[Federal Register Volume 68, Number 156 (Wednesday, August 13, 2003)]
[Notices]
[Pages 48392-48393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20672]


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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 (SPA) 02-09

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

ACTION: Notice of hearing.

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SUMMARY: This notice announces an administrative hearing on September 
25, 2003, 10 a.m., Room 217; Second Floor; Suite 216, The Public Ledger 
Building; 150 South Independence Mall West; Philadelphia, Pennsylvania 
19106 to reconsider our decision to disapprove Virginia State Plan 
Amendment (SPA) 02-09.

Closing Date: Requests to participate in the hearing as a party must be 
received by the presiding officer by August 28, 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, dated June 16, 2003, to disapprove 
Virginia State Plan Amendment (SPA) 02-09. This SPA proposes to provide 
supplemental payment for services rendered by a newly created class of 
physicians and other health professionals who are State employees 
affiliated with a State academic medical center. There are two 
supplemental payment methodologies described in the SPA. The first, 
effective July 2, 2002, until August 12, 2002, would provide payment 
equal to the difference between the amount indicated on the Medical 
Assistance (Medicaid) fee schedule applicable to other providers of the 
same type, and the lower of Medicare-allowed amount or billed charges. 
The second method, effective August 13, 2002, would be equal to the 
difference between the Medicaid fee schedule and providers' usual and 
customary charges. There is no ceiling on charges during the second 
period.
    At issue is whether the State has documented that its proposed 
supplemental payment methodology is consistent with efficiency, 
economy, and quality of care when the supplemental payment methodology: 
(1) Is not justified by any increased costs to the State to ensure 
access to services for Medicaid beneficiaries; (2) pays significantly 
more than other third party payers for the same services; (3) is not a 
usual and customary payment methodology; and (4) would unduly 
complicate tracking and audit processes.
    Section 1902 (a)(30)(A) of the Social Security Act (the Act) 
requires that states have methods and procedures to ensure that 
payments are consistent with efficiency, economy, and quality of care. 
The State was unable to document that other third party payers pay an 
amount equal to billed charges. In addition, the State did not document 
that the providers affected by this amendment have higher costs than 
other providers of the same type in the State, nor did it demonstrate 
that any portion of the increased payment would be required to pay 
actual costs incurred in order to ensure access to the Medicaid 
services at issue. Virginia also failed to justify why the supplemental 
payment is warranted for public providers only.
    The supplemental payment methodology proposed by the State is

[[Page 48393]]

not a customary method for paying physicians and other health 
professionals. The methodology would make it difficult to track 
payments for specific services and would complicate auditing processes.
    For the above-stated reasons, and after consulting with the 
Secretary as required by 42 CFR 430.15(c)(2), CMS disapproved Virginia 
SPA 02-09 because CMS concluded that the State had failed to 
demonstrate that it fulfilled the conditions as specified in section 
1902(a)(30)(A) of the Act to ensure that payments are ``consistent with 
efficiency, economy, and quality of care.''
    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. 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 Virginia announcing an administrative hearing to 
reconsider the disapproval of its SPA reads as follows:

Mr. Patrick W. Finnerty, Director,
Virginia Department of Medical Assistance Services,
600 East Broad Street, Suite 1300,
Richmond, VA 23119.
Dear Mr. Finnerty:
    I am responding to your request for reconsideration of my 
decision, dated June 16, 2003, to disapprove Virginia State Plan 
Amendment (SPA) 02-09. This SPA proposes to provide supplemental 
payment for services rendered by a newly created class of physicians 
and other health professionals who are State employees affiliated 
with a State academic medical center. There are two supplemental 
payment methodologies described in the SPA. The first, effective 
July 2, 2002, until August 12, 2002, would provide payment equal to 
the difference between the amount indicated on the Medical 
Assistance (Medicaid) fee schedule applicable to other providers of 
the same type, and the lower of Medicare-allowed amount or billed 
charges. The second method, effective August 13, 2002, would be 
equal to the difference between the Medicaid fee schedule and 
providers' usual and customary charges. There is no ceiling on 
charges during the second period.
    At issue is whether the State has documented that its proposed 
supplemental payment methodology is consistent with efficiency, 
economy, and quality of care when the supplemental payment 
methodology: (1) Is not justified by any increased costs to the 
State to ensure access to services for Medicaid beneficiaries; (2) 
pays significantly more than other third party payers for the same 
services; (3) is not a usual and customary payment methodology; and 
(4) would unduly complicate tracking and audit processes.
    Section 1902(a)(30)(A) of the Social Security Act (the Act) 
requires that states have methods and procedures to ensure that 
payments are consistent with efficiency, economy, and quality of 
care. The State was unable to document that other third party payers 
pay an amount equal to billed charges. In addition, the State did 
not document that the providers affected by this amendment have 
higher costs than other providers of the same type in the State, nor 
did it demonstrate that any portion of the increased payment would 
be required to pay actual costs incurred in order to ensure access 
to the Medicaid services at issue. Virginia also failed to justify 
why the supplemental payment is warranted for public providers only.
    The supplemental payment methodology proposed by the State is 
not a customary method for paying physicians and other health 
professionals. The methodology would make it difficult to track 
payments for specific services and would complicate auditing 
processes.
    For the above stated reasons, and after consulting with the 
Secretary as required by 42 CFR 430.15(c)(2), CMS disapproved 
Virginia SPA 02-09 because CMS concluded that the State had failed 
to demonstrate that it fulfilled the conditions as specified in 
section 1902(a)(30)(A) of the Act to ensure that payments are 
``consistent with efficiency, economy, and quality of care.'' 
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 02-09.
    I am scheduling a hearing on your request for reconsideration to 
be held on September 25, 2003, at 10 a.m., Room 217; Second Floor; 
Suite 216; The Public Ledger Building; 150 South Independence Mall 
West; Philadelphia, Pennsylvania 19106 to reconsider our decision to 
disapprove Virginia SPA 02-09. 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.

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

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

    Dated: July 28, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 03-20672 Filed 8-12-03; 8:45 am]
BILLING CODE 4120-03-P