[Federal Register Volume 69, Number 148 (Tuesday, August 3, 2004)]
[Notices]
[Pages 46549-46550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17578]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)

Centers for Medicare & Medicaid Services


Notice of Hearing: Reconsideration of Disapproval of Vermont 
State Plan Amendment (SPA) 03-015a

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 
August 25, 2004, at 10 a.m., JFK Federal Building, Room 2325, Boston, 
Massachusetts 02203-0003, to reconsider our decision to disapprove 
Vermont State Plan Amendment (SPA) 03-015a.

DATES: Requests to participate in the hearing as a party must be 
received by the presiding officer by August 18, 2004.

FOR FURTHER INFORMATION CONTACT: Kathleen Scully-Hayes, Presiding 
Officer, CMS, Lord Baltimore Drive, Mail Stop LB-23-20, Baltimore, 
Maryland 21244. Telephone: (410) 786-2055.

SUPPLEMENTARY INFORMATION: This notice announces an administrative 
hearing to reconsider our decision to disapprove Vermont State Plan 
Amendment (SPA) 03-015a, which Vermont submitted to the Centers for 
Medicare & Medicaid Services (CMS) on September 30, 2003. In SPA 03-
15a, Vermont proposes to establish State-only Medicaid supplemental 
rebate agreements under which pharmaceutical manufacturers would pay 
supplemental rebates to the State based on Medicaid utilization in the 
State, for the period from October 1, 2002, through June 30, 2003. The 
level of the supplemental rebates would also be based on a ``multi-
state pooling'' arrangement to take into account aggregate utilization 
levels among several participating states. The Centers for Medicare & 
Medicaid Services (CMS) reviewed this proposal and determined it was 
unable to approve SPA 03-015a for the reasons set forth below.
    At issue is whether the requested effective date of October 1, 
2002, is consistent with statutory and regulatory requirements. States 
receiving Federal Medicaid funding must have approved state plans that 
describe the nature and scope of the state Medicaid program and must 
fulfill the requirements for approval set forth in section 1902(a) of 
the Social Security Act (the Act) and pertinent regulations as set 
forth in 42 CFR 430.15(a). Federal regulations at 42 CFR 430.20(b) 
provide that the rules of 42 CFR 447.256 apply with respect to the 
effective date of a plan amendment that changes the state's payment 
methods and standards. Federal regulations at 42 CFR 447.256 provide 
that the effective date of such amendments may not be earlier than the 
first day of the calendar quarter in which an approvable plan is 
submitted.
    CMS concluded that the change proposed by Vermont amounted to a 
change in the State's payment methods and standards, and that the 
earliest approvable effective date would be the first day of the 
calendar quarter in which the SPA was submitted, or July 1, 2003. In a 
separate action, CMS approved SPA 03-15b, which authorized State-only 
Medicaid supplemental rebate agreements and participation in a multi-
state pooling arrangement effective July 1, 2003.
    In addition, section 1902(a)(19) of the Act requires that care and 
services under the plan be provided in a manner

[[Page 46550]]

consistent with simplicity of administration and the best interests of 
recipients. CMS was concerned that approval of a retroactive effective 
date could, in some circumstances, adversely impact beneficiary access 
and would be inconsistent with these provisions.
    Based on the above, and after consultation with the Secretary of 
the Department of Health and Human Services as required under Federal 
regulations at 42 CFR 430.15(c)(2), CMS disapproved Vermont SPA 03-
015a.
    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 Vermont announcing an administrative hearing to 
reconsider the disapproval of its SPA reads as follows:

Mr. Charles P. Smith, Secretary, Vermont Agency of Human Services 
103 South Main Street, Waterbury, VT 05671-0204.

    Dear Mr. Smith: I am responding to your request for 
reconsideration of the decision to disapprove Vermont State Plan 
Amendment (SPA) 03-015a, which Vermont submitted on September 30, 
2003. In SPA 03-15a, Vermont proposes to establish State-only 
Medicaid supplemental rebate agreements under which pharmaceutical 
manufacturers would pay supplemental rebates to the State based on 
Medicaid utilization in the State, for the period from October 1, 
2002, through June 30, 2003. The level of the supplemental rebates 
would also be based on a ``multi-state pooling'' arrangement to take 
into account aggregate utilization levels among several 
participating states. The Centers for Medicare & Medicaid Services 
(CMS) reviewed this proposal and was unable to approve SPA 03-015a 
for the reasons set forth below.
    At issue is whether the requested effective date of October 1, 
2002, is consistent with statutory and regulatory requirements. 
States receiving Federal Medicaid funding must have approved state 
plans that describe the nature and scope of the state Medicaid 
program and must fulfill the requirements for approval as set forth 
in section 1902(a) of the Social Security Act (the Act) and 
pertinent regulations as set forth in 42 CFR 430.15(a). Federal 
regulations at 42 CFR 430.20(b) provide that the rules of 42 CFR 
447.256 apply with respect to the effective date of a plan amendment 
that changes the state's payment methods and standards. Federal 
regulations at 42 CFR 447.256 provide that the effective date of 
such amendments may not be earlier than the first day of the 
calendar quarter in which an approvable plan is submitted.
    CMS concluded that the change proposed by Vermont amounted to a 
change in the State's payment methods and standards, and that the 
earliest approvable effective date would be the first day of the 
calendar quarter in which the SPA was submitted, or July 1, 2003. In 
a separate action, CMS approved SPA 03-15b, which authorized State-
only Medicaid supplemental rebate agreements and participation in a 
multi-state pooling arrangement effective July 1, 2003.
    In addition, section 1902(a)(19) of the Act requires that care 
and services under the plan be provided in a manner consistent with 
simplicity of administration and the best interests of recipients. 
CMS was concerned that approval of a retroactive effective date 
could, in some circumstances, adversely impact beneficiary access 
and would be inconsistent with these provisions.
    Based on the above, and after consultation with the Secretary of 
the Department of Health and Human Services as required under 
Federal regulations at 42 CFR 430.15(c)(2), CMS disapproved Vermont 
SPA 03-015a.
    I am scheduling a hearing to be held on August 25, 2004, at 
10:00 a.m., JFK Federal Building, Room 2325, Boston, Massachusetts 
02203-0003, to reconsider our decision to disapprove Vermont SPA 03-
015a.
    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 that 
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,
Mark B. McClellan, M.D., Ph.D.

    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: July 21, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 04-17578 Filed 8-2-04; 8:45 am]
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