[Federal Register Volume 71, Number 82 (Friday, April 28, 2006)]
[Rules and Regulations]
[Pages 25085-25092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3981]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 433

[CMS-2231-IFC]
RIN 0938-AO31


Medicaid Program; State Allotments for Payment of Medicare Part B 
Premiums for Qualifying Individuals: Federal Fiscal Year 2006

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

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule with comment period sets forth the 
methodology and process used to compute and issue each State's 
allotment for fiscal year (FY) 2006 and FY 2007 that is available to 
pay Medicare Part B premiums for qualifying individuals. It also 
provides the preliminary FY 2006 allotments determined under this 
methodology.

DATES: Effective date: These regulations are effective October 1, 2005 
for allotments for payment of Medicare Part B premiums from the 
allocations for FY 2006 and FY 2007.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on June 27, 2006.

ADDRESSES: In commenting, please refer to file code CMS-2231-IFC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to http://www.cms.hhs.gov/regulations/eRulemaking. Click on the link ``Submit electronic comments on CMS 
regulations with an open comment period.'' (Attachments should be in 
Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft 
Word.)
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-2231-IFC, P.O. Box 8011, Baltimore, MD 21244-8011.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-2231-IFC, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-7195 in advance to schedule your arrival 
with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this rule to assist us in fully considering issues 
and developing policies. You can assist us by referencing the file code 
CMS-2231-IFC and the specific ``issue identifier'' that precedes the 
section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.cms.hhs.gov/regulations/eRulemaking. Click on the link ``Electronic 
Comments on CMS Regulations'' on that Web site to view public comments.
    Comments received timely will be available for public inspection as 
they are received, generally beginning

[[Page 25086]]

approximately 3 weeks after publication of a document, at the 
headquarters of the Centers for Medicare & Medicaid Services, 7500 
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of 
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view 
public comments, phone 1-800-743-3951.

SUPPLEMENTARY INFORMATION:

I. Background

    [If you choose to comment on issues in this section, please include 
the caption ``BACKGROUND'' at the beginning of your comments.]

A. Allotments Prior to FY 2005

    Section 1902 of the Social Security Act (the Act) sets forth the 
requirements for State plans for medical assistance. Before August 5, 
1997, section 1902(a)(10)(E) of the Act specified that the State 
Medicaid plan must provide for some or all types of Medicare cost 
sharing for three eligibility groups of low-income Medicare 
beneficiaries. These three groups included 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 with income at 
or below the Federal poverty line (FPL) and resources below $4,000 for 
an individual and $6,000 for a couple. A SLMB is an individual who 
meets the QMB criteria, except that his or her income is above 100 
percent of the FPL and does not exceed 120 percent of the FPL. A QDWI 
is a disabled individual who is entitled to enroll in Medicare Part A 
under section 1818A of the Act, whose income does not exceed 200 
percent of the FPL for a family of the size involved, whose resources 
do not exceed twice the amount allowed under the Supplementary Security 
Income (SSI) 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 premiums for Medicare Part B.
    Section 4732 of the Balanced Budget Act of 1997 (BBA), enacted on 
August 5, 1997, amended section 1902(a)(10)(E) of the Act to require 
States to provide for Medicaid payment of the Medicare Part B premiums 
for two additional eligibility groups of low-income Medicare 
beneficiaries, referred to as qualifying individuals (QIs).
    Specifically, a new section 1902(a)(10)(E)(iv)(I) of the Act was 
added, under which States must pay the full amount of the Medicare Part 
B premium for qualifying individuals who would be QMBs but for the fact 
that their income level is at least 120 percent of the FPL but less 
than 135 percent of the FPL 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 added 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 FPL for a family of the 
size involved, who are not otherwise eligible for Medicaid under the 
approved State plan. These QIs were eligible for only 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).
    Coverage of the second group of QIs ended on December 31, 2002 and 
the 2003 Welfare Reform Bill (Pub. L. 108-89) eliminated reference to 
the QI-2 benefit. In each of the years 2002 and 2003, Continuing 
Resolutions extended the coverage of the first group of QIs (whose 
income is at least 120 percent but less than 135 percent of the Federal 
poverty line) through the next fiscal year, but maintained the annual 
funding at the FY 2002 level.
    In 2004, ``A Bill to Amend Title XIX of the Social Security Act to 
Extend Medicare Cost-Sharing for the Medicare Part B Premium for 
Qualifying Individuals'' (Pub. L. 108-448) continued coverage of this 
group through September 30, 2005, again with no change in funding.
    The BBA also added a new section 1933 to the Act to provide for 
Medicaid payment of Medicare Part B premiums for QIs. (The previous 
section 1933 was re-designated as section 1934.)
    Section 1933(a) of the Act specifies that a State plan 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 States must follow in selecting QIs and providing payment for 
Medicare Part B premiums. Specifically, the State must permit all 
qualifying individuals to apply for assistance and must select 
individuals on a first-come, first-served basis (that is, the State 
must select QIs in the order in which they apply). Under section 
1933(b)(2)(B) of the Act, in selecting persons who will receive 
assistance in years after 1998, States must give preference to those 
individuals who received assistance as QIs, QMBs, SLMBs, or QDWIs in 
the last month of the previous year and who continue to be (or become) 
QIs.
    Under section 1933(b)(4) of the Act, persons selected to receive 
assistance in a calendar year are entitled to receive assistance for 
the remainder of the year, but not beyond, as long as they continue to 
qualify. The fact that an individual is selected to receive assistance 
at any time during the year does not entitle the individual to 
continued assistance for any succeeding year. Because the State's 
allotment is limited by law, section 1933(b)(3) of the Act provides 
that the State must limit the number of QIs so that the amount of 
assistance provided during the year is approximately equal to the 
allotment for that year.
    Section 1933(c) of the Act limits the total amount of Federal funds 
available for payment of Part B premiums for QIs each fiscal year and 
specifies the formula that is to be used to determine an allotment for 
each State from this total amount. For States that executed 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. In 1999, the Department 
published a notice (64 FR 14931, March 29, 1999) to advise States of 
the methodology used to calculate allotments and each State's specific 
allotment for that year. Following that notice, there was no change in 
methodology and States have been notified annually of their allotments. 
We did not include the methodology for computing the allocation in our 
regulations. Although the BBA originally provided coverage of QIs only 
through FY 2002, through several continuing resolutions, coverage has 
been continued through the current fiscal year, but without any 
increase in total allocation over the FY 2002 level.
    The Federal medical assistance percentage for Medicaid payment of 
Medicare Part B premiums for qualifying individuals is 100 percent for 
expenditures up to the amount of the State's allotment. No Federal 
funds are available for expenditures in excess of the State allotment 
amount. The Federal matching rate for administrative expenses 
associated with the payment of Medicare Part B premiums for QIs remains 
at the 50 percent matching level. Federal financial participation in 
the administrative expenses is not counted against the State's 
allotment.
    The amount available for each fiscal year is to be allocated among 
States according to the formula set forth in section 1933(c)(2) of the 
Act. The formula provides for an amount to each

[[Page 25087]]

State that is to be based on each State's share of the Secretary's 
estimate of the ratio of: (a) An amount equal to the total number of 
individuals in the State who meet all but the income requirements for 
QMBs, whose incomes are at least 120 percent but less than 135 percent 
of the Federal poverty line, and who are not otherwise eligible for 
Medicaid, to (b) the sum of all those individuals for all eligible 
States.

B. Allotments for FY 2005

    In FY 2005, some States exhausted their FY 2005 allotments before 
the end of the fiscal year, which caused them to deny benefits to 
eligible persons under section 1933(b)(3) of the Act, while other 
States projected a surplus in their allotments. We asked those States 
that exhausted or expected to exhaust their FY 2005 allotments before 
the end of the fiscal year to project the amount of funds that would be 
required to grant eligibility to all eligible persons in their State, 
that is, their need. We also asked those States that did not expect to 
use their full allotments in FY 2005 to project the difference between 
the amount they expected to spend and their allotment, that is, their 
surplus. After all States reported these figures, it was evident that 
the total surplus exceeded the total need. In spite of there being 
adequate overall funding for the QI benefit, some eligible individuals 
would have been denied benefits due to the allocation methodology 
initially used to determine the FY 2005 allotments.
    We believed that it was the clear intent of the statute to provide 
benefits to eligible persons up to the full amount of funds made 
available for the program. We attributed the difference between the 
surplus in available QI allotments for some States and the need in 
other States in FY 2005 as due to the imprecision in the data that we 
used to provide States with their initial allocations under section 
1933 of the Act. Therefore, on August 26, 2005 we published an interim 
final rule in the Federal Register (70 FR 50214) under which we 
compensated for this imprecision in order to enable States to enroll 
those QIs whom they would have been able to enroll had the data been 
more precise.
    The interim final rule amended 42 CFR 433.10(c) to specify the 
formula and the data to be used to determine States' allotments and to 
revise, under certain circumstances, individual State allotments for a 
Federal fiscal year for the Medicaid payment of Medicare Part B 
premiums for qualifying individuals identified under section 
1902(a)(10)(E)(iv) of the Act.
    The FY 2005 allotments were determined by applying the U.S. Census 
Bureau data to the formula set forth in section 1933(c)(2)of the Act. 
However, the statute requires that the allocation of the fiscal year 
allotment be based upon a ratio of the amount of ``total number of 
individuals described in section 1902(a)(10)(E)(iv) in the State'' to 
the sum of these amounts for all States. Because this formula requires 
an estimate of an unknown number, that is, the number of individuals 
who could be QIs (rather than the number of individuals who were QIs in 
a previous period), our use of the Census Bureau data in the formula 
represented a rough proxy to attain the statutory number. Actual 
expenditure data, however, revealed that the Census Bureau data yielded 
an inappropriate distribution of the total appropriated fund as 
evidenced by the fact that several States projected significant 
shortfalls in their allotments, while many other States projected a 
significant surplus by the end of the fiscal year 2005. Census Bureau 
data were not accurate for the purpose of projecting States' needs 
because the data could not take into consideration all variables that 
contribute to QI eligibility and enrollment, such as resource levels 
and the application process itself.
    While section 1933 of the Act requires the Secretary to estimate 
the allocation of the allotments among the States, it did not preclude 
a subsequent readjustment of that allocation, when it became clear that 
the data used for that estimate did not effectuate the statutory 
objective. The interim final rule published in the Federal Register on 
August 26, 2005 permitted in this specific circumstance a 
redistribution of surplus funds, as it was demonstrated that the 
States' projections and estimates resulted in an inequitable initial 
allocation for FY 2005, such that some States were granted an 
allocation in excess of their total projected need, while the 
allocation granted to other States proved insufficient to meet their 
projected QI expenditures.
    In the August 26, 2005 interim final rule, we codified the 
methodology we have been using to approximate the statutory formula for 
determining State allotments. However, since certain States projected a 
deficit in their allotment before the end of fiscal year 2005, the rule 
permitted fiscal year 2005 funds to be reallocated from the surplus 
States to the need States. The regulation specified the methodology for 
computing the annual allotments, and for reallocating funds in this 
circumstance. The formula used to reallocate funds was intended to 
minimize the impact on surplus States, to equitably distribute the 
total needed amount among those surplus States, and to meet the 
immediate needs for those States projecting deficits. At the time of 
the publication of the interim final rule on August 26, 2005, the 
authorization for the QI benefit expired at the end of calendar year 
2005, and no additional funds were appropriated for the QI benefit 
beyond September 30, 2005; therefore, the regulation specified a sunset 
at the end of calendar year 2005.
    Finally, we received only one comment with respect to the August 
26, 2005 interim final rule. The comment indicated that the Census 
Bureau data were inadequate for the purpose of appropriately allocating 
the funds available for the QI program; in that regard, they commended 
CMS for modifying the formula to more precisely address States' needs 
under this program. The comment also asked for clarification on the 
source of the data used for modifying the allocation formula. Our 
response to that comment is that the data used are obtained directly 
from the States and, specifically, are the States' estimates of the 
expenditures that would be incurred under this program. The August 26, 
2005 interim final rule indicated that. As indicated below, the 
methodology/process for allocation of the QI allotments for FY 2006 and 
2007 takes the same approach and uses the same data that were used to 
reallocate fiscal year 2005 funds.

C. Allotments for FY 2006 and FY 2007

    On October 20, 2005 the ``QI, TMA, and Abstinence Programs 
Extension and Hurricane Katrina Unemployment Relief Act of 2005'' was 
enacted by Congress (Pub. L. 109-91). In particular, section 101 of 
Pub. L. 109-91 extended the QI program through September 30, 2007 with 
no change in funding; that is, under this legislation $400 million per 
fiscal year is appropriated for each of FY 2006 and FY 2007. Under 
section 101(c), the provisions of section 101 of Pub. L. 109-91 are 
effective as of September 30, 2005.
    We continue to believe that the clear intent of the statute is to 
provide benefits to eligible persons up to the full amount of funds 
made available for the program in each fiscal year. We recognize that 
because of the imprecision in data for computing the States' QI 
allotments for a fiscal year, there is the potential for a surplus to 
occur with respect to available QI allotments for some States and a 
need to occur in other States for FY 2006 and FY 2007. We are 
publishing this interim final rule for the determination of States' FY 
2006 and FY 2007 QI

[[Page 25088]]

allotments under which we attempt to compensate for the imprecision in 
data in order to enable States to enroll those QIs whom they would have 
been able to enroll if the data were more precise.

II. Provisions of the Interim Final Rule

    [If you choose to comment on issues in this section, please include 
the caption ``PROVISIONS'' at the beginning of your comments.]
    This interim final rule amends 42 CFR 433.10(c) to specify the 
formula, data, and process to be used for determining and issuing 
States' QI allotments. This methodology and process provides for an 
adjustment in the amounts of the QI allotments preliminarily determined 
for the Medicaid payment of Medicare Part B premiums for qualifying 
individuals identified under section 1902(a)(10)(E)(iv) of the Act.
    Under the methodology and process described in this interim final 
rule, ``initial'' FY 2006 and FY 2007 allotments will be derived by 
applying U.S. Census Bureau data to the formula set forth in section 
1933(c)(2) of the Act. The statute requires that the allocation of the 
fiscal year allotment be based upon a ratio of the amount of ``total 
number of individuals described in section 1902(a)(10)(E)(iv) in the 
State'' to the sum of these amounts for all States. Because this 
formula requires an estimate of an unknown number, that is, the number 
of individuals who could be QIs (rather than the number of individuals 
who were QIs in a previous period), our use of the Census Bureau data 
in the formula represents a proxy to attain the statutory number. Use 
of the Census Bureau data may yield an inappropriate distribution of 
the total appropriated funds resulting in significant shortfalls in the 
projected allotments for some States and significant surpluses by the 
end of the fiscal year for other States. Census Bureau data may not be 
sufficiently accurate for the purpose of projecting States' needs 
because the data cannot take into consideration all variables that 
contribute to QI eligibility and enrollment, such as resource levels 
and the application process itself. While section 1933 of the Act 
requires the Secretary to estimate the allocation of the allotments 
among the States, it does not preclude a subsequent readjustment of 
that allocation, when it becomes clear that the data used for that 
estimate did not effectuate the statutory objective.
    This interim final rule sets out a methodology and process for 
determining States' QI allotments for FY 2006 and FY 2007 that permits 
a redistribution of surplus funds to States whose allotments, 
determined based only on the formula in section 1933 of the Act, would 
be insufficient to meet their projected QI expenditures for the fiscal 
year. In this interim final rule, we are codifying the methodology and 
process we will use to approximate the statutory formula for 
determining State allotments and making adjustments in such allotment, 
as appropriate.
    In this interim final rule, we set forth a two step/two phase 
methodology/process for determining States' QI allotments for FY 2006 
and FY 2007. Under the first step of phase one, an ``initial'' 
allocation would be determined for each State under the formula 
specified in section 1933 of the Act and based only on the data 
obtained from the Census Bureau (the 3-year average of the number of 
Medicare beneficiaries in the State who are not enrolled in the 
Medicaid program but whose incomes are at least 120 percent of the 
Federal poverty level and less than 135 percent of the Federal poverty 
level). However, we would also obtain States' projected QI expenditures 
for the fiscal year. We would then compare the initial allocations for 
the fiscal year to the States' projected QI expenditures for the fiscal 
year to determine those States with a projected need (initial 
allocation is less than the projected expenditures) or a surplus 
(initial allocation is greater than the projected expenditures) for the 
fiscal year. Under the second step, we would adjust the States' initial 
allocations by considering the States' projected QI expenditures for 
the fiscal year. This would be done by reducing the States' surpluses 
by the amount of the total States' need.
    In this interim final rule, we will apply this methodology/process 
in two phases in each fiscal year. That is, at the beginning of each 
fiscal year, we would determine the initial allocations based on the 
Census Bureau data, obtain States' projected QI expenditures for the 
fiscal year, and make any adjustments based on the projected surpluses/
needs for the fiscal year. The amount of the States' QI allotments 
determined under phase one at the beginning of the fiscal year would be 
considered the ``preliminary'' QI allotments for the fiscal year. Then, 
under phase two of the process sometime during the fourth quarter of 
the fiscal year we would obtain States' updated projected QI 
expenditures for the fiscal year. We would then establish the ``final'' 
QI allotments for the fiscal year based on these updated projections.
    The final QI allotments would be determined by comparing the 
initial QI allotments for the fiscal year (again which are calculated 
based on the Census Bureau data) to the States' updated projections of 
QI expenditures for the fiscal year; this would established the States 
with a ``final'' projected need (initial allocation is less than the 
updated projected expenditures) or a surplus (initial allocation is 
greater than the updated projected expenditures) for the fiscal year. 
Using the updated projected QI expenditures, we would adjust the 
States' initial allocations by reducing the surplus States' initial 
allotments proportionately to meet the need States' deficits. This is 
the same methodology used for determining the FY 2005 allotments as 
published in the interim final rule published on August 26, 2005 in the 
Federal Register; the only change is that in computing the FY 2006 and 
FY 2007 allotments, we will determine the preliminary allotments at the 
beginning of the fiscal year using States' preliminary projected QI 
expenditures, and then we will determine the final QI allotments later 
in the fiscal year using States' updated projected QI expenditures.
    The formula used to reallocate the available funds to need States 
is intended to minimize the impact on surplus States, to equitably 
distribute the total needed amount among those surplus States, and to 
meet the needs for those States projecting deficits. Since under Pub. 
L. 109-91 the authorization for the QI benefit expires at the end of 
calendar year 2007, and currently no funds have been appropriated for 
the QI benefit beyond September 30, 2007, this regulation will sunset 
at the end of calendar year 2007. Should the Congress authorize an 
extension of the QI benefit and appropriate additional funds for 
allocation among the States, we will amend the sunset date in this 
regulation to take into account any extension.
    The resulting initial allotments for FY 2006 are shown by State in 
the table below. In this table each column contains data defined as 
follows:

Chart--Preliminary FY 2006 Qualified Individuals Allotments

    Column A--State. Column A shows the name of each State.
    Columns B through D show the determination of the States' Initial 
FY 2006 QI Allotments, based only on Census Bureau data.
    Column B--Number of Individuals. Column B contains the estimated 
average number of Medicare beneficiaries for the years 2003 through 
2005 who are not covered by Medicaid whose family income is between 120 
and 135 percent of the poverty level for each State, in thousands, as 
obtained from the Census Bureau's Annual Social and Economic Supplement 
to the

[[Page 25089]]

Current Population Survey through March of 2005.
    Column C--Percentage of Total. Column C provides the percentage of 
total number of individuals for each State, determined as the Number of 
Individuals for the State in Column B divided by the sum of the Number 
of Individuals for all States in Column B.
    Column D--Initial QI Allotment. Column D contains each State's 
Initial FY 2006 QI allotment, calculated as the State's Percentage of 
Total in Column C multiplied by $400,000,000, the total amount 
available for FY 2006 for all States.
    Columns E through J show the determination of the States' 
Preliminary FY 2006 QI Allotments.
    Column E--FY 2006 Estimated QI Expenditures. Column E contains the 
States' most recent estimates of their total QI expenditures for FY 
2006.
    Column F--Need (Difference). Column F contains the additional 
amount of QI allotment needed for those States whose estimated 
expenditures in Column E exceed their Initial FY 2006 QI allotments in 
Column D; for such States, Column E shows the amount in Column E minus 
the amount in Column D. For other States, Column F shows ``NA.''
    Column G--Reduction Pool for Non-Need States. Column G contains the 
amount of the pool of surplus FY 2006 QI allotments for those States 
that project they will not need all of their FY 2006 QI allotments 
(referred to as non-need States). For States whose estimates of QI 
expenditures for FY 2006 in Column E are equal to or less than their 
Initial FY 2006 QI allotments in Column D, Column G shows the amount in 
Column D minus the amount in Column E. For the States with a need, 
Column G shows ``Need.'' The pool of excess QI allotments is equal to 
the sum of the amounts in Column G.
    Column H--Percent of Total Non-Need States. Column H shows the 
percentage of the total excess FY 2006 allotments for each Non-Need 
State, determined as the amount for each Non-Need State in Column G 
divided by the sum of the amounts for all States in Column G.
    Column I--Reduction for Non-Need States. Column I shows the amount 
of reduction to Non-Need States' Initial FY 2006 QI allotments in 
Column D in order to provide for the total need shown in Column F. The 
amount in Column I is determined as the percentage in Column H for Non-
Need States multiplied by the sum of the need for all States from 
Column F.
    Column J--Preliminary FY 2006 QI Allotment. Column J contains the 
Preliminary FY 2006 QI allotment for each State. For States that need 
additional amounts based on their FY 2006 Estimated QI Expenditures in 
Column E, Column J is equal to the Initial FY 2006 QI Allotment in 
Column D plus the amount of Need Column F. For Non-Need States, Column 
J is equal to the Initial FY 2006 QI Allotment in Column D minus the 
amount in Column I.

BILLING CODE 4120-01-P

[[Page 25090]]

[GRAPHIC] [TIFF OMITTED] TR28AP06.000

BILLING CODE 4120-01-C

[[Page 25091]]

III. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 35).

IV. Waiver of Notice With Comment and 30-Day Delay in Effective Date

    [If you choose to comment on issues in this section, please include 
the caption ``WAIVER OF ADVANCE PUBLIC COMMENT'' at the beginning of 
your comments.]
    We ordinarily publish an advance notice in the Federal Register for 
substantive rules to provide a period for public comment. However, we 
may waive that procedure if we find good cause that notice and comment 
are impractical, unnecessary, or contrary to the public interest. In 
addition, we also normally provide a delay of 30 days in the effective 
date. However, if adherence to this procedure would be impractical, 
unnecessary, or contrary to public interest, we may waive the delay in 
the effective date.
    We are publishing this rule as an interim final rule because of the 
need to notify individual States of the limitations on Federal funds 
for their Medicaid expenditures for payment of Medicare Part B premiums 
for qualifying individuals. Some States have experienced deficits in 
their current allotments that have caused them to deny benefits to 
eligible applicants, while other States project a surplus in their 
allotments. This rule permits redistribution of funds and will allow 
all eligible applicants to receive QI benefits during this calendar 
year. Because access to Medicare Part B coverage for QIs, who without 
this coverage would have difficulty paying for needed health care, is 
critically important, we believe that it is in the public interest to 
waive the usual notice and comment procedure which we undertake before 
making a rule final.
    Also, for the reasons discussed above, we find that good cause 
exists to dispense with the normal requirement that a regulation cannot 
become effective any earlier than 30 days after its publication. States 
that will have access to additional funds to enroll QIs need to know 
that these funds are available as soon as possible, so they can begin 
enrolling QIs. While we believe those States that will have diminished 
amounts available for this fiscal year will have sufficient funds for 
enrolling all potential QIs in their States, they also need to know as 
soon as possible that a certain amount of their unused allocation will 
no longer be available to them for this fiscal year.
    We are publishing this interim final rule with a 60-day period for 
public comment. However, if we decide that changes are necessary as a 
result of our consideration of timely comments, we will issue a final 
rule and respond to the comments in that rule.

V. Regulatory Impact Statement

    We have examined the impact of this rule 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 Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 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). This rule 
does not reach the economic threshold and thus is not considered a 
major rule.
    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 small governmental 
jurisdictions. 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 interim final rule with comment period codifies our procedures 
for implementing provisions of the Balanced Budget Act of 1997 to 
allocate, among the States, Federal funds to provide Medicaid payment 
for Medicare Part B premiums for low-income Medicare beneficiaries. 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. We have applied the statutory formula for the 
State allotments. Because the data specified in the law were not 
initially available, we used comparable data from the U.S. Census 
Bureau on the number of possible qualifying individuals in the States. 
This rule also permits, in a specific circumstance, reallocation of 
funds to enable enrollment of all eligible individuals to the extent of 
the available funding.
    We believe that the statutory provisions implemented in this 
interim final rule with comment period will have a positive effect on 
States and individuals. Federal funding at the 100 percent matching 
rate is available for Medicare cost-sharing for Medicare Part B premium 
payments for qualifying individuals and, with the reallocation of the 
State allotments, a greater number of low-income Medicare beneficiaries 
will be eligible to have their Medicare Part B premiums paid under 
Medicaid. In no States will the changes in allotments result in fewer 
individuals receiving the QI benefit. The FY 2006 and FY 2007 costs for 
this provision have been included in the FY 2007 President's Budget.
    Section 1102(b) of the Social Security Act requires us to prepare a 
regulatory impact analysis for any rule that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. The 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 Core-Based 
Statistical Area and has fewer than 100 beds.
    We are not preparing analyses for either the RFA or section 1102(b) 
of the Act because we have determined and certify that this interim 
final rule with comment period 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.
    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 by the private 
sector, of $110 million. This rule will have no consequential effect on 
the governments mentioned or on the private sector.
    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. Since this regulation does not impose any costs on State 
or local governments,

[[Page 25092]]

the requirements of E.O. 13132 are not applicable.
    In accordance with the provisions of Executive Order 12866, this 
interim final rule with comment period was reviewed by the Office of 
Management and Budget.

List of Subjects in 42 CFR Part 433

    Administrative practice and procedure, Child support, Claims, Grant 
programs health, Medicaid, Reporting and recordkeeping requirements.


0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR Chapter IV as set forth below:

PART 433--STATE FISCAL ADMINISTRATION

0
1. The authority citation for part 433 continues to read as follows:


    Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 
1302).

0
2. Section 433.10 is amended by revising paragraph (c)(5) to read as 
follows:


Sec.  433.10  Rates of FFP for program services.

* * * * *
    (c) * * *
    (5)(i) Under section 1933(d) of the Act, the Federal share of State 
expenditures for Medicare Part B premiums described in section 
1905(p)(3)(A)(ii) of the Act on behalf of Qualifying Individuals 
described in section 1902(a)(10)(E)(iv) of the Act, is 100 percent, to 
the extent that the assistance does not exceed the State's allocation 
under paragraph (c)(5)(ii) of this section. To the extent that the 
assistance exceeds that allocation, the Federal share is 0 percent.
    (ii) Under section 1933(c)(2) of the Act and subject to paragraph 
(c)(5)(iii) of this section, the allocation to each State is equal to 
the total allocation specified in section 1933(c)(1) of the Act 
multiplied by the Secretary's estimate of the ratio of the total number 
of individuals described in section 1902(a)(10)(E)(iv) of the Act in 
the State to the total number of individuals described in section 
1902(a)(10)(E)(iv) of the Act for all eligible States. In estimating 
that ratio, the Secretary will use data from the U.S. Census Bureau.
    (iii) If, based on projected expenditures for a fiscal year, the 
Secretary determines that the expenditures described in paragraph 
(c)(5)(i) of this section for one or more States are projected to 
exceed the allocation made to the State, the Secretary may adjust each 
State's fiscal year 2005, 2006, or 2007 allocation, as follows:
    (A) The Secretary will compare each State's projected total 
expenditures for the expenses described in paragraph (c)(5)(i) of this 
section to the State's initial allocation determined under paragraph 
(c)(5)(ii) of this section, to determine the extent of each State's 
projected surplus or deficit.
    (B) The surplus of each State with a projected surplus, as 
determined in accordance with paragraph (c)(5)(iii)(A) of this section 
will be added together to arrive at the Total Projected Surplus.
    (C) The deficit of each State with a projected deficit, as 
determined in accordance with paragraph (c)(5)(iii)(A) of this section 
will be added together to arrive at the Total Projected Deficit.
    (D) Each State with a projected deficit will receive an additional 
allocation equal to the amount of its projected deficit. The amount to 
be reallocated from each State with a projected surplus will be equal 
to A x B, where A equals the Total Projected Deficit and B equals the 
amount of the State's projected surplus as a percentage of the Total 
Projected Surplus.
    (iv) CMS will notify States of any changes in allotments resulting 
from any reallocations.
    (v) The provisions of this paragraph (c)(5) will be in effect 
through the end of calendar year 2007.

    Authority:  Sections 1902(a)(10), 1933 of the Social Security 
Act (42 U.S.C. 1396a), and Pub. L. 105-33.)

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

    Dated: January 20, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: February 14, 2006.
Michael O. Leavitt,
Secretary.
[FR Doc. 06-3981 Filed 4-27-06; 8:45 am]
BILLING CODE 4120-01-P