[Federal Register Volume 70, Number 157 (Tuesday, August 16, 2005)]
[Notices]
[Pages 48155-48157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-16304]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Notice of Hearing: Reconsideration of Disapproval of Maryland 
State Plan Amendment (05-06)

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 
September 15, 2005, at 12 noon, in the Virginia Room 229, 150 S. 
Independence Mall, West, Suite 216, Philadelphia, Pennsylvania 19106, 
to reconsider our decision to disapprove Maryland's State Plan 
Amendment (SPA) 05-06.

[[Page 48156]]


DATES: Requests to participate in the hearing as a party must be 
received by the presiding officer by August 31, 2005.

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 CMS' decision to disapprove Maryland State plan 
amendment (SPA) 05-06, which was submitted on January 25, 2005.
    The amendment seeks approval to place what the State believes to be 
reasonable limits on the amounts of incurred necessary medical and 
remedial care expenses which must be deducted from a nursing facility 
resident's income under the post-eligibility treatment of income 
process.
    Section 1902(r)(1)(A) of the Social Security Act (the Act) requires 
States to take into account, under the post-eligibility process, 
amounts for incurred medical and remedial care expenses that are not 
subject to payment by a third party. Section 1902(r)(1)(A)(ii) of the 
Act permits States to place ``reasonable'' limits on the amounts of 
necessary medical and remedial care expenses recognized under State law 
but not covered under the State plan. However, those reasonable limits 
must ensure nursing home residents are able to use their own funds to 
purchase necessary medical or remedial care not covered, i.e., not paid 
for, by the State Medicaid program.
    The SPA 05-06 proposes to limit the deduction of medical expenses 
to those incurred only during a period of eligibility for Medicaid. 
Thus, an individual who incurred medical expenses during the 3-month 
period prior to the date of application would not have any protection 
under the post-eligibility calculation for medical expenses incurred 
during that period unless he or she were determined to be eligible 
during that period.
    In discussions with State Medicaid program staff, we confirmed this 
is the intent of the proposed amendment. While we believe some 
limitations imposed on the age of an incurred expense could be 
considered reasonable, we do not believe it would be reasonable for a 
State to exclude from post-eligibility protection an incurred medical 
expense that could be deducted from a person's income under the 
medically needy spenddown process. While the medically needy spenddown 
rules in Federal regulations at 42 CFR 435.831(g)(2) permit States to 
exclude expenses incurred earlier than 3 months before the month of 
application, Maryland proposes to only permit deduction under its post-
eligibility process for expenses incurred while an individual is 
actually eligible for Medicaid.
    The State's limitation would result in an individual being able to 
use certain incurred medical expenses to establish eligibility for 
Medicaid, but not being able to deduct those same expenses under the 
post-eligibility process. While the statue permits the State to 
establish reasonable limits on the amount of non-covered expenses, we 
do not believe the limit is reasonable if the result were to deny the 
individual the ability to pay for a non-covered expense used to 
establish eligibility during a budget period.
    The intent of section 1902(r)(1) of the Act is to afford an 
institutionalized individual with income the ability to actually pay 
non-covered medical expenses for medical and remedial care. Section 
1902(r)(1) of the Act was added to the Medicaid statute by the Medicare 
Catastrophic Coverage Act of 1988. The Conference Report explains it 
was enacted to reinstate policies set forth previously in Medicaid 
regulations before they were revised by the Department of Health and 
Human Services in February 1988. Under that revised regulation, 
Maryland would have had the authority to implement the limits it 
proposes in SPA 05-06. However, by enacting section 1902(r)(1) of the 
Act, Congress specifically rejected that approach.
    Moreover, by not protecting income to pay for non-covered expenses 
which were used to establish eligibility under the medically needy 
spenddown, the State's proposed amendment undercuts the Medicaid 
statute's purpose of requiring States to deduct incurred expenses under 
the spenddown process. To the extent that Maryland's amendment fails to 
protect income to enable the individual to actually pay for these 
incurred expenses, we view the State's proposed limit as not being 
reasonable. As a result, we believe the limit does not meet the 
requirements of section 1902(a)(17) of the Act, as refined by section 
1902(r)(1) of the Act. For individuals whose post-eligibility 
calculation is determined using the spousal impoverishment rules, 
specified at section 1924 of the Act and refined by section 1902(r)(1) 
of the Act, we believe the limit does not meet the requirements of 
section 1902(a)(51) of the Act, which requires the State plan to meet 
the requirements of section 1924 of the Act.
    The issues to be considered during the hearing are whether the 
amendment's limit violates the requirements of sections 1902(a)(17) and 
1902(a)(51) of the Act by imposing an unreasonable limit on expenses 
for medical and remedial care which will be protected under the post-
eligibility process.
    Section 1116 of the Act and Federal regulations at 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 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 in Federal regulations 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 in Federal regulations 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 Federal regulations 
at 42 CFR 430.15(c)(2), CMS disapproved Maryland SPA 05-06. The notice 
to Maryland announcing an administrative hearing to reconsider the 
disapproval of its SPA reads as follows:

Mr. Joel L. Tornari,
Assistant Attorney General, Department of Health and Mental 
Hygiene,300 W. Preston Street, Suite 302, Baltimore, MD 21201

    Dear Mr. Tornari: I am responding to your request for 
reconsideration of the decision to disapprove Maryland State plan 
amendment (SPA) 05-06, which was submitted on January 25, 2005.
    In SPA 05-06, Maryland seeks approval to place what the State 
believes to be reasonable limits on the amounts of incurred 
necessary medical and remedial care expenses which must be deducted 
from a nursing facility resident's income under the post-eligibility 
treatment of income process.
    Section 1902(r)(1)(A) of the Social Security Act (the Act) 
requires States to take into account, under the post-eligibility 
process, amounts for incurred medical and remedial care expenses 
that are not subject to payment by a third party. Section 
1902(r)(1)(A)(ii) of the Act permits States to place ``reasonable''

[[Page 48157]]

limits on the amounts of necessary medical and remedial care 
expenses recognized under State law but not covered under the State 
plan. However, those reasonable limits must ensure that nursing home 
residents are able to use their own funds to purchase necessary 
medical or remedial care not covered; i.e., not paid for, by the 
State Medicaid program.
    The SPA 05-06 proposes to limit the deduction of medical 
expenses to those incurred only during a period of eligibility for 
Medicaid. Thus, an individual who incurred medical expenses during 
the 3-month period prior to the date of application would not have 
any protection under the post-eligibility calculation for medical 
expenses incurred during that period unless he or she were 
determined to be eligible during that period.
    In discussions with State Medicaid program staff, we confirmed 
this is the intent of the proposed amendment. While we believe some 
limitations imposed on the age of an incurred expense could be 
considered reasonable, we do not believe it would be reasonable for 
a State to exclude from post-eligibility protection an incurred 
medical expense that could be deducted from a person's income under 
the medically needy spenddown process. While the medically needy 
spenddown rules in Federal regulations at 42 CFR 435.831(g)(2) 
permit States to exclude expenses incurred earlier than 3 months 
before the month of application, Maryland proposes to only permit 
deduction under its post-eligibility process for expenses incurred 
while an individual is actually eligible for Medicaid.
    The State's limitation would result in an individual being able 
to use certain incurred medical expenses to establish eligibility 
for Medicaid, but not being able to deduct those same expenses under 
the post-eligibility process. While the statute permits the State to 
establish reasonable limits on the amount of non-covered expenses, 
we do not believe the limit is reasonable if the result were to deny 
the individual the ability to pay for a non-covered expense used to 
establish eligibility during a budget period.
    The intent of section 1902(r)(1) of the Act is to afford an 
institutionalized individual with income the ability to actually pay 
non-covered medical expenses for medical and remedial care. Section 
1902(r)(1) of the Act was added to the Medicaid statute by the 
Medicare Catastrophic Coverage Act of 1988. The Conference Report 
explains it was enacted to reinstate policies set forth previously 
in Medicaid regulations before they were revised by the Department 
of Health and Human Services in February 1988. Under that revised 
regulation, Maryland would have had the authority to implement the 
limits it proposes in SPA 05-06. However, by enacting section 
1902(r)(1) of the Act, Congress specifically rejected that approach.
    Moreover, by not protecting income to pay for non-covered 
expenses which were used to establish eligibility under the 
medically needy spenddown, the State's proposed amendment undercuts 
the Medicaid statute's purpose of requiring States to deduct 
incurred expenses under the spenddown process. To the extent that 
Maryland's amendment fails to protect income to enable the 
individual to actually pay for these incurred expenses, we view the 
State's proposed limit as not being reasonable. As a result, we 
believe the limit does not meet the requirements of section 
1902(a)(17) of the Act, as refined by section 1902(r)(1) of the Act. 
For individuals whose post-eligibility calculation is determined 
using the spousal impoverishment rules, specified at section 1924 of 
the Act and refined by section 1902(r)(1) of the Act, we believe the 
limit does not meet the requirements of section 1902(a)(51) of the 
Act, which requires the State plan to meet the requirements of 
section 1924 of the Act.
    Based on the reasoning set forth above, and after consulting 
with the Secretary as required by Federal regulations at 42 CFR 
430.15(c)(2), the Centers for Medicare & Medicaid Services (CMS) 
disapproved Maryland Medicaid SPA 05-06.
    I am scheduling a hearing to be held on September 15, 2005, at 
12:00 Noon in CMS'' Philadelphia Regional Office, in the Virginia 
Room 229;150 S. Independence Mall, West; Suite 216; Philadelphia, 
Pennsylvania 19106, to reconsider our decision to disapprove 
Maryland's SPA 05-06. 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.
    The issues to be considered during the hearing are whether the 
amendment's limit violates the requirements of sections 1902(a)(17) 
and 1902(a)(51) of the Act by imposing an unreasonable limit on 
expenses for medical and remedial care which will be protected under 
the post-eligibility process.
    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,

    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 19, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 05-16304 Filed 8-12-05; 1:32 pm]
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