[Federal Register Volume 73, Number 36 (Friday, February 22, 2008)]
[Proposed Rules]
[Pages 9727-9740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-3211]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 447 and 457

[CMS-2244-P]
RIN 0938-A047


Medicaid Program; Premiums and Cost Sharing

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement and interpret the 
provisions of sections 6041, 6042, and 6043 of the Deficit Reduction 
Act of 2005 (DRA), and section 405(a)(1) of the Tax Relief and Health 
Care Act of 2006 (TRHCA). These sections amend the Social Security Act 
(the Act) by adding a new section 1916A to provide State Medicaid 
agencies with increased flexibility to impose premium and cost sharing 
requirements on certain Medicaid recipients. This authority is in 
addition to the existing authority States have to impose premiums and 
cost sharing under section 1916 of the Act. The DRA provisions also 
specifically address cost sharing for non-preferred

[[Page 9728]]

drugs and non-emergency care furnished in a hospital emergency 
department.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on March 24, 2008.

ADDRESSES: In commenting, please refer to file code CMS-2244-P. 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/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-2244-P, P.O. Box 8016, Baltimore, MD 21244-8016.
    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-2244-P, 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.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by mailing your 
comments to the addresses provided at the end of the ``Collection of 
Information Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Donna Schmidt, (410) 786-5532.

SUPPLEMENTARY INFORMATION:
    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-2244-P 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/eRulemaking. Click on the link ``Electronic Comments on 
CMS Regulations'' on that Web site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning 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.

I. Background

A. General

    For more than a decade, States have been asking for the tools to 
modernize their Medicaid programs. With the enactment of the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171, enacted on February 8, 
2006), States now have new options to create programs that are aligned 
with today's Medicaid populations and the health care environment. 
Alternative cost sharing, benefit flexibility through benchmark plans, 
and the health opportunity accounts (HOA) demonstration provide the 
greatest opportunities to modernize Medicaid, to make the cost of the 
program and health care more affordable, and to expand coverage for the 
uninsured. States will be able to reconnect families to the larger 
insurance system that serves most Americans and promote continuity of 
coverage. The sweeping DRA provisions on Medicaid include six chapters 
and 39 sections. Through a combination of new options for States and 
new requirements related to program integrity, the DRA will help ensure 
the sustainability of the Medicaid program over time.

B. Statutory Authority

    Sections 6041, 6042, and 6043 of the DRA established a new section 
1916A of the Social Security Act (the Act). Section 405(a)(1) of the 
Tax Relief and Health Care Act of 2006 (TRHCA) (Pub. L. 109-432, 
enacted on December 20, 2006) modified section 1916A of the Act. 
Section 1916A sets forth options for alternative premiums and cost 
sharing, including options for higher cost sharing for non-preferred 
prescription drugs and for non-emergency use of a hospital emergency 
room.
    Section 6041 of the DRA established new subsections 1916A(a) and 
(b), of the Act, which allow States to amend their State plans to 
impose alternative premiums and cost sharing on certain groups of 
individuals, for items and services other than drugs (which are subject 
to a separate provision discussed below), and to enforce payment of the 
premiums and cost sharing. Subsections 1916A(a) and (b) set forth 
limitations on alternative premiums and cost-sharing that vary based on 
family income, and exclude some specific services from alternative cost 
sharing. Section 6041 also created a new section 1916(h) of the Act, 
which requires the Secretary to increase the ``nominal'' cost sharing 
amounts under section 1916 for each year (beginning with 2006) by the 
annual percentage increase in the medical care component of the 
consumer price index for all urban consumers (CPI-U) as rounded up in 
an appropriate manner. Section 405(a)(1) of the TRHCA modified 
subsections 1916A(a) and (b) of the Act.
    Section 6042 of the DRA created section 1916A(c) of the Act, which 
provides States with additional options for establishing cost sharing 
requirements for drugs to encourage the use of preferred drugs. Section 
405(a)(1) of the TRHCA also modified section 1916A(c) of the Act. Under 
section

[[Page 9729]]

1916A(c), States may amend their State plans to require increased cost 
sharing by certain groups of individuals for non-preferred drugs and to 
waive or reduce the otherwise applicable cost sharing for preferred 
drugs. States may also permit pharmacy providers to require the receipt 
of a cost sharing payment from an individual before filling a 
prescription. We believe the Congress intended to provide additional 
flexibilities to States in issuing the DRA. Thus, we have not defined 
preferred drugs or non-preferred drugs within a class of such drugs in 
this rule and we believe defining these terms should be at State 
discretion. We would anticipate that States would publish schedules of 
preferred drugs as part of, or as a supplement to, the required public 
schedule of cost sharing under 42 CFR 447.76.
    Section 6043 of the DRA created section 1916A(e) of the Act, which 
permits States to amend their State plans to allow hospitals, after an 
appropriate medical screening examination under section 1867 (EMTALA) 
of the Act, to impose higher cost sharing upon certain groups of 
individuals for non-emergency care or services furnished in a hospital 
emergency department. Section 405(a)(1) of the TRHCA modified section 
1916A(e) of the Act. Under this option, if the hospital determines that 
an individual does not have an emergency medical condition, before 
providing the non-emergency services and imposing cost sharing, it must 
inform the individual that an available and accessible alternate non-
emergency services provider can provide the services without the 
imposition of the same cost sharing and that the hospital can 
coordinate a referral to that provider. After notice is given, the 
hospital may require payment of the cost sharing before providing the 
non-emergency services to the individual.

II. Provisions of the Proposed Regulations

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

A. Overview

    The Department began issuing guidance about the new flexibilities 
available to States within months of the enactment of the DRA. We 
released two letters to State Medicaid directors and health officials 
providing guidance on sections 6041, 6042 and 6043 of the DRA, and 
section 405(a)(1) of the TRHCA as it relates to sections 6041 and 6042 
of the DRA respectively. States and Territories have used this guidance 
to design and implement the new options. These regulations formalize 
the guidance on alternative premiums and cost sharing.
    These proposed regulations would amend existing Medicaid cost 
sharing regulations at 42 CFR part 447 and State Children's Health 
Insurance Program (SCHIP) cost sharing regulations at 42 CFR part 457. 
We propose this approach to assist the reader in easily accessing all 
Medicaid and SCHIP cost sharing regulations.

B. Medicaid Regulations

1. Maximum Allowable Charges (Sec.  447.54)
    We are proposing to revise Sec.  447.54 to update the existing 
``nominal'' Medicaid cost sharing amounts, specifically the nominal 
deductible amount described at Sec.  447.54(a)(1) and the nominal 
copayment amounts described at Sec.  447.54(a)(3). We are also 
proposing to add Sec.  447.54(a)(4) to establish a maximum copayment 
amount for services provided by a managed care organization (MCO).
    Section 6041(b)(2) of the DRA requires the Secretary to increase 
the nominal cost sharing amounts under section 1916 of the Act for each 
year (beginning with 2006) by the annual percentage increase in the 
medical care component of the consumer price index for all urban 
consumers (U.S. city average) as rounded up in an appropriate manner. 
In accordance with the statute, we propose to increase the nominal 
amounts on the beginning of the Federal Fiscal Year (FY) (October 1) in 
each calendar year by the percentage increase in the medical care 
component of the Consumer Price Index for All Urban Consumers (CPI-U) 
for the period of September to September ending in the preceding 
calendar year. We use this period to update other amounts, such as the 
Medicaid spousal impoverishment standards, by inflation. The first 
adjustment would be for FY 2007, and would be based on the CPI-U 
increases during the period September 2004 to September 2005. The 
medical care component of the CPI-U increased by 3.9 percent between 
September 2004 and September 2005, so we propose to update the nominal 
amounts by that factor and then round to the next higher 10-cent 
increment. We propose to round to the next higher 10-cent increment 
because it will simplify calculation and collection of the amounts 
involved. Based on this methodology, we propose a maximum deductible 
for $2.10 per month per family for each period of Medicaid eligibility. 
In addition, we propose the following copayment maximum amounts:

------------------------------------------------------------------------
                                                               Maximum
               State payment for the service                  copayment
------------------------------------------------------------------------
$10 or less................................................        $ .60
$10.01 to $25..............................................         1.10
$25.01 to $50..............................................         2.10
$50.01 or more.............................................         3.20
------------------------------------------------------------------------

    States should use these updated nominal amounts during FY 2007. 
Thereafter, these amounts will be updated each October 1 by the 
percentage increase in the medical care component of the CPI-U for the 
period of September to September ending in the preceding year, rounded 
to the next higher 10-cent increment.
    In addition, we have proposed to specify a maximum copayment amount 
for services provided by an MCO. When we published the final Medicaid 
managed care rules on June 14, 2002 (67 FR 40989), we also issued at 
Sec.  447.60, a requirement that contracts with MCOs limit cost sharing 
charges an MCO may impose on Medicaid enrollees to the amounts that 
could be imposed if fee-for-service payment rates were applicable. 
Since some States do not have fee-for-service programs, we have 
proposed to specify maximum copayment amounts for services provided by 
an MCO.
2. Premiums and Cost Sharing: Basis, Purpose and Scope (Sec.  447.62)
    Section 1916A of the Act allows States to impose alternative 
premiums and cost sharing that are not subject to the limitations on 
premiums and cost sharing under section 1916 of the Act. Section 1916A 
of the Act does not affect the Secretary's existing waiver authority 
with regard to premiums and cost sharing. Section 447.62 of the 
regulations briefly describes this statutory provision which is the 
basis for Sec.  447.64 through Sec.  447.82. Section 447.62 also sets 
forth limitations on the scope of these regulations by indicating that 
they do not limit the Secretary's waiver authority, or affect existing 
waivers, concerning premiums or cost sharing.
    Section 405(a)(1) of the TRHCA amended section 1916A by explicitly 
providing certain exemptions from the provisions, and other 
protections, for the population with family incomes at or below 100 
percent of the FPL. The statute also includes protections for 
individuals with family incomes between 100 and 150 percent of the FPL 
and individuals with family incomes above 150 percent of the FPL.

[[Page 9730]]

3. Premiums, Enrollment Fees, or Similar Fees: State Plan Requirements 
(Sec.  447.64)
    Section 1916A(a)(1) of the Act requires that the State plan specify 
the group or groups of individuals upon which it will impose alternate 
premiums. In accordance with the statute, at Sec.  447.64(a), we 
propose that the State plan describe the group or groups of individuals 
that may be subject to such premiums, enrollment fees, or similar 
charges. For example, States may impose premiums upon all non-exempt 
childless adults (with family incomes over 150 percent of the FPL). We 
further propose in Sec.  447.64(b) that the State plan must include a 
schedule of the premiums, enrollment fees, or similar charges and the 
process for informing recipients, applicants, providers, and the public 
of the schedule. States may vary the premiums, enrollment fees, or 
similar charges among the groups of individuals.
    Section 1916A(b)(4) of the Act requires that the State plan specify 
the manner and the period for which the State determines family income. 
In accordance with the statute, at Sec.  447.64(c), we propose that the 
State plan describe the methodology used to determine family income, 
including the period and periodicity of those determinations. We also 
propose in Sec.  447.64(d) that the State plan describe the methodology 
the State will use to ensure that the aggregate amount of premiums and 
cost sharing imposed for all individuals in the family does not exceed 
5 percent of family income as applied during the monthly or quarterly 
period specified by the State.
    Section 1916A(d)(1) of the Act requires that the State specify the 
group or group of individuals for whom payment of premiums is a 
condition of eligibility. In accordance with the statute, at Sec.  
447.64(e), we propose that the State plan, list the group or groups of 
individuals. We further propose in Sec.  447.64(f) that the State plan 
describe the premium payment terms for the group or groups.
4. General Premium Protections (Sec.  447.66)
    Under section 1916A(b)(3)(A) of the Act, the State plan may not 
impose premiums upon the following:
     Individuals under 18 years of age who are required to be 
provided medical assistance under section 1902(a)(10)(A)(i) of the Act, 
and including individuals with respect to whom child welfare services 
are made available under Part B of title IV on the basis of being a 
child in foster care and individuals with respect to whom adoption or 
foster care assistance is made available under part E of that title, 
without regard to age;
     Pregnant women;
     Any terminally ill individual receiving hospice care, as 
defined in section 1905(o) of the Act;
     Any individual who is an inpatient in a hospital, nursing 
facility, intermediate care facility, or other medical institution, if 
the individual is required, as a condition of receiving services in 
that institution under the State plan, to spend for costs of medical 
care all but a minimal amount of the individual's income required for 
personal needs;
     Women who are receiving Medicaid on the basis of the 
breast or cervical cancer eligibility group under sections 
1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the Act; and
     Disabled children who are receiving medical assistance by 
virtue of the application of sections 1902(a)(10)(A)(ii)(XIX) and 
1902(cc) of the Act.
    In accordance with the statute, at Sec.  447.66(a), we propose that 
the State exclude these classes of individuals from the imposition of 
premiums.
    Section 1916A(b)(3)(C) of the Act clarifies that a State may exempt 
additional classes of individuals from premiums. At proposed Sec.  
447.66(b), we would implement this section.
5. Copayments, Coinsurance, Deductibles, or Similar Cost Sharing 
Charges: State Plan Requirements (Sec.  447.68)
    Section 1916A(a)(1) of the Act requires that the State plan specify 
the group or groups of individuals upon which it opts to impose cost 
sharing. In accordance with the statute, at Sec.  447.68(a), we propose 
that the State plan describe the group or groups of individuals that 
may be subject to cost sharing. For example, States may impose cost 
sharing for non-exempt items and services to individuals in the section 
1931 eligibility group with family incomes between 100 and 200 percent 
of the FPL. We further propose that the State plan must include a 
schedule of the copayments, coinsurance, deductibles, or similar cost 
sharing charges, the items or services for which the charges apply, and 
the process for informing recipients, applicants, providers, and the 
public of the schedule. States may vary cost sharing among the types of 
items and services.
    Section 1916A(b)(4) of the Act requires that the State plan specify 
the manner and the period for which the State determines family income. 
In accordance with the statute, at Sec.  447.68(b), we propose that the 
State plan describe the methodology used to determine family income, 
including the period and periodicity of such determinations.
    We also propose that the State plan describe the methodology the 
State will use to ensure that the aggregate amount of premiums and cost 
sharing imposed for all individuals in the family does not exceed 5 
percent of family income as applied during the monthly or quarterly 
period specified by the State. We further propose that the State plan 
describe the State's methods for tracking cost sharing charges, 
informing recipients and providers of their liability, and notifying 
recipients and providers when individual recipients have reached their 
aggregate limit on premiums and cost sharing. States can use the same 
methods that SCHIP programs use to track cost sharing. For example, 
States can program their automated systems to track and compute 
recipients' cost sharing.
    Finally, we propose that the State plan specify whether the State 
permits a provider participating under the State plan to require 
payment of authorized cost sharing as a condition for the provision of 
covered care, items, or services.
6. General Cost Sharing Protections (Sec.  447.70)
    Under section 1916A(b)(3)(B) of the Act, the State plan may not 
impose alternative cost sharing under 1916A(a) for the following:
     Services furnished to individuals under 18 years of age 
who are required to be provided Medicaid under section 
1902(a)(10)(A)(i) of the Act, and including services furnished to 
individuals with respect to whom child welfare services are made 
available under Part B of title IV on the basis of being a child in 
foster care and individuals with respect to whom adoption or foster 
care assistance is made available under part E of that title, without 
regard to age;
     Preventive services (such as well baby and well child care 
and immunizations) provided to children under 18 years of age 
regardless of family income;
     Services furnished to pregnant women, if those services 
relate to pregnancy or to any other medical condition that may 
complicate the pregnancy;
     Services furnished to a terminally ill individual who is 
receiving hospice

[[Page 9731]]

care (as defined in section 1905(o) of the Act);
     Services furnished to any individual who is an inpatient 
in a hospital, nursing facility, intermediate care facility for the 
mentally retarded, or other medical institution, if the individual is 
required, as a condition of receiving services in that institution 
under the State plan, to spend for costs of medical care all but a 
minimal amount of the individual's income required for personal needs;
     Emergency services as defined by the Secretary for the 
purposes of section 1916(a)(2)(D) of the Act;
     Family planning services and supplies described in section 
1905(a)(4)(C) of the Act;
     Services furnished to women who are receiving medical 
assistance by virtue of the application of sections 
1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the Act (breast or cervical 
cancer provisions); and
     Services furnished to disabled children who are receiving 
medical assistance by virtue of the application of sections 
1902(a)(10)(A)(ii)(XIX) and 1902(cc) of the Act.
    In addition, section 1916A(c)(1)(B) of the Act prohibits the State 
plan from imposing otherwise applicable cost sharing for preferred 
drugs for individuals ``for whom cost sharing may not otherwise be 
imposed under subsection (a) due to the application of 1916A(b)(3)(B) 
of the Act.'' Therefore, in accordance with the statute, at Sec.  
447.70(a)(1)(x), we propose that the State plan exclude these classes 
of individuals from the imposition of cost sharing for preferred drugs 
within a class.
    Section 1916A(b)(3)(C) of the Act clarifies that a State may exempt 
additional individuals or services from cost sharing. At proposed Sec.  
447.70(c), we would implement this section.
    Finally, section 1916A(c)(3) of the Act requires a State to charge 
cost sharing applicable to a preferred drug in the case of a non-
preferred drug if the prescribing physician determines that the 
preferred drug would not be as effective for the individual or would 
have adverse effects for the individual or both. We would implement 
this section at proposed Sec.  447.70(b). We further propose at Sec.  
447.70(b) that such overrides meet State criteria for prior 
authorization and be approved through the State prior authorization 
process.
7. Premium and Cost Sharing Exemptions and Protections for Individuals 
With Family Income at or Below 100 Percent of the FPL (Sec.  447.71)
    Under section 1916A(a)(2)(A) of the Act, the State plan may not 
impose premiums on individuals whose family income is at or below 100 
percent of the FPL. In accordance with the statute, at Sec.  447.71(a) 
we propose that the State plan exclude these individuals from the 
imposition of premiums.
    Under section 1916A(a)(2)(A) of the Act, the State plan may not 
impose cost sharing on individuals whose family income is at or below 
100 percent of the FPL with the exception of cost sharing for non-
preferred drugs and for non-emergency services furnished in a hospital 
emergency department. However, section 1916A(c)(2)(A)(i) of the Act 
prohibits a State from imposing, with respect to a non-preferred drug, 
cost sharing that exceeds the nominal amount as otherwise determined 
under section 1916 of the Act and described at Sec.  447.54(a)(3) or 
(4) for those individuals. In addition, section 1916A(e)(2)(B) of the 
Act prohibits a State from imposing, with respect to non-emergency 
services furnished in a hospital emergency department, cost sharing 
that exceeds the nominal amount as otherwise determined under section 
1916 of the Act and described at Sec.  447.54(a)(3) or (4). 
Furthermore, a State may only impose nominal cost sharing with respect 
to non-emergency services so long as no cost sharing is imposed to 
receive such care through an outpatient department or other alternative 
health care provider in the geographic area of the hospital emergency 
department involved.
    In accordance with the statute, we propose at Sec.  447.71(b)(1) 
that cost sharing for non-preferred drugs for those individuals not 
exceed the nominal cost sharing amount. In addition, we propose at 
Sec.  447.71(b)(2) that cost sharing for non-emergency services 
furnished in a hospital emergency department for those individuals not 
exceed the nominal cost sharing amount and be imposed only so long as 
no cost sharing is imposed on those individuals to receive such care 
through an outpatient department or other alternative non-emergency 
services provider in the geographic area of the hospital emergency 
department involved.
    Section 1916A(a)(2)(B) of the Act provides that the total aggregate 
amount of cost sharing imposed under sections 1916A(c), 1916A(e), and/
or 1916 of the Act upon individuals whose family income is at or below 
100 percent of the FPL may not exceed 5 percent of the family income of 
the family involved, as applied on a quarterly or monthly basis as 
specified by the State. In accordance with the statute, we propose at 
Sec.  447.71(c) that aggregate cost sharing for individuals whose 
family income is at or below 100 percent of the FPL applicable to a 
family of the size involved not exceed the maximum permitted under 
Sec.  447.78(b). At Sec.  447.78(b), we propose that the total 
aggregate amount of cost sharing may not exceed 5 percent of such 
family's income for the monthly or quarterly period, as specified in 
the State plan.
8. Premium and Cost Sharing Exemptions and Protections for Individuals 
Whose Family Income is Above 100 Percent but Does Not Exceed 150 
Percent of the FPL (Sec.  447.72)
    Under section 1916A(b)(1)(A) of the Act, the State plan may not 
impose premiums on individuals whose family incomes exceeds 100 
percent, but does not exceed 150 percent of the FPL applicable to a 
family of the size involved. In accordance with the statute, at Sec.  
447.72(a), we propose that the State plan exclude these individuals 
from the imposition of premiums.
    Section 1916A(b)(1)(B)(i) of the Act provides that, in the case of 
individuals whose family income exceeds 100 percent, but does not 
exceed 150 percent of the FPL applicable to a family of the size 
involved, cost sharing imposed under the State plan may not exceed 10 
percent of the cost of such item or service. However, section 
1916A(c)(2)(A)(i) of the Act prohibits a State from imposing, with 
respect to a non-preferred drug, cost sharing that exceeds the nominal 
amount as otherwise determined under section 1916 of the Act and 
described at Sec.  447.54(a)(3) for those individuals. In addition, 
section 1916A(e)(2)(A) of the Act prohibits a State from imposing, with 
respect to non-emergency services furnished in a hospital emergency 
department, cost sharing that exceeds twice the nominal amount as 
otherwise determined under section 1916 of the Act and described at 
Sec.  447.54(a)(3) for those individuals.
    Therefore, in accordance with the statute, we propose at Sec.  
447.72(b) that cost sharing for those individuals under the State plan 
not exceed 10 percent of the payment the agency makes for that item or 
service, with the exception that it not exceed the nominal cost sharing 
amount for non-preferred drugs or twice the nominal cost sharing amount 
for non-emergency services furnished in a hospital emergency 
department. In the case of States that do not have fee-for-service 
payment rates, we propose that

[[Page 9732]]

any copayment that the State imposes for services provided by an MCO 
may not exceed $5.20 for FY 2007. This proposal would provide greater 
flexibility to State Medicaid programs consistent with that provided to 
State SCHIP programs. Thereafter, any copayment that the State imposes 
for services provided by an MCO may not exceed this amount as updated 
each October 1 by the percentage increase in the medical care component 
of the CPI-U for the period of September to September ending in the 
preceding calendar year and then rounded to the next highest 10-cent 
increment.
    Section 1916A(b)(1)(B)(ii) of the Act provides that the total 
aggregate amount of cost sharing imposed under section 1916 and 1916A 
of the Act may not exceed 5 percent of the family income of the family 
involved, as applied on a quarterly or monthly basis as specified by 
the State. In accordance with the statute, we propose at Sec.  
447.72(c) that aggregate cost sharing for individuals whose family 
income exceeds 100 percent, but does not exceed 150 percent of the FPL 
applicable to a family of the size involved, not exceed the maximum 
permitted under Sec.  447.78(a). At Sec.  447.78(a), we propose that 
the total aggregate amount of cost sharing may not exceed 5 percent of 
such family's income for the monthly or quarterly period, as specified 
in the State plan.
9. Premium and Cost Sharing Protections for Individuals With Family 
Income Above 150 Percent of the FPL (Sec.  447.74)
    Under section 1916A(b)(2) of the Act, the State plan may impose 
premiums upon individuals whose family income exceeds 150 percent of 
the FPL applicable to a family of the size involved provided that, as 
described at section 1916A(b)(2)(A)of the Act, the total aggregate 
amount of premiums and cost sharing imposed under section 1916 and 
1916A of the Act not exceed 5 percent of the family income. In 
accordance with the statute, at Sec.  447.74(a), we state that the 
State plan can impose premiums upon individuals with family income 
above 150 percent of the FPL subject to the aggregate limit on premiums 
and cost sharing.
    Section 1916A(b)(2)(B) of the Act provides that, in the case of 
individuals whose family income exceeds 150 percent of the FPL 
applicable to a family of the size involved, cost sharing imposed under 
the State plan may not exceed 20 percent of the cost of that item 
(including a non-preferred drug) or service. Therefore, in accordance 
with the statute, we propose at Sec.  447.74(b) that cost sharing for 
those individuals under the State plan not exceed 20 percent of the 
payment the agency makes for that item or service. In the case of 
States that do not have fee-for-service payment rates, we propose that 
any copayment that the State imposes for services provided by an MCO 
may not exceed $5.20 for FY 2007. This proposal would provide greater 
flexibility to State Medicaid programs consistent with that provided to 
State SCHIP programs. Thereafter, any copayment that the State imposes 
for services provided by an MCO may not exceed this amount as updated 
each October 1 by the percentage increase in the medical care component 
of the CPI-U for the period of September to September ending in the 
preceding calendar year and then rounded to the next highest 10-cent 
increment.
    Section 1916A(b)(2)(A) of the Act provides that the total aggregate 
amount of cost sharing imposed under section 1916 and 1916A of the Act 
may not exceed 5 percent of the family income of the family involved, 
as applied on a quarterly or monthly basis as specified by the State. 
In accordance with the statute, we propose at Sec.  447.74(c) that 
aggregate cost sharing for individuals whose family income exceeds 150 
percent of the FPL applicable to a family of the size involved, not 
exceed the maximum permitted under Sec.  447.78(a). At Sec.  447.78(a), 
we propose that the total aggregate amount of premiums and cost sharing 
may not exceed 5 percent of such family's income for the monthly or 
quarterly period, as specified in the State plan.
10. Public Schedule (Sec.  447.76)
    As described in this preamble, section 1916 and 1916A of the Act 
provides authority for States to impose premiums and cost sharing for 
items and services, including prescription drugs and non-emergency use 
of a hospital emergency department, and to require a group or groups of 
individuals to make payment as a condition of eligibility or of 
receiving that item or service. In Sec.  447.76(a), we propose that 
State plans provide for schedules of premiums and cost sharing. In 
Sec.  447.76(a), we propose that the public schedule contain the 
following information: (1) Current premiums, enrollment fees, or 
similar fees; (2) current cost sharing charges; (3) the aggregate 
limits on premiums and cost sharing or only cost sharing; (4) 
mechanisms for making payments for required premiums and charges; (5) 
the consequences for an applicant or recipient who does not pay a 
premium or charge; and (6) a list of hospitals charging alternative 
cost sharing for non-emergency use of the emergency department. In 
addition, at Sec.  447.76(b) we propose that the State make the public 
schedule available to recipients, at the time of enrollment and 
reenrollment and when charges are revised, applicants, all 
participating providers, and the general public.
11. Aggregate Limits on Premiums and Cost Sharing (Sec.  447.78)
    As described above, section 1916A(b)(1)(B)(ii) of the Act provides 
that the total aggregate amount of cost sharing imposed under section 
1916 and 1916A of the Act upon individuals with family income above 100 
percent but at or below 150 percent of the FPL may not exceed 5 percent 
of the family income, as applied on a quarterly or monthly basis as 
specified by the State. Section 1916A(c)(2)(C) of the Act reiterates 
that this aggregate limit includes cost sharing for prescription drugs 
and section 1916A(e)(2)(C) of the Act reiterates that this aggregate 
limit includes cost sharing for non-emergency use of a hospital 
emergency department. Section 1916A(b)(2)(A) of the Act provides that 
the total aggregate amount of premiums and cost sharing imposed under 
section 1916 and 1916A of the Act upon individuals with family income 
above 150 percent of the FPL may not exceed 5 percent of the family 
income, as applied on a quarterly or monthly basis as specified by the 
State. Again, section 1916A(c)(2)(C) of the Act reiterates that this 
aggregate limit includes cost sharing for prescription drugs, and 
section 1916A(e)(2)(C) of the Act reiterates that this aggregate limit 
includes cost sharing for non-emergency use of a hospital emergency 
department. Finally, section 1916A(a)(2)(B) of the Act provides that to 
the extent that cost sharing under section 1916A(c) of the Act for 
prescription drugs, cost sharing under section 1916A(e) of the Act for 
non-emergency use of a hospital emergency department, and/or cost 
sharing under section 1916 of the Act is imposed upon individuals whose 
family income is at or below 100 percent of the FPL, the total 
aggregate amount of premiums and cost sharing imposed may not exceed 5 
percent of the family income.
    In accordance with these provisions, at Sec.  447.78(a), we propose 
that for individuals with family income above 100 percent of the FPL 
the aggregate amount of premiums (when applicable) and cost sharing 
under section 1916 and 1916A of the Act not exceed 5 percent of a 
family's income for the monthly or quarterly period, as specified by 
the State in the State plan. At Sec.  447.78(b), we propose that for 
individuals whose family income is at or below 100

[[Page 9733]]

percent of the FPL the aggregate amount of cost sharing under sections 
1916, 1916A(c), and/or 1916A(e) of the Act not exceed 5 percent of a 
family's income for the monthly or quarterly period, as specified by 
the State in the State plan. We also propose at Sec.  447.78(c) that 
family income shall be determined in a manner and for that period as 
specified by the State in the State plan. We clarify that States may 
use gross income to compute family income and that they may use a 
different methodology for computing family income for purposes of 
determining the aggregate limits than for determining income 
eligibility.
12. Enforceability of Premiums and Cost Sharing (Sec.  447.80)
    Section 1916A(d)(1) of the Act permits a State to condition 
Medicaid eligibility upon the prepayment of premiums imposed under 
section 1916A of the Act or to terminate Medicaid eligibility for the 
failure to pay such a premium for 60 days or more. The statute provides 
States flexibility to implement these requirements for some or all 
groups of individuals as specified in the State plan. The statute also 
provides flexibility to waive payment of any premium in any case where 
the State determines that requiring that payment would create undue 
hardship.
    In accordance with the statute, we propose at Sec.  447.80(a) to 
permit a State to condition eligibility for a group or group of 
individuals upon prepayment of premiums, to terminate the eligibility 
of an individual from a group or groups of individuals for failure to 
pay for 60 days or more, and to waive payment in any case where 
requiring the payment would create undue hardship.
    Section 1916A(d)(2) of the Act permits a State to allow a provider 
to require that an individual, as a condition of receiving an item or 
service, pay the cost sharing charge imposed under section 1916A of the 
Act. The provider is not prohibited by this authority from choosing to 
reduce or waive cost sharing on a case-by-case basis. However, section 
1916A(a)(2)(A) specifies that section 1916A(d)(2) shall not apply in 
the case of an individual whose family income does not exceed 100 
percent of the FPL applicable to a family of the size involved.
    In accordance with the statute, at Sec.  447.80(b) we propose that 
a State permit a provider, including a pharmacy, to require an 
individual to pay cost sharing imposed under section 1916A of the Act 
as a condition of receiving an item or service. However, at Sec.  
447.80(b)(1) we specify that a provider, including a pharmacy or 
hospital, may not require an individual whose family income is at or 
below 100 percent of the FPL to pay the cost sharing charge as a 
condition of receiving the item or service. In addition, at Sec.  
447.80(b)(2) we propose that a hospital that has determined after an 
appropriate medical screening under section 1867 of the Act that an 
individual does not have an emergency medical condition must first 
provide the name and location of an available and accessible alternate 
non-emergency services provider, the fact that the alternate provider 
can provide the services without the imposition of that cost sharing, 
and a referral to coordinate scheduling of treatment before it can 
require payment of the cost sharing. Finally, at Sec.  447.80(b)(3) we 
propose that a provider may reduce or waive cost sharing imposed under 
section 1916A of the Act on a case-by-case basis.
13. Restrictions on Payments to Providers (Sec.  447.82)
    Proposed Sec.  447.82 requires States to reduce the amount of State 
payments to providers by the amount of recipients' cost sharing 
obligations under section 1916A of the Act. However, States have the 
ability to increase total State plan rates to providers to maintain the 
same level of State payment when cost sharing is introduced.

C. SCHIP Regulations

1. Maximum Allowable Cost Sharing Charges on Targeted Low-Income 
Children in Families With Incomes From 101 to 150 Percent of the FPL 
(Sec.  457.555)
    We are revising Sec.  457.555 to update the existing ``nominal'' 
SCHIP cost sharing amounts, specifically the copayment amounts 
described at Sec.  457.555(a)(1) and (2), (c), and (d) and the 
deductible amount described at Sec.  447.555(a)(4). Section 6041(b)(2) 
of the DRA requires the Secretary to increase the nominal Medicaid cost 
sharing amounts under section 1916 of the Act for each year (beginning 
with 2006) by the annual percentage increase in the medical care 
component of the consumer price index for all urban consumers (U.S. 
city average) as rounded up in an appropriate manner. While section 
6041(b)(2) of the DRA does not require the Secretary to increase the 
SCHIP nominal cost sharing amounts, we believe that our proposal is 
consistent with sections 2103(e)(3)(A)(ii) and 2103(e)(1)(B) of the 
SCHIP statute. Section 2103(e)(3)(A)(ii) of the Act specifies that a 
State SCHIP plan may not impose a deductible, cost sharing, or similar 
charge that exceeds an amount that is nominal as determined consistent 
with Medicaid regulations at Sec.  447.54, with an appropriate 
adjustment for inflation or other reasons as the Secretary determines 
to be reasonable. Section 2103(e)(1)(B) of the Act prohibits a State 
SCHIP plan from imposing cost sharing that favors children from 
families with higher income over children from families with lower 
income. By updating the existing SCHIP nominal cost sharing amounts by 
the annual percentage increase in the medical care component of the 
CPI-U by the period of September to September ending in the preceding 
calendar year, we would retain nominal cost sharing amounts that 
reflect a SCHIP recipient's ability to pay higher cost sharing. The 
medical care component of the CPI-U increased by 3.9 percent between 
September 2004 and September 2005, so we propose to update the nominal 
amounts by that factor and then round to the next higher 10-cent 
increment. We propose to round to the next higher 10-cent increment 
because it will simplify calculation and collection of the amounts 
involved. Based on this methodology, we propose the following copayment 
maximum amounts:

------------------------------------------------------------------------
               Total cost of services                   Maximum amount
------------------------------------------------------------------------
$15.00 or less......................................               $1.10
$15.01 to $40.......................................                2.10
$40.01 to $80.......................................                3.20
$80.01 or more......................................                5.20
------------------------------------------------------------------------

    We also propose that the copayments for services provided by an MCO 
and for emergency services provided by an institution not exceed $5.20 
per visit and that the copayment for non-emergency services furnished 
in a hospital emergency room to targeted low-income children with 
family income from 101 to 150 percent of the FPL not exceed $10.40. 
Finally, we propose that a deductible not exceed $3.20 per family per 
month.
    States should use these updated nominal amounts during FY 2007. 
Thereafter, we will update these amounts each October 1 by the 
percentage increase in the medical care component of the CPI-U for the 
period of September to September ending in the preceding calendar year 
and then rounding to the next higher 10-cent increment.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-

[[Page 9734]]

day notice in the Federal Register and solicit public comment before a 
collection of information requirement is submitted to the Office of 
Management and Budget (OMB) for review and approval. In order to fairly 
evaluate whether an information collection should be approved by OMB, 
section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires 
that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements:

Section 447.64 Premiums, Enrollment Fees, or Similar Fees: State Plan 
Requirements

    Section 447.64 requires a State imposing premiums, enrollment fees, 
or similar fees on individuals to describe in the State plan:
    (a) The group or groups of individuals that may be subject to the 
premiums, enrollment fees, or similar charges.
    (b) The schedule of the premiums, enrollment fees, or similar fees 
imposed.
    (c) The methodology used to determine family income for purposes of 
the limitations related to family income level that are described 
below, including the period and periodicity of those determinations.
    (d) The methodology used to ensure compliance with the requirements 
of Sec.  447.78 that the aggregate amount of premiums and cost sharing 
imposed for all individuals in the family does not exceed 5 percent of 
the family income of the family involved.
    (e) The process for informing the recipients, applicants, 
providers, and the public of the schedule of premiums, enrollment fees, 
or similar fees for a group or groups of individuals in accordance with 
Sec.  447.76.
    (f) The notice of, timeframe for, and manner of required premium 
payments for a group or groups of individuals and the consequences for 
an individual who does not pay.
    The burden associated with this requirement is the time and effort 
it would take for a State to include this detailed description in the 
State plan. We estimate it would take one State approximately 20 
minutes to incorporate this information in their plan. We believe 56 
States will be affected by this requirement for a total annual burden 
of 18.67 hours.

Section 447.68 Copayments, Coinsurance, Deductibles, or Similar Cost 
Sharing Charges: State Plan Requirements

    Section 447.68 requires a State imposing copayments, coinsurance, 
deductibles, or similar cost sharing charges on individuals to describe 
in the State plan:
    (a) The group or groups of individuals that may be subject to the 
cost sharing charge.
    (b) The methodology used to determine family income, for purposes 
of the limitations on cost sharing related to family income that are 
described below, including the period and periodicity of those 
determinations.
    (c) The item or service for which the charge is imposed.
    (d) The methods, such as the use of integrated automated systems, 
for tracking cost sharing charges, informing recipients and providers 
of their liability, and notifying recipients and providers when 
individual recipients have paid the maximum cost sharing charges 
permitted for the period of time.
    (e) The process for informing recipients, applicants, providers, 
and the public of the schedule of cost sharing charges for specific 
items and services for a group or groups of individuals in accordance 
with Sec.  447.76.
    (f) The methodology used to ensure that:
    (1) The aggregate amount of premiums and cost sharing imposed for 
all individuals with family income above 100 percent of the FPL does 
not exceed 5 percent of the family income of the family involved.
    (2) The aggregate amount of cost sharing under sections 1916, 
1916A(c), and/or 1916A(e) of the Act for individuals with family income 
at or below 100 percent of the FPL does not exceed 5 percent of the 
family income of the family involved.
    (g) The notice of, timeframe for, and manner of required cost 
sharing and the consequences for failure to pay.
    The burden associated with this requirement is the time and effort 
it would take for a State to include this detailed description in the 
State plan. We estimate it would take one State approximately 20 
minutes to incorporate this information in their plan. We believe 56 
States will be affected by this requirement for a total annual burden 
of 18.67 hours.

Section 447.76 Public Schedule

    Section 447.76(a) requires States to make available to the groups 
in paragraph (b) of this section a public schedule that contains the 
following information:
    (1) Current premiums, enrollment fees, or similar fees.
    (2) Current cost sharing charges.
    (3) The aggregate limit on premiums and cost sharing.
    (4) Mechanisms for making payments for required premiums and 
charges.
    (5) The consequences for an applicant or recipient who does not pay 
a premium or charge.
    (6) A list of hospitals charging alternative cost sharing for non-
emergency use of the emergency department.
    The burden associated with this requirement is the time and effort 
it would take the State to prepare and make available to appropriate 
parties a public schedule. We estimate that it would take 20 minutes 
per State. We believe 56 States will be affected by this requirement 
for an annual burden of 18.67 hours.

Section 447.80 Enforceability of Premiums and Cost Sharing

    Section 447.80(b)(1) states that a hospital that has determined 
after an appropriate medical screening pursuant to section 489.24, that 
an individual does not have an emergency medical condition before 
imposing cost sharing on an individual must provide the name and 
location of an available and accessible alternate non-emergency 
services provider as defined in section 1916A(e)(4)(B) of the Act, the 
fact that the alternate provider can provide the services with the 
imposition of a lesser cost sharing amount or no cost sharing, and a 
referral to coordinate scheduling of treatment by this provider before 
requiring payment of cost sharing.
    The burden associated with this requirement is the time and effort 
it would take for a hospital to provide the name and location of an 
alternate provider who can provide services of a lesser cost sharing 
amount or no cost sharing and a referral. We estimate the burden on a 
hospital to be 30 minutes. We believe the number of hospital visits 
will be 4 million; therefore, the total annual burden is 2 million 
hours.
    We have submitted a copy of this proposed rule to OMB for its 
review of the information collection requirements described above. 
These requirements are not effective until they have been approved by 
OMB.
    If you comment on these information collection and recordkeeping

[[Page 9735]]

requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Division of Regulations Development, 
Attn: Melissa Musotto, [CMS-2244-P], Room C4-26-05, 7500 Security 
Boulevard, Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503,
Attn: Katherine Astrich, CMS Desk Officer, CMS-2244-P, [email protected]. Fax (202) 395-6974.

Regulatory Impact Analysis

A. Overall Impact

    We have examined the impacts 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 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) 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 reaches the economic threshold and thus is considered a major 
rule.
    The RFA requires agencies to analyze options for regulatory relief 
of 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 
$6.5 million to $31.5 million in any 1 year. Individuals and States are 
not included in the definition of a small entity. We have determined, 
and the Secretary certifies, that this rule would not have a 
significant economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 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 of a Core-Based 
Statistical Area and has fewer than 100 beds. We have determined, and 
the Secretary certifies, that this rule would not have a significant 
impact on the operations of a substantial number of small rural 
hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4) also requires that agencies assess anticipated costs and 
benefits before issuing any rule that may result in expenditures in any 
1 year by State, local, or tribal governments, in the aggregate, or by 
the private sector, of $100 million, updated annually for inflation. 
That threshold level is currently approximately $127 million. We have 
determined that this rule would require new spending in excess of the 
threshold. Table 2 outlines the total increase to Medicaid enrollees 
cost sharing as a result of all the provisions of the DRA. This 
includes an estimated cost increase to Medicaid recipients of $105 
million in 2007, $155 million in 2008, $255 million in 2009, $375 
million in 2010, and $455 million in 2011.
    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. We have determined that this rule would not impose 
substantial direct requirement costs on State and local governments.

B. Anticipated Effects

    The following chart summarizes our estimate of the anticipated 
effects of this rule.

      Table 1.--Estimated Savings of the Cost Sharing Provisions of the Deficit Reduction Act (DRA) of 2005
                                        [Savings in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                       2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
                                                                                    Federal Share
----------------------------------------------------------------------------------------------------------------
Sec. 6041 Optional alternative premiums/cost sharing...............       65       85      135      190      220
Sec. 6042 Cost sharing for prescription drugs......................       40       65      120      185      240
Sec. 6043(a) Copays for non-emergency care in ER...................        5       10       15       20       25
----------------------------------------------------------------------------------------------------------------
                                                                                     State Share
----------------------------------------------------------------------------------------------------------------
Sec. 6041 Optional alternative premiums/cost sharing...............       50       65      105      145      165
Sec. 6042 Cost sharing for prescription drugs......................       30       50       90      140      180
Sec. 6043(a) Copays for non-emergency care in ER...................        5        5       10       15       20
----------------------------------------------------------------------------------------------------------------


   Table 2.--Medicaid Enrollees Cost Sharing Impact as a Result of the Provisions of the Deficit Reduction Act
                                                  (DRA) of 2005
                                         [Costs in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                       2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
                                                                               Medicaid Enrollee Share
----------------------------------------------------------------------------------------------------------------
Total increase in Medicaid enrollee/cost sharing for all provisions      105      155      255      375      455
----------------------------------------------------------------------------------------------------------------


[[Page 9736]]

    These estimates are based on data regarding copayments in the 
Medicaid program derived from a 2004 Kaiser Family Foundation survey, 
and data on premiums from a 2004 report by the U.S. Government 
Accountability Office. In addition, we have used enrollment data from 
the Medicaid Statistical Information System and utilization data from 
the 2002 Medicaid Expenditure Panel Survey conducted by the Agency for 
Healthcare Research and Quality.
    We assume that only States that currently charge copayments and/or 
premiums for some groups will take advantage of the option to expand 
the use of premiums and copayments under the DRA provisions. States now 
charging copayments are assumed to increase them on average to 75 
percent of maximum possible levels by 2011, and states currently 
charging premiums are assumed to add premiums requirements for some 
groups not currently allowed, also reaching 75 percent of the maximum 
possible by 2011.
    In addition to direct savings from increased cost sharing, we 
assume there would be declines in utilization as some enrollees subject 
to new cost sharing requirements choose to decrease their use of 
services. The decline is assumed to create additional savings of 75 
percent of direct savings for physician and outpatient hospital 
services, 100 percent for drugs, and 125 percent for dental services. 
These additional savings are assumed to be reduced somewhat as a result 
of some providers failing to collect copayments. Savings are split 
between Federal and State governments using an average matching rate of 
57 percent.
    Table 2 illustrates that the estimated impact for Medicaid 
enrollees as a result of all of the cost-sharing provisions of the DRA 
are $105 million for 2007, $155 million for 2008, $255 million for 
2009, $375 million for 2010, and $455 million for 2011. Although, these 
estimates reflect an increase of costs to beneficiaries, we do not 
believe this will pose a barrier to accessing health care. The law 
provides that States can impose alternative cost sharing. We believe 
through the use of alternative cost sharing, States will help 
recipients become more educated and efficient health care consumers. We 
do, however, solicit comments on these assumptions.

C. Alternatives Considered

    This rule is necessary to implement section 1916A of the Social 
Security Act, which was established by the Deficit Reduction Act of 
2005 (DRA) and amended by the Tax Relief and Health Care Act of 2006 
(TRHCA).

D. Accounting Statement and Table

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in the table below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of this proposed rule. This 
table provides our best estimate of the decrease in Medicaid payment as 
a result of the changes presented in this proposed rule. All savings 
are classified as transfers to the Federal Government.

         Table.--Accounting Statement: Classification of Estimated Expenditures, from FY 2007 to FY 2011
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                      Category                                                 Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers......................................................     3% Units      7% Units
                                                                                         Discount      Discount
                                                                                      Rate $278.2   Rate $270.7
----------------------------------------------------------------------------------------------------------------


From Whom To Whom?.........................................................................................  Beneficiaries to Federal Government
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Category                                                                    Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year.......................................................................................................    2007     2008     2009     2010     2011
                                                                                                            --------------------------------------------
Annualized Monetized Transfers.............................................................................     $110     $160     $270     $395     $485
--------------------------------------------------------------------------------------------------------------------------------------------------------
From Whom To Whom?.........................................................................................  Beneficiaries to Federal Government
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
 
 
----------------------------------------------------------------------------------------------------------------
                                      Category                                                 Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers......................................................     3% Units      7% Units
                                                                                         Discount      Discount
                                                                                      Rate $210.6   Rate $205.0


From Whom To Whom?.........................................................................................  Beneficiaries to Federal Government
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Category                                                                    Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year.......................................................................................................    2007     2008     2009     2010     2011
                                                                                                            --------------------------------------------
Annualized Monetized Transfers.............................................................................      $85     $120     $205     $300     $365
--------------------------------------------------------------------------------------------------------------------------------------------------------
From Whom To Whom?.........................................................................................  Beneficiaries to Federal Government
--------------------------------------------------------------------------------------------------------------------------------------------------------

E. Conclusion

    We expect that this rule would promote the modernization of the 
Medicaid program. The proposed rule would provide a new option to 
States to create programs that are aligned with today's Medicaid 
populations and the health care environment. Through alternative cost 
sharing, States would help recipients become more educated and 
efficient health care consumers. Thus, this rule would help ensure the 
sustainability of the Medicaid program over time.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 447

    Accounting, Administrative practice and procedure, Drugs, Grant 
programs--Health, Health facilities, Health professions, Medicaid, 
Reporting and recordkeeping requirements, Rural areas.

[[Page 9737]]

42 CFR Part 457

    Administrative practice and procedure, Grant programs--Health, 
Health insurance, Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services propose to amend 42 CFR chapter IV as set forth 
below:

PART 447--PAYMENTS FOR SERVICES

    1. The authority citation for part 447 continues to read as 
follows:

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

    2. Section 447.54 is amended by--
    a. Republishing the introductory text to paragraph (a).
    b. Revising paragraphs (a)(1) and (a)(3).
    c. Adding new paragraph (a)(4).
    The republication, revisions, and additions read as follows:


Sec.  447.54  Maximum allowable and nominal charges.

    (a) Non-institutional services. Except as specified in paragraph 
(b) of this section, for non-institutional services, the plan must 
provide that the following requirements are met:
    (1) For Federal Fiscal Year 2007, any deductible it imposes does 
not exceed $2.10 per month per family for each period of Medicaid 
eligibility. For example, if Medicaid eligibility is certified for a 3-
month period, the maximum deductible which may be imposed on a family 
for the period of eligibility is $6.30. Thereafter, any deductible 
should not exceed these amounts as updated each October 1 by the 
percentage increase in the medical care component of the CPI-U for the 
period of September to September ending in the preceding calendar year, 
and then rounded to the next higher 10-cent increment.
* * * * *
    (3)(i) For Federal Fiscal Year 2007, any copayments it imposes 
under a fee-for-service delivery system do not exceed the amounts shown 
in the following table:

------------------------------------------------------------------------
                                                               Maximum
                       State payment                          copayment
------------------------------------------------------------------------
$10 or less................................................         $.60
$10.01 to $25..............................................         1.10
$25.01 to $50..............................................         2.10
$50.01 or more.............................................         3.20
------------------------------------------------------------------------

    (ii) Thereafter, any copayments should not exceed these amounts as 
updated each October 1 by the percentage increase in the medical care 
component of the CPI-U for the period of September to September ending 
in the preceding calendar year and then rounded to the next higher 10-
cent increment.
    (4) For Federal Fiscal Year 2007, any copayment it imposes for 
services provided by an MCO may not exceed $5.20 per visit. Thereafter, 
any copayment should not exceed these amounts as updated each October 1 
by the percentage increase in the medical care component of the CPI-U 
for the period of September to September ending in the preceding 
calendar year and then rounded to the next higher 10-cent increment.
* * * * *
    3. Section 447.55 is amended by revising paragraph (b) to read as 
follows:


Sec.  447.55  Standard copayment.

* * * * *
    (b) This standard copayment amount for any service may be 
determined by applying the maximum copayment amounts specified in Sec.  
447.54(a) and (b) to the agency's average or typical payment for that 
service. For example, if the agency's typical payment for prescribed 
drugs is $4 to $5 per prescription, the agency might set a standard 
copayment of $.60 per prescription. This standard copayment may be 
adjusted based on updated copayments as permitted under Sec.  
447.54(a)(3).
    4. New Sec. Sec.  447.62, 447.64, 447.66, 447.68, 447.70, 447.71, 
447.72, 447.74, 447.76, 447.78, 447.80, and Sec.  447.82, and a new 
undesignated center heading are added to read as follows:

ALTERNATIVE PREMIUMS AND COST SHARING UNDER SECTION 1916A


Sec.  447.62  Alternative premiums and cost sharing: Basis, purpose and 
scope.

    (a) Section 1916A of the Act sets forth options for alternative 
premiums and cost sharing, which are premiums and cost sharing that are 
not subject to the limitations under section 1916 of the Act as 
described in Sec.  447.51 through Sec.  447.56. For States that impose 
alternative premiums, Sec.  447.64 through Sec.  447.66, Sec.  447.72, 
Sec.  447.74, Sec.  447.78, and Sec.  447.80 prescribe State plan 
requirements and options for alternative premiums and the standards and 
conditions under which States may impose them. For States that impose 
alternative cost sharing, Sec.  447.68 through Sec.  447.72, Sec.  
447.74, Sec.  447.78, and Sec.  447.80 prescribe State plan 
requirements and options for alternative cost sharing and the standards 
and conditions under which States may impose alternative cost sharing. 
For other individuals, premiums and cost sharing must comply with the 
requirements described in Sec.  447.50 through Sec.  447.60.
    (b) Neither section 1916A of the Act nor the regulations referenced 
in paragraph (a) of this section affect the following:
    (1) The Secretary's authority to waive limitations on premiums and 
cost sharing under this subpart.
    (2) Existing waivers with regard to the imposition of premiums and 
cost sharing.


Sec.  447.64  Alternative premiums, enrollment fees, or similar fees: 
State plan requirements.

    When a State imposes alternative premiums, enrollment fees, or 
similar fees on individuals, the State plan must describe the 
following:
    (a) The group or groups of individuals that may be subject to the 
premiums, enrollment fees, or similar charges.
    (b) The schedule of the premiums, enrollment fees, or similar fees 
imposed.
    (c) The methodology used to determine family income for purposes of 
the limitations related to family income level that are described 
below, including the period and periodicity of those determinations.
    (d) The methodology used to ensure compliance with the requirements 
of Sec.  447.78 that the aggregate amount of premiums and cost sharing 
imposed for all individuals in the family do not exceed 5 percent of 
the family income of the family involved.
    (e) The process for informing the recipients, applicants, 
providers, and the public of the schedule of premiums, enrollment fees, 
or similar fees for a group or groups of individuals in accordance with 
Sec.  447.76.
    (f) The notice of, time frame for, and manner of required premium 
payments for a group or groups of individuals and the consequences for 
an individual who does not pay.


Sec.  447.66  General alternative premium protections.

    (a) States may not impose alternative premiums upon the following 
individuals:
    (1) Individuals under 18 years of age that are required to be 
provided medical assistance under section 1902(a)(10)(A)(i) of the Act, 
and including individuals with respect to whom child welfare services 
are made available under Part B of title IV on the basis of being a 
child in foster care and individuals with respect to whom adoption or 
foster care assistance is made available under Part E of that title, 
without regard to age.

[[Page 9738]]

    (2) Pregnant women.
    (3) Any terminally ill individual receiving hospice care, as 
defined in section 1905(o) of the Act.
    (4) Any individual who is an inpatient in a hospital, nursing 
facility, intermediate care facility, or other medical institution, if 
the individual is required, as a condition of receiving services in 
that institution under the State plan, to spend for costs of medical 
care all but a minimal amount of the individual's income required for 
personal needs.
    (5) Women who are receiving Medicaid on the basis of the breast or 
cervical cancer eligibility group under sections 
1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the Act.
    (6) Disabled children who are receiving medical assistance by 
virtue of the application of sections 1902(a)(10)(A)(ii)(XIX) and 
1902(cc) of the Act.
    (b) States may exempt additional classes of individuals from 
premiums.


Sec.  447.68  Alternative copayments, coinsurance, deductibles, or 
similar cost sharing charges: State plan r equirements.

    When a State imposes alternative copayments, coinsurance, 
deductibles, or similar cost sharing charges on individuals, the State 
plan must describe the following:
    (a) The group or groups of individuals that may be subject to the 
cost sharing charge.
    (b) The methodology used to determine family income, for purposes 
of the limitations on cost sharing related to family income that are 
described below, including the period and periodicity of those 
determinations.
    (c) The item or service for which the charge is imposed.
    (d) The methods, such as the use of integrated automated systems, 
for tracking cost sharing charges, informing recipients and providers 
of their liability, and notifying recipients and providers when 
individual recipients have paid the maximum cost sharing charges 
permitted for the period of time.
    (e) The process for informing recipients, applicants, providers, 
and the public of the schedule of cost sharing charges for specific 
items and services for a group or groups of individuals in accordance 
with Sec.  447.76.
    (f) The methodology used to ensure that:
    (1) The aggregate amount of premiums and cost sharing imposed for 
all individuals with family income above 100 percent of the FPL does 
not exceed 5 percent of the family income of the family involved.
    (2) The aggregate amount of cost sharing under sections 1916, 
1916A(c), and/or 1916A(e) of the Act for individuals with family income 
at or below 100 percent of the FPL does not exceed 5 percent of the 
family income of the family involved.
    (g) The notice of, time frame for, and manner of required cost 
sharing and the consequences for failure to pay.


Sec.  447.70  General alternative cost sharing protections.

    (a)(1) States may not impose alternative cost sharing for the 
following items/services. Except as indicated, these limits do not 
apply to alternative cost sharing for non-preferred prescription drugs 
within a class of such drugs or non-emergency use of the emergency 
room.
    (i) Services furnished to individuals under 18 years of age who are 
required to be provided Medicaid under section 1902(a)(10)(A)(i) of the 
Act, and including services furnished to individuals with respect to 
whom child welfare services are made available under Part B of title IV 
on the basis of being a child in foster care and individuals with 
respect to whom adoption or foster care assistance is made available 
under Part E of that title, without regard to age.
    (ii) Preventive services (such as well baby and well child care and 
immunizations) provided to children under 18 years of age regardless of 
family income.
    (iii) Services furnished to pregnant women, if those services 
relate to pregnancy or to any other medical condition which may 
complicate the pregnancy.
    (iv) Services furnished to a terminally ill individual who is 
receiving hospice care (as defined in section 1905(o) of the Act).
    (v) Services furnished to any individual who is an inpatient in a 
hospital, nursing facility, intermediate care facility for the mentally 
retarded, or other medical institution, if the individual is required, 
as a condition of receiving services in that institution under the 
State plan, to spend for costs of medical care all but a minimal amount 
of the individual's income required for personal needs.
    (vi) Emergency services as defined at Sec.  447.53(b)(4), except 
charges for services furnished after the hospital has determined, based 
on the screening and any other services required under Sec.  489.24 of 
this chapter, that the individual does not have an emergency medical 
condition consistent with the requirements of paragraph (a)(2) of this 
section and Sec.  447.80(b)(1).
    (vii) Family planning services and supplies described in section 
1905(a)(4)(C) of the Act.
    (viii) Services furnished to women who are receiving medical 
assistance by virtue of the application of sections 
1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the Act (breast or cervical 
cancer provisions).
    (ix) Services furnished to disabled children who are receiving 
medical assistance by virtue of the application of sections 
1902(a)(10)(A)(ii)(XIX) and 1902(cc) of the Act.
    (x) Preferred drugs within a class for individuals for whom cost 
sharing may not otherwise be imposed as described in paragraphs 
(a)(1)(i) through (a)(1)(ix) of this section.
    (2) A State may impose nominal cost sharing as defined in Sec.  
447.54 for services furnished in a hospital emergency department, other 
than those required under Sec.  489.24 of this chapter, if the hospital 
has determined based on the screening required under Sec.  489.24 that 
the individual does not have an emergency medical condition, the 
requirements of Sec.  447.80(b)(1) are met, and no cost sharing is 
imposed to receive the care through an outpatient department or another 
alternative health care provider in the geographic area of the hospital 
emergency department involved.
    (b) In the case of a drug that is a preferred drug within a class, 
cost sharing may not exceed the levels permitted under section 1916 of 
the Act. Cost sharing can be imposed that exceeds section 1916 levels 
only for drugs that are not preferred drugs within a class in 
accordance with section 1916A(c).
    (c) In the case of a drug that is not a preferred drug, the cost 
sharing is limited to the amount imposed for a preferred drug if the 
following conditions are met:
    (1) The prescribing physician determines that the preferred drug 
would be less effective or would have adverse effects for the 
individual or both.
    (2) State criteria for prior authorization, if any, are met.
    (d) States may exempt additional individuals, items, or services 
from cost sharing.


Sec.  447.71  Alternative premium and cost sharing exemptions and 
protections for individuals with family incomes at or below 100 percent 
of the FPL.

    (a) The State may not impose premiums under the State plan on 
individuals whose family income is at or below 100 percent of the FPL.
    (b) The State may not impose cost sharing under the State plan on

[[Page 9739]]

individuals whose family income is at or below 100 percent of the FPL, 
with the following exceptions:
    (1) The State may impose cost sharing for non-preferred drugs that 
does not exceed the nominal amount as defined in Sec.  447.54.
    (2) The State may impose cost sharing for non-emergency services 
furnished in a hospital emergency department that does not exceed the 
nominal amount as defined in Sec.  447.54 so long as no cost sharing is 
imposed to receive such care through an outpatient department or other 
alternative non-emergency services provider in the geographic area of 
the hospital emergency department involved.
    (c) Aggregate cost sharing of the family under sections 1916, 
1916A(c), and/or 1916A(e) may not exceed the maximum permitted under 
Sec.  447.78(b).


Sec.  447.72  Alternative premium and cost sharing exemptions and 
protections for individuals with family incomes above 100 percent but 
at or below 150 percent of the FPL.

    (a) The State may not impose premiums under the State plan on 
individuals whose family income exceeds 100 percent, but does not 
exceed 150 percent, of the FPL.
    (b) Cost sharing may not exceed 10 percent of the payment the 
agency makes for the item or service, with the following exceptions:
    (1) Cost sharing for non-preferred drugs cannot exceed the nominal 
amount as defined in Sec.  447.54.
    (2) Cost sharing for non-emergency services furnished in the 
hospital emergency department cannot exceed twice the nominal amount as 
defined in Sec.  447.54. A hospital must meet the requirements 
described at Sec.  447.80 before the cost sharing can be imposed.
    (3) In the case of States that do not have fee-for-service payment 
rates, any copayment that the State imposes for services provided by an 
MCO may not exceed $5.20 for Federal Fiscal Year 2007. Thereafter, any 
copayment may not exceed this amount as updated each October 1 by the 
percentage increase in the medical care component of the CPI-U for the 
period of September to September ending in the preceding calendar year 
and then rounded to the next highest 10-cent increment.
    (c) Aggregate cost sharing of the family may not exceed the maximum 
permitted under Sec.  447.78(a).


Sec.  447.74  Alternative premium and cost sharing protections for 
individuals with family incomes above 150 percent of the FPL.

    (a) States may impose premiums consistent with the aggregate limits 
set forth in Sec.  447.78(a).
    (b) Cost sharing may not exceed 20 percent of the payment the 
agency makes for the item (including a non-preferred drug) or service, 
with the following exception: In the case of States that do not have 
fee-for-service payment rates, any copayment that the State imposes for 
services provided by an MCO may not exceed $5.20 for Federal Fiscal 
Year 2007. Thereafter, any copayment may not exceed this amount as 
updated each October 1 by the percentage increase in the medical care 
component of the CPI-U for the period of September to September ending 
in the preceding calendar year and then rounded to the next highest 10-
cent increment.
    (c) Aggregate premiums and cost sharing of the family may not 
exceed the maximum permitted under Sec.  447.78(a).


Sec.  447.76  Public schedule.

    (a) The State must make available to the groups in paragraph (b) of 
this section a public schedule that contains the following information:
    (1) Current premiums, enrollment fees, or similar fees.
    (2) Current cost sharing charges.
    (3) The aggregate limit on premiums and cost sharing or just cost 
sharing.
    (4) Mechanisms for making payments for required premiums and 
charges.
    (5) The consequences for an applicant or recipient who does not pay 
a premium or charge.
    (6) A list of hospitals charging alternative cost sharing for non-
emergency use of the emergency department.
    (b) The State must make the public schedule available to the 
following:
    (1) Recipients, at the time of their enrollment and reenrollment 
after a redetermination of eligibility, and when premiums, cost sharing 
charges, and the aggregate limits are revised.
    (2) Applicants, at the time of application.
    (3) All participating providers.
    (4) The general public.


Sec.  447.78  Aggregate limits on alternative premiums and cost 
sharing.

    (a) If a State imposes alternative premiums or cost sharing, the 
total aggregate amount of premiums and cost sharing under section 1916, 
1916A(c) or 1916A(e) for individuals with family income above 100 
percent of the FPL may not exceed 5 percent of the family's income for 
the monthly or quarterly period, as specified by the State in the State 
plan
    (b) The total aggregate amount of cost sharing under sections 1916, 
1916A(c), and/or 1916A(e) of the Act for individuals with family income 
at or below 100 percent of the FPL may not exceed 5 percent of the 
family's income for the monthly or quarterly period, as specified in 
the State plan.
    (c) Family income shall be determined in a manner and for that 
period as specified by the State in the State plan.
    (1) States may use gross income or any other methodology.
    (2) States may use a different methodology for determining the 
aggregate limits than they do for determining income eligibility.


Sec.  447.80  Enforceability of alternative premiums and cost sharing.

    (a) With respect to alternative premiums, a State may do the 
following:
    (1) Require a group or groups of individuals to prepay.
    (2) Terminate an individual from medical assistance on the basis of 
failure to pay for 60 days or more.
    (3) Waive payment of a premium in any case where it determines that 
requiring the payment would create an undue hardship.
    (b) With respect to alternative cost sharing, a State may permit a 
provider, including a pharmacy, to require an individual, as a 
condition for receiving the item or service, to pay the cost sharing 
charge, except as specified below.
    (1) A provider, including a pharmacy and a hospital, may not 
require an individual whose family income is at or below 100 percent of 
the FPL to pay the cost sharing charge as a condition of receiving the 
service.
    (2) A hospital that has determined after an appropriate medical 
screening pursuant to Sec.  489.24, that an individual does not have an 
emergency medical condition, before imposing cost sharing on an 
individual, must provide the name and location of an available and 
accessible alternate non-emergency services provider as defined in 
section 1916A(e)(4)(B), the fact that the alternate provider can 
provide the services with the imposition of a lesser cost sharing 
amount or no cost sharing, and a referral to coordinate scheduling of 
treatment by this provider before requiring payment of cost sharing.
    (3) The provider is not prohibited by this authority from choosing 
to reduce or waive cost sharing on a case-by-case basis.

[[Page 9740]]

Sec.  447.82  Restrictions on payments to providers.

    The plan must provide that the agency reduces the payment it makes 
to any provider by the amount of a recipient's cost sharing obligation, 
regardless of whether the provider successfully collects the cost 
sharing.

PART 457--ALLOTMENTS AND GRANTS TO STATES

    5. The authority citation for part 457 continues to read as 
follows:

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

    6. Section 457.555 is amended by--
    a. Republishing paragraph (a) introductory text.
    b. Revising paragraphs (a)(1), (a)(2), and (a)(4).
    c. Revising paragraph (c).
    d. Revising paragraph (d).
    The republication and revisions read as follows:


Sec.  457.555  Maximum allowable cost sharing charges on targeted low-
income children in families with income from 101 to 150 percent of the 
FPL.

    (a) Non-institutional services. For targeted low-income children 
whose family income is from 101 to 150 percent of the FPL, the State 
plan must provide that for non-institutional services, including 
emergency services, the following requirements must be met:
    (1)(i) For Federal Fiscal Year 2007, any copayment or similar 
charge the State imposes under a fee-for-service delivery system may 
not exceed the following amounts:

------------------------------------------------------------------------
                                                               Maximum
                         Total cost                             amount
------------------------------------------------------------------------
$15.00 or less.............................................        $1.10
$15.01 to $40..............................................         2.10
$40.01 to $80..............................................         3.20
$80.01 or more.............................................         5.20
------------------------------------------------------------------------

    (ii) Thereafter, any copayments may not exceed these amounts as 
updated each October 1 by the percentage increase in the medical care 
component of the CPI-U for the period of September to September ending 
in the preceding calendar year and then rounded to the next higher 10-
cent increment.
    (2) For Federal Fiscal Year 2007, any copayment that the State 
imposes for services provided by a managed care organization may not 
exceed $5.20 per visit. Thereafter, any copayment may not exceed this 
amount as updated each October 1 by the percentage increase in the 
medical care component of the CPI-U for the period of September to 
September ending in the preceding calendar year and then rounded to the 
next higher 10-cent increment.
* * * * *
    (4) For Federal Fiscal Year 2007, any deductible the State imposes 
may not exceed $3.20 per month, per family for each period of 
eligibility. Thereafter, any deductible may not exceed this amount as 
updated each October 1 by the percentage increase in the medical care 
component of the CPI-U for the period of September to September ending 
in the preceding calendar year and then rounded to the next higher 10-
cent increment.
* * * * *
    (c) Institutional emergency services. For Federal Fiscal Year 2007, 
any copayment that the State imposes on emergency services provided by 
an institution may not exceed $5.20. Thereafter, any copayment may not 
exceed this amount as updated each October 1 by the percentage increase 
in the medical care component of the CPI-U for the period of September 
to September ending in the preceding calendar year and then rounded to 
the next higher 10-cent increment.
    (d) Non-emergency use of the emergency room. For Federal Fiscal 
Year 2007, for targeted low-income children whose family income is from 
101 to 150 percent of the FPL, the State may charge up to twice the 
charge for non-institutional services, up to a maximum amount of 
$10.40, for services furnished in a hospital emergency room if those 
services are not emergency services as defined in Sec.  457.10. 
Thereafter, any charge may not exceed this amount as updated each 
October 1 by the percentage increase in the medical care component of 
the CPI-U for the period of September to September ending in the 
preceding calendar year and then rounded to the next higher 10-cent 
increment.
* * * * *

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

    Dated: October 5, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.

    Approved: November 1, 2007.
Michael O. Leavitt,
Secretary.
[FR Doc. E8-3211 Filed 2-21-08; 8:45 am]
BILLING CODE 4120-01-P