[Federal Register Volume 68, Number 98 (Wednesday, May 21, 2003)]
[Notices]
[Pages 27815-27816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12698]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Notice of Hearing: Reconsideration of Disapproval of Arkansas 
(SPA) 02-17 State Plan Amendment

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

ACTION: Notice of hearing.

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SUMMARY: This notice announces an administrative hearing on June 25, 
2003, at 10 a.m., at the Centers for Medicare & Medicaid Services 
(CMS), Dallas Regional Office, 1301 Young Street, Room 1119; Dallas, 
Texas 75202.
    Closing Date: Requests to participate in the hearing as a party 
must be received by the presiding officer by June 5, 2003.

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 the decision to disapprove Arkansas State Plan 
Amendment (SPA) 02-17, which was submitted to the Centers for Medicare 
& Medicaid Services (CMS) on July 29, 2002. This amendment proposes to 
provide supplemental payments to physicians and other allied health 
professionals who provide services through Faculty Group Practices 
associated with the University of Arkansas School of Medicine. The 
supplemental payment would be equal to the difference between the 
existing fee schedule rates and Faculty Group Practices' charges. CMS 
issued its initial determination disapproving Arkansas SPA 02-17 on 
March 6, 2003.
    Arkansas timely requested reconsideration by letter dated April 14, 
2003. At issue is whether the State has demonstrated that this SPA is 
consistent with the requirements of section 1902 (a)(30)(A) of the 
Social Security Act (the Act). The CMS concluded that the information 
provided with this SPA was insufficient to document consistency with 
economy, efficiency, and quality of care. Arkansas indicated that no 
other major payers in the State pay these Faculty Group Practices at 
these levels; indeed, Arkansas indicated that the five largest private 
third-party payers pay less than half of these levels. Arkansas 
provided no documentation to show that the Faculty Group Practices have 
higher costs than other providers of the same type in the State. In the 
light of evidence, CMS found that the State had not established that it 
was consistent with economy or efficiency for Medicaid to pay twice the 
rate paid by other third-party insurers for the same services. 
Moreover, the annualized payment methodology proposed by the State is 
not a customary method for paying physicians and other allied health 
professionals. The methodology would make it difficult to track 
payments for specific services and would complicate auditing processes. 
In the initial decision, CMS also cited the complicated nature of this 
payment scheme and difficulty in tracking and auditing payments for 
services as a reason why the proposed payment methodology was not 
consistent with section 1902(a)(30)(A) of the Act.
    Section 1116 of 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 Centers for 
Medicare & Medicaid Services (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 Arkansas announcing an administrative hearing to 
reconsider the disapproval of the SPA reads as follows:

Mr. Kurt Knickrehm, Director
Arkansas Department of Human Services
Donaghey Plaza South
PO Box 1437, Slot S401
Little Rock, Arkansas 72203-1437

Dear Mr. Knickrehm:

    I am responding to your request for reconsideration of the 
decision to disapprove Arkansas State Plan Amendment (SPA ) 02-17, 
which was submitted to the Centers for Medicare & Medicaid Services 
(CMS) on July 29, 2002. This amendment proposes to provide 
supplemental payments to physicians and other allied health 
professionals who provide services through Faculty Group Practices 
associated with the University of Arkansas School of Medicine. The 
supplemental payment would be equal to the difference between the 
existing fee schedule rates and Faculty Group Practices' charges. 
The CMS issued its initial determination disapproving Arkansas SPA 
02-17 on March 6, 2003. Arkansas timely requested reconsideration by 
letter dated April 14, 2003.
    At issue is whether the State has demonstrated that this SPA is 
consistent with the requirements of section 1902(a)(30)(A) of the 
Social Security Act. The CMS concluded that the information provided 
with this SPA was insufficient to document consistency with economy, 
efficiency and quality of care. Arkansas indicated that no other 
major payers in the State pay these Faculty Group Practices at these 
levels; indeed, Arkansas indicated that the five largest private 
third-party payers pay less than half of these levels. Arkansas 
provided no documentation to show that the Faculty Group Practices 
have higher costs than other providers of the same type in the 
State. In the light of evidence,CMS found that the State had not 
established that it was consistent with economy or efficiency for 
Medicaid to pay twice the rate paid by other third-party insurers 
for the same services. Moreover, the annualized payment methodology 
proposed by the State is not a customary method for paying 
physicians and other allied health professionals. The methodology 
would make it difficult to track payments for specific services and 
would complicate auditing processes. In the initial decision, CMS 
also cited the complicated nature of this payment scheme and 
difficulty in tracking and auditing payments for services as a 
reason why the proposed payment methodology was not consistent with 
section 1902(a)(30)(A).
    This notice announces an administrative hearing on June 25, 
2003, at 10 a.m., Centers for Medicare & Medicaid Services (CMS), 
Dallas Regional Office, 1301 Young Street, Room 1119; Dallas, Texas 
75202.
    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.


[[Page 27816]]


    Sincerely,
    Thomas A. Scully.

(Sect. 1116 of the Social Security Act (42 U.S.C. section 1316); (42 
CFR 430.18))
(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. 03-12698 Filed 5-20-03; 8:45 am]
BILLING CODE 4120-01-P