[Federal Register Volume 63, Number 16 (Monday, January 26, 1998)]
[Notices]
[Pages 3752-3756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1675]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
HCFA-2005-NC
RIN 0938-AI39


Medicaid Program; State Allotments for Payment of Medicare Part B 
Premiums for Qualifying Individuals: Federal Fiscal Year 1998

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

ACTION: Notice with Comment Period.

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SUMMARY: Section 4732 of the Balanced Budget Act of 1997 (Public Law 
105-33) amended the Social Security Act to provide for two additional 
eligibility groups of low-income Medicare beneficiaries for whom 
Medicaid payment can be made for Medicare Part B premiums during the 
period beginning January 1998 and ending December 2002. This notice 
announces the Federal fiscal year 1998 State allotments that are 
available to pay Medicare Part B premiums for these two new eligibility 
groups and describes the methodology used to determine each State's 
allotment.

DATES: Effective Date: This is a major rule under 5 U.S.C. section 
804(2). As indicated in the preamble of this notice, pursuant to 
section 5 U.S.C. section 553(b)(B), for good cause we find that prior 
notice and comment procedures are unnecessary and impracticable. 
Pursuant to 5 U.S.C. section 808(2), this notice is effective January 
1, 1998, for

[[Page 3753]]

allotments for payment of Medicare Part B premiums for individuals in 
calendar year 1998 from the allocation for fiscal year 1998.
    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 March 27, 1998.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-2005-NC, P.O. Box 7517, 
Baltimore, MD 21207-0517, or
    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 C5-09-26, 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 HCFA-2005-NC. Comments received timely will be available 
for public inspection as they are received, generally beginning 
approximately 3 weeks after the 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).
    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, P.O. Box 37194, Pittsburgh, PA 15250-7954. Specify the date 
of the issue requested and enclose a check or money order payable to 
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calling the order desk at (202) 512-1800 or by faxing to (202) 512-
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Register.
    This Federal Register document is also available from the Federal 
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password required). Dial-in users should use communications software 
and modem to call (202) 512-1661; type swais, then login as guest (no 
password required).

FOR FURTHER INFORMATION CONTACT: Miles McDermott, (410) 786-3722

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1902 of the Social Security Act (the Act) sets forth the 
requirements for State plans for medical assistance. Prior to August 5, 
1997, section 1902(a)(10)(E) of the Act specified that the State 
Medicaid plan must provide for Medicare cost-sharing for three 
eligibility groups of low-income Medicare beneficiaries. These three 
groups included qualified Medicare beneficiaries (QMBs), specified low-
income Medicare beneficiaries (SLMBs), and qualified disabled and 
working individuals (QDWIs).
    A QMB is an individual entitled to Medicare Part A with income at 
or below the Federal poverty line and resources below $4,000 for an 
individual and $6,000 for a couple. A SLMB is an individual who meets 
the QMB criteria, except that his or her income is between a State 
established level (at or below the Federal poverty line) and 120 
percent of the Federal poverty line. A QDWI is an individual who is 
entitled to enroll in Medicare Part A, whose income does not exceed 200 
percent of the Federal poverty line for a family of the size involved, 
whose resources do not exceed twice the amount allowed under the 
Supplementary Security Income (SSI) program, and who is not otherwise 
eligible for Medicaid. The definition of Medicare cost-sharing at 
section 1905(p)(3) of the Act includes payment for premiums for 
Medicare Part B.
    Section 4732 of the Balanced Budget Act of 1997 (BBA), enacted on 
August 5, 1997, amended section 1902(a)(10)(E) of the Act to require 
States to provide for Medicaid payment of the Medicare Part B premiums 
for two additional eligibility groups of low-income Medicare 
beneficiaries, referred to as qualifying individuals (QIs). 
Specifically, a new section 1902(a)(10)(E)(iv)(I) of the Act is added, 
under which States must pay the full amount of the Medicare Part B 
premium for selected qualifying individuals who would be QMBs but for 
the fact that their income level is at least 120 percent but less than 
135 percent of the Federal poverty line for a family of the size 
involved. These individuals cannot otherwise be eligible for medical 
assistance under the approved State Medicaid plan.
    The second group of QIs, added under section 1902(a)(10)(E)(iv)(II) 
of the Act, includes Medicare beneficiaries who would be QMBs except 
that their income is between 135 percent and 175 percent of the Federal 
poverty line for a family of the size involved, who are not otherwise 
eligible for Medicaid under the approved State plan. These QIs are 
eligible for a portion of Medicare cost-sharing consisting only of a 
percentage of the increase in the Medicare Part B premium attributable 
to the shift of Medicare home health coverage from Part A to Part B (as 
provided in section 4611 of the BBA).
    The BBA also added a new section 1933 to the Act to provide for 
Medicaid payment of Medicare Part B premiums for QIs. (The previous 
section 1933 is redesignated as section 1934.) Section 1933(a) 
specifies that a State plan must provide, through a State plan 
amendment, for medical assistance to pay for the cost of Medicare cost-
sharing on behalf of qualifying individuals who are selected to receive 
assistance.
    Section 1933(b) of the Act sets forth the rules that States must 
follow in selecting QIs and providing payment for Medicare Part B 
premiums. Specifically, the State must permit all qualifying 
individuals to apply for assistance and must select individuals on a 
first-come, first-served basis (that is, the State must select QIs in 
the order in which they apply). Under section 1933(b)(2)(B) of the Act, 
in selecting persons who will receive assistance in years after 1998, 
States must give preference to those individuals who received 
assistance as QIs, QMBs, SLMBs, or QDWIs in the last month of the 
previous year and who continue to be (or become) QIs. Under section 
1933(b)(4), persons selected to receive assistance in a calendar year 
are entitled to receive assistance for the remainder of the year, but 
not beyond, as long as they continue to qualify. The fact that an 
individual is selected to receive assistance at any time during the 
year does not entitle the individual to continued assistance for any 
succeeding year. Because the State's allotment is limited by law, 
section 1933(b)(3) of the Act provides that the State must limit the 
number of QIs so that the amount of assistance provided during the year 
is approximately equal to the State's allotment for that year.

[[Page 3754]]

    Section 1933(c) of the Act limits the total amount of Federal funds 
available for payment of Part B premiums each fiscal year and specifies 
the formula that is to be used to determine an allotment for each State 
from this total amount. For States that execute a State plan amendment 
in accordance with section 1933(a) of the Act, a total of $1.5 billion 
is allocated over 5 years as follows: $200 million in FY 1998; $250 
million in FY 1999; $300 million in FY 2000; $350 million in FY 2001; 
and $400 million in FY 2002.
    The Federal matching rate for Medicaid payment of Medicare Part B 
premiums for qualifying individuals is 100 percent for expenditures up 
to the amount of the State's allotment. No Federal matching funds are 
available for expenditures in excess of the State allotment amount. 
Administrative expenses associated with the payment of Medicare Part B 
premiums for QIs remain at the 50 percent matching level and are not 
part of the State's allotment.
    The amount appropriated for each fiscal year is to be allocated 
among States according to the formula set forth in section 1933(c)(2) 
of the Act. The formula provides for an amount to each State that is to 
be based on each State's share of the Secretary's estimate of the ratio 
of: (1) an amount equal to the sum of (a) twice the total number of 
individuals who meet all but the income requirements for QMBs, whose 
incomes are at least 120 percent but less than 135 percent of the 
Federal poverty line, and who are not otherwise eligible for Medicaid, 
and (b) the total number of individuals in the State who meet all but 
the income requirements for QMBs, whose incomes are at least 135 
percent but less than 175 percent of the Federal poverty line, and who 
are not otherwise eligible for Medicaid, to (2) the sum of all of these 
individuals under item (1) for all eligible States.

II. Provisions of this Notice

    This notice announces the availability of individual State 
allotments for Federal fiscal year 1998 for the Medicaid payment of 
Medicare Part B premiums for qualifying individuals identified under 
sections 1902(a)(10)(E)(iv) (I) and (II) of the Act.
    In this notice, we are not applying precisely the statutory formula 
to determine the individual State allotments. A precise application of 
the allocation formula in the statute would require us to determine 
State-specific estimates of the number of individuals who:
     Are entitled to Medicare Part A;
     Have incomes in the poverty level ranges specified;
     Have assets not exceeding twice the amount allowed under 
the SSI program; and
     Would not be eligible for Medicaid but for the provisions 
of section 1902(a)(10)(E) of the Act regarding QIs.
    Section 4732(c)(2) of the BBA allows HCFA to take an estimate of 
the ration of the relevant numbers. We have not been able to locate any 
available current data that would permit us to directly produce the 
estimates specified in the statute. As an alternative to direct 
measurement, we believe that estimates might be derived from models of 
income, assets, and State Medicaid eligibility. Estimates could be 
constructed using available data sources; however such an approach 
would be very time-consuming and resource-intensive and may still not 
produce credible State-level estimates. Consequently, we are 
approximating the required estimates by using data from the U.S. Census 
Bureau on the number of individuals who, according to its March Current 
Population Survey (CPS), are Medicare beneficiaries, have incomes in 
the appropriate ranges, and are not enrolled in Medicaid.
    In order to reduce the variability of State-level estimates derived 
from CPS data, we have used a moving average of the most recent 3 years 
of available data. For the FY 1998 allotments shown in the table below, 
we have averaged CPS data for the years 1994 through 1996. 
Specifically, the Federal fiscal year 1998 allotments have been 
calculated as follows:

    AT=Total amount to be allocated
    M1i=3-year average of the number of Medicare 
beneficiaries in state i who are not enrolled in Medicaid and whose 
incomes are at least 120 percent but less than 135 percent of Federal 
poverty line M2i=3-year average of the number of Medicare 
beneficiaries in State i who are not enrolled in Medicaid and whose 
incomes are at least 135 percent but less than 175 percent of Federal 
poverty line.

Then, the allotment reserved for State i is determined by the 
following formula:
[GRAPHIC] [TIFF OMITTED] TN26JA98.000

    The resulting allotments are shown by State in the table below.

                  Estimated State Allotments for Medicaid Payments of Medicare Part B Premiums                  
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                                                                                                    State FY 98 
              State                 (a)  M1\1\      (b)  M2\2\       (c)  [2 x    State share of  allocation (in
                                                                     (a)]+(b)      (c) (percent)    thousands)  
----------------------------------------------------------------------------------------------------------------
AK..............................               0               2               2            0.03             $63
AL..............................              36              65             137            2.14           4,283
AR..............................              21              37              79            1.23           2,470
AZ..............................              18              50              86            1.34           2,688
CA..............................              99             311             509            7.96          15,911
CO..............................              13              33              59            0.92           1,844
CT..............................              13              65              91            1.42           2,845
DC..............................               2               3               7            0.11             219
DE..............................               4               9              17            0.27             531
FL..............................              89             270             448            7.00          14,004
GA..............................              42             102             186            2.91           5,814
HI..............................               4               9              17            0.27             531
IA..............................              15              49              79            1.23           2,470
ID..............................               4              15              23            0.36             719
IL..............................              75             167             317            4.95           9,909
IN..............................              25              92             142            2.22           4,439
KS..............................              13              41              67            1.05           2,094
KY..............................              18              91             127            1.98           3,970
LA..............................              27              56             110            1.72           3,439
MA..............................              37              83             157            2.45           4,908

[[Page 3755]]

                                                                                                                
MD..............................              25              72             122            1.91           3,814
ME..............................               7              27              41            0.64           1,282
MI..............................              44             122             210            3.28           6,565
MN..............................              18              55              91            1.42           2,845
MO..............................              30              81             141            2.20           4,408
MS..............................              26              42              94            1.47           2,938
MT..............................               8              16              32            0.50           1,000
NC..............................              58             110             226            3.53           7,065
ND..............................               5              11              21            0.33             656
NE..............................              10              26              46            0.72           1,438
NH..............................               7              17              31            0.48             969
NJ..............................              51             118             220            3.44           6,877
NM..............................              10              29              49            0.77           1,532
NV..............................               7              19              33            0.52           1,032
NY..............................              92             271             455            7.11          14,223
OH..............................              56             167             279            4.36           8,721
OK..............................              26              47              99            1.55           3,095
OR..............................              22              53              97            1.52           3,032
PA..............................              82             213             377            5.89          11,785
RI..............................               7              18              32            0.50           1,000
SC..............................              27              52             106            1.66           3,314
SD..............................               5               9              19            0.30             594
TN..............................              39              56             134            2.09           4,189
TX..............................              78             221             377            5.89          11,785
UT..............................               4              18              26            0.41             813
VA..............................              19              81             119            1.86           3,720
VT..............................               4               7              15            0.23             469
WA..............................               9              67              85            1.33           2,657
WI..............................              10              56              76            1.19           2,376
WV..............................              19              39              77            1.20           2,407
WY..............................               2               4               8            0.13             250
                                 -------------------------------------------------------------------------------
      Total.....................            1362            3674            6398          100.00        200,000 
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\1\ Three-year average of number (000) of Medical beneficiaries in State who are not enrolled in Medicaid but   
  whose incomes are at least 120 but less than 135 of Federal Poverty Line.                                     
\2\ Three-year average of number (000) of Medicare beneficiaries in State who are not enrolled in Medicaid but  
  whose incomes are at least 135 but less than 175 of Federal Poverty Line.                                     

III. Waiver of Advance Public Comment and 30-Day Delay in Effective 
Date

    We ordinarily publish an advance notice in the Federal Register for 
a notice containing substantive rules to provide a period for public 
comment. However, we may waive that procedure if we find good cause 
that notice and comment are impractical, unnecessary, or contrary to 
the public interest. In addition, we also normally provide a delay of 
30 days in the effective date. However, if adherence to this procedure 
would be impractical, unnecessary, or contrary to public interest, we 
may waive the delay in the effective date.
    We are adopting this notice as a final with comment period without 
publication of a proposed notice because of the need to notify 
individual States in advance of the limitations with Federal matching 
funds in their Medicaid expenditures for payment of Medicare Part B 
premiums for qualifying individuals. Publication of a proposed notice 
with a 60-day comment period prior to publication of a final notice 
would, we believe, be contrary to the public interest. The law is 
specific regarding the total amount available for Medicare Part B 
premiums for qualifying individuals and the formula that is to be used 
to determine individual State allotments. Therefore, we find good cause 
to waive issuance of a proposed notice and to issue the notice as 
final.
    Also, because States can begin making payments for Medicare Part B 
premiums for qualifying individuals as early as January 1, 1998, we are 
not making the effective date of the notice the usual 30 days after 
publication. For the reasons discussed above, we find good cause to 
waive the usual 30-day delay.
    Although we are publishing this as a final notice, we are providing 
a 60-day period for public comment. Because of the large number of 
items of correspondence we normally receive, we are not able to 
acknowledge or respond to the comments individually. However, if we 
decide that changes are necessary as a result of our consideration of 
timely comments, we will issue an additional notice and respond to the 
comments in that notice.

IV. Effect of the Contract with America Advancement Act

    Normally, under 5 U.S.C. section 801, as added by section 251 of 
Public Law 104-121, the effective date of a major rule is delayed 60 
days for Congressional review. This has been determined to be a major 
rule under 5 U.S.C. section 804(2). However, as indicated in section 
III of this notice with comment period, we have found that good cause 
exists to dispense with prior notice and comment procedures since they 
are unnecessary and impracticable under the circumstances. Pursuant to 
5 U.S.C. section 808(2), a rule shall take effect at such time as the 
Federal agency promulgating the rule determines if it finds, for good 
cause, that prior notice and comment procedures are unnecessary or 
impracticable. Accordingly, under the exemption provided in 5 U.S.C. 
section

[[Page 3756]]

808(2), this notice with comment period is effective January 1, 1998, 
for allotments for payments of Medicare Part B premiums for individuals 
in calendar year 1998 from the allotment for fiscal year 1998.

V. Regulatory Impact Statement

    We have examined the impact of this notice with comment period as 
required by Executive Order 12866 and the Regulatory Flexibility Act 
(RFA) (Pub. L. 96-354). Executive Order 12866 directs agencies to 
assess all costs and benefits of available regulatory alternatives and, 
when regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects; distributive impacts; and equity). 
The RFA requires agencies to analyze options for regulatory relief for 
small businesses. For purposes of the RFA, States and individuals are 
not considered to be small entities.
    This notice with comment period implements provisions of the 
Balanced Budget Act of 1997 to allocate, among the States, Federal 
funds to provide Medicaid payment for Medicare Part B premiums for two 
additional groups of low-income Medicare beneficiaries. The total 
amount of Federal funds available during a Federal fiscal year and the 
formula for determining individual State allotments are specified in 
the law. We have applied the statutory formula for the State allotments 
except for the use of specified data. Because the data specified in the 
law were not currently available, we have used comparable data from the 
U.S. Census Bureau on the number of possible qualifying individuals in 
the States.
    We believe that the statutory provisions implemented in this notice 
with comment period will have a positive effect on States and 
individuals. Federal funding at the 100 percent matching rate is 
available for Medicare cost-sharing for Medicare Part B premium 
payments for qualifying individuals and a greater number of low-income 
Medicare beneficiaries will be eligible to have their Medicare Part B 
premiums paid under Medicaid.
    Section 1102(b) of the Social Security Act requires us to prepare a 
regulatory impact analysis for any notice that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. Such an analysis must conform to the provisions of section 
603 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 a 
Metropolitan Statistical Area and has fewer than 50 beds.
    We are not preparing analyses for either the RFA or section 1102(b) 
of the Act because we have determined and certify that this notice with 
comment period 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 
notice with comment period was reviewed by the Office of Management and 
Budget.

    Authority: Sections 1902(a)(10), 1933 of the Social Security Act 
(42 U.S.C. 1396a), and Public Law 105-33.

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

    Dated: December 12, 1997.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: January 13, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-1675 Filed 1-23-98; 8:45 am]
BILLING CODE 4120-01-P