[Federal Register Volume 66, Number 25 (Tuesday, February 6, 2001)]
[Notices]
[Pages 9088-9089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3058]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration


Notice of Hearing: Reconsideration of Disapproval of Missouri 
State Plan Amendment (SPA) 99-29

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

ACTION: Notice of hearing.

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SUMMARY: This notice announces an administrative hearing on March 8, 
2001, at 10:00 a.m., Plaza Room 664, Richard Bolling Federal Building, 
601 E. Twelfth Street, Kansas City, Missouri 64106, to reconsider our 
decision to disapprove Missouri SPA 99-29.

CLOSING DATE: Requests to participate in the hearing as a party must be 
received by the presiding officer by February 21, 2001.

FOR FURTHER INFORMATION CONTACT: Kathleen Scully-Hayes, Presiding 
Officer, HCFA, C1-09-13, 7500 Security Boulevard, Baltimore, MD 21244, 
Telephone: (410) 786-2055.

SUPPLEMENTARY INFORMATION: This notice announces an administrative 
hearing to reconsider HCFA's decision to disapprove Missouri's SPA 99-
29. Missouri submitted SPA 99-29 on December 29, 1999, which proposed 
to pay for school-based assessment services described in an 
individualized education plan pursuant to the Individuals with 
Disabilities Education Act (IDEA) using a bundled rate methodology. One 
rate would be paid for a variable package of assessment services, 
regardless of the number of assessment services provided to a 
particular child. As explained below, HCFA disapproved Missouri SPA 99-
29 after consulting with the Secretary on October 31, 2000.
    Section 1116 of the Social Security Act (the Act) and 42 CFR part 
430, establish Department procedures that provide an administrative 
hearing for reconsideration of a disapproval of a State plan or plan 
amendment. HCFA is required to publish a copy of the notice to a State 
Medicaid agency that informs said agency of the time and place of the 
hearing and the issues to be considered. If the agency is subsequently 
notified of additional issues that will be considered at the hearing, 
that notice will also be published.
    In accordance with the requirements contained at 42 CFR 
430.76(b)(2), any individual or group that wants to participate in the 
hearing as a party must petition the presiding officer within 15 days 
after publication of this notice. Any interested person or organization 
that wants to participate as amicus curiae must petition the presiding 
officer before the hearing begins in accordance with the requirements 
contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the 
presiding officer will notify all participants.
    The first issue is whether payment for Medicaid services using a 
bundled rate methodology, under which payment is made at a single rate 
for one or more in a group of different services furnished to an 
eligible individual over a fixed period of time, meets the conditions 
set forth in section 1902(a)(30) of the Act. Section 1902(a)(30)(A) 
provides that Medicaid State plans must provide for such methods and 
procedures relating to the payment for care and services available 
under the plan as may be necessary to ensure that payments are 
consistent with efficiency, economy, and quality of care. The amendment 
proposed to pay for school-based assessment services furnished pursuant 
to the IDEA using a bundled rate methodology. Under the proposed 
payment methodology, one rate would be paid for a variable package of 
assessment services, regardless of the number of assessment services 
provided to a particular child. As explained below, HCFA was unable to 
approve Missouri SPA 99-29 because the proposed payment methodology was 
not in compliance with section 1902(a)(30)(A) of the statute, and could 
not generate sufficient documentation to establish such compliance.
    On May 21, 1999, HCFA issued a letter to all State Medicaid 
directors indicating that it would no longer approve State plan 
amendments proposing reimbursement for school-based health services 
using a bundled rate. That letter described a bundled rate as a single 
rate for one or more in a group of different services furnished to an 
eligible individual during a fixed period of time. In the May 21 
letter, HCFA explained that such rates do not ensure accurate and 
reasonable payments consistent with efficiency, economy, and quality of 
care. Specifically, HCFA stated that the bundled rate is inconsistent 
with economy since the rate is not designed to accurately reflect true 
costs or reasonable fee-for-service rates. The bundled rate is also 
inconsistent with efficiency since it requires substantially more 
Federal oversight resources to establish the accuracy and 
reasonableness of State expenditures. In sum, HCFA concluded that, with 
a bundled rate, there is no reliable basis for determining that the 
payments

[[Page 9089]]

would be accurate, reasonable, and consistent with statutory 
requirements.
    The second issue is whether the proposed amendment provided 
sufficient information on the payment methodology or rate structure to 
demonstrate that the requirements of 42 CFR part 447, subpart F 
(Payment Methods for Other Institutional and Noninstitutional Services) 
were met. HCFA concluded that the proposed amendment did not meet the 
requirements because it (including all associated communications with 
the State) did not fully explain how payments would be calculated and 
how rates would be determined. Therefore, based on the above, and after 
consultation with the Secretary as required under 42 CFR 430.15(c)(2), 
HCFA disapproved Missouri SPA 99-29.
    The notice to Missouri announcing an administrative hearing to 
reconsider disapproval of its SPA reads as follows:

    Mr. Steven E. Renne, Acting Director, Missouri Department of Social 
Services, P.O. Box 1527, Broadway State Office Building, Jefferson 
City, MO 65102-1527
    Dear Mr. Renne:
    I am responding to your request received January 3, 2001, for 
reconsideration of the October 31, 2000, decision by the Health Care 
Financing Administration (HCFA) to disapprove Missouri State Plan 
Amendment (SPA) 99-29. I set forth below a statement of the issues 
and scheduled a hearing on your request.
    The first issue is whether payment for Medicaid services using a 
bundled rate methodology, under which payment is made at a single 
rate for one or more in a group of different services furnished to 
an eligible individual over a fixed period of time, meets the 
conditions set forth in section 1902(a)(30) of the Social Security 
Act (Act). Section 1902(a)(30)(A) provides that Medicaid State plans 
must provide for such methods and procedures relating to the payment 
for care and services available under the plan as may be necessary 
to ensure that payments are consistent with efficiency, economy, and 
quality of care. The amendment proposed to pay for school-based 
assessment services furnished to special education children pursuant 
to the Individuals with Disabilities Education Act using a bundled 
rate methodology. Under the proposed payment methodology, one rate 
would be paid for a variable package of assessment services, 
regardless of the number of assessment services provided to a 
particular child. As explained below, HCFA was unable to approve 
Missouri SPA 99-29 because the proposed payment methodology was not 
in compliance with section 1902(a)(30)(A) of the statute, and 
sufficient documentation was not provided to establish such 
compliance.
    On May 21, 1999, HCFA issued a letter to all State Medicaid 
directors indicating that it would no longer approve State plan 
amendments proposing reimbursement for school-based health services 
using a bundled rate. That letter described a bundled rate as a 
single rate for one or more in a group of different services 
furnished to an eligible individual during a fixed period of time. 
In the May 21 letter, HCFA explained that such rates do not ensure 
accurate and reasonable payments consistent with efficiency, 
economy, and quality of care. Specifically, HCFA stated that the 
bundled rate is inconsistent with economy since the rate is not 
designed to accurately reflect true costs or reasonable fee-for-
service rates. The bundled rate is also inconsistent with efficiency 
since it requires substantially more Federal oversight resources to 
establish the accuracy and reasonableness of State expenditures. In 
sum, HCFA concluded that, with a bundled rate, there is no reliable 
basis for determining that the payments would be accurate, 
reasonable, and consistent with statutory requirements.
    The second issue is whether the proposed amendment provided 
sufficient information on the payment methodology or rate structure 
to demonstrate that the requirements of 42 CFR part 447, subpart F 
(Payment Methods for Other Institutional and Noninstitutional 
Services) were met. HCFA concluded that the proposed amendment did 
not meet these requirements because it (including all associated 
communications with the State) did not fully explain how payments 
would be calculated and how rates would be determined.
    A hearing on your request for reconsideration has been scheduled 
for 10:00 A.M. on March 8, 2001, Plaza Room 664, Richard Bolling 
Federal Building, 601 E. Twelfth Street, Kansas City, Missouri 
64106. If this date is not acceptable, we would be glad to set 
another date that is mutually agreeable to the parties. The hearing 
will be governed by the procedures prescribed at 42 CFR, part 430.
    I am designating Ms. Kathleen Scully-Hayes as the presiding 
officer. If these arrangements present any problems, please contact 
the presiding officer. In order to facilitate any communication, 
which may be necessary between the parties to the hearing, please 
notify the presiding officer to indicate acceptability of the 
scheduled hearing date and provide names of the individuals who will 
represent the State at the hearing. The presiding officer may be 
reached at (410) 786-2055.

      Sincerely,
Michael McMullan,
Acting Deputy Administrator.
    Section 1116 of the Social Security Act (42 U.S.C., section 
1316); 42 CFR, section 430.18).
(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid 
Assistance Program)

    Dated: January 31, 2001.
Michael McMullan,
Acting Deputy Administrator, Health Care Financing Administration.
[FR Doc. 01-3058 Filed 2-5-01; 8:45 am]
BILLING CODE 4120-03-P