[Federal Register Volume 68, Number 163 (Friday, August 22, 2003)]
[Notices]
[Pages 50790-50793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21440]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2136-FN]
RIN 0938-AL79


Medicaid Program; State Allotments for Payment of Medicare Part B 
Premiums for Qualifying Individuals: Federal Fiscal Year 2002

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

ACTION: Final notice.

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SUMMARY: In this notice, we are adopting as final the proposed 
expenditures allotted under sections 1902(a)(10)(E)(iv)(I) and (II) of 
the Social Security Act (the Act) to participating State agencies to 
pay all, or some portion of, Medicare Part B premium costs for a 
specified category of eligible low-income Medicare beneficiaries called 
qualifying individuals (QIs) during Federal fiscal year 2002. The 
proposed notice announcing the update was published in the August 30, 
2002 Federal Register. Federal fiscal year 2002 is the final year that 
these allotments are authorized under the Act. However, the Congress 
has extended funding at the same level for one group of QIs for fiscal 
year 2003.

EFFECTIVE DATE: This final notice is effective on October 21, 2003.

FOR FURTHER INFORMATION CONTACT: Robert Nakielny, (410) 786-4466.

I. Background

A. Before the Balanced Budget Act of 1997

    Before enactment of the Balanced Budget Act of 1997 (BBA), section 
1902(a)(10)(E) of the Social Security Act specified that State Medicaid 
plans must provide Medicare cost-sharing for three groups of eligible 
low-income Medicare beneficiaries. These three groups include: 
qualified Medicare beneficiaries (QMBs), specified low-income Medicare 
beneficiaries (SLMBs), and qualified disabled and working individuals 
(QDWIs).
    A QMB is an individual entitled to Medicare Part A (Hospital 
Insurance) with an income that falls at or below the Federal poverty 
level and resources below $4,000 for an individual and $6,000 for a 
couple. An SLMB is an individual who meets the QMB criteria, except 
that his or her income is between a State-established level (at or 
below the Federal poverty level) and 120 percent of the Federal poverty 
level. A QDWI is an individual who is entitled to enroll in Medicare 
Part A, whose income does not exceed 200 percent of the Federal poverty 
level for a family of the size involved, whose resources do not exceed 
twice the amount allowed under the Supplementary Security Income 
program, and who is not otherwise eligible for Medicaid.
    The definition of Medicare cost-sharing at section 1905(p)(3) of 
the Act includes payment for Medicare premiums, although QDWIs only 
qualify to have Medicaid pay their Medicare Part A premiums, and SLMBs 
only qualify to have Medicaid pay their Medicare Part B premiums.

[[Page 50791]]

B. After Enactment of the Balanced Budget Act of 1997

    Section 4732 of the BBA amended section 1902(a)(10)(E) of the Act 
to require that States provide for Medicaid payment of all, or a 
portion of, Medicare Part B (Supplementary Medical Insurance) premiums, 
during the period beginning January 1998 through December 2002, for 
selected members of two eligibility groups of low-income Medicare 
beneficiaries, referred to as qualifying individuals (QIs).
    Under section 1902(a)(10)(E)(iv)(I) of the Act, State agencies are 
required to pay the full amount of the Medicare Part B premium for 
selected QIs who would be QMBs except that their income level is at 
least 120 percent but less than 135 percent of the Federal poverty 
level for a family of the size involved. These individuals cannot 
otherwise be eligible for medical assistance under the approved State 
Medicaid plan.
    The second group of QIs, under section 1902(a)(10)(E)(iv)(II) of 
the Act, includes Medicare beneficiaries who would be QMBs except that 
their income is at least 135 percent but less than 175 percent of the 
Federal poverty level for a family of the size involved. These QIs may 
not be otherwise eligible for Medicaid under the approved State plan, 
but are eligible for a portion of Medicare cost-sharing consisting only 
of a percentage of the increase in the Medicare Part B premium 
attributable to the shift of Medicare home health coverage from Part A 
to Part B (as provided in section 4611 of the BBA).
    Section 4732(c) of the BBA also added section 1933 of the Act, 
which specifies the provisions for State coverage of the Medicare cost-
sharing for additional low-income Medicare beneficiaries.
    Section 1933(a) of the Act specifies that a State agency must 
provide, through a State plan amendment, for medical assistance to pay 
for the cost of Medicare cost-sharing on behalf of QIs who are selected 
to receive assistance.
    Section 1933(b) of the Act sets forth the rules that State agencies 
must follow in selecting QIs and providing payment for Medicare Part B 
premiums. Specifically, the State agency must permit all QIs to apply 
for assistance and must select individuals on a first-come, first-
served basis in the order in which they apply.
    Section 1933(c) of the Act limits the total amount of Federal funds 
available for payment of Part B premiums each fiscal year and specifies 
the formula to be used to determine an allotment for each State from 
this total amount. For State agencies that execute a State plan 
amendment in accordance with section 1933(a) of the Act, a total of 
$1.5 billion was allocated over 5 years as follows: $200 million in FY 
1998; $250 million in FY 1999; $300 million in FY 2000; $350 million in 
FY 2001; and $400 million in FY 2002.
    The Federal matching rate for Medicaid payment of Medicare Part B 
premiums for QIs is 100 percent for expenditures up to the amount of 
the State's allotment. No Federal matching funds are available for 
expenditures in excess of the State's allotment amount. Administrative 
expenses associated with the payment of Medicare Part B premiums for 
QIs remain at the 50 percent matching level and may not be taken from 
the State's allotment.
    The amount available for each fiscal year was allocated among 
States according to the formula set forth in section 1933(c)(2) of the 
Act.

II. Provisions of the Proposed Notice

    The August 30, 2002 (67 FR 55851) proposed notice announced the 
proposed allotments that were made available to individual States for 
Federal fiscal year 2002 for the Medicaid payment of Medicare Part B 
premiums for QIs identified under sections 1902(a)(10)(E)(iv)(I) and 
(II) of the Act. Specifically, the Federal fiscal year 2002 allotments 
have been calculated as follows:

AT = Total amount to be allocated
M1i= 3-year average of the number of Medicare beneficiaries 
in State i who are not enrolled in Medicaid and whose incomes are at 
least 120 percent but less than 135 percent of Federal poverty line
M2i = 3-year average of the number of Medicare beneficiaries 
in State i who are not enrolled in Medicaid and whose incomes are at 
least 135 percent but less than 175 percent of Federal poverty line.

    Then, the allotment reserved for State i is determined by the 
following formula:
[GRAPHIC] [TIFF OMITTED] TN22AU03.000

    We note that the formula used to calculate these allotments is the 
same we have used since 1998 for calculating the annual QI allotments. 
In applying the formula for the allotments presented in this document, 
we have used the latest data available to us as of August 30, 2002, the 
date we published our proposed allotments for Fiscal Year 2002.

           FY 2002 State Allotments for Payment of Part B Premiums Under Sec. 4732 of the BBA of 1997
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                                                                                                   State FY 2002
              State                  (a) M1\1\       (b) M2\2\     (c) 2 x (a) +  State Share of    allocation
                                                                        (b)             (c)           ($000)
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AK..............................               1               3               5           0.08%             321
AL..............................              25              68             118            1.90           7,584
AR..............................              23              46              92            1.48           5,913
AZ..............................              20              63             103            1.65           6,620
CA..............................             114             307             535            8.60          34,383
CO..............................              11              37              59            0.95           3,792
CT..............................              11              55              77            1.24           4,949
DC..............................               3               5              11            0.18             707
DE..............................               5              10              20            0.32           1,285
FL..............................             114             249             477            7.66          30,656
GA..............................              31              69             131            2.10           8,419
HI..............................               3              13              19            0.31           1,221
IA..............................              20              49              89            1.43           5,720
ID..............................               7              18              32            0.51           2,057
IL..............................              38             138             214            3.44          13,753
IN..............................              46              88             180            2.89          11,568
KS..............................              12              33              57            0.92           3,663
KY..............................              19              65             103            1.65           6,620

[[Page 50792]]

 
LA..............................              27              57             111            1.78           7,134
MA..............................              40              85             165            2.65          10,604
MD..............................              26              49             101            1.62           6,491
ME..............................               7              23              37            0.59           2,378
MI..............................              42             127             211            3.39          13,560
MN..............................              27              46             100            1.61           6,427
MO..............................              29              60             118            1.90           7,584
MS..............................              17              44              78            1.25           5,013
MT..............................               5              11              21            0.34           1,350
NC..............................              49              89             187            3.00          12,018
ND..............................               5              13              23            0.37           1,478
NE..............................               9              34              52            0.84           3,342
NH..............................               3              14              20            0.32           1,285
NJ..............................              35             109             179            2.88          11,504
NM..............................              11              28              50            0.80           3,213
NV..............................               7              23              37            0.59           2,378
NY..............................              92             233             417            6.70          26,799
OH..............................              52             167             271            4.35          17,416
OK..............................              14              65              93            1.49           5,977
OR..............................              15              32              62            1.00           3,985
PA..............................              81             187             349            5.61          22,429
RI..............................               7              13              27            0.43           1,735
SC..............................              34              58             126            2.02           8,098
SD..............................               4              13              21            0.34           1,350
TN..............................              37              61             135            2.17           8,676
TX..............................              82             218             382            6.14          24,550
UT..............................               7              16              30            0.48           1,928
VA..............................              45              83             173            2.78          11,118
VT..............................               3               8              14            0.22             900
WA..............................              21              56              98            1.57           6,298
WI..............................              24              87             135            2.17           8,676
WV..............................              11              44              66            1.06           4,242
WY..............................               3               7              13            0.21             835
                                 -----------------
    Total.......................            1374            3476            6224          100.00       $400,000
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\1\ Three-year average (1999-2001) of number (000) of Medicare beneficiaries in State who are not enrolled in
  Medicaid but whose incomes are at least 120% but less than 135% of the Federal Poverty Level (FPL).
\2\ Three-year average (1999-2001) of number (000) of Medicare beneficiaries in State who are not enrolled in
  Medicaid but whose incomes are at least 135% but less than 175% of the Federal Poverty Level (FPL).

III. Analysis of and Responses to Public Comments and Provisions of the 
Final Notice

    We received no public comments on the August 30, 2002 Federal 
Register proposed notice. We are adopting the provisions of the 
proposed notice as final.

IV. Regulatory Impact Statement

    We have examined the impacts of this final notice as required by 
Executive Order 12866 (September 1993, Regulatory planning and review), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of 
1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year).
    We have determined this notice is not a major rule because we are 
simply giving notice of FY 2002 allotments that were available to 
States of up to $400 million for a specialized category of low-income 
Medicare beneficiaries. We note that these funds were already budgeted 
and expended. In fact, State expenditures claimed for fiscal year 2002 
were less than 25 percent of the total amount allotted, which is below 
the $100 million threshold for economically significant rulemaking 
under Executive Order 12866. Therefore, consistent with Executive Order 
12866, we are not providing an impact analysis.
    The RFA requires agencies to analyze options for regulatory relief 
for small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity.
    This final notice will allocate, among the States, Federal funds to 
provide Medicaid payment for Medicare Part B premiums for QIs. The 
total amount of Federal funds available during a Federal fiscal year 
and the formula for determining individual State allotments are 
specified in the law. Because the formula for determination of State

[[Page 50793]]

allotments is specified in the statute, there were no other options to 
be considered. Therefore, we have applied the statutory formula for the 
State allotments except for the use of specified data. Because the data 
specified in the law were not available, we have used comparable data 
from the United States Census Bureau on the number of possible QIs in 
the States, as described in detail in the January 26, 1998 Federal 
Register. Since the statutory formula calls for an estimate of 
individuals who could qualify for QI status rather than the number of 
individuals who actually have that status, the exact numbers of those 
individuals will always be uncertain. These new allotments for FY 2002 
incorporated the latest data from the United States Census Bureau from 
1999 to 2001, as specified in the footnotes to the preceding table.
    We believe that announcing the final allocations in this notice 
will have a positive effect on States and individuals. Federal funding 
at the 100 percent matching rate was available for Medicare Part B 
premiums (or for a portion of those premiums) for QIs.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside a Metropolitan 
Statistical Area and has fewer than 100 beds.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or any the private 
sector, of $110 million. This final notice does not mandate expenditure 
by State, local or tribal governments in the aggregate or the private 
sector of $110 million.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications.
    Because this final notice provides notice of funding ceilings, as 
determined under the statute, we have determined that this final notice 
will not significantly affect the rights, roles, and responsibilities 
of States.
    We are not preparing analyses for either the RFA or section 1102(b) 
of the Act, because we have determined, and we certify, that this final 
notice will not have a significant economic impact on a substantial 
number of small entities or a significant impact on the operations of a 
substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
final notice was reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: April 18, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: May 13, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-21440 Filed 8-21-03; 8:45 am]
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