[Federal Register Volume 73, Number 5 (Tuesday, January 8, 2008)]
[Notices]
[Pages 1355-1357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-109]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Notice of hearing: Reconsideration of Disapproval of California's 
State Plan Amendment (SPA) 06-019B

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 
February 15, 2008, at the CMS San Francisco Regional Office, 90 7th 
Street, 5th Floor, Room 5A, San Francisco, California 94103, to 
reconsider CMS' decision to disapprove California's SPA 06-019B.
    Closing Date: Requests to participate in the hearing as a party 
must be received by the presiding officer by January 23, 2008.

[[Page 1356]]


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

SUPPLEMENTARY INFORMATION: This notice announces an administrative 
hearing to reconsider CMS' decision to disapprove California's SPA 
06-019B which was submitted on December 27, 2006.
    Under this SPA, the State was seeking to provide direct 
reimbursement effective October 1, 2006, to Medicaid recipients where 
the recipient obtains and pays for Medicaid services after receiving a 
Medicaid card.
    The amendment was disapproved because it did not comport with the 
requirements of sections 1902(a)(10), 1902(a)(32), and 1905(a) of the 
Social Security Act (the Act) and Federal regulations at 42 CFR 
431.246, 431.250, and 447.15.
    The following are the issues to be considered at the hearing:
     Would payments under the proposed SPA that would be made 
directly to Medicaid recipients for services furnished after the 
recipients have been determined to be eligible (and not during a 
retroactive eligibility period) be within the scope of the definition 
of ``medical assistance'' referenced in section 1902(a)(10) and set 
forth in section 1905(a) of the Act? The definition at section 1905(a) 
specifically limits medical assistance to payments made to providers of 
covered services (the ``vendor payment principle''), and contains an 
express statutory exception permitting direct payment to recipients 
only for physician and dentist services; the proposed SPA does not 
appear to be limited to payments for these service categories.
     Would payments under the proposed SPA that are made 
directly to Medicaid recipients for services furnished after the 
recipients have been determined eligible (and not during a retroactive 
eligibility period) be consistent with the requirement of section 
1902(a)(32) of the Act? That section limits payment under the plan to 
amounts paid directly to providers (or certain assignees of those 
providers). This statutory requirement ensures that recipients obtain 
covered services from participating providers who bill the Medicaid 
program rather than the recipient, and accept the State's payment, 
including a payment of zero dollars, as payment in full. (See 42 CFR 
447.15.)
     Would payments under the proposed SPA that are made 
directly to Medicaid recipients for services furnished after the 
recipients have been determined eligible (and not during a retroactive 
eligibility period) be within the regulatory exception at 42 CFR 
431.246 and 431.250(b) to the vendor payment principle? Those sections 
provide for corrective payments based on a successful appeal by a 
recipient who, pending the appeal decision, sought and paid for covered 
services. Such a circumstance in the context of SPA 06-019B would exist 
where a recipient appealed the State's determination of the amount of 
the recipient's ``share of cost'' for covered services. But, SPA 06-
019B does not appear to limit such payment to these exceptions to the 
vendor payment rule.
     Is there any binding judicial decision that would permit 
the Federal Government to participate in the payments contemplated in 
the proposed SPA? The United States was not a party to a California 
State Court case that apparently addressed the issues, and is not bound 
by that decision. Moreover, under regulations at 42 CFR 431.250 that 
provide for Federal participation in payments made under court order, 
the services must be provided within the scope of the Medicaid program 
under Federal law. Services that are billed directly to the recipient 
(and not part of a retroactive eligibility period) are outside of the 
Federal definition of medical assistance, and thus are not within the 
scope of the Federal Medicaid program.
     Is there any statutory or regulatory conflict providing a 
basis to conclude that the express statutory provisions establishing 
the vendor payment principle could not practically be applied? CMS has 
recognized such a conflict as the basis for permitting an exception to 
the vendor payment principle during a retroactive period, but such a 
conflict does not appear to be present in this instance.
     Are direct payments to recipients who have been determined 
eligible consistent with accuracy, efficiency, and effectiveness of the 
State Medicaid program in serving those recipients?
    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. 
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 California announcing an administrative hearing to 
reconsider the disapproval of its SPA reads as follows:

Mr. Stan Rosenstein, Chief Deputy Director, Health Care Program, 
Health and Human Services Agency, 1501 Capitol Avenue, MS 4506, P.O. 
Box 997413, Sacramento, CA 99859-7413.

Dear Mr. Rosenstein:

    I am responding to your request for reconsideration of the 
decision to disapprove California's State plan amendment (SPA) 06-
109B, which was submitted on December 27, 2006.
    Under this SPA, the State was seeking to provide direct 
reimbursement, effective October 1, 2006, to Medicaid recipients 
where the recipient obtains and pays for Medicaid services after 
receiving a Medicaid card.

    The amendment was disapproved because it did not comport with 
the requirements of sections 1902(a)(10), 1902(a)(32), and 1905(a) 
of the Social Security Act (the Act) and Federal regulations at 42 
CFR sections 431.246, 431.250, and 447.15.
    The following are the issues to be considered at the hearing:
     Would payments under the proposed SPA that would be 
made directly to Medicaid recipients for services furnished after 
the recipients have been determined to be eligible (and not during a 
retroactive eligibility period) be within the scope of the 
definition of ``medical assistance'' referenced in section 
1902(a)(10) and set forth in section 1905(a) of the Act? The 
definition at section 1905(a) specifically limits medical assistance 
to payments made to providers of covered services (the ``vendor 
payment principle''), and contains an express statutory exception 
permitting direct payment to recipients only for physician and 
dentist services; the proposed SPA does not appear to be limited to 
payments for these service categories.
     Would payments under the proposed SPA that are made 
directly to Medicaid recipients for services furnished after the 
recipients have been determined eligible (and not during a 
retroactive eligibility period) be consistent with the requirement 
of section 1902(a)(32) of the Act? That section limits payment under 
the plan to amounts paid directly to providers (or certain assignees 
of those providers). This statutory requirement ensures that 
recipients obtain covered services from participating providers who

[[Page 1357]]

bill the Medicaid program rather than the recipient, and accept the 
State's payment, including a payment of zero dollars, as payment in 
full. (See 42 CFR 447.15.)
     Would payments under the proposed SPA that are made 
directly to Medicaid recipients for services furnished after the 
recipients have been determined eligible (and not during a 
retroactive eligibility period) be within the regulatory exception 
at 42 CFR 431.246 and 431.250(b) to the vendor payment principle? 
Those sections provide for corrective payments based on a successful 
appeal by a recipient who, pending the appeal decision, sought and 
paid for covered services. Such a circumstance in the context of SPA 
06-019B would exist where a recipient appealed the State's 
determination of the amount of the recipient's ``share of cost'' for 
covered services. But, SPA 06-019B does not appear to limit such 
payment to these exceptions to the vendor payment rule.
     Is there any binding judicial decision that would 
permit the Federal Government to participate in the payments 
contemplated in the proposed SPA? The United States was not a party 
to a California State Court case that apparently addressed the 
issues and is not bound by that decision. Moreover, under 
regulations at 42 CFR 431.250 that provide for Federal participation 
in payments made under court order, the services must be provided 
within the scope of the Medicaid program under Federal law. Services 
that are billed directly to the recipient (and not part of a 
retroactive eligibility period) are outside of the Federal 
definition of medical assistance, and thus are not within the scope 
of the Federal Medicaid program.
     Is there any statutory or regulatory conflict providing 
a basis to conclude that the express statutory provisions 
establishing the vendor payment principle could not practically be 
applied? CMS has recognized such a conflict as the basis for 
permitting an exception to the vendor payment principle during a 
retroactive period, but such a conflict does not appear to be 
present in this instance.
     Are direct payments to recipients who have been 
determined eligible consistent with accuracy, efficiency, and 
effectiveness of the State Medicaid program in serving those 
recipients?
    I am scheduling a hearing on your request for reconsideration to 
be held on February 15, 2008, at the CMS San Francisco Regional 
Office, 90 7th Street, 5th Floor, Room 5A, San Francisco, California 
94103, to reconsider the decision to disapprove SPA 06-019B. 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 by Federal regulations 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 at (410) 786-2055. 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.

Sincerely,

Kerry Weems,

Acting Administrator.

(Section 1116 of the Social Security Act (42 U.S.C. 1316); 42 CFR 
430.18)

(Catalog of Federal Domestic Assistance program No. 13.714, Medicaid 
Assistance Program.)

    Dated: January 2, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
 [FR Doc. E8-109 Filed 1-7-08; 8:45 am]
BILLING CODE 4120-01-P