[Federal Register Volume 68, Number 98 (Wednesday, May 21, 2003)]
[Notices]
[Pages 27813-27815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12697]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Notice of Hearing: Reconsideration of Disapproval of Michigan 
State Plan Amendment (SPA) 02-021

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

ACTION: Notice of hearing.

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SUMMARY: This notice announces an administrative hearing on July 10, 
2003, at 10 a.m., at the Centers for Medicare & Medicaid Services 
(CMS), Chicago Regional Office, 233 North Michigan Avenue; Suite R5-5 
NW Minnesota; Chicago, Illinois 60601.
    Closing Date: Requests to participate in the hearing as a party 
must be filed with the presiding officer by June 5, 2003.

FOR FURTHER INFORMATION CONTACT: Kathleen Scully-Hayes, Presiding 
Officer, CMS, 2520 Lord Baltimore

[[Page 27814]]

Drive, Suite L, Baltimore, Maryland 21244-2670, Telephone: (410) 786-
2055.

SUPPLEMENTARY INFORMATION: This notice announces an administrative 
hearing to reconsider the decision to disapprove Michigan SPA 02-021, 
which was submitted to the Centers for Medicare & Medicaid Services 
(CMS) on December 23, 2002. This SPA was disapproved on February 14, 
2003. In this amendment, Michigan proposes to allow the imposition of 
prior authorization requirements in the Medicaid program on 
prescription drugs when the manufacturer of the drug does not offer 
rebates to two State-funded, non-Medicaid programs. The State-funded 
programs are the Children's Special Health Care Services program 
(CSHCS) and the State Medical program (SMP).
    At issue is whether CMS properly concluded as a basis for 
disapproving the amendment that: (1) The State had not demonstrated 
that its proposed prior authorization program would be consistent with 
simplicity of administration and the best interests of Medicaid 
recipients, as required by section 1902(a)(19) of the Social Security 
Act (the Act); and (2) the State had not demonstrated that its proposed 
prior authorization program would be consistent with efficiency, 
economy, or quality of care, as required by section 1902 (a)(30)(A) of 
the Act. In addition, Michigan contends that CMS does not have the 
authority to review the State's implementation of prior authorization 
requirements in the Medicaid program, other than for consistency with 
section 1927(d)(5) of the Act.
    As indicated in a letter to state Medicaid directors dated 
September 18, 2002, CMS stated that it would review proposed state plan 
amendments seeking to secure prescription drug benefits, rebates, or 
discounts for non-Medicaid populations for consistency with the goals 
and objectives of the Medicaid program. After review, CMS did not find 
the evidence presented by the State in support of this SPA demonstrated 
that its prior authorization program furthered Medicaid goals and 
objectives. The CMS concluded that Michigan failed to show that a 
significant proportion of beneficiaries in either the CSHCS or SMP 
programs would meet the requirements needed to become eligible for 
Medicaid if their pharmacy benefit was terminated. In light of the 
burden that prior authorization may impose on Medicaid beneficiaries 
and the absence of documented benefit to current or potential Medicaid 
eligibles, CMS determined that the State had failed to document that 
such prior authorization procedures would further the goals and 
objectives of the Medicaid program and thus be consistent with sections 
1902(a)(19) and 1902(a)(30) of the Act.
    Therefore, based on the reasoning above, and after consultation 
with the Secretary as required under 42 CFR 430.15 (c)(2), CMS 
disapproved Michigan SPA 02-021.
    Section 1116 of the Act and 42 CFR part 430 establish Departmental 
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.
    The notice to Michigan announcing an administrative hearing to 
reconsider the disapproval of its SPA reads as follows:

Janet Olszewski,
Director, Michigan Department of Community Health,
Lewis Cass Building,
320 South Walnut Street--Sixth Floor
Lansing, Michigan 48913

Dear Ms. Olszewski:

    I am responding to your request for reconsideration of the 
decision to disapprove Michigan State Plan Amendment (SPA) 02-021, 
which was submitted on December 23, 2002. This SPA was disapproved 
on February 14, 2003. In this amendment, Michigan proposes to allow 
the imposition of prior authorization requirements in the Medicaid 
program on prescription drugs when the manufacturer of the drug does 
not offer rebates to two State-funded, non-Medicaid programs. The 
State-funded programs are the Children's Special Health Care 
Services program (CSHCS) and the State Medical program (SMP).
    At issue is whether the Centers for Medicare & Medicaid Services 
(CMS) properly concluded as a basis for disapproving the amendment 
that: (1) The State had not demonstrated that its proposed prior 
authorization program would be consistent with simplicity of 
administration and the best interests of Medicaid recipients, as 
required by section 1902(a)(19) of the Social Security Act (the 
Act); and (2) the State had not demonstrated that its proposed prior 
authorization program would be consistent with efficiency, economy, 
or quality of care, as required by section 1902 (a)(30)(A). In 
addition, Michigan contends that CMS does not have the authority to 
review the State's implementation of prior authorization 
requirements in the Medicaid program, other than for consistency 
with section 1927(d)(5) of the Act.
    As indicated in a letter to state Medicaid directors dated 
September 18, 2002, CMS stated that it would review proposed state 
plan amendments seeking to secure prescription drug benefits, 
rebates, or discounts for non-Medicaid populations for consistency 
with the goals and objectives of the Medicaid program. After review, 
CMS did not find that the evidence presented by the State in support 
of this SPA demonstrated that its prior authorization program 
furthered Medicaid goals and objectives. The CMS concluded that 
Michigan failed to show that a significant proportion of 
beneficiaries in either the CSHCS or SMP programs would meet the 
requirements needed to become eligible for Medicaid if their 
pharmacy benefit was terminated. In light of the burden that prior 
authorization may impose on Medicaid beneficiaries and the absence 
of documented benefit to current or potential Medicaid eligibles, 
CMS determined that the State had failed to document that such prior 
authorization procedures would further the goals and objectives of 
the Medicaid program and thus be consistent with sections 
1902(a)(19) and 1902(a)(30) of the Act. 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 Michigan SPA 
02-021.
    I am scheduling a hearing on your request for reconsideration to 
be held on July 10, 2003, at 10 a.m., Centers for Medicare & 
Medicaid Services, Chicago Regional Office, 233 Michigan Avenue; 
Suite R5-5 NW Minnesota; Chicago, Illinois 60601.
    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.

(Sect. 1116 of the Social Security Act (42 U.S.C. section 1316); (42 
CFR 430.18))

[[Page 27815]]

(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid 
Assistance Program)

    Dated: May 12, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 03-12697 Filed 5-20-03; 8:45 am]
BILLING CODE 4120-01-P