[Federal Register Volume 67, Number 205 (Wednesday, October 23, 2002)]
[Notices]
[Pages 65128-65129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26905]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Notice of Hearing: Reconsideration of Disapproval of Virginia 
State Plan Amendment 01-14

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice of hearing.

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SUMMARY: This notice announces an administrative hearing to be held on 
December 11, 2002, 10 a.m., Suite 216, The Public Ledger Building, 150 
S. Independence Mall West; Philadelphia, Pennsylvania 19106, to 
reconsider our decision to disapprove Virginia State Plan Amendment 01-
14.

CLOSING DATE: Requests to participate in the hearing as a party must be 
received by the presiding officer by November 7, 2002.

FOR FURTHER INFORMATION CONTACT: Kathleen Scully-Hayes, Presiding 
Officer, CMS, 2520 Lord Baltimore Drive, Suite L, Baltimore, Maryland 
21244-2670, Telephone: (410) 786-2055.

SUPPLEMENTARY INFORMATION: This notice announces an administrative 
hearing to reconsider our decision to disapprove Virginia State Plan 
Amendment (SPA) 01-14. Virginia submitted SPA 01-14 on December 14, 
2001. The amendment would revise the State's payment methodology to 
provide for supplemental payments for inpatient and outpatient services 
furnished by non-state government owned or operated facilities.
    The issue is whether this SPA sets out a definite payment 
methodology for supplemental payments for inpatient and outpatient 
services furnished by non-state government owned or operated facilities 
in compliance with the requirements of the Centers for Medicare & 
Medicaid Services' (CMS) regulations at 42 CFR 430.10 and 447.252(b). 
First, the methodology set out in the proposed plan amendment is 
contingent on unexplained factors including size criteria and Medicaid 
participation criteria that are not described, and the hospital's 
acceptance of an intergovernmental transfer agreement that is not 
described. As a result, the proposed State plan amendment does not 
``comprehensively'' describe the State Medicaid program, and does not 
contain ``all information necessary for CMS to determine whether the 
plan can be approved to serve as a basis for Federal financial 
participation'' consistent with

[[Page 65129]]

these regulatory requirements. Second, the State was on notice that CMS 
would review this proposed state plan amendment with heightened 
scrutiny because of CMS'' concern that the payment level was not 
consistent with efficiency, economy, and quality of care. During a 
portion of the period covered by this amendment, the methodology would 
result in total aggregate payments at the level of 150 percent of the 
amount that would be paid for the services under Medicare payment 
principles. In a State Medicaid Director's letter dated November 23, 
2002, CMS informed states of the intention not to approve amendments 
submitted after the November 23, 2001, issuance of a notice of proposed 
rulemaking that would lower the permissible aggregate payment level 
from 150 percent to 100 percent of the amount that would be paid for 
the services under Medicare payment principles.
    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. The CMS is required to publish a copy of the notice to a 
state Medicaid agency that informs the agency of the time and place of 
the hearing and the issues to be considered. If we subsequently notify 
the agency of additional issues that will be considered at the hearing, 
we will also publish that notice.
    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, in accordance with the requirements 
contained at 42 CFR 430.76(b)(2). 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. Therefore, based on the 
reasoning set forth above, and after consultation with the Secretary as 
required under 42 CFR 430.15(c)(2), CMS disapproved Virginia SPA 01-14.
    The notice to Virginia announcing an administrative hearing to 
reconsider the disapproval of its SPA reads as follows:

Mr. Patrick W. Finnerty,
Director, Department of Medical Assistance Services, 600 E. Broad 
Street, Suite 1300, Richmond, VA 23119.
    Dear Mr. Finnerty: I am responding to your request for 
reconsideration of the decision to disapprove Virginia State Plan 
Amendment (SPA) 01-14. Virginia submitted SPA 01-14 on December 14, 
2001. The amendment would revise the State's payment methodology to 
provide for supplemental payments for inpatient and outpatient 
services furnished by non-state government owned or operated 
facilities.
    The issue is whether this SPA sets out a definite payment 
methodology for supplemental payments for inpatient and outpatient 
services furnished by non-state government owned or operated 
facilities in compliance with the requirements of the Centers for 
Medicare & Medicaid Services' (CMS) regulations at 42 CFR 430.10 and 
447.252(b). First, the methodology set out in the proposed plan 
amendment is contingent on unexplained factors including size 
criteria and Medicaid participation criteria that are not described, 
and the hospital's acceptance of an intergovernmental transfer 
agreement that is not described. As a result, the proposed state 
plan amendment does not ``comprehensively'' describe the state 
Medicaid program, and does not contain ``all information necessary 
for CMS to determine whether the plan can be approved to serve as a 
basis for Federal financial participation'' consistent with these 
regulatory requirements. Second, the State was on notice that CMS 
would review this proposed state plan amendment with heightened 
scrutiny because of CMS'' concern that the payment level was not 
consistent with efficiency, economy, and quality of care. During a 
portion of the period covered by this amendment, the methodology 
would result in total aggregate payments at the level of 150 percent 
of the amount that would be paid for the services under Medicare 
payment principles. In a State Medicaid Director's letter dated 
November 23, 2002, CMS informed states of the intention not to 
approve amendments submitted after the November 23, 2001, issuance 
of a notice of proposed rulemaking that would lower the permissible 
aggregate payment level from 150 percent to 100 percent of the 
amount that would be paid for the services under Medicare payment 
principles.
    Based on the reasoning set forth above, and after consultation 
with the Secretary as required under 42 CFR 430.15(c)(2), CMS 
disapproved Virginia SPA 01-14.
    I am scheduling a hearing on your request for reconsideration to 
be held on December 11, 2002, at 10 a.m., Suite 216, The Public 
Ledger Building, 150 S. Independence Mall West; Philadelphia, 
Pennsylvania 19106 to reconsider our decision to disapprove Virginia 
SPA 01-14.
    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 
hearing date that has been scheduled 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,
Thomas A. Scully.

    Authority: 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: October 11, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-26905 Filed 10-22-02; 8:45 am]
BILLING CODE 4120-03-P