containing a requirement
that CMS approve State informational materials that provide comparative
information and information on choice. Other commenters were concerned
that inappropriate marketing activities such as those they believe are
being used by some Medicare Advantage plans, may be adopted by
benchmark plans. These commenters urged CMS to be aware of the
potential for inappropriate marketing tactics, require States to
oversee marketing activities, and impose limits on marketing to ensure
individuals are not enrolled under false pretenses.
Response: To the extent that benchmark and benchmark-equivalent
benefit packages are provided through managed care plans, States must
comply with the Medicaid managed care rules at 42 CFR part 438.
Marketing requirements for managed care plans are described in Sec.
438.104. States must consider these requirements in contracting with
these entities.
At this time, we do not see a need for additional oversight
measures when alternative benefit packages are offered outside of the
managed care context.
Comment: Other commenters indicated that CMS should require strong
beneficiary protections for people, including frail older and disabled
beneficiaries, who have the opportunity to voluntary opt into benchmark
plans. The commenters indicated that these protections should include
objective counseling to make sure they understand the potential for
higher costs and make truly informed decisions, a ban on aggressive and
coercive marketing such as door-to-door sales, a requirement to
document network adequacy for additional populations, and ongoing
monitoring to ensure that these beneficiaries are getting the care they
need. Some commenters indicated that, even with full information,
individuals who voluntarily enroll may be likely to make an
inappropriate election. They suggested a professional counselor
independent of the plan be available to review their plan selection.
Response: We believe a professional counselor or enrollment broker
would be a reasonable administrative protection that could be adopted
by a State, but we are not requiring it. This is an operational issue
that may depend on the circumstances of a particular State's program.
States who contract with an enrollment broker can receive
administrative match from CMS at the 50 percent match rate. To the
extent that the State offers alternative benefits through managed care
plans, enrollment brokers must operate consistently with the
requirements at Sec. 438.810. And, consistent with the managed care
rules at Sec. 438.10, States are encouraged to provide information at
least annually as to an individual's enrollment choice under the
benchmark option or the traditional State plan option. This could be
accomplished at the point of redetermining eligibility for enrollees.
Additionally, if it becomes apparent that a change in eligibility
status has occurred (for example, non-pregnant female mandatorily
enrolled in the benchmark plan becomes pregnant and is no longer
eligible for mandatory enrollment), it is incumbent upon the State to
provide the individual with information about their benefit options.
These individuals must have the opportunity to receive State plan
services that may not be available in the benchmark plan either as
wrap-around to the benchmark plan or by reverting to traditional
Medicaid.
Comment: Several commenters believed exempt individuals will be
automatically enrolled without their expressed consent and wanted an
assurance that this will not occur. These commenters urged CMS to
safeguard exempt individuals from being enrolled in benchmark or
benchmark-equivalent plans without their prior informed consent by more
expressly prohibiting States from taking an ``opt-out'' approach to
their enrollment. They suggested that the proposed language could allow
or even encourage States to adopt an opt-out approach without further
clarification, the language could be read to allow States to initially
enroll all exempt persons who do not affirmatively opt out. These
commenters indicated that failure to clarify this point would be
construed as approval of opt-out practices and would not protect
against any form of automatic or ``presumed voluntary'' enrollment.
Response: Section 1937 provides that exempt individuals cannot be
mandatorily enrolled in benchmark or benchmark-equivalent plans. We
proposed to permit States to offer exempt individuals a voluntary
option to enroll, based on informed choice. In order for exempt
individuals not to be mandatorily enrolled and to have made an
``informed choice'' about enrollment, the choice must take place before
enrollment in the benchmark or benchmark-equivalent plan. We have
amended the final rule to make this clear. Further, these actions
should occur before the receipt of services in a benchmark or
benchmark-equivalent plan. We mentioned earlier that we require that
the individual's file is documented to reflect that an exempt
individual is fully informed and has chosen to be enrolled in a
benchmark or benchmark-equivalent plan. CMS, in response to these
comments, has made it clear that individuals cannot be enrolled until
an informed election is made.
In terms of CMS monitoring, we provide in Federal regulations at
Sec. 430.32 for program reviews of State and local administration of
the Medicaid program. In order to determine whether the State is
complying with the Federal requirements and the provisions of its
Medicaid plan, we may conduct reviews that include analysis of the
State's policies and procedures, on-site review of selected aspects of
agency operation,
[[Page 73707]]
and examination of individual case records.
Comment: One commenter believed that the rule should describe the
level of detail required in the State's description of the difference
between State Plan benefits and benchmark-equivalent plan benefits
because the commenter believed it is important that there be a
detailed, written comparison.
Response: We agree with the commenter on the importance of the
benefit comparison. We have required that if the State chooses to
provide benchmark or benchmark-equivalent benefit options, individuals
exempt from mandatory enrollment must be given, prior to benchmark
enrollment, a comparison of traditional State plan benefits and the
benefits offered in the benchmark or benchmark-equivalent benefit
package. We believe that in order for exempt individuals to make an
informed choice, the information must be fully detailed. But we have
determined not to include specific standards for these benefit
crosswalks in the regulation itself because we believe this issue is
better addressed in case-by-case program reviews.
Comment: Another commenter believed CMS should prohibit States from
implementing procedures that make it harder for beneficiaries to stay
in the regular Medicaid program than to enroll in benchmark benefit
plans. Beneficiaries should not be asked to make a choice without being
afforded a reasonable time to evaluate the options.
Response: We agree that individuals should be given a reasonable
time to evaluate the options in considering traditional Medicaid
benefits versus benchmark or benchmark-equivalent options. In order for
individuals to make an informed choice, individuals must have ample
time to consider the options available. Therefore, we have revised the
regulatory provision at Sec. 440.320(a)(3) to require that the State
document that the individual had ample time for an informed choice. We
are not prescribing standards for what constitutes ``ample time''
because we believe this may vary based on the circumstances and/or
individual involved.
Comment: Another commenter believed CMS should require States to
institute expedited processes to transition out of benchmark plans
those individuals who become eligible for exempted categories.
Response: We agree with the commenter that States should provide
for transition of individuals if they become eligible for exempt
categories and thus not required to be mandatorily enrolled in a
benchmark plan. Congress clearly identified individuals who are exempt
from mandatory enrollment in benchmark or benchmark-equivalent plans.
As mentioned previously, we have revised the final rule at Sec.
440.320 to require that opt out requests are acted upon promptly and
that States must have a process in place to ensure continuous access to
services while any opt out requests are being processed. These State
plan requirements would mean that if an individual becomes part of an
exempt population for which no mandatory enrollment can occur, it is
incumbent upon the State to ensure that procedures are in place to
transition individuals quickly and/or to provide information to
individuals quickly to ensure an informed choice. We believe that
States should not rely on the individual's ability to revert back to
Medicaid. These individuals are entitled to the full range of Medicaid
benefits. They must have the choice to receive them either as part of,
or as wrap-around to, the benchmark plan or as part of the traditional
Medicaid State plan.
Comment: One commenter asked for clarification on whether the
benchmark or benchmark-equivalent benefit packages would apply to
``unqualified individuals'' who fall under the ``exempt category'' and
who could be offered optional enrollment in a benchmark benefit
package.
Response: We wish to clarify that unqualified individuals (aliens
who are not lawfully admitted for permanent residence in the United
States or otherwise do not meet the Medicaid eligibility requirements
for aliens; for example, aliens who are residing in the U.S. illegally
or who have not met the 5-year bar for lawful permanent resident
aliens) are exempt individuals that cannot be mandatorily enrolled in
benchmark plans.
Unqualified individuals are not entitled to Medicaid unless they
are aliens eligible for Medicaid coverage in situations where care and
services are necessary for the treatment of the alien's emergency
medical condition (see section 1903(v) of the Act). Thus, these
individuals can be enrolled in a benchmark or benchmark-equivalent plan
on a voluntary basis. The limitations in Sec. 440.320 and section
1903(v) of the Act would apply.
G. Section 440.330 Benchmark Health Benefits Coverage
Comment: A few commenters questioned the coverage standards of a
Secretary-approved benefit package. They contended that under this
option, CMS could approve coverage of any kind, one that may include or
exclude any benefits the State chooses. They asserted that this failure
to recognize any minimum set of required benefits in Medicaid could
limit access to critical health care services. They argued that
allowing States even greater flexibility, by not requiring that
coverage meet benchmark levels, is inappropriate and is likely to
result in more beneficiaries going without health care services until
they become sick and require emergency treatment.
Another commenter agreed and stated that the proposed rule says,
``Secretary approved coverage is any other health benefits coverage
that the Secretary determines * * * provides appropriate coverage for
the population proposed to be provided this coverage.'' The commenter
finds this statement troublesome. This provision gives the Secretary
the wide discretion to approve a number of plans that are more flexible
than the benchmark plan requirements as articulated in this rule. This
provision would give States the option to craft qualifying plans that
include or exclude any benefits that the State chooses.
The commenters urged CMS to remove this fourth option for
Secretary-approved benchmark packages from the proposed rule.
Response: The statute provides States with the option of Secretary-
approved coverage, and we believe we have provided for sufficient
protections to ensure that this option will be consistent with the
statutory purpose of meaningful health benefits coverage while also
allowing State flexibility. In this final rule, we have articulated the
general standard that Secretary-approved coverage must be appropriate
coverage to meet the needs of the population provided that coverage.
The regulations also provide a number of documentation requirements so
that CMS can determine that this standard has been met. States are
required to submit a full description of the proposed coverage. They
must include a benefit-by-benefit comparison of the proposed plan to
one or more of the three benchmark plans specified in Sec. 440.330 or
to the State's standard full Medicaid coverage package under section
1905(a) of the Act, as well as a full description of the population
that would receive the coverage. Additionally, States will be providing
to CMS any other information that would be relevant in making a
determination that the proposed coverage would be appropriate for the
proposed population. In considering Secretary approved coverage, we
will review individual State designs on a case-by-case basis. To the
extent that State
[[Page 73708]]
designs deviate from the other options for benchmark coverage (for
example, State employees coverage, etc.) or traditional Medicaid State
plan coverage, we will consider the information provided as a result of
the public input process and any other information States submit that
would be relevant to a determination that the proposed coverage would
be appropriate for the proposed population.
We believe that Secretary-approved coverage can be appropriate to
meet the needs of the targeted population provided that coverage. We
have approved six Secretary-approved benchmark plans. All of these six
plans include not only all regular Medicaid State plan services but
provide for additional services like disease management and/or
preventive services as well.
Comment: Some commenters believed that to allow States to establish
alternative health benefit programs that do not include family planning
services is counter productive to ensuring the health of Americans and
maintaining the sustainability of the Medicaid program. Also, a
benchmark or benchmark-equivalent plan would not be appropriate for
individuals of childbearing age if it did not include access to family
planning services. The commenter believed that no health benefits
package would be ``appropriate'' for individuals of childbearing age if
it did not include access to family planning services and supplies, and
asked CMS to revise the proposed rule to clarify that, in order to be
considered ``appropriate,'' a benchmark or benchmark-equivalent plan
must include coverage of family planning services and supplies.
The commenter also urged CMS to amend the rule to allow
beneficiaries to disenroll from any such alternative benefit plan and
reenroll in traditional Medicaid if the plan does not cover family
planning services and supplies.
Several commenters noted that family planning is basic preventive
health care for women and that ensuring a women's freedom of choice is
critical in the delivery of these services. Birth control, the main
component of family planning coverage, is the most effective way to:
(1) Prevent unwanted pregnancies, (2) safely space pregnancies in the
interest of the mother and child's health, and (3) keep women in the
workforce. Furthermore, birth control enables preventive behaviors and
allows for the early detection of disease by getting women into
doctor's offices for regular health screenings.
One commenter believed that the legislation authorizes the
Secretary to approve benchmark plans that provide ``appropriate
coverage for the population proposed to be provided that coverage.''
Similarly, the legislation requires benchmark-equivalent coverage to
include ``other appropriate preventive services, as designated by the
Secretary.'' Coverage offered to women of reproductive age cannot be
considered ``appropriate'' if it excludes coverage of family planning
services and supplies.
Some commenters asserted that permitting some plans to exclude
coverage of family planning runs directly counter to three of the major
goals articulated by the legislation's supporters: reducing Medicaid
costs, promoting personal responsibility and improving enrollees'
health.
Other commenters believed that approximately half of all
pregnancies in the United States are unplanned and there is a strong
correlation between unintended pregnancies and failure to obtain timely
prenatal care. They stated that guaranteeing coverage of family
planning services for women enrolled in Medicaid benchmark plans
increases the likelihood that these women will be under the care of a
health professional before pregnancy, and that when they do become
pregnant they will obtain timely prenatal care as recommended by the
American College of Obstetricians and Gynecologists.
The commenters urged the Department to revise Sec. 440.330 to
clarify that in order for Secretary-approved coverage to be considered
appropriate coverage for women of reproductive age, it must include
family planning services and supplies. In addition, the commenters
urged the Department to modify Sec. 440.335 to designate family
planning services and supplies as a required preventive service that
must be included in all benchmark-equivalent plans offered to women of
reproductive age.
Response: Even if one of the statutorily-specified benchmark
packages did not contain family planning services, the statute
nonetheless permits States to base an alternative benefit package on
that benchmark. CMS has no authority to disapprove the use of a
statutorily-specified benchmark plan as the basis for an alternative
benefit package. Consequently, we are revising Sec. 440.375 to update
the title and revise the text of this section to indicate that States
can provide benchmark or benchmark-equivalent coverage to recipients
without regard to the requirements relating to the scope of coverage
that would otherwise apply under traditional Medicaid benefit packages.
The scope of coverage would still need to be consistent with the
requirements for the scope of coverage contained in this subpart, which
are based on the statutory benchmark or benchmark-equivalent coverage
provisions.
With respect to Secretarially-approved coverage, we agree with the
commenters that if a benchmark benefit plan is provided to individuals
of child bearing age that did not include family planning services, it
may not be appropriate to meet the needs of the population it serves.
Additionally, if a benchmark or benchmark-equivalent benefit package
does not include family planning services, States have the option of
providing wrap-around or additional benefits to the benchmark. Because
of the flexibility granted by the DRA, States can submit innovative
designs for implementing Medicaid programs to their beneficiaries. CMS
will review each State plan amendment on a case by case basis and will
consider the merit of each design based on the standard that benchmark
benefit packages ``are appropriate to meet the needs of the targeted
population.''
Comment: Other commenters believed that one reason States may wish
to design a plan under the option for benchmark-equivalent or Secretary
approved is to offer beneficiaries important services that are not
otherwise covered by Medicaid or a standard benchmark plan. The
commenters stated that this rule does not permit this. CMS should allow
States to submit proposals that include other services and judge the
overall plan proposed by the State to assess its efficiency.
Response: Section 1937 provides that benchmark-equivalent or
Secretary-approved can be offered as benchmark plans, so long as basic
services are provided as part of the benchmark-equivalent benefits or
the benefit package is appropriate to meet the needs of the population
it serves for Secretary-approved coverage. The rule is consistent with
these flexibilities. Additionally, the rule provides that the scope of
a Secretary-approved health benefits package or any wrap-around or
additional benefits will be limited to benefits within the scope of the
categories available under a benchmark coverage package or the standard
full Medicaid coverage under section 1905(a) of the Act. This provision
allows States flexibility to offer additional health care services that
would not otherwise be offered. Additional services are limited to
those in categories offered under a benchmark
[[Page 73709]]
plan or section 1905(a) of the Act because section 1937 of the Act did
not expressly authorize coverage beyond the defined scope of medical
assistance, and these limits ensure that additional services will be of
the type generally considered as health care services.
In considering the benchmark packages that have been approved by
CMS, States have created innovative designs that do offer additional
services and do provide for efficiency.
H. Section 440.335 Benchmark-Equivalent Health Benefits Coverage
Comment: One commenter urged CMS to clarify that plans cannot use
actuarial methods that further reduce benefits because of cost-sharing
limits.
Another commenter noted that the preamble of the proposed rule
indicates that even if the benchmark plan has 50 percent coinsurance,
the State would have to ensure that cost sharing does not exceed the
applicable limits in Medicaid, which are substantially lower.
However, Sec. 440.340 specifies that the actuarial report ``should
also state if the analysis took into account the State's ability to
reduce benefits because of the increase in actuarial value of health
benefits coverage offered under the State plan that results from the
limitations on cost sharing * * * under that coverage.'' The commenter
strongly urged CMS to clarify that this language does not allow States
to reduce mental health benefits below 75 percent of the value of the
benchmark benefits because there are less co-payments in the benchmark-
equivalent plan. Congress intended that individuals would get 75
percent of the value of the benefit; they did not intend to reduce the
value of this benefit through cost-sharing limitations.
Response: We agree that clarification is needed in terms of using
actuarial methods to further reduce benefits because of cost-sharing
limits. We have specified in Sec. 440.340 that, as a condition of
approval of benchmark-equivalent coverage, States must provide an
actuarial report with an actuarial opinion that the benchmark-
equivalent coverage meets the actuarial requirements for coverage
specified in Sec. 440.335. We have also specified in Sec. 440.340
that the actuarial report must--
Be prepared by a member of the American Academy of
Actuaries and must meet the standards of this Academy;
Use generally accepted actuarial principles and
methodologies of the Academy, standard utilization and price factors,
and a standardized population representative of the population
involved;
Use the same principles and factors in analyzing the value
of different coverage (or categories of services) without taking into
account differences in coverage based on the method of delivery or
means of cost control or utilization use;
Indicate if the analysis took into account the State's
ability to reduce benefits because of the increase in actuarial value
of health benefits coverage offered under the State plan that results
from the limitations on cost sharing under that coverage;
Select and specify the standardized set of utilization and
pricing factors as well as the standardized population; and
Provide sufficient detail to explain the basis of the
methodologies used to estimate the actuarial value.
In considering the actuarial value, we expect that the States and
the actuaries making the determination of actuarial equivalence will
account for changes in cost sharing between the benchmark-equivalent
plan and the benchmark plan as well as account for any differences in
income and assets between Medicaid beneficiaries and the enrollees in
the benchmark plan. Cost sharing for the Medicaid benchmark-equivalent
plan will still be subject to the limitations set forth in this rule
and in sections 1916 and 1916A of the Act. The determination of
actuarial equivalence should provide an aggregate actuarial value that
is at least equal to the value of one of the benchmark benefit
packages, or if prescription drugs, mental health services, vision and/
or hearing services are included in the benchmark plan, an aggregate
actuarial value that is at least 75 percent of the actuarial value of
prescription drugs, mental health services, vision and/or hearing
services of one of the benchmark benefit packages. Changes to the
benchmark-equivalent plans, including changes in the cost-sharing
structure that would result in expected benefit amounts less than under
the benchmark plan or less than 75 percent of the actuarial value of
prescription drugs, mental health services, vision and/or hearing
services, would not be allowed under this rule.
Comment: Several commenters note that the standard for adopting a
benchmark-equivalent coverage package is set at 75 percent of the
actuarial value of that category of services in the benchmark plan and
wants to understand if the percentage is set in statute. The commenters
believe that if this percentage is not a statutory provision, it would
be important to describe the basis for this standard.
Response: The DRA provides for this standard. Section 1937(b)(2)(C)
of the Act specifies that the benchmark-equivalent coverage with
respect to prescription drugs, mental health services, vision services,
and/or hearing services must have an actuarial value equal to at least
75 percent of the actuarial value of the coverage of that category of
services in the benchmark plan. We have maintained this standard in the
rule consistent with the statutory provision.
Comment: Another commenter pointed out that the benchmark plans are
allowed to provide 75 percent of the actuarial value of mental health
and prescription drugs. The commenter is concerned that if the plan
used as a benchmark does not cover mental health treatment or
prescription drugs, the new Medicaid benefit package does not have to
provide this coverage.
Other commenters are concerned about language indicating that a
benchmark-equivalent coverage package is not required to include
coverage for prescription drugs, mental health services, vision
services, or hearing services. The commenter believed all of these
services are necessary medical services.
Response: CMS clarifies that any and all services under section
1905(a) of the Act must meet medical necessity. Prescription drugs,
mental health services, vision services, or hearing services would meet
the test of medical necessity, however, it is important to note that
these services are not considered mandatory services under the State
plan but rather are considered optional services. Many States have
chosen not to provide Medicaid beneficiaries with optional services
under their state's Medicaid State plan.
Further, it is the DRA that specifies if coverage for prescription
drugs, mental health, vision and/or hearing is provided in the
benchmark plan, the benchmark-equivalent plan must provide at least 75
percent of the actuarial value of the coverage. If coverage is not
provided under the benchmark plan, the benchmark-equivalent is also not
required to provide the coverage. This would be logical since, in
calculating the actuarial value of the benchmark-equivalent, the
actuarial value would be calculated based only on the services included
in the benchmark plan and not calculated based on services that are not
included. This is consistent with the statutory provision, and we have
maintained this flexibility in the rule.
[[Page 73710]]
Comment: Some commenters questioned how the State will assure the
aggregate actuarial value is equivalent if there is lesser coverage in
prescription drugs, mental health, vision, and/or hearing services.
Response: Section 1937(b)(2)(C) of the Act specifies that, in
considering a benchmark-equivalent benefit, if prescription drugs,
mental health, vision, and/or hearing are provided in the benchmark
plan, the benchmark-equivalent must provide at least 75 percent of the
actuarial value of that coverage. This section specifies the minimum
coverage levels but does not specify the maximum level. Thus, States
have the option to cover these services at higher than 75 percent of
the actuarial value. To assure that the aggregate actuarial value is
equivalent, we required in Sec. 440.340 that, as a condition of
approval of benchmark-equivalent coverage, States must provide an
actuarial report that provides, among other things, sufficient detail
as to the basis of the methodologies used to estimate the actuarial
value of the benchmark-equivalent coverage.
Comment: Another commenter suggested that rehabilitation services
should be added to the list of services included at Sec. 440.335.
Response: The DRA specifies that benchmark-equivalent coverage must
include basic services; that is, inpatient and outpatient hospital
services; physicians' surgical and medical services; laboratory and x-
ray services; well-baby and well-child care including age-appropriate
immunizations; and other appropriate preventive services. We have
interpreted other appropriate preventive services to include services
such as emergency services, but have left States with flexibility to
define other appropriate preventive services. We disagree with the
commenter that additional services should be added to the list of
services that are required services under benchmark-equivalent plans.
It is important to note, however, that States, at their option, can
provide additional or wrap-around services to benchmark or benchmark-
equivalent plans. Including rehabilitation services may be appropriate
for some populations. Additional and wrap-around services are discussed
in Sec. 440.360 of this rule.
We did not receive any comments to Sec. 440.340 Actuarial report.
Therefore, Sec. 440.340 will adopted as written in the proposed rule
of February 22, 2008.
I. Section 440.345 EPSDT Services Requirement
Comment: Some commenters supported the proposed regulation that
would require individuals to first seek coverage of EPSDT services
through the benchmark or benchmark-equivalent plan before seeking
coverage of services through wrap-around benefits. Commenters believed
that when individuals need to access additional services as a wrap-
around either for children or adults, States should be required to
ensure they continue to be able to receive services from the same
provider.
Response: We agree that it is important for individuals to receive
services from the same provider, whenever possible. We believe that an
individual's primary care provider is in the best position to
``manage'' an individual's care. For individuals enrolled in a
benchmark or benchmark-equivalent benefit plan, the primary care
provider is going to be serving the individual under that plan. If an
individual is entitled to additional services, the primary care
provider should be responsible for providing and/or coordinating the
individual's care and should be aware of any additional services the
individual needs.
Comment: Some commenters objected to the provision in the proposed
rule that stipulates that individuals must first seek coverage of EPSDT
services through the benchmark plan before seeking coverage of these
services through wrap-around benefits. These commenters asserted that
Congress intended to allow States the option of providing these
benefits directly to Medicaid beneficiaries or to provide these
benefits in whole or in part by the benchmark provider. They indicated
that CMS provides no justification as to why children must first
wrestle with the administrators of the benchmark benefit package before
accessing EPSDT services. One commenter asked that the rule be amended
to eliminate the requirement that a family first seek coverage of EPSDT
services through the benchmark plans.
Response: It is important for individuals to first seek coverage of
EPSDT services through the benchmark plan since we believe the
benchmark provider should serve as the ``medical home'' for the
individual. Thus, the benchmark provider becomes the one central source
of a child's pediatric record and can guard against duplication and
gaps in services. The benchmark provider ensures that care is managed
and coordinated, providing access to specialists and necessary support
services. Also, the benchmark provider facilitates access to
information regarding the services to which the individual is entitled
and information regarding how and when to access such services. We
believe that in accessing services first through the benchmark plan the
provider can act as a facilitator who coordinates and leverages the
attributes and resources of a complex healthcare system and advocate
for the beneficiary as they navigate care options and information
available to them. As such, we believe the individual will be provided
with better health care service and will experience better health care
outcomes overall.
Comment: One commenter believed that families are unlikely to
realize that their children have access to more coverage than that
provided through the benchmark. Even if they understood, they may not
know how to request such a service. The commenter suggested that this
section be strengthened by requiring States to explain, in detail, how
a family will be informed of their rights under EPSDT once they are
enrolled in a benchmark plan and to explain the specific process the
state will then go through to approve or disapprove these services.
States should also explain timelines for consideration of EPSDT
requests in emergency, urgent and routine cases.
The commenter goes on further to say the preamble to the proposed
rule stated, ``the State may provide wrap-around * * * under such
plan.'' The commenter urged that CMS clarify that the word ``may''
should be read ``must'' because the word ``may'' inaccurately suggested
that States are not required to provide these services. The commenter
noted that, in other areas of the proposed rule, CMS correctly stated
that EPSDT services must wrap-around benchmark plans.
Response: We agree that States should be required to inform
families of their rights under EPSDT. The commenter is correct that
children enrolled in benchmark or benchmark-equivalent plans may be
entitled to additional services. Therefore, we are clarifying that
States must ensure that information is provided to all EPSDT eligibles
and/or their families about the benefits of preventive health care,
what services are available under the EPSDT benefit, where and how to
access those services, that transportation and scheduling assistance
are available, and that services are available at no cost. This is
consistent with the requirements of section 1902(a)(43)(A) of the Act
and current policy outlined in Section 5121
[[Page 73711]]
of the State Medicaid Manual. Information must be given to individuals
no later than 60 days of the individual's initial Medicaid eligibility
determination, and annually thereafter if they have not utilized EPSDT
services. We believe most States have booklets to inform individuals of
their benefits, rights, responsibilities, etc. This information is
typically presented to families by the eligibility worker at the time
of application and/or sent to individuals as part of an enrollment
packet from the managed care plan. These types of documents should
clearly explain the benchmark and wrap-around benefits available to
EPSDT eligibles under the age of 19.
Additionally, we agree with the commenter that the word ``may'' was
inaccurate in the preamble to the proposed rule. The law specifically
requires that States are required to wrap-around services (if the full
range of EPSDT services is not provided as part of the benchmark or
benchmark-equivalent plan) to assure that all EPSDT services are
available to eligibles. We are providing clarification here in response
to the comment; however, we are not revising the regulation text, since
the language in Sec. 440.345 clearly indicates that this is a
requirement, and not a choice.
Comment: One commenter stated that the rule was silent on the
requirement that the state provide information in plain language that
is understood by the individual, parent or guardian including clear
instructions on how to access EPSDT services not provided by the
benchmark plan and how to opt out.
Response: We agree that it is important that individuals be
provided with clear instructions in plain language on how to access
EPSDT services not provided by the benchmark plan and how to opt out.
This is already required by the EPSDT outreach provisions of section
1902(a)(43) of the Act, which are applicable to alternative benefit
packages. To the extent that alternative benefit packages are delivered
through managed care plans, States must also comply with managed care
rules at 42 CFR part 438. According to Sec. 438.10, information
provided must be in an easily understood language and format.
Comment: One commenter noted that proposed Sec. 440.350 failed to
specify that under the employer-sponsored insurance plan option States
must still ensure that children have access to the wrap-around EPSDT
benefit. This section should be amended to note this requirement.
Response: The requirement to provide EPSDT benefits to children
under the age of 19 applies to benchmark and benchmark-equivalent
coverage. We have provided that States can offer employer sponsored
insurance if the insurance is considered a benchmark plan.
Additionally, we have indicated in Sec. 440.350(b) that the State must
assure that employer sponsored plans meet the requirements of benchmark
or benchmark-equivalent coverage, including the cost-effectiveness
coverage requirements at Sec. 440.370. By requiring that employer
sponsored plans meet the requirements of benchmark or benchmark-
equivalent coverage and since benchmark or benchmark-equivalent
coverage must provide EPSDT to children under the age of 19 either as
part of, or as wrap-around to, the benchmark or benchmark-equivalent
plan, we are requiring that any employer sponsored insurance coverage
provide EPSDT services to children under the age of 19. We believe this
is clear in the regulation, so we have not revised the regulation text
in this regard.
Comment: Another commenter believed that limiting the mandatory
EPSDT benefit to children under age 19 rather than under age 21 denies
19 and 20 years olds access to critical health care services. The
commenter stated that this provision is inconsistent with the title XIX
definition of EPSDT. Removing EPSDT for 19 and 20 years olds may
exacerbate existing health disparities for minority adolescents,
compromise 19 and 20 years olds' ability to transition successfully
into adulthood, and impede identification of physical and mental
conditions.
Response: We have promulgated language in this rule consistent with
the statutory language enacted in the DRA. Requiring States to extend
EPSDT benefits to 19 and 20 year olds enrolled in benchmark plans would
require a change in law since section 1937(a)(1)(A)(ii) of the Act
provides only that children under 19 years old must receive coverage of
EPSDT as defined in section 1905(r) of the Act. States are given the
option to extend EPSDT benefits in benchmark plans to 19 and 20 year
olds. This option is similar to the choice States currently have in
extending Medicaid eligibility to 19 and 20 year olds; thus, extending
EPSDT to 19 and 20 year olds under the State plan. We note that in
approving nine benchmark State plan amendments, most States with
approved benchmark plans have extended EPSDT coverage to 19 and 20 year
olds enrolled in these plans.
Comment: One State Medicaid official suggested, instead of the
current language in the published proposed rule on (page 9727) of the
Federal Register regarding EPSDT, the following amendment be made to be
consistent with Federal laws: ``(a) The State must ensure access to
EPSDT services, through benchmark * * * for any child under 19 years of
age eligible under the State plan in a category under section
1902(a)(10)(A) of the Act.''
Response: We agree to adopt the language precisely as included in
the statute. We have revised the rule to effectuate the clarification.
I. Section 440.350 Employee-Sponsored Insurance Health Plans
Comment: One commenter requested information about enrollment in
commercial plans and suggested a discussion of how such arrangements
might actually be operationalized; that is, how premiums would be paid
and tracked, and the level of Medicaid contribution to such plans.
Response: Benchmark or benchmark-equivalent benefit coverage may be
offered through employer sponsored insurance health plans for
individuals with access to private health insurance. If an individual
has access to employer sponsored coverage and that coverage is
determined by the State to offer a benchmark or benchmark-equivalent
benefit package (either alone or with the addition of wrap-around
services covered separately under Medicaid), a State may elect to
provide premium payments on behalf of the recipient to purchase the
employer coverage. Non-exempt individuals can be required to enroll in
employer sponsored insurance, and the premium payments would be
considered medical assistance. The requirement for children under the
age of 19 to receive EPSDT either as wrap-around or as part of the
benchmark coverage would still be applicable. The premium payments and
any other cost-sharing obligations by beneficiaries would be subject to
the premium and cost-sharing requirements outlined in sections 1916 and
1916A of the Act, including the requirement that cost sharing not
exceed the aggregate limit of 5 percent of the family's income, as
applied on a monthly or quarterly basis specified by the State.
If the employer plan is cost-effective, States have the flexibility
to take advantage of the coverage, without requiring a uniform employer
contribution. It is likely that a substantial employer contribution
would be necessary in order to meet the cost-effectiveness requirement.
States must identify the specific minimum contribution level that they
are requiring of participating employers.
We have not approved any Medicaid benchmark programs at this time
that provide for employer sponsored
[[Page 73712]]
coverage; however, we have approved section 1115 demonstrations in
which States have provided premium assistance payments and employer
sponsored insurance coverage to Medicaid beneficiaries. For these
section 1115 demonstration programs, some States have required
beneficiaries to provide proof of premium assistance payments. Then,
after such proof is received, the State reimburses the beneficiary
directly. Some States use a voucher system in which they provide a
monthly voucher directly to the beneficiary for the premium payment in
purchasing the employer sponsored insurance. We are not specifying the
way in which States operationalize employer sponsored insurance
benchmark plans; however, we provide this information for
consideration.
Comment: One commenter supported the inclusion of wrap-around
services in general and wrap-around services for employer sponsored
insurance plans as an option available to States, but does not support
a requirement for additional wrap-around services. The commenter
requested that language be added to describe the permissibility of
various types of market innovations in coverage such as high deductible
plans, health savings accounts, consumer-directed plans and wellness
plans or that there be language added indicating such market
innovations are acceptable as ``Secretary-approved coverage'' through a
State plan amendment.
Response: Section 1937(a)(1)(C) of the Act provides that wrap-
around or additional benefits are options that can be added by the
State as additional benefits to benchmark or benchmark-equivalent
coverage. Any wrap-around services that are added do not need to
include all State plan services; however, wrap-around services must be
within the scope of categories of services covered under the benchmark
plan, or described in section 1905(a) of the Act.
The only requirement for wrap-around services is at section
1937(a)(1)(A)(ii) of the Act, which provides that if children under the
age of 19 are receiving services in a benchmark or benchmark-equivalent
benefit plan, they are entitled to EPSDT services as defined in section
1905(r) of the Act and so must receive medically necessary services
consistent with EPSDT either as services provided in the benchmark or
as wrap-around to the benchmark plan.
We have further provided in Sec. 440.330 that Secretary-approved
coverage can be offered as benchmark coverage, consistent with the DRA.
This coverage must be appropriate to meet the needs of the targeted
population. We have required that States wishing to opt for Secretary-
approved coverage should submit a full description of the proposed
coverage and include a benefit-by-benefit comparison of the proposed
plan to one or more of the other benchmark options listed in this
section or to the State's standard full Medicaid coverage package under
section 1905(a) of the Act, as well as a full description of the
population that would be receiving the coverage. In addition, the State
should submit any other information that would be relevant to a
determination that the proposed health benefits coverage would be
appropriate for the proposed population. The scope of the Secretary-
approved health benefits package will be limited to benefits within the
scope of the categories available under a benchmark coverage package or
the standard full Medicaid coverage package under section 1905(a) of
the Act.
To the extent that a benchmark coverage plan that is used as the
comparison for the Secretary-approved benchmark plan provides for
market innovations such as high deductible health plans, health savings
accounts, consumer-directed plans, and/or wellness plans, we would
consider these on a case-by-case basis as components included in a
Secretary-approved benchmark option. It should be noted that CMS has
approved nine benchmark programs. Of these nine, six have been approved
as Secretary-approved programs. At least one of the Secretary-approved
plans includes such innovations as high deductible health plans.
We did not receive any comments to Sec. 440.355 Payment of
premiums. Therefore, Sec. 440.355 will be adopted as written in the
proposed rule of February 22, 2008.
J. Section 440.360 State Plan Requirement for Providing Additional
Wrap-Around Services
Comment: A dental provider indicated that the proposed rules give
States the ability to create new benefit packages tailored to different
populations and that States have the flexibility to provide ``wrap-
around'' and ``additional benefits.'' The commenter noted that CMS
cited in a press release ``dental coverage'' as an example of
``additional benefits'' but, in the actual language of the proposed
rule there are no examples or reference to ``dental coverage.''
Further, the commenter noted that the conference report to the DRA
includes guidance to States by explaining that both benchmark and
benchmark-equivalent coverage would include ``qualifying child
benchmark dental coverage.'' The commenter also noted that in the
context of employer group health plans, stand-alone dental arrangements
are very often offered as a supplemental coverage that is separate from
medical care coverage. The commenter indicated that this option would
align Medicaid more closely with private market insurance options and
give States more control over their Medicaid benefit packages.
The commenter requested that CMS provide guidance to the States
with respect to ``additional benefits'' such as ``dental coverage.''
The commenter recommended the rule be amended to include an additional
paragraph that would provide that States have the option to provide
additional benefits that specifically include dental benefits that may
be offered as a supplement to medical care coverage.
Response: The House Conference Report 109-362 provided for the
language that benchmark or benchmark-equivalent coverage would include
``qualifying child benchmark dental coverage.'' The conference
agreement removed this reference. Thus, the final provisions of section
1937 of the Act includes no such requirement for the inclusion of
dental coverage as wrap-around or additional services. In fact, section
1937 of the Act provides no examples of wrap-around or additional
coverage. The rule provides that additional or wrap-around services do
not need to include all State plan services but would be health
benefits that are of the same type as those covered under the benchmark
or considered to be health benefits under the Medicaid statute.
We do agree that dental coverage could be added to benchmark or
benchmark-equivalent benefit plans. Further, it is possible that,
because of the plan options that have been identified by Congress as
benchmark coverage, dental services may already be covered services in
these plans.
If the commenter is concerned that children will not receive dental
coverage, we wish to point out that children under the age of 19 must
receive EPSDT services consistent with section 1905(r) of the Act
either as part of, or as wrap-around to, the benchmark plan. Therefore,
dental coverage will be provided to children under the age of 19
enrolled in benchmark plans.
K. Section 440.365 Coverage of Rural Health Clinic and Federally
Qualified Health Center (FQHC) Services
Comment: One commenter was concerned that the proposed rule only
[[Page 73713]]
stipulated that States with benchmark plans need only assure that these
individuals have access through such coverage and that FQHCs are to be
reimbursed for such services as provided under the FQHC reimbursement
requirements found in section 1902(bb) of the Act. The commenter
indicated further concern that CMS did not elaborate further on these
requirements, and particularly, that it did not lay out minimum steps a
State must take to assure that these patient and health center
protections are effectively implemented. The commenter believed it is
important that the final rule and preamble make clear that there are
minimum steps a State must take to be in compliance with these FQHC
statutory requirements.
Specifically, the commenter asked that it should be clear that
recipients who are mandatorily or voluntarily enrolled in a benchmark
plan: (1) Remain eligible to receive from an FQHC all of the services
included in the definition of the services of an FQHC, as provided in
section 1902(a)(2)(C); and (2) must be informed that one or several of
the providers by whom they may choose to be treated under this coverage
is (or are) an FQHC. The commenter asserted that, to the extent these
same individuals receive benchmark coverage, both the State and the
benchmark plans must be encouraged to contract with FQHCs as providers
of services to these enrolled Medicaid populations. These FQHC(s) must
be identified by name. The commenter further stated that, in the event
the benchmark plans identified do not contract with an FQHC, enrollees
must be informed that they still may receive Medicaid covered services
from FQHCs. In the preamble and final rule, the commenter provided that
CMS should underline to the States the importance of full compliance
with the FQHC reimbursement requirements of section 1937(b)(4) of the
Act and Sec. 440.365. The commenter added that adoption of these
recommendations is important to assure that the requirements of section
1937(b)(4) of the Act are met.
Response: We agree with the commenters and we have required in
Sec. 447.365 that if a State provides benchmark or benchmark-
equivalent coverage to individuals, it must assure that the individual
has access, through that coverage or otherwise, to rural health clinic
services and FQHC services and that payment for these services must be
made in accordance with the payment provisions of section 1902(bb) of
the Act. We also agree that individuals always have access to FQHC
services, even if the State does not contract with an FQHC to provide
such services, and we encourage States to contract with FQHCs as
providers.
We did not receive any comments to Sec. 440.370 Cost-
effectiveness. Therefore, we will adopt Sec. 440.370 as written in the
proposed rule of February 22, 2008.
L. Section 440.375 Comparability
Comment: One commenter encouraged CMS to require comparability
across traditional Medicaid and Medicaid benchmark alternatives.
Response: The language included in the rule allowing for States to
offer benchmark or benchmark-equivalent health care coverage without
regard to comparability is based on the DRA language providing that
``notwithstanding any other provision of Title XIX'' States can offer
medical assistance to certain Medicaid beneficiaries through benchmark
or benchmark-equivalent benefit packages. We interpreted this
``notwithstanding language'' to provide that States could offer
benchmark or benchmark-equivalent coverage to certain specified
Medicaid populations, considering different benefit packages, and to
different regions within the State. This provision gives meaning to the
statutory language permitting States to offer benchmark or benchmark-
equivalent coverage to certain, but not all, Medicaid populations.
For example, States could craft benchmark options that provide
individuals with a benefit that integrates acute care and long term
care services and a different benefit that provides for traditional
State plan services with the addition of disease management services.
We believe this provides that States can better meet the needs of their
Medicaid populations, and we further believe that this is consistent
with Congressional intent in establishing maximum flexibility for
implementing benchmark benefit options.
M. Section 440.380 Statewideness
Comment: One commenter is concerned that States are given the
option to amend their State plan to provide benchmark plan coverage to
Medicaid recipients without regard to statewideness. This proposed
regulation would likely result in health care disparities among
individuals living in different parts of the State, has no basis in the
statute, and should therefore be excluded from the final regulations.
The commenter stated that the proposed Sec. 440.380 should be revised
to ensure that beneficiaries across the State are not subject to
disparities in health care services.
Response: The language included in the rule allowing for States to
offer benchmark or benchmark-equivalent health care coverage without
regard to statewideness is based on the DRA language providing that
``notwithstanding any other provision of Title XIX'' States can offer
medical assistance to certain Medicaid beneficiaries through benchmark
or benchmark equivalent benefit packages. We interpreted this
``notwithstanding language'' to provide that States could offer
benchmark or benchmark-equivalent coverage to certain Medicaid
populations, considering different benefit packages, and to different
regions within the State. This provision also gives meaning to the
language permitting States to offer benchmark or benchmark-equivalent
coverage to certain, but not all, Medicaid populations.
For example, States could craft benchmark options that provide
individuals with a benefit in an urban area of the State that is
different from the benefit offered to individuals in the rural area of
the State. Moreover, States can test new concepts in pilot areas before
expanding the benchmark program to the entire State. We believe this
provides that States can better meet the needs of their Medicaid
populations, and we further believe that this is consistent with
Congressional intent in establishing maximum flexibility for benchmark
benefit options.
N. Section 440.385 Freedom of Choice
Comment: One commenter noted that CMS protects the free choice of
emergency services providers but failed to do so for family planning
services providers. The commenter urged CMS to preserve the free choice
of family planning services providers by amending the rule to include a
provision preserving the free choice of family planning providers. The
commenter believes that this has been a long standing policy of the
Congress and the Medicaid program.
The commenter added that the proposed rules would permit States to
deny freedom of choice of a provider for managed care enrollees seeking
family planning services and supplies. The commenter argued that this
provision lacks any basis in the statute and is contrary to the clear,
repeated articulated intent of Congress.
The provider asserted that provider freedom of choice is critical
because of the potentially sensitive nature of the service. The
commenter argued that, unable to obtain confidential services from the
provider of their choice, some managed care enrollees may forgo
[[Page 73714]]
obtaining family planning services entirely. This would threaten
beneficiaries' access to high quality, confidential reproductive health
care and set a precedent of inequity between beneficiaries in fee-for-
service programs and beneficiaries in managed care plans.
The commenter noted that Congress has clearly indicated that while
States may require Medicaid beneficiaries to enroll in managed care
plans and obtain care from providers affiliated with those plans, an
exception should be made for individuals seeking family planning. The
commenter also noted that Federal regulations at Sec. 431.51 state,
``A recipient enrolled in a primary care case management system, a
Medicaid MCO, or other similar entity will not be restricted in freedom
of choice of providers of family planning services.'' The commenters
urged the Department to revise Sec. 440.385 to reflect that provider
freedom of choice for family planning should be retained.
Response: We agree. Accordingly, we have revised the regulation to
ensure that selective contracting does not apply to family planning
services providers.
Comment: One commenter requested that CMS explain the concept of
``selective contracting'' and provide more detail as to how this would
be operationalized under benchmark plans.
Response: Selective contracting is a term usually referred to in
the context of section 1915(b)(4) waiver programs. Selective
contracting provides States with the opportunity to contract with
certain providers so long as certain other criteria are maintained.
Specifically, the State must ensure that in order to selectively
contract with providers, the selective process does not restrict
providers in emergency situations; is based on reimbursement, quality
and utilization standards under the State plan; and does not
discriminate among classes of providers on grounds unrelated to their
demonstrated effectiveness and efficiency in providing benchmark
benefit packages. Also, all providers must be paid on a timely basis
consistent with Federal regulations at Sec. 447.45. States previously
requested section 1915(b)(4) waiver authority for selective
contracting, but now because of the flexibilities outlined in the DRA,
we will provide that States can selectively contract with providers in
offering benchmark benefit coverage without requesting a 1915(b)
waiver. By using State plan authority, the burden for requesting waiver
renewals every 2 years would be eliminated.
We believe the authority to provide for selectively contracting is
as a result of the DRA language that provides that ``notwithstanding
any other provision of Title XIX,'' States can offer medical assistance
through the use of alternative benchmark benefits to certain Medicaid
beneficiaries. We believe that Congress intended for States to have a
great amount of flexibility to tailor benefit packages appropriate to
specified groups of Medicaid recipients. We also believe that Congress
intended that efficiency and cost-effectiveness should be maintained in
implementing State Medicaid programs. Thus, we have required in Sec.
440.370 that benchmark or benchmark-equivalent coverage must be
provided in accordance with economy and efficiency principles.
Selective contracting of providers affords the greatest amount of
flexibility, works to provide beneficiaries with continuity of care,
and is cost-effective.
Comment: One commenter noted that CMS should include an ``any
willing provider'' provision in Medicaid contracts for alternate plans
that allow Medicaid participating providers the opportunity to continue
serving those who are required by the State to enroll in a benchmark
plan.
Response: We are not requiring States to incorporate an ``any
willing provider'' requirement when selectively contracting for
benchmark or benchmark-equivalent benefits. We believe that the
protections we have incorporated into the selective contracting
provisions at Sec. 440.385 are sufficient to ensure beneficiary access
to benchmark or benchmark-equivalent benefits. And, even under the
selective contracting provisions, States have the option to provide
that ``any willing provider'' can provide services to individuals who
enroll in benchmark plans, so long as the provider is a qualified
provider that meets the criteria established in title XIX and in
Federal regulations as a qualified provider, and agrees to accept the
reimbursement, quality, and utilization standards set forth in the
State plan.
This would mean that States can contract with specific providers in
offering specific services; for example, States could contract with a
dental managed care plan to provide Medicaid beneficiaries with dental
services. We recognize that individuals may have concerns with the
flexibility granted herein that States can selectively contract with
providers if certain conditions are met. However, over the years States
have selectively contracted with providers and we believe individuals
continue to receive quality care. We believe that to allow States the
option to selectively contract with providers gives States the
flexibility to provide for benchmark or benchmark-equivalent packages
consistent with the intent of the DRA while still providing that
individuals continue to receive quality health care.
O. Section 440.390 Assurance of Transportation
Comment: One commenter agreed with the interpretation of the
notwithstanding language to ``bypass'' the assurance of transportation,
including the elimination of non-emergency medical transportation
(NEMT). The commenter noted that the ability of States to exclude NEMT
services in their benchmark benefits is evident not only from the broad
language of the statute but also from Congressional intent. The
commenter noted that one of the stated purposes of section 6044 of the
DRA is to allow States to offer benefit packages that mirror commercial
packages.
Response: We agree that offering benchmark or benchmark-equivalent
benefit packages without regard to the assurance of transportation is
consistent with the benchmark options that Congress specified: Federal
Employees Health Benefit Plan equivalent coverage, State employees
coverage, and coverage offered by an HMO in the State with the largest
insured commercial non-Medicaid population. These benchmark plans
generally do not pay for NEMT to and from medical providers in all
instances. Since section 1937 of the Act gives States the flexibility
to provide benefits that are similar to commercial packages, it would
appear inconsistent with that flexibility to require the States to
provide NEMT that the selected benchmark package do not offer.
Comment: A preponderance of commenters, however, disagreed with the
provision in the rule that would allow States the option to exclude
NEMT as a benefit under a benchmark and benchmark-equivalent plan.
Generally, these comments were submitted by transportation providers,
medical providers, and Medicaid beneficiaries, particularly Medicaid
beneficiaries who rely on dialysis treatments.
Most of the commenters believed that the goals of the Medicaid
program would be undermined if needy individuals were unable to get to
and from healthcare services and such an option would create a barrier
to care. They asserted that assurance of transportation is a vital
component of the Medicaid program and is of particular importance to
mentally and physically disabled and elderly patients. They expressed
concern that vulnerable populations might not receive medically
necessary and often life sustaining
[[Page 73715]]
services because of their difficulty to access the needed care. For
example, one commenter stated that, in the case of patients with ESRD,
many patients would be unable to access dialysis services.
Response: We disagree that benchmark and/or benchmark-equivalent
plan options undermine the intent of the Medicaid program and create
major barriers to access appropriate care. The benchmark and benchmark-
equivalent plan options provide unprecedented flexibilities to States
in an effort to create benefit packages that appropriately meet the
needs of their Medicaid populations. In order to provide States with
maximum flexibility, the rule provides that States can offer benchmark
or benchmark-equivalent coverage without regard to the assurance of
transportation, which will align these plans with today's health care
environment.
Generally, private health insurance plans do not offer non-
emergency medical transportation as a medical benefit to enrollees.
However, many private health plans do cover emergency ambulance
transport, and in some cases, non-emergency ambulance transport for
circumstances such as transporting beneficiaries between facilities.
When a State selects a private health plan that provides coverage of
emergency ambulance and/or non-emergency ambulance transport, the State
is required to follow the coverage policy for transportation that is
contained in the private health plan.
If, however, the private health plan does not provide emergency
transportation or NEMT benefits, the State may choose to provide some
or all transportation assistance as a wrap-around service to the
benchmark plan. To date, nine States have approved benchmark State
plans. Of these nine States, only three do not provide NEMT services to
beneficiaries enrolled in benchmark programs.
It is, therefore, important to recognize that section 1937 of the
Act contains protections for children and exempt individuals. Children
will continue to have access to NEMT as an EPSDT benefit. Exempt
individuals will have an informed choice to determine whether
enrollment in a alternative benefit package is advantageous, and may
take into account the availability of NEMT in making that election.
Comment: Several commenters noted that elimination of the
requirement to provide transportation would actually drive up Medicaid
costs because medical visits would become less frequent, resulting in a
higher incidence of more serious and costly medical problems, an
increase in the use of emergency medical services, and an increase in
long term nursing home admissions. A number of these commenters cited a
2006 Cost Benefit Analysis conducted by the Marketing Institute of
Florida State University College of Business as proof of the cost
effectiveness of providing NEMT to Medicaid beneficiaries. Another
commenter cited several studies that compared Medicaid recipients
residing in States that do provide access to NEMT. The commenter stated
that these studies found that access to non-emergency transportation
produces cost savings and increased health care results.
One commenter indicated that CMS requires States to comply with
economy and efficiency principles in offering benchmark or benchmark-
equivalent benefit packages to Medicaid beneficiaries, but does not
require non-emergency medical transportation in benchmark or benchmark-
equivalent plans, when according to several studies it has been proven
that providing this service is cheaper overall and leads to better
health outcomes for Medicaid beneficiaries.
One commenter suggested that this rule sets up a system that would
limit mileage payments to drivers for non-emergency doctor visits. The
commenter indicated that medical mileage is funded in part to drivers
who transport people for medical care on a non-emergency basis.
Response: Generally, the populations that are mandated to enroll in
a benchmark program are healthier and require medical services less
frequently than most Medicaid eligibles. Moreover, children who are
enrolled in benchmark or benchmark-equivalent coverage will continue to
receive NEMT services because NEMT is required under EPSDT. The most
vulnerable individuals are statutorily exempt individuals, such as
those with disabilities or special medical needs, who cannot be
mandated to enroll in a benchmark benefit plan but rather must be
provided the choice to enroll, including a comparison of the benefits
in the benchmark or benchmark-equivalent plan versus those in the
traditional State plan package. If exempt individuals choose to enroll
in a plan that does not cover NEMT services, these individuals have the
right to disenroll at any time if they find that they need
transportation assistance. Because the population for which NEMT may
not be provided could be very limited, we do not agree that the impact
of allowing States to choose not to provide NEMT will be great enough
to increase Medicaid costs.
To the extent that the commenters are correct that noncoverage of
NEMT will lead to higher eventual costs, we believe that States will
respond by ensuring coverage for NEMT. It is a State's choice whether
to include NEMT benefits when offering benchmark or benchmark-
equivalent coverage. It is certain States will consider the potential
impact on costs and beneficiaries' health care utilization and status
when they make these decisions.
Comment: One commenter stated that the number one reason that
dentists and doctors do not wish to accept Medicaid patients is that
Medicaid beneficiaries do not show-up for appointments or are late for
appointments. If CMS does not require transportation benefits, no-shows
will increase and the result will be that fewer providers will
participate in Medicaid.
Response: We do not agree with the commenter that not requiring
NEMT will result in fewer providers participating in the Medicaid
program. Provider participation in Medicaid is based on a number of
reasons, including patient loads and reimbursement rates.
To the extent that the commenters are correct that noncoverage of
NEMT will lead to lower provider participation, we believe that States
will respond by ensuring coverage for NEMT. It is a State's choice
whether to include NEMT benefits when offering benchmark or benchmark-
equivalent coverage. It is certain States will consider the potential
impact on provider participation when they make these decisions.
Comment: Many of the commenters focused on the impact that the
proposed regulation would have on dialysis patients who require 3
weekly trips to and from dialysis facilities in order to survive. They
noted that effective care of ESRD patients requires meticulous
coordination of dialysis treatment and drug therapy with frequent and
specialized care. Dialysis patients often have multiple co-morbidities
and, therefore, require frequent transportation to multiple services.
The severity of the complications that develop due to missed treatments
is often life threatening. Elimination of transportation services would
make it very difficult and often impossible for beneficiaries with ESRD
to consistently access the frequent dialysis services that sustain
their lives.
Many commenters stated that individuals with physical or mental
disabilities have difficulty using public transportation and require
specialized transportation that would otherwise not be available should
State Medicaid
[[Page 73716]]
programs be allowed to stop providing transportation. For many
beneficiaries, the cost of frequent trips in specialized vehicles would
be unaffordable. Often beneficiaries live in rural areas where the only
available transportation to and from medical appointments is provided
through the Medicaid program. Without Medicaid transportation services,
many beneficiaries would be unable to access needed care and ultimately
would require more costly services, costly emergency care, and
expensive emergency ambulance services and/or expensive non-medical
wheelchair van care.
Other commenters indicated that co-occurring physical health
conditions such as diabetes or heart disease, as well as mental health
conditions such as depression and anxiety affect an individual's
ability to drive.
Several commenters indicated that people suffering with HIV/AIDS,
some in wheel chairs, others who are extremely fragile or elderly, have
monthly office visits where they are assessed and treated. To remove
their only means of free transportation will take away their compliance
with medical office treatment.
Response: As we stated in a previous response, beneficiaries with
end-stage renal disease who rely on dialysis treatments and
beneficiaries with other physical and mental disabilities, individuals
with HIV/AIDS, and those who are medically frail and elderly are likely
exempt populations for which mandatory enrollment in benchmark or
benchmark-equivalent plans may not occur. If exempt individuals who
voluntarily enroll in benchmark plans determine that the plan is not
meeting all of their health care needs including NEMT, such exempt
individuals must be given the opportunity to disenroll from the
benchmark program and revert to traditional Medicaid at any time.
Additionally, children under the age of 19 must be provided with EPSDT
services and thus will receive NEMT. Furthermore, the benchmark or
benchmark-equivalent plans available may provide NEMT services.
Consequently, we believe that only a very limited number of the cited
individuals would not be provided with NEMT services.
Comment: Many commenters stated that the possible elimination of
transportation will not only decrease access to healthcare but would
imperil the financial stability of ambulance services across the
Emergency Medical Services (EMS) community. EMS providers depend on
reimbursement from non-emergency transports to sustain operational
costs and maintain optimal readiness standards for emergency
transports. Without adequate reimbursement from Medicaid for non-
emergency transports, many ambulance providers, especially those in
rural areas, would cease to stay in business, causing a serious
reduction in the overall availability of ambulance services. Many
commenters stated the provision would likely cause over-utilization of
emergency ambulance services, since beneficiaries would need to rely
more frequently on more expensive emergency ambulance transport. One
commenter suggested that CMS implement the same ``medically necessary
transportation'' guidelines for the Medicaid program that already exist
and govern non-emergency ambulance transportation for Medicare
patients, because commercial insurance almost universally uses these
guidelines as the benchmark for reimbursement for non-emergency
ambulance transportation.
One commenter noted that the GAO has found that the current
Medicare rates for ambulance transportation is on average 6 percent
below the cost of providing care. Medicaid rates are currently even
less. Ambulance transportation is a vital service for Medicaid
beneficiaries, and ambulance companies are currently operating under a
fee schedule that does not compensate them for the cost of providing
that care. To further reduce the overall reimbursement to the ambulance
providers while leaving benefits in tact for hospitals, physicians, and
labs is unfair. Ambulance transport is a vital link between the patient
and these other services, and should not be relegated to non-payment.
Response: Because there are significant portions of the Medicaid
population that will still be able to receive NEMT services, even if
their State has chosen to implement the benchmark plan option, we do
not believe that the flexibility in not providing NEMT to beneficiaries
enrolled in benchmark plans would greatly reduce the overall
availability of ambulance services, nor would it imperil the financial
stability of ambulance services across the EMS community. It should
also be noted that Medicaid is not responsible for the general
operation or deficit financing of public or private transportation
providers. The commenter's assumption that the elimination of NEMT
would likely cause over-utilization of emergency ambulance services is
unfounded. States as well as private insurers have in place policies
stipulating when transport by emergency ambulance is appropriate, and
these policies make it less likely that there would be abuse on the
part of beneficiaries.
With regard to the comment that CMS implement the same ``medically
necessary transportation'' guidelines for the Medicaid program that
already exist and govern non-emergency ambulance transportation for
Medicare patients, because commercial insurance almost universally uses
these guidelines as the benchmark for reimbursement for non-emergency
ambulance transportation, we do not believe that it is necessary to
require in this regulation specific guidelines that are universally
used by commercial insurance. Due to the benchmarking requirements,
services in universal use will probably be included in benchmark or
benchmark-equivalent plans.
Comment: Many commenters indicated that the proposed rule would
shift financial responsibility for Medicaid non-emergency
transportation to non-profit and municipal fire service-based EMS
systems, ADA paratransit programs, beneficiaries, beneficiaries'
families, and other segments of the population who often do not have
sufficient funds to pay for trips to and from providers. The commenters
believed that the proposed cuts in transportation conflict with the
protections afforded to the disabled under the Americans with
Disabilities Act. Commenters stated the shifting of the financial
burden for Medicaid non-emergency transportation to ADA paratransit
services and local transit programs without any additional funding
constitutes an unfunded mandate.
Response: We continue to believe that the responsibility for
Medicaid NEMT will not be shifted to municipal EMS systems, ADA
paratransit programs, or beneficiaries. Many beneficiaries are exempt
from mandatory enrollment in benchmark benefit plans and therefore will
continue to receive NEMT services if they choose to remain in
traditional State plan coverage. If they enroll in benchmark or
benchmark-equivalent coverage and determine that the coverage is not
meeting their needs, they can revert to traditional Medicaid State plan
coverage at any time. Also, children under the age of 19 will receive
NEMT because of the EPSDT requirements. Consistent with Federal
regulations, States are required to assure non-emergency transportation
only when the beneficiary has no other means of transportation.
Comment: Several commenters stated that under section 1937 of the
Act, a benchmark-equivalent package must offer a specific range of
services set forth
[[Page 73717]]
in Sec. 440.335(b)(1)-(5) of the proposed regulation and that the
majority of qualifying benchmark plans cover emergency ambulance
services. To ensure that enrollees in benchmark-equivalent plans
receive coverage that is qualitatively equivalent to benchmark plans
that provide emergency ambulance transportation, CMS should require
benchmark-equivalent plans to cover emergency ambulance transportation.
Response: Benchmark and benchmark-equivalent plans model the
private health insurance plans which frequently cover emergency medical
transportation. Thus, there is no need to specifically require coverage
of emergency ambulance transportation.
Comment: One commenter noted that instead of saving money by
eliminating non-emergency transportation, CMS should do a better job of
policing the system to reduce fraud and abuse. Another commenter
indicated that coordinating transportation would reduce the cost of
providing transportation.
Response: Coordination and monitoring of the provision of
transportation services is not relevant to this rule. We agree that the
reduction of fraud and abuse by States should always be considered by
States when designing or implementing their State Medicaid program.
Comment: One commenter believed that during the DRA process CMS
attempted to end the Medicaid transportation service. This attempt was
turned back by Congress with the clear intention that transportation
was essential for adequate access to health services. It is clear that
the proposed rule is contrary to the intent of Congress.
Response: We are unaware of any attempt by CMS during this
regulatory process to end the requirement for States to assure Medicaid
non-emergency transportation. On the contrary, on August 23, 2007, CMS
published a rule on the ``State Option to Establish a Non-Emergency
Medical Transportation Program.'' When implemented, this regulation
will enhance the ability of States to provide NEMT by offering the new
option to provide more cost effective non-emergency transportation as a
medical service through a brokerage program.
Comment: One commenter noted the proposed rule on the State Option
to Establish a Non-Emergency Medical Transportation Program providing
guidance on section 6083 of the DRA and wonders how CMS on one hand is
providing guidance regarding non-emergency medical transportation and
encourages use of a brokerage program, while at the same time provides
guidance on the elimination of non-emergency medical transportation in
benchmark or benchmark-equivalent plans.
Additionally, the commenter believed that the transportation
benefit currently operates in a fiscally sound manner. As currently
structured, the commenter asserted that the transportation benefit is
cost effective in most States. The commenter noted that States
generally limit reimbursement for transportation to the least costly
form of transport that is medically appropriate based on the
beneficiary's condition. Moreover, Medicaid beneficiaries are generally
required to use free transportation resources before the program will
provide reimbursement for transportation. The commenter stated that,
consequently, patients who receive transportation under State Medicaid
programs are required, as a condition of coverage, to have no other
means of getting to or from providers of medical care.
Response: CMS understands that there are two separate provisions in
the DRA, one providing for a brokerage program for non-emergency
medical transportation and the other offering benchmark or benchmark-
equivalent benefits to certain Medicaid beneficiaries. These benchmark
plans can be offered without regard to the assurance of transportation,
including non-emergency medical transportation. CMS understands the
confusion this may cause; however, it should be noted that in adopting
these transportation provisions in the DRA, Congress provided States
with additional flexibilities to redesign their Medicaid programs in
order to maintain sustainability. These options are intended to be used
by States to improve the delivery of health care to Medicaid
beneficiaries as well as to reduce overall costs, including improving
the delivery of non-emergency medical transportation.
The brokerage program option for delivering non-emergency medical
transportation and the benchmark or benchmark-equivalent benefits
option that allows States to deliver benchmark health plans without
regard to the assurance of transportation do not contravene each other
as the commenter suggests. These are merely options that are part of an
array of improvements and cost saving measures that can be selected by
States. Because there is no requirement for a State to select either
the brokerage program option or the benchmark or benchmark-equivalent
option we do not believe that these transportation provisions are
contradictory.
Moreover, as noted below, the fact that States have options to
operate fiscally sound transportation programs simply indicates that
the flexibility with respect to benchmark and benchmark-equivalent
coverage will not necessarily result in the elimination of needed
transportation benefits.
Comment: A few commenters stated that in the proposed rule CMS
proposed to create more ``flexibility'' for States by allowing them to
craft more mainstream packages like those found in the private health
insurance market, and private health plans do not offer transportation
as a covered benefit for enrollees. These commenters disagreed with
this assumption because it assumes that Medicaid patients are of equal
financial standing with enrollees of private health care plans in their
ability to assume the cost of transportation to and from health care
services and that private health plans do not provide non-emergency
ambulance transportation, when in fact they do.
Response: The DRA provided that benchmark or benchmark-equivalent
plans be available to States at their option and States are not
required to implement these provisions. If States choose to offer
benchmark or benchmark-equivalent benefit packages to Medicaid
beneficiaries, States must comply with the requirements of section 1937
of the Act including EPSDT for children under age 19 and voluntary
enrollment and informed choice to exempt individuals. Further, States
can offer additional or wrap-around services to beneficiaries. If NEMT
and emergency ambulance services are included in the benchmark or
benchmark-equivalent plan the State has chosen to offer Medicaid
beneficiaries, these transportation services should be provided to the
beneficiaries enrolled in the benchmark or benchmark-equivalent plan.
States also have the option of providing NEMT and/or emergency
transportation services as a wrap-around benefit.
Comment: One commenter stated that CMS did not conduct an analysis
of the impact that excluding the transportation benefit would have on
the populations affected or on the States. The commenter also noted
that in the ``Regulatory Impact Analysis,'' CMS states that they are
under no obligation to assess anticipated costs and benefits of this
rule, even if the rule may result in expenditures by the State, local,
or tribal governments or the private sector, because States are not
mandated to participate in the benchmark plans. This precludes any
discussion of the shift in
[[Page 73718]]
costs to other agencies that may result from the exclusion of
transportation benefits. The commenter stated that in the proposed rule
CMS says that shifting the financial burden to the vulnerable Medicaid
populations is simply a matter of personal responsibility. The
commenter believed that the elimination of transportation is a scenario
for less effective, more expensive health care because fewer people
will seek preventive care since they won't have transportation and will
therefore end up needing more expensive medical services.
Response: We disagree with the commenter. In the ``Regulatory
Impact Analysis,'' we made two key assumptions: (1) The per capita cost
of benchmark plans relative to per capita costs for Medicaid, and (2)
the rate at which these plans will be used. Given the amount of
flexibility States have in designing these plans, we do not have
information that drills down into service-level estimates.
Subsequently, we did not specifically account for the impact that not
providing NEMT would have. In our opinion, the proposed rule provides
States with so much flexibility it would not be possible to anticipate
how many States might have benchmark plans that would have an impact on
transportation. Furthermore, since there are significant portions of
the Medicaid population that will still be able to receive
transportation services, even if their State chooses to implement a
benchmark or benchmark-equivalent plan that has limited or no
transportation coverage, we do not believe the impact as being
significant since beneficiaries have always been personally responsible
for seeking alternative transportation before requesting assistance
from the Medicaid program.
Comment: Several commenters noted the lack of definition addressing
the difference between emergency and non-emergency transportation.
Several other commenters requested that CMS provide a universal
definition of non-emergency transportation, because without this
guidance there would be chaos and an inability to adjudicate issues and
disputes over what is and is not non-emergency transportation.
One commenter urged CMS to require that benchmark and benchmark-
equivalent plans cover emergency ambulance transportation and do so by
clarifying that the reference to ``emergency services'' in proposed
Sec. 440.335 includes emergency ambulance services. Several commenters
stated the regulation fails to make a distinction between emergency and
non-emergency transport and CMS assumes that ``to and from providers''
means non-emergency medical transportation; however, this may not
always be the case. According to the commenter, transport is often
required for Medicaid patients who develop critical conditions that
require immediate care beyond the scope of the initial facility,
resulting in the patient being transported to another facility for
care. If States are no longer required to ensure necessary
transportation for recipients to and from providers, the State will
likely not cover this type of transport under a benchmark or benchmark-
equivalent plan. This type of transport fits the parameters of the
regulation because it is from one provider to another, but the
regulation does not make the distinction that it must be a non-
emergency transport.
Other commenters believed ambulance service, whether considered
non-emergency or emergency transportation, should be required in all
benchmark or benchmark-equivalent plans.
Response: States have broad flexibility in designing non-emergency
and emergency transportation programs for the Medicaid population.
Consistent with this flexibility, we believe that States are best
suited to define the differences between emergency and non-emergency
transportation and when and under what conditions it is appropriate to
transport beneficiaries by ambulance. In determining this difference,
we expect States to remain consistent with the definition of
transportation found in Sec. 440.170.
Additionally, experience has shown us that many of the States that
have submitted benchmark State plan amendments have included
transportation as a covered benefit, even when the private plan does
not provide a transportation benefit.
Comment: A number of commenters disagreed with the assumption that
non-emergency transportation is not covered by private health
insurance. They stated that many private health insurance plans do
provide coverage for non-emergent ambulance transportation when
medically necessary. One commenter stated that CMS is ignoring the fact
that many commercial plans have provided services to Medicaid
beneficiaries and are thus equipped to provide the transportation
benefit. The same commenter requested that if the provision on non-
emergency transportation remains in the final regulation, CMS should
require that no benchmark or benchmark-equivalent plan be allowed to
require emergency ambulance services to join a network as a condition
of obtaining necessary information for billing or as a condition of
prompt payment, and that benchmark and benchmark-equivalent plans be
required to pay for emergency ambulance transportation at a rate not
less than the State Medicaid approved rate. One commenter noted that if
CMS intends to make this a rationale for the elimination of Medicaid
benefits, it should first study this issue and release its findings.
Response: We acknowledge that many private health plans cover
emergency medical transport and some also cover non-emergency ambulance
transport. Therefore, it is highly likely that benchmark plans will
cover these services. However, we maintain that private health plans do
not generally cover transportation to and from outpatient providers for
routine services.
In terms of contracting with providers, the contracting process
between States and providers is a State process. CMS is not intending
to enter into that process as part of this rule.
Comment: Many of the commenters voiced concerns that CMS has
overreached in its rationale for allowing States to opt-out of the
transportation requirements, and that CMS did not support its
rationale. Several commenters stated that CMS did not have the legal
authority to allow States to choose not to provide non-emergency
transportation. One commenter stated that Sec. 440.390 exceeds the
Department's administrative authority, results in an impermissible
legislative action by the agency, and violates the separation of powers
doctrine of the Constitution. Generally, an executive agency's
authority is limited to implementing laws and to clarifying ambiguities
in statutes passed by Congress (Chevron U.S.A. v. Natural Resources
Defense Council, 467 U.S. 837 (1984)).
A number of commenters noted that CMS's interpretation of the
language in section 1937 of the Act is ``overbroad'' because it permits
CMS too much discretion. Several commenters also stated that in
believing that it could change a long standing Medicaid policy on the
assurance of transportation, CMS wrongly interpreted the statute and
had not supported its rationale for allowing States to waive the
provider-to-provider transportation requirement. A number of commenters
believed that allowing States to choose not to provide transportation
was inconsistent with Medicaid's mission of increasing access to
healthcare. Many commenters indicated that exempting States from the
transportation requirement set forth in Sec. 431.53 ``renders those
provisions to mere surplusage'' and that CMS's
[[Page 73719]]
interpretation affords CMS the unfettered ability to make ad hoc
determinations about what laws and regulations will apply to benchmark
and benchmark-equivalent plans. Many commenters stated that the
requirements in Sec. 431.53 exist to protect beneficiaries and to
ensure that they receive access to healthcare. Also, CMS should not be
permitted to allow States to deprive Medicaid recipients of necessary
transportation based upon an illogical interpretation of a provision of
the Act.
Several commenters stated that CMS is providing sufficient
flexibility to States through the option to provide benchmark or
benchmark-equivalent coverage without regard to comparability,
statewideness, and freedom of choice. The commenter did not see how
relieving the State of the requirement to assure transportation to and
from providers offers any additional flexibility.
Response: We disagree with the commenters that believe we do not
have authority to allow for States to offer benchmark or benchmark-
equivalent plans without regard to the assurance of transportation.
Section 1937 permits States to offer benchmark or benchmark-equivalent
coverage ``notwithstanding any other provision of Title XIX.'' We have
interpreted this language to provide a basis for flexibility with
regard to requirements related to the scope of benefits available
through benchmark or benchmark-equivalent coverage to provide that such
benefits can be offered without regard to the requirement at Sec.
431.53 to assure transportation to and from covered medical services.
This regulation is thus consistent with the statutory language, and the
overall purpose to ensure State flexibility in offering benefits.
Moreover, the assurance of transportation is not a statutory benefit,
but is a regulatory requirement that should not be given precedence
over the statutory flexibility expressly provided by Congress. The
statute itself provides that States can impose alternative benchmark or
benchmark-equivalent benefit packages at their option, and must
reasonably be read to include flexibility in the scope of benefits
including transportation benefits.
We also note that the availability of this flexibility does not
mean that beneficiaries will necessarily lose transportation benefits.
States are not required to offer benchmark or benchmark-equivalent
coverage and, if they do, they are not required to limit coverage of
transportation to and from providers. As noted above, States may
determine that such coverage is essential to ensuring appropriate
coverage to meet the needs of the target population.
Comment: Several commenters mentioned earlier that CMS offered a
definition of ``special medical needs'' but pointed out that CMS did
not offer a definition of ``medically frail.'' The commenters urged
CMS, in considering transportation, to include in any definition of
``medically frail'' a recipient who might require medically necessary
ambulance transportation due to their physical or mental condition,
illness, injury, disability, in a bed confined or wheelchair confined
state, such that transportation by any means other than ambulance would
likely jeopardize the patient's health or safety.
Response: As stated earlier, we have not defined ``medically
frail'' because CMS wishes to maintain the State flexibility; however,
we encourage States to consider all of these examples in their
definition, when considering that these individuals may be in need of
transportation.
Comment: Several commenters stated the proposed elimination of
transportation was discriminatory because individuals with special
needs are not able to access transportation services and will be de
facto denied the medical services that other Medicaid recipients
receive. Also, the commenters asserted that the ``notwithstanding any
other provision of this title'' will not pass a challenge in the court
system because it discriminates against disabled individuals.
Response: We disagree with the commenters that the flexibility to
not assure transportation is discriminatory because this requirement
applies to all individuals enrolled in benchmark or benchmark-
equivalent plans (with certain limitations). All individuals are
treated equally including all exempt individuals. Disabled individuals
can only enroll in a benchmark program that does not include NEMT by
choice.
Comment: Several commenters noted that Executive Order 13330
requires coordination for elderly and handicapped transportation
programs among Federal agencies. Creating Federal DHHS standards for
appropriate service levels would promote this coordination effort and
in the interests of quality services, lower costs and enhanced
coordination, DHHS should develop parallel standards that would drive
cost savings derived by competitive procurement instead of denying
services to those who need it the most. Removing an essential element
such as transportation in order to save money will ultimately result in
greater reliance on institutional care at a much higher cost. One
commenter believed that CMS should withdraw the regulation and allow
the Coordinating Council on Access and Mobility, which was established
by Executive Order 13330, to develop the benchmark policy on non-
emergency transportation.
Response: We do not believe that this rule contravenes Executive
Order 13330, which requires coordination of transportation among
Federal agencies, but does not supersede program coverage limitations
or purposes. In other words, section 1937 simply does not require NEMT
to be included as a benefit or administrative activity of alternative
benefit programs, and Executive Order 13330 does not change that
circumstance.
Comment: One commenter, submitting on behalf of the Alaska Natives
(ANs) Tribal Health Consortium, wrote that in Alaska nearly 40 percent
of the Medicaid eligible populations are ANs. The vast majority of AN
villages are accessible only by plane, boat, snow-machine, or dog-sled.
Due to the extreme poverty found in AN villages, Congress authorized
tribal health programs to bill the Medicare and Medicaid programs for
covered services. Tribal health services rely heavily on Medicaid and
Medicare payments. The commenter is profoundly concerned that the
proposed rule would allow States to curtail Medicaid coverage of
crucial health services currently provided to ANs and would eliminate
coverage of transportation needed by ANs to access medical services.
Response: We understand that Alaska has unique transportation needs
and that the vast majority of AN villages are accessible only by plane,
boat, snow machine, or dog-sled. We are also aware that tribal health
services provide the majority of health care to Medicaid eligible
tribal populations. Before the passage of the DRA, Alaska provided
transportation through a broker under section 1915(b) authority. In
2006, Alaska converted its non-emergency transportation waiver to the
State plan non-emergency medical transportation brokerage program
option provided by the DRA.
While AN beneficiaries have not been specifically excluded from
mandatory enrollment in a benchmark plan, due to the rural nature of
the areas in which these beneficiaries live and the unique
transportation needs of ANs in Alaska, we do not believe that AN
beneficiaries are at risk of losing needed transportation benefits. We
do not believe it is in the interest of the State to eliminate such
benefits, nor that it would be consistent with appropriate
[[Page 73720]]
coverage to meet the needs of the targeted population.
IV. Provisions of the Final Regulations
For the most part, this final rule incorporates the provisions of
the February 2008 proposed rule. Those provisions of this final rule
that differ from the February 2008 proposed rule are as follows:
Scope (Sec. 440.305)
We have added a new paragraph (d) at Sec. 440.305 to provide for
public input, which states ``Any state that opts to offer alternative
benchmark or benchmark-equivalent coverage to Medicaid beneficiaries
must secure public input prior to the submission of any State plan
amendment to CMS.''
We have also added a new paragraph (e) at Sec. 440.305 to indicate
that in implementing benchmark or benchmark-equivalent package, States
must comply with the managed care rules at section 1932 of the Act and
42 CFR part 438 if benchmark or benchmark-equivalent benefits are
provided through managed care plans, except when the State demonstrates
that such requirements are impractical in the context of, or
inconsistent with, methods of offering coverage that is appropriate to
meet the needs of the targeted population.
Exempt Individuals (Sec. 440.315)
We have revised paragraph (f) to indicate that the definition of
individuals who are medically frail and/or the definition of
individuals with special medical needs will be left to State discretion
but the definition for individuals with special medical needs must at
least include those individuals described in Sec. 438.50(d)(3).
Further, we deleted the reference to Sec. 438.50(d)(1) for individuals
entitled to Medicare benefits as these individuals are already exempt
individuals for whom voluntary enrollment because of the requirement in
section 1932(a)(2)(iii) of the Act.
We have added a new paragraph (m) in Sec. 440.315 to include
medically needy or those eligible as a result of a reduction of
countable income based on costs incurred for medical care in the list
of populations for which voluntary enrollment in benchmark or
benchmark-equivalent plans can occur.
Section 440.320 State Plan Requirements: Optional Enrollment for Exempt
Individuals
We have revised paragraphs (a)(1), (a)(2), and (a)(3) to indicate
that the State must effectively inform exempt individuals prior to
enrollment that the individual has the opportunity to voluntarily
enroll in a benchmark or benchmark-equivalent plan, must inform the
individual of the benefits in the benchmark or benchmark-equivalent
plan and provide a comparison of how they differ from traditional
Medicaid State plan coverage, and document the individual's eligibility
file that prior to enrollment he was provided a comparison of the
benefit package, was given ample time to make an informed choice as to
enrollment and voluntarily choose to enroll in the benchmark or
benchmark-equivalent plan.
We have added a new paragraph (a)(4) to indicate that States must
comply with the requirements of Sec. 440.320(a)(1), (a)(2), and (a)(3)
within 30 days after a determination is made that an individual has
become part of an exempt group while enrolled in benchmark or
benchmark-equivalent coverage.
We have added a new paragraph (b)(1) and (b)(2) to discuss the
disenrollment/opt out process and require that States act upon opt out
requests promptly for those exempt individuals who choose to opt out of
benchmark or benchmark-equivalent coverage and must have a process in
place to ensure continuous access to services while requests to opt out
of benchmark or benchmark-equivalent coverage are being processed.
EPSDT Services Requirement (Sec. 440.345)
We have revised paragraph (a) in Sec. 440.345 to be completely
reflective of the statutory language, which indicates that ``The State
must assure access to early and periodic screening, diagnostic and
treatment (EPSDT) services through benchmark or benchmark-equivalent
plan benefits or as wrap-around benefits to those plans for any child
under 19 years of age eligible under the State plan in a category under
section 1902(a)(10)(A) of the Act.''
Comparability and Scope of Coverage (Sec. 440.375)
We revised the title and text of this section to indicate that
States have the option to amend their State plan to provide benchmark
or benchmark-equivalent coverage to recipients without regard to
comparability or requirements relating to the scope of coverage other
than those contained in this subpart.
Freedom of Choice (Sec. 440.385)
We have redesignated paragraph (b)(3) as paragraph (b)(4) in Sec.
440.385 of this regulation. In newly revised paragraph (b)(3), we have
made clarifying changes to indicate that selective contracting does not
apply to family planning providers.
V. Collection of Information Requirements
While the following requirements are subject to the PRA, they are
currently approved under OMB 0938-0993 with an expiration date
of October 31, 2009.
Section 440.320 State Plan Requirements: Optional Enrollment for Exempt
Individuals
Section 440.320(a) requires a State to: (1) Inform the individuals
that the enrollment is voluntary and that the individual may opt out of
the benchmark or benchmark-equivalent coverage at any time and regain
immediate access to standard full Medicaid coverage under the State
plan; (2) Inform the exempt recipient of the benefits available under
the benchmark or benchmark-equivalent benefit package and provide a
comparison of how they differ from the benefits available under the
standard full Medicaid program; and, (3) Document in the exempt
recipient's eligibility file that the recipient was informed in
accordance with this section and voluntarily chose to enroll in the
benchmark or benchmark-equivalent benefit package.
Section 440.330 Benchmark Health Benefits Coverage
Section 440.330(d) requires States wishing to opt for Secretarial-
approved coverage to submit a full description of the proposed coverage
and include a benefit-by-benefit comparison of the proposed plan to one
or more of the three other benchmark plans specified.
Section 440.340 Actuarial Report for Benchmark-Equivalent Coverage
Section 440.340 requires a State trying to obtain approval for
benchmark-equivalent health benefits coverage described in 440.335 to
submit, as part of its State Plan Amendment, an actuarial report. The
report must provide sufficient detail to explain the basis of the
methodologies used to estimate the actuarial value or, if requested by
CMS, to replicate the State's result.
Section 440.345 Requirement To Provide EPSDT Services
Section 440.345(a)(2) requires a State to include a description in
their State Plan of how the wrap-around benefits or additional services
will be provided to ensure that recipients receive full EPSDT services.
The description must describe the populations covered and
[[Page 73721]]
the procedures for assuring those services.
Section 440.350 Employer-Sponsored Insurance Health Plans
Section 440.350(b) requires a State to set forth in the State plan
the criteria it will use to identify individuals who would be required
to enroll in an available group health plan to receive benchmark or
benchmark-equivalent coverage.
Section 440.360 State Plan Requirement for Providing Additional Wrap-
around Services
This section requires States opting to provide additional services
to the benchmark-equivalent plans, to describe the populations covered
and the payment methodology for these services in their State plan.
Section 440.390 Assurance of Transportation
At proposed Sec. 440.390, a State may at its option amend its
State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to the assurance of transportation to
medically necessary services requirement specified in section 42 CFR
431.53.
VI. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993, as
further amended), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive
Order 13132 on Federalism (August 4, 1999), and Congressional Review
Act (5 U.S.C. 804(2)).
Executive Order 12866 (as amended by Executive Order 13258, which
merely reassigns responsibility of duties) directs agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
We issued a State Medicaid Director's letter on March 31, 2006,
providing guidance on the new flexibilities available to States as a
result of the enactment of the Deficit Reduction Act of 2005. This
final rule simply codifies that guidance. States have already begun
implementing this provision well in advance of this final rule. As a
result, while we anticipate that implementation of this flexibility
will be economically significant, the significance is based on the
changes authorized by statute and not based on discretionary policies
contained in the rule itself. The impact of the rule will be limited to
ensuring uniform policies for States that implement the flexibility
afforded under section 1937 of the Act, as added by the DRA of 2005.
The aggregate amount of Federal savings is estimated to be $2.3 billion
from FY 2006 through FY 2010.
We have estimated the impact of this rule by analyzing the
potential Federal savings related to lower per capita spending that may
be achieved if States choose to enroll beneficiaries in eligible
populations in plans that are less costly than projected Medicaid
costs. To do this, we developed estimates based on the following
assumptions:
The number of eligible beneficiaries and the Federal
Medicaid costs of these beneficiaries are based on 2003 Medicaid
Statistical Information System (MSIS) data;
Projections of the number of eligible beneficiaries and
their associated Federal Medicaid costs were made using assumptions
from the President's Budget 2007, including enrollment growth rates and
per capita spending growth rates;
The relative costs of the new plans allowed under this
rule to current Medicaid spending were estimated based on reviews of
Medicaid spending data and the plans described in this rule.
Additionally, we have assumed that not all States would immediately use
the options made available through this rule; therefore, we assume that
State use of these plans will continue to increase through 2011. We
assume that use in 2006 will be about 10 percent of 2011-level of use;
40 percent in 2007; 60 percent in 2008; 80 percent in 2009; and 90
percent in 2010.
These estimates assume that there will be a negligible impact on
State administration costs. As States already have experience in
dealing with alternative plan designs, including through waivers or
managed care plans, we have assumed States are equipped to implement
these plans and will be part of their normal administrative spending.
These estimates are subject to a substantial amount of uncertainty
and actual experience may be significantly different. The range of
possible experience is greater than under most other rules for the
following two reasons. First, this rule provides the option for States
to use alternative plans; to the extent that States participate more or
less than assumed here (both the number of States that participate and
the extensiveness of States' use of these plans), Federal savings may
be greater than or less than estimated. Second, this rule also provides
a wide range of options for States in designing these plans; to the
extent that States use plans that are relatively more or less costly
than assumed here, Federal savings may be less than or greater than
estimated.
Estimated Annual Federal Savings Discounted at 0 Percent, 3 Percent and 7 Percent--From FY 2006 to FY 2010
[In millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 2006-
Discount rate 2006 2007 2008 2009 2010 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
0%...................................................... $70 $280 $460 $660 $810 2,280
3%...................................................... 68 264 421 586 699 2,038
7%...................................................... 65 245 375 504 578 1,767
--------------------------------------------------------------------------------------------------------------------------------------------------------
We anticipate that States will phase in alternative benefit
programs, and changes will not be fully realized until 2010. The
majority of savings will be achieved through cost avoidance of future
anticipated costs by providing appropriate benefits based on a
population's health care needs, appropriate utilization of services,
and through gains in efficiencies through contracting. States will be
able to take greater advantage of marketplace
[[Page 73722]]
dynamics within their State. We also anticipate that a number of States
will use this flexibility to create programs that are more similar to
their SCHIP programs. Because States are no longer tied to
statewideness and comparability rules for non-disabled, non-aged, and
non-blind populations, they will be able to offer individuals and
families different types of plans consistent with their needs and
available delivery systems.
Estimated Annual State Savings Discounted at 0 Percent, 3 Percent and 7 Percent--From FY 2006 to FY 2010
[In millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 2006-
Discount rate 2006 2007 2008 2009 2010 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
0%...................................................... $50 $210 $350 $500 $610 $1,720
3%...................................................... 49 198 320 444 526 1,537
7%...................................................... 47 183 286 381 435 1,332
--------------------------------------------------------------------------------------------------------------------------------------------------------
The RFA requires agencies to analyze options for regulatory relief
of small businesses if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities as
that term is used in the RFA (include small businesses, nonprofit
organizations, and small governmental jurisdictions). The great
majority of hospitals and most other health care providers and
suppliers are small entities, either by being nonprofit organizations
or by meeting the SBA definition of a small business (having revenues
of less than $6.5 million to $31.5 million in any 1 year.) Individuals
and States are not included in the definition of a small entity. We
have determined, and the Secretary certifies, that this provision
applies to States only and will not affect small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. We have determined, and
the Secretary certifies, that this rule would not have a significant
impact on the operations of a substantial number of small rural
hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. 104-4) also requires that agencies assess anticipated costs
and benefits before issuing any rule whose mandates require spending in
any 1 year of $100 million in 1995 dollars, updated annually for
inflation. In 2008, that threshold is approximately $127 million.
Because this rule does not mandate State participation in using these
benchmark plans, there is no obligation for the State to make any
change to their Medicaid program. Therefore, there is no mandate for
the State. We believe this final rule will not mandate expenditures in
that amount.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This final rule will not impose direct cost on States or
local government or preempt State law. The rule will provide States the
option to implement alternative Medicaid benefits through a Medicaid
State plan amendment.
Comment: One commenter questioned the validity of CMS's Regulatory
Impact Analysis, believing that the proposed rule will cause additional
administrative effort in order for AI/AN beneficiaries to participate.
Response: CMS is required by Executive Order 12866 (September 1993,
Regulatory Planning and Review), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive
Order 13132 on Federalism, and the Congressional Review Act (5 U.S.C.
804(2)) to conduct a regulatory analysis of the impact of any
regulatory revision to the Medicare, Medicaid, and/or State Children's
Health Insurance Program before adoption of any rule. A Regulatory
Impact Analysis was completed for this rule. We believe there is
negligible impact on State administrative costs since States already
have experience in dealing with alternative plan designs, including
through waivers or managed care plans. Thus, we have assumed States are
equipped to implement these plans and that costs will be part of their
normal administrative spending. We believe this would be true for any
State that chooses to offer benchmark or benchmark-equivalent plans to
the Medicaid beneficiaries including AI/AN Medicaid beneficiaries.
B. Anticipated Effects
Before section 6044 of the DRA became effective on March 31, 2006,
State Medicaid programs generally were required to offer at minimum the
same standard benefit package to each recipient, regardless of income,
eligibility category, or geographic location. Some States offered
alternative benefit packages to certain recipients under section 1115
demonstration waivers approved by the Centers for Medicare & Medicaid
Services. This provision allows for similar program alternatives under
the State plan without the constraints of a waiver. Moreover, Medicaid
families will gain continuity in coverage as family members move
together from Medicaid and the State Children's Health Insurance
Program (SCHIP) to, eventually, private coverage. Today, because of the
lack of flexibility in Medicaid, one child may be receiving Medicaid,
another in SCHIP, and the parent has access to private coverage. With
benefit flexibility in State Medicaid programs, families could enroll
under the same plan, with the same providers and one set of
administrative rules. Administrative simplification can help families
maintain health insurance coverage and give them experience with
private insurance coverage that would become important when their
income rises above Medicaid and SCHIP eligibility levels and mitigate
the need for dependence. States with strong employer-based coverage may
emphasize family coverage premium assistance. States may form larger
pools by combining Medicaid recipients with their public employees.
C. Alternatives Considered
This rule finalizes requirements for States to elect alternative
Medicaid benefit programs through the adoption
[[Page 73723]]
of a Medicaid State plan amendment. The final requirements in this rule
were designed to maximize State flexibility while assuring that
beneficiaries will get quality care that meets their needs. Under this
rule, we will permit States to define the alternative benefit packages
only by reference to the benchmark or benchmark-equivalent standard
(with the exception of the EPSDT wrap-around benefits). We will also
permit States to combine an alternative benefit package with
alternative benefit delivery methods, such as through managed care,
employer-based coverage, or selective contracting. An alternative might
have been to require the State to document any deviation from otherwise
applicable State plan requirements, much as is required under section
1115 demonstration waivers, 1915(b) waivers, 1915(c) waivers, or any
combination thereof. We have not elected this alternative because it
would be cumbersome for States, it will not be consistent with the
statutory use of benchmark and benchmark-equivalent coverage as
reference points for permissible benefit packages, and it will not
improve the clarity of the State plan. Another alternative might have
been to limit State flexibility under this provision to variation in
the amount, duration and scope of benefits without providing authority
for an integrated approach combining alternative benefits with
alternative benefit delivery methods. We have not elected this
alternative because an integrated approach allows greater State
flexibility to tailor both benefits and delivery methods to the
eligible groups of individuals being served.
D. Accounting Statement
As required by OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 15 below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this rule. This table
provides our best estimate of the decrease in Medicaid payments as a
result of the changes presented in this rule. All savings are
classified as transfers to the Federal Government, as well as to
States.
Table--Accounting Statement: Classification of Estimated Savings, From FY 2006 to FY 2010
[In $millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers................................ Year dollar Units discount rate Period covered
-----------------------------------------------------------------------------------------
7% 3% 0%
-----------------------------------------------------------------------------------------
2006 -$430.8 -$445.0 -$456.0 2006-2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
From Whom To Whom?............................................ Federal Government to Beneficiaries, Providers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2006 2007 2008 2009 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers................................ -$70 -$280 -$460 -$660 -$810
--------------------------------------------------------------------------------------------------------------------------------------------------------
From Whom to Whom?............................................ Federal Government to Beneficiaries, Providers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers................................ Year dollar Units discount rate Period covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
7% 3% 0%
-----------------------------------------------------------------------------------------
2006 -$324.9 -$335.7 -$344.0 2006-2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
From Whom to Whom?............................................ State Governments to Beneficiaries, Providers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2006 2007 2008 2009 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers................................ -$50 -$210 -$350 -$500 -$610
--------------------------------------------------------------------------------------------------------------------------------------------------------
From Whom to Whom?............................................ State Governments to Beneficiaries, Providers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column 1: Category--Contains the description of the different
impacts of the rule; it could include monetized, quantitative but not
monetized, or qualitative but not quantitative or monetized impacts; it
also may contain unit of measurement (such as, dollars). In this case,
the only impact is the Federal annualized monetized impact of the rule.
Column 2: Primary Estimate--Contains the quantitative or
qualitative impact of the rule for the respective category of impact.
Monetized amounts are generally shown in real dollar terms. In this
case, the federalized annualized monetized primary estimate represents
the equivalent amount that, if paid (saved) each year over the period
covered, would result in the same net present value of the stream of
costs (savings) estimated over the period covered.
Column 3: Year Dollar--Contains the year to which dollars are
normalized; that is, the first year that dollars are discounted in the
estimate.
Column 4: Unit Discount Rate--Contains the discount rate or rates
used to estimate the annualized monetized impacts. In this case, three
rates are used: 7 percent; 3 percent; 0 percent.
Column 5: Period Covered--Contains the years for which the estimate
was made.
Rows: The rows contain the estimates associated with each specific
impact and each discount rate used.
``From Whom to Whom?''--In the case of a transfer (as opposed to a
change in aggregate social welfare as described in the OMB Circular),
this section describes the parties involved in the transfer of costs.
In this case, the costs represent a reduction in Federal Government
spending on behalf of beneficiaries. The table may also contain minimum
and maximum
[[Page 73724]]
estimates and sources cited. In this case, there is only a primary
estimate and there are no additional sources for the estimate.
Estimated Savings--The following table shows the discounted costs
(savings) for each discount rate and for each year over the period
covered. ``Total'' represents the net present value of the impact in
the year the rule takes effect. These numbers represent the anticipated
annual reduction in Federal Medicaid spending under this rule.
E. Conclusion
We project that the use of benchmark plans under this rule will
result in $2.3 billion in Federal savings from 2006-2010. These savings
would arise as States use the plans described by this rule to manage
the costs of their Medicaid program by modifying plan benefits for
targeted beneficiaries. The actual savings will heavily depend on the
number of States that ultimately implement these plans, the number of
beneficiaries States cover with these plans, and the specific design
and selection of benchmark plans.
For reasons stated above, we are not preparing analyses for either
the RFA or section 1102(b) of the Act because we have determined that
this rule will not have a significant economic impact on a substantial
number of small entities or a significant impact on the operations of a
substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 440
Grant programs--health, Medicaid.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 440--SERVICES: GENERAL PROVISIONS
0
1. The authority citation for part 440 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302)
0
2. A new subpart C, consisting of Sec. 440.300 through Sec. 440.390,
is added to part 440 to read as follows:
Subpart C--Benchmark Benefit and Benchmark-Equivalent Coverage
Sec.
440.300 Basis.
440.305 Scope.
440.310 Applicability.
440.315 Exempt individuals.
440.320 State plan requirements: Optional enrollment for exempt
individuals.
440.325 State plan requirements: Coverage and benefits.
440.330 Benchmark health benefits coverage.
440.335 Benchmark-equivalent health benefits coverage.
440.340 Actuarial report for benchmark-equivalent coverage.
440.345 EPSDT services requirement.
440.350 Employer-sponsored insurance health plans.
440.355 Payment of premiums.
440.360 State plan requirement for providing additional wrap-around
services.
440.365 Coverage of rural health clinic and federally qualified
health center (FQHC) services.
440.370 Cost-effectiveness.
440.375 Comparability and Scope of Coverage.
440.380 Statewideness.
440.385 Freedom of choice.
440.390 Assurance of Transportation.
Subpart C--Benchmark Benefit and Benchmark-Equivalent Coverage
Sec. 440.300 Basis.
This subpart implements section 1937 of the Act, which authorizes
States to provide for medical assistance to one or more groups of
Medicaid-eligible recipients specified by the State under an approved
State plan amendment through enrollment in coverage that provides
benchmark or benchmark-equivalent health care benefit coverage.
Sec. 440.305 Scope.
(a) General. This subpart sets out requirements for States that
elect to provide medical assistance to certain Medicaid eligible
recipients within one or more groups of individuals specified by the
State, through enrollment of the recipients in coverage, identified as
``benchmark'' or ``benchmark-equivalent.''
(b) Limitations. A State may only apply the option in paragraph (a)
of this section for an individual whose eligibility is based on an
eligibility category under section 1905(a) of the Act that would have
been covered under the State's plan on or before February 8, 2006.
(c) A State may not require but may offer enrollment in benchmark
or benchmark-equivalent coverage to the Medicaid eligible individuals
listed in Sec. 440.315. States allowing individuals to opt in must be
in compliance with the rules specified at Sec. 440.320.
(d) Any State that opts to offer alternative benchmark or
benchmark-equivalent coverage to Medicaid beneficiaries must secure
public input prior to the submission of any State plan amendment to
CMS.
(e) In implementing benchmark or benchmark-equivalent package,
States must comply with the managed care rules at section 1932 of the
Act and part 438 of this chapter if benchmark or benchmark-equivalent
benefits are provided through managed care plans unless the State
demonstrates that such requirements are impractical in the context of,
or inconsistent with, methods of offering coverage appropriate to meet
the health care needs of the targeted population.
Sec. 440.310 Applicability.
(a) Enrollment. The State may require ``full benefit eligible''
recipients not excluded in Sec. 440.315 to enroll in benchmark or
benchmark-equivalent coverage.
(b) Full benefit eligible. A recipient is a full benefit eligible
if determined by the State to be eligible to receive the standard full
Medicaid benefit package under the approved State plan if not for the
application of the option available under this subpart.
Sec. 440.315 Exempt individuals.
For recipients within one (or more) of the following categories,
the State plan may offer, but may not require under Sec. 440.310, the
opportunity to obtain benefits through enrollment in benchmark or
benchmark-equivalent coverage:
(a) The recipient is a pregnant woman who is required to be covered
under the State plan under section 1902(a)(10)(A)(i) of the Act.
(b) The recipient qualifies for medical assistance under the State
plan on the basis of being blind or disabled (or being treated as being
blind or disabled) without regard to whether the individual is eligible
for Supplemental Security Income benefits under title XVI on the basis
of being blind or disabled and including an individual who is eligible
for medical assistance on the basis of section 1902(e)(3) of the Act.
(c) The recipient is entitled to benefits under any part of
Medicare.
(d) The recipient is terminally ill and is receiving benefits for
hospice care under title XIX.
(e) The recipient is an inpatient in a hospital, nursing facility,
intermediate care facility for the mentally retarded, or other medical
institution, and is required, as a condition of receiving services in
that institution under the State plan, to spend for costs of medical
care all but a minimal amount of the individual's income required for
personal needs.
(f) The recipient is medically frail or otherwise an individual
with special medical needs. For these purposes, the State's definition
of individuals with special needs must at least include
[[Page 73725]]
those individuals described in Sec. 438.50(d)(3) of this chapter.
(g) The recipient qualifies based on medical condition for medical
assistance for long-term care services described in section
1917(c)(1)(C) of the Act.
(h) The recipient is an individual with respect to whom aid or
assistance is made available under part B of title IV to children in
foster care and individuals with respect to whom adoption or foster
care assistance is made available under part E of title IV, without
regard to age.
(i) The recipient qualifies for medical assistance on the basis of
eligibility to receive assistance under a State plan funded under part
A of title IV (as in effect on or after welfare reform effective date
defined in section 1931(i) of the Act). This provision relates to those
individuals who qualify for Medicaid solely on the basis of
qualification under the State's TANF rules.
(j) The recipient is a woman who is receiving medical assistance by
virtue of the application of sections 1902(a)(10)(ii)(XVIII) and
1902(a) of the Act.
(k) The recipient qualifies for medical assistance on the basis of
section 1902(a)(10)(A)(ii)(XII) of the Act.
(l) The recipient is not a qualified alien (as defined in section
431 of the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996) and receives care and services necessary for the treatment
of an emergency medical condition in accordance with section 1903(v) of
the Act.
(m) The recipient is determined eligible as medically needy or
eligible because of a reduction of countable income based on costs
incurred for medical or other remedial care under section 1902(f) of
the Act or otherwise based on incurred medical costs.
Sec. 440.320 State plan requirements: Optional enrollment for exempt
individuals.
(a) General rule. A State plan that offers exempt individuals as
defined in Sec. 440.315 the option to enroll in benchmark or
benchmark-equivalent coverage must identify in its State plan the
exempt groups for which this coverage is available, and must comply
with the following provisions:
(1) In any case in which the State offers an exempt individual the
option to obtain coverage in a benchmark or benchmark-equivalent
benefit package, the State must effectively inform the individual prior
to enrollment that the enrollment is voluntary and that the individual
may opt out of the benchmark or benchmark-equivalent coverage at any
time and regain immediate access to standard full Medicaid coverage
under the State plan.
(2) Prior to any enrollment in benchmark or benchmark-equivalent
coverage, the State must inform the exempt recipient of the benefits
available under the benchmark or benchmark-equivalent benefit package
and provide a comparison of how they differ from the benefits available
under the standard full Medicaid program.
(3) The State must document in the exempt recipient's eligibility
file that the recipient was informed in accordance with this section
prior to enrollment, was given ample time to arrive at an informed
choice, and voluntarily chose to enroll in the benchmark or benchmark-
equivalent benefit package.
(4) For individuals who the State determines have become exempt
individuals while enrolled in benchmark or benchmark-equivalent
coverage, the State must comply with the requirements in paragraphs
(a)(1) through (a)(3) of this section within 30 days after such
determination.
(b) Disenrollment or Opt/Out Process.
(1) The State must act upon requests promptly for exempt
individuals who choose to opt out of benchmark or benchmark-equivalent
coverage.
(2) The State must have a process in place to ensure that exempt
individuals have continuous access to services while opt out requests
are being processed.
Sec. 440.325 State plan requirements: Coverage and benefits.
Subject to requirements in Sec. 440.345 and Sec. 440.365, States
may elect to provide any of the following of types of health benefits
coverage:
(a) Benchmark coverage in accordance with Sec. 440.330.
(b) Benchmark-equivalent coverage in accordance with Sec. 440.335.
Sec. 440.330 Benchmark health benefits coverage.
Benchmark coverage is health benefits coverage that is equal to the
coverage under one or more of the following benefit plans:
(a) Federal Employees Health Benefit Plan Equivalent Coverage
(FEHBP--Equivalent Health Insurance Coverage). A benefit plan
equivalent to the standard Blue Cross/Blue Shield preferred provider
option service benefit plan that is described in and offered to Federal
employees under 5 U.S.C. 8903(1).
(b) State employee coverage. Health benefits coverage that is
offered and generally available to State employees in the State.
(c) Health maintenance organization (HMO) plan. A health insurance
plan that is offered through an HMO, (as defined in section 2791(b)(3)
of the Public Health Service Act) that has the largest insured
commercial, non-Medicaid enrollment in the State.
(d) Secretary approved coverage. Any other health benefits coverage
that the Secretary determines, upon application by a State, provides
appropriate coverage to meet the needs of the population provided that
coverage. States wishing to opt for Secretarial approved coverage
should submit a full description of the proposed coverage, (including a
benefit-by-benefit comparison of the proposed plan to one or more of
the three other benchmark plans specified above or to the State's
standard full Medicaid coverage package under section 1905(a) of the
Act), and of the population to which the coverage would be offered. In
addition, the State should submit any other information that would be
relevant to a determination that the proposed health benefits coverage
would be appropriate for the proposed population. The scope of a
Secretary-approved health benefits package will be limited to benefits
within the scope of the categories available under a benchmark coverage
package or the standard full Medicaid coverage package under section
1905(a) of the Act.
Sec. 440.335 Benchmark-equivalent health benefits coverage.
(a) Aggregate actuarial value. Benchmark-equivalent coverage is
health benefits coverage that has an aggregate actuarial value, as
determined in Sec. 440.340 that is at least actuarially equivalent to
the coverage under one of the benchmark benefit packages described in
Sec. 440.330 for the identified Medicaid population to which it will
be offered.
(b) Required coverage. Benchmark-equivalent health benefits
coverage must include coverage for the following categories of
services:
(1) Inpatient and outpatient hospital services.
(2) Physicians' surgical and medical services.
(3) Laboratory and x-ray services.
(4) Well-baby and well-child care, including age-appropriate
immunizations.
(5) Other appropriate preventive services, such as emergency
services as designated by the Secretary.
(c) Additional coverage.
(1) In addition to the categories of services of this section,
benchmark-equivalent coverage may include coverage for any additional
services in
[[Page 73726]]
a category included in the benchmark plan or described in section
1905(a) of the Act.
(2) If the benchmark coverage package used by the State for
purposes of comparison in establishing the aggregate actuarial value of
the benchmark-equivalent package includes any of the following four
categories of services: prescription drugs; mental health services;
vision services; and hearing services; then the actuarial value of the
coverage for each of these categories of service in the benchmark-
equivalent coverage package must be at least 75 percent of the
actuarial value of the coverage for that category of service in the
benchmark plan used for comparison by the State.
(3) If the benchmark coverage package does not cover one of the
four categories of services in paragraph (c)(2) of this section, then
the benchmark-equivalent coverage package may, but is not required to,
include coverage for that category of service.
Sec. 440.340 Actuarial report for benchmark-equivalent coverage.
(a) A State plan amendment that would provide for benchmark-
equivalent health benefits coverage described in Sec. 440.335, must
include an actuarial report. The actuarial report must contain an
actuarial opinion that the benchmark equivalent health benefits
coverage meets the actuarial requirements set forth in Sec. 440.335.
The report must also specify the benchmark coverage used for
comparison.
(b) The actuarial report must state that it was prepared according
to the following requirements:
(1) By an individual who is a member of the American Academy of
Actuaries (AAA).
(2) Using generally accepted actuarial principles and methodologies
of the AAA.
(3) Using a standardized set of utilization and price factors.
(4) Using a standardized population that is representative of the
population involved.
(5) Applying the same principles and factors in comparing the value
of different coverage (or categories of services).
(6) Without taking into account any differences in coverage based
on the method of delivery or means of cost control or utilization used.
(7) Taking into account the ability of the State to reduce benefits
by taking into account the increase in actuarial value of health
benefits coverage offered under the State plan that results from the
limitations on cost sharing (with the exception of premiums) under that
coverage.
(c) The actuary preparing the opinion must select and specify the
standardized set of factors and the standardized population to be used
in paragraphs (b)(3) and (b)(4) of this section.
(d) The State must provide sufficient detail to explain the basis
of the methodologies used to estimate the actuarial value or, if
requested by CMS, to replicate the State's result.
Sec. 440.345 EPSDT services requirement.
(a) The State must assure access to early and periodic screening,
diagnostic and treatment (EPSDT) services through benchmark or
benchmark-equivalent plan benefits or as wrap-around benefits to those
plans for any child under 19 years of age eligible under the State plan
in a category under section 1902(a)(10)(A) of the Act.
(1) Sufficiency: Any wrap-around EPSDT benefits must be sufficient
so that, in combination with the benchmark or benchmark-equivalent
benefits plan, these individuals have access to the full EPSDT benefit.
(2) State Plan requirement: The State must include a description of
how the wrap-around benefits will be provided to ensure that these
recipients have access to the full EPSDT benefit.
(b) Individuals must first seek coverage of EPSDT services through
the benchmark or benchmark-equivalent plan before seeking coverage of
such through wrap-around benefits.
Sec. 440.350 Employer-sponsored insurance health plans.
(a) A State may provide benchmark or benchmark-equivalent coverage
by obtaining employer sponsored health plans (either alone or with the
addition of wrap-around services covered separately under Medicaid) for
individuals with access to private health insurance.
(b) The State must assure that employer sponsored plans meet the
requirements of benchmark or benchmark-equivalent coverage, including
the cost-effectiveness requirements at Sec. 440.370.
(c) A State may provide benchmark or benchmark-equivalent coverage
through a combination of employer sponsored health plans and additional
benefit coverage provided by the State that wraps around the employer
sponsored health plan which, in the aggregate, results in benchmark or
benchmark-equivalent level of coverage for those recipients.
Sec. 440.355 Payment of premiums.
Payment of premiums by the State, net of beneficiary contributions,
to obtain benchmark or benchmark-equivalent benefit coverage on behalf
of beneficiaries under this section will be treated as medical
assistance under section 1905(a) of the Act.
Sec. 440.360 State plan requirement for providing additional wrap-
around services.
If the State opts to provide additional or wrap-around coverage to
individuals enrolled in benchmark or benchmark-equivalent plans, the
State plan must describe the populations covered and the payment
methodology for these services. Additional or wrap-around services must
be in categories that are within the scope of the benchmark coverage,
or are described in section 1905(a) of the Act.
Sec. 440.365 Coverage of rural health clinic and federally qualified
health center (FQHC) services.
If a State provides benchmark or benchmark-equivalent coverage to
individuals, it must assure that the individual has access, through
that coverage or otherwise, to rural health clinic services and FQHC
services as defined in subparagraphs (B) and (C) of section 1905(a)(2)
of the Act. Payment for these services must be made in accordance with
the payment provisions of section 1902(bb) of the Act.
Sec. 440.370 Cost-effectiveness.
Benchmark and benchmark-equivalent coverage and any additional
benefits must be provided in accordance with Federal upper payment
limits, procurement requirements and other economy and efficiency
principles that would otherwise be applicable to the services or
delivery system through which the coverage and benefits are obtained.
Sec. 440.375 Comparability and scope of coverage.
States have the option to amend their State plan to provide
benchmark or benchmark-equivalent coverage to recipients without regard
to comparability or requirements relating to the scope of coverage
other than those contained in this subpart.
Sec. 440.380 Statewideness.
States have the option to amend their State plan to provide
benchmark or benchmark-equivalent coverage to recipients without regard
to statewideness.
Sec. 440.385 Freedom of choice.
(a) States have the option to amend their State plan to provide
benchmark or benchmark-equivalent coverage to recipients without regard
to the
[[Page 73727]]
requirements for free choice of provider in Sec. 431.51 of this
chapter.
(b) States may restrict recipients to obtaining services from (or
through) selectively procured provider plans or practitioners that
meet, accept, and comply with reimbursement, quality and utilization
standards under the State Plan, to the extent that the restrictions
imposed meet the following requirements:
(1) Do not discriminate among classes of providers on grounds
unrelated to their demonstrated effectiveness and efficiency in
providing the benchmark benefit package.
(2) Do not apply in emergency circumstances.
(3) Does not apply to family planning providers.
(4) Require that all provider plans are paid on a timely basis in
the same manner as health care practitioners must be paid under Sec.
447.45 of this chapter.
Sec. 440.390 Assurance of transportation
A State may at its option amend its State plan to provide benchmark
or benchmark-equivalent coverage to recipients without regard to the
assurance of transportation to medically necessary services requirement
specified in Sec. 431.53 of this chapter.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: August 8, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: September 29, 2008.
Michael O. Leavitt,
Secretary.
Editorial Note: This document was received in the Office of the
Federal Register on Monday, November 24, 2008.
[FR Doc. E8-28330 Filed 12-2-08; 8:45 am]
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