[Federal Register Volume 69, Number 200 (Monday, October 18, 2004)]
[Notices]
[Pages 61386-61388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23252]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Notice of Hearing: Reconsideration of Disapproval of California's 
Medicaid State Plan Amendment 03-028B

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

ACTION: Notice of hearing.

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SUMMARY: This notice announces an administrative hearing on 
California's Medicaid State Plan Amendment (SPA) 03-28B to be held on 
December 2, 2004, 10 a.m., 75 Hawthorne Street; 4th Floor Conference 
Room, San Francisco, California 94105-3901 to reconsider our decision 
to disapprove SPA 03-028B.
    Closing Date: Requests to participate in the hearing as a party 
must be received by the presiding officer by November 2, 2004.

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

SUPPLEMENTARY INFORMATION: This notice announces an administrative 
hearing to reconsider our decision to disapprove California's Medicaid 
State Plan Amendment (SPA) 03-28B.
    California submitted SPA 03-28B on September 18, 2003. In this SPA, 
California proposed to provide targeted case management (TCM) services 
in several counties for two populations: persons on probation, and 
individuals with a public guardian. By letter dated July 6, 2004, the 
Centers for Medicare & Medicaid Services (CMS) disapproved the SPA.
    At issue in this reconsideration is whether SPA 03-28B is 
consistent with the requirements contained in sections 1902(a)(10) and 
1902(a)(23), of the Social Security Act (the Act), as described in more 
detail below. In general, CMS found that the SPA had three fundamental 
problems: (1) The proposed TCM services duplicate services that are 
integral components of the State's adult probation program and the 
State's public guardian program; (2) the amendment would result in 
charges to Medicaid for services available without charge to 
individuals on probation; and (3) the provider qualifications limit 
providers of services for these groups to the probation officers 
employed by the county probation departments and to court-appointed 
guardians under county public guardian agencies.
    More specifically, at issue is whether the SPA complies with the 
requirement in section 1902(a)(10) of the Act which authorizes State 
Medicaid plans to provide for ``medical assistance.'' In the definition 
of that term, at section 1905(a)(19) of the Act, case management 
services are authorized ``as defined in section 1915 (g)(2).'' That 
section defines case management as services that assist beneficiaries 
in gaining access to needed services. The Congressional Conference 
committee report accompanying Pub. L. 99-272, which added section 
1915(g) to the Act, emphasized that payment for case management 
services must not duplicate payments made to public agencies or private 
entities under other program authorities for the same purpose. CMS uses 
the term ``duplication of required coverage to refer to this situation. 
In this instance, Medicaid payment for services provided by the adult 
probation program and the public guardian program would duplicate 
payments under other programs that are the responsibility of the State 
government. Because the congressional definition of Medicaid TCM 
excluded duplicate coverage, CMS determined that the proposed case 
management services are not within the scope of the definition of 
``medical assistance'' that is authorized to be included in a State 
Medicaid plan by section 1902(a)(10).
    The CMS' reading of the term ``medical assistance'' to exclude 
``duplication of required coverage'' is also consistent with the 
language of section 8435 of Pub. L. 100-647, which states that the 
Medicaid case management benefit is not to be construed as to require 
the Secretary of Health and Human Services to make payment for case 
management services that are provided without charge to the users of 
such services. Approval of SPA 03-028B would be contrary to this 
provision, because the proposed adult population services are available 
without charge.
    In addition, at issue is whether the proposed SPA is consistent 
with the requirements at section 1902(a)(23) of the Act that a state 
plan must provide that beneficiaries may obtain services from any 
qualified entity or person who undertakes to provide such services. The 
proposed SPA restricts providers of

[[Page 61387]]

services to the two target groups in question, to probation officers 
employed by the county probation department and to court-appointed 
guardians. While states are free to set qualifications for providers, 
states must comply with Medicaid laws and regulations concerning 
freedom-of-choice at section 1902(a)(23) of the Act and the 
implementing regulation at 42 CFR 431.51. The State did not establish 
why it is consistent with those requirements to restrict providers to 
probation officers or public guardians. The State did not show why 
those providers are uniquely qualified to assist the target population 
nor did the State explain how beneficiaries would have access to 
qualified providers who do not work as a probation officer or public 
guardian. As a result, CMS found that the State did not demonstrate 
compliance with the requirements of section 1902(a)(23) and its 
implementing regulation.
    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. 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. 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 California SPA 03-
28B.
    The notice to California announcing an administrative hearing to 
reconsider the disapproval of its SPA reads as follows:

Mr. Stan Rosenstein,
Deputy Director, Department of Health Services,
MS 40900, P.O. Box 942732, Sacramento, CA 94231-7320.
    Dear Mr. Rosenstein:
    I am responding to your request for reconsideration of the 
decision to disapprove California State Plan Amendment (SPA) 03-28B, 
which the State submitted on September 18, 2003. In this SPA, 
California proposed to provide targeted case management (TCM) 
services in several counties for two populations, persons on 
probation and individuals with a public guardian. The Centers for 
Medicare & Medicaid Services (CMS) reviewed this proposal, and for 
the reasons set forth below, was unable to approve SPA 03-28B as 
submitted.
    At issue in this reconsideration is whether SPA 03-28B is 
consistent with the requirements contained in sections 1902(a)(10) 
and 1902(a)(23) of the Social Security Act (the Act), as described 
in more detail below. In general CMS found that the SPA has three 
fundamental problems: (1) The proposed TCM services duplicate 
services that are integral components of the State's adult probation 
program and the State's public guardian program; (2) the amendment 
would result in charges to Medicaid for services available without 
charge to individuals on probation; and (3) the provider 
qualifications limit providers of services for these groups to the 
probation officers employed by the county probation departments and 
to court-appointed guardians under county public guardian agencies.
    Section 1902(a)(10) of the Act authorizes state Medicaid plans 
to provide for ``medical assistance.'' In the definition of that 
term, at section 1905(a)(19) of the Act, case management services 
are authorized ``as defined in section 1915(g)(2).'' That section 
defines case management as services that assist beneficiaries in 
gaining access to needed services. The Congressional Conference 
committee report accompanying Pub. L. 99-272, which added section 
1915(g) to the Act, emphasized that payment for case management 
services must not duplicate payments made to public agencies or 
private entities under other program authorities for the same 
purpose.
    The CMS uses the term ``duplication of required coverage'' to 
refer to this situation, in order to distinguish it from 
circumstances in which two payments are actually made for the same 
claim. In this instance, Medicaid payment for services provided by 
the adult probation program and the public guardian program would 
duplicate payments under other programs that are the responsibility 
of the State government. Therefore, CMS determined that Medicaid 
funding is not available for case management for individuals in the 
adult probation or public guardian system because claiming such 
activities as Medicaid TCM would result in duplication of necessary 
coverage. Because the congressional definition of Medicaid TCM 
excluded duplicate coverage, CMS determined that the proposed case 
management services are not within the scope of the definition of 
``medical assistance'' that is authorized to be included in a state 
Medicaid plan by section 1902(a)(10).
    Congress further states in section 8435 of Pub. L. 100-647 that 
the Medicaid case management benefit was not to be construed as to 
require the Secretary of Health and Human Services to make payment 
for case management services that are provided without charge to the 
users of such services. Approval of SPA 03-028B would be contrary to 
this provision. The activities in question are key service and/or 
administrative activities of the State's adult probation program. 
Thus, CMS determined that the SPA cannot be approved because the 
adult population services are available without charge.
    The proposed SPA restricts providers of services to the two 
target groups in question, to probation officers employed by the 
county probation department and to court-appointed guardians. While 
states are free to set qualifications for providers, states must 
comply with Medicaid laws and regulations concerning freedom-of-
choice at section 1902(a)(23) of the Act and the implementing 
regulation at 42 CFR 431.51. The State did not establish why it is 
consistent with those requirements to restrict providers to 
probation officers or public guardians. The State did not show why 
those providers are uniquely qualified to assist the target 
population in gaining access to medical, educational, social, and 
other services. Nor did the State explain how beneficiaries would 
have access to qualified providers who do not work as a probation 
officer or public guardian. As a result, the State did not 
demonstrate compliance with the requirements of section 1902(a)(23) 
and its implementing regulation.
    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 California SPA 03-28B. This 
disapproval only applies to SPA 03-028B. The currently approved 
sections of the State Plan for these target groups will remain in 
effect. However, CMS would like to emphasize that providing Medicaid 
TCM to individuals in the adult probation or public guardian State 
systems is not consistent with CMS' interpretation of applicable 
laws, as noted above. To the extent that current plan provisions do 
so, CMS expects the State to revise its plan in order to come into 
compliance on this issue. Moreover, CMS may review State claims to 
determine if Federal Medicaid funding is appropriate when another 
program or entity is liable for payment.
    I am scheduling a hearing on your request for reconsideration to 
be held December 2, 2004, at 10 a.m., 4th Floor Conference Room, 75 
Hawthorne Street, San Francisco, California 94105-3901. 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 61388]]


 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: October 6, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 04-23252 Filed 10-15-04; 8:45 am]
BILLING CODE 4120-03-P