[Federal Register Volume 59, Number 21 (Tuesday, February 1, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2115]
[[Page Unknown]]
[Federal Register: February 1, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 431
[MB-068-IFC]
RIN 0938-AG63
Medicaid Program; Freedom of Choice Waiver; Conforming Changes
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Interim final rule with comment period.
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SUMMARY: This interim final rule amends existing Medicaid regulations
on freedom of choice waivers granted under section 1915(b) of the
Social Security Act (the Act) to conform them to the amendments made to
the Act by sections 4604 and 4742 of the Omnibus Budget Reconciliation
Act of 1990. This rule:
Specifies that the Secretary may not waive the requirement
that the State plan provide for adjustments in payment for inpatient
hospital services furnished to infants under one year of age, or to
children under 6 years of age who receive these services in
disproportionate share hospitals.
Extends to any provider participating under a section
1915(b)(4) waiver the same prompt payment standards that apply to all
other health care practitioners furnishing Medicaid services.
This rule also makes technical changes in the regulations relating
to a recipient's free choice of providers of family planning services
and cost-sharing requirements under waivers.
DATES: Effective Date: This interim final rule is effective on March 3,
1994. Comment Date: Written comments will be considered if we receive
them at the appropriate address, as provided below, no later than 5
p.m. on April 4, 1994.
ADDRESSES: Mail comments (original and three copies) to the following
address: Health Care Financing Administration, Department of Health and
Human Services, Attention: MB-068-IFC, P.O. Box 7518, Baltimore, MD
21207-0518
If you prefer, you may deliver your written comments (original and
three copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,
MD, 21207.
Due to staffing and resource limitations, we cannot accept comments
by facsimile (FAX) transmission. In commenting, please refer to file
MB-068-IFC. Comments received timely will be available for public
inspection as they are received, beginning approximately three weeks
after publication of this document, in room 309-G of the Department's
offices at 200 Independence Avenue, SW, Washington DC, on Monday
through Friday of each week from 8:30 a.m. to 5 p.m. (phone: 202-690-
7890).
FOR FURTHER INFORMATION CONTACT: Carole Benner, (410) 966-4464
SUPPLEMENTARY INFORMATION:
I. Background
Title XIX of the Social Security Act (the Act) provides authority
for the States to operate Medicaid programs to provide medical
assistance to needy individuals. States with Medicaid programs must
meet State plan requirements specified in section 1902 of the Act to
qualify for Federal financial participation (FFP). The costs of both
administration and health care services furnished under approved State
Medicaid plans qualify for FFP.
Under section 1915(b) of the Act, a State may request the Secretary
to waive certain State plan requirements of section 1902 of the Act, if
the Secretary finds such waivers to be cost effective, efficient, and
consistent with Medicaid program objectives. The waivers permit a
State, under its Medicaid program, to restrict a recipient's free
choice of provider by:
Implementing a case management system or a specialty
physician services arrangement that restricts the provider from or
through whom the recipients can obtain primary care services (other
than emergency services), so long as the restriction does not
substantially impair access to services of adequate quality;
Allowing a locality to act as a central broker in
assisting beneficiaries in selecting among competing health care plans;
Sharing with recipients any cost savings (through
provision of additional health services) resulting from the use by a
recipient of more cost effective medical care service arrangements; and
Restricting the provider from or through whom the
recipient can receive services (other than emergency services) to
providers or practitioners who comply with State plan payment, quality,
efficiency, and utilization standards so long as this restriction does
not discriminate among classes of providers on grounds unrelated to
their demonstrated effectiveness and efficiency in providing those
services. (This provision has been expanded to provide for timely
payment to providers, as explained later in this preamble.)
No section 1915(b) waiver may restrict the choice of a recipient in
receiving family planning services.
Congress has prohibited the Secretary from granting, under section
1915(b), waivers of certain State plan requirements through amendments
made by sections 4604 and 4742 of the Omnibus Budget Reconciliation Act
of 1990 (OBRA '90), Public Law 101-508. Section 4604(c) of OBRA '90
amended section 1915(b) of the Act to prohibit waiver of the
requirement that the State plan provide for adjustments in payment for
inpatient hospital services furnished to infants who have not attained
one year of age or to children who have not attained 6 years of age and
who receive these services in disproportionate share hospitals. Section
4742(a) of OBRA '90 amended section 1915(b)(4) of the Act to specify
that the same prompt payment requirements that apply to health care
practitioners under Medicaid under section 1902(a)(37)(A) must be
extended to any type of provider who participates in the Medicaid
program under a section 1915(b)(4) freedom of choice waiver.
II. Discussion of Legislative Changes and Provisions of Regulations
A. Medicaid Payments for Services Provided in Disproportionate Share
Hospitals
Section 4604 (a) and (b) of OBRA '90 amended section 1902 of the
Act by adding sections 1902(a)(55) and 1902(s). Section 1902(a)(55)
specifies that a State Medicaid plan must provide, in accordance with
section 1902(s), for adjustments in payments for certain inpatient
hospital services. Section 1902(s) specifies that a State plan must
provide that payments to hospitals for inpatient hospital services
furnished to infants who have not attained age one and to children who
have not attained age six and who receive these services in
disproportionate share hospitals must provide outlier adjustments for
inpatient hospital services involving exceptionally high costs, or
exceptionally long lengths of stay, if payment is made on a prospective
basis (whether per diem, per case, or otherwise). Also, section 1902(s)
provides that these payments must not be limited by (1) the imposition
of day limits with respect to delivery of these services to the
specified individuals; and (2) the imposition of dollar limits (other
than limits resulting from the outlier adjustments specified above)
with respect to the delivery of these services to infants who have not
attained their first birthday (or in the case of an infant who is an
inpatient on his first birthday, until the infant is discharged).
Section 4604(c) of OBRA '90 amended section 1915(b) of the Act to
specifically prohibit any waiver of the section 1902(s) requirements.
Section 4604 became effective with respect to payments for calendar
quarters beginning on or after July 1, 1991, without regard to whether
or not final regulations to carry out the amendments have been
promulgated by that date. However, if a State requires State
legislation to meet the requirements, the State will not be held out of
compliance with the requirement before the first day of the calendar
quarter beginning after the close of the first regular session of the
State legislature that begins after November 5, 1990.
This interim final rule amends Sec. 431.55 of the Medicaid
regulations by adding a new paragraph (b)(5) that prohibits the waiver
of the section 1902(s) requirements of the Act under section 1915(b)
waivers.
B. Timely Payment of Claims to Health Care Providers
Under section 1902(a)(37) of the Act, as interpreted under
Sec. 447.45 of the Medicaid regulations, a State's Medicaid plan must
require the following prompt payment standards with regard to the
payment of Medicaid claims made by health care practitioners in
individual or group practice, or in shared health facilities:
Claims can be submitted no later than 12 months from the
date of service.
The agency must pay 90 percent of all clean claims within
30 days of the receipt of the claim unless a waiver is granted for good
faith effort to comply.
The agency must pay 99 percent of all clean claims within
90 days of receipt of the claim unless a waiver is granted for good
faith effort to comply.
The agency must pay all other claims within 12 months of
receipt of the claim. This limitation does not apply to retroactive
adjustments to providers who are paid under a retrospective payment
system; to claims filed timely under Medicare; to claims of providers
under investigation for fraud or abuse; or to claims for which this
limitation is superseded by a court order, a hearing decision, or other
corrective action.
Section 447.45 also requires that the State plan contain a
definition of a claim to be used in meeting the requirements of timely
claims payments; specifies the conditions for approving waiver
requests; and requires that the State agency provide compliance reports
and documentation.
Section 1902(a)(37) of the Act and Sec. 447.45 do not apply to
claims from hospitals and other institutions.
Section 4742(a) of OBRA '90 amended section 1915(b)(4) of the Act
to require timely payment of claims for services provided under the
freedom of choice waivers. This provision specifies that each State
must meet the same prompt payment standards for providers under a
section 1915(b)(4) waiver that are currently required for payment of
other health care practitioners who furnish services under Medicaid, as
provided for in section 1902(a)(37)(A) of the Act. Section 4742(a) of
OBRA '90 became effective on January 1, 1991.
This interim final rule amends Sec. 431.55 of the Medicaid
regulations by adding a new paragraph (f)(4) that requires States to
make timely payments to any provider who participates in a Medicaid
program under a section 1915(b)(4) waiver in the same manner that is
required for payment to other health care practitioners furnishing
Medicaid services, as specified in Sec. 447.45.
III. Technical Changes
A. Freedom of Choice of Providers of Family Planning Services
Section 1902(a)(23) of the Act provides that Medicaid recipients
may obtain services from any qualified provider that undertakes to
provide services to them. Under section 1915(b) of the Act, a State may
request that the Secretary waive the freedom of choice of provider
requirement of section 1902(a)(23) in certain specified circumstances,
but the law prohibits any restriction on a recipient's choice of a
provider of family planning services.
One of the circumstances for waiving the section 1902(a)(23)
freedom of choice requirement is to allow the State to implement
primary care case management systems (PCCMs) or specialty physician
services arrangements, under which the State may restrict the provider
through whom a recipient can receive medical care services. Under a
PCCM, the State must assure that a specific person or agency will be
responsible for locating, coordinating, and monitoring all primary and
other medical services on behalf of recipients involved in the program.
A specialty services arrangement allows the State to restrict
recipients of specialty services to designated providers even in the
absence of a PCCM, for example, restricting recipients in need of
maternity related services to specific clinics. Emergency services and
family planning services may not be restricted under these waivers, nor
may the waiver substantially impair a recipient's access to services of
adequate quality.
Section 431.51(b)(1) of the existing regulations specifies that a
recipient has a freedom of choice of providers, with certain allowed
exceptions (one of which is under a section 1915(b) waiver). Section
431.51(b)(2) of the existing regulations specifically states that a
State plan must provide that a recipient enrolled in a primary care
case management system, an HMO, or other similar entity will not be
restricted in freedom of choice of providers of family planning
services. However, the existing regulations at Sec. 431.55(b) that set
forth the general requirements for waivers under section 1915(b),
including waivers relating to implementing case management systems
(Sec. 431.55(c)), do not specifically reference the prohibited
restriction of a recipient's freedom of choice of providers of family
planning services. We believe this reference oversight may result in
some misunderstanding if Sec. 431.55 is read alone and not in the
context of the complete subpart which contains both Secs. 431.51 and
431.55. Therefore we are revising Sec. 431.55(b) by adding a new
paragraph (b)(2)(iv) to clarify that the prohibition against limiting a
recipient's freedom of choice of family planning services applies to
all section 1915(b) waivers (including waivers relating to case
management systems).
B. Waiver of Cost-Sharing Requirements
For organizational purposes, we are separating the provisions on
waiver of cost-sharing requirements that appear under the existing
paragraph (g) of Sec. 431.55 from other requirements and establishing
them as a new Sec. 431.57, with some minor editorial changes. We have
made conforming changes in paragraph (a) of Sec. 431.55 to reflect this
transfer.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking for a
regulation in the Federal Register to provide a period for public
comment.
Section 4207(j) of OBRA '90 permits the Secretary to issue interim
final regulations in order to implement the provisions of that Act.
Therefore, we are dispensing with prior notice and comment rulemaking
in this case and promulgating this rule on an interim final basis.
However, we are providing a 60-day period for public comments on the
interim final rule as indicated at the beginning of this preamble.
V. Response to Comments
Because of the large volume of correspondence we normally receive
on an interim final rule, we are not able to acknowledge or respond to
them individually. However, we will consider all comments that we
receive by the date and time specified in the DATES section of this
preamble, and if we proceed with the final rule, we will respond to the
comments in the final rule.
VI. Regulatory Impact Statement
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612) unless the Secretary certifies that a rule would not have
a significant economic impact on a substantial number of small
entities. For purposes of the RFA, States are not considered to be
small entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis for any interim final rule that may have a
significant effect on the operations of a substantial number of small
rural hospitals. Such an 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 50 beds. We are not
preparing a rural hospital impact statement since we have determined,
and the Secretary certifies, that this interim final rule would not
have a significant economic impact on the operations of a substantial
number of small rural hospitals.
VII. Collection of Information Requirements
This final rule contains no information collection requirements.
Consequently, this rule need not be reviewed by the Office of
Management and Budget under the authority of the Paperwork Reduction
Act of 1980 (44 U.S.C. 3501 et seq.).
List of Subjects in 42 CFR Part 431
Grant programs-health, Health facilities, Medicaid, Privacy,
Reporting and recordkeeping requirements.
42 CFR part 431 is amended as follows:
PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION
1. The authority citation for part 431 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act, (42 U.S.C.
1302).
2. In Sec. 431.55, paragraph (a) is revised, paragraph (b)(2) is
revised, a new paragraph (b)(5) is added, a new paragraph (f)(4) is
added, and paragraph (g) is removed to read as follows:
Sec. 431.55 Waiver of other Medicaid requirements.
(a) Statutory basis. Section 1915(b) of the Act authorizes the
Secretary to waive most requirements of section 1902 of the Act to the
extent he or she finds proposed improvements or specified practices in
the provision of services under Medicaid to be cost effective,
efficient, and consistent with the objectives of the Medicaid program.
Sections 1915 (f) and (h) prescribe how such waivers are to be
approved, continued, monitored, and terminated.
(b) General requirements.
* * * * *
(2) In applying for a waiver to implement an approvable project
under paragraph (c), (d), (e), or (f) of this section, a Medicaid
agency must document in the waiver request and maintain data regarding:
(i) The cost-effectiveness of the project;
(ii) The effect of the project on the accessibility and quality of
services;
(iii) The anticipated impact of the project on the State's Medicaid
program and;
(iv) Assurances that the restrictions on free choice of providers
do not apply to family planning services.
* * * * *
(5) The requirements of section 1902(s) of the Act, with regard to
adjustments in payments for inpatient hospital services furnished to
infants who have not attained age 1 and to children who have not
attained age 6 and who receive these services in disproportionate share
hospitals, may not be waived under a section 1915(b) waiver.
* * * * *
(f) Restriction of freedom of choice.
* * * * *
(4) The agency must make payments to providers furnishing services
under a freedom of choice waiver under this paragraph (f) in accordance
with the timely claims payment standards specified in Sec. 447.45 of
this chapter for health care practitioners participating in the
Medicaid program.
3. A new Sec. 431.57 is added to read as follows:
Sec. 431.57 Waiver of cost-sharing requirements.
(a) Sections 1916(a)(3) and 1916(b)(3) of the Act specify the
circumstances under which the Secretary is authorized to waive the
requirement that cost-sharing amounts be nominal.
(b) For nonemergency services furnished in a hospital emergency
room, the Secretary may by waiver permit a State to impose a copayment
of up to double the ``nominal'' copayment amounts determined under
Sec. 447.54(a)(3) of this subchapter.
(c) Nonemergency services are services that do not meet the
definition of emergency services at Sec. 447.53(b)(4) of this
subchapter.
(d) In order for a waiver to be approved under this section, the
State must establish to the satisfaction of HCFA that alternative
sources of nonemergency, outpatient services are available and
accessible to recipients.
(e) Although, in accordance with Sec. 431.55(b)(3) of this part, a
waiver will generally be granted for a 2-year duration, HCFA will
reevaluate waivers approved under this section if the State increases
the nominal copayment amounts in effect when the waiver was approved.
(f) A waiver approved under this section cannot apply to services
furnished before the waiver was granted.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: August 5, 1993.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: December 2, 1993.
Donna E. Shalala,
Secretary.
[FR Doc. 94-2115 Filed 1-31-94; 8:45 am]
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