[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Proposed Rules]
[Pages 9405-9410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5511]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 440

[MB-071-P]
RIN 0938-AG36


Medicaid Program; Coverage of Personal Care Services

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: In accordance with the provisions of section 13601(a)(5) of 
the Omnibus Budget Reconciliation Act of 1993, which added section 
1905(a)(24) to the Social Security Act, this proposed rule would 
specify the revised requirements for Medicaid coverage of personal care 
services furnished in a home or other location as an optional benefit, 
effective for services furnished on or after October 1, 1994. In 
particular, this proposed rule would specify that personal care 
services may be furnished in a home or other location by any individual 
who is qualified to do so. Additionally, we are proposing two minor 
changes to the Medicaid regulations concerning home health services.

DATES: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on May 7, 
1996.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: MB-071-P, P.O. Box 7517-0517, 
Baltimore, MD 21207.
    If you prefer, you may deliver your written comments (one 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 No. C5-11-17, 7500 Security Boulevard, Baltimore, MD 
21244-1850.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code MB-071-P. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a 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: Terese Klitenic (410) 786-5942.

SUPPLEMENTARY INFORMATION:

I. Background

    Title XIX of the Social Security Act (the Act) authorizes grants to 
States for medical assistance (Medicaid) to certain individuals whose 
income and resources are insufficient to meet the cost of necessary 
medical care. The Medicaid program is jointly financed by the Federal 
and State governments and administered by the States. Within Federal 
rules, each State chooses eligible groups, types and ranges of 
services, payment levels for most services, and administrative and 
operating procedures. The nature and scope of a State's Medicaid 
program is described in the State plan that the State submits to HCFA 
for approval. The plan is amended whenever necessary to reflect changes 
in Federal or State law, changes in policy, or court decisions.
    Under section 1902(a)(10) of the Act, States must provide certain 
basic services. Section 1905(a) of the Act defines the services States 
may provide as medical assistance. Personal care services historically 
have been permitted under the Secretary's discretionary authority under 
current section 1905(a)(25) of the Act until the enactment of 
legislation, described below. Currently, regulations concerning 
personal care services are located at 42 CFR 440.170(f).

II. Legislation Concerning Personal Care Services

    Before the enactment of the legislation discussed below, a State 
had the option to elect to cover personal care services under its 
Medicaid State plan. Although not specifically mentioned in section 
1905(a) of the Act, personal care services could be covered under 
section 1905(a)(22) of the Act (redesignated as section 1905(a)(25) of 
the Act on November 5, 1990), under which a State may furnish any 
additional services specified by the Secretary and recognized under 
State law. In Sec. 440.170(f), the Secretary specified that personal 
care services may be covered.
    Section 4721 of the Omnibus Budget Reconciliation Act of 1990 (OBRA 
'90) (Pub. L. 101-508, enacted on November 5, 1990) amended section 
1905(a)(7) of the Act to include personal care services as part of the 
home health services benefit and to impose certain conditions on the 
provision of personal care services, effective for services furnished 
on or after October 1, 1994. This amendment would have had a 
significant effect since, under section 1902(a)(10)(D) of the Act, home 
health services are a mandatory benefit for all Medicaid recipients 
eligible for nursing facility services under the State plan. Thus, had 
section 1905(a)(7) of the Act not been further amended (as discussed 
below) before the effective date of section 4721 of OBRA '90, personal 
care services would have become a mandatory benefit for all recipients 
eligible for nursing facility services, effective October 1, 1994.
    Before the provisions of OBRA '90 became effective, the Omnibus 
Budget Reconciliation Act of 1993 (OBRA '93) (Pub. L. 103-66) was 
enacted on August 10, 1993. Section 13601(a)(1) of OBRA '93 amended 
section 1905(a)(7) of the Act to remove personal care services from the 
definition of home health services. Additionally, section 13601(a)(5) 
of OBRA '93 added a new paragraph (24) to section 1905(a) of the Act, 
to include payment for personal care services under the definition of 
medical assistance. Under section 1905(a)(24) of the Act, personal care 
services furnished to an individual who is not an inpatient or resident 
of a hospital, nursing facility, intermediate care facility for the 
mentally retarded, or institution for mental disease is an optional 
benefit for which States may provide medical assistance payments. 

[[Page 9406]]
The statute specifies that personal care services must be: (1) 
Authorized for an individual by a physician in accordance with a plan 
of treatment or (at the option of the State) otherwise authorized for 
the individual in accordance with a service plan approved by the State; 
(2) provided by an individual who is qualified to provide such services 
and who is not a member of the individual's family; and (3) furnished 
in a home or other location. This amendment is effective October 1, 
1994. Therefore, as a result of the legislative changes made by OBRA 
'93, personal care services continue to be an optional State plan 
benefit, and are now authorized under section 1905(a)(24) of the Act, 
effective for services furnished on or after October 1, 1994.

III. Provisions of the Proposed Regulations

A. Personal Care Services in a Home or Other Location (Sec. 440.167)

    As historically used in the Medicaid program, personal care 
services means services related to a patient's physical requirements, 
such as assistance with eating, bathing, dressing, personal hygiene, 
activities of daily living, bladder and bowel requirements, and taking 
medications. These services primarily involve ``hands on'' assistance 
by a personal care attendant with a recipient's physical dependency 
needs (as opposed to purely housekeeping services). These tasks are 
similar to those that would normally be performed by a nurse's aide if 
the recipient were in a hospital or nursing facility. Although personal 
care services may be similar to or overlap some services furnished by 
home health aides, skilled services that may be performed only by a 
health professional are not considered personal care services. 
Alternatively, services that require a lower level of skill such as 
personal care services may also be provided by home health aides in the 
home under the home health benefit.
    The above description of personal care services is based on the 
definition of personal care services originally set forth in Part 5, 
Section 140, of the Medical Assistance Manual (the precursor of the 
State Medicaid Manual) and reflects States' experiences in providing 
these services. We plan to publish a definition of personal care 
services in the State Medicaid Manual in the near future. Until that 
time, States should use the above description of personal care services 
as a guide in setting parameters for this optional benefit. To provide 
States with maximum flexibility in providing personal care services, we 
are providing guidelines for this benefit in a manual issuance, rather 
than codifying it in the regulations.
    Currently, provisions regarding personal care services in a 
recipient's home are set forth at Sec. 440.170. This section of the 
regulations defines the additional services that States may furnish as 
any other medical care or remedial care recognized under State law and 
specified by the Secretary. Under Sec. 440.170(f), personal care 
services in a recipient's home means services prescribed by a physician 
in accordance with the recipient's plan of treatment, and furnished by 
an individual who is (1) qualified to provide the services, (2) 
supervised by a registered nurse, and (3) not a member of the 
recipient's family. The existing regulations do not provide for 
personal care services furnished in settings other than the recipient's 
home.
    To conform the regulations to the provisions of section 1905(a)(24) 
of the Act (as added by section 13601(a)(5) of OBRA '93), we propose to 
add a new Sec. 440.167, ``Personal care services in a home or other 
location.'' We would specify that personal care services are services 
furnished to an individual who is not an inpatient or resident of a 
hospital, nursing facility, intermediate care facility for the mentally 
retarded, or institution for mental disease, that are: (1) authorized 
for the individual by a physician in accordance with a plan of 
treatment or (at the option of the State) otherwise authorized for the 
individual in accordance with a service plan approved by the State; (2) 
provided by an individual who is qualified to provide such services and 
who is not a member of the individual's family; and (3) furnished in a 
home, and if the State chooses, in another location.
    Since section 1905(a)(24) of the Act does not require that the 
services be supervised by a registered nurse, we would not require such 
supervision in proposed Sec. 440.167. While section 13601(a)(1) of OBRA 
'93 eliminated the statutory requirement for supervision by a 
registered nurse, the versions of the bill passed by both the House and 
Senate (H.R. 2264) contained this requirement. The nurse supervision 
requirement was apparently dropped while the bill was in conference; 
however, the conference report does not specifically refer to this 
change (H. Conf. Rept. No. 2133, 103rd Cong., 1st sess., page 833, 
(1993)). We believe our proposal reflects statutory intent to eliminate 
the requirement for such supervision. Moreover, since extensive medical 
knowledge or technical skill is not required to provide personal care 
services, we believe that supervision by a registered nurse is not 
necessary in most cases. However, we are soliciting public comments 
concerning the need to retain the requirement that personal care 
services be provided under the supervision of a registered nurse or 
another supervisory individual, such as a medical social worker.
    Under our proposal, States that elect to offer the personal care 
services benefit must cover personal care services provided in the home 
but may also choose to cover personal care services provided in other 
locations. We believe that this proposal is consistent with the intent 
of the statute to expand the possible settings where personal care 
services may be covered under the Medicaid program. We note that 
coverage of personal care services outside the home is not optional 
with respect to those individuals who require personal care services 
that are medically necessary to correct or ameliorate conditions 
discovered as a result of a screen performed under the Early and 
Periodic Screening, Diagnostic, and Treatment (EPSDT) program.
    We also considered two other options for implementing the provision 
of OBRA '93 that allows States to cover personal care services 
furnished outside the home. One option was to require States that elect 
to offer the personal care services benefit to cover such services in 
both the home and other locations. However, section 1905(a)(24)(C) of 
the Act refers to services ``furnished in a home or other location,'' 
and we believe that this option would unnecessarily limit States' 
flexibility in implementing the personal care services benefit. 
Moreover, it could work against the best interests of recipients if 
States choose not to offer the personal care services benefit at all 
because of the expense involved in covering the services both inside 
and outside the home.
    We also considered allowing States electing to offer this benefit 
to cover the services either in the home or in other locations. Since 
many States historically have covered these services when furnished in 
the recipient's home, we do not believe that it would be consistent 
with statutory intent to allow States to choose to cover personal care 
services only in locations other than the home. That is, States that 
have previously covered personal care services furnished in the home 
should not be allowed to eliminate this location and opt to cover the 
services only when provided outside of the home. Again, we believe that 
the purpose of section 1905(a)(24) of the Act is to add to the possible 
settings where 

[[Page 9407]]
States may provide personal care services, not to decrease the amount 
of services currently being offered. Thus, we believe that our proposed 
policy is the most appropriate interpretation of the statute, is in the 
best interest of recipients, and gives States the discretion necessary 
to operate their programs in an efficient manner.
    We propose to leave to the State's option the decision of whether 
personal care services are to be authorized by a physician in 
accordance with a plan of treatment, or otherwise authorized in 
accordance with a service plan approved by the State. Similarly, we 
would permit States to determine, through development of provider 
qualifications, which individuals are qualified to provide personal 
care services (other than family members). Again, we believe that these 
proposed provisions would allow States to maintain a high level of 
flexibility in providing and defining optional personal care services. 
We note that home health aides employed by home health agencies may 
sometimes provide personal care services. Home health aides that 
provide only personal care services under Medicaid need only meet the 
qualifications set forth at Sec. 484.36(e) (and not the other 
qualifications for home health aide services).
    Section 1905(a)(24)(B) of the Act specifies that, for Medicaid 
purposes, personal care services may not be furnished by a member of 
the individual's family. To date, we have not defined ``family member'' 
for purposes of the personal care services benefit. Thus, each State 
that offers this benefit makes its own determination as to who is 
considered a family member for purposes of personal care services. To 
provide for more clarity and consistency in this regard, we propose to 
define family members under new Sec. 440.167(b) as spouses of 
recipients and parents (or step-parents) of minor recipients. This 
definition is essentially identical to the one that applies to personal 
care services provided under a home and community-based waiver (see 
section 4442.3.B.1. of the State Medicaid Manual). We believe that 
spouses and parents are inherently responsible for meeting the personal 
care needs of their family members, and, therefore, it would not be 
appropriate to allow Medicaid reimbursement for such services. States 
would continue to have the flexibility to expand upon the definition of 
family members at Sec. 440.167. That is, States could further restrict 
which family members can qualify as providers by extending the 
definition to apply to family members other than spouses and parents.
    We note that our proposed definition of family member would only 
apply for purposes of the personal care services benefit in 
Sec. 440.167 and not for other Medicaid benefits that allow 
reimbursement for family members. Because we recognize that States have 
developed their own definitions of ``family members'' for purposes of 
the personal care services benefit, we welcome comments on our proposed 
definition.
    Since personal care services are now an optional benefit under 
section 1905(a)(24) of the Act, we would remove current 
Sec. 440.170(f), which provides for coverage of personal care services 
in a recipient's home as part of any other medical care or remedial 
care recognized under State law and specified by the Secretary.

B. Proposed Changes Concerning Home Health Services (Sec. 440.70)

    We are proposing several changes to the regulations concerning home 
health services. Currently, Sec. 440.70(a)(2) provides that home health 
services must be furnished to a recipient on his or her physician's 
orders as part of a written plan of care that the physician reviews 
every 60 days. Section 440.70(b) lists the services that constitute 
home health services and thus are subject to the plan of care 
requirements. Section 440.70(b)(3) specifies that these services 
include medical supplies, equipment, and appliances suitable for use in 
the home. We have found that in many cases, once a recipient's need for 
medical supplies, equipment, and appliances is indicated by a 
physician, that need is unlikely to change within 60 days. Thus, absent 
changes in a recipient's condition, we do not believe that a 
recipient's need for medical equipment necessitates routine inclusion 
in a plan of care reviewed every 60 days by a physician.
    Modification of the plan of care and physician review requirements 
for medical equipment would decrease physicians' paperwork burden as 
well as the time and costs involved with these requirements. 
Accordingly, we would revise Sec. 440.70(b)(3) to provide that 
physician review of a recipient's need for medical supplies, equipment, 
and appliances suitable for use in the home under the home health 
benefit would be required annually. We believe that the requirement for 
annual review of medical supplies and equipment would allow States 
flexibility in furnishing home health services while providing an 
appropriate level of oversight. Frequency of further review of a 
recipient's continuing need for the equipment on other than an annual 
basis would be determined on a case-by-case basis depending on the 
nature of the item prescribed. A recipient's need for supplies or 
pieces of equipment that generally tend to be used on a long-term basis 
would not be reviewed as frequently as equipment that is usually used 
only temporarily. For example, review of the need for a wheelchair need 
not be as frequent as review of the need for an oxygen concentrator. In 
all cases, a physician's order for the equipment would be required 
initially.
    Additionally, Sec. 440.70(d) now defines a home health agency for 
purposes of Medicaid reimbursement as a public or private agency or 
organization, or part of an agency or organization, that meets 
requirements for participation in Medicare. We propose to revise this 
definition to indicate that in order to participate in Medicaid, the 
agency must meet Medicare requirements for participation as well as any 
additional standards the State may wish to apply that are not in 
conflict with Federal requirements. This proposed change reflects the 
long standing principle in the Medicaid program that affords States 
flexibility in establishing Medicaid program requirements tailored to 
their own specific needs. Under this proposal a State would have the 
option of imposing additional standards on home health agencies for 
participation in Medicaid beyond the Medicare conditions of 
participation.
    Finally, we are making a technical change to Sec. 440.70(c) to 
remove an obsolete reference to subparts F and G of part 442.

IV. Impact Statement

A. Background

    For proposed rules such as this, we generally prepare a regulatory 
flexibility analysis that is consistent with the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 through 612), unless we certify that a proposed 
rule will not have a significant economic impact on a substantial 
number of small entities. For purposes of a RFA, States and individuals 
are not considered small entities. However, providers are considered 
small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis for any proposed rule that may have a 
significant impact on the operation 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 

[[Page 9408]]
Statistical Area and has fewer than 50 beds.
    We are not preparing a rural impact statement since we have 
determined, and we certify, that this proposed rule would not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    In accordance with the provisions of section 1905(a)(24) of the 
Act, this proposed regulation would revise the regulations to 
incorporate the new statutory requirements concerning personal care 
services. In accordance with the statute, we are proposing that the 
services must be: (1) Authorized for the individual by a physician in 
accordance with a plan of treatment or (at the option of the State) 
otherwise authorized for the individual in accordance with a service 
plan approved by the State; (2) provided by an individual who is 
qualified to provide such services and who is not a member of the 
individual's family; and (3) furnished in a home or other location.
    In general, the provisions of this proposed rule are prescribed by 
section 1905(a)(24) of the Act, as added by section 13601(a)(5) of OBRA 
'93. The most significant change required under the statute is that, as 
of October 1, 1994, the settings in which States may elect to cover 
personal care services have been expanded to include locations outside 
the home. We believe that this statutory provision will increase 
Medicaid program expenditures independently of the promulgation of this 
rule. The primary discretionary aspect of this rule is our proposal 
that States electing to offer the personal care services benefit must 
cover the services in the home and may choose to cover them in any 
other location. As discussed in section III.A of this preamble, we 
considered requiring States that elect to offer the personal care 
services benefit to cover such services in both the home and other 
locations. We also considered allowing States to cover the services 
either in the home or in other locations. However, we believe that our 
proposed policy is the most appropriate interpretation of the statute 
and gives States the discretion necessary to operate their programs in 
an efficient manner and in the best interest of their recipients.
    As noted above, the major provisions of this proposed rule are 
required by the statute. Thus, costs associated with these proposed 
regulations are the result of legislation. However, to the extent that 
a legislative provision being implemented through rulemaking may have a 
significant effect on recipients or providers or may be viewed as 
controversial, we believe that we should address any potential 
concerns. In this instance, we believe it is desirable to inform the 
public of our estimate of the substantial budgetary effect of these 
statutory changes. The statutorily driven costs have been included in 
the Medicaid budget baseline. In addition, we anticipate that a large 
number of Medicaid recipients and providers, particularly home health 
agencies, will be affected. Thus, the expansion of settings where 
personal care services may be furnished represents an expansion of 
Medicaid benefits that, if exercised by States, would likely have 
significant effects, particularly on Medicaid recipients.

B. Impact of New Personal Care Services Provision

1. Overview
    This analysis addresses a wide range of costs and benefits of this 
rule. Whenever possible, we express impact quantitatively. In cases 
where quantitative approaches are not feasible, we present our best 
examination of determinable costs, benefits and associated issues.
    It is difficult to predict the economic impact of expanding the 
settings where personal care services may be covered under Medicaid to 
locations outside the home. We do not know the exact number and type of 
personal care services furnished by individual States or how much these 
services currently cost. Currently, approximately 32 States offer 
coverage for personal care services, and we do not have cost data from 
all of those States. States also differ in their definitions of 
personal care services and rules concerning who may furnish them. Since 
we do not have a full picture of the scope or cost of the different 
services, it is difficult for us to quantify the impact these changes 
will have. Other unknown factors regarding the future provision of 
personal care services include which States now offering the personal 
care services benefit will choose to cover services furnished outside 
the home, how many additional States will opt to offer coverage, how 
many Medicaid recipients will elect to utilize these services in States 
in which the services have not been covered, and the type and costs of 
these specific services. We believe that the majority of those 
individuals who qualify for these services will elect to utilize this 
benefit. Thus, although costs to States will rise as they begin to pay 
for the additional services, there would be substantial benefits to 
some providers and to Medicaid recipients as described in detail below.
2. Effects Upon Medicaid Recipients
    Permitting States that elect to offer the personal care services 
benefit the option of covering these services in locations outside the 
home will have a positive effect on recipients. In States where 
coverage has been provided only for personal care services in the home, 
this proposed rule may expand the types of personal care services 
available and/or the settings where recipients may receive these 
services. Expansion of personal care services or settings could help 
improve the quality of life for these recipients as well as for 
recipients who have not been receiving personal care services. It also 
would save money for some Medicaid recipients or their families since 
they would no longer have to pay for these services. No data are 
available on the number of recipients or family members who are 
currently paying for these services. However, since only 32 States 
currently pay for personal care services, we believe that a substantial 
number of recipients who receive these services are paying for them out 
of pocket.
3. Effects on Providers
    By expanding the range of settings in which Medicaid will cover 
personal care services, we anticipate that this proposed rule will 
increase the demand for such services. We believe this effect will be 
viewed as beneficial to providers of personal care services. If the 
increase in demand for such services is sufficient, the number of 
providers of personal care services may increase.
4. Effects on Medicaid Program Expenditures
    This proposed rule would implement the provisions of section 
1905(a)(24) of the Act by specifying that personal care services are an 
optional State plan benefit under the Medicaid program. The proposed 
rule would allow States the option to cover personal care services 
furnished in a home or other location, effective for services furnished 
on or after October 1, 1994. Table 1 below provides an estimate of the 
anticipated additional Medicaid program expenditures associated with 
furnishing these services outside the home, beginning on October 1, 
1994. This estimate was made using various assumptions about increases 
in utilization by current recipients, adjusted for age, as well as 
assumptions about the induced utilization that would result from the 
availability of these services. We have assumed a utilization increase 
of 5 percent for the aged and 10 percent for the non-aged, and an 
overall induction factor of 10 percent. We have 

[[Page 9409]]
also assumed that the option of providing personal care services 
outside the home would affect only those States that represent 33 
percent of Medicaid personal care spending. Given these assumptions, 
our estimate based on Federal budget projections is shown in Table 1, 
which also provides a breakdown of these costs. The first row of 
figures shows the costs of providing this optional State plan benefit. 
The second row shows the administrative costs associated with 
furnishing these services. We estimate the following costs to the 
Medicaid program:

                                Table 1.--Personal Care Services Outside the Home                               
----------------------------------------------------------------------------------------------------------------
                                                                 Federal medicaid cost estimate (in millions)*  
                                                             ---------------------------------------------------
                                                                FY 1996      FY 1997      FY 1998      FY 1999  
----------------------------------------------------------------------------------------------------------------
Services....................................................         $230         $280         $350         $430
Administration costs........................................           10           10           15           15
      Total.................................................         $240         $290         $365         $445
----------------------------------------------------------------------------------------------------------------
*Figures are rounded to the nearest $5 million. We note that the costs associated with these proposed           
  regulations are the result of legislation and due to the interpretation of statutory changes already in       
  effect. Therefore, these costs have been included in the Medicaid budget estimates.                           

5. Effects on States
    As stated above, the coverage of personal care services is optional 
except when such services are medically necessary to correct or 
ameliorate medical problems found as a result of a screen under the 
EPSDT program. Many States currently do not cover optional personal 
care services. In those States that do offer the personal care services 
benefit, services furnished outside the home previously could not be 
covered. Therefore, there may be a substantial economic impact on 
States that decide to provide coverage for personal care services 
furnished outside the home. The varying State definitions of personal 
care services, and rules concerning who may furnish them, make it 
difficult to estimate accurately the potential increases in 
expenditures for those States that choose to expand coverage of 
personal care services to include services furnished outside the home. 
However, Table 2, which is based upon the same data and assumptions 
used to formulate the Federal expenditures shown in Table 1, estimates 
the cost to States.

                                Table 2.--Personal Care Services Outside the Home                               
----------------------------------------------------------------------------------------------------------------
                                                                      State cost estimate (in millions)*        
                                                             ---------------------------------------------------
                                                                FY 1996      FY 1997      FY 1998      FY 1999  
----------------------------------------------------------------------------------------------------------------
Services....................................................         $175         $210         $265         $325
Administration costs........................................            5           10           10           10
                                                             ---------------------------------------------------
      Total.................................................          180          220          275         335 
----------------------------------------------------------------------------------------------------------------
*Figures are rounded to the nearest $5 million.                                                                 

C. Conclusion
    The provisions of this proposed rule are required by section 
1905(a)(24) of the Act. We believe that the provisions of this rule 
adding personal care services as an optional State plan benefit and 
expanding the possible settings for covering personal care services to 
locations outside the home will benefit providers, recipients and their 
families.
    As shown above in Tables 1 and 2, the costs to the Federal 
government and States associated with paying for personal care services 
furnished outside the home are substantial. There may be some minor off 
setting of costs if the number of admissions to nursing facilities 
decreases as a result of these provisions, but we have no data to 
determine the potential savings, if any. Regardless of any possible 
savings, the economic impact of these provisions is attributable to the 
statutory changes mandated by OBRA '93.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

V. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

VI. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on a proposed rule, we are not able to acknowledge or respond 
to them individually. We will consider all comments we receive by the 
date and time specified in the DATES section of this preamble, and, if 
we proceed with a final rule, we will respond to the comments in the 
preamble to that document.

List of Subjects in 42 CFR Part 440

    Grant programs-health, Medicaid.

    42 CFR part 440 is proposed to be amended as set forth below:

PART 440--SERVICES: GENERAL PROVISIONS

    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).

Subpart A--Definitions

    2. In Sec. 440.70, the introductory text of paragraph (a) and the 
first sentence of the introductory text of paragraph (b) are 
republished and paragraphs (a)(2), (b)(3), (c) and (d) are revised to 
read as follows:


Sec. 440.70  Home health services.

    (a) ``Home health services'' means the services in paragraph (b) of 
this section that are provided to a recipient--
* * * * *
    (2) On his or her physician's orders as part of a written plan of 
care that the physician reviews every 60 days, except 

[[Page 9410]]
as specified in paragraphs (b)(3) (i) and (ii) of this section.
    (b) Home health services include the following services and items. 
* * *
* * * * *
    (3) Medical supplies, equipment, and appliances suitable for use in 
the home.
    (i) A recipient's need for medical supplies, equipment, and 
appliances must be reviewed by a physician annually.
    (ii) Frequency of further physician review of a recipient's 
continuing need for the items is determined on a case-by-case basis, 
based on the nature of the item prescribed;
* * * * *
    (c) A recipient's place of residence, for home health services, 
does not include a hospital, nursing facility, or intermediate care 
facility for persons with mental retardation.
    (d) ``Home health agency'' means a public or private agency or 
organization, or part of an agency or organization that meets 
requirements for participation in Medicare and any additional standards 
legally promulgated by the State that are not in conflict with Federal 
requirements.
* * * * *
    3. A new Sec. 440.167 is added to read as follows:


Sec. 440.167  Personal care services

    (a) Personal care services means services that are furnished to an 
individual who is not an inpatient or resident of a hospital, nursing 
facility, intermediate care facility for persons with mental 
retardation, or institution for mental disease that are--
    (1) Authorized for the individual by a physician in accordance with 
a plan of treatment or (at the option of the State) otherwise 
authorized for the individual in accordance with a service plan 
approved by the State;
    (2) Provided by an individual who is qualified to provide such 
services and who is not a member of the individual's family; and
    (3) Furnished in a home, and at the State's option, in another 
location.
    (b) For purposes of this section, family member means a parent (or 
step parent) of a minor recipient or a recipient's spouse.
    4. In Sec. 440.170, paragraph (f) is removed and reserved.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: October 6, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 96-5511 Filed 3-7-96; 8:45 am]
BILLING CODE 4120-01-P