[Federal Register Volume 76, Number 159 (Wednesday, August 17, 2011)]
[Proposed Rules]
[Pages 51148-51199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20756]
[[Page 51147]]
Vol. 76
Wednesday,
No. 159
August 17, 2011
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 431, 433, 435, et al.
Medicaid Program; Eligibility Changes Under the Affordable Care Act of
2010; Proposed Rule
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 /
Proposed Rules
[[Page 51148]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 431, 433, 435, and 457
[CMS-2349-P]
RIN 0938-AQ62
Medicaid Program; Eligibility Changes Under the Affordable Care
Act of 2010
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement provisions of the Patient
Protection and Affordable Care Act of 2010 and the Health Care and
Education Reconciliation Act of 2010 (collectively referred to as the
Affordable Care Act). The Affordable Care Act expands access to health
insurance through improvements in Medicaid, the establishment of
Affordable Insurance Exchanges (``Exchanges''), and coordination
between Medicaid, the Children's Health Insurance Program (CHIP), and
Exchanges. This proposed rule would implement sections of the
Affordable Care Act related to Medicaid and CHIP eligibility,
enrollment simplification, and coordination.
In addition, this proposed rule also sets out the increased Federal
Medical Assistance Percentage (FMAP) rates and the related conditions
and requirements that will be available for State medical assistance
expenditures relating to ``newly eligible'' individuals and certain
medical assistance expenditures in ``expansion States'' beginning
January 1, 2014, including a proposal of three alternative
methodologies to use for purposes of applying the appropriate FMAP for
expenditures in accordance with section 2001 of the Affordable Care
Act.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on October 31, 2011.
ADDRESSES: In commenting, please refer to file code CMS-2349-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-2349-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 to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-2349-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey 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.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Sarah Delone, (410) 786-0615.
Stephanie Kaminsky, (410) 786-4653.
SUPPLEMENTARY INFORMATION: A detailed Preliminary Regulatory Impact
Analysis associated with this proposed rule is available at http://www.cms.gov/MedicaidEligibility/downloads/CMS-2349-P-PreliminaryRegulatoryImpactAnalysis.pdf. A summary of the
aforementioned analysis is included as part of this proposed rule.
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.regulations.gov. Follow the search instructions 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.
Table of Contents
I. Background
A. Introduction
B. Legislative Overview
C. Overview of the Proposed Rule
II. Provisions of the Proposed Rule
A. Changes to Medicaid Eligibility
1. Coverage for Individuals Age 19 or Older and Under Age 65 at
or Below 133 Percent FPL (Sec. 435.119)
2. Individuals Above 133 Percent FPL (Sec. 435.218)
3. Amendments to Part 435, Subparts A Through D
a. Eligibility for Parents and Other Caretaker Relatives,
Pregnant Women, and Children
(1) Parents and Other Caretaker Relatives (Sec. 435.110)
(2) Pregnant Women (Sec. 435.116)
(3) Infants and Children Under Age 19 (Sec. 435.118)
b. Other Conforming Changes to Existing Regulations
B. Financial Methodologies for Determining Medicaid Eligibility
Based on MAGI Under the Affordable Care Act
1. Point-in-Time Measurement of Income (Budget Periods) (Sec.
435.603(h))
2. Changes to Medicaid Financial Methods
3. Provisions of Proposed Rule Implementing MAGI Methods
a. Proposed Methods for Counting Income Based on MAGI (Sec.
435.603(e))
b. Proposed Rules for Determining Household Composition Under
MAGI Based Methods (Sec. 435.603(f))
(1) Household Composition for Tax Filers (Sec. 435.603(f)(1))
and Their Tax Dependents (Sec. 435.603(f)(2))
(2) Household Composition for Non-Filers (Sec. 435.603(f)(3))
(3) Retention of Existing Financial Methods (Sec. 435.603(i))
C. Residency for Medicaid Eligibility Defined
[[Page 51149]]
1. Residency Definition for Adults (Age 21 and Over) Sec.
435.403(h))
2. Residency Definition for Children (Under Age 21) (Sec.
435.403(i))
D. Application and Enrollment Procedures for Medicaid
1. Availability of Program Information (Sec. 435.905)
2. Applications (Sec. 435.907)
3. Assistance With Application and Redetermination (Sec.
435.908)
E. MAGI Screen (Sec. 435.911)
F. Coverage Month
G. Verification of Income and Other Eligibility Criteria (Sec.
435.940 Through Sec. 435.956)
1. Basis, Scope, and General Requirements (Sec. 435.940 and
Sec. 435.945)
2. Verification of Financial Eligibility (Sec. 435.948)
3. Verification of Information From Federal Agencies (Sec.
435.949)
4. Use of Information and Request for Additional Information
(Sec. 435.952)
5. Verification of Other Non-Financial Information (Sec.
435.956)
H. Periodic Redetermination of Medicaid Eligibility (Sec.
435.916)
I. Coordination of Eligibility and Enrollment Among Insurance
Affordability Programs--Medicaid Agency Responsibilities (Sec.
435.1200)
1. Basic Responsibilities (Sec. 435.1200(c))
2. Internet Web Site (Sec. 435.1200(d))
3. Provision of Medical Assistance for Individuals Found
Eligible for Medicaid by an Exchange (Sec. 435.1200(e))
4. Transfer of Applications From Other Insurance Affordability
Programs to the State Medicaid Agency (Sec. 435.1200(f))
5. Evaluation of Eligibility for Other Insurance Affordability
Programs (Sec. 435.1200(g))
J. Single State Agency (Sec. 431.10 and Sec. 431.11)
K. Provisions of Proposed Regulation Implementing Application of
MAGI to CHIP
1. Definitions and Use of Terms (Sec. 457.10 and Sec. 457.301)
2. State Plan Provisions (Sec. 457.305)
3. Application of MAGI and Household Definition (Sec. 457.315)
4. Other Eligibility Standards (Sec. 457.320)
5. Clarifications Related to MAGI
L. Residency for CHIP Eligibility (Sec. 457.320)
M. CHIP Coordinated Eligibility and Enrollment Process
1. Applications and Outreach Standards (Sec. 457.330, Sec.
457.334, Sec. 457.335 and Sec. 457.340)
2. Determination of CHIP Eligibility and Coordination With
Exchange and Medicaid (Sec. 457.348 and Sec. 457.350)
3. Periodic Redetermination of CHIP Eligibility (Sec. 457.343)
and Coverage Months
4. Verification of Eligibility (Sec. 457.380)
5. Ministerial Changes (Sec. 457.80, Sec. 457.300, Sec.
457.301, Sec. 457.305, and Sec. 457.353)
N. Federal Medical Assistance Percentage (FMAP) for Newly
Eligible Individuals and for Expansion States
1. Availability of FMAP (Sec. 433.10(c))
a. Newly Eligible FMAP (Sec. 433.10(c)(6))
b. Expansion State FMAP (Sec. 433.10(c)(7) and Sec.
433.10(c)(8))
(1) 2.2 Percentage Points Increase in FMAP (Sec. 433.10(c)(7))
(2) Expansion State FMAP (Sec. 433.10(c)(8))
2. Methodology (Sec. 433.206(a) and Sec. 433.206(b))
3. Alternative 1: 2009 Eligibility Standard Threshold
4. Alternative 2: Statistically Valid Sampling Methodology
(Sec. 433.210)
5. Alternative 3: Use of a FMAP Methodology Based on Reliable
Data Sources (Sec. 433.212)
6. Additional Methodology Approaches
III. Collection of Information Requirements
IV. Response to Comments
V. Summary of Preliminary Regulatory Impact Analysis
Regulations Text
Acronyms
Because of the many organizations and terms to which we refer by
acronym in this proposed rule, we are listing these acronyms and their
corresponding terms in alphabetical order below:
Act Social Security Act
AFDC Aid to Families with Dependent Children
BBA Balanced Budget Act of 1997
CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
DHS Department of Homeland Security
EITC Earned Income Tax Credit
EPSDT Early and periodic screening, diagnosis, and treatment
FFP Federal financial participation
FMAP Federal medical assistance percentage
FPL Federal poverty level
HCERA Health Care and Education Reconciliation Act of 2010 (Pub. L.
111-152, enacted March 30, 2010)
HHS [U.S.] Department of] Health and Human Services
IRA Individual Retirement Account
IRC Internal Revenue Code of 1986
IRS Internal Revenue Service
LEP Limited English Proficient
MAGI Modified adjusted gross income
MSA Medical Savings Account
PRWORA Personal Responsibility and Work Opportunity Reconciliation
Act of 1996
QI Qualifying Individuals
QMB Qualified Medicare Beneficiaries
SHO State Health Official
SLMB Specified Low-Income Medicare Beneficiaries
SMD State Medicaid Director
SNAP Supplemental Nutrition Assistance Program
SPA State Plan Amendment
SSA Social Security Administration
SSI Supplemental Security Income
SSN Social Security number
TANF Temporary Assistance for Needy Families
I. Background
A. Introduction
The Patient Protection and Affordable Care Act (Pub. L. 111-148,
enacted on March 23, 2010), was amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March
30, 2010), and together these laws are referred to as the Affordable
Care Act. In addition, section 205 of the Medicare & Medicaid Extenders
Act of 2010 (Pub. L. 111-309, enacted December 15, 2010) made technical
corrections to the Social Security Act (the Act) to implement the
Affordable Care Act. This proposed rule addresses changes to Medicaid
and CHIP eligibility in the Affordable Care Act.
Prior to the implementation of the Affordable Care Act in 2014,
individuals who fall into certain ``categories'' or ``categorical
groups'' are eligible for Medicaid, including low-income children,
pregnant women, parents and other caretaker relatives, seniors, and
people with disabilities. Federal minimum income eligibility standards
vary by category. All States currently cover pregnant women and
children under age 6 at or below 133 percent of the Federal poverty
level (FPL) (in some States the minimum eligibility level is 185
percent FPL for pregnant women and children under one), and children
age 6 through age 18 with family incomes at or below 100 percent of the
FPL, though many States have implemented higher standards for pregnant
women and children. The Federally specified minimum eligibility levels
for parents, people with disabilities and the elderly are significantly
lower, although States have the option to expand coverage to people
within these categories at higher income levels. Prior to the
Affordable Care Act, States could not cover non-disabled, non-elderly
adults who do not have dependent children, regardless of their income
level, except through a Medicaid demonstration under Section 1115 of
the Act. As a result of the varying Federal minimum standards and State
options, eligibility for Medicaid is complicated and significant gaps
continue to exist even among the lowest income Americans.
The Affordable Care Act extends and simplifies Medicaid
eligibility. Starting in calendar year (CY) 2014, it replaces the
complex categorical groupings and limitations to provide Medicaid
eligibility to all individuals under age 65 with income at or below 133
percent FPL, provided that the individual meets certain non-financial
eligibility criteria, such as citizenship or satisfactory immigration
status. Children and, in some States, pregnant women will be eligible
at income levels equal to or higher than the 133 percent level,
depending on existing State-established
[[Page 51150]]
income eligibility standards. In addition, States will have a new
option to expand eligibility beyond the new simplified Federal
minimums.
In addition, starting January 1, 2014, eligibility for Medicaid for
most individuals, as well as for CHIP, will be determined using
methodologies that are based on modified adjusted gross income (MAGI),
as defined in the Internal Revenue Code of 1986 (IRC). Per the
Affordable Care Act, eligibility for advance payments of premium tax
credits for the purchase of private coverage through the Exchange will
use MAGI as it is defined in the IRC to determine eligibility as well.
Medicaid, CHIP and the Exchanges will use common income methodologies
and will align the rules and methodologies used to evaluate eligibility
for most individuals under all three programs.
The alignment of the methods for determining eligibility is one
part of an overall system established by the Affordable Care Act that
allows for real-time eligibility determinations of most applicants and
allows for prompt enrollment of individuals in the ``insurance
affordability program'' for which they qualify. In this proposed rule,
insurance affordability programs include Medicaid, CHIP, advance
payments of premium tax credits and cost-sharing reductions through the
Exchange, and any State-established Basic Health Program, if
applicable.
Individuals will not have to apply to multiple programs nor will
they be sent from one program to another if they initially apply to a
program for which they are not ultimately eligible. To achieve
coordination, this proposed rule for Medicaid and CHIP eligibility is
aligned with the applicable provisions in the proposed rule
establishing the Exchanges published in the July 15, 2011 Federal
Register (76 FR 41866) (``Patient Protection and Affordable Care Act;
Establishment of Exchanges and Qualified Health Plans''), as well as in
the accompanying proposed rule published elsewhere in this Federal
Register implementing the Affordable Care Act provisions related to the
eligibility for advance payments of premium tax credits and cost-
sharing reductions and enrollment in a qualified health plan through
the Exchanges (referred to hereinafter as the ``Exchange proposed
rule'') as well as the proposed rule developed by the Department of the
Treasury regarding the health insurance premium assistance tax credit
(``the Treasury proposed rule''), also published elsewhere in this
Federal Register.
Section 2001 of the Affordable Care Act ensures that States will
receive an increased FMAP for all newly eligible individuals, defined
as those who would not have been eligible in the State in December
2009. The FMAP for these newly eligible individuals will be 100 percent
for Calendar Year (CY) 2014--2016, gradually declining to 90 percent in
2020 where it remains indefinitely. In addition, some States that had
expanded coverage to adults (parents and adults without children) prior
to December 2009, referred to as ``expansion States,'' shall also
receive an increased FMAP that begins in 2014 between the regular FMAP
and the FMAP for newly eligible individuals and equalizing with the
newly eligible FMAP in 2019 and beyond. The proposed rule sets forth
the definitions of newly eligible individuals and expansion States as
well as the applicable FMAPs beginning in 2014.
While the new FMAPs provide significant new federal financial
support for States, they could cause States significant burden to
administer if States had to evaluate all applicants under the new
simplified rules for purposes of determining eligibility and under
their otherwise obsolete December 2009 eligibility rules for purposes
of determining the appropriate FMAP. A dual system would be inefficient
and likely lead to inaccuracies. To promote States' ability to operate
efficient and effective processes, this rule proposes three alternative
approaches for determining the applicable FMAP. Based on the comments
received through this proposed rule and the results of an upcoming CMS/
HHS feasibility study, we expect to modify, narrow or combine the
approaches available to States in the final rule. By establishing an
alternative methodology or methodologies for use in the FMAP
determination by a State, the proposed rule aims to ensure that it will
not be necessary for a State to make an eligibility determination for
every individual using two separate eligibility systems and thereby
advancing efficient and effective operations for States, individuals,
and the Federal government.
Starting in 2014, individuals and small businesses will be able to
purchase private health insurance through State-based competitive
marketplaces called Affordable Insurance Exchanges. Exchanges will
offer Americans competition, choice, and clout. Insurance companies
will compete for business on a level playing field, driving down costs.
Consumers will have a choice of health plans to fit their needs. And
Exchanges will give individuals and small businesses the same
purchasing clout as big businesses. The Departments of Health and Human
Services, Labor, and the Treasury (the Departments) are issuing
regulations implementing Exchanges in several phases. The first in this
series was a Request for Comment relating to Exchanges, published in
the August 3, 2010 Federal Register (75 FR 45584). Second, Initial
Guidance to States on Exchanges was published issued on November 18,
2010. Third, a proposed rule for the application, review, and reporting
process for waivers for State innovation was published in the March 14,
2011 Federal Register (76 FR 13553). Fourth, two proposed regulations
were published in the Federal Register on July 15, 2011 (76 FR 41866
and 76 FR 41930) to implement components of the Exchange and health
insurance premium stabilization policies in the Affordable Care Act.
Fifth, a proposed regulation for the establishment of the Consumer
Operated and Oriented Plan (CO-OP) Program under section 1322 of the
Affordable Care Act was published in the Federal Register on July 20,
2011 (76 FR 43237). Sixth, three proposed rules, including this one,
are being published in the Federal Register on August 17, 2011 to
provide guidance on the eligibility determination process related to
enrollment in a qualified health plan, advance payments of the premium
tax credit, cost-sharing reductions, Medicaid, and the Children's
Health Insurance Program (CHIP).
B. Legislative Overview
This proposed rule implements the Medicaid and CHIP eligibility and
enrollment provisions of the Affordable Care Act including:
Section 1413, which directs the Secretary of HHS (the
``Secretary'') to establish a streamlined system for individuals to
apply for and be enrolled in an insurance affordability program if
eligible.
Section 1414, which directs the Secretary of Treasury,
upon written request, to provide the Secretary with certain tax return
information used in determining an individual's eligibility for all
insurance affordability programs.
Section 2001, which sets out the Medicaid eligibility
changes and new optional coverage effective in CY 2014.
Section 2002, which references the determination of
financial eligibility for Medicaid for certain populations.
Section 2101, which implements new eligibility standards
for CHIP.
Section 2201, which simplifies and coordinates eligibility
and enrollment system between all insurance affordability programs.
[[Page 51151]]
Section 2001(a)(3), which added a new section 1905(y) of
the Act, which provides for a significant increase in the FMAP for
medical assistance expenditures for individuals determined eligible
under the adult group in the State and who are considered to be ``newly
eligible'', as defined in section 1905(y)(2)(A) of the Act.
Section 10201(c)(4), which added a new section 1905(z) to
the Act. As discussed in section N of this rule, Section 1905(z) of the
Act contains two provisions, which make available additional FMAP rates
for the expansion States.
In this rule, ``CHIP'' refers to a separate child health program
operated by a State under title XXI and the regulations governing such
programs at 42 CFR part 457.
C. Overview of the Proposed Rule
The proposed amendments to 42 CFR parts 431, 435, and 457 in this
rule propose the Federal policies and guidelines necessary to
facilitate the creation of the eligibility and enrollment system
established by the Affordable Care Act. Amendments to 42 CFR part 435
subparts B and C are proposed to implement the statutory changes to
Medicaid eligibility. We propose amendments to subpart A to add new or
revised definitions.
Amendments to 42 CFR part 435 subpart G propose that, for most
individuals, financial eligibility for Medicaid will be based on MAGI,
to define the new MAGI-based financial methodologies, and to identify
those individuals whose eligibility will not be based on MAGI.
Proposed amendments to subpart J and the addition of a new subpart
M provide Federal rules to promote the establishment by States of a
seamless and coordinated system to determine eligibility of individuals
seeking assistance and to enroll them in the appropriate insurance
affordability program. We propose a new subpart M to delineate the
responsibilities of the State Medicaid agency in the coordinated system
of eligibility and enrollment established under the Affordable Care
Act, and propose comparable amendments for CHIP at 42 CFR part 457.
We propose to amend 42 CFR part 433 to add new provisions at Sec.
433.10(c) to indicate the increases to the FMAPs as available to States
under the Affordable Care Act. A number of provisions in the Affordable
Care Act are not included in this proposed rule, but either have been
or will be addressed in separate rulemaking or other guidance. In the
April 19, 2011 Federal Register, we published the Federal Funding for
Medicaid Eligibility Determination and Enrollment Activities final rule
(76 FR 21950) that provides details on enhanced Federal funding for
Medicaid eligibility systems.
We also intend to issue additional proposed rules on related
matters such as appeals, notices, presumptive eligibility, eligibility
for former foster care children, deletion of existing regulations that
have been rendered obsolete, and eligibility policy in the territories.
In addition, we intend to release a Request for Information (RFI)
related to State conversion of current income standards to MAGI-
equivalent standards per section 2002 of the Affordable Care Act as
well as a RFI related to the State flexibility to establish basic
health programs for low-income individuals not eligible for Medicaid
under section 1331 of the Affordable Care Act.
II. Provisions of the Proposed Rule
The following descriptions are structured to explain the provisions
being proposed and do not necessarily follow the order of the
regulation's text.
A. Changes to Medicaid Eligibility
1. Coverage for Individuals Age 19 or Older and Under Age 65 at or
Below 133 Percent FPL (Sec. 435.119)
Section 2001(a) of the Affordable Care Act adds a new section
1902(a)(10)(A)(i)(VIII) of the Act (referred to as ``the adult
group''), under which States will provide Medicaid coverage starting in
CY 2014 to individuals under age 65 who are not otherwise mandatorily
eligible for Medicaid under sections 1902(a)(10)(A)(i)(I) through (VII)
or (IX) of the Act and have household income, based on the new MAGI
methods described in section II.B of this proposed rule, at or below
133 percent FPL. Although the Act specifies that this new group is for
individuals under age 65, individuals under age 19 are not included
because such individuals with household income at or below 133 percent
FPL are covered in the eligibility groups under sections
1902(a)(10)(A)(i)(IV), (VI), and (VII) of the Act.
We propose to replace the current Sec. 435.119 (which addresses
obsolete provisions for eligibility of qualified family members under
section 1902(a)(10)(A)(i)(V) of the Act for which the statutory
authority ended on September 30, 1998), to establish this new
eligibility group.
Proposed Sec. 435.119(a) and (b) set forth the policy, explained
above. Reflected in proposed paragraph (b), financial eligibility for
the adult group will be based on MAGI, as defined in section
1902(e)(14) of the Act and implemented at proposed Sec. 435.603; there
is no resource test.
Section 1902(a)(10)(A)(i)(VIII) of the Act specifies that
individuals may be eligible for the adult group if they ``are not
described in a previous subclause of'' section 1902(a)(10)(A)(i) of the
Act. Under these proposed rules, an individual is not eligible under
the new adult group if the individual is otherwise eligible under
section 1902(a)(10)(A)(i) of the Act and 42 CFR 435 subpart B, but may
be eligible for the adult group if the individual is described in but
not eligible for Medicaid under another mandatory group. This will mean
that an individual who is a recipient of Supplemental Security Income
(SSI) benefits, and so potentially eligible under section
1902(a)(10)(A)(i)(II) of the Act, may be eligible for coverage under
the adult group in a State that has elected in accordance with section
1902(f) of the Act and Sec. 435.121 to use more restrictive
eligibility criteria for Medicaid than SSI.
The new adult group will include parents as well as adults not
living with children. It will also include individuals currently
eligible under an optional coverage group (such as, for individuals
with disabilities) who have household income, based on the new MAGI
methods, at or below 133 percent of the FPL and otherwise meet the
criteria for coverage under the new group. At proposed Sec.
435.119(c), we codify section 1902(k)(3) of the Act, which permits
coverage of parents and other caretaker relatives under the new adult
group only if their children under age 19 (or higher if the State has
elected to cover children under age 20 or 21 under Sec. 435.222) are
enrolled in Medicaid or ``other health insurance coverage.'' In
paragraph (c)(1), we propose to define ``other health insurance
coverage'' to mean minimum essential coverage, as defined in Sec.
435.4 of this proposed rule.
2. Individuals Above 133 Percent FPL (Sec. 435.218)
Section 2001(e) of the Affordable Care Act adds a new section
1902(a)(10)(A)(ii)(XX) of the Act, giving States the option starting in
CY 2014 to provide Medicaid coverage to individuals under age 65
(including pregnant women and children) with income above 133 percent
FPL. This new eligibility group provides a simplified mechanism for
States to cover individuals whose income exceeds the State's income
standard for
[[Page 51152]]
mandatory coverage (for example, 133 percent FPL for the adult group).
This option is an alternative to the use of income disregards under
section 1902(r)(2) or 1931(b)(2)(C) of the Act, which have been used in
the past to expand eligibility, but which will no longer be available
starting in 2014.
We propose to add a new Sec. 435.218 establishing this optional
eligibility group, which covers individuals who are under 65 years old;
are not eligible for and enrolled in an eligibility group under section
1902(a)(10)(A)(i) of the Act and 42 CFR 435 subpart B or under section
1902(a)(10)(A)(ii) of the Act and 42 CFR part 435 subpart C; and have
household income based on MAGI that exceeds 133 percent of the FPL but
does not exceed the optional income standard established by the State.
The basis and basic eligibility criteria for this group are set forth
in proposed Sec. 435.218(a) and (b)(1).
Section 1902(a)(10)(A)(ii)(XX) of the Act specifies that
individuals may be eligible under this category if they ``are not
described in or enrolled under a previous subclause of'' section
1902(a)(10)(A)(ii) of the Act. We interpret the language ``described in
or enrolled under'' to mean eligible for another optional or mandatory
group under section 1902(a)(10)(A) of the Act, and we propose at Sec.
435.218(b)(1)(ii) and (iii) that this limitation applies only if the
individual is eligible for or enrolled under another eligibility group
that is covered by the State.
To ease administrative burden on States and to make it easier for
States to enroll eligible individuals under the simplest eligibility
category, we also propose in Sec. 435.218(b)(1)(ii) and (iii) that an
individual who meets the eligibility criteria at Sec. 435.218(b)(1)(i)
and (iv) would be determined eligible under this group, unless the
individual can be determined eligible under another eligibility group
based on information available to the State from the application. A
State is not required to make determinations regarding eligibility
factors such as disability, level of care, or resources first in order
to decide whether an individual would be eligible for another
eligibility group, unless such determination can be made based only on
the information provided on the application. However, as an exception
to this, if an individual appears to be eligible as ``medically needy''
based on information provided, he or she could still be enrolled in
this optional group. States would still have to determine eligibility
under all possible categories if the individual is not eligible under
this new optional group.
Section 1902(a)(10)(A)(ii)(XX) of the Act provides that, to be
eligible under this optional group, an individual's income must ``not
exceed the highest income eligibility level established under the State
plan or under a waiver of the plan[.]'' We are interpreting the statute
to give States flexibility in establishing the income standard for this
group, provided such standard exceeds 133 percent FPL and is approved
in the State plan.
Section 1902(hh)(1) of the Act provides that States ``may elect to
phase-in'' coverage for this optional group ``based on the categorical
group (including non-pregnant childless adults) or income, so long as
the State does not extend such eligibility to individuals * * * with
higher income before making individuals * * * with lower income
eligible for medical assistance.'' We propose that if a State wants to
phase in coverage for this group, it submit a plan for Secretarial
approval.
Children are included in this new optional group for individuals
above 133 percent FPL if they are not already eligible for Medicaid.
Therefore, if a State covers children above 133 percent FPL under a
separate CHIP and adopts coverage under this new optional group, the
State ultimately must shift coverage of children with income at or
below the income standard from CHIP to Medicaid under this group. The
State would still be able to claim enhanced FMAP under title XXI for
such children.
Section 1902(hh)(2) of the Act limits eligibility of parents and
other caretaker relatives under the new optional group to individuals
whose children have coverage in the same manner as eligibility is
limited for parents and caretaker relatives under the new adult group
per section 1902(k)(3) of the Act. At Sec. 435.218(b)(2)(ii), we
propose to implement this provision in the same manner as proposed for
the new adult group at Sec. 435.119(c).
3. Amendments to Part 435, Subparts A Through D
Determining Medicaid eligibility prior to the Affordable Care Act
changes in CY 2014 is complicated due to a patchwork of multiple
mandatory and optional eligibility groups for different ``categorical
populations.'' Many States cover 50, 60, or more distinct eligibility
groups. Financial eligibility is determined using methodologies based
on other programs, such as the SSI and the former AFDC programs, adding
further complexity to the eligibility determination process. In this
rule, consistent with the Affordable Care Act policies, we propose to
streamline and simplify current regulations governing Medicaid
eligibility for children, pregnant women, parents, and other caretaker
relatives whose financial eligibility, beginning in CY 2014, will be
based on MAGI.
In response to the President's request, outlined in Executive Order
13563, that agencies streamline and simplify Federal regulations, we
propose to use the authority of section 1902(a)(19) of the Act, which
provides ``that eligibility * * * be determined * * * in a manner
consistent with simplicity of administration and the best interests of
recipients,'' to simplify and consolidate certain existing mandatory
and optional eligibility groups into three categories starting in CY
2014, to complement the new adult group: (1) Parents and caretaker
relatives (new Sec. 435.110); (2) pregnant women (new Sec. 435.116);
and (3) children (new Sec. 435.118).
As illustrated in Table 1, we are proposing to collapse existing
Medicaid eligibility categories, with the goal of making the program
significantly easier for States to administer and for the public to
understand. In subsequent rulemaking, we will provide additional
guidance on existing regulatory provisions that are effectively
subsumed under the provisions contained in these proposed rules or have
been rendered obsolete for other reasons. In proposing a simplified
approach to eligibility for populations whose eligibility will be based
on MAGI, it is our intent that eligibility for coverage will not change
for any of the populations as a result of this proposal. We solicit
comments on the implications of these proposed rules for individuals as
well as States. Table 1 shows how the mandatory and optional groups in
current regulations (the column on the left) are moved into the new
broader groups (parents, pregnant women, and children) under this
proposed rule.
[[Page 51153]]
Table 1
----------------------------------------------------------------------------------------------------------------
Medicaid Proposed Rule
Social Security Act and Pre-ACA -----------------------------------------------------------------------------
Regulations Parents/caretaker relatives (Sec. Pregnant women Children < 19
435.110) (Sec. 435.116) (Sec. 435.118)
----------------------------------------------------------------------------------------------------------------
Mandatory Medicaid Eligibility Groups
----------------------------------------------------------------------------------------------------------------
Low-income families-- X X X
1902(a)(10)(A)(i)(I) and 1931
AFDC recipients--Sec. 435.110.
Qualified Pregnant Women & ................................... X X
Children < 19--
1902(a)(10)(A)(i)(III)--Sec.
435.116.
Poverty-level related pregnant ................................... X X
women & infants--
1902(a)(10)(A)(i)(IV)--No rule.
----------------------------------------------------------------------------------------------------------------
Poverty-level related children 1- ................................... ................... X
5--1902(a)(10)(A)(i)(VI)--No rule.
Poverty-level related children 6- ................................... ................... X
18--1902(a)(10)(A)(i)(VII)--No
rule.
----------------------------------------------------------------------------------------------------------------
Optional Medicaid Eligibility Groups
----------------------------------------------------------------------------------------------------------------
Families & children financially Keeps 435.210 for parents/caretaker X X
eligible for AFDC-- relatives.
1902(a)(10)(A)(ii)(I)--Sec.
435.210.
Families & children who would be ................................... X X
eligible for AFDC if not
institutionalized--1902(a)(10)(A)
(ii)(IV)--Sec. 435.211.
Poverty-level related pregnant ................................... X X
women & infants--
1902(a)(10)(A)(ii)(IX)--No rule.
----------------------------------------------------------------------------------------------------------------
a. Eligibility for Parents and Other Caretaker Relatives, Pregnant
Women, and Children
(1) Parents and Other Caretaker Relatives (Sec. 435.110)
We propose to delete in its entirety Sec. 435.110 for individuals
receiving AFDC and to replace it with a new Sec. 435.110 for existing
eligibility that is continuing under sections 1902(a)(10)(A)(i)(I) and
1931(b) and (d) of the Act for parents and other caretaker relatives of
dependent children (including pregnant women who are parents or
caretaker relatives). These statutory provisions remain and are not
superseded by the provisions of the Affordable Care Act establishing a
new adult group for individuals not otherwise eligible under section
1902(a)(10)(A)(i) of the Act. While the parent/caretaker relative
category continues to apply, our proposed rules simplify this category
considerably and provides States flexibility to set their income
eligibility standard under this category within allowable Federal
parameters.
Under the proposed rule, each State will establish an income
standard in its State plan for coverage of parents and other caretaker
relatives under Sec. 435.110. The Federal minimum and maximum income
standards for this group are set forth in sections 1931(b)(2)(A) and
1931(b)(2)(B) of the Act. The minimum income standard for the new
parent/caretaker relative group is a State's AFDC income standards for
a household of the applicable family size in effect as of May 1, 1988.
The maximum income standard would be established as set forth below.
The maximum income standard for the parent and other caretaker relative
eligibility group would be the higher of:
The State's effective income level (including any
disregard of a block of income) for section 1931 families under the
State plan or waiver of such plan as of March 23, 2010 or December 31,
2013, if higher, converted to a MAGI-equivalent income standard in
accordance with guidance to be issued by the Secretary under section
1902(e)(14)(A) and (E) of the Act (The conversion of current income
standards to a MAGI-equivalent standard is discussed in section
II.B.3.a of this proposed rule.); and
The State's AFDC income standard in effect as of July 16,
1996, increased by no more than the percentage increase in the Consumer
Price Index for all urban consumers since such date.
If a State's income standard for the parent/caretaker relative
group is below 133 percent FPL, parents and other caretaker relatives
with income above that income standard and at or below 133 percent FPL
would qualify for Medicaid under the new adult group. The conversion of
current income standards to a MAGI-equivalent standard is discussed in
section II.B.3.a of this proposed rule.
States currently have the option to cover parents and other
caretaker relatives at income levels above the standard for families
under section 1931 of that Act. They can do so under the authority at
section 1902(a)(10)(A)(ii)(I) of the Act and Sec. 435.210 of the
existing regulations. This option will continue under the Affordable
Care Act for coverage of parents and other caretaker relatives who are
not eligible for mandatory Medicaid coverage under Sec. 435.110 or the
new adult group at proposed Sec. 435.119. We note that parents and
other caretaker relatives who are Medicare-eligible or elderly may be
covered under Sec. 435.110 and Sec. 435.210, even though they are
excluded from coverage under the adult group at Sec. 435.119.
We are also proposing to simplify the income methods for
determining eligibility under the new parent and other caretaker
relative group. Pre-Affordable Care Act, section 1931 of the Act
requires a two-step process in determining income eligibility: (1) The
family must have gross income at or below 185 percent of the State's
consolidated standard of need under its AFDC program, in effect as of
July 16, 1996; and (2) the family's net countable income after
subtracting various income exclusions and disregards and expenses must
be at or below the State's AFDC payment standard or a higher income
standard established by the State under section 1931 of the Act.
Because each State's net countable income standard converted to a MAGI-
equivalent income standard will be lower than its current gross income
standard, we propose to eliminate the 185 percent gross income test as
unnecessary and, to simplify eligibility, base income eligibility in
proposed Sec. 435.110 only on the second prong of the income test,
that is, the net countable income standard converted to a MAGI-
equivalent income standard.
Consistent with section 1931 of the Act, we propose Medicaid
definitions of ``caretaker relative'' and ``dependent child'' at Sec.
435.4. A caretaker relative is defined as a parent or other relative
(related by blood, adoption, or marriage) living with a dependent child
for whom such individual is assuming primary responsibility. Per
section 1931 of the
[[Page 51154]]
Act, to be ``dependent,'' the child must be ``deprived'' of at least
one parent's support by reason of death, absence, or unemployment.
Under the statute, a parent is considered to be unemployed if he or she
is working less than 100 hours per month. However, we propose to codify
in this rule the flexibility given States in a final rule amending 45
CFR 233.101 (63 FR 42270) and in a State Medicaid Director letter dated
September 22, 1997 to eliminate the ``deprivation'' requirement
altogether (which most States have done) or to establish a higher
number of working hours as the threshold for determining unemployment.
In proposing this rule, we are retaining the minimum income
standards specified in Federal statute for each eligibility group,
while giving States flexibility to set new standards at a level that
takes into account a State's current rules regarding how income is
counted. In all cases, the income standard would be applied to an
individual's MAGI-based household income. We considered whether or not
States should convert the Federal minimum income standards prescribed
in statute--for example, the minimum standard for pregnant women and
children specified in section 1902(l) and for parents and other
caretaker relatives in section 1931(b) of the Act--to a MAGI-equivalent
minimum income standard based on the income exclusions and disregards
currently used by the State. While doing so could result in maintaining
eligibility for individuals who might otherwise lose Medicaid due to
the elimination of income exclusions and disregards under MAGI, if a
State were to reduce its income standard to the minimum permitted, it
also would result in different minimum income eligibility standards
being applied across States and reduce the amount of eligibility
simplification that could be achieved. We, therefore, do not propose to
require conversion of the Federal minimum income standards currently
prescribed in statute to MAGI-equivalent standards.
Furthermore, we do not believe that the impact on eligibility of
the proposed policy will be significant. Eligibility standards for
children must be maintained through September 2019, in accordance with
the maintenance of effort provisions (MOE) in section 1902(gg) of the
Act, and when the MOE provision expires, eligibility for only a small
number of children would be affected if a State were to drop coverage
to the minimum level permitted. Parents and other caretaker relatives
who could lose eligibility under section 1931 of the Act if a State
were to reduce coverage to the minimum permitted under the statute
would retain eligibility under the new adult group. Pregnant women
would be affected if a State were to decrease its income standard to
the statutory minimum level, as the MOE for pregnant women ends with
the establishment of an Exchange in 2014 and there is no other coverage
group to which affected pregnant women would necessarily be
transferred; instead, pregnant women affected by a State's decision to
reduce its Medicaid income standard for pregnant women to the minimum
permitted under the Act would likely become eligible for advanced
payments of the premium tax credit for enrollment through the Exchange.
(2) Pregnant Women (Sec. 435.116)
As is true for parents and caretaker relatives, the law retains
eligibility based on pregnancy. To simplify the eligibility rules, we
propose to replace the current Sec. 435.116 for qualified pregnant
women and qualified children under section 1902(a)(10)(A)(i)(III) of
the Act with a new Sec. 435.116 for pregnant women. In addition, under
the authority of section 1902(a)(19) of the Act, we are consolidating
many different eligibility categories for pregnant women and are
proposing to include in the revised Sec. 435.116 all mandatory and
optional eligibility groups, except the medically needy, for which
pregnancy status and income are the only factors of eligibility. The
following sections of the Act are included under the proposed Sec.
435.116: 1931 (low-income families); 1902(a)(10)(A)(i)(III) (qualified
pregnant women); 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(ii)(IX), and
1902(l) (poverty-level related pregnant women); 1902(a)(10)(A)(ii)(I)
(pregnant women who meet AFDC financial eligibility criteria); and
1902(a)(10)(A)(ii)(IV) (institutionalized pregnant women).
Under the proposed rule, paragraphs (a) through (c) set forth the
basis and basic provisions for coverage of pregnant women under Sec.
435.116. We propose at Sec. 435.116(c) that each State will establish
an income standard in its State plan for coverage of pregnant women.
The minimum income standard is 133 percent FPL, unless a higher income
standard, at or below 185 percent FPL, was in effect for pregnant women
on December 19, 1989 (section 1902(l)(2)(A) of the Act). The maximum
income standard is the higher of:
The highest effective income level (including any
disregard of a block of income), converted to a MAGI-equivalent income
standard, in effect under the State plan or waiver of the State plan as
of March 23, 2010 or December 31, 2013, if higher, for coverage of
pregnant women under the sections of the Act identified above; and
185 percent FPL.
We are also codifying current law to add a definition of ``pregnant
woman'' in Sec. 435.4, incorporating the post partum period.
While we propose to consolidate various eligibility categories for
pregnant women, States continue to have flexibility under the statute
to provide different benefits to certain pregnant women or to provide
all pregnant women with full Medicaid coverage, as many States do
today. Thus, under clause (V) in the matter following section
1902(a)(10)(G) of the Act, pregnant women eligible for Medicaid under
sections 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(ii)(IX), and 1902(l) of
the Act are only covered for services related to pregnancy or to a
condition which may complicate the pregnancy. In accordance with
section 1902(a)(10)(B) of the Act, all other pregnant women eligible
for coverage under the sections of the Act listed in Sec. 435.116(a)
are eligible for all services that the State covers under the State
plan, regardless of whether the service is related to pregnancy or to a
condition that may complicate pregnancy.
However, States currently have the flexibility to provide full
Medicaid coverage as pregnancy-related services for all pregnant women.
Thus, we propose at Sec. 435.116(d) that pregnant women are covered
for full Medicaid coverage, unless a State elects to provide only the
pregnancy-related services described at Sec. 435.116(d)(3) for
pregnant women whose income exceeds an income limit established by the
State for full coverage. States have flexibility under existing
regulations at Sec. 440.210(a)(2) to establish a policy that all
services covered under the State plan are related to pregnancy or to a
condition that may complicate pregnancy. Therefore, States will not
have to establish an income limit for full coverage for pregnant women
under Sec. 435.116(d)(4), but may elect to provide full coverage for
all pregnant women. Reflected at proposed paragraph (d)(3), States also
may elect to cover certain enhanced pregnancy-related services, as
specified in Sec. 440.250(p), for pregnant women only.
(3) Infants and Children Under age 19 (Sec. 435.118)
Section 2001(a)(4) of the Affordable Care Act amends section
1902(l)(2)(C) of the Act to provide Medicaid to children ages 6 through
18 with household income at or below at least 133 percent
[[Page 51155]]
FPL. This amendment eliminates certain of the age-based differences in
Federal Medicaid eligibility rules for children, which currently
provide for a minimum income standard of 100 percent FPL for coverage
of children ages 6 through 18 (although many States have implemented
optional coverage at higher levels), and means that all children and
adults under age 65 with household income at or below 133 percent FPL
will be eligible for Medicaid. Section 205(b) of the Medicare and
Medicaid Extenders Act of 2010 clarifies that this amendment is
effective January 1, 2014. If some or all of these children are covered
under a separate CHIP before this provision takes effect, these
children will move to coverage under Medicaid. Such a change, however,
will not affect States' ability to claim enhanced FMAP under title XXI
for these children.
Currently, there are many different mandatory and optional
eligibility categories for children. To simplify the eligibility rules,
we propose to include under Sec. 435.118 all mandatory and optional
eligibility groups for which age under 19 and income are the only
factors of eligibility. The following sections of the Act are included
under proposed Sec. 435.118: 1931 (low-income families);
1902(a)(10)(A)(i)(III) (qualified children who meet AFDC financial
eligibility criteria); 1902(a)(10)(A)(i)(IV) and 1902(a)(10)(A)(ii)(IX)
(infants); 1902(a)(10)(A)(i)(VI) (children ages 1 through 5);
1902(a)(10)(A)(i)(VII) (children ages 6 through 18); and
1902(a)(10)(A)(ii)(IV) (institutionalized children).
Proposed Sec. 435.118(a) through (c) set forth the basis and
eligibility criteria for children, as explained above. We propose in
Sec. 435.118(c) that each State will establish income standard(s) in
its State plan for coverage of children by age group. There is no
resource test. The minimum income standard for all age groups is 133
percent FPL, unless, for infants per section 1902(l)(2)(A) of the Act,
a higher income standard, at or below 185 percent FPL, was in effect on
December 19, 1989. The maximum income standard for each age group is
the higher of:
The highest effective income level for the age group
(including any disregard of a block of income)--converted to a MAGI-
equivalent standard--in effect under the State plan or waiver as of
March 23, 2010 or December 31, 2013; or
For infants, 185 percent FPL.
A State may not otherwise increase its income standard above the
levels specified because, effective January 1, 2014, States may no
longer apply new income disregards in determining eligibility for
individuals whose eligibility is based on MAGI. Coverage at higher
income levels can be implemented through adoption of the new optional
group at proposed Sec. 435.218.
The maintenance of effort (MOE) provisions of the Affordable Care
Act at section 2001(b) maintain the minimum income standards for
children at the levels in effect on March 23, 2010; these standards are
maintained for children until September 30, 2019. These proposed
regulations do not address the MOE provisions specified in sections
1902(a)(74) and 1902(gg) of the Act, as added by section 2001(b) of the
Affordable Care Act. As a condition of receiving Federal financial
participation, States must comply with these provisions, which are
being addressed through subregulatory guidance.
Other Conforming Changes to Existing Regulations
Revisions are proposed at Sec. 435.4 to the definition of
``families and children'' to delete references to AFDC rules.
Definitions are proposed for ``agency,'' ``caretaker relative,''
``dependent child,'' and ``pregnant woman.'' Definitions related to
implementation of the Affordable Care Act are proposed for ``advance
payments of the premium tax credit,'' ``Affordable Insurance Exchange
(Exchange),'' ``effective income level,'' ``electronic account,''
``household income,'' ``insurance affordability program,'' ``MAGI-based
income,'' ``minimum essential coverage,'' ``modified adjusted gross
income (MAGI),'' ``secure electronic interface,'' and ``tax
dependent''.
B. Financial Methodologies for Determining Medicaid Eligibility Based
on MAGI Under the Affordable Care Act
Section 2002 of the Affordable Care Act, as amended by section 1004
of the HCERA, creates a new section 1902(e)(14) of the Act, which
provides that effective January 1, 2014, financial eligibility for most
individuals shall be based on MAGI and ``household income,'' as defined
in section 36B(d)(2) of the IRC (hereinafter referred to as ``section
36B definitions''). In this preamble, ``MAGI-based methodologies''
refers both to the rules governing the determination of the MAGI of an
individual or a married couple filing a joint tax return, as well as to
the determination of total household income. Similarly, reference to
the determination of income eligibility ``based on MAGI'' refers to
determinations based on household income using MAGI-based
methodologies.
The adoption of MAGI-based methodologies to determine income
represents a significant simplification for the Medicaid program,
eligibility for which has historically been linked to programs
providing cash assistance to low-income populations. We are considering
permitting States to convert to MAGI-based methodologies prior to 2014
through section 1115 demonstrations.
Proposed Sec. 435.603 sets forth proposed methodologies to
implement MAGI in determining Medicaid eligibility for affected
individuals effective January 1, 2014. Our proposed methodologies
codify the section 36B definitions of MAGI and household income, except
in a very limited number of cases discussed below. At proposed Sec.
435.603(i), we identify those populations excepted under the Affordable
Care Act from application of MAGI-based methodologies; for these
populations pre-Affordable Care Act Medicaid financial methodologies--
generally set forth in existing regulations at Sec. 435.601 and Sec.
435.602--will continue to apply.
1. Point-in-Time Measurement of Income (Budget Periods) (Sec.
435.603(h))
Under pre-Affordable Care Act Medicaid rules, per section
402(a)(13)(A) of former title IV-A of the Act, income eligibility for
Medicaid is based on current income actually available to the
individual in any given month. MAGI, as defined in section 36B of the
IRC, is determined on the basis of annual income. The Affordable Care
Act addresses this issue by adding section 1902(e)(14)(H)(i) of the Act
to provide that the use of MAGI in determining eligibility for Medicaid
shall not be ``construed as affecting or limiting the application of
the requirement under this title to determine an individual's income as
of the point in time at which an application for medical assistance is
processed.'' Moreover, section 1902(a)(17) of the Act provides that
States use eligibility standards and methodologies that are
``reasonable,'' ``consistent with the objectives of [the Act],'' and
take into account only such income as is ``determined in accordance
with standards prescribed by the Secretary, available to the applicant
or recipient[.]''
In this proposed rule, we refer to the ``point in time'' rules
referenced in the statute as the ``budget period'' (that is, monthly
versus annual income) based upon which income eligibility is
determined. At proposed Sec. 435.603(h)(3), we are retaining the
[[Page 51156]]
current flexibility afforded States to take into account future changes
in income that can be reasonably anticipated (as may be the case with
certain seasonal workers or someone with a signed employment contract
or layoff notice). Such anticipated changes would be determined in
accordance with the verification regulations at Sec. 435.940 et seq.
Uncertain changes in future income (for example, someone who is looking
for, but has not secured, a job) may not be considered under the option
reflected at proposed Sec. 435.603(h)(3). Actual changes in income--
including deviations from reasonably anticipated fluctuations in
income--must still be reported to, and acted upon by, the agency in
accordance with Sec. 435.916(c) and (d).
To promote flexibility, administrative simplification and
continuity of coverage for beneficiaries already enrolled in Medicaid,
we propose at Sec. 435.603(h)(2) to give States the additional
flexibility, for individuals eligible for Medicaid based on MAGI, to
maintain eligibility as long as annual income based on MAGI methods for
the calendar year remains at or below the Medicaid income standard.
This gives States the option to align with the annual eligibility
period applied in the Exchanges and to minimize the extent to which
individuals experiencing relatively small fluctuations in income bounce
back and forth between programs.
We believe that these flexibilities will help address some of the
challenges that will arise due to the reliance on monthly income for
purposes of eligibility for Medicaid versus annual income for purposes
of eligibility for advance payments of premium tax credits. In
particular, if a State does not opt to take into account a reasonably
predictable drop in future income, someone with current monthly income
above the Medicaid income standard, but projected annual income below
100 percent FPL could be determined both ineligible for Medicaid (until
their monthly income actually dropped) and for advance payments of the
premium tax credit for enrollment through the Exchange (because, with
very limited exceptions, individuals with income below 100 percent FPL
are not eligible for advance payments of the premium tax credit). We
solicit comments on how best to prevent a gap in coverage, including
whether to ensure that State Medicaid agencies take into account a
predictable future drop in income.
2. Changes to Medicaid Financial Methods
Under pre-Affordable Care Act Medicaid rules for families and
children, essentially all money received, from whatever source, is
counted as income in the month in which it is received, unless
explicitly excluded or disregarded under the Act, disregarded at State
option, or excluded under other Federal statutes. A ``household'' (for
purposes of determining family size and whose income is counted)
generally consists of parents and the children with whom they are
living. Other non-legally responsible relatives and unrelated
individuals living together are not included, nor are spouses or
parents living apart from the rest of the family, which means that the
income of such individuals is not deemed available to the Medicaid
applicant. Under pre-Affordable Care Act Medicaid rules, inclusion of
stepparents in a stepchild's household depends on State law relating to
obligations to support stepchildren. A stepparent's income is
considered available to his or her spouse since spouses are legally
responsible for each other.
Section 36B of the IRC, and Sec. 1.36B-1 of the IRS proposed
premium tax credit rule, define ``MAGI, '' ``household income,'' and
``family size.'' See also section 152 of the IRC and Internal Revenue
Service (IRS) Publication 501 regarding rules for claiming ``qualifying
children'' and ``qualifying relatives'' as tax dependents. To be
eligible to receive advance payments of a premium tax credit for the
purchase of coverage through an Exchange, married couples generally
must file jointly.
As discussed in section II.I of this proposed rule, sections 1413
and 2201 of the Affordable Care Act direct the creation of a seamless,
simplified system of coordinated eligibility and enrollment between
insurance affordability programs, and in most instances, section 36B
definitions of ``MAGI'' and ``household income'' are applied to
Medicaid to promote seamless coordination. In some situations, the
application of these new rules will have the impact of constraining
Medicaid eligibility, but consistent with the statute, we have applied
the 36B rules because of the impact on coordination. In a few limited
situations in which the potential adverse impact of adopting the
section 36B definitions could be significant (albeit for a relatively
small group of individuals), and the impact on coordination minimal, we
propose, consistent with the statute, retention of current Medicaid
rules.
3. Provisions of Proposed Rule Implementing MAGI Methods
Proposed Sec. 435.603(a)(1) and (2) set forth the basis and scope
of this section. At proposed Sec. 435.603(a)(3), we implement section
1902(e)(14)(D)(v) of the Act, as added by section 2002(a) of the
Affordable Care Act, which specifies that, in determining ongoing
eligibility of individuals enrolled in the Medicaid program as of
January 1, 2014, the financial methodologies based on MAGI shall not be
applied until the next regularly-scheduled redetermination of
eligibility after December 31, 2013 or March 31, 2014, whichever is
later, if such individual otherwise would lose eligibility as a result
of the shift to MAGI-based methodologies before such date.
Consistent with the 36B definition, we propose in Sec. 435.603(b)
to define ``family size'' as equal to the number of persons in the
individual's household (as defined in paragraph (f) of this section and
discussed below); ``tax dependent'' is defined in proposed revisions to
Sec. 435.4, and cross referenced at proposed Sec. 435.603(b), as an
individual for whom another individual properly claims a deduction for
a personal exemption under section 151 of the IRC for a taxable year.
Proposed Sec. 435.603(c) sets forth the basic rule that, except for
eligibility determinations exempt from MAGI methodologies, financial
eligibility for Medicaid must be based on household income as defined
in Sec. 435.603(d).
Consistent with the section 36B definition of household income,
proposed Sec. 435.603(d)(1) provides that, for purposes of determining
Medicaid eligibility under Sec. 435.603, ``household income'' is the
sum of the income based on MAGI-based methods of every individual who
is: (1) included in the individual's household; and (2) required to
file a tax return under section 6012 of the IRC, except that, also
consistent with section 36B definitions, the MAGI-based income of a
child who files a tax return, but is not required to file, is not
included in household income under proposed Sec. 435.603(d)(2). The
MAGI-based income of adults as well as children who are not included in
the household of their parent(s) is always counted in determining the
household income of the adult or such child as well as the household
income of their spouse and children with whom they are living (if any).
a. Proposed Methods for Counting Income Based on MAGI (Sec.
435.603(e))
In general, we propose income counting rules at Sec. 435.603(e)
that are the same as the section 36B definitions
[[Page 51157]]
to ensure streamlined eligibility rules and avoid coverage gaps. There
are some differences in the treatment of several types of income under
the IRC as compared to pre-Affordable Care Act Medicaid rules, in which
the changes occasioned by the adoption of the section 36B definitions
would have varying effects on the Medicaid eligibility of potential
beneficiaries. Given the general directive to apply the section 36B
definitions and the value of alignment, these proposed rules generally
codify the section 36B rules and definitions. This is the case with
respect to the treatment of child support payments, depreciation of
business expenses, and capital gains and losses.
Under this regulation as proposed, we also are applying the section
36B rules and definitions of Social Security benefits under title II of
the Act. Such benefits count as income for the purpose of determining
eligibility for Medicaid under pre-Affordable Care Act treatment of
income, but certain amounts of Social Security benefits are not counted
as income under the 36B definition of MAGI. The section 36B treatment
of Social Security benefits may increase State Medicaid costs, as some
individuals who receive Social Security benefits would gain Medicaid
eligibility using the 36B definitions. The Administration is concerned
about this unintended consequence and is exploring options to address
it, including a modification of the section 36B treatment of Social
Security benefits through regulation. We seek comment on this issue,
including how any modification of the proposed regulation may affect
eligibility for premium tax credits for enrollment in a qualified
health plan through the Exchange and how any potential gaps in coverage
that may be created by such modification could be minimized.
There are three types of income for which we propose to codify
current Medicaid rules. We solicit comments on these proposed policies.
The first is lump sum payments, which consist of non-recurring
income received on a one-time-only basis (for example, insurance
settlements, back pay, State tax refunds, inheritance, and retroactive
benefit payments). Under section 36B definitions, taxable ``lump sum''
payments are included in computing MAGI in the year the lump sum is
received. Currently in Medicaid, most States count lump sum payments as
income in the month received and, for any amounts retained, as a
resource in months following. Because of the statutory directive to
consider point-in-time (that is, current monthly) rather than annual
income for determination of Medicaid eligibility, and the challenges in
amortizing a lump sum payment over time to pay for coverage, we propose
in Sec. 435.603(e)(1) to count lump sum payments of taxable income as
income only in the month received.
Second, certain types of educational scholarships and grants (for
example, work-study arrangements and other situations in which the
individual has to provide a service) are generally counted as taxable
income under the IRC, but not counted as income under current Medicaid
rules. To avoid low-income students having to forgo either Medicaid or
this education-related aid, we propose in Sec. 435.603(e)(2) to retain
the Medicaid rules for this type of income.
Third, American Indian and Alaska Native (AI/AN) income is the
subject of special treatment and protections in multiple provisions of
titles XIX and XXI of the Act. Most recently, the Recovery Act added
section 1902(ff) to the Act (applied also to CHIP through the addition
of section 2107(e)(1)(c) of the Act) to broaden exemptions related to
certain AI/AN financial interests to ensure that low-income AI/AN
individuals have access to Medicaid. There are certain instances where
the IRC and the section 36B definition of MAGI are identical to or more
liberal than current Medicaid rules with regard to income exclusions
for AI/AN populations, and therefore, are adopted in the proposed rule.
However, there are several instances in which the IRC treats as taxable
income distributions from AI/AN trust properties, which are excluded
from income for purposes of Medicaid and CHIP eligibility under the
Recovery Act and other current law. In these instances, we propose at
Sec. 435.603(e) to codify current Medicaid treatment of AI/AN income,
including distributions from Alaska Native corporations and settlement
trusts; distributions from any property held in trust, or otherwise
under the supervision of the Secretary of the Interior; distributions
resulting from certain real property ownership interests; payments from
other ownership interests or usage rights that support subsistence or a
traditional lifestyle; and student financial assistance provided under
the Bureau of Indian Affairs education programs.
In addition, section 1902(B)(e)(14)(B) of the Act, codified at
Sec. 435.603(g), prohibits the continued use of any asset test or
income or expense disregards for individuals whose financial
eligibility is based on MAGI (other than a disregard of 5 percent of
the FPL to be applied to every such individual under section
1902(e)(14)(I) of the Act.) In order to account for the general
elimination of income disregards and to ensure continued coverage at
pre-Affordable Care Act levels, per section 1902(e)(14)(A) and (E),
States will convert current income standards for eligibility groups
under which financial eligibility will be based on MAGI to a ``MAGI-
equivalent'' income standard. Separate guidance will be issued
regarding the methodologies States may employ to determine such MAGI-
equivalent income standards. Application of the statutory across-the-
board 5 percent disregard is reflected in proposed Sec. 435.603(d)(1).
Detailed guidance on the treatment of all types of income under the
new MAGI-based methodologies will be provided in subregulatory
guidance.
b. Proposed Rules for Determining Household Composition Under MAGI-
Based Methods (Sec. 435.603(f))
(1) Household Composition for Tax Filers (Sec. 435.603(f)(1)) and
Their Tax Dependents (Sec. 435.603(f)(2))
Our proposed rules for household composition are divided into two
categories: those for individuals filing taxes (Sec. 435.603(f)(1))
and their tax dependents (Sec. 435.603(f)(2)); and those for
individuals who neither file a tax return nor are claimed as a tax
dependent on someone else's tax return, whom we refer to as ``non-
filers'' (Sec. 435.603(f)(3)).
After analyzing the differences between the section 36B definitions
and current Medicaid rules, we believe that for most families, the
section 36B definitions and current Medicaid rules yield the same
household. However, there are a relatively small number of situations
in which application of the section 36B definitions yields a different
household than current Medicaid rules, including the following:
(1) Families in which the parents claim as tax dependents children
age 21 or older.
(2) Families in which the parents claim as tax dependents children
living outside of the home.
(3) Families with stepchildren/stepparents (in States without a law
requiring stepparents to support their stepchildren.
(4) Families in which one or more children are required to file a
tax return.
(5) Families in which one member is supporting and claiming as a
tax dependent extended family members or unrelated individuals,
including children other than their own biological or adopted children.
(6) Children claimed as a tax dependent by a non-custodial parent.
(7) Pregnant women.
[[Page 51158]]
(8) Married couples who do not file jointly.
In the first four types of households identified, consistent with
the general statutory directive to apply the section 36B definitions to
Medicaid, we are proposing at Sec. 435.603(f)(1) to adopt the
household composition rules embodied in the section 36B definitions.
Doing so will result in some loss of Medicaid eligibility compared to
pre-2014 Medicaid rules. However, maintaining different rules for the
insurance affordability programs for these household types would
undermine simplicity and coordination, which benefits consumers and
States alike, and add to States' and potentially families'
administrative burden.
For the fifth type of household identified (for example, a
grandparent caring for a grandchild claimed as a tax dependent), the
income of the claimed tax dependent is likely to be quite low, making
them likely eligible for Medicaid based on their income alone. However,
in such situations adoption of the section 36B definitions for
household composition for determining the Medicaid eligibility of the
tax dependent could significantly affect both the taxpayer and the
relative or unrelated individual whom the taxpayer has no legal
responsibility to support, putting such taxpayers in the position
either of: (1) Forgoing a tax advantage (including, in some cases, an
Earned Income Tax Credit) so as to enable the tax dependent to apply
for Medicaid on his own; or (2) assuming financial responsibility for
purchasing health care for such individual--a responsibility which they
do not have under current law. Accordingly, we propose at Sec.
435.603(f)(2)(i) to codify current Medicaid rules in determining the
eligibility of qualifying relatives claimed as tax dependents by
another taxpayer. MAGI-based definitions would be used in determining
household composition for purposes of the taxpayer's eligibility, per
proposed Sec. 435.603(f)(1). It is also important to note that,
reflected in proposed Sec. 435.603(d)(3) and consistent with current
Medicaid rules, actually available cash support provided by the non-
legally responsible relative is counted as income to the claimed tax
dependent. The purpose of retaining the Medicaid household rules as a
backstop in these situations is to prevent the attribution of income
from non-legally responsible relatives when that income is not in fact
available to the tax dependent. We do not believe that this proposal
would disrupt coordination or create a gap in coverage.
Regarding households in which a child is claimed as a tax dependent
by a non-custodial parent, we are proposing at Sec. 435.603(f)(2)(iii)
to apply rules based on pre-Affordable Care Act Medicaid principles of
parents' legal responsibility for the children with whom they are
living. By applying the rules for non-filers in this situation, as
proposed in these rules, these children would be treated as members of
the custodial parent's household for Medicaid eligibility purposes, and
the income of the custodial parent (and other members of the custodial
parent's household required to file a tax return) would be counted in
determining the child's Medicaid eligibility. Alternatively, the child
could enroll in coverage through the Exchange in the child's State of
residence as a member of the non-custodial parent's household. (See
discussion in section II.A.4 (b) of the preamble for the accompanying
Exchange proposed rule.) We specifically solicit comments on the
proposed handling of the household composition for these children.
Under pre-2014 Medicaid rules, a pregnant woman is considered as a
household of two for purposes of determining eligibility. States have
the option to count a pregnant woman as two in determining the family
size of other members of a pregnant woman's household (for example, her
spouse or other children). Under the section 36B definition of family
size, pregnant women count as one person for purposes of eligibility
for advance payments of the premium tax credit, but if the child is
born by the end of the calendar year, the annual premium tax credit
would be for two persons. Counting the pregnant woman as a household
that will be comprised of two for Medicaid eligibility purposes
essentially anticipates the change in household size that will occur
after the birth. Applying the 36B definitions would result in some
women being enrolled, with advance payments of the premium tax credit,
in a qualified health plan through the Exchange who, after giving
birth, will be eligible for Medicaid. Therefore, the proposed
definition of family size in Sec. 435.603(b) retains current Medicaid
rules for pregnant women to promote continuity of coverage for the
family and to ease State administrative burden.
Married couples who file separately are not eligible for premium
tax credits. However, there is no similar provision in title XIX of the
Act with respect to Medicaid eligibility. Therefore, in such
situations, we propose at Sec. 435.603(f)(4) to codify current
Medicaid rules to include each spouse in the household of the other and
to count the MAGI-based income of each spouse required to file a tax
return in determining the other's household income, regardless of
whether the couple files a joint tax return. We recognize that at times
two legally married individuals may live apart. Therefore, consistent
with current Medicaid rules, the proposed rule also limits the
inclusion of spouses in each other's household to those who are living
together.
In some cases, a child may be living with both parents, but the
parents do not file, or are not married and therefore cannot file, a
joint tax return. Consistent with current Medicaid principles of legal
responsibility, we propose at Sec. 435.603(f)(2)(ii) to apply the
proposed rules for non-filers in the case of children living with such
parents, so that both parents, if living with the child, will be
included in the child's household and their income counted in
determining the child's eligibility.
(2) Household Composition for Non-Filers (Sec. 435.603(f)(3))
The IRC contains provisions regarding filing thresholds--ranging
from $9,350 in 2010 (86 percent FPL) for a single individual to $19,800
for a married couple filing jointly with one spouse 65 or older (137
percent FPL)--below which individuals are not required to file.
Individuals below these thresholds may file a tax return, but for non-
filers, section 36B of the IRC does not specifically address household
composition.
To be eligible for a premium tax credit, spouses must file jointly
and (except in cases of divorce or separation in which the non-
custodial parent is permitted to claim a child) parents who file can
claim their children under 19 who are living with them (or under age 24
if a full time student) as a qualifying child. See IRS Publication 501.
The current Medicaid principle that parents are legally responsible for
their children and that spouses are legally responsible for each other
is consistent with section 36B of the IRC. In the case of Medicaid,
parents are assumed to be financially responsible for their children up
to age 21; this does not vary with the child's student status.
Under either section 36B of the IRC or pre-Affordable Care Act
Medicaid rules, spouses living together are considered to be part of
the same household for eligibility purposes, and proposed paragraph
Sec. 435.603(f)(3) similarly specifies that spouses living together be
included in the same household. We considered several alternatives
regarding when children who are living with their parent(s), but are
not claimed as a tax dependent on such parent's tax
[[Page 51159]]
return, should be included in the parent's household.
Applying pre-Affordable Care Act Medicaid rules making parents
financially responsible for children who are under age 21 could result
in a gap in coverage for children aged 19 and 20 who are not in school
and are not claimed as dependents on their parents' tax return, but
whose parents do file a tax return and have household income above the
Medicaid income standard for 19 and 20 year-olds. (Coverage for 19 and
20-year olds, in most States, will be under the new group for adults
with household income at or below 133 percent FPL). On the other hand,
adopting the IRC rule allowing parents to claim as a qualifying child
their children only until age 19, unless a full-time student, could
result in an increase in Medicaid eligibility for 19 and 20-year olds
who are not full-time students and are living with their parents, as
compared to pre-Affordable Care Act Medicaid rules. Adopting the IRC
rule with respect to adult children ages 21-23 who are full-time
students could result in a decrease in Medicaid eligibility and an
imposition of legal responsibility for certain adult children not
consistent with current law.
In balancing these considerations, we propose at Sec.
435.603(f)(3), to treat spouses/parents (including stepparents) and all
children (including stepchildren and stepsiblings) under age 19 or, if
a full-time student, under age 21, who are living together, as members
of the same household. This proposed policy will avoid the gap in
coverage for 19 and 20 year olds, discussed above, while limiting any
unnecessary increase in Medicaid eligibility. Children who are not
living with their parents, or who are over the specified age limit,
would not be included in their parents' household, and as with tax
filing households, individuals other than a spouse, biological,
adopted, or step-parent, child or sibling would not be included in the
same Medicaid household under this proposed rule. We specifically
solicit comments on the proposed rule for household composition of non-
filers at Sec. 435.603(f)(3).
(3) Retention of Existing Financial Methods (Sec. 435.603(i))
Section 1902(e)(14)(D) of the Act provides that the financial
methodologies based on MAGI will not apply in certain situations. In
those cases, eligibility will be determined using the rules in effect
prior to the Affordable Care Act, codified in existing regulations at
Sec. 435.601 and Sec. 435.602. Proposed Sec. 435.603(i) sets out six
exceptions:
Individuals eligible for Medicaid on a basis that does not
require a determination of income by the Medicaid agency. This
exception from use of MAGI-based methods includes, but is not limited
to, individuals receiving or deemed to be receiving SSI, individuals
receiving assistance under title IV-E of the Act, and individuals for
whom the agency is relying on a finding of income made by an Express
Lane Agency under section 1902(e)(13) of the Act.
Individuals who qualify for medical assistance on the
basis of being blind or disabled. This exception applies only to those
individuals for whom the determination of eligibility is made on the
basis of being blind or disabled. Individuals who are blind or who have
disabilities can also be covered under the new mandatory eligibility
group for adults (codified at proposed Sec. 435.119) with MAGI-based
household income at or below 133 percent of FPL. To the extent that
their income exceeds that level, current financial methodologies will
be used to determine their eligibility for coverage on the basis of
being blind or disabled under an optional eligibility group for blind
or disabled individuals.
In proposed Sec. 435.603(i)(3), we identify the most common of the
eligibility groups for blind and disabled individuals excepted from
MAGI methods under the Act. We are not listing coverage provided to
individuals receiving SSI in so-called ``criteria States'' because they
are encompassed under proposed Sec. 435.603(i)(1)(iii)(A). (These
individuals are receiving SSI but the State does not have an agreement
under section 1634 of the Act under which the Social Security
Administration makes a determination of Medicaid eligibility for the
State.) We also are not specifically identifying children under age 18
who were receiving SSI as of the date of enactment of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)
(August 22, 1996), who would continue to receive SSI but for the
enactment of section 211 of that Act and who are eligible for Medicaid
in accordance with section 1902(a)(10)(A)(i)(II) of the Act. While
financial eligibility for continued coverage of these children will be
excepted from MAGI, most, if not all, of the affected children will
have reached age 18 as of January 1, 2014, the effective date for the
transition to MAGI-based methods. We seek comment as to whether there
might be children still eligible under this mandatory coverage group as
of 2014, and therefore, whether they should be identified in these
regulations.
Individuals age 65 or older are categorically excepted
from MAGI methods under section 1902(e)(14)(D)(i)(II) of the Act. We
recognize that the exception of all elderly individuals from MAGI
methodologies for all eligibility groups could result in States having
to retain application of AFDC financial methodologies in a small number
of cases in which an elderly individual is being evaluated for coverage
on the basis of being a parent or caretaker relative, for which age is
not a factor. We solicit comments on possible approaches we might adopt
to avoid this result--for example, interpreting the exception to apply
only in the case of elderly individuals when age is a condition of
eligibility or of applying SSI methodologies (which will continue to be
used for most MAGI-excepted groups) in determining the eligibility of
elderly individuals for coverage as a caretaker relative.
Individuals whose eligibility is being determined on the
basis of the need for long-term care services, including nursing
facility services or a level of care equivalent to such services.
Similar to the exceptions from MAGI for determinations based on being
blind or disabled, we propose to apply this exception in the case of
individuals whose eligibility is based on the need for or receipt of
such services. Individuals otherwise eligible for Medicaid under an
eligibility group to which MAGI-based methods apply (for example,
children eligible under proposed Sec. 435.118) will not be excepted
from application of MAGI-based methods in determining ongoing
eligibility under such group simply because they may need long-term
care services.
Individuals eligible for assistance with Medicare cost
sharing under section 1902(a)(10)(E) of the Act. We propose to
interpret this exception to apply only to the determination of
eligibility for Medicare cost sharing assistance.
Medically needy individuals eligible under section
1902(a)(10)(C) of the Act. This exception also applies only to the
determination of eligibility for medically-needy coverage. Individuals
who meet the eligibility criteria for coverage under another
eligibility group--for example, the new adult group--are not excepted
from application of MAGI-based methods for purposes of determining
their eligibility for such other groups simply because they would
qualify for coverage as a
[[Page 51160]]
medically needy individual if not eligibility under such other group.
Section 1902(e)(14)(D)(iii) of the Act provides that MAGI-based
methods shall not be used in determining eligibility for Medicare Part
D premium and cost sharing subsidies under section 1860D-14 of the Act.
Because such subsidies are not a form of Medicaid and determinations
for Part D cost sharing subsidies are not performed under the authority
of the Medicaid statute, we are not proposing to include regulations
regarding this exception in these rules.
C. Residency for Medicaid Eligibility Defined
We propose to simplify Medicaid's residency rules to promote
achievement of the coordinated eligibility and enrollment system
established under sections 1413 and 2201 of the Affordable Care Act and
discussed in section II.I of this proposed rule. We propose to
redesignate and revise paragraphs Sec. 435.403(h) and Sec. 435.403(i)
to Sec. 435.403(i) (rules for individuals under age 21) and (h) (rules
for individuals age 21 and older), which set parameters for States to
determine who is a State resident. These revisions are not
significantly different than the current rules. We do not propose
changes to our current regulations regarding individuals living in
institutions, receiving Federal foster care or adoption assistance
under title IV-E of the Act, or adults who do not have the capacity to
state intent. Note that policies regarding verification of residency
are proposed at Sec. 435.956(c) and discussed in section II.H.5 of
this proposed rule.
1. Residency Definition for Adults (Age 21 and Over) (Sec. 435.403(h))
We propose to strike the term ``permanently and for an indefinite
period'' from the definition for adults in redesignated Sec.
435.403(h)(1) and (h)(4), and replace the term ``remain'' with
``reside.'' An adult's residency will be determined based upon where
the individual is living and has intent to reside, including without a
fixed address, or the State which the individual entered with a job
commitment or seeking employment (whether or not currently employed).
While proposing to remove the phrase ``permanently or for an indefinite
period'' and use the term ``reside,'' we are maintaining existing
policy that an individual must intend to remain living in the State in
which he or she is seeking coverage. Persons visiting a State for
personal pleasure or purposes of obtaining medical care are not
residents of the State visited. By removing the term ``living'' in the
State or replacing the term ``remain'' with ``reside,'' we do not
intend to have any policy impact on State policy. Indeed, we note that
section 1902(b)(2) of the Act refers to individuals who ``reside in the
State''. We are removing the word ``living'' from the definition in
order to simplify the language. An individual must still maintain
present intent to reside in the State being claimed as the State of
residence; a State would not be required to recognize an intent to
reside at some future point in time. We have retained the term
``living'' for individuals who do not have the capacity to state
intent, as we are not modifying the regulations for that population.
Our proposal to remove language regarding permanency and ``an
indefinite period'' will help to facilitate coordination of eligibility
determinations across and between programs and is also consistent with
long-standing statutory requirements. Under section 1902(b)(2) of the
Act, States may not exclude from coverage an individual who resides in
the State ``regardless of whether or not the residence is maintained
permanently or at a fixed address[.]''
2. Residency Definition for Children (Under Age 21) (Sec. 435.403(i))
For individuals who are emancipated or married, we propose language
to align the residency rules with the proposed definition for adults.
Accordingly, at redesignated Sec. 435.403(i)(1), we propose to strike
the term ``permanently and for an indefinite period'' and to replace
the word ``remain'' with ``reside.''
We propose in Sec. 435.403(i)(2) to combine and consolidate two
different definitions of residency currently set forth in paragraphs
(h)(2) and (h)(3) for unemancipated individuals under age 21: (1) those
whose Medicaid eligibility is based on a disability and (2) those who
are not disabled and not living in an institution or receiving foster
care or adoption assistance under IV-E of the Act. We eliminate the
cross-reference to the AFDC rules at 45 CFR 233.40 and for both groups
of children we propose to apply a similar definition as that proposed
for most adults, but without the ``intent'' component, as individuals
under age 21 may not legally be able to express intent. Under the
proposed rule, States may not determine residency of a child based
solely on the residency of the parent.
Our proposal will simplify State administration and make the rules
clearer to the public. Our proposal to allow children to establish
residency to the same extent as adults when a parent or caretaker is
seeking or has confirmed employment is intended to ensure a consistent
approach for migrant, seasonal workers and other families living in a
State while employed or in search of employment. The proposed
definition also allows flexibility for families in which children
attend school in a State other than where the parents live; such
children may be considered residents of the parents' ``home State,'' if
the parent expresses the requisite intent. However, we do not change
States' current flexibility to determine whether students ``reside'' in
a State, as long as each individual has the opportunity to provide
evidence of actual residence. The proposed rule excludes children who
are visitors for pleasure or for purposes of obtaining medical care.
Parents, caretakers, and persons acting responsibly on behalf of a
child may attest to where the child resides, under new Sec.
435.956(c).
While we do not believe our proposed changes significantly affect
Federal guidance on residency, we seek comments on the proposed
modifications to Sec. 435.403(h) and (i), particularly on the impact
of this proposed rule on children eligible for Medicaid based on
disability. We also seek comments on whether to change the current
State residency policy with regard to individuals living in
institutions and adults who do not have the capacity to express intent.
D. Application and Enrollment Procedures for Medicaid
1. Availability of Program Information (Sec. 435.905)
Section 2201 of the Affordable Care Act adds a new section
1943(b)(1)(A) to the Act which directs States to develop procedures
that enable individuals to apply for, renew, and enroll in coverage
through an Internet Web site. Section 1943(b)(4) directs States to
establish a Web site (which must be linked to the Web site established
by the Exchange operating in the State) that will allow individuals to
obtain information regarding coverage under Medicaid and CHIP and
compare such coverage to that available through the Exchange. Thus, we
propose to amend Sec. 435.905 to ensure that program information be
made available electronically through a Web site in addition to
providing information to applicants both orally and in writing. We
propose to modify Sec. 435.905(b) to eliminate specific requirements
regarding quantity and electronic availability of bulletins and
[[Page 51161]]
pamphlets, as we do not believe these are necessary in regulations.
2. Applications (Sec. 435.907)
To support States in developing a coordinated eligibility and
enrollment system for all insurance affordability programs, section
1943(b)(3) and section 1413 of the Affordable Care Act direct the
Secretary to develop and provide States with a single, streamlined
application. The single application, to be used for all insurance
affordability programs and available through a variety of formats
including on-line and phone applications, will build on the successes
many States have had in developing simplified applications.
Accordingly, we propose to amend current regulations at Sec.
435.907 to reflect use of the new single, streamlined application. The
Secretary will develop the data elements for the application in
collaboration with States and consumer groups. As permitted in section
1413(b)(1)(B) of the Affordable Care Act, proposed Sec. 435.907(b)(2)
provides States the option to develop and use an alternative
streamlined application, subject to review and approval by the
Secretary. Under the law, those who are limited English proficient
(LEP) and persons with disabilities must have equal access to health
care and the benefits. We intend to address the readability and
accessibility of applications, forms and other communications with
applicants and beneficiaries in future guidance.
In Sec. 435.907(c), we propose two alternative approaches related
to applications for individuals who may qualify for coverage on a basis
other than MAGI. First, we propose that States may use supplemental
forms to gather additional information, such as information pertaining
to resources, needed to make an eligibility determination. This
approach would permit anyone seeking coverage to begin by completing
the same single, streamlined application as all other applicants.
Second, we propose to permit States to develop and use an alternative
single, streamlined application form designed specifically to capture
information needed to determine eligibility for individuals whose
eligibility is not determined based on MAGI. Under the statute and
proposed 435.907(c), such supplemental and alternative forms are
subject to the Secretary's approval. We seek comment on both of the
proposed approaches as well as other alternatives to ensure a simple
application process.
In Sec. 435.907(d), we explain that the agency must establish
procedures to allow persons seeking coverage to file an application
through a variety of means including online, in person, over the phone
and by mail. Applications may be submitted in person, but under this
proposed rule, particularly in light of the seamless coordination
process required for enrollment in Medicaid and the Exchange, in person
interviews cannot be required for the individuals whose eligibility is
based on MAGI.
For individuals not seeking coverage for themselves (``non-
applicants''), to ensure privacy we propose in Sec. 435.907(e)(1) to
codify the long-standing policy against requiring such individuals to
provide Social Security numbers (SSNs) or information regarding their
citizenship, nationality, or immigration status. To promote enrollment
of eligible applicants, States may request an SSN of a non-applicant on
a voluntary basis. Proposed Sec. 435.907(e)(2) codifies existing
policy grounded in Title VI of the Civil Rights Act of 1964, the
Privacy Act, and Medicaid confidentiality provisions at section
1902(a)(7) of the Act to allow States to request an SSN of a non-
applicant only if: (1) Providing an SSN is voluntary; (2) use of a non-
applicant's SSN is limited to processing the applicant's eligibility or
for other functions necessary to the administration of the State's
plan; and (3) the State provides notice that provision of an SSN is
voluntary and indicates how the SSN will be used.
In support of the proposed rule, we note that sections 1411(g) and
1414(a)(2) of the Affordable Care Act specify that taxpayer information
may only be used for eligibility determinations and other functions
directly related to the administration of benefits. Section 1902(a)(7)
of the Act directs States to have safeguards that restrict the ``use or
disclosure of information concerning applicants and recipients only for
purposes directly connected with the administration of the [State] plan
* * *'' Non-applicant information used to determine an applicant's
eligibility is considered to be information ``concerning'' the
applicant or recipient; thus, this information must be appropriately
safeguarded.
We propose to continue the current policy that Medicaid applicants
and beneficiaries must provide an SSN, if the individual has one. Under
our current regulations at Sec. 435.910, if an individual does not
have an SSN, the agency must assist the individual in obtaining one.
For background and a detailed discussion of the current policy on the
collection of SSNs, see the Tri-Agency Guidance issued in conjunction
with the Administration for Children and Families and the Food
Nutrition Service, in September 2000, at http://www.hhs.gov/ocr/civilrights/resources/specialtopics/tanf/triagencyletter.html.
Section 1943(b)(1)(A) of the Act directs Medicaid agencies to
permit enrollment and reenrollment in the State plan or under a waiver
through electronic signature. Accordingly, we propose in Sec.
435.907(f) that States must accept applications signed through the use
of electronic signature techniques, including telephonically recorded
signatures, as well as handwritten signatures transmitted by fax or
other electronic means. This is consistent with current practice in
most States.
3. Assistance With Application and Redetermination (Sec. 435.908)
Some of the individuals eligible for coverage in 2014 may need
assistance with the application and renewal process. Therefore, we
propose to amend current Sec. 435.908(b) to ensure that the agency
provides assistance through a variety of means to any individual
seeking help with the application or redetermination process. This is
consistent with current State practice and is in accordance with
section 1902(a)(19) of the Act.
We are proposing that States have flexibility to design the
available assistance, while assuring that such assistance is provided
in a manner accessible to individuals with disabilities and who are
LEP. In addition, section 1943(b)(1)(F) of the Act directs States to
conduct outreach to vulnerable and underserved populations eligible for
Medicaid. Such outreach and assistance will be particularly important
for those who are newly eligible, as well as for people with
disabilities, underserved racial and ethnic minorities and other
groups. We will provide technical assistance and subregulatory guidance
to further address application and renewal assistance to meet the needs
of the multiple populations served by the program.
E. MAGI Screen (Sec. 435.911)
This section of the preamble and the proposed rules at Sec.
435.911 describe the process for applying a new simplified test for
determining eligibility based on MAGI--which is facilitated by the
simplified eligibility categories, including the new adult coverage
group, discussed in section II.A of this proposed rule--as well as the
steps States will take to ensure that individuals who do not meet the
simplified test are evaluated for Medicaid eligibility on other bases
and for potential eligibility for other insurance affordability
programs.
[[Page 51162]]
Proposed Sec. 435.911(a) sets forth the statutory basis for this
section. In proposed Sec. 435.911(b) we set forth several pertinent
definitions, including ``applicable modified adjusted gross income
standard,'' which will be at least 133 percent FPL, but in some States
may be higher for certain individuals, including parents or other
caretaker relatives, pregnant women or children.
Proposed Sec. 435.911(c) describes the key steps in the proposed
streamlined eligibility process. Under Sec. 435.911(c)(1), for every
individual who has submitted an application and who meets the non-
financial criteria for eligibility (or for whom the agency is providing
a reasonable opportunity to provide documentation of citizenship or
immigrations status in accordance with sections 1903(x), 1902(ee) and
1137(d) of the Act), the Medicaid agency would determine whether such
individual has household income at or below the applicable MAGI
standard. This means that States will not need to review whether an
individual who meets the applicable MAGI standard (for example, 133
percent FPL for the new adult group) is also eligible as a disabled or
medically needy individual, both of which typically entail a more
involved eligibility determination.
For individuals with household income at or below the applicable
MAGI standard, the agency would provide Medicaid benefits promptly and
without undue delay. Benefits will be addressed in subsequent guidance.
Some individuals with household income above the applicable MAGI
standard may be eligible for Medicaid on another basis. In some States,
for example, some individuals may be eligible based on disability or
need for long-term care services, even if their income exceeds the
applicable MAGI standard, and individuals eligible for Medicare may be
eligible for assistance with Medicare premiums and cost sharing
charges. In accordance with Sec. 435.911(c)(2), for each individual
who is not eligible for Medicaid based on MAGI under Sec.
435.911(c)(1), the Medicaid agency shall collect additional
information, consistent with proposed Sec. 435.907(c), as may be
needed to determine Medicaid eligibility on other such other bases.
We note that the MAGI screen proposed for State Medicaid agencies
is the same process as that at proposed 45 CFR 155.305(c) of the
Exchange Proposed Rule published elsewhere in this Federal Register;
however, the Exchange will not be required to undertake Medicaid
eligibility determinations based on factors other than MAGI. Under
proposed Sec. 435.1200(e)(2) and the Exchange Proposed Rule at 45 CFR
155.345, the Medicaid agency will retain responsibility for making such
determinations, although the State can establish procedures whereby the
Exchange will undertake such other determinations in certain
circumstances, consistent with regulations at Sec. 431.10 and Sec.
431.11, as revised in and discussed in section J of this proposed rule.
Proposed Sec. 435.911(c)(2)(iii) specifies that the agency must
follow the policies of proposed Sec. 435.1200(g) to assess individuals
determined not eligible for Medicaid based on MAGI for potential
eligibility for other insurance affordability programs and to
facilitate seamless transfer of the individual's electronic account to
these other programs. Under proposed Sec. 435.1200(g)(2), evaluation
of individuals for Medicaid eligibility based on blindness or
disability in accordance with proposed Sec. 435.911(c)(2) should occur
at that same time as evaluation for potential eligibility for premium
tax credits for enrollment through the Exchange.
We are not proposing specific timeliness standards for the
determination of eligibility under proposed Sec. 435.911. In
collaboration with States, we will be developing performance standards
and metrics for the streamlined and coordinated eligibility and
enrollment system. These metrics will also support the standards and
conditions described in the Federal Funding for Medicaid Eligibility
Determination and Enrollment Activities final rule (76 FR 21950)
published in the April 19, 2011 Federal Register.
F. Coverage Month
In proposed Sec. 155.410 of the Exchange proposed rule, enrollment
through the Exchange for individuals terminated from Medicaid can begin
at the earliest on the 1st day of the month following the date the
individual loses Medicaid and is determined eligible for enrollment
through the Exchange. If the individual loses Medicaid eligibility and
is determined eligible for enrollment through the Exchange after the
22nd day of the month, enrollment through the Exchange begins at the
earliest on the first day of the second month following such date. To
promote coordination with coverage through the Exchange, we are
considering adding a provision to the regulations to extend Medicaid
coverage until the end of the month that the appropriate termination
notice period ends. Certain exceptions--such as the death of a
beneficiary--would apply. This is the current practice in many States
which now end Medicaid coverage at the end of a month for
administrative convenience or to align with coverage offered by
participating health plans paid on a per capita per month basis, as
permitted under current regulations. We believe that providing coverage
through the end of the month is similar to existing regulations at
redesignated Sec. 435.915(b), which allows States to make eligibility
effective from the beginning of a month.
We invite comments on this potential approach to coverage, its
likely impact on maintaining continuous coverage, whether the costs of
this approach outweigh the benefits, or whether we should retain the
current policy that provides State flexibility to end coverage at any
time during a month.
G. Verification of Income and Other Eligibility Criteria (Sec. 435.940
Through Sec. 435.956)
In this section, we discuss changes to 42 CFR part 435 subpart J to
make verification processes more efficient, modernized and coordinated
with the Exchange. In general, the proposed rules maximize reliance on
electronic data sources, shift certain verification responsibilities to
the Federal government, and provide States flexibility in how and when
they verify information needed to determine Medicaid eligibility. The
proposed changes draw from successful State systems and are aligned
with those proposed at Sec. 155.315 and Sec. 155.320 of the Exchange
proposed rule. The major changes are:
In accordance with section 1413(c) of the Affordable Care
Act, State Medicaid agencies will use a system established by the
Secretary pursuant to her authority under sections 1411(c) and 1413(c)
of such Act, through which all insurance affordability programs can
corroborate or verify certain information with other Federal agencies
(for example, citizenship with the Social Security Administration
(SSA), immigration status through the Department of Homeland Security
(DHS), and income data from the IRS.) This system will reduce
administrative burden on State Medicaid agencies and Exchanges.
Consistent with current policy, State Medicaid agencies
may accept self-attestation of all eligibility criteria, with the
exception of citizenship and immigration status. To ensure program
integrity, States must comply with the requirements of section 1137 of
the Act to request information from trusted data sources when useful to
verifying financial eligibility.
[[Page 51163]]
We propose that in verifying eligibility States will rely,
to the maximum extent possible, on electronic data matches with trusted
third party data sources. Additional information, including paper
documentation, may be requested from individuals when information
cannot be obtained through an electronic data source or is not
``reasonably compatible'' with information provided by the individual.
These changes align eligibility verification methods for Medicaid with
those used for advance payments of premium tax credits and other
insurance affordability programs. This proposal would apply to the
specific financial and non-financial information referenced in these
rules, as well as to any additional information the agency finds it
necessary to verify in order to determine eligibility, regardless of
whether that information is specifically referenced in the regulation.
A new section at Sec. 435.956 relates to requests by the
agency for information about non-financial eligibility factors.
Finally, we have deleted a number of prescriptive
provisions that are in current regulations as to when or how often
States must query certain data sources, or when certain State wage
agencies must provide data to the State Medicaid agency. We do not
believe that this level of specificity regarding State use of data
sources is necessary, nor do we believe it is appropriate to include in
Medicaid regulations requirements that bind other agencies, such as
State wage agencies.
These and other proposed revisions are discussed in more detail
below.
1. Basis, Scope, and General Requirements (Sec. 435.940 and Sec.
435.945)
At Sec. 435.940, we add statutory citations to the basis and scope
of the income and eligibility verification regulations to include, in
addition to section 1137 of the Act, sections 1902(a)(4), 1902(a)(19),
1903(r)(3) and 1943 of the Act, as well as section 1413 of the
Affordable Care Act.
At Sec. 435.945(a), consistent with 42 CFR part 455, we are
specifying that nothing in this proposed rule shall prevent a State
from acting to ensure program integrity. Program integrity is a top
priority and should be considered in commenting on the proposed rule.
Consistent with current policy, at Sec. 435.945(b), we add
language to expressly permit States to accept attestation of
information related to eligibility, including income, age, birth date
and State residency, without requesting paper documentation. The
exceptions to this provision are citizenship and immigration status, as
these are subject to separate statutory requirements. States must
continue to comply with the provisions of section 1137 of the Act
relating to income information in accordance with rules set out in this
section.
Redesignated Sec. 435.945(c) directs the agency to request and use
information in accordance with the appropriate sections of the
regulations. We modify existing cross references to reflect other
changes proposed and add cross references to the new Sec. 435.949 and
Sec. 435.956. In addition, we have deleted references in Sec.
435.945(c) and throughout the regulation to verifying ``medical
assistance payments,'' ``amount of medical assistance payments'' and
``benefit amount'' as the reference to the verification of
``eligibility'' is sufficient.
We removed the list of programs with which the State Medicaid
agency must exchange information at Sec. 435.945(d) and instead
include a reference to those programs listed in 1137(b) of the Act, as
well as the child support enforcement program under Part IV-D of the
Act (which is also referenced in section 1137) and SSA. Pursuant to
sections 1413 of the Affordable Care Act and 1943 of the Social
Security Act, we have added insurance affordability programs as
programs with which the agency must exchange information.
We have not changed the rules for reimbursement arrangements
between agencies for data exchanges at redesignated Sec. 435.945(e),
except for an updated cross reference and citing to section 1137(a)(7)
of the Act.
Redesignated Sec. 435.945(f) specifies that before a request for
information from a third-party data source is initiated, an individual
must receive notice of the information being requested and its use.
Consistent with current State practice, we anticipate that this notice
would be provided as part of the application process. We have deleted
the current exception to this notice requirement when an individual's
eligibility has been determined by another agency because, under our
revised rule, proper notice is required only when the agency itself
will be requesting data from another agency or program. The reporting
requirements at redesignated Sec. 435.945(g) remain unchanged; however
the regulatory citations relating to MEQC and documentation have been
updated.
Existing Sec. 435.945(g), regarding a State Wage Information
Collection Agency (SWICA) that does not use the quarterly wages
reported by employers under section 1137 of the Act, has been deleted,
as we believe these requirements are not within the purview of the
State Medicaid agency.
Per section 1413(c) of the Affordable Care Act, we add a new Sec.
435.945(h) (renumbering the next paragraph) to require that data
exchanged electronically under this section must be sent and received
via secure electronic interfaces which, as defined in proposed Sec.
435.4, must be consistent with 42 CFR part 433.
Redesignated Sec. 435.945(i), pertaining to written agreements
between agencies engaged in data exchanges, has been modified to
eliminate specific requirements regarding the precise content of such
agreements and the timing and frequency of data exchanges to provide
States greater flexibility. This flexibility will facilitate
coordination with Exchanges and other insurance affordability programs
and allow States to take full advantage of the increased automation of
electronic data matching enabled through the provision of enhanced
Federal funding for the development and implementation of such systems
available under 42 CFR part 433 subpart C.
2. Verification of Financial Eligibility (Sec. 435.948)
Under sections 1137 and 1902(a)(46) of the Act, certain Federally-
funded, State-administered programs, including Medicaid, are required
to conduct electronic data matches to obtain income information from
the State quarterly wage reports and Unemployment Insurance Benefits,
the IRS, and the SSA to verify financial eligibility for benefits, if
such information may be useful in verifying eligibility for Medicaid,
as determined by the Secretary.
However, not all data sources are useful in all situations and
under section 1137(a)(4)(C). The use of information identified in
section 1137 of the Act ``shall be targeted to those uses which are
most likely to be productive in identifying and preventing
ineligibility * * * and no State shall be required to use such
information to verify the eligibility of all recipients.'' In addition
to the data sources specifically listed in section 1137 of the Act,
many States also rely on other data matches, which they find useful to
verify income.
We believe that States are in the best position to determine the
usefulness of the available data sources in specific cases. Therefore,
we propose at Sec. 435.948(a) to delegate to the State Medicaid agency
the discretion afforded to the Secretary of the HHS under section
1137(a)(2) of the Act to determine when the information
[[Page 51164]]
identified in section 1137 of the Act is useful to verifying financial
eligibility for an individual and must be requested. The sources of
data which States much check, if useful, remain unchanged, except as
follows:
For the reasons discussed above, specific references to
the timing and/or frequency with which information must be requested
are deleted;
Public Assistance Reporting Information System (PARIS) is
added as a new data source given the requirement in 1903(r)(3) of the
Act that all eligibility determination systems must conduct data
matching through PARIS;
We eliminate reference to the former AFDC program; and
We replace reference to ``Food Stamps'' with
``Supplemental Nutrition Assistance Program'' to reflect the new name
under the Food, Conservation and Energy Act of 2008.
As noted above and discussed in more detail below in relation to
proposed Sec. 435.949, the Secretary is required to establish a system
through which all insurance affordability programs can verify certain
information with other Federal agencies. At new Sec. 435.948(b), we
propose that, to the extent available, States must access needed
information when available through the system established by the
Secretary, consistent with sections 1943(b)(3) and 1902(a)(4) of the
Act.
At Sec. 435.948(c)(1), we provide that information not available
through the service established by the Secretary under Sec. 435.949
may be obtained directly from the agency or program housing the
information. At Sec. 435.948(c)(2), we retain the current policy in
paragraph (c) of the existing regulations that information be requested
by SSN, but clarify that, when an SSN is not available, the agency
attempt to obtain needed information using other personally identifying
information otherwise available in the individual's account, as
described in Sec. 435.4. Note that when an SSN is not available, the
agency must assist the individual in obtaining a SSN in accordance with
Sec. 435.910.
States may request and use alternate data sources, as permitted at
proposed Sec. 435.948(d), subject to Secretarial approval. Such
alternative sources should reduce administrative costs and burdens on
individuals and States, maximize accuracy, and minimize delay. Also, we
make explicit existing policy that use of any such alternative data
source must meet applicable requirements relating to the
confidentiality, disclosure, maintenance, or use of information.
Finally, consistent with section 1413 of the Affordable Care Act, we
add that the use of an alternative data source facilitate coordination
between all other insurance affordability programs.
3. Verification of Information From Federal Agencies (Sec. 435.949)
Section 1413(c) of the Affordable Care Act directs the Secretary of
HHS, in consultation with the Secretary of the Treasury, the Secretary
of Homeland Security and the Commissioner of Social Security, to
establish a system of verification, using secure electronic interfaces,
through which all State health coverage programs can verify information
needed to determine eligibility. Section 1411(c) of the Affordable Care
Act specifically directs that the system enable electronic verification
of household income and family size with the IRS, citizenship data with
SSA, and immigration status with DHS.
By enabling access to multiple Federal sources though a single
inquiry, insurance affordability programs can receive prompt, reliable
data through the same service, thereby alleviating multiple data
inquiries that the State might otherwise have to make. Since all of the
insurance affordability programs will rely on certain common sources
(that is, SSA, DHS and IRS), once such information is gathered and
evaluated by one program, reevaluation or re-verification of data will
not be necessary, and thus, not permitted by another program (unless an
individual reports a change in circumstances).
We propose at Sec. 435.949(a) to specify the Federal agencies from
which information will be available through the Secretary, including
SSA, DHS and the IRS. We propose in Sec. 435.949(b) that, if data
included in Sec. 435.949 is available through the Secretary, States
would be required to obtain such data through the service established
by the Secretary. Other applicable regulations, including those set
forth at Sec. 435.948, Sec. 435.956 and Sec. 435.960, remain in
effect for information, which cannot be requested through the
Secretary.
We propose Sec. 435.949(c) to codify section 1413(c)(3) of the
Affordable Care Act, which provides that the Secretary may modify the
methods used in the verification system established if she determines
that modifications would reduce the administrative costs and burdens on
individuals or agencies; ensure accurate and timely verification;
comply with applicable requirements for the confidentiality,
disclosure, program integrity, and maintenance or use of the
information, including the requirements of section 6103 of the IRC; and
promote coordination among insurance affordability programs. Section
435.949(c) is proposed to be consistent and coordinated with Sec.
155.315 of the proposed Exchange rule.
4. Use of Information and Requests for Additional Information (Sec.
435.952)
We are proposing changes to Sec. 435.952, which describes the
appropriate use of information. We are proposing to eliminate vague
language at the end of Sec. 435.952(a) regarding the requirement to
independently verify information ``* * * if determined appropriate by
agency experience.'' We expect processes to occur in real time wherever
possible and we will be defining more detailed standards and other
performance metrics, with State and stakeholder input, in subsequent
Federal guidance. Accordingly, we also are proposing to delete the
specific timeliness requirements contained in the current regulation at
Sec. 435.952(c), which now requires agency action within 45 days from
the date new information is received.
Under Sec. 435.952(b), as revised, if information provided by an
individual is reasonably compatible with information that the agency
has obtained from other trusted sources, the agency must act on such
information and may not request additional information from the
individual. To establish an appropriate balance between reliance on
electronic verification and paper documentation, we propose to
establish a ``reasonable compatibility'' standard governing when
additional information, including paper documentation, can be requested
from applicants and beneficiaries. Under proposed Sec. 435.952(c), no
further information may be required from the individual unless the
agency is unable to obtain information through electronic data matching
or the information obtained is not reasonably compatible with that
provided by the individual. In such cases, the agency may contact the
individual and accept the individual's explanation without further
documentation, if reasonable, or the agency may request additional
information, including paper documentation. ``Reasonably compatible''
does not necessarily mean an identical match for the data, only that
the information is generally consistent. Since what is ``reasonably
compatible'' may vary depending on the particular circumstances, we are
proposing to provide States flexibility to apply this standard. Under
Sec. 435.948(d), if the individual fails to respond to a request for
additional information permitted under the proposed rule, the
[[Page 51165]]
agency shall proceed to deny, terminate, or reduce Medicaid only after
notice and appeal rights have been provided in accordance with part
431, subpart E.
Sections 435.953 and 435.955 of the current regulations are deleted
in the proposed rule. Provisions contained in Sec. 435.953(a) and
Sec. 435.955(a) through (c) and (f) are revised and incorporated into
Sec. 435.948 and Sec. 435.952, in accordance with the discussion
above. We propose to remove the remaining requirements in Sec.
435.953(b) through (d) (relating to detailed information the State must
submit for the Secretary's approval to exclude specific data requests)
and the detailed requirements in Sec. 435.955(a) and (d), (e) and (g)
(relating to the additional provisions regarding information released
by a Federal agency, including State reporting requirements and
requests for a waiver from the Federal agency's Data Integrity Board).
We believe that the detailed nature of these provisions may
unnecessarily hamper development of an efficient, modernized and
coordinated system and that such details are best developed in
collaboration with States and addressed through subregulatory guidance.
5. Verification of Other Non-Financial Information (Sec. 435.956)
We propose a new Sec. 435.956 to address verifying non-financial
information. As with financial information, to the extent non-financial
information is available through the electronic service established by
the Secretary, States would use that service under proposed Sec.
435.949(b).
Under the proposed rule, at Sec. 435.956(c), States may use
attestation (including attestation of someone acting responsibly on
behalf of the individual) or electronic data sources to determine State
residency, in accordance with Sec. 435.945(b) and Sec. 435.952. Under
proposed Sec. 435.956(c), documents that provide information regarding
immigration status should be used as a source of evidence to verify
satisfactory immigration status, but may not, by themselves, be used to
demonstrate lack of residency. For example, a temporary or time-limited
immigration status, such as Temporary Protected Status (TPS), does not
necessarily establish that the individual is not a State resident
because TPS is routinely renewed. The proposed rule relating to
residency does not diminish States' responsibility to ensure that only
individuals with valid and satisfactory immigration status are
determined eligible for and enrolled in Medicaid; if an individual has
a temporary immigration status, the agency must ensure that the
individual's Medicaid eligibility is reviewed at the appropriate time.
Proposed Sec. 435.956(d) simply cross-references current policy at
Sec. 435.910(f) and (g) regarding issuance and verification of SSNs.
Current Federal rules regarding verification of pregnancy vary
based on the woman's eligibility category, but verification of
pregnancy is not required in all cases under current rules.
Verification (except by self-attestation) may not be required for
pregnant women eligible for pregnancy related services under section
1902(a)(10)(A)(i)(IV) or (ii)(IX) of the Act, but pregnant women must
provide medical verification of pregnancy to be eligible for full
Medicaid coverage as a qualified pregnant woman (with very low-income
below the State's former AFDC standard) under section
1902(a)(10)(A)(i)(III) of the Act or under section 1931 of the Act, if
medical verification was required under the State's AFDC program in
effect on July 16, 1996.
In light of the proposed regulations at Sec. 435.116, which
combine these different eligibility categories to achieve greater
simplicity in the program, we believe a verification rule for the
combined group is needed. Thus, we are exercising the authority
provided in section 1902(e)(14)(A)of the Act to propose application of
the self-attestation verification rule under section
1902(a)(10)(A)(i)(IV) or (ii)(IX) of the Act in determining eligibility
under Sec. 435.116. Although a change in federal guidelines, we do not
believe that this will have significant practical impact for States, as
we believe most pregnant women today are covered under the eligibility
groups for which medical verification is already not required. Proposed
Sec. 435.956(e) reflects this policy, providing that the agency must
rely on the woman's attestation of pregnancy, unless the agency has
other information (for example, claims history) that is not reasonably
compatible with her attestation. To promote coordination of eligibility
rules and procedures with the Exchange, we also propose at Sec.
435.956(e) to codify the widespread State practice of accepting
attestation of household composition unless the State has information
which is not reasonably compatible with such attestation.
In proposed Sec. 435.956(f), in the situations when age is a
factor of eligibility, States may apply the same proposed verification
procedures and options, as are available for other eligibility criteria
verification, in accordance with Sec. 435.945(b) and Sec. 435.952.
When agencies obtain information regarding residency, SSN,
pregnancy, age, and birth date in accordance with paragraphs (c)
through (f) that is not reasonably compatible with the information or
attestation provided by an individual, they must take reasonable steps
to reconcile discrepancies that would affect eligibility, following the
process set out in Sec. 435.952(c) and (d).
H. Periodic Redetermination of Medicaid Eligibility (Sec. 435.916)
Consistent with section 1943(b)(3) of the Act and sections 1413(a)
and 1413(c)(2) of the Affordable Care Act, which aim to ensure that
individuals remain enrolled for as long as they meet eligibility
standards, we propose to amend Sec. 435.916 to establish simplified,
data-driven renewal policies and procedures for individuals whose
eligibility is based on MAGI, consistent with ensurance of program
integrity.
States are increasingly re-engineering their renewal processes,
recognizing that the traditional process, which involves a new
application and documentation, may be unnecessary and can be burdensome
for families and agencies. In addition, many eligible beneficiaries
lose coverage at renewal for procedural reasons, only to reapply, and
to regain eligibility, soon after losing coverage. This churning on and
off of coverage is administratively costly and burdensome for the
agency, health plans, and consumers, and is disruptive to continuity of
care and efforts to achieve quality and efficiency in the delivery of
care. This rule proposes renewal procedures that are consistent with
those that will operate for the premium tax credit and that mirror the
practices many States have adopted as they have sought to simplify the
enrollment process and promote continuity of coverage.
Under current Federal policy, eligibility must be redetermined at
least once every 12 months, and although States can have a shorter
regular redetermination period, very few States do so today. According
to a 2011 50-State survey by the Kaiser Family Foundation, all but two
States currently have a 12-month renewal period for children and all
but five also provide 12-month renewal periods to parents. Consistent
with this State trend and the annual redetermination procedures for
individuals eligible for tax credits to purchase coverage through the
Exchange at Sec. 155.335 of the Exchange proposed rule, we propose at
Sec. 435.916(a)(1) that States schedule regular redeterminations or
renewals for beneficiaries whose eligibility is based on MAGI once
every 12 months.
[[Page 51166]]
Consistent with current policy, eligibility should be redetermined more
frequently if a beneficiary reports a change in circumstance that may
affect continued eligibility, or the agency obtains information (for
example, through a data match from other program records) that suggests
the need for an eligibility review. States maintain authority and
flexibility to establish procedures that ensure program integrity.
In recent years, States also have increasingly adopted measures to
streamline the renewal process, including the use of administrative,
telephone and online renewals. Consistent with this State trend, under
the proposed process at Sec. 435.916(a), States would not need a
renewal form from all individuals, further streamlining the process for
individuals and States. Similar to the proposed verification processes
at initial application, discussed in section II.H. of this proposed
rule, the proposed renewal procedures maximize the use of current
third-party data matching to verify continued eligibility. Thus, at
Sec. 435.916(a)(2), we propose to codify the longstanding policy (see
http://www.cms.gov/smdl/downloads/smd040700.pdf) that agencies renew
eligibility for beneficiaries by first evaluating information available
to the agency in the electronic account or from other reliable data
sources. If the information available to the agency is sufficient to
make a determination of continued eligibility, including information
that establishes that the individual or family continues to reside in
the State, coverage shall be renewed on the basis of this information
and the agency would send the appropriate notice to the beneficiary
without requiring any further action. This eliminates the need for and
administrative burden of a renewal form or a signed returned notice and
unnecessary requests for information already on hand.
State experience with this type of renewal process shows that it
reduces the number of eligible beneficiaries who lose coverage for
procedural reasons while maintaining program integrity. Beneficiaries
must correct any inaccurate information contained in the determination
notice and would be permitted to do so through a variety of means,
including online, in person, by telephone, or via mail. As noted below,
if any information is missing or is not reasonably compatible with
ongoing eligibility, the agency must take further action to complete
the renewal process.
If the agency cannot determine that the individual remains eligible
through the process described above, we propose in Sec. 435.916(a)(3)
a process in which the agency would provide the individual with a pre-
populated renewal form containing information that is relevant to the
renewal and available to the agency. The agency would then provide the
individual with a reasonable period--these rules propose at least 30
days--to furnish necessary information and to correct any inaccurate
information either in person, online, by telephone, and via mail. We
seek comments on this proposed process.
At Sec. 435.916(a)(3)(ii), we propose that the agency verify the
information reported by the beneficiary in accordance with Sec.
435.945 through Sec. 435.956, as revised in these proposed rules,
including, at State option, reliance on self-attestation consistent
with those sections. In Sec. 435.916(a)(3)(iii), to avoid unnecessary
reapplications for coverage, we also propose a reconsideration period
for individuals who lose coverage for failure to return the renewal
form. Individuals who return the form within a reasonable period after
coverage is terminated would be redetermined without the need for a new
application. We considered specifying a 90-day reconsideration period
to align with the 3-month retroactive assistance period provided under
section 1902(a)(34) of the Act, but did not specify a particular length
of time in this proposed rule. We seek comments on the use and length
of a specified reconsideration period.
Finally, consistent with section 1413 of the Affordable Care Act,
we propose at Sec. 435.916(a)(4) that for beneficiaries no longer
eligible for Medicaid, the agency assess the individual for eligibility
in other insurance affordability programs and transmit the electronic
account and other pertinent data to the appropriate program for a
determination of eligibility in accordance with proposed Sec.
435.1200(g).
We have not proposed amending the renewal procedures for
beneficiaries eligible on a basis other than MAGI (reflected in current
regulations at redesignated Sec. 435.916(b)), but seek comment on
extending the renewal procedures proposed in Sec. 435.916(a) to such
individuals.
We propose to expand the standards under redesignated Sec.
435.916(c) to include options for permitting all beneficiaries to
report changes online, over the telephone, by mail or in person. Given
the evolving reliance on methods for communication that go beyond the
in-person interview, we solicit comment on whether more modernized
procedures to report changes should be available to both the MAGI and
MAGI-excepted populations.
We note that we will be modifying the Payment Error Rate
Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC)
regulations to ensure that both the PERM Medicaid eligibility review
and MEQC processes take into account these rules and procedures,
including the use of authoritative data sources in redetermining
eligibility. We also note that any State expenditures (before the end
of 2015) for system changes necessary to adopt these renewal procedures
should be subject to the enhanced (90 percent) match as outlined in the
Federal Funding for Medicaid Eligibility Determination and Enrollment
Activities final rule published in the April 19, 2011 Federal Register
(76 FR 21950), provided these systems meet the standards and conditions
set forth in that rule.
I. Coordination of Eligibility and Enrollment Among Insurance
Affordability Programs--Medicaid Agency Responsibilities (Sec.
435.1200)
We propose to add a new subpart M, Coordination between Medicaid
and other insurance affordability programs, including a new Sec.
435.1200 to delineate the State Medicaid agency's responsibilities in
effectuating such coordination. Proposed Sec. 435.1200 also includes
policies previously included in Sec. 431.636, Coordination of Medicaid
with the State CHIP. Section 435.1200(a) and (b) set forth the basis
for and definitions used in the proposed section.
1. Basic Responsibilities (Sec. 435.1200(c))
Proposed Sec. 435.1200(c) sets forth the basic responsibilities of
the State Medicaid agency. Proposed Sec. 435.1200(c)(1) specifies that
the Medicaid agency must participate in the coordinated eligibility and
enrollment system described in section 1943 of the Act. As discussed,
most individuals will be evaluated for eligibility in the Exchange,
Medicaid, and CHIP using a coordinated set of rules and these programs
will work together to ensure that eligible applicants are enrolled in
the appropriate program, no matter where their application originates.
For example, an individual who directly applies for and is determined
ineligible for Medicaid would be immediately assessed for eligibility
for advance payment of the premium tax credit and coverage through the
Exchange. That individual would not need to file a new application in
order to participate in Exchange coverage, if eligible. Integration
among these programs will help to avoid duplication of costs,
[[Page 51167]]
processes, data, and effort on the part of both the State and the
individual.
We expect the use of a shared eligibility service to adjudicate
placement for most individuals. The shared eligibility service would
coordinate determination and renewal requirements for eligibility in
each of the insurance affordability programs. It may include processes
such as those used for collecting and verifying applicant information,
including verification of citizenship and immigration status and
certain income information as well as determining and renewing
eligibility. Regardless of an applicant's point of entry (directly
online at home, with a navigator or community organization/assister,
through the mail, or through a consumer assistance office established
by the Exchange), this shared eligibility service would be used
whenever the single streamlined application for enrollment, discussed
in section II.E.2 of this proposed rule, is initiated or whenever a
renewal occurs.
We note that shared systems and the Medicaid functions they perform
are eligible for enhanced Federal financial participation (FFP) of 90
percent for development (through December 31, 2015) and 75 percent for
operations (no time limit) if certain conditions and standards are met.
For additional information, see the April 19, 2011 final rule
establishing enhanced funding for Medicaid eligibility and enrollment
activities. Such systems are subject to cost allocation principles, per
OMB Circular A-87 and guidance from CMS. In addition, the entities and
agencies performing functions on behalf of one another that involve the
use or disclosure of an individual's health information will be
required to comply with the applicable business associate provisions of
the Privacy and Security Rules under the Health Insurance Portability
and Accountability Act of 1996.
Section 435.1200(c)(2) proposes that State Medicaid agencies enter
into one or more agreements with the Exchange and other insurance
affordability programs as necessary to ensure coordination of
eligibility and enrollment, including coordination with a Basic Health
Program if applicable. Details about the Basic Health Program will be
included in forthcoming guidance. States may also use such agreements
to coordinate related activities, such as health plan management.
States may design these agreements in different ways that reflect
their governance structures. We see three broad options. First, one or
more of the entities (the Exchange, Medicaid or CHIP agencies) could
enter into an agreement whereby some or all of the responsibilities of
each entity are performed by one or more of the others. Second, a State
could develop a fully integrated system whereby the responsibilities of
all entities are performed by a single integrated entity. Third, each
entity could fulfill its responsibilities and establish strong
connections to ensure the seamless exchange of information and data. We
solicit public comments on these different working relationships and
the best mechanisms to facilitate States' ability to coordinate
eligibility and enrollment.
We note that relationships between the State Medicaid program and
other insurance affordability programs must be established in
accordance with section 1902(a)(5) of the Act, which specifies that a
single State agency will administer or supervise the administration of
the Medicaid program. When the Exchange or other entity is performing
delegated functions, it must at all times conduct such business
consistent with the rules adopted by the Medicaid agency. This is
further discussed in section II.J of this proposed rule.
At Sec. 435.1200(c)(3), we propose that the State Medicaid agency
must certify criteria necessary for the Exchange to use in determining
Medicaid eligibility based on MAGI. This includes the applicable
Medicaid MAGI standard for parents and caretaker relatives, other
adults, pregnant women, and children, as well as the criteria for
determining satisfactory immigration status, in accordance with the
Medicaid State plan. We invite public comment on other eligibility
rules or criteria that should be certified by the Medicaid agency for
Medicaid eligibility determinations made by the Exchange. MAGI
methodologies and Medicaid eligibility based on the applicable MAGI
standards are discussed in sections II.B.3 and II.E of this proposed
rule.
2. Internet Web Site (Sec. 435.1200(d))
Section 1943 of the Act says that no later than January 1, 2014,
States shall establish an Internet Web site, linked to the Web sites of
other insurance affordability programs, through which individuals may
obtain information, apply for, and enroll in Medicaid. To accomplish
this, States could, for example, create one enrollment Web site for
information and enrollment in all insurance affordability programs, or
they could establish a broad health care Web site that includes health
insurance coverage, health care services and supports, and health
education information from a broad array of entities. Additionally, a
State could establish a Medicaid presence on an existing State Web
site. This Web site must be coordinated with the Exchange Web site as
described at Sec. 155.205 of the Exchange proposed rule.
Proposed Sec. 435.1200(d) gives individuals the option to apply
for or renew their eligibility for Medicaid online. A Web site that
connects an individual directly into the Medicaid eligibility
determination system is eligible for enhanced FFP under the April 2011
final rule establishing enhanced funding for Medicaid eligibility and
enrollment activities, if the system in its totality, including the Web
site, meets certain standards and conditions. Additional information on
Web site specifications will be provided in forthcoming guidance.
Because the Internet Web site may serve as the primary mechanism
through which individuals communicate with the agency, it must be
accessible to individuals with disabilities and persons who are limited
English proficient (LEP). At Sec. 435.1200(d)(2) we propose that the
agency must ensure accessibility of Web resources in accordance with
the Americans with Disabilities Act and section 504 of the
Rehabilitation Act, and must take reasonable steps to provide
meaningful access for LEP persons. Accessibility needs of LEP persons
may be met by providing language assistance services, such as
translated information and ``taglines'' that inform LEP persons of the
ability to talk to a multilingual staff person or an interpreter.
Web sites, interactive kiosks, and other information systems would
be viewed as being in compliance with section 504 if they meet or
exceed section 508 standards, which ensure that Federal agencies'
electronic information technology is accessible to people with
disabilities. The latest Section 508 guidelines issued by the US Access
Board can be accessed at http://access-board.gov/sec508/standards.htm,
and W3C's Web Content Accessibility Guidelines (WCAG) 2.0 can be
accessed at http://www.w3.org/TR/WCAG20/.
3. Provision of Medical Assistance for Individuals Found Eligible for
Medicaid by an Exchange (Sec. 435.1200(e))
Consistent with sections 1413 and 2201 of the Affordable Care Act,
under the coordinated system proposed in these rules, if the Exchange
finds that an individual is eligible for Medicaid, the State Medicaid
agency must enroll the
[[Page 51168]]
individual without further determination of eligibility. This
enrollment is subject to the rules established by the agency. We note
that the State Medicaid agency has the responsibility to facilitate
health plan selection for enrolled individuals, but may arrange with
the Exchange to undertake this function. This could include providing
the individual with available health plan options and transmitting
enrollment transactions to the health plan, if applicable.
As discussed in section II.B.3 of this proposed rule, for most
individuals, eligibility for Medicaid would be determined based on
MAGI. As described in the Exchange proposed rule, the scope of the
final eligibility determinations made by the Exchanges is limited to
those based on individuals having MAGI-based income at or below the
applicable MAGI standard. Note that in certain circumstances the State
may establish procedures whereby the Exchange will undertake Medicaid
eligibility determinations on other bases. Individuals who are not
eligible for Medicaid based on MAGI, would be screened, using
information provided on the application, for potential Medicaid
eligibility on other bases. As appropriate, their applications and
other relevant information would be transmitted to the Medicaid agency
for a full Medicaid eligibility determination. See section 155.345 of
the Exchange proposed rule for additional information. Further, all
applicants have the right to request and receive a full determination
of eligibility on bases other than MAGI from the State Medicaid agency.
Section 435.1200(e) describes the standards for the Medicaid agency
to promptly and efficiently enroll individuals determined to be
Medicaid eligible by the Exchange. To accomplish this, we propose that
the agency establish procedures to receive, via secure electronic
interface from the Exchange, the finding of Medicaid eligibility and
the individual's electronic account, including all application
information. We recognize that an actual transfer of data may not
occur, as the Medicaid agency and the Exchange may be utilizing a
shared eligibility system. However, the legal responsibility for the
electronic accounts and for further action, as appropriate, will
transfer from the Exchange to the Medicaid agency. We expect processes
to occur in real time whenever possible and, as noted earlier, we will
be defining more detailed standards and other performance metrics, with
State and stakeholder input, in subsequent Federal guidance.
4. Transfer of Applications From Other Insurance Affordability Programs
to the State Medicaid Agency (Sec. 435.1200(f))
To ensure a coordinated eligibility and enrollment process as
directed by the Affordable Care Act and address existing coordination
rules for separate CHIP and Medicaid agencies in section 2102(b)(3)(B)
of the Act, we propose a new Sec. 435.1200(f). This provision includes
and revises provisions previously covered under Sec. 431.636(b)(1)
through (b)(3). Under proposed Sec. 435.1200(f), the State Medicaid
agency must adopt procedures to promptly determine the eligibility of
individuals assessed as potentially Medicaid-eligible by other
insurance affordability programs and, if eligible, to enroll them
without delay.
Under this proposal, individuals with household income below the
applicable MAGI level who are assessed as potentially Medicaid eligible
by another insurance affordability program would be quickly and easily
enrolled in Medicaid. Because all insurance affordability programs will
be utilizing a common process for MAGI-based eligibility
determinations, an individual assessed by such a program as potentially
Medicaid eligible based on MAGI should receive a seamless determination
from the Medicaid agency, and no further action should be required of
the applicant. For individuals with household income above the
applicable MAGI standard, who are either assessed by an insurance
affordability program as potentially eligible on a basis other than
MAGI, or who request an eligibility determination on another basis, we
propose that the Medicaid agency must conduct a full Medicaid
eligibility determination in the same manner as if their application
had been submitted directly to the agency.
We propose that the Medicaid agency establish procedures to receive
the electronic account of any individual determined potentially
Medicaid eligible by another insurance affordability program, and to
promptly and without undue delay conduct an eligibility determination
in accordance with the provisions set forth in Sec. 435.911(c). The
agency must not request any information already obtained, or duplicate
any eligibility verifications already performed, by the other insurance
affordability program and included in the individual's electronic
account. Once the Medicaid determination is complete, we propose that
the agency notify the insurance affordability program of the
determination of Medicaid eligibility or ineligibility. Issues related
to the notices needed to effectuate coordinated eligibility will be
addressed in future rulemaking.
5. Evaluation of Eligibility for Other Insurance Affordability Programs
(Sec. 435.1200(g))
Section 1943(b)(1)(C) of the Act directs States to ensure that any
individual who applies for, but is determined ineligible for, Medicaid
or CHIP is screened for eligibility for advance payment of the premium
tax credit, cost sharing reductions, and enrollment in a qualified
health plan offered through the Exchange. Therefore, in Sec.
435.1200(g)(1), we propose that the Medicaid agency must assess
potential eligibility for other insurance affordability programs when
the agency determines that an individual is not eligible for Medicaid.
While the Affordable Care Act does not provide express authority
for Medicaid to make eligibility determinations for coverage through
the Exchanges, sections 1943(b)(2) of the Act and 1413(d)(2) of the
Affordable Care Act do permit the agency to enter into a contract with
the Exchange to do so. Absent such an agreement, the agency must
promptly transfer the electronic account of individuals screened as
potentially eligible, via secure electronic interface, to the Exchange
so that such individuals can receive an immediate eligibility
determination and, if eligible, be enrolled without delay. This
provision assumes that verification of any information required only
for eligibility in the Exchange, such as access to affordable employer-
sponsored insurance, will be completed by the applicable program once
the applicant's case is transferred. (Under current law and
regulations, States also have the flexibility to have the State
Medicaid agency administer some or all of the administrative functions
for a separate CHIP, including the determination of eligibility for
such program.)
We further propose that the electronic account transferred include
the determination of ineligibility made by the Medicaid agency as well
as all information provided on the single streamlined application and,
as appropriate, verified by the State Medicaid agency. We note again
that an actual transfer of data may not be necessary, but legal
responsibility for the case will transfer from Medicaid to the
appropriate program. We also note that the Exchange cannot reverse a
determination of Medicaid ineligibility made by the Medicaid agency.
[[Page 51169]]
In this and the Exchange proposed rule, we propose that individuals
determined ineligible for Medicaid based on MAGI, for whom the Medicaid
agency is evaluating eligibility on the basis of being blind or
disabled, may enroll in other insurance affordability programs while a
final Medicaid determination is pending. Once the Medicaid
determination is completed, if the individual is Medicaid-eligible,
such coverage would be terminated in favor of Medicaid, but if not
Medicaid-eligible, coverage would continue through the other program.
This avoids unnecessary delays in coverage for individuals whose
Medicaid eligibility determination process may be lengthy, while
avoiding any overlap in coverage for those eventually determined
Medicaid eligible based on blindness or disability. Proposed Sec.
435.1200(g)(2) reflects the Medicaid agency's responsibilities in
effectuating this policy. We note that proposed 26 CFR
1.36B(2)(c)(2)(iii)(B) in the Treasury proposed rule specifies that if
an individual receiving advance payments of the premium tax credit is
approved for Medicaid coverage, the individual is treated for purposes
of eligibility for such credit, as eligible for minimum essential
coverage no earlier than the first day of the first calendar month
after such coverage is approved; thus, an applicant who is being
evaluated by the Medicaid agency for eligibility based on blindness or
disability and who is provided with advance payments of the premium tax
credit in the interim would not be liable to repay such advance
payments upon retroactive approval of Medicaid during the period for
which advance payments were paid.
Since it would be inefficient and confusing to transfer and enroll
individuals in other coverage, only to be disenrolled from such
coverage days or even a few weeks later for enrollment in Medicaid, we
propose to limit application of the policy described to individuals
whom the Medicaid agency, in accordance with procedures in proposed
Sec. 435.911(c)(3), is evaluating for eligibility on the basis of
being blind or disabled.
J. Single State Agency (Sec. 431.10 and Sec. 431.11)
As discussed in section II.I above, to ensure a fully coordinated
eligibility determination and enrollment process, the Exchange proposed
rule provides that Exchanges will make Medicaid eligibility
determinations to effectuate Section 1943(b)(B). For numerous reasons,
including the coordinated enrollment process, we anticipate that States
will want to consider different ways to achieve integration across
Exchanges, Medicaid agencies and CHIP.
Under Medicaid's ``single State agency'' requirement in section
1902(a)(5) of the Act, as codified in Sec. 431.10 and Sec. 431.11,
States must identify a ``single State agency to administer or to
supervise the administration'' of the Medicaid program (that is, the
Medicaid agency). This ensures that there is a single point of
responsibility and accountability for proper administration of the
State Medicaid program, including for eligibility determinations.
We note, however, that the statute at 1902(a)(5) specifically
permits and in some cases requires the single State agency to delegate
the authority to make eligibility determinations to certain other
agencies. Current regulations provide for such delegation of
eligibility functions in Sec. 431.10(c). The regulations at Sec.
431.10(e) provide that, in delegating any single State agency
functions, the Medicaid agency retain authority to exercise
administrative discretion in the administration or supervision of the
plan, and that if other State or local agencies perform services for
the Medicaid agency, they must not have the authority to change or
disapprove any administrative decision of the Medicaid agency, or
otherwise substitute their judgment for that of the Medicaid agency in
the application of policies, rules and regulations issued by the
Medicaid agency. It is our understanding that the use of this
delegation authority is widespread across the nation, and in some
States, multiple State agencies separate and apart from the State
Medicaid agency, as well as county agencies make Medicaid eligibility
determinations on behalf of the single State agency and under its
supervision. In all instances, the single State agency is responsible
under the statute to set the rules for the program, and to ensure that
the determinations made are consistent with the statute.
Related section 1902(a)(4) of the Act requires a State plan to
provide for certain methods of administration, including the
establishment of personnel standards on a merit basis. We have
historically advised States that public employees must make Medicaid
eligibility determinations. This position has been based on the premise
that certain activities in the eligibility determination process cannot
be delegated to private entities because they involve discretion or
value judgment that are inherently governmental in nature, and in such
instances we have stated that State merit system employees must be
utilized. In addition, there have been concerns about whether States
that contract out their eligibility determination capacity would be
able to effectively monitor and if necessary bring that capacity back
``in house'' if policy implementation issues arose.
Section 1413(d)(2)(B) of the Affordable Care Act reaffirms the
single State agency requirement by providing that nothing in the law
``changes any requirement under Title XIX that eligibility for
participation in a State's Medicaid program must be determined by a
public agency.'' The proposed regulation is consistent with this
provision. Simultaneously, we solicit comments on how these statutory
provisions should apply in the context of Exchanges making Medicaid
eligibility determinations and simpler, more uniform eligibility
criteria.
In this rule, we propose to allow Medicaid agencies to delegate
eligibility determinations for individuals whose eligibility will be
determined according to MAGI to Exchanges that are public agencies.
Specifically, we propose to permit Exchanges that are public agencies
to make Medicaid eligibility determinations as long as the single State
Medicaid agency retains discretion in the administration or supervision
of the plan. We note that if Exchanges are established as a non-
governmental entity as allowed by the Affordable Care Act, the
coordination provisions in the law may mean the co-location of Medicaid
State workers at Exchanges or other accommodations to ensure
coordination is accomplished. We solicit comment on approaches to
accommodate the statutory option for a State to operate an Exchange
through a private entity, including whether such entities should be
permitted to conduct Medicaid eligibility determinations consistent
with the law.
In Sec. 431.10(c)(1)(iii), we propose to permit Medicaid single
State agencies to delegate their MAGI eligibility determination
function to Exchanges operated by governmental entities, provided the
single State agency remains solely responsible for setting eligibility
policies and is accountable for ensuring the program operates
consistently with such polices. In Sec. 431.10(c), we propose that the
single State agency be responsible for ensuring that eligibility
determinations are made consistent with its rules and that corrective
actions are instituted as appropriate; that there is no conflict of
interest by any agency delegated the responsibility to make
determinations; that eligibility determinations are made in the best
interest of beneficiaries; and
[[Page 51170]]
that it guard against improper incentives or outcomes.
We further propose to add new Sec. 435.10(d)(l) through (5), and a
conforming change to the introductory text at Sec. 431.10(d), to
provide that agreements between single State agencies and agencies
making determinations must state the quality control and oversight
plans by the single State agency to review determinations made by
agencies making Medicaid eligibility determinations; that the agencies
making Medicaid eligibility determinations report to the single State
agency; that confidentiality and security requirements in accordance
with sections 1902(a)(7) and 1942 of the Act for all beneficiary data
are met; and that all agencies making Medicaid eligibility
determinations meet the requirements of 1902(a)(4) relating to
personnel standards.
Finally, we would retain the requirement in Sec. 431.10(e) that
Medicaid agencies may not delegate the authority to exercise
administrative discretion or issue policies and rules on program
matters; that the authority must not be impaired if subject to review
by other entities; and that other entities must not have the authority
to change or disapprove any administrative decision of that agency, or
otherwise substitute their judgment for that of the Medicaid agency for
the application of policies, rules and regulations issued by the
Medicaid agency.
K. Provisions of Proposed Regulation Implementing Application of MAGI
to CHIP
Section 2101(d) of the Affordable Care Act revises section
2102(b)(1)(B) of the Act to ensure that, effective January 1, 2014,
that States base income eligibility for CHIP on MAGI and household
income, as defined in section 36B of the IRC, consistent with section
1902(e)(14) of the Act. Below we outline proposed changes to existing
sections (Sec. 457.10, Sec. 457.301, Sec. 457.305 and Sec. 457.320)
of the CHIP regulations, as well as the addition of new Sec. 457.315,
to implement the CHIP MAGI components of the law.
1. Definitions and Use of Terms (Sec. 457.10 and Sec. 457.301)
We propose a nomenclature change, replacing the term ``family
income'' with ``household income'' wherever it appears in 42 CFR part
457, and adding a definition for ``household income.'' We propose to
modify the term ``Medicaid applicable income level'' to clarify that
the 1997 Medicaid applicable income level used in CHIP will also be
converted to a MAGI-equivalent income level, consistent with guidance
provided by the Secretary under sections 1902(e)(14)(A) and (E) of the
Act. We are also adding other new terms related to the proposed
regulations.
2. State Plan Provisions (Sec. 457.305)
Section 2102(a)(5) of the Act directs States to include a
description of their income eligibility standards in their State plan.
We propose to add a reference to the new Sec. 457.315 on application
of MAGI and household income.
3. Application of MAGI and Household Definition (Sec. 457.315)
Under section 2102(b)(1)(B)(v) of the Act, as added by section
2101(d)(1) of the Affordable Care Act, beginning January 1, 2014,
States will use ``modified adjusted gross income'' (MAGI) and
``household income,'' as those terms are defined in section 36B(d)(2)
of the IRC, to determine eligibility for CHIP, and for other purposes
for which an income determination is needed, ``consistent with section
1902(e)(14)'' of the Act, which governs the application of MAGI and
``household'' income in Medicaid and which is implemented at proposed
Sec. 435.603 of these rules. In addition, section 2107(e)(1)(F) of the
Act, as added by section 2101(d)(2) of the Affordable Care Act, states
that section 1902(e)(14) be applied to CHIP ``in the same manner'' as
it is applied to Medicaid.
Currently, States use different methods for defining income and
household composition under CHIP. Many States operate their programs
through expansions of Medicaid coverage. Among States with separate
CHIP programs, some follow Medicaid financial methodologies while
others rely on different methods, including gross income tests. While
we recognize that the statutory application of MAGI rules to CHIP
represents a change for some States, doing so is consistent with
broader goals of coordination across programs. The adoption of MAGI-
based methodologies to determine income for CHIP represents a necessary
alignment with other insurance affordability programs and is
particularly important for families both because children will be
moving among different programs as family circumstances changes and
because CHIP-eligible children will often be in families where the
parent is eligible for a premium tax credit through the Exchange.
Because the statute provides that CHIP apply the new MAGI methodologies
in the same manner as Medicaid, we propose at Sec. 457.315 that, in
determining financial eligibility for CHIP, States use the
methodologies for determining household composition and income as those
proposed for Medicaid at Sec. 435.603(b)-(h), as well as the
exception, codified at proposed Sec. 435.603(i)(1), to permit States
to rely on a finding of income made by an Express Lane Agency in
accordance with section 2107(e)(1)(E) of the Act. As discussed in
section II.B. of this proposed rule, our proposed MAGI-based methods
for determining Medicaid eligibility mirror the section 36B definitions
of MAGI and household income, except in a very limited number of
situations.
For a more detailed discussion of the proposed financial
methodologies based on MAGI to be applied to both CHIP and Medicaid,
see section II.B.1 and II.B.3 of this proposed rule.
4. Other Eligibility Standards (Sec. 457.320)
As discussed in section II.B.3.a and consistent with current
practice in almost all State CHIPs, assets will no longer be considered
in determining financial eligibility for Medicaid or CHIP. Section
457.320(a) lists the various eligibility standards States may adopt for
one or more groups of children. We propose eliminating ``resources''
and ``disposition of resources'' in conformance with the law.
The Affordable Care Act also eliminates the use of income
disregards other than a disregard of 5 percent of income specified
under section 1902(e)(14)(I) of the Act. This means that, as of 2014,
States no longer will be able to raise their effective income standards
for their CHIPs through the use of a ``block of income'' disregard. The
maximum income standard will be the higher of 200 percent FPL, 50
percentage points above the applicable Medicaid income level defined in
section 2110(b)(4) of the Act and Sec. 457.301, and the effective
income standard in effect in the State (taking into account any income
disregards adopted) as of December 31, 2013, converted to a MAGI-
equivalent income standard in accordance with section 1902(e)(14)(A)
and (E) of the Act.
5. Clarifications Related to MAGI
Nothing in this regulation affects existing rules regarding family
size in States that take up the CHIP ``unborn child option'' (per the
existing definition of child at Sec. 457.10). In States that provide
coverage under the option at Sec. 457.10, the unborn child is counted
in family size.
[[Page 51171]]
L. Residency for CHIP Eligibility (Sec. 457.320)
CHIP regulations currently allow States the option to adopt
eligibility standards related to residency. The following changes to
the regulations governing residency standards for separate CHIPs are
proposed to ensure coordination between all insurance affordability
programs. Further discussion on the rationale behind the proposed
changes can be found in section II.C of this proposed rule.
We propose at Sec. 457.320(d) to modify the definition of
residency for non-institutionalized children who are not wards of the
State under CHIP to reference the Medicaid definition for children at
proposed Sec. 435.403(i). As under Sec. 435.403(i), for purposes of
CHIP eligibility, a child under the proposed rule is considered a
resident of the State in which he or she resides (for example, with a
parent or caretaker and including without a fixed address), or in which
a parent or caretaker is employed or seeking employment, including
seasonal workers. The provisions of the proposed rule are not intended
to effect a significant change in policy, and are discussed in more
detail in section II.C.2 of this proposed rule. The provision at Sec.
435.403(m) of the Medicaid rule, involving situations in which two or
more States dispute a child's State of residence, is also applied under
the proposed rule to CHIP; under that provision, physical location
governs.
M. CHIP Coordinated Eligibility and Enrollment Process
Section 2101(e) of the Affordable Care Act adds section
2107(e)(1)(O) to the Act to apply to CHIP the same enrollment
simplification standards described for Medicaid under the new section
1943 of the Act. These standards build on existing practices and
provisions in section 2102(b)(3)(B) of the Act relating to coordinated
eligibility and enrollment between Medicaid and CHIP. The regulatory
amendments proposed correspond to proposed changes and additions to
Medicaid at Sec. 435.905 through Sec. 435.908, Sec. 435.916, Sec.
435.917, Sec. 435.940 through Sec. 435.956, and Sec. 435.1200,
discussed more fully at sections II.D, II.E, II.G, II.H, II.I, and II.K
of this proposed rule. We seek comments for CHIP on the issues raised
in these corresponding sections for Medicaid.
1. Applications and Outreach Standards (Sec. 457.330, Sec. 457.334,
Sec. 457.335 and Sec. 457.340)
We propose revisions to Sec. 457.330 similar to those proposed for
Medicaid at Sec. 435.907 to implement the use of a single, streamlined
application for all insurance affordability programs, which builds on
the successful experience many States have had with joint Medicaid-CHIP
applications.
We propose adding Sec. 457.335 and modifying Sec. 457.340(a) to
set forth standards for the availability of program information and
application assistance, similar to those proposed for Medicaid at Sec.
435.905 and at Sec. 435.908, discussed in section II.E.3 of this
proposed rule. We propose removing the mention of enrollment caps in
Sec. 457.340(a) to support the role of CHIP agencies in accepting the
single streamlined application and screening for all insurance
affordability programs regardless of whether CHIP enrollment is capped.
To implement section 1943(b)(4)of the Act, relating to the
establishment of Web sites to facilitate application and enrollment in
all insurance affordability programs, we propose adding Sec. 457.335
similar to the rule proposed for Medicaid at Sec. 435.1200(d),
discussed in section II.I. of this proposed rule.
We propose to revise Sec. 457.340(b) to specify that all CHIP
agencies require applicants who have an SSN to provide it. We recognize
that the Privacy Act makes it unlawful for States to deny benefits to
an individual based upon that individual's failure to disclose his or
her Social Security number, unless such disclosure is required by
Federal law or was part of a Federal, State or local system of records
in operation before January 1, 1975. However, section 1414(a)(2) of the
Affordable Care Act authorizes the Secretary to collect and use SSNs
where necessary to administer the provisions of, and amendments made
by, the Affordable Care Act. We believe such section provides the
authority for the requirement of SSNs when applicants are using the
coordinated system and streamlined application designed by the
Secretary under section 1413 of the Affordable Care Act. However,
similar to Medicaid, non-applicants cannot be required (but may be
requested) to provide an SSN. Consistent with Medicaid regulations at
Sec. 435.910, the CHIP agency must not deny or delay services to an
otherwise eligible applicant pending issuance or verification of an
applicant's SSN.
We propose revisions to the effective date of eligibility in Sec.
457.340(f) to ensure that the method adopted by the State for
determining the effective date of coverage will provide for a
coordinated transition of children between programs as family
circumstances change, without gaps or overlaps in coverage.
2. Determination of CHIP Eligibility and Coordination With Exchange and
Medicaid (Sec. 457.348 and Sec. 457.350)
We propose to add new coordination rules at Sec. 457.348 to mirror
the rules for Medicaid agencies at proposed Sec. 435.1200(e) and (f),
and to coordinate with the rules in 45 CFR Sec. 155.345 of the
Exchange proposed rule. Proposed Sec. 457.348(a) and (b) would ensure
that State CHIP agencies promptly enroll individuals determined
eligible for CHIP by the Exchange, without requiring additional
information or making further determinations, and promptly determine
the eligibility of (and, if eligible, enroll) individuals determined
potentially eligible for CHIP by the State Medicaid agency. Consistent
with current CHIP policy, proposed Sec. 457.348(c) clarifies that CHIP
agencies may enter into arrangements with the State Medicaid agency to
accept that agency's determinations of CHIP eligibility.
We also propose revisions to regulations at Sec. 457.350, which
currently relate to the responsibilities of the CHIP agency to
coordinate with Medicaid. The proposed revisions are consistent with
those proposed for Medicaid agencies at Sec. 435.1200(g), discussed in
section II.I.5 of this preamble, and 45 CFR Sec. 155.345 of the
Exchange rule, discussed in section II.A.1 of the Exchange preamble.
Two of the proposed revisions to Sec. 457.350 warrant particular
mention. First, the standards at Sec. 457.350, as revised, apply to
all individuals who are included as applicants on the single
application--for example, parents and other adults in the household.
Second, at Sec. 457.350(j), we propose that, for children who do not
appear Medicaid eligible based on MAGI, but whom the CHIP agency
identifies as potentially eligible for Medicaid on another basis, such
as disability, the CHIP agency both transmit the application and all
pertinent information to the Medicaid agency for a full Medicaid
evaluation and continue to process the CHIP determination, enrolling
the child, if eligible, in the program unless and until the child is
determined eligible for Medicaid. This is consistent with the process
proposed for the Exchange at 45 CFR 155.345 in the Exchange proposed
rule and with the responsibilities of the
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Medicaid agency at proposed Sec. 435.1200(f).
We anticipate significant variation in how States choose to
operationalize the coordination of CHIP with other insurance
affordability programs, and we will work with States to achieve the
high level of integration of processes, which will be needed to
effectuate the coordination required and to avoid duplication of costs
and reduce administrative burden on States, children, and their
families. At proposed Sec. 457.350(k), we note that CHIP agencies may
enter into arrangements with the Exchange to make eligibility
determinations for advanced premium tax credits in accordance with
section 1943(b)(2) of the Act.
3. Periodic Redetermination of CHIP Eligibility (Sec. 457.343) and
Coverage Months
Under sections 1943(b)(3) of the Act and sections 1413(a) and
1413(c)(2) of the Affordable Care Act, we propose to add new policies
at Sec. 457.343 to implement the data-driven renewal procedures for
CHIP proposed for Medicaid at Sec. 435.916. For a fuller discussion of
the proposed renewal process, which we believe is consistent with
current renewal processes in many States; see section II.G of this
proposed rule. The proposed data-driven verification system is also
consistent with the system proposed for the premium tax credit
determinations conducted by the Exchange.
In proposed 45 CFR Sec. 155.410 of the Exchange proposed rule
published on July 15, 2011, eligibility begins on the first day of the
following month for all qualified health plan selections made by the
22nd of the previous month, and on the first day of the second
following month for all qualified health plan selections made between
the 23rd and last day of a given month. Similar to Medicaid, we are
seeking comment on a provision that would continue CHIP coverage until
the end of the month following the end of the appropriate termination
notice period, subject to certain exceptions. This policy, which we
believe is the policy currently in operation in most CHIPs, would
prevent a gap in coverage for an individual or family moving from CHIP
to the Exchange. Further discussion of this issue can be found at
section II.G. of this proposed rule.
4. Verification of Eligibility (Sec. 457.380)
Consistent with the provisions of section 1413(c)(3)(A) of the
Affordable Care Act (applicable to CHIP through sections 1943(b)(3) and
2107(e)(1)(O) of the Act), we propose revising Sec. 457.380, based on
section 1413 of the Affordable Care Act, relating to verification of
eligibility for separate CHIPs consistent with the rules proposed for
the Exchanges and Medicaid. Consistent verification procedures prevent
gaps in coverage caused by different programs operating under different
rules.
To better align all insurance affordability programs, we reference
specific verification methods for residency and income. Proposed Sec.
457.380(c) references proposed regulations for verification of
residency for purposes of Medicaid eligibility at Sec. 435.956(c),
which also align with proposed Exchange regulations at 45 CFR
155.315(c). At proposed Sec. 457.380(d), we require separate CHIPs to
verify income in accordance with proposed Medicaid regulations at Sec.
435.948, which are coordinated with proposed Exchange regulations at 45
CFR 155.320. As described in Sec. 435.945(b) and Sec. 435.948, States
may continue to choose to accept self-declaration of income, but must
also request information from third-party data sources in accordance
with Sec. 435.948 and to continue to comply with program integrity
requirements. States are not required under Sec. 435.948 to request
third-party financial eligibility information that the State determines
is not useful to verifying the financial eligibility of the applicant.
For other eligibility criteria, we propose in Sec. 457.380(a) and (e)
to continue to allow CHIPs to develop reasonable verification
procedures, including reliance on self-declaration or attestation
(except when verifying citizenship or immigration status). However, we
explicitly provide that States accept self-attestation of pregnancy and
household membership, as proposed for Medicaid in Sec. 435.956(e),
unless the State has other information that is not reasonably
compatible with the attestation. We also provide standards for
verifying age and date of birth.
The Affordable Care Act envisions a data-driven verification system
in order to improve the application experience for families while
maintaining strong program integrity. Mirroring standards being
proposed for Medicaid at Sec. 435.952 and the Exchange at 45 CFR
155.315, we propose adding Sec. 457.380(f) to clarify that the State
may only request additional information if it is not available
electronically. Consistent with proposed Medicaid regulations at Sec.
435.948(b), we propose in Sec. 457.380(g) that States must use the
electronic service established by the Secretary under proposed Sec.
435.949 if reliable electronic data needed for verification is
available. In proposed Sec. 457.380(h), we affirm that program
integrity responsibilities for CHIP are not affected by this proposed
regulation.
Finally, we propose adding Sec. 457.380(i), similar to proposed
Sec. 435.948(f) and Sec. 435.949(c) of the Medicaid regulation, and
to enable States, with approval from the Secretary, to modify the
verification procedures used by its program. We solicit comments on
alternative verification methods that may help improve coordination
between CHIP and other insurance affordability programs.
5. Ministerial Changes (Sec. 457.80, Sec. 457.300, Sec. 457.301,
Sec. 457.305 and Sec. 457.353)
We are also proposing a number of ministerial changes necessary to
bring other sections of the current CHIP into conformance with the
proposed changes and revisions described above, including revisions to
Sec. 457.80, Sec. 457.300, Sec. 457.301, Sec. 457.305 and Sec.
457.353.
N. FMAP for Newly Eligible Individuals and for Expansion States
The Affordable Care Act provides for a significant increase in the
FMAP for medical assistance expenditures for individuals determined
eligible under the adult group in the State and who are considered to
be ``newly eligible'', as defined in section 1905(y)(2)(A) of the Act.
The increased FMAP specified in section 1902(y)(1) of the Act is not
available for the medical assistance expenditures for any individual
who is not considered newly eligible. Under section 1905(y)(2) of the
Act, an individual is newly eligible if the individual would not have
otherwise been determined eligible for Medicaid under the eligibility
provisions of the Medicaid State plan, demonstrations, or waivers in
effect in the State as of December 1, 2009.
1. Availability of FMAP (Sec. 433.10(c))
We propose to amend 42 CFR part 433 to add new provisions at Sec.
433.10(c) to indicate the increases to the FMAPs as available to States
under the Affordable Care Act. The following describes these new FMAP
provisions.
a. Newly Eligible FMAP (Sec. 433.10(c)(6))
In Sec. 433.10, we propose to add a new paragraph (c)(6) to
indicate the increased FMAP rates available to States beginning January
1, 2014, for the medical assistance expenditures of individuals
determined eligible under the adult group who are considered to
[[Page 51173]]
be newly eligible, as defined in section 1905(y)(2)(A) of the Act.
b. Expansion State FMAP (Sec. 433.10(c)(7) and Sec. 433.10(c)(8))
In Sec. 433.10, we propose to add new paragraphs (c)(7) and (8) to
indicate the availability of additional FMAP rates for expansion
States.
(1) 2.2 Percentage Point Increase in FMAP (Sec. 433.10(c)(7))
Per section 1905(z)(1) of the Act, we propose to add Sec.
433.10(c)(7) to indicate the availability of a general 2.2 percentage
point increase to the base FMAP of a State (as determined under section
1905(b) of the Act) for certain expansion States, as defined in section
1905(z)(3) of the Act. The general 2.2 percentage increase to the base
FMAP is available only to a State that: (1) Meets the definition of
expansion State; (2) does not qualify for any payments for the full
increased FMAP for individuals who are newly eligible; and (3) has not
been approved by the Federal government to use amounts of their DSH
allotments for the costs of providing medical assistance or other
health benefits coverage under a demonstration that was in effect on
July 1, 2009. Only for States that meet these 3 conditions, the base
FMAP would be increased by 2.2 percentage points for all expenditures
in CYs 2014 and 2015 (to which the base FMAP would apply). Since by
definition, the base FMAP plus 2.2 percentage points would only be
available and applicable for expenditures for individuals who are not
newly eligible, such general increase would be available for all
individuals in such States.
(2) Expansion State FMAP (Sec. 433.10(c)(8))
The increased FMAP discussed in section II.N.1.a. of this proposed
rule is available for individuals in the adult group who are considered
to be newly eligible. We propose to add Sec. 433.10(c)(8) to indicate
an additional FMAP rate will be available for expansion States for the
expenditures for certain nonpregnant childless adults who are
determined eligible under the adult group, and who are not considered
to be newly eligible, as defined in section 1905(y)(2)(A) of the Act.
Beginning in CY 2014 and each year thereafter, the expansion State
FMAP for medical assistance for individuals described in the adult
group who are nonpregnant childless adults is equal to the base FMAP
for the State increased by a certain percentage determined in
accordance with a formula specified in section 1905(z) of the Act, as
amended by the Affordable Care Act. This new expansion State FMAP is
equal to the base FMAP plus a ``transition percentage'' multiplied by
the difference between the Newly Eligible FMAP provided to States
beginning in CY 2014 and the expansion State's base FMAP. The
transition percentage is as follows:
50 percent in CY 2014;
60 percent in CY 2015;
70 percent in CY 2016;
80 percent in CY 2017;
90 percent in CY 2018; and
100 percent in CY 2019 and every year thereafter.
The following illustrates how the expansion State's FMAP would be
calculated:
Example. In CY 2019, assume the expansion State's base FMAP is 60
percent. In CY 2019 the Newly Eligible FMAP is 93 percent. Therefore,
in this example, in CY 2019 the expansion State FMAP would be 93
percent, calculated as follows:
E = F + (T x (N - F))
E = Expansion State FMAP
F = Expansion State's Base FMAP
T = Transition Percentage
N = Newly Eligible FMAP
93% = 60% + (100% x (93% - 60%))
Beginning in 2020 both the expansion State FMAP and the newly
eligible FMAP will be 90 percent.
2. Methodology (Sec. 433.206(a) and Sec. 433.206(b))
One of the key steps in simplifying the eligibility determination
process for individuals and States involves developing a methodology
that ensures the Federal government will pay the appropriate FMAP rate
for both ``newly eligible'' individuals as well as for expenditures
that are subject to the expansion State FMAP rate. As discussed above,
the Affordable Care Act provides for streamlined eligibility and
enrollment policies and processes that are a departure from the more
complex pre-Affordable Care Act Federal Medicaid eligibility policy,
but the pre-Affordable Care Act rules retain relevance for the purposes
of determining the appropriate FMAP rate for expenditures beginning in
CY 2014. Although the new MAGI rules are used for purposes of
determining eligibility for the adult group, the newly eligible FMAP is
not available for all individuals whose eligibility will be determined
using MAGI; rather the newly eligible FMAP is only available for those
members of the adult group who are determined to be newly eligible as
discussed in this regulation. In order for States to determine which
beneficiaries are ``newly eligible'' and which are not, States must
evaluate a large group of beneficiaries against the State's pre-
Affordable Care Act eligibility rules. To do so on a case-by-case basis
would require States to operate two eligibility systems or processes--
one simplified system for the purpose of determining eligibility, and
another different and more complex system to assign the appropriate
FMAP rate. The two sets of rules would, in turn, require Exchanges as
well as State Medicaid agencies to collect from applicants information
in excess of what is required for States to determine eligibility
either for Medicaid or premium tax credits available through the
Exchange.
Running two distinct eligibility systems would pose challenges to
applicants, States, and the Federal government. Applicants would have
to report and verify income, assets, and deductions under pre-
Affordable Care Act rules, even though that information would no longer
be required to determine eligibility. Similarly, States and the Federal
government would have to seek and verify information not needed for
eligibility determinations, resulting in excess administrative burden
and inefficiency, a result counter to the goals of the Affordable Care
Act.
Because a double eligibility system is burdensome and costly to
States and the Federal government, a barrier to enrollment for eligible
individuals and families, and would likely lead to inaccurate
determinations, we have identified possible alternate approaches for
determining the appropriate FMAP rate. Specifically, this proposed rule
discusses the potential revision of regulatory provisions in part 433
to propose three alternative methodologies which States could use for
claiming expenditures at the appropriate FMAPs: The regular FMAP, the
newly eligible FMAP and the expansion State FMAP for individuals
eligible for Medicaid beginning in CY 2014 under the provisions in
sections 1902(a)(10)(A)(i)(VIII) and 1905(y) and (z) of the Act as
amended by the Affordable Care Act. The proposed rules would not permit
FFP for the costs of maintaining dual eligibility systems for the adult
group. HHS plans to test, with States, each of the proposed
methodologies and possibly others suggested through the comment
process. Once the rules are finalized, CMS will provide technical
support to States as they adopt an identified methodology.
In developing the proposed claiming methods, in consultation with
States and subject matter experts, we identified and applied certain
principles
[[Page 51174]]
to assure that each method will accurately reflect the application of
the appropriate FMAP. These principles are also the criteria against
which we will measure the feasibility of the approaches proposed in
this proposed rule and others that may be proposed during the comment
period. First, any methodology must provide as accurate and valid
application of the applicable FMAPs to actual expenditures as possible
in the determination of the appropriate amounts of Federal payments for
such expenditures. The methodology must not include a systemic bias in
favor of either the States or the Federal government. Second, any
allowable methodology should minimize administrative burdens and costs
to States, the Federal government, individuals, and the health care
system. Third, any methodology must be developed and applied
transparently by both the Federal government and States. Fourth, any
method must take into consideration the practical programmatic and
operational goals of the Medicaid program. Finally, in order to ensure
that the States claim expenditures at the correct FMAP, any
methodologies used by the States should include sufficient data to
identify, associate and reconcile expenditures with the related
eligibility group to which the FMAPS apply. With these principles in
mind, we propose that States work in partnership with the Federal
government on technical support and review as well as ongoing
monitoring, verification, and adjustment by States and the Federal
government. HHS plans to monitor State implementation and operations
closely and could require adjustments and changes to processes as
necessary to ensure that systems are implemented in an unbiased and
accurate way. HHS is exploring mechanisms to verify methodology
results, including on-site reviews, sampling and confirmation with
outside data sources, which could identify issues resulting in improper
levels of FMAP being claimed. HHS will define procedures as needed to
ensure accurate reporting and verification of computations to determine
the applicable FMAP potentially including enhanced monitoring and
prospective or retrospective FMAP adjustments. States and the Federal
government each have a strong interest in an accurate, simplified
system, and we expect to undertake these efforts in full partnership
with States.
Given the principles discussed above, we are considering three main
approaches to identifying newly eligible individuals for purposes of
applying the correct FMAP rate in the development of States' claims for
Federal funding in Medicaid: (1) Using upper income and other
thresholds across categorical eligibility groups, taking into account
the December 2009 eligibility standards in effect under State plans,
waivers or demonstrations and applicable disregards and adjustments, to
approximate, in the aggregate, the December 2009 standards; (2) using a
sampling methodology across individuals in the adult group and related
Medicaid expenditures to make a statistically valid extrapolation of
who is newly eligible and their related expenditures; or (3) using an
extrapolation from available data sources to determine the proportion
of individuals covered under the new adult group who would not have
been eligible under the eligibility criteria in effect under the State
plan or applicable waiver as of December 1, 2009, validating and
adjusting the estimate, based on sampling or some other mechanism,
going forward. We seek comment on these three approaches.
At Sec. 433.206(a), we propose that a State may opt to use any of
the specified alternatives discussed below. As discussed further, these
specific options may not ultimately be the methods available, as we
expect to modify, narrow or combine the proposed approaches in the
final rule depending upon public comment and testing for feasibility.
We are specifically interested in input as to what other options should
be considered, and whether it is advisable for States to choose from
among different methods or for HHS to identify a single method that all
States would use.
If selection is available, we propose at Sec. 433.206(b) that a
State provide notice to CMS of which methodology it plans to use at
least two calendar years prior to the first day of the calendar year in
which the State will use that particular method, except for 2014 as
discussed below. For example, a State would provide notice to CMS of
the methodology it plans to use for CY 2017 no later than December 31,
2014. For the initial year (CY 2014), States would give notice to CMS
no later than one year prior to the beginning of the calendar year,
January 1, 2013. This allows States time to determine which method best
meets their needs in that context and to make preparations for the
systems and eligibility determination modifications needed for the
initial years. We further propose that once a State selects a
methodology, it must use that method for a 3-year period, at a minimum,
subject to necessary monitoring and adjustment. This will allow
stability in the process and allow for the provision of appropriate
allocation of resources within the State and at the Federal level. We
request comments on this minimum 3-year period.
As noted above, we are proposing to not provide the option of
maintaining double eligibility systems and completing a determination
for each individual under obsolete eligibility rules for purposes of
determining the appropriate FMAP because we believe that this is
neither necessary nor efficient. Rather, we propose to rely on one or
more alternate methodologies.
3. Alternative 1: 2009 Eligibility Standard Threshold
The ``threshold methodology'' would allow States to use upper-
income thresholds, as well as proxies for other eligibility criteria
(such as assets or disability status) across categorical eligibility
groups, taking into account the December 1, 2009 eligibility standards,
to determine whether an individual is considered to be newly eligible
for purposes of assigning a Federal matching rate. This methodology
would use information the individual supplied on their application, and
other appropriate data sources, subject to appropriate verification and
documentation requirements, to assign the individual to one of the
categories that the Affordable Care Act subsumed into the adult group,
such as certain parents and caretaker relatives, 19 and 20 year olds,
and childless adults, and to then apply simplified eligibility criteria
based on the rules in effect December 1, 2009 to identify those who
would have been eligible under the December 1, 2009 criteria. This
option requires States to apply the December 1, 2009 eligibility
criteria, but in a simplified manner, to each Medicaid beneficiary who
is included in the adult group. Based on the threshold combined with
proxies, the individual would be determined to be newly eligible or an
individual who would have been eligible based on the December 2009
eligibility standards.
As previously noted, States will need to establish income
eligibility thresholds for MAGI populations to be eligible for Medicaid
under the State plan, demonstration or a waiver of the plan using MAGI
that are not less than the effective income eligibility levels that
applied under the State plan, demonstration or waiver on the date of
enactment of the Act (``income standard conversion''). States using the
threshold methodology similarly could convert the income standards in
effect as of December 1, 2009 for other optional eligibility groups
(for example, based on
[[Page 51175]]
disability) to MAGI-equivalent standards, against which the MAGI-based
income of an individual eligible under the new adult group would be
compared for the purpose of determining whether such individual would
have been eligible under the optional group and thus is newly eligible
or not. CMS will solicit State input and providing further guidance and
technical support on the income standard conversion process.
We propose that States employing this threshold methodology would
also establish, subject to CMS approval, proxies of eligibility
criteria in place prior to CY 2014 that are not related to income, such
as disability status and asset value. For disability, for example,
proxies could be based on receipt of SSDI, screening questions included
in the application process (for example, ``Have you had an accident or
illness serious enough that it has caused and is still causing you to
miss work for an extended period of time?''), retroactive claims review
(to determine individuals with significant medical problems), some
other method, or such methods in combination (for example, use of both
a screening question and retrospective claims review). States would
have to be clear with applicants that this information would not be
used for an eligibility determination purposes. We are requesting
comments on what methods or proxies could be used by States for
disability status as well as whether there are any special
considerations which must be considered in the identification or use of
appropriate proxies for States that apply a more restrictive definition
of disability than the SSI program.
Although we are looking for proxies for disability determinations
to determine whether to claim enhanced FMAP for an individual or not,
we are also considering the possibility of using only actual disability
determinations to ascertain the appropriate FMAP. Thus, if an
individual underwent an actual disability determination and was found
to be disabled, and met other criteria associated with a pre-Affordable
Care Act optional eligibility category for the disabled such that he or
she would have been eligible as disabled in December 2009, that
individual would not be newly eligible. This proposal would be feasible
to the extent that it is reasonable to expect that individuals with
disabilities have sufficient incentives to undergo disability
determinations, most likely to obtain disability-related cash benefits,
such that a proxy is not necessary. We are soliciting comments on
whether adequate incentives do exist such that no additional proxies
for a disability determination need be applied.
For the reasons noted, we are also proposing that States using the
threshold methodology identify thresholds or proxies for estimating
whether individuals in the adult group meet any asset test that was
applied to the applicant's coverage category in December 2009. The
State would also propose procedures for obtaining the information
needed to compare the situation of individuals in the adult group to
the proxy. For example a State might include a few simple questions
during the application process to enable comparison against the proxy,
for example, ``Excluding your primary residence and automobile, are
your assets, including any savings or checking accounts, stocks, bonds,
or other liquid assets, greater than X dollars?'' States could also use
information on tax returns to obtain information about assets via
interest or dividend income. We also are interested in comments
regarding the feasibility of using the Asset Verification System (AVS),
required for all States under section 1940 of the Act as a tool to
obtain asset data on individuals in the adult group without asking for
it directly.
We also considered proposing that the threshold methodology be
limited to an individual's income and not the assets/resources when
comparing the individual against the December 2009 eligibility
criteria. This would allow States to not collect asset information no
longer needed for eligibility purposes and it is consistent with
analysis showing that only very small numbers of people with income in
this range will have disqualifying assets. However, without evaluating
assets, all individuals whose incomes are below the income threshold
would not be newly eligible, even though it is possible that some would
not have been eligible under the pre-Affordable Care Act rules. Thus,
if assets are not considered there could be individuals who would be
newly eligible, but for whom the State could not claim enhanced match.
We believe this methodology has merit as we recognize there is a burden
on States and to beneficiaries in including an asset proxy and that a
significant portion of low-income individuals do not have assets in
excess of those thresholds. We invite comment on both approaches.
In lieu of additional questions on an application for coverage
asking about assets, we are also considering allowing States to develop
an estimate based on actual data on the proportion of individuals
applying for coverage who failed eligibility for a specific group in
effect as of December 1, 2009 due to possession of assets exceeding the
asset limit. For example, if the State had an optional disability group
in December 2009 with a resource test, and 15 percent of applicants
were denied coverage in that group because their assets exceeded the
resource, the State could assume that 15 percent of the disabled
individuals with incomes below the converted December 2009 standard in
the adult group would also fail the asset test. The State would
therefore estimate the percentage of individuals who were disabled in
the adult group would be newly eligible. We are interested in comments
as to whether States have reliable data upon which this calculation
could be made.
We also propose that once an individual is determined to be either
a newly eligible individual or an individual who would have been
eligible under the December 2009 standards for FMAP determination
purposes, the determination would be applicable throughout the 12-month
eligibility period after a person is determined eligible. Our proposal
is based on the observation that changes in income occur in both
directions and are not biased in one direction or the other. Our
proposal is also based on the goal of achieving administrative
simplicity, which can best be obtained through a single annual FMAP
determination for an individual who remains enrolled in Medicaid,
whether continuously enrolled or not, rather than requiring a State to
potentially make many such determinations over the course of a year.
Finally, we do not believe that States need to consider whether an
individual would have been eligible under a spend down for a medically
needy category under section 1902(a)(10)(C) of the Act in considering
whether someone would have been eligible under standards in effect in
December 2009. This is because we believe that there is inherent
uncertainty in determining whether and when a spend down would have
been met. An individual who is not yet ``medically needy'' because he
or she has not yet met the spenddown requirements would not be
considered to be eligible for Medicaid under the December 2009
standards. However, if an individual does qualify by meeting the
medically needy income standard without a spenddown, the State could
not claim enhanced FMAP for that individual.
The threshold methodology would require ongoing monitoring,
verification, and adjustment. States using the threshold methodology
would need to work with CMS to verify this
[[Page 51176]]
methodology for a sample of cases within the first 2 years of use to
test whether the threshold methodology is accurate and valid. We
propose to undertake a periodic review, working collaboratively with
States to evaluate the accuracy of the threshold methodologies and make
adjustments to improve the accuracy of the threshold, as needed. We
propose that adjustments to the methodology would be prospective only.
Once a State has an approved methodology, that methodology would apply
unless and until a review process indicated that adjustment was
necessary. Finality and certainty are important for the operation of
the program.
4. Alternative 2: Statistically Valid Sampling Methodology (Sec.
433.210)
At Sec. 433.210, we are proposing the standards for States to use
sampling to extrapolate the correct expenditures for which the State
would receive the FMAP rate for newly eligible individuals established
under the Affordable Care Act. Sampling is the statistical practice of
selecting a random and unbiased subset of Medicaid eligible individuals
and their related expenditures. We believe that a statistically valid
sampling plan is a transparent, and widely accepted methodology of
allocating costs. OMB Circular A-87 revised establishes principles and
standards for determining costs for Federal awards carried out through
grants, cost reimbursement contracts, and other agreements with State
and local governments and Federally-recognized Indian tribal
governments. We propose that States using this methodology would use a
statistically valid sampling methodology meeting the requirements of
OMB A-87.
To ensure consistency, we propose to specify the additional
standards States would need to use to perform a statistically valid
sample of the population of individuals covered under the new
eligibility group created by the Affordable Care Act, to determine the
proportion that would not have been eligible based on the State's
December 2009 eligibility standards, and therefore be newly eligible.
We propose to specify standards within this regulation as well as in
accompanying guidance relating to sample size and specifics of sampling
techniques, etc. We believe this will allow HHS to work with States to
refine specific sampling requirements and procedures as we gain
experience over time. For example, we anticipate the sample size
requirements may evolve as we gain experience with actual data becoming
available and tested over time. We also believe that guidance on the
inclusion of specific demonstration-related issues would be best
provided through subregulatory guidance to allow better consideration
of State-specific issues, as well as to provide an opportunity to
refine the specific methodologies and requirements.
For all individuals selected for the sample, the State would
perform the equivalent of a full eligibility determination using the
eligibility standards in place in that State as of December 2009. Each
individual in the sample would be determined to be either a newly
eligible individual or an individual who would have been eligible under
the December 2009 standards. We propose that States should submit their
sampling plans to CMS with adequate time for review and approval in
advance of implementation, preferably not later than the first day of
the calendar year for which the State will implement that plan.
We propose that the State would pull the claims for each selected
individual to determine actual expenditures for the sample. The State
would determine the proportion of actual expenditures in the sample
that were for newly eligible individuals and extrapolate this
proportion to the population sampled to determine the correct
allocation of expenditures for which the State would make a claim at
the FMAP rate for newly eligible individuals established under the
Affordable Care Act. We believe this methodology would most accurately
determine a weighted expenditure proportion from actual claims to apply
to the adult group.
We also considered using a methodology in which a per capita
expenditure would be determined for the adult group. States would apply
this per capita expenditure amount proportionately to determine the
appropriate FMAP claiming. We believe this methodology may allow for
greater ease of administration, but seek comment on whether this would
reflect a fair allocation of expenditures to each distinct population.
We propose that States would perform a statistically valid sample
for the year in which the State is claiming. This sample would be based
on the entire adult group population, from which the State would
randomly select Medicaid eligible individuals on a monthly basis, in
accordance with CMS' sampling guidelines. Once individuals are
determined in that month of review to be either a newly eligible
individual or an individual who would have been eligible under the
December 2009 standards, the State would apply that eligibility
determination throughout the entire year for the purpose of FMAP
determination. Our proposal is based on the observation that switches
occur in both directions and are not biased in one direction and the
administrative simplicity that can be obtained through a single annual
determination is preferred.
The State would pull all medical expenditures for the prior 12
months for the individual. If the individual is enrolled exclusively in
a managed care organization (MCO), for which the State makes a
capitated monthly payment to an MCO, the State would consider the risk-
adjusted monthly payment to the MCO as the full medical assistance
expenditure for that individual for each month the individual is so
enrolled. Otherwise, the medical expenditures for each individual are
equal to the actual expenditures made to providers for items and
services provided to that individual. It does not include any Medicaid
supplemental payments that are not associated with medical assistance
payments made for specific items and services provided to a specific
individual.
We propose that the State complete the sampling and related
expenditure analysis no later than 2 years after the completion of the
designated year. The State will retroactively apply the FMAP to the
correct year and make any necessary prior period adjustments to the
CMS-64 expenditure report to assure accurate Federal funding. We will
work with States to meet the proposed time frame to ensure their
ability to claim the enhanced funding.
We propose that the State would claim based on the most recent data
for the current year. We understand that the State will not have
accurate data based on the actual year's enrollment and expenditures
until after the finish of that year. Therefore, we propose to allow
States to make interim claims for the FMAP rate for newly eligible
individuals established under the Affordable Care Act. These claims
would be based on the most recent year for which a State has
statistically valid data. For example, in CY 2020, if a State had a
completed sample for CY 2018, but was finalizing its sample and related
extrapolation for CY 2019, the State would use the data from the CY
2018 sample and apply the FMAP according to the CY 2018 findings. Once
the State completes the CY 2020 sample, it will retroactively adjust
the CY 2020 expenditures claimed on the CMS-64 to incorporate the
actual data from 2020 (the process for CYs 2014 and 2015 is discussed
below). We solicit comment on this estimation and reconciliation
process.
[[Page 51177]]
We propose that States will continue to sample on an annual basis
for the first consecutive three years the State implements a sampling
methodology. For all following years, we propose that the State would
sample on a 3-year basis.
For the initial years (CYs 2014 and 2015), we propose to allow
States to calculate and apply a reasonable estimate of the expenditures
claimed at the Newly Eligible and expansion State FMAP rates
established under the Affordable Care Act and make the retroactive
adjustment described above based on CY 2014 data extrapolated using the
State's sampling methodology. We would allow States to create a
reasonable estimate in one of two ways: (a) Based on a State's
statistically valid sample of low-income populations that reasonably
approximates the expected Medicaid adult group; or (b) based on a HHS
developed estimate of the proportion of newly eligibles and per capita
expenditures for the projected newly eligibles that HHS would develop
and test in collaboration with States by, for example, using a
combination of Medical Expenditure Panel Survey (MEPS) and Medical
Statistical Information System (MSIS) data, or other existing data
sources. In the first option, we propose to allow States to calculate
the projected per capita expenditures for the newly eligible population
based on a sample of the low-income population of those individuals
enrolled in and appearing to be potentially eligible for Medicaid as of
CY 2014. The States would use the sampling methodology guidelines
applied to the population of State residents (Medicaid enrollees and
other low-income individuals) that approximated the expected Medicaid
eligible adult group. We propose that States submit a sampling plan
demonstrating compliance with OMB Circular A-87 and, other requirements
specified within this rule and other CMS sampling guidance. The
methodology must include not only a description of the population from
which the sample will be pulled prior to CY 2014, but also how the
chosen population approximates the adult group. States would complete
the sample and expenditure extrapolation in accordance with a sampling
plan prior to January 1, 2014.
We propose that States use data from the sample to calculate the
projected proportion of newly eligible individuals, as well as per
capita expenditures for such individuals. The State would use MSIS data
and Medicaid experience to estimate expenditures for the ``would have
been eligible'' population. The State would use this information to
determine the appropriate estimated expenditure proportions to claim at
the respective FMAP rates for the initial years.
We propose to allow Federal match based on the estimate until the
actual data became available and sampled in accordance with the
methodology established above. The State would make a retroactive
claims adjustment on the CMS-64 based on the actual data from CY 2014.
Alternatively, in the second option we propose to allow States to
use a CMS established estimate of the proportion and per capita
expenditures for the projected newly eligible for CY 2014 based on
currently available State-specific data (for example using MEPS data, a
combination of MEPS and MSIS data, or other existing data sources). We
propose to establish the proportion of newly eligible individuals and
per capita expenditure amounts that each State could use in estimating
FMAP for the initial years. We would publish the estimates for State
use for CY 2014 no later than January 1, 2013 to ensure States have
sufficient time to incorporate the data and create reasonable
estimates.
We propose to provide Federal match based on the estimate until the
actual data became available and sampled in accordance with the CMS-
established sampling requirements established in this regulation and in
future subregulatory guidance or validated in another way. If sampling
were chosen as a validation method, we propose to require that States
would implement a statistically valid sample methodology throughout CYs
2014 and 2015 to determine the correct proportion of newly eligibles
and expenditures to claim at the 100 percent FMAP for CYs 2014 and
2015, respectively. The State would make a retroactive adjustment based
on the actual data from CY 2014.
We consider this concept to be similar to an interim rate payment
methodology. It allows for the State to receive the increased FMAP rate
for a reasonable estimate of newly eligible individuals and settle to
actual expenditures when the data is available. We are soliciting
comments on this approach.
5. Alternative 3: Use of a FMAP Methodology Based on Reliable Data
Sources (Sec. 433.212)
We are also proposing an option for States to use State specific
estimates established by the Secretary using reliable data sources such
as MEPS data or State MSIS data. This option is described in proposed
Sec. 433.212.
Under this model, States would use the estimated proportions in
claiming FFP for medical assistance expenditures for newly eligible
individuals. Because the model and estimated proportions would be
available prior to each year, the State would claim expenditures and
draw down Federal funds in real time. There would be no need for a
retroactive adjustment. Rather, the verification to actual claims
beginning in CY 2016 would apply to correcting for future years by
adjusting the model.
We have reviewed current Federal analytic models created for other
purposes to determine if they could estimate the potential impact of
eligibility changes in the Affordable Care Act. We believe these models
may have merit and may be an appropriate starting point for creating
estimates for payment purposes beginning CY 2014. We are also
considering a model in which HHS develops an algorithm to determine,
for each State, the appropriate percentages of Medicaid enrollees with
a given set of characteristics (such as income, age, assets, family
structure, disability status) who would be considered newly eligible or
not newly eligible under the December 2009 eligibility rules for
purposes or applying the related FMAP. The algorithm would estimate for
example, that 90 percent of the adults with a child with income between
100 percent and 110 percent of the FPL in a specific State would not
have been eligible under the old rules. Then, the State would count the
number of adult Medicaid enrollees in CY 2014 who had a child and whose
income was between 100 percent and 110 percent of FPL, and would
receive the Newly Eligible FMAP for 90 percent of their expenditures,
and the base FMAP for 10 percent.
We propose to review, evaluate, and potentially expand upon
existing models to develop an acceptable estimate to be the basis for
determining FMAP. We are specifically interested in receiving comments
on the data sources that should be considered for inclusion in the
model. We believe MSIS and MEPS data likely to be the most useful and
relevant data sources available consistently for all States. We propose
to not limit the data sources we may choose to review and incorporate
into a predictive model as long as the data sources are relevant,
accurate and available in a timely manner to both the Federal
government and the State. We believe the modeling process, as well as
the data sources used to create the specific models must be fully
tested, transparent and readily available to States.
[[Page 51178]]
We further propose that we would annually establish a model to
reasonably predict in an unbiased way the appropriate proportion of
expenditures (that is, State-specific rates) to determine the amount
each State could claim using the ``Newly Eligible'' FMAP. We propose to
solicit and integrate public input into the development of the final
modeling estimate. The State-specific rates would be finalized and made
public no later than October 1 of the year prior to the calendar year
in which the State would implement the methodology. For CY 2014, we
would establish and publish the State-specific rates by October 1,
2012.
We solicit comments on the potential of creating accurate State
specific estimates given the available data sources and the limitations
of each. We also are requesting comments on other possible approaches
to compensate for the potential limits on State-specific data to create
robust accurate estimates at the State level.
Beginning in CY 2016, we propose to integrate validation measures,
such as statistically valid sampling methodologies, into the model to
verify and assure the data accuracy. This verification of actual claims
would apply to correcting for future years by adjusting the model. For
example, we would work with selected States in each year to pull a
random sample of Medicaid enrolled individuals in the adult group. We
would then work with the State to apply the State's December 1, 2009
eligibility standards to determine the proportion of individuals that
are newly eligible and the proportion that would have been eligible
under the standards at that time. We would then determine actual
expenditures for those individuals to determine the appropriate
proportion of expenditures to be claimed at the Newly Eligible FMAP
rate. We propose that such sampling methodology be transparent to
States. We further propose to employ a public notice and comment
process to assure the integration of State and other stakeholder
concerns into a final verification system.
6. Additional Methodology Approaches
We are requesting comments and suggestions on hybrid approaches
that incorporate all of the alternatives listed. We believe that the
above-described alternatives could be combined, so as to achieve the
benefits, while mitigating the downside of each. Thus, sampling could
be used to verify and improve upon the accuracy of the estimates made
under the threshold methodology or as stated above in the other data
source methodology. While sampling might be necessary in the initial
years, as confidence in the accuracy of the other method increased,
sampling could be required on a less frequent basis (for example, once
every 3 to 5 years), thereby diminishing the burden otherwise imposed
by sampling, or we could see using the threshold methodology for
simpler, more straight-forward cases and sampling for more complicated
ones. We invite comments on using a hybrid approach.
In addition, regardless of which approach is ultimately employed,
we intend to monitor the effects and impact of that method over time
and make refinements as necessary. We are interested in assuring that
the alternatives proposed are viable in the sense that States can
implement them in a meaningful way. We solicit comments on how each
method may be operationalized and what challenges or obstacles a State
may face in doing so. We also seek comment on analytical approaches
that CMS should consider using when comparing the relative feasibility,
validity, and reliability of the methods proposed above.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-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.
This proposed rule would implement provisions of the Affordable
Care Act that expand access to health coverage through improvements in
Medicaid and CHIP; ensure coordination between Medicaid, CHIP, and the
new Affordable Insurance Exchanges (which are proposed in a separate
NPRM under RIN 0938-AR25); and simplify the enrollment and renewal
processes. Taken together, the policies proposed in this rule would
result in a reduction in burden for individuals applying for or
receiving coverage, as well as for States. Although there are short-
term burdens associated with implementation of this proposed rule, over
time the Medicaid program would be made substantially easier for States
to administer and for individuals to navigate by streamlining Medicaid
eligibility, simplifying Medicaid and CHIP eligibility rules for most
individuals, and creating a coordinated process that results in a
seamless enrollment experience across Medicaid, CHIP, and the new
affordable insurance Exchanges.
At the same time, CMS is undertaking a number of business process,
structural and system improvements designed to support modernized IT
systems and streamline the manner in which it works with States and to
minimize burdens in review and approval processes. A new reliance on
automated information sources and data-sharing across agencies and
programs will facilitate enrollment and renewal. In addition, the
business process, structural and data system improvements underway at
CMS are designed to create an environment where a significant
proportion of the interactions between States and the Federal
government can take place through a Web-based information portal. For
example, we anticipate that CMS will have developed a Web-based system
for States to submit the State plan amendments that will be needed to
implement the Medicaid and CHIP programmatic modifications and that the
system itself, for submission, review, and approval will be
significantly more streamlined. It is not possible at this point to
quantify the impact of these changes in terms of burden, but we believe
that the estimates included in this collection of information
discussion likely overstate the actual burden on States. The foundation
for this is established through a final rule that enables States to
receive a 90 percent Federal matching rate for design, development,
installation or enhancement of eligibility determination systems
through December 31, 2015, for those States meeting a series of
specified standards and conditions. In addition, enhanced funding at a
75 percent Federal matching rate is available for States to maintain
and operate their eligibility systems, subject to the conditions noted
above. The estimates of the impact of these changes and the additional
Federal support in this area are discussed in more detail in the final
rule published on April 19, 2011 (76 FR
[[Page 51179]]
21950) entitled ``Federal Funding for Medicaid Eligibility
Determination and Enrollment Activities.''
Information collection requirements (ICRs) are outlined below that
involve Medicaid and CHIP eligibility determinations and enrollment. We
are soliciting public comment on each of these issues for the following
sections of the proposed rule that contain ICRs. We used data from the
Bureau of Labor Statistics to derive average costs for all estimates of
salary in establishing the information collection requirements. Salary
estimates include the cost of fringe benefits, calculated at 35 percent
of salary, which is based on the March 2011 Employer Costs for Employee
Compensation report by the U.S. Bureau of Labor Statistics.
Finally, in calculating the estimates of burden on States, it was
important to take into account the Federal government's contribution to
the cost of administering the Medicaid and CHIP programs. The Federal
government provides funding based on a Federal Medical Assistance
Percentage (FMAP) that is established for each State based on the per
capita income in the State as compared to the national average. FMAPs
range from a minimum of 50 percent in States with higher per capita
incomes to a maximum of 76.25 percent in States with lower per capita
incomes. States receive an ``enhanced'' FMAP for administering their
CHIP programs, ranging from 65 to 83 percent. All States receive a 50
percent FMAP for administration. As noted above, States also receive
higher Federal matching rates for certain services and now for systems
improvements or redesign, so the level of Federal funding provided to a
State can be significantly higher. As such, in taking into account the
Federal contribution to the costs of administering the Medicaid and
CHIP programs for purposes of estimating State burden with respect to
collection of information, we elected to use the higher end estimate
that the States would contribute 50 percent of the costs, even though
the burden will likely be much smaller.
The following provisions will be addressed through separate PRA
notices and comment processes:
Medicaid and CHIP State Plans: Sec. Sec. 431.10(c) and (d);
431.11(d); 435.110(b); 435.116(b); 435.118(b); 435.119(b); 435.218(b);
435.403(h) and (i); 435.603(a); 435.905(a) and (b); 435.948(d);
435.949(c); 435.1200(c), (d), (e), (f), and (g); 457.80(c); 457.305(a)
and (b); 457.310(b); 457.320(d); 457.340(a), (b), and (f); 457.343;
457.348(a), (b), (c), and (d); 457.350(a), (b), (c), (f), (g), and (j);
457.380(a), (c), (d), (e), (f), (g), (h), and (i); and 457.390;
Choice of Methodology for Determining Expenditures Claimed at FMAP
Rate for Newly Eligibles: Sec. Sec. 433.206(b); 433.208(b);
433.210(a); and 433.212(a);
Single, Streamlined Application: Sec. Sec. 435.907 and 457.330;
Collection of Applicant's Social Security Number: Sec. Sec.
435.907(e) and 457.340(b); and
Revisions to CHIP Annual Reporting Template System (CARTS): Sec.
435.907(e), Sec. 457.353.
A. ICRs Regarding Program Information (Sec. Sec. 435.905 and 457.335)
Amendments are proposed to Sec. 435.905 for Medicaid and Sec.
457.335 for CHIP that would require Medicaid and CHIP State agencies to
disclose program information to the public electronically. These
provisions are necessary to ensure that Medicaid and CHIP program
information is available on the Internet Web site where individuals and
families can explore their coverage options and submit an application.
In a review of State Web sites, we found that all 50 States and the
District of Columbia have Web sites for Medicaid and CHIP and that
nearly every State already provides the information specified in this
proposed rule. We also found that all States offer access to their
health insurance applications online.
While these provisions are subject to the PRA, we believe that the
requirement above is a usual and customary practice in keeping with the
use of modern technology and, therefore, presents no new burden. States
have always been required to assure that applicants, providers, other
interested parties, and the general public have access to information
about Medicaid and CHIP eligibility requirements, available Medicaid
services, and the rights and responsibilities of applicants and
beneficiaries.
B. ICRs Regarding Verification (Sec. Sec. 435.945, 435.948, 435.956,
457.350, and 457.380)
The provisions propose guidelines for verification of certain
factors for Medicaid and CHIP eligibility (for example, income, State
residency, SSNs, and pregnancy status) and the sharing of data among
agencies. These proposed amendments are necessary to facilitate the
determination of eligibility with minimal paper documentation required
from individuals.
We expect that over the long-term, these guidelines will reduce
burden on States and individuals. The State of Utah's eFIND system
provides an example of a successfully streamlined verification process.
eFIND gathers data from more than 15 Federal and State sources
including wage reporting, SSA, the SAVE system, and child support to
verify Medicaid eligibility for applicants in real time. The State has
estimated that eFIND has reduced the processing time for an eligibility
determination from 17 minutes down to 3 minutes, saving the State $2.1
million in the first year.
The specific burden associated with the written agreements for data
sharing is the time and effort necessary for the State to modify
existing agreements with applicable agencies for the collection of this
information. We estimate that 53 State Medicaid agencies (the 50
States, the District of Columbia, Northern Mariana Islands, and
American Samoa) will be subject to this requirement. We estimate it
will take each State an average of 30 hours to modify agreements with
the appropriate agencies. For the purpose of the cost burden, we
estimate it will take a health policy analyst 20 hours, at $43 an hour,
and a manager 10 hours, at $77 an hour, to complete the agreements. The
estimated cost burden for each State is $1,630 [($43 x 20) + ($77 x
10)], for a total cost burden of $86,390 [$1,630 x 53] and a total
annual hour burden of 1,590 hours [30 x 53]. Taking into account the
Federal contribution to Medicaid and CHIP program administration, the
estimated State share of these costs will be no more than $43,195
[$86,390 x 50 percent].
D. ICRs Regarding Renewal (Sec. Sec. 435.916 and 457.343)
These provisions discuss the redetermination process for
individuals whose eligibility is based on MAGI. These provisions are
necessary to facilitate the accurate and efficient redetermination of
Medicaid and CHIP eligibility.
We estimate 53 Medicaid agencies (the 50 States, District of
Columbia, Northern Mariana Islands, and American Samoa) and an
additional 43 CHIP agencies (States that have a separate or combination
CHIP) will be subject to the provision above, for a total of 96
agencies.
The burden associated with this requirement is the time and effort
necessary for the State to develop and automate renewal notices and
perform the revised recordkeeping related to redetermining eligibility.
Individuals whose eligibility is based on MAGI would need to provide
any additional
[[Page 51180]]
information for the State to complete a redetermination of eligibility.
Research has indicated that 33-50 percent of people experience a
change in circumstance that may impact their eligibility for coverage
(Sommers and Rosenbaum, Health Affairs 2011). Based on this research we
conservatively estimate that of the approximately 51 million
individuals enrolled in Medicaid and CHIP whose eligibility will be
based on MAGI, half (25.5 million individuals) will have their
eligibility redetermined using the information already available to the
agency. This approach greatly simplifies the renewal process and will
ultimately reduce costs for States.
For example, the State of Louisiana streamlined its renewal process
through a combination of administrative renewal, ex-parte review and
conducting renewals over the telephone in 2007. As a result, fewer than
10 percent of families actually complete and submit a renewal form in
order to remain enrolled in Medicaid or CHIP coverage. The State
reports more than $18 million in savings each year due to these
changes.
We estimate that it will take each Medicaid and CHIP agency 16
hours annually to develop, automate and distribute the notice of
eligibility determination based on use of existing information. For the
purpose of the cost burden, we estimate it will take a health policy
analyst 10 hours, at $43 an hour, and a senior manager 6 hours, at $77
an hour, to complete the notice. The estimated cost burden for each
agency is $892 [(10 x $43) + (6 x $77)]. The total estimated cost
burden is $85,632 [96 x $892], and the total annual hour burden is
1,536 hours [(10 + 6) x 96]. Taking into account the Federal
contribution, the total estimated State costs would be $42,816 [$85,632
x 50 percent].
The remaining half of the individuals (25.5 million) will need to
provide additional information to the State so that their eligibility
can be renewed. The proposed process is much less burdensome than the
processes currently in place in many States that require individuals to
complete a new application at renewal. We estimate that it will take an
individual 20 minutes to complete the proposed streamlined renewal
process. The total annual hour burden is 8.5 million hours [(20 minutes
x 25.5 million individuals)/60 minutes] for 25.5 million individuals.
We note that the number of people who need to provide additional
information may be smaller than our estimate, but we used a higher end
estimate to account for the greatest potential impact on States and
individuals. Some States that employ a simplified renewal approach
similar to what is proposed in this rule are able to renew coverage for
nearly 80 percent of beneficiaries without contacting the individual or
family.
States will keep records of each renewal that is processed in
Medicaid and CHIP. The amount of time for recordkeeping will be the
same for renewals based on information available to the agency and
renewals that require additional information from individuals. We
estimate that it will take the State agency 3 minutes (0.05 hour) at a
rate of $25 per hour for the average State eligibility worker to
conduct the required recordkeeping for each of the 51 million renewals.
The total estimated annual hour burden is 2,550,000 hours or 26,562.5
hours per agency [2,550,000/96]. At a rate of $25 per hour the total
estimated cost burden for recordkeeping is $63,750,000 [2,550,000 x
$25] or $664,063 per agency [$63,750,000/96]. Taking into account the
Federal contribution, the total estimated State share of the costs
would be $31,875,000 [$63,750,000 x 50 percent].
E. ICRs Regarding Web Sites (Sec. 435.1200 and Sec. 457.335)
Sections 435.1200 and 457.335 require Medicaid and separate CHIP
agencies to have a Web site that performs the functions described in
this proposed rule.
We estimate that 53 Medicaid agencies and an additional 43 CHIP
agencies (in States that have a separate or combination CHIP) would be
subject to the provisions above. To achieve efficiency, we assume that
States will develop only one Web site to perform the required
functions. Therefore, we base our burden estimates on 50 States, the
District of Columbia, the Northern Mariana Islands, and American Samoa
(53 agencies) and do not include the 43 separate CHIP programs.
The burden associated with this ICR for information disclosure is
the time and effort necessary for the State to develop and disclose
information on the Web site, develop and automate the required notices,
and transmit (report) the application data to the appropriate insurance
affordability program.
We know that all States have Web sites and printable applications
online and that 19 States have some ability to enable individuals to
renew their coverage online. We estimate that it will take each State
an average of 320 hours to develop the additional functionality to meet
the proposed requirements, including developing an online application,
automating the renewal process and adding a health plan selection
function. We estimate that it will take a health policy analyst 85
hours (at $43 an hour), a senior manager 50 hours (at $77 an hour), and
various network/computer administrators or programmers 185 hours (at
$54 an hour) to meet the reporting requirements for this subpart. We
estimate the total cost burden for a State to be $17,495 [(85 x $43) +
(50 x $77) + (185 x $54)] for a total estimated burden of $927,235 [53
x $17,495] and a total annual hour burden of 16,960 hours for all 53
entities [(85 + 50 + 185) x 53]. Taking into account the Federal
contribution to Medicaid and CHIP systems development and
administration efforts, we estimate that the total State share of costs
would be $463,618 [$927,235 x 50 percent] at most. States that elect to
pursue these activities as part of a larger systems redesign effort
would have significantly lower costs due to the availability of the 90
percent FMAP.
We estimate that it will take each State entity 16 hours annually
to develop and automate each of the two required notices (32 total
hours). For the purpose of the cost burden, we estimate it will take a
health policy analyst 10 hours, at $43 an hour, and a senior manager 6
hours, at $77 an hour, to complete each notice. The estimated cost
burden of two notices for each agency is $1,784 [$892 x 2]. The total
estimated cost burden is $94,552 [$1,784 x 53], and the total annual
hour burden is 1,696 hours [16 x 2 x 53] for the notices.
We estimate that it will take network/computer administrators or
programmers 150 hours (at $54 an hour) to transmit the application data
of ineligible individuals to the appropriate insurance affordability
program and meet this information reporting requirement for each State
(53). The estimated cost burden for each agency is $8,100 [150 x $54].
The total estimated cost burden for 53 States is $429,300 [53 x
$8,100], and the total annual hour burden is 7,950 hours [150 x 53].
Taking into account the Federal contribution, the estimated total State
share of costs would be $214,650 [$429,300 x 50 percent].
The total estimated cost burden of the provisions described above
is $1,451,087 [$927,235 + $94,552 + $429,300], and the total annual
hour burden is 26,606 hours [16,960 + 1,696 + 7,950].
F. ICRs Regarding Medicaid Statement of Expenditures for the Medical
Assistance Program (CMS-64)
This action does not revise or impose any new information
collection requirements or burden that would
[[Page 51181]]
require additional OMB review of CMS-64. OMB has approved the burden
and information collection requirements of CMS-64 under OMB control
number 0938-0067.
Table 2--Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Burden per
Regulation section(s) Respondents Responses response Total annual Labor cost of Total cost ($) State share
(hours) burden (hours) reporting ($) of costs ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. Sec. 435.945, 435.948, 435.956, 53 1 30 1,590 1,630 86,390 43,195
457.350, and 457.380...................
Sec. Sec. 435.916 and 457.343........ 96 1 16 1,536 892 85,632 42,816
Sec. Sec. 435.916 and 457.343........ 25.5 million 1 .33 8.5 million .............. .............. ..............
Sec. Sec. 435.916 and 457.343........ 96 1 26,562.5 \1\ 2.55 664,063 63,750,000 31,875,000
million
Sec. Sec. 435.1200 and 457.335....... 53 1 502 26,606 27,379 1,451,087 725,543
---------------------------------------------------------------------------------------------------------------
Total............................... .............. .............. .............. .............. .............. 65,373,100 32,686,555
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: All proposed collections are new; therefore the OMB Control Number is omitted from the table.
There are no capital or maintenance costs incurred by the proposed collections; therefore it is omitted from the table. Capital costs resulting from the
development or improvement of new electronic systems were addressed in the Federal Funding for Medicaid Eligibility Determination and Enrollment
Activities final rule (76 FR 21950).
Labor Cost figures are indicated here on a per Respondent basis.
The 1.4 average responses per Agency (that is, Respondent) are based on the total estimated number of agreements divided by the number of respondents.
The number of actual agreements will vary by State based on the governance structure of the State's Medicaid, CHIP, and Exchange programs.
We have submitted a copy of this proposed rule to the OMB for its
review of the rule's information collection and recordkeeping
requirements. These requirements are not effective until they have been
approved by the OMB.
To obtain copies of the supporting statement and any related forms
for the proposed paperwork collections referenced above, access CMS'
Web site at http://www.cms.hhs.gov/[email protected], or call the
Reports Clearance Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you comment on these information collection and
recordkeeping requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
(CMS-2349-P) Fax: (202) 395-6974; or E-mail: [email protected].
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
V. Summary of Preliminary Regulatory Impact Analysis
The summary analysis of benefits and costs included in this
proposed rule is drawn from the detailed Preliminary Regulatory Impact
Analysis (PRIA), available at http://www.cms.gov/MedicaidEligibility/downloads/CMS-2349-P-PreliminaryRegulatoryImpactAnalysis.pdf.
A. Introduction
The Office of Management and Budget has determined that this rule
is ``economically significant'' for the purposes of Executive Order
12866. Therefore, we have prepared a PRIA that presents the costs and
benefits of this rulemaking.
B. Need for This Regulation
This proposed rule would implement provisions of the Affordable
Care Act related to Medicaid eligibility, enrollment and coordination
with the Exchanges, CHIP, and other insurance affordability programs.
It also addresses the current eligibility restrictions and barriers to
enrollment in the Medicaid program which leave millions of low-income
Americans uninsured, and which contribute to poor health outcomes,
financial stress, and high health care and administrative costs. In
addition, this proposed rule sets out the increased Federal medical
assistance percentage (FMAP) rates relating to ``newly eligible''
individuals and certain medical assistance expenditures in expansion
States'' beginning January 1, 2014.
---------------------------------------------------------------------------
\1\ OACT's original estimates for the financial impact of the
expansion of Medicaid eligibility under the Affordable Care Act are
documented in an April 22, 2010 memorandum, ``Estimated Financial
Effects of the Patient Protection and Affordable Care Act, as
Amended,'' available at https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf. These estimates have been updated
using later data, revised participation assumptions, and later
information on policy decisions.
\2\ OACT's estimates include approximately 2-3 million
individuals with primary health insurance coverage through employer-
sponsored plans who would enroll in Medicaid for supplemental
coverage.
---------------------------------------------------------------------------
C. Summary of Costs and Benefits
The preliminary impact analysis uses the estimates of the CMS
Office of the Actuary (OACT) and the estimates prepared by the
Congressional Budget Office (CBO) and the staff of the Joint Committee
on Taxation. It provides both estimates to illustrate the uncertainty
inherent in projections of future Medicaid financial operations.
Analysis by OACT indicates that the proposed rule would result in an
estimated additional 24 million newly eligible and currently eligible
individuals enrolling in Medicaid by 2016.1 2 OACT notes
that such estimates are uncertain, since they depend on future
economic, demographic, and other factors that
[[Page 51182]]
cannot be precisely determined in advance. Similarly, the actual
behavior of individuals and the actual operation of the new enrollment
processes and Affordable Insurance Exchanges will affect enrollment and
costs. The Congressional Budget Office (CBO) has estimated a net
increase of 16 million newly and previously eligible people enrolled in
Medicaid and CHIP in 2016 as a result of the new law as implemented
through this regulation.\3\ Some of the difference between OACT and
CBO's projections can be explained by different participation rate
assumptions, which are described further in the more detailed PRIA.
---------------------------------------------------------------------------
\3\ CBO. Analysis of Major Health Care Legislation Enacted in
March 2010. Statement of Douglas W. Elmendorf. March 30, 2011--
http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-
;HealthCareLegislation.pdf The CBO estimates exclude individuals
with primary coverage through employer-sponsored plans who enroll in
Medicaid for supplemental coverage.
---------------------------------------------------------------------------
Increased access to medical care and the simplified enrollment
process proposed by this rule would benefit both newly eligible and
currently eligible individuals by improving health outcomes and
providing financial security. Additionally, the proposed rule would
benefit States and providers by reducing uncompensated care costs,
shifting spending on either State-funded health coverage or
uncompensated care to the Federal government. Finally, the simplified
Medicaid eligibility policies will over time reduce administrative
burdens on State Medicaid agencies.
We anticipate that the proposed rule would impose costs on a small
number of currently eligible individuals who will become ineligible for
Medicaid coverage under the new eligibility methodology. These
individuals would bear the cost of purchasing subsidized insurance in
the Exchanges, though these costs may be offset by premium tax credits.
OACT estimates that Federal spending on Medicaid for newly and
currently eligible individuals who enroll as a result of the changes
made by the Affordable Care Act would increase by a total of $202
billion from 2012 through 2016. Reflecting somewhat different
participation assumptions and other projection factors, CBO estimates
an increase in federal spending of $162 billion over the same period of
time.\4\ OACT estimates that State expenditures on behalf of the
additional individuals and families gaining Medicaid coverage as a
result of the Affordable Care Act will total $2.7 billion in FY 2014,
$4.0 billion in FY 2015, and $4.9 billion in FY 2016.\5\ For both OACT
and CBO, these estimates do not consider offsetting savings to States
that will result, to a varying degree depending on the State, from less
uncompensated care, less need for State-financed health services and
coverage programs, and greater efficiencies in the delivery of care.
Indeed, an Urban Institute analysis estimates that the costs to States
will be more fully offset by other effects of the legislation, for net
savings to States of $92 to $129 billion from 2014 to 2019.\6\
---------------------------------------------------------------------------
\4\ CBO. Analysis of the Major Health Care Legislation Enacted
in March 2010. Statement of Douglas W. Elmendorf. March 30, 2011--
http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-HealthCareLegislation.pdf.
\5\ OACT estimates total gross additional State expenditures of
approximately $80 billion for FYs 2012 through 2021, offset by $35
billion in lower State costs as a result of the transitional FMAP
for expansion States, for a net total increase of $45 billion. For
comparison, CBO estimates net additional State expenditures of about
$60 million for the same time frame.
\6\ M. Buettgens et al., ``Consider savings as well as costs:
State governments would spend at least $90 billion less with the ACA
than without it from 2014 to 2019,'' The Urban Institute, July 2011.
Available at http://www.urban.org/uploadedpdf/412361-consider-savings.pdf.
---------------------------------------------------------------------------
D. Methods of Analysis
OACT prepared its estimate using data on individuals and families,
together with their income levels and insured status, from the Current
Population Survey and the Medical Expenditure Panel Survey. In
addition, they made assumptions as to the actions of individuals in
response to the new coverage options under the Affordable Care Act and
the operations of the new enrollment processes and the Affordable
Insurance Exchanges. The estimated Medicaid coverage and financial
effects are particularly sensitive to these latter assumptions. Among
those eligible for Medicaid under the expanded eligibility criteria
established by the Affordable Care Act, and who would not otherwise
have health insurance, OACT assumed that 95 percent would enroll. This
assumption, which is significantly higher than current enrollment
percentages, reflects OACT's consideration of the experience with
health insurance reform in Massachusetts and its expectation that the
streamlined enrollment process and enrollment assistance available to
people through the Affordable Insurance Exchanges will be very
effective in helping eligible individuals and families become enrolled.
Although CBO used similar data and overall methodologies, and also
anticipates that the streamlined enrollment process and Exchange
enrollment assistance will improve applicants' ability to become
enrolled, CBO has included a significantly smaller from this factor
than assumed by OACT.\7\
---------------------------------------------------------------------------
\7\ CBO's specific take-up assumptions are not available.
Researchers at the Urban Institute have approximated the
participation rate assumed by CBO. The Kaiser Family Foundation has
characterized this assumption as follows: ``These results assume
moderate levels of participation similar to current experience among
those made newly eligible for coverage and little additional
participation among those currently eligible. This scenario assumes
57 percent participation among the newly eligible uninsured and
lower participation across other coverage groups.'' J. Holohan and
I. Headen, ``Medicaid coverage and spending in health reform:
National and State-by-State results for adults at or below 133%
FPL,'' Kaiser Commission on Medicaid and the Uninsured, May 2010,
available online at http://www.kff.org/healthreform/upload/Medicaid-Coverage-and-Spending-In-Health-Reform-National-and-State-By-State-Results-for-Adults-at-or-Below-133-FPL.pdf.
---------------------------------------------------------------------------
E. Regulatory Options Considered
Alternative approaches to implementing the Medicaid eligibility,
enrollment and coordination requirements in the Affordable Care Act
were considered in developing this proposed rule. However, it was
determined that these alternatives would have created substantial
administrative burdens for States and individuals, and created gaps in
coverage that would reduce the number of people with insurance. We
welcome public comment regarding the potential economic effects of the
proposed rule.
F. Accounting Statement
For full documentation and discussion of these estimated costs and
benefits, see the detailed PRA, available at http://www.cms.gov/MedicaidEligibility/downloads/CMS-2349-P-PreliminaryRegulatoryImpactAnalysis.pdf.
[[Page 51183]]
Table 3--Accounting Statement: Classification of Estimated Net Costs, From FY 2012 to FY 2016
[In millions]
----------------------------------------------------------------------------------------------------------------
Transfers
-----------------------------------------------------------------------------
Category Year dollar Units discount rate
----------------------------------------------- Period covered
2012 7% 3%
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers Primary Estimate..... $35,564 $37,324 FYs 2012-2016
from Federal Government to States
on Behalf of Beneficiaries.
Annualized Monetized Transfers Primary Estimate..... 2,131 2,235 FYs 2012-2016
from States on Behalf of
Beneficiaries.
Annualized Monetized Transfers Primary Estimate..... 1,577 1,657 FYs 2012-2016
from Federal Government to States.
----------------------------------------------------------------------------------------------------------------
Source: CMS Office of the Actuary.
G. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2011, that
threshold is approximately $136 million. It is important to understand,
however, that the UMRA does not address the total cost of a rule.
Rather, it focuses on certain categories of cost, mainly costs
resulting from (A) imposing enforceable duties on State, local, or
tribal governments, or on the private sector, or (B) increasing the
stringency of conditions in, or decreasing the funding of, State,
local, or tribal governments under entitlement programs.
We believe that States can take actions that will largely offset
the increased medical assistance spending for newly enrolled persons.
Because the net effects are uncertain and the overall costs
significant, we have drafted the PRIA to meet the requirements for
analysis imposed by UMRA, together with the rest of the preamble. The
extensive consultation with States we describe later in this analysis
was aimed at the requirements of both UMRA and Executive Order 13132 on
Federalism. We invite comment on these issues from States and local
governments as well as any other interested parties.
1. State and Local Governments
Our discussion of the potential expected impact on States is
provided in the benefits, costs, and transfers section of the
preliminary regulatory impact analysis. As noted previously, the
Affordable Care Act requires States that participate in the Medicaid
program to cover adults with incomes below 133 percent of the Federal
poverty level, and provides substantial new Federal support to nearly
offset the costs of covering that population.
2. Private Sector and Tribal Governments
We do not believe this proposed rule would impose any unfunded
mandates on the private sector. As we explain in more detail in the
Regulatory Flexibility Act analysis, the provisions of the Affordable
Care Act implemented by the proposed rule deal with eligibility and
enrollment for the Medicaid and CHIP programs, and as such are directed
toward State governments rather than toward the private sector. Since
the proposed rule would impose no mandates on the private sector, we
conclude that the cost of any possible unfunded mandates would not meet
the threshold amounts discussed previously that would otherwise require
an unfunded mandate analysis for the private sector. We also conclude
that an unfunded mandate analysis also is not needed for tribal
governments since the proposed rules would not impose mandates on
tribal governments.
H. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities if a proposed rule would have a significant economic
impact on a substantial number of small entities. Few of the entities
that meet the definition of a small entity as that term is used in the
RFA (for example, small businesses, nonprofit organization, and small
governmental jurisdictions with a population of less than 50,000) would
be impacted directly by this proposed rule. Individuals and States are
not included in the definition of a small entity. There are some States
in which counties or cities share in the costs of Medicaid. OACT has
estimated that between 2014 and 2021 the Federal government would pay
about 94 percent of the costs of benefits for new Medicaid enrollees
with the States paying the remaining 6 percent. An Urban Institute and
Kaiser Family Foundation study estimated that the Federal government
will bear between 92 and 95 percent of the overall costs of the new
coverage provided as a result of the Affordable Care Act, with the
States shouldering the remaining five to eight percent of the costs.\8\
To the extent that States require counties to share in these costs,
some small jurisdictions could be affected by the requirements of this
proposed rule. However, nothing in this rule would constrain States
from making changes to alleviate any adverse effects on small
jurisdictions. The Department has no way of estimating the impact of
this proposed rule on small jurisdictions and requests public comment
on this issue.
---------------------------------------------------------------------------
\8\ J. Holahan and I. Headen, ``Medicaid coverage and spending
in health reform: National and State-by-State results for adults at
or below 133% FPL,'' Kaiser Commission on Medicaid and the
Uninsured, May 2010, available online at http://www.kff.org/
healthreform/upload/Medicaid-Coverage-and-Spending-in-Health-Reform-
National-and-State-By-State-Results-for-Adults-at-or-Below-133-
FPL.pdf.
---------------------------------------------------------------------------
Because this proposed rule is focused on eligibility and enrollment
in public programs, it does not contain provisions that would have a
significant direct impact on hospitals, and other health care providers
that are designated as small entities under the RFA. However, the
provisions in this proposed rule may have a substantial, positive
indirect effect on hospitals and other health care providers due to the
substantial increase in the prevalence of health coverage among
populations who are currently unable to pay for needed health care,
leading to lower rates of uncompensated care at hospitals. Again, the
Department cannot determine whether this proposed rule would have a
significant economic impact on a substantial number of small entities,
and we request public comment on this issue.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a proposed rule may have a significant economic
impact on the operations of a substantial number of small rural
[[Page 51184]]
hospitals. This analysis must conform to the provisions of section 603.
For purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because the Secretary has
determined that this proposed rule would not have a direct economic
impact on the operations of a substantial number of small rural
hospitals. As indicated in the preceding discussion, there may be
indirect positive effects from reductions in uncompensated care.
I. Federalism
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 effects on States, preempts
State law, or otherwise has Federalism implications. As discussed
previously, the Affordable Care Act and this proposed rule have
significant direct effects on States.
The Affordable Care Act requires major changes in the Medicaid and
CHIP programs, which would require changes in the way States operate
their individual programs. While these changes are intended to benefit
beneficiaries and enrollees by improving coordination between programs,
they are also designed to reduce the administrative burden on States by
simplifying and streamlining systems.
We have consulted with States to receive input on how the various
Affordable Care Act provisions codified in this proposed rule would
affect States. We have participated in a number of conference calls and
in person meetings with State officials in the months before and since
the law was enacted. These discussions have enabled the States to share
their thinking and questions about how the Medicaid changes in the
legislation would be implemented. The conference calls also furnished
opportunities for CMS to explore these implementation issues together
with States and also provide information on an informal basis about
implementation plans to the State Medicaid Directors, and for the
Directors to comment informally on what they heard in the course of
those conversations.
We continue to engage in ongoing consultations with Medicaid and
CHIP Technical Advisory Groups (TAGs), which have been in place for
many years and serve as a staff level policy and technical exchange of
information between CMS and the States. In particular, we have had
discussions with the Eligibility TAG (E-TAG) and the Children's
Coverage TAG. The E-TAG is a group of State Medicaid officials with
specific expertise in the field of eligibility policy under the
Medicaid program. The Children's Coverage TAG is a combination of
Medicaid and CHIP officials that convene to discuss issues that affect
children enrolled in those programs. Through consultations with these
TAGs, we have been able to get input from States specific to issues
surrounding the changes in eligibility groups and rules that will
become effective in 2014.
List of Subjects
42 CFR Part 431
Grant programs--health, Health facilities, Medicaid, Privacy,
Reporting and recordkeeping requirements.
42 CFR Part 433
Administrative practice and procedure, Child support Claims, Grant
programs--health, Medicaid, Reporting and recordkeeping requirements.
42 CFR Part 435
Aid to Families with Dependent Children, Grant programs--health,
Medicaid, Reporting and recordkeeping requirements, Supplemental
Security Income (SSI), Wages.
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 proposes to amend 42 CFR chapter IV as set forth
below:
PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION
1. The authority citation for part 431 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act, (42 U.S.C.
1302).
Subpart A--Single State Agency
2. Section 431.10 is amended by--
A. Revising paragraph (b)(2)(ii) and the introductory text of
paragraph (c)(1).
B. Adding paragraphs (c)(1)(iii) and (c)(3).
C. Revising paragraphs (d) and (e)(3).
The revisions and additions read as follows:
Sec. 431.10 Single State agency.
* * * * *
(b) * * *
(2) * * *
(ii) Make rules and regulations that it follows in administering
the plan or that are binding upon State or other agencies that
administer the plan.
* * * * *
(c) * * *
(1) The plan must specify whether the entity that determines
eligibility for families, adults, and for individuals under 21 is--
* * * * *
(iii) A government-operated Exchange established under sections
1311(b)(1) or 1321(c)(1) of the Affordable Care Act (Pub. L. 111-148).
* * * * *
(3) The single State agency is responsible for assuring and
enforcing that--
(i) Eligibility determinations are made consistent with its rules
and if there is a pattern of incorrect determinations that corrective
actions are instituted and/or the delegation is terminated;
(ii) There is no conflict of interest by any agency delegated the
responsibility to make eligibility determinations; and
(iii) Eligibility determinations will be made in the best interest
of applicants and beneficiaries and that the single State agency will
guard against improper incentives and/or outcomes.
(d) Agreement with Federal or State and local agencies. The plan
must provide for written agreements between the Medicaid agency and the
Federal or other State or local agencies that determine eligibility for
Medicaid, stating--
(1) The relationships and respective responsibilities of the
agencies;
(2) The quality control and oversight plans by the single State
agency to review determinations made by the delegee;
(3) The reporting requirements from the delegee making Medicaid
eligibility determinations to the single State agency.
(4) The confidentiality and security requirements in accordance
with sections 1902(a)(7) and 1942 of the Act for all applicant and
beneficiary data; and
(5) That merit protection principles are employed by the agency
responsible for the Medicaid eligibility determination.
(e) * * *
(3) If other Federal, State or local agencies or offices perform
services for the Medicaid agency, they must not have the authority to
change or disapprove any administrative decision of, or otherwise
substitute their judgment for that of, the Medicaid agency for the
application of policies, rules and regulations issued by the Medicaid
agency.
[[Page 51185]]
3. Section 431.11 is amended by revising paragraph (d) to read as
follows:
Sec. 431.11 Organization for administration.
* * * * *
(d) Eligibility determined by other agencies. If eligibility is
determined by Federal or State agencies other than the Medicaid agency
or by local agencies under the supervision of other State agencies, the
plan must include a description of the staff designated by those other
agencies and the functions they perform in carrying out their
responsibilities.
Subpart M--Relations With Other Agencies
Sec. 431.636 [Removed]
4. Remove Sec. 431.636.
PART 433--STATE FISCAL ADMINISTRATION
5. The authority citation for part 433 continues to read as
follows:
Authority: Section 1102 of the Social Security Act (42 U.S.C.
1302).
Subpart A--Federal Matching and General Administration Provisions
6. Section 433.10 is amended by--
A. In paragraph (a), removing the phrase ``and 1905(b),'' and
adding in its place the phrase ``1905(b), 1905(y), and 1905(z)''
B. Adding new paragraphs (c)(6), (c)(7), and (c)(8).
The additions read as follows:
Sec. 433.10 Rates of FFP for program services
* * * * *
(c) * * *
(6)(i) Beginning January 1, 2014, under section 1905(y) of the Act,
the FMAP for a State that is one of the 50 States or the District of
Columbia, for amounts expended by such State for medical assistance for
newly eligible individuals, as defined in Sec. 433.204 of this part,
will be an increased FMAP equal to:
(A) 100 percent, for calendar quarters in calendar years (CYs) 2014
through 2016;
(B) 95 percent, for calendar quarters in CY 2017;
(C) 94 percent for calendar quarters in CY 2018;
(D) 93 percent for calendar quarters in CY 2019;
(E) 90 percent for calendar quarters in CY 2020; and
(F) 90 percent for calendar quarters in all other CYs after 2020.
(ii) The FMAP specified in paragraph (c)(6)(i) of this section will
apply to amounts expended by a State for medical assistance for newly
eligible individuals in accordance with the requirements of the
methodology selected by the State under Sec. 422.206 of this chapter.
(7)(i) During the period January 1, 2014 through December 31, 2015,
under section 1905(z)(1) of the Act for a State described in paragraph
(c)(7)(ii) of this section, the FMAP determined under paragraph (b) of
this section will be increased by 2.2 percentage points.
(ii) A State qualifies for the general increase in the FMAP under
paragraph (c)(7)(i) of this section, if the State:
(A) Is an expansion State, as described in paragraph (c)(8)(iii) of
this section;
(B) Does not qualify for any payments on the basis of the increased
FMAP under paragraph (c)(6) of this section, as determined by the
Secretary; and
(C) Has not been approved by the Secretary to divert a portion of
the Disproportionate Share Hospital Allotment for the State to the
costs of providing medical assistance or other health benefits coverage
under a demonstration that is in effect on July 1, 2009.
(iii) The increased FMAP under paragraph (c)(7)(i) of this section
is available for amounts expended by the State for medical assistance
for individuals that are not newly eligible as defined in Sec. 433.204
of this part.
(8)(i) Beginning January 1, 2014, under section 1905(z) of the Act,
the FMAP for an expansion State defined in paragraph (c)(8)(iii) of
this section, for amounts expended by such State for medical assistance
for individuals described in section 1902(a)(10)(A)(i)(VIII) of the Act
who are not newly eligible as defined in Sec. 433.204 of this part and
who are nonpregnant childless adults for whom the State may require
enrollment in benchmark coverage under section 1937 of the Act, will be
determined in accordance with the following formula:
F + (T x (N-F))
F = The base FMAP for the State determined under paragraph (b) of this
section, subject to paragraph (c)(7) of this section.
T = The transition percentage specified in paragraph (c)(8)(ii) of this
section.
N = The Newly Eligible FMAP determined under paragraph (c)(6) of this
section.
(ii) For purposes of paragraph (c)(8)(i) of this section, the
transition percentage is equal to:
(A) 50 percent, for calendar quarters in CY 2014;
(B) 60 percent, for calendar quarters in CY 2015;
(C) 70 percent, for calendar quarters in CY 2016;
(D) 80 percent, for calendar quarters in CY 2017;
(E) 90 percent, for calendar quarters in CY 2018; and
(F) 100 percent, for calendar quarters in CY 2019 and all
subsequent calendar years.
(iii) A State is an expansion State if, on the March 23, 2010, the
State offered health benefits coverage Statewide to parents and
nonpregnant, childless adults whose income is at least 100 percent of
the poverty line, that includes inpatient hospital services, is not
dependent on access to employer coverage, employer contribution, or
employment and is not limited to premium assistance, hospital-only
benefits, a high deductible health plan, or alternative benefits under
a demonstration program authorized under section 1938 of the Act. A
State that offers health benefits coverage to only parents or only
nonpregnant childless adults described in the preceding sentence will
not be considered to be an expansion State.
(iv) For amounts expended by an expansion State as defined in
paragraph (c)(8)(iii) of this section for medical assistance for
individuals described in section 1902(a)(10)(A)(i)(VIII) of the Act who
are newly eligible as defined in Sec. 433.201, and who are non-
pregnant childless adults for whom the State may require enrollment in
benchmark coverage under section 1937 of the Act, the FMAP is as
specified in paragraph (c)(6) of this section.
7. Subpart E is added to part 433 to read as follows:
Subpart E--Methodologies for Determining Federal Share of Medicaid
Expenditures for Mandatory Group
Sec.
433.202 Scope.
433.204 Definitions.
433.206 Choice of methodology.
433.208 Threshold methodology.
433.210 Statistically-valid sampling methodology.
433.212 CMS established FMAP proportion.
Subpart E--Methodologies for Determining Federal Share of Medicaid
Expenditures for Mandatory Group
Sec. 433.202 Scope.
This subpart sets forth the requirements and procedures under which
States may claim for the higher Federal share of expenditures for newly
eligible individuals specified in Sec. 433.204 of this subpart.
Sec. 433.204 Definitions.
As used in this subpart:
[[Page 51186]]
Newly Eligible Individual means an individual eligible for Medicaid
in accordance with the requirements of the new adult group and who
would not have been eligible for Medicaid under the State's eligibility
standards and methodologies for the Medicaid State plan, waiver or
demonstration programs in effect in the State as of December 1, 2009.
Sec. 433.206 Choice of methodology.
(a) Beginning January 1, 2014, the State must determine the
expenditures which may be claimed at the FMAP rate described in Sec.
433.10 of this part using one of the following methods:
(1) Applying eligibility thresholds and proxies in accordance with
Sec. 433.208 of this part; or
(2) Conducting a statistically valid sample in accordance with
Sec. 433.210 of this part; or
(3) Electing to utilize the CMS established FMAP proportion rate
established in accordance with Sec. 433.212 of this part.
(b) The State must provide to CMS for approval a methodology that
provides the description of the method it will use to determine the
appropriate FMAP claim for medical assistance expenditures for newly
eligible individuals including all of the following requirements:
(1) Except as provided in paragraph (b)(2) of this section, at
least 2 years prior to the year in which the State will implement that
method.
(2) For CY 2014, the State must notify CMS of such method no later
than December 31, 2012.
(3) Changing claiming methodologies:
(i) The State must use the chosen methodology for at least 3
consecutive years before changing to another methodology;
(ii) The State must notify CMS of any change in methodology in
accordance with paragraphs (b)(1) and (b)(2) of this section.
(c) To implement each methodology--
(1) The State must first determine those individuals eligible under
section 1902(a)(10)(A)(i)(VIII) of the Act.
(2) The State may apply a CMS approved methodology only to
expenditures for such individuals.
(d) Nothing in this section impacts the timing or approval of an
individual's eligibility for Medicaid.
Sec. 433.208 Threshold methodology.
(a) Beginning January 1, 2014, States may elect to apply a CMS-
approved State specific threshold methodology that meets all of the
following requirements:
(1) Incorporates State eligibility standards, including disregards
and other adjustments that were in place as of December 1, 2009.
(2) Incorporates any enrollment caps under section 1115
demonstration programs that were in place in the State on December 1,
2009.
(3) Is applied to each individual applicant determined eligible for
Medicaid under the adult group.
(4) Is used to determine whether each individual is newly eligible
so that the State may claim the FMAP described in Sec. 433.10(c) of
this subpart for all expenditures for such individuals.
(b) To implement the threshold methodology, the State must submit a
methodology and receive CMS approval of such methodology prior to its
application to new FMAP determinations.
(1) Such methodology will specify how the State will determine the
population within the adult group and describe in a format provided by
CMS how it is approximating the December 1, 2009 standards and
methodologies, as well as how the State will apply the established
criteria.
(2) Subject to approval by CMS, a State may use criteria including
but not limited to:
(i) Self-declaration.
(ii) Claims history.
(iii) Receipt of Social Security Disability Income.
(iv) Disability determination by SSA.
(v) Information from the Asset Verification System established
under the DRA.
(vi) Information from tax returns.
(vii) Application of a proportion derived from historical data of
the actual proportion of individuals within specific eligibility groups
that were ineligible for Medicaid due to assets or eligible for
Medicaid due to disability status using the eligibility standards in
place as of December 1, 2009.
(viii) Other disability and asset data sources.
(c) The threshold methodology must:
(1) Not be biased in such a manner as to overestimate or over
report individuals as newly eligible who were actually individuals who
would have been eligible using the State's December 1, 2009 eligibility
standards.
(2) Provide an accurate estimation of which individuals would have
been eligible in accordance with the December 1, 2009 eligibility
standards to be used for the designated year, by incorporating
simplified assessments of asset and disability requirements in place at
that time. Once individuals are determined to be either a newly
eligible individual or an individual who would have been eligible under
the December 2009 standards, the State would apply that eligibility
determination throughout the entire year.
(3) Be verified by, and adjusted prospectively to include results
of, any evaluations conducted by CMS in conjunction with the State(s)
of the accuracy of the threshold.
Sec. 433.210 Statistically valid sampling methodology.
(a)(1) A State choosing to implement a statistically-valid sampling
methodology to determine the proportion of expenditures to which the
FMAP specified in Sec. 433.10(c) of this subpart will apply, must
submit to CMS a methodology that details the sampling plan prior to
making such claims which demonstrates compliance with the requirements
established in this section as well as all additional requirements that
CMS issues in subregulatory guidance.
(2) The methodology with the sampling plan must be submitted to CMS
on or before January 1 of the calendar year in which the State will
claim expenditures using the sampling methodology.
(3) The State may not implement the sampling methodology until CMS
has reviewed and approved the State's sampling plan.
(b) A State must verify that its sampling plan follows all relevant
requirements established in the most current OMB Circular A-87.
(c) The State must implement the plan as specified in the CMS-
approved sampling plan for the year in which it claims expenditures
based on the sampling plan.
(d) A State must draw a statistically valid sample from the
population of Medicaid applicants who are eligible for Medicaid under
the adult group.
(e) The State must evaluate each individual randomly selected to be
included in the sample to determine whether:
(1) The individual is newly eligible; or
(2) The individual would have been eligible under the standards in
place to determine eligibility under the Medicaid State plan and/or
demonstration program as of December 1, 2009, including any enrollment
caps under section 1115 demonstration programs that were in place in
the State on December 1, 2009.
(f) The State will attribute all actual medical assistance
expenditures in that calendar year for each newly eligible individual
in the sample and for each individual in the sample who would have been
eligible under the December 1, 2009 standards. The State will
extrapolate and apply the proportion of
[[Page 51187]]
Medicaid expenditures attributed to the newly eligible in the sample to
the expenditures of the population.
(g) The State will consider the amount determined in accordance
with paragraph (f) of this section to be the expenditures of the newly
eligible individuals and receive the FMAP rate described in Sec.
433.10(c) of this subpart for such expenditures when the State claims
on the CMS-64.
(h) The State may claim and receive the FMAP described in Sec.
433.10(c) of this subpart for an estimated proportion on an interim
basis as follows:
(1) States may claim expenditures in current years based on an
interim FMAP proportion determined by the most recent year for which
data is available.
(2) States must make a retroactive adjustment to claims on the CMS-
64 for the current year once that expenditure information is finalized
under the provisions of paragraph (f) of this section.
(3)(i) Results of a statistically-valid sampling methodology for
any given year must be finalized and applied, and adjustments to claims
on the CMS-64 must be made, within 2 years from the date of the actual
expenditure.
(ii) If the State does not have supporting documentation at the end
of the second year following the year at issue, the State must make a
decreasing adjustment on the CMS-64 to refund the higher FMAP rates,
and such claims will be regarded as untimely under 45 CFR 95.7 if
resubmitted.
(iii) A State must implement the statistically valid sampling
methodology in accordance with this section on an annual basis for the
initial 3 consecutive years.
(A) States that have completed the requirements for 3 consecutive
years, are required thereafter to verify using a sampling methodology
in accordance with this section every 3 years.
(B) Any State that meets the requirements of paragraph
(h)(3)(iii)(A) of this section may retroactively apply results of the
sample to the rates of the calendar year expenditures for the years
prior to the sample up to the last year in which the State completed
and applied the results of a sampling methodology.
Sec. 433.212 CMS established FMAP proportion.
(a) Beginning January 1, 2014, States may elect to apply a CMS
determined proportion to medical assistance expenditures for
individuals eligible for Medicaid in the adult group.
(b) CMS will publish State-specific estimated FMAP proportions of
eligibility under the December 2009 eligibility criteria using data
sources including, but not limited to MEPS and MSIS data.
(c) CMS will meet all of the following requirements:
(1) Solicit and incorporate comments on the development of rates.
(2) Annually establish a model to predict in an unbiased way the
appropriate proportion of expenditures for which each State would claim
the FMAP rate described in Sec. 433.10(c) of this subpart for newly
eligible individuals taking into account any enrollment caps under
demonstration programs that were in place in the State on December 1,
2009.
(3) Publish the State-specific rates by October 1 of the preceding
year. For CY 2014, the model must be published no later than January 1,
2013.
(4) Incorporate results from a validation methodology in accordance
with Sec. 433.212(e) of this subpart such as a statistically valid
sampling of State data of actual individuals eligible for and enrolled
in Medicaid in accordance with section 1902(a)(10)(A)(i)(VIII) of the
Act.
(5) Provide technical assistance to States on applying the rates
established.
(d) States will apply the CMS published State-specific proportion
of expenditures attributed to the newly eligible to expenditures for
all individuals eligible for and enrolled in Medicaid in accordance
with section 1902(a)(10)(A)(i)(VIII) of the Act. The State will
consider the amount determined in accordance with this section to be
the expenditures of the newly eligible individuals and receive the FMAP
rate described in Sec. 433.10(c) of this part for such expenditures
when the State claims expenditures on the CMS-64.
(e) Validation measures such as statistical sampling must be
incorporated into the estimate:
(1) On an annual basis beginning in CY 2016, to include
expenditures related to CY 2014, and continue through CY 2021;
(2) After CY 2021, validation will be completed, and results
incorporated into the model, on a 3-year basis;
(3) After CY 2030, validation will be completed, and results
incorporated into the model, on a 5-year basis.
PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA
8. The authority citation for part 435 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
9a. Remove the term ``family income'' wherever it appears in part
435 and add in its place the term ``household income.''
Subpart A--General Provisions and Definitions
9b. Section 435.4 is amended by--
A. Adding the definitions of ``Advance payments of the premium tax
credit,'' ``Affordable Insurance Exchange (Exchange),'' ``Agency,''
``Caretaker relative,'' ``Dependent child,'' ``Effective income
level,'' ``Electronic account,'' ``Household income,'' ``Insurance
affordability program,'' ``MAGI-based income,'' ``Minimum essential
coverage,'' ``Modified adjusted gross income (MAGI),'' ``Pregnant
woman,'' ``Secure electronic interface,'' and ``Tax dependent'' in
alphabetical order.
B. Revising the definition of ``Families and children.''
The revisions read as follows:
Sec. 435.4 Definitions and use of terms.
* * * * *
Advance payments of the premium tax credit means payments of the
tax credit specified in section 36B of the Internal Revenue Code of
1986, which provide premium assistance on an advance basis to support
enrollment of an eligible individual in a qualified health plan through
the Exchange.
* * * * *
Affordable Insurance Exchange (Exchange) means a governmental
agency or non-profit entity that meets the applicable requirements and
makes qualified health plans available to qualified individuals and
qualified employers. Unless otherwise identified, this term refers to
State Exchanges, regional Exchanges, subsidiary Exchanges, and a
Federally-facilitated Exchange.
Agency means a State Medicaid agency.
* * * * *
Caretaker relative means a relative of a dependent child by blood,
adoption, or marriage with whom the child is living, who assumes
primary responsibility for the child's care (as may, but is not
required to, be indicated by claiming the child as a tax dependent for
Federal income tax purposes), including the child's natural, adoptive,
or step parent; another relative of the child based on blood (including
those of half-blood), adoption, or marriage; and the spouse of such
parent or relative, even after the marriage is terminated by death or
divorce.
* * * * *
Dependent child means a child who is under the age of 18, or is age
18 and a
[[Page 51188]]
full-time student, and who is deprived of parental support by reason of
the death, absence from the home, or unemployment of at least one
parent, unless the State has elected in its State plan to eliminate
such deprivation requirement. A parent is considered to be unemployed
if he or she is working less than 100 hours per month, or such higher
number of hours as the State may elect in its State plan.
Effective income level means the income standard applicable under
the State plan for an eligibility group, after taking into
consideration any disregard of a block of income.
Electronic account means an electronic file that includes all
information collected and generated by the State regarding each
individual's Medicaid eligibility and enrollment, including all
documentation required under Sec. 435.913.
Families and children means individuals whose eligibility for
Medicaid is determined based on being a pregnant woman, a child younger
than age 21, or a parent or other caretaker relative of a dependent
child. It does not include individuals whose eligibility is based on
other factors, such as blindness, disability, being aged (65 or more
years old), or a need for long-term care services.
Household income has the meaning provided in Sec. 435.603(d).
Insurance affordability program means:
(1) A State Medicaid program under title XIX of the Act;
(2) A State children's health insurance program (CHIP) under title
XXI of the Act;
(3) A State basic health program established under section 1331 of
the Affordable Care Act;
(4) Coverage in a qualified health plan through the Exchange with
advance payments of the premium tax credit established under section
36B of the Internal Revenue Code of 1986; or
(5) Coverage in a qualified health plan through the Exchange with
cost-sharing reductions established under section 1402 of the
Affordable Care Act.
MAGI-based income has the meaning provided in Sec. 435.603(e).
* * * * *
Minimum essential coverage means coverage defined in section
5000A(f) of subtitle D of the Internal Revenue Code of 1986, as added
by section 1401 of the Affordable Care Act, and implementing
regulations of such section issued by the Secretary of the Treasury.
Modified adjusted gross income (MAGI) has the meaning provided in
section 36B(d)(2) of the Internal Revenue Code of 1986.
* * * * *
Pregnant woman means a woman during pregnancy and the post partum
period, which extends until the last day of the month in which a 60-day
period, beginning on the date the pregnancy terminates, ends.
Secure electronic interface means an interface which allows for the
exchange of data between Medicaid and other insurance affordability
programs and adheres to the requirements in part 433, subpart C of this
chapter.
* * * * *
Tax dependent means an individual for whom another individual
properly claims a deduction for a personal exemption under section 151
of the Internal Revenue Code of 1986 for a taxable year.
Subpart B--Mandatory Coverage
10. The heading for subpart B is revised as set forth above.
11. Section 435.110 is revised to read as follows:
Sec. 435.110 Parents and other caretaker relatives.
(a) Basis. This section implements sections 1931(b) and (d) of the
Act.
(b) Scope. The agency must provide Medicaid to parents and other
caretaker relatives, as defined in Sec. 435.4, and if applicable the
spouse of the parent or other caretaker relative, whose household
income is at or below the income standard established by the agency in
the State plan, in accordance with paragraph (c) of this section.
(c) Income standard. The agency must establish in its State plan
the income standard as follows:
(1) The minimum income standard is a State's AFDC income standard
in effect as of May 1, 1988 for a household of the applicable family
size.
(2) The maximum income standard is the higher of--
(i) The effective income level in effect for section 1931 low-
income families under the Medicaid State plan or waiver of the State
plan as of March 23, 2010 or December 31, 2013, if higher, converted to
a MAGI-equivalent standard in accordance with guidance issued by the
Secretary under section 1902(e)(14)(A) and (E) of the Act; or
(ii) A State's AFDC income standard in effect as of July 16, 1996
for a household of the applicable family size, increased by no more
than the percentage increase in the Consumer Price Index for all urban
consumers between July 16, 1996 and the effective date of such
increase.
12. Revise the undesignated center heading that is immediately
before Sec. 435.116 to read as follows:
Mandatory Coverage of Pregnant Women, Children Under 19, and Newborn
Children
13. Section 435.116 is revised to read as follows:
Sec. 435.116 Pregnant women.
(a) Basis. This section implements sections 1902(a)(10)(A)(i)(III)
and (IV); 1902(a)(10)(A)(ii)(I), (IV), and (IX); and 1931(b) and (d) of
the Act.
(b) Scope. The agency must provide Medicaid to pregnant women whose
household income is at or below the income standard established by the
agency in its State plan, in accordance with paragraph (c) of this
section.
(c) Income standard. The agency must establish in its State plan
the income standard as follows:
(1) The minimum income standard is the higher of:
(i) 133 percent FPL for a household of the applicable family size;
or
(ii) Such higher income standard up to 185 percent FPL, if any, as
the State had established as of December 19, 1989 for determining
eligibility for pregnant women, or, as of July 1, 1989, had authorizing
legislation to do so.
(2) The maximum income standard is the higher of--
(i) The highest effective income level in effect under the Medicaid
State plan for coverage under the sections specified at paragraph (a)
of this section, or waiver of the State plan covering pregnant women,
as of March 23, 2010 or December 31, 2013, if higher, converted to a
MAGI-equivalent standard in accordance with guidance issued by the
Secretary under section 1902(e)(14)(A) and (E) of the Act; or
(ii) 185 percent FPL.
(d) Covered services.
(1) Pregnant women are covered under this section for the full
Medicaid coverage described in paragraph (d)(2) of this section, except
that the agency may provide only pregnancy-related services described
in paragraph (d)(3) of this section for pregnant women whose income
exceeds the applicable income limit established by the agency in its
State plan, in accordance with paragraph (d)(4) of this section.
(2) Full Medicaid coverage--
(i) Consists of all services which the State is required to cover
under Sec. 440.210(a)(1) of this chapter and all services which it has
opted to cover under Sec. 440.225 of this chapter; and
(ii) May include, at State option, enhanced pregnancy-related
services in accordance with Sec. 440.250(p) of this chapter.
[[Page 51189]]
(3) Pregnancy-related services--
(i) Consist at least of services, as defined by the agency, related
to pregnancy (including prenatal, delivery, postpartum, and family
planning services) and other conditions which may complicate pregnancy;
and
(ii) May include, at State option, enhanced pregnancy-related
services in accordance with Sec. 440.250(p) of this chapter).
(4) Applicable income limit for full Medicaid coverage of pregnant
women. For purposes of paragraph (d)(1) of this section--
(i) The minimum applicable income limit is the State's AFDC income
standard in effect as of May 1, 1988 for a household of the applicable
family size.
(ii) The maximum applicable income limit is the highest effective
income level for coverage under section 1902(a)(10)(A)(i)(III) of the
Act or under section 1931(b) and (d) of the Act in effect under the
Medicaid State plan or waiver of the State plan as of March 23, 2010 or
December 31, 2013, if higher, converted to a MAGI-equivalent standard.
14. Section 435.118 is added to read as follows:
Sec. 435.118 Infants and children under age 19.
(a) Basis. This section implements sections 1902(a)(10)(A)(i)(III),
(IV), (VI), and (VII); 1902(a)(10)(A)(ii)(IV) and (IX); and 1931(b) and
(d) of the Act.
(b) Scope. The agency must provide Medicaid to children under age
19 whose household income is at or below the income standard
established by the agency in its State plan, in accordance with
paragraph (c) of this section.
(c) Income standard.
(1) The minimum income standard is the higher of--
(i) 133 percent FPL for a household of the applicable family size;
or
(ii) For infants under age 1, such higher income standard up to 185
percent FPL, if any, as the State had established as of December 19,
1989 for determining eligibility for infants, or, as of July 1, 1989
had authorizing legislation to do so.
(2) The maximum income standard for each of the age groups of
infants under age 1, children age 1 through age 5, and children age 6
through age 18 is the higher of--
(i) 133 percent FPL;
(ii) The highest effective income level for each age group in
effect under the Medicaid State plan for coverage under the applicable
sections of the Act listed at Sec. 435.118(a), or waiver of the State
plan covering such age group, as of March 23, 2010 or December 31,
2013, if higher, converted to a MAGI-equivalent standard in accordance
with guidance issued by the Secretary under section 1902(e)(14)(A) and
(E) of the Act; or
(iii) For infants under age 1, 185 percent FPL.
15. Revise the undesignated center heading that is before Sec.
435.119 to read as follows:
Mandatory Coverage for Individuals Age 19 through 64
16. Section 435.119 is revised to read as follows:
Sec. 435.119 Coverage for individuals age 19 or older and under age
65 at or below 133 percent FPL.
(a) Basis. This section implements section 1902(a)(10)(A)(i)(VIII)
of the Act.
(b) Eligibility. The agency must provide Medicaid to individuals
who:
(1) Are age 19 or older and under age 65;
(2) Are not pregnant;
(3) Are not entitled to or enrolled for Medicare benefits under
part A or B of title XVIII of the Act;
(4) Are not otherwise eligible for and enrolled for mandatory
coverage under a State's Medicaid State plan in accordance with subpart
B of this part; and
(5) Have household income that is at or below 133 percent FPL for a
household of the applicable family size.
(c) Coverage for dependent children.
(1) A State may not provide Medicaid to a parent or other caretaker
relative living with a dependent child if the child is under the age
specified in paragraph (c)(2) of this section, unless such child is
receiving benefits under Medicaid, the Children's Health Insurance
Program under subchapter D of this chapter, or otherwise is enrolled in
other minimum essential coverage as defined in Sec. 435.4 of this
part.
(2) For the purpose of paragraph (c)(1) of this section, the age
specified is under age 19, unless the State had elected as of March 23,
2010 to provide Medicaid to individuals under age 20 or 21 under Sec.
435.222 of this part, in which case the age specified is such higher
age.
Subpart C--Options for Coverage
17. The heading for subpart C is revised to read as set forth
above.
18. Section 435.218 is added to read as follows:
Sec. 435.218 Individuals above 133 percent FPL.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(XX)
of the Act.
(b) Eligibility.
(1) Criteria. The agency may provide Medicaid to individuals who:
(i) Are under age 65;
(ii) Are not eligible for and enrolled for mandatory coverage under
a State's Medicaid State plan in accordance with subpart B of this
part;
(iii) Are not otherwise eligible for and enrolled for optional
coverage under a State's Medicaid State plan in accordance with subpart
C of this part, based on information available to the State from the
application filed by or on behalf of the individual; and
(iv) Have household income that exceeds 133 percent FPL, but is at
or below the income standard elected by the agency and approved in its
Medicaid State plan, for a household of the applicable family size.
(2) Limitations.
(i) A State may not, except as permitted under an approved phase-in
plan adopted in accordance with paragraph (b)(3) of this section,
provide Medicaid to higher income individuals described in paragraph
(b)(1) of this section without providing Medicaid to lower income
individuals described in such paragraph.
(ii) The limitation on coverage of parents and other caretaker
relatives specified in Sec. 435.119(c) also applies to coverage under
this section.
(3) Phase-in plan. A State may phase in coverage to all individuals
described in paragraph (b)(1) of this section under a phase-in plan
submitted in a State plan amendment to and approved by the Secretary.
Subpart E--General Eligibility Requirements
19. Section 435.403 is amended by--
A. Redesignating paragraphs (h) and (i) as paragraphs (i) and (h),
respectively.
B. Revising newly redesignated paragraphs (h)(1) and (h)(4)
C. Revising newly redesignated paragraphs (i)(1) and (i)(2).
D. Removing newly redesignated paragraph (i)(3).
E. Further redesignating newly redesignated paragraph (i)(4) as
paragraph (i)(3).
F. Amending paragraph (l)(2) by removing ``paragraph (h)'' and
adding ``paragraph (i)'' in its place.
The revisions and addition read as follows:
Sec. 435.403 State residence.
* * * * *
(h) Individuals age 21 and over.
(1) For an individual not residing in an institution as defined in
paragraph (b) of this section, the State of residence is the State
where the individual--
(i) Intends to reside, including without a fixed address or, if
incapable
[[Page 51190]]
of stating intent, where the individual is living; or
(ii) Has entered the State with a job commitment or seeking
employment (whether or not currently employed).
* * * * *
(4) For any other institutionalized individual, the State of
residence is the State where the individual intends to reside or, if
incapable of stating intent, where the individual is living.
(i) Individuals under age 21.
(1) For an individual under age 21 who is capable of indicating
intent and who is emancipated from his or her parent or who is married,
the State of residence is determined in accordance with paragraph
(h)(1) of this section.
(2) For an individual under age 21 not described in paragraph
(i)(1) of this section, not living in an institution as defined in
paragraph (b) of this section and not eligible for Medicaid based on
receipt of assistance under title IV-E of the Act, as addressed in
paragraph (g) of this section, the State of residence is the State:
(i) Where the individual resides, including with a custodial parent
or caretaker or without a fixed address; or
(ii) Where the individual's parent or caretaker has entered the
State with a job commitment or seeking employment (whether or not
currently employed).
* * * * *
Subpart G--General Financial Eligibility Requirements and Options
20. Section 435.603 is added to read as follows:
Sec. 435.603 Application of modified adjusted gross income (MAGI).
(a) Basis, scope, and implementation.
(1) This section implements section 1902(e)(14) of the Act.
(2) Effective January 1, 2014, the agency must apply the financial
methodologies set forth in this section in determining the financial
eligibility of all individuals for Medicaid, except for individuals
identified in paragraph (i) of this section and as provided in
paragraph (a)(3) of this section.
(3) In the case of determining ongoing eligibility for
beneficiaries determined eligible for Medicaid on or before December
31, 2013 and receiving Medicaid as of January 1, 2014, application of
the financial methodologies set forth in this section must not be
applied until March 31, 2014 or the next regularly-scheduled
redetermination of eligibility for such individual under Sec. 435.916,
whichever is later, if the individual otherwise would lose eligibility
as a result of the application of these methodologies.
(b) Definitions. For purposes of this section--
Code means the Internal Revenue Code of 1986.
Family size means the number of persons counted as members of an
individual's household. In the case of determining the family size of a
pregnant woman, the pregnant woman is counted as 2 persons. In the case
of determining the family size of other individuals who have a pregnant
woman in their household, the pregnant woman is counted, at State
option, as either 1 or 2 person(s).
Tax dependent has the meaning provided in Sec. 435.4 of this part.
(c) Basic rule. Except as specified in paragraph (i) of this
section, the agency must determine financial eligibility for Medicaid
based on ``household income'' as defined in paragraph (d) of this
section.
(d) Household income.
(1) Except as provided in paragraphs (d)(2) and (d)(3) of this
section, household income is the sum of the MAGI-based income, as
defined in paragraph (e) of this section, of every individual included
in the individual's household, minus an amount equivalent to 5
percentage points of the Federal poverty level for the applicable
family size.
(2) The MAGI-based income of an individual who is included in the
household of his or her natural, adopted or step parent and is not
required to file a tax return under section 6012 of the Code for the
taxable year in which eligibility for Medicaid is being determined, is
not included in household income whether or not the individual files a
tax return.
(3) In the case of individuals described in paragraph (f)(2)(i) of
this section, household income also includes actually available cash
support provided by the person claiming such individual as a tax
dependent.
(e) MAGI-based income. For the purposes of this section, MAGI-based
income means income calculated using the same financial methodologies
used to determine modified adjusted gross income as defined in section
36B(d)(2)(B) of the Code, except that, notwithstanding the treatment of
the following under the Code--
(1) An amount received as a lump sum is counted as income only in
the month received.
(2) Scholarships or fellowship grants used for education purposes
and not for living expenses are excluded from income.
(3) American Indian/Alaska Native exceptions. The following are
excluded from income:
(i) Distributions from Alaska Native Corporations and Settlement
Trusts;
(ii) Distributions from any property held in trust, or that is
subject to Federal restrictions, or otherwise under the supervision of
the Secretary of the Interior.
(iii) Distributions resulting from real property ownership
interests related to natural resources and improvements--
(A) Located on or near a reservation or within the most recent
boundaries of a prior Federal reservation; or
(B) Resulting from the exercise of Federally-protected rights
relating to such real property ownership interests;
(iv) Payments resulting from ownership interests in or usage rights
to items that have unique religious, spiritual, traditional, or
cultural significance or rights that support subsistence or a
traditional lifestyle according to applicable Tribal Law or custom;
(v) Student financial assistance provided under the Bureau of
Indian Affairs education programs.
(f) Household.
(1) Basic rule for taxpayers not claimed as a tax dependent. In the
case of an individual filing a tax return for the taxable year in which
an initial determination or redetermination of eligibility is being
made, and who is not claimed as a tax dependent by another taxpayer,
the household consists of the taxpayer and all tax dependents.
(2) Basic rule for individuals claimed as a tax dependent. In the
case of an individual who is claimed as a tax dependent by another
taxpayer, the household is the household of the taxpayer claiming such
individual as a tax dependent, except that the household must be
determined in accordance with paragraph (f)(3) of this section in the
case of--
(i) Individuals other than a spouse or a biological, adopted or
step child who are claimed as a tax dependent by another taxpayer;
(ii) Individuals under age 21 living with both parents, if the
parents are not married; and
(iii) Individuals under age 21 claimed as a tax dependent by a non-
custodial parent.
(3) Rules for individuals who neither file a tax return nor are
claimed as a tax dependent. In the case of individuals who do not file
a Federal tax return and are not claimed as a tax dependent, the
household consists of the individual and, if living with the
individual--
(i) The individual's spouse;
(ii) The individual's natural, adopted and step children under age
19 or, if such child is a full-time student, under age 21; and
[[Page 51191]]
(iii) In the case of individuals under age 19, or, in the case of
full-time students, under age 21 the individual's natural, adopted and
step parents and adoptive and step siblings under age 19 or, if such
sibling is a full-time student, under age 21.
(4) Married couples. In the case of a married couple living
together, each spouse will be included in the household of the other
spouse, regardless of whether they file a joint tax return under
section 6013 of the Code or whether one spouse is claimed as a tax
dependent by the other spouse.
(g) No resource test or income disregards. In the case of
individuals whose financial eligibility for Medicaid is determined in
accordance with this section, the agency must not--
(1) Apply any assets or resources test; or
(2) Apply any income or expense disregards under sections
1902(r)(2) or 1931(b)(2)(C), or otherwise under title XIX, of the Act.
(h) Budget period.
(1) Applicants and new enrollees. Financial eligibility for
Medicaid for applicants and other individuals not receiving Medicaid
benefits at the point at which eligibility for Medicaid is being
determined must be based on current monthly household income and family
size.
(2) Current beneficiaries. For individuals who have been determined
financially-eligible for Medicaid using the MAGI-based methods set
forth in this section, a State may elect in its State plan to base
financial eligibility either on current monthly household income and
family size or projected annual household income for the current
calendar year.
(3) In determining current monthly or projected annual household
income under paragraph (h)(1) or (h)(2) of this section, the agency may
adopt a reasonable method to include a prorated portion of reasonably
predictable future income, to account for a reasonably predictable
decrease in future income, or both, as evidenced by a signed contract
for employment, a clear history of predictable fluctuations in income,
or other clear indicia of such future changes in income. Such future
increase or decrease in income must be verified in the same manner as
other income, in accordance with the income and eligibility
verification requirements at Sec. 435.940 et seq., including by self-
attestation if reasonably compatible with other electronic data
obtained by the agency in accordance with such sections.
(i) Eligibility Groups for which modified MAGI-based methods do not
apply. The financial methodologies described in this section are not
applied in determining the eligibility for individuals whose
eligibility for Medicaid is being determined on the following bases or
under the following eligibility groups. For individuals described in
paragraphs (i)(3) through (i)(6) of this section, the agency must use
the financial methods described in Sec. 435.601 and Sec. 435.602 of
this subpart.
(1) Individuals whose eligibility for Medicaid does not require a
determination of income by the State Medicaid agency, including, but
not limited to, individuals deemed to be receiving Supplemental
Security Income (SSI) benefits and eligible for Medicaid under Sec.
435.120, individuals receiving SSI benefits and eligible for Medicaid
under Sec. 435.135, Sec. 435.137 or Sec. 435.138 of this subpart and
individuals for whom the State relies on a finding of income made by an
Express Lane agency, in accordance with section 1902(e)(13) of the Act.
(2) Individuals who are age 65 or older.
(3) Individuals whose eligibility is being determined on the basis
of being blind or disabled, or on the basis of being treated as being
blind or disabled, including, but not limited to, individuals eligible
under Sec. 435.121, Sec. 435.232 or Sec. 435.234 of this part or
under section 1902(e)(3) of the Act.
(4) Individuals whose eligibility is being determined on the basis
of the need for long-term care services, including nursing facility
services or a level of care in any institution equivalent to such
services; home and community-based services under section 1915 or under
a demonstration under section 1115 of the Act; or services described in
sections 1905(a)(7) or (24) or in sections 1905(a)(22) and 1929 of the
Act.
(5) Individuals who are being evaluated for eligibility for
Medicare cost sharing assistance under section 1902(a)(10)(E) of the
Act, but only for purposes of determining eligibility for such
assistance.
(6) Individuals who are being evaluated for coverage as medically
needy under subparts D and I of this part.
Subpart J--Eligibility in the States and District of Columbia
Applications
21. Section 435.905 is revised to read as follows:
Sec. 435.905 Availability of program information.
(a) The agency must furnish the following information in electronic
and paper formats, and orally as appropriate, to all applicants and
other individuals who request it:
(1) The eligibility requirements;
(2) Available Medicaid services; and
(3) The rights and responsibilities of applicants and
beneficiaries.
(b) Such information must be provided in simple and understandable
terms and in a manner that is accessible to persons who are Limited
English Proficient (LEP) and individuals living with disabilities.
22. Section 435.907 is revised to read as follows:
Sec. 435.907 Application.
(a) The agency must require an application from the applicant, an
authorized representative, or someone acting responsibly for the
applicant.
(b) The application must be--
(1) The single, streamlined application for all insurance
affordability programs developed by the Secretary in accordance with
section 1413(b)(1)(A) of the Affordable Care Act; or
(2) An alternative single, streamlined application for all
insurance affordability programs developed by a State and approved by
the Secretary in accordance with section 1413(b)(1)(B) of the
Affordable Care Act. The alternative application must be no more
burdensome than the single streamlined application described in
paragraph (b)(1) of this section and ensure coordination across
insurance affordability programs.
(c) For individuals applying for coverage, or who may be eligible,
on a basis other than the applicable modified adjusted gross income
standard in accordance with Sec. 435.911, the agency may use either
the single, streamlined application and supplemental forms to collect
additional information needed to determine eligibility on such other
basis or an alternative application form approved by the Secretary.
(d) The agency must establish procedures to enable an individual,
or other authorized person acting on behalf of the individual, to
submit an application--
(1) Via the Internet Web site described in Sec. 435.1200(d) of
this part;
(2) By telephone;
(3) Via mail;
(4) In person; or
(5) Via facsimile.
(e) Information related to non-applicants.
(1) The agency may not require an individual who is not applying
for benefits for himself or herself (a ``non-applicant'') to provide an
SSN or information regarding such individual's citizenship,
nationality, or immigration
[[Page 51192]]
status on any application or supplemental form.
(2) The agency may request that a household member who is a non-
applicant provide an SSN, only if--
(i) Provision of the SSN to the agency is voluntary and the agency
permits the completion of the application without such information;
(ii) The SSN from a non-applicant is used to determine an
applicant's eligibility for Medicaid or for a purpose directly
connected to the administration of the State plan; and
(iii) The agency clearly notifies the non-applicant that the
provision of an SSN is voluntary and informs the individual how the SSN
will be used, at the time it is requested.
(f) The initial application must be signed under penalty of
perjury. Electronic, including telephonically recorded, signatures and
handwritten signatures transmitted by fascimile or other electronic
transmission must be accepted.
23. Section 435.908 is revised to read as follows:
Sec. 435.908 Assistance with application and redetermination.
(a) The agency must allow individual(s) of the applicant or
beneficiary's choice to assist in the application process or during a
redetermination of eligibility.
(b) The agency must provide assistance to any individual seeking
help with the application or redetermination process in person, over
the telephone, and online, and in a manner that is accessible to
individuals with disabilities and those who are limited English
proficient.
24. Redesignate Sec. 435.911 through Sec. 435.914 as Sec.
435.912 through Sec. 435.915 respectively.
25. Add new Sec. 435.911 to read as follows:
Sec. 435.911 Determination of eligibility.
(a) Statutory basis. This section implements sections 1902(a)(4),
(a)(8), (a)(10)(A), (a)(19), and (e)(14) and section 1943 of the Act.
(b)(1) Applicable modified adjusted gross income standard means 133
percent of the Federal poverty level or, if higher--
(i) In the case of parents and other caretaker relatives described
in Sec. 435.110(b), the income standard established in accordance with
Sec. 435.110(c);
(ii) In the case of pregnant women, the income standard established
in accordance with Sec. 435.116(c);
(iii) In the case of individuals under age 19, the income standard
established in accordance with Sec. 435.118(c);
(iv) The income standard established under Sec. 435.218(b)(1)(iv)
of this part, if the State has elected to provide coverage under such
section and, if applicable, coverage under the State's phase-in plan
has been implemented for the individual whose eligibility is being
determined.
(2) [Reserved]
(c) For each individual who has submitted an application described
Sec. 435.907 and who meets the non-financial requirements for
eligibility (or for whom the agency is providing a reasonable
opportunity to provide documentation of citizenship or immigration
status, in accordance with sections 1903(x), 1902(ee) or 1137(d) of the
Act), the State Medicaid Agency must comply with the following--
(1) Eligibility determination for mandatory coverage on basis of
modified adjusted gross income. For each such individual who is under
age 19, pregnant, or age 19 or older and under age 65 and not entitled
to or enrolled for Medicare benefits under part A or B or title XVIII
of the Act, and whose household income is at or below the applicable
modified adjusted gross income standard, the agency must promptly and
without undue delay furnish Medicaid benefits to such individual in
accordance with parts 440 and 441 of this chapter.
(2) Eligibility on basis other than applicable modified adjusted
gross income standard. For each such individual not determined eligible
for Medicaid in accordance with paragraph (c)(1) of this section, the
agency must collect additional information as needed, consistent with
Sec. 435.907(c), to--
(i) Determine whether such individual is eligible for Medicaid on
any other basis.
(ii) Promptly and without undue delay furnish Medicaid to each such
individual determined eligible, in accordance with parts 440 and 441 of
this chapter; and
(iii) Comply with the requirements set forth in Sec. 435.1200(g).
26. Section 435.916 is revised to read as follows:
Sec. 435.916 Periodic redeterminations of Medicaid eligibility.
(a) Redetermination of individuals whose Medicaid eligibility is
based on modified adjusted gross income.
(1) Except as provided in paragraph (d) of this section, the
eligibility of Medicaid beneficiaries whose financial eligibility is
based on the applicable modified adjusted gross income standard in
accordance with Sec. 435.911(c)(1)must be redetermined once every 12
months.
(2) The agency must make a redetermination of eligibility without
requiring information from the individual if able to do so based on
reliable information contained in the individual's account or other
more current information available to the agency, including but not
limited to information accessed through any data bases accessed by the
agency under Sec. 435.948, Sec. 435.949 and Sec. 435.956 of this
part.
(i) Individuals redetermined eligible on the basis of information
available to the agency.
(A) If the agency determines, on the basis of information available
to the agency that the individual remains eligible for Medicaid,
consistent with the requirements of this subpart and subpart E of part
431 the agency must notify the individual--
(1) Of the eligibility determination, and basis therefore; and
(2) That the individual must inform the agency, through any of the
modes permitted for submission of applications under Sec. 435.907(d)
of this subpart, if any of the information contained in such notice is
inaccurate.
(B) Such individuals must not be required to sign and return the
notice.
(ii) Individuals not redetermined eligible on basis of information
available to agency. If the agency cannot determine, on the basis of
information available to it, that the individual remains eligible for
Medicaid, or if it otherwise needs additional information to complete
the redetermination, the agency must comply with the requirements in
paragraph (a)(3) of this section.
(3) Use of a pre-populated renewal form. For individuals not
redetermined eligible under paragraph (a)(2) of this section, the
agency must--
(i) Provide the individual with--
(A) A renewal form containing information available to the agency
that is needed to renew eligibility, as specified by the Secretary;
(B) At least 30 days from the date of the renewal form to respond
and provide necessary information;
(C) Notice of the agency's decision concerning eligibility in
accordance with this subpart and subpart E of part 431 of this chapter;
and
(D) The ability to respond to the renewal form through any of the
modes permitted for submission of applications under Sec. 435.907(d),
and if required, sign the renewal electronically.
(ii) Verify any information provided by the beneficiary in
accordance with Sec. 435.945 through Sec. 435.956.
[[Page 51193]]
(iii) Reconsider in a timely manner the eligibility of an
individual who is terminated for failure to respond to the renewal
form, if the individual subsequently responds to the agency within a
reasonable period after the date of termination without the need for
the individual to file a new application.
(4) Transmission of data on individuals no longer eligible for
Medicaid. If an individual is determined ineligible for Medicaid, the
agency must assess the individual for eligibility for other insurance
affordability programs and transmit the electronic account and any
relevant information used to make the eligibility determination to the
appropriate program in accordance with the requirements set forth in
Sec. 435.1200(g) of this part.
(b) Redetermination of individuals whose Medicaid eligibility is
determined on a basis other than modified adjusted gross income. The
agency must redetermine the eligibility of Medicaid beneficiaries
excepted from modified adjusted gross income under Sec. 435.603(i) of
this part, for circumstances that may change, at least every 12 months.
The agency may--
(1) Consider blindness as continuing until the reviewing physician
under Sec. 435.531 of this part determines that a beneficiary's vision
has improved beyond the definition of blindness contained in the plan;
and
(2) Consider disability as continuing until the review team, under
Sec. 435.541 of this part, determines that a beneficiary's disability
no longer meets the definition of disability contained in the plan.
(c) Procedures for reporting changes. The agency must have
procedures designed to ensure that beneficiaries make timely and
accurate reports of any change in circumstances that may affect their
eligibility and that such changes may be reported in accordance with
the modes required for submission of applications under Sec.
435.907(d) of this subpart.
(d) Agency action on information about changes. Consistent with the
requirements of Sec. 435.952 of this subpart--
(1) The agency must promptly redetermine eligibility when it
receives information about changes in a beneficiary's circumstances
that may affect his or her eligibility.
(2) If the agency has information about anticipated changes in a
beneficiary's circumstances that may affect his or her eligibility, it
must redetermine eligibility at the appropriate time based on such
changes.
27. Section 435.940 is revised to read as follows:
Sec. 435.940 Basis and scope.
The income and eligibility verification requirements set forth at
Sec. 435.940 through Sec. 435.960 of this subpart are based on
sections 1137, 1902(a)(4), 1902(a)(19), 1903(r)(3) and 1943(b)(3) of
the Act and section 1413 of the Affordable Care Act.
28. Section 435.945 is revised to read as follows:
Sec. 435.945 General requirements.
(a) Nothing in these regulations in this subpart should be
construed as limiting the State's program integrity measures or
affecting the State's obligation to ensure that only eligible
individuals receive benefits, consistent with part 455 of this
subchapter.
(b) Except with respect to citizenship and immigration status
information, and subject to the verification requirements set forth in
this subpart, the agency may accept attestation without requiring
further paper documentation (either self-attestation by the applicant
or beneficiary or by a parent, caretaker or other person acting
responsibly on behalf of an applicant or beneficiary) of all
information needed to determine the eligibility of an applicant or
beneficiary for Medicaid.
(c) The agency must request and use information relevant to
verifying an individual's eligibility for Medicaid in accordance with
Sec. 435.948 through Sec. 435.956 of this subpart.
(d) The agency must furnish, in a timely manner, income and
eligibility information needed for verifying eligibility for the
following programs:
(1) To other agencies in the State and other States and to the
Federal programs both listed in Sec. 435.948(a) of this subpart and
identified in section 1137(b) of the Act;
(2) Other insurance affordability programs;
(3) The child support enforcement program under part D of title IV
of the Act; and
(4) SSA for OASDI under title II and for SSI benefits under title
XVI of the Act.
(e) The agency must, as required under section 1137(a)(7) of the
Act, and upon request, reimburse another agency listed in Sec.
435.948(a) of this subpart or paragraph (d) of this section for
reasonable costs incurred in furnishing information, including new
developmental costs associated with furnishing the information to
another agency.
(f) Prior to requesting information for an applicant or beneficiary
from another agency or program under this subpart, the agency must
inform the individual that the agency will obtain and use information
available to it under this subpart to verify income and eligibility or
for other purposes directly connected to the administration of the
State plan.
(g) The agency must report information as prescribed by the
Secretary for purposes of determining compliance with Sec. 431.305,
subpart P of part 431, Sec. 435.910, Sec. 435.913, and Sec. 435.940
through Sec. 435.965 of this chapter and of evaluating the
effectiveness of the income and eligibility verification system.
(h) Information exchanged electronically between the State Medicaid
agency and any other agency or program must be sent and received via
secure electronic interfaces as defined in Sec. 435.4 of this part.
(i) The agency must execute written agreements with other agencies
before releasing data to, or requesting data from, those agencies. Such
agreements must provide for appropriate safeguards limiting the use and
disclosure of information as required by Federal or State law or
regulations.
29. Section 435.948 is revised to read as follows:
Sec. 435.948 Verifying financial information.
(a) The agency must request information relating to financial
eligibility from other agencies in the State and other States and
Federal programs in accordance with this section. To the extent the
agency determines such information is useful to verifying the financial
eligibility of an individual, the agency must request:
(1) Information related to wages, net earnings from self-
employment, unearned income and resources from the State Wage
Information Collection Agency (SWICA), the Internal Revenue Service,
the Social Security Administration, the agencies administering the
State unemployment compensation laws, the State-administered
supplementary payment programs under section 1616(a) of the Act, and
any State program administered under a plan approved under Titles I, X,
XIV, or XVI of the Act; and
(2) Information related to eligibility or enrollment from the
Public Assistance Reporting Information System (PARIS), the
Supplemental Nutrition Assistance Program, and other insurance
affordability programs.(Note: all eligibility determination systems
must conduct data matching through PARIS).
(b) To the extent that the information identified in paragraph (a)
is available through the electronic service established in accordance
with Sec. 435.949 of this subpart, the agency
[[Page 51194]]
must obtain the information through such service.
(c)(1) If the information identified in paragraph (a) of this
section is not available through the electronic service established in
accordance with Sec. 435.949 of this subpart, the agency may obtain
the information directly from the appropriate agency or program
consistent with the requirements in Sec. 435.945 of this subpart.
(2) The agency must request the information by SSN, or if a SSN is
not available, using other personally identifying information in the
individual's account, if possible.
(d) Flexibility in information collection and verification. Subject
to approval by the Secretary, the agency may request and use income
information from a source or sources alternative to those listed in
paragraph (a) of this section provided that such alternative source
will reduce the administrative costs and burdens on individuals and
States while maximizing accuracy, minimizing delay, meeting applicable
requirements relating to the confidentiality, disclosure, maintenance,
or use of information, and promoting coordination with other insurance
affordability programs.
30. Section 435.949 is added to read as follows:
Sec. 435.949 Verification of information through an electronic
service.
(a) The Secretary will establish an electronic service through
which States may verify certain information with, or obtain such
information from, Federal agencies, including the Social Security
Administration, the Department of Treasury, the Department of Homeland
Security and any other Federal offices that maintain records containing
information related to eligibility for Medicaid or other minimum
essential coverage.
(b) To the extent that information is available through the
electronic service established by the Secretary, States must obtain the
information through such service, subject to the requirements in
subpart C of part 433 of this chapter.
(c) The Secretary may provide for, or approve a request from a
State to utilize, an alternative mechanism through which States may
collect and verify such information, if the Secretary determines that
such alternative mechanism meets the criteria set forth in Sec.
435.948(d) of this subpart.
31. Section 435.952 is revised to read as follows:
Sec. 435.952 Use of information and requests of additional
information from individuals.
(a) The agency must promptly evaluate information received or
obtained by it in accordance with regulations under Sec. 435.940
through Sec. 435.960 of this subpart to determine whether such
information may affect the eligibility of an individual or the benefits
to which he or she is entitled.
(b) If information provided by or on behalf of an individual (on
the application or renewal form or otherwise) is reasonably compatible
with information obtained by the agency in accordance with Sec.
435.948, Sec. 435.949 or Sec. 435.956 of this subpart, the agency
must determine or redetermine eligibility based on such information.
(c) An individual must not be required to provide additional
information or documentation unless information needed by the agency in
accordance with Sec. 435.948, Sec. 435.949 or Sec. 435.956 of this
subpart cannot be obtained electronically or the information obtained
electronically is not reasonably compatible with information provided
by or on behalf of the individual.
(1) In such cases, the agency may seek additional information,
including a statement which reasonably explains the discrepancy or
other additional information (including paper documentation), from the
individual.
(2) The agency must provide the individual a reasonable period to
furnish such additional information.
(d) The agency may not deny or terminate eligibility or reduce
benefits for any individual on the basis of information received in
accordance with regulations under Sec. 435.940 through Sec. 435.960
of this subpart unless the agency has sought additional information
from the individual in accordance with paragraph (c) of this section,
and provided proper notice and hearing rights to the individual in
accordance with this subpart and subpart E of part 431.
Sec. 435.953 [Removed]
32. Section 435.953 is removed.
Sec. 435.955 [Removed]
33. Section 435.955 is removed.
34. Section 435.956 is added to read as follows:
Sec. 435.956 Verification of other non-financial information.
(a) [Reserved]
(b) [Reserved]
(c) State residency.
(1) The agency may verify State residency in accordance with Sec.
435.945(b) of this subpart or through other reasonable verification
procedures consistent with the requirements in Sec. 435.952 of this
subpart.
(2) A document that provides evidence of immigration status may not
be used alone to determine State residency.
(d) Social Security numbers. The agency must verify Social
Ssecurity numbers (SSNs) in accordance with Sec. 435.910(f) and (g) of
this subpart.
(e) Pregnancy and household size. The agency must accept self-
attestation of pregnancy and the individuals that comprise an
individual's household, as defined in 435.603(f), unless the state has
information that is not reasonably compatible with such attestation,
subject to the requirements of Sec. 435.952 of this subpart.
(f) Age and date of birth. The agency may verify date of birth in
accordance with Sec. 435.945(b) of this subpart or through other
reasonable verification procedures consistent with the requirements in
Sec. 435.952 of this subpart.
35. Subpart M is added to read as follows:
Subpart M--Coordination of Eligibility and Enrollment Between
Medicaid, CHIP, Exchanges and Other Insurance Affordability
Programs
Sec. 435.1200 Medicaid agency responsibilities.
(a) Statutory basis. This section implements sections 1943 and
2102(b)(3)(B) and (c)(2) of the Act.
(b) Definitions. As used in this subpart:
Applicable modified adjusted gross income (MAGI) standard is
defined as provided in Sec. 435.911(b)(1) of this part.
Application means the single streamlined application described in
Sec. 435.907(b) submitted by or on behalf of an individual.
Exchange is defined as provided in Sec. 435.4 of this part.
Insurance Affordability Program is defined as provided in Sec.
435.4 of this part.
Secure electronic interface is defined as provided in Sec. 435.4
of this part.
(c) General requirements. The State Medicaid Agency must --
(1) Participate in and comply with the coordinated eligibility and
enrollment system described in section 1943 of the Act to ensure that
the agency fulfills the responsibilities set forth in paragraphs (e)
through (g) of this section in partnership with other insurance
affordability programs.
(2) Consistent with Sec. 431.10(d) of this chapter, enter into one
or more agreements with the Exchange and the
[[Page 51195]]
agencies administering other insurance affordability programs, as
defined in Sec. 435.4 of this part, as are necessary to fulfill each
of the requirements of this section.
(3) In accordance with the Medicaid State plan, certify the
criteria, including but not limited to applicable MAGI standards as
defined in Sec. 435.911(b) of this subpart and satisfactory
immigration status, necessary for the Exchange to determine Medicaid
eligibility.
(d) Internet Web site. The State Medicaid agency must make
available to current and prospective Medicaid applicants and
beneficiaries a Web site that:
(1) Supports applicant and beneficiary activities, including
accessing information on the insurance affordability programs available
in the State, applying for and renewing coverage, and other activities
as appropriate; and
(2) Is accessible to people with disabilities in accordance with
the Americans with Disabilities Act and section 504 of the
Rehabilitation Act and provides meaningful access for persons who are
limited English proficient.
(e) Provision of Medicaid for individuals found eligible for
Medicaid by the Exchange. For each individual found eligible for
Medicaid by the Exchange based on the applicable MAGI standard, the
agency must establish procedures--
(1) To receive, via secure electronic interface, the electronic
account containing the finding of Medicaid eligibility, all information
provided on the application, and any information obtained or verified
by the Exchange in making such finding; and
(2) To furnish Medicaid to the individual promptly and without
undue delay in accordance with parts 440 and 441 of this chapter, to
the same extent and in the same manner as if such individual had been
determined eligible for Medicaid by the agency.
(f) Transfer of applications from other insurance affordability
programs to the State Medicaid agency. The agency must adopt procedures
to ensure that it promptly and without undue delay determines the
Medicaid eligibility of individuals determined to be potentially
eligible for Medicaid by other insurance affordability programs. The
procedures must ensure that--
(1) The agency accepts, via secure electronic interface, the
electronic account for the individual screened as potentially Medicaid
eligible, including all information provided on the application and any
information obtained or verified by the insurance affordability
program;
(2) The agency may not request information or documentation from
the individual that is already contained in the electronic account;
(3) The agency determines the Medicaid eligibility of the
individual, promptly and without undue delay, in accordance with Sec.
435.911(c) of this part in the same manner as if the application had
been submitted directly to, and processed by, the agency, except that
the agency must not verify eligibility criteria already verified by the
insurance affordability program.
(4) The agency notifies the insurance affordability program of the
final determination of the individual's eligibility or ineligibility
for Medicaid.
(g) Evaluation of eligibility for the Exchanges and other insurance
affordability programs.
(1) Individuals determined not eligible for Medicaid. For
individuals who submit an application which includes sufficient
information to determine Medicaid eligibility, and whom the agency
determines are not eligible for Medicaid, the agency must establish
procedures to assess such individuals for potential eligibility for
other insurance affordability programs and promptly and without undue
delay transfer such individuals' electronic accounts to any other
program(s) for which they may be eligible. The electronic account must
include all information provided on the application and any information
obtained or verified by the agency, including the determination of
Medicaid ineligibility.
(2) Individuals undergoing a Medicaid eligibility determination on
a basis other than MAGI. In the case of an individual with household
income, as defined in Sec. 435.603(d) of this part, greater than the
applicable MAGI standard and for whom the agency is determining
eligibility on the basis of being blind or disabled, the agency must
establish procedures to--
(i) Assess the individual for potential eligibility for coverage
under other insurance affordability programs and, promptly and without
undue delay, provide the individual's electronic account to any such
program for which the individual may be eligible. The electronic
account must be transmitted via secure electronic interface and must
include all information provided on the application and any information
obtained or verified by the agency, along with the determination that
the individual is not Medicaid eligible on the basis of the applicable
MAGI standard, but that a final determination of Medicaid eligibility
is still pending; and
(ii) Notify the appropriate insurance affordability program(s) of
the agency's final determination of eligibility or ineligibility.
PART 457--ALLOTMENTS AND GRANTS TO STATES
36a. The authority citation for part 457 continues to read as
follows:
Authority: Section 1102 of the Social Security Act (42 U.S.C.
1302).
36b. In part 457, remove the term ``family income'' wherever it
appears and add in its place the term ``household income.''
37. In part 457 remove ``SCHIP'' wherever it appears and add in its
place ``CHIP.''
Subpart A--Introduction; State Plans for Child Health Insurance
Programs and Outreach Strategies
38. Section Sec. 457.10 is amended by--
A. Removing the definition of ``Medicaid applicable income level.''
B. Adding the following definitions in alphabetical order:
``Affordable Insurance Exchange (Exchange),'' ``Electronic account,''
``Household income,'' ``Insurance affordability program,'' ``Secure
electronic interface,'' and ``Single, streamlined application.''
The additions read as follows:
Sec. 457.10 Definitions and use of terms.
* * * * *
Affordable Insurance Exchange (Exchange) is defined as provided in
Sec. 435.4 of this chapter.
* * * * *
Electronic account means an electronic file that includes all
information collected and generated by the State regarding each
individual's CHIP eligibility and enrollment, including all
documentation required under Sec. 457.380 of this part.
* * * * *
Household income is defined as provided in Sec. 435.603(d) of this
chapter.
Insurance affordability program is defined as provided in Sec.
435.4 of this chapter.
* * * * *
Secure electronic interface is defined as provided in Sec. 435.4
of this chapter.
* * * * *
Single, streamlined application means the single, streamlined
application form that is used by the State in accordance with Sec.
435.907(b) of this chapter and 45 CFR 155.405 for individuals to apply
for coverage for all insurance affordability programs.
* * * * *
[[Page 51196]]
39. Section Sec. 457.80 is amended by revising paragraph (c)(3) to
read as follows:
Sec. 457.80 Current State child health insurance coverage and
coordination.
* * * * *
(c) * * *
(3) Ensure coordination with other insurance affordability programs
in the determination of eligibility and enrollment in coverage to
ensure that there are no unnecessary gaps in coverage, including
through use of the procedures described in Sec. 457.305, Sec. 457.350
and Sec. 457.353.
Subpart C--State Plan Requirements: Eligibility, Screening,
Applications, and Enrollment
40. Section 457.300 is amended by--
A. Republishing paragraph (a) introductory text.
B. Adding paragraphs (a)(4) and (a)(5).
C. Revising paragraph (c).
The addition and revision reads as follows:
Sec. 457.300 Basis, scope, and applicability.
(a) Statutory basis. This subpart interprets and implements--
* * * * *
(4) Section 2107(e)(1)(O) of the Act, which relates to coordination
of CHIP with the Exchanges and the State Medicaid agency.
(5) Section 2107(e)(1)(F) of the Act, which relates to income
determined based on modified adjusted gross income.
* * * * *
(c) Applicability. The requirements of this subpart apply to child
health assistance provided under a separate child health program.
Regulations relating to eligibility, screening, applications and
enrollment that are applicable to a Medicaid expansion program are
found at Sec. 435.4, Sec. 435.229, Sec. 435.905 through Sec.
435.908, Sec. 435.1102, Sec. 435.940 through Sec. 435.958, Sec.
435.1200, Sec. 436.3, Sec. 436.229, and Sec. 436.1102 of this
chapter.
41. Section 457.301 is amended by--
A. Adding the definitions of ``Family size'' and ``Medicaid
applicable income level'' in alphabetical order.
B. Removing the definition of ``Joint application.''
The additions read as follows:
Sec. 457.301 Definitions and use of terms.
* * * * *
Family size is defined as provided in Sec. 435.603(b) of this
chapter.)
Medicaid applicable income level means, for a child, the effective
income level (expressed as a percentage of the Federal poverty level
and converted to a modified adjusted gross income equivalent level in
accordance with guidance issued by the Secretary under section
1902(e)(14)(A) and (E) of the Act) specified under the policies of the
State plan under title XIX of the Act (including for these purposes, a
section 1115 waiver authorized by the Secretary or under the authority
of section 1902(r)(2) of the Act) as of March 31, 1997 for the child to
be eligible for Medicaid under either section 1902(l)(2) or 1905(n)(2)
of the Act.
* * * * *
42. Section 457.305 is revised to read as follows:
Sec. 457.305 State plan provisions.
The State plan must include a description of--
(a) The standards, consistent with Sec. 457.310 and Sec. 457.320
of this subpart, and financial methodologies consistent with Sec.
457.315 of this subpart used to determine the eligibility of children
for coverage under the State plan.
(b) The State's policies governing enrollment and disenrollment;
processes for screening applicants for and, if eligible, facilitating
their enrollment in other insurance affordability programs; and
processes for implementing waiting lists and enrollment caps (if any).
43. Section 457.310 is amended by--
A. Republishing paragraph (b) introductory text.
B. Revising paragraphs (b)(1)(i), (b)(1)(ii), (b)(1)(iii)
introductory text, and (b)(1)(iii)(B).
C. Adding paragraph (b)(1)(iv).
The revisions and addition read as follows:
Sec. 457.310 Targeted low-income child.
* * * * *
(b) Standards. A targeted low-income child must meet the following
standards:
(1) * * *
(i) Has a household income, as determined in accordance with Sec.
457.315, at or below 200 percent of the Federal poverty level for a
family of the size involved;
(ii) Resides in a State with no Medicaid applicable income level;
(iii) Resides in a State that has a Medicaid applicable income
level and has a household income that either--
* * * * *
(B) Does not exceed the income level specified for such child to be
eligible for medical assistance under policies of the State plan under
title XIX on June 1, 1997; or
(iv) Is not eligible for Medicaid as a result of the elimination of
income disregards as specified under Sec. 435.603(g) of this chapter.
* * * * *
44. Section 457.315 is added to read as follows:
Sec. 457.315 Application of modified adjusted gross income and
household definition.
Effective January 1, 2014, the CHIP agency shall apply the
financial methodologies set forth in paragraphs (b) through (h) of
Sec. 435.603 of this chapter in determining the financial eligibility
of all individuals for CHIP. The exception to application of such
methods for individuals for whom the State relies on a finding of
income made by an Express Lane agency at Sec. 435.603(i)(1) also
applies.
45. Section 457.320 is amended by--
A. Removing paragraphs (a)(4) and (a)(6).
B. Redesignating paragraphs (a)(5), (a)(7), (a)(8), (a)(9), and
(a)(10) as paragraphs (a)(4), (a)(5), (a)(6), (a)(7), and (a)(8),
respectively.
C. Revising paragraph (d).
D. Removing and reserving paragraph (e)(2).
The revisions and additions read as follows:
Sec. 457.320 Other eligibility standards.
* * * * *
(d) Residency.
(1) Residency for a non-institutionalized child who is not a ward
of the State must be determined in accordance with Sec. 435.403(i) of
this chapter.
(2) A State may not--
(i) Impose a durational residency requirement;
(ii) Preclude the following individuals from declaring residence in
a State--
(A) An institutionalized child who is not a ward of a State, if the
State is the State of residence of the child's custodial parent or
caretaker at the time of placement; or
(B) A child who is a ward of a State, regardless of where the child
lives
(3) In cases of disputed residency, the State must follow the
process described in Sec. 435.403(m) of this chapter.
(e) * * *
(2) [Reserved]
46. Section 457.330 is added to read as follows:
Sec. 457.330 Application.
The State shall use the single, streamlined application used by the
State in accordance with Sec. 435.907(b) of this chapter, and
otherwise comply with the provisions of such Sec. 435.907 of this
chapter, except that the terms of Sec. 435.907(c) of this chapter
(relating to applicants seeking coverage on a basis
[[Page 51197]]
other than modified adjusted gross income) do not apply.
47. Section 457.335 is added to read as follows:
Sec. 457.335 Availability of program information and Internet Web
site.
The terms of Sec. 435.905 and Sec. 435.1200(d) of this chapter
apply equally to the State in administering a separate CHIP.
48. Section 457.340 is amended by revising the section heading and
paragraphs (a), (b) and (f) to read as follows:
Sec. 457.340 Application for and enrollment in CHIP.
(a) Application assistance. A State must afford families an
opportunity to apply for CHIP without delay and must provide assistance
to families in understanding and completing applications and in
obtaining any required documentation. Such assistance must be made
available to applicants and enrollees in person, over the telephone,
and online, and must be provided in a manner that is accessible to
individuals living with disabilities and those who are limited English
proficient.
(b) Use of Social Security number. A State must require each
individual applying for CHIP to provide a Social Security number (SSN)
in accordance with Sec. 435.910 and cannot require non-applicants to
provide an SSN consistent with the requirements at Sec. 435.907(e) of
this chapter.
* * * * *
(f) Effective date of eligibility. A State must specify a method
for determining the effective date of eligibility for CHIP, which can
be determined based on the date of application or through any other
reasonable method that ensures coordinated transition of children
between programs as family circumstances change and avoids gaps or
overlaps in coverage.
49. Section 457.343 is added to read as follows:
Sec. 457.343 Periodic redetermination of CHIP eligibility.
The redetermination procedures described in Sec. 435.916 of this
chapter apply equally to the State in administering a separate CHIP,
except that the State shall verify information needed to renew CHIP
eligibility in accordance with Sec. 457.380 of this subpart, shall
provide notice regarding the State's determination of renewed
eligibility or termination in accordance with Sec. 457.340(e) of this
subpart and shall comply with the requirements set forth in Sec.
457.350 of this subpart for screening individuals for other insurance
affordability programs and transmitting such individuals' electronic
account and other relevant information to the appropriate program.
50. Section 457.348 is added to read as follows:
Sec. 457.348 Determinations of Children's Health Insurance Program
eligibility from other applicable health coverage programs.
(a) Exchange determinations of CHIP eligibility.
(1) For each individual found eligible for CHIP by the Exchange
based on the applicable MAGI standard, the State must establish
procedures--
(i) To receive, via secure electronic interface, the electronic
account containing the finding of CHIP eligibility and all information
provided on the application and/or verified by the Exchange which made
such finding; and
(ii) To furnish CHIP to the individual promptly and without undue
delay in accordance with Sec. 457.340 of this subpart, to the same
extent and in the same manner as if such individual had been determined
by the State to be eligible for CHIP in accordance with such section.
(2) [Reserved].
(b) Screening for potential CHIP eligibility by other insurance
affordability programs. The State must adopt procedures to ensure that
it promptly and without undue delay determines the CHIP eligibility of
individuals determined to be potentially eligible for CHIP, by other
insurance affordability programs. The procedures must ensure that--
(1) The State accepts, via secure electronic interface, the
electronic account for the individual screened as potentially CHIP
eligible, including all information provided on the application and any
information obtained or verified by the insurance affordability
program;
(2) The State may not request information or documentation from the
individual that is already contained in the electronic account;
(3) The State determines the CHIP eligibility of the individual,
promptly and without undue delay, in accordance with Sec. 457.340 in
the same manner as if the application had been submitted directly to,
and processed by, the State, except that the State must not verify
eligibility criteria already verified by the insurance affordability
program.
(4) The State notifies the insurance affordability program of the
final determination of the individual's eligibility or ineligibility
for CHIP.
(c) Option to accept CHIP eligibility determinations from the
Medicaid agency. A State may accept determinations of CHIP eligibility
made by another insurance affordability program in the same manner that
it accepts Exchange determinations of CHIP eligibility under paragraph
(a) of this section.
(d) Certification of eligibility criteria. The State must certify
for the Exchange the criteria necessary to determine CHIP eligibility,
including but not limited to the income standard adopted for its
separate CHIP program and the criteria related to satisfactory
immigration status, as set forth in the State plan in accordance with
Sec. 457.305 of this part.
51. Section 457.350 is amended by--
A. Revising the section heading.
B. Revising paragraphs (a), (b), (c), and (f).
C. Removing and reserving paragraph (d).
D. Adding paragraphs (i), (j), and (k).
The additions and revisions read as follows:
Sec. 457.350 Eligibility screening and enrollment in other insurance
affordability programs.
(a) State plan requirement. The State plan shall include a
description of the coordinated eligibility and enrollment procedures
used, at intake and any follow-up eligibility determination, including
any periodic redetermination, to ensure that:
(1) Only targeted low-income children are furnished CHIP coverage
under the plan; and
(2) Enrollment is facilitated for applicants found to be
potentially eligible for other insurance affordability programs in
accordance with this section.
(b) Screening objectives. A State must identify any applicant,
beneficiary, or other individual applying for coverage on the single,
streamlined application who is potentially eligible for:
(1) Medicaid on the basis of having household income at or below
the applicable modified adjusted gross income standard, as defined in
Sec. 435.911(b) of this chapter;
(2) Medicaid on a basis other than having household income at or
below the applicable modified adjusted gross income standard; or
(3) Eligibility for other insurance affordability programs,
including eligibility for advanced payments for premium tax credits
based on having household income above the income standard in the State
for CHIP or the applicable modified adjusted gross income standard in
the State for Medicaid, as appropriate, or for enrollment in a
qualified health plan through an Exchange without advanced payments for
a premium tax credit.
[[Page 51198]]
(c) Income eligibility test. To identify the individuals described
in paragraphs (b)(1) and (b)(3) of this section, a State must apply the
methodologies used to determine household income described in Sec.
457.315 of this part.
(d) [Reserved].
* * * * *
(f) Applicants found potentially eligible for Medicaid based on
modified adjusted gross income. If the screening process reveals that
the applicant is potentially eligible for Medicaid based on modified
adjusted gross income, the State must--
(1) Promptly transmit the electronic account, and any other
relevant information obtained through the application, to the Medicaid
agency via secure electronic interface; and
(2) Except as provided in Sec. 457.355 of this subpart, find the
applicant ineligible, provisionally ineligible, or suspend the
applicant's application for CHIP unless and until the Medicaid
application for the applicant is denied; and
(3) Determine or redetermine eligibility for CHIP, consistent with
the timeliness standards established under Sec. 457.340(d) of this
subpart, if--
(i) The State is notified, in accordance with Sec. 435.1200(f)(4)
of this chapter that the applicant has been found ineligible for
Medicaid; or
(ii) The State is notified prior to the final Medicaid eligibility
determination that the applicant's circumstances have changed and
another screening shows that the applicant is not likely to be eligible
for Medicaid.
* * * * *
(i) Applicants found potentially eligible for other insurance
affordability programs. If the screening process reveals that an
applicant is not eligible for CHIP, is not screened as potentially
eligible for Medicaid on the basis of modified adjusted gross income,
and is potentially eligible for enrollment in a qualified health plan
through the Exchange or other insurance affordability programs, the
State must promptly transmit the electronic account, and other relevant
information obtained through the application to the applicable program
using secure electronic interfaces.
(j) Applicants potentially eligible for Medicaid on a basis other
than modified adjusted gross income. If, based on information obtained
through the single, streamlined application, the applicant is not
screened as potentially eligible for Medicaid on the basis of modified
adjusted gross income but may be eligible for Medicaid on another
basis, the State must--
(1) Promptly transmit the electronic account, and any other
relevant information obtained through the application to the Medicaid
agency using secure electronic interfaces; and
(2) Complete the determination of eligibility for CHIP in
accordance with Sec. 457.340 of this subpart; and
(3) Disenroll the beneficiary from CHIP if the State is notified in
accordance with Sec. 435.1200(f)(4) of this chapter that the applicant
has been determined eligible for Medicaid.
(k) A State may enter into an arrangement with the Exchange to make
eligibility determinations for advanced premium tax credits in
accordance with Section 1943(b)(2) of the Act.
52. Section 457.353 is revised to read as follows:
Sec. 457.353 Monitoring and evaluation of screening process.
States must establish a mechanism and monitor to evaluate the
screen and enroll process described at Sec. 457.350 of this subpart to
ensure that children who are:
(a) Screened as potentially eligible for other insurance
affordability programs are enrolled in such programs, if eligible; or
(b) Determined ineligible for other insurance affordability
programs are enrolled in CHIP, if eligible.
53. Section 457.380 is revised to read as follows:
Sec. 457.380 Eligibility verification.
(a) General requirements. Except with respect to verification of
citizenship and immigration status, and subject to the verification
requirements set forth in paragraph (d) of this section, the State may
accept attestation of all information needed to determine the
eligibility of an applicant or beneficiary for CHIP.
(b) [Reserved]
(c) State Residents. If the State does not accept self-attestation
of residency, the State must verify residency in accordance with Sec.
435.956(c) of this chapter.
(d) Income. The State must verify the income of an individual by
using the data sources and following the standards and procedures for
verification of financial eligibility described in Sec. 435.945(b),
Sec. 435.948 and Sec. 435.952 of this chapter.
(e) Verification of other factors of eligibility. For eligibility
requirements not described in paragraphs (b), (c) or (d) of this
section, a State may adopt reasonable verification procedures, except
that the State must accept self-attestation of pregnancy and the
individuals that comprise an individual's household unless the state
has information that is not reasonably compatible with such
attestation. The State may verify date of birth in accordance with
Sec. 435.945(b) or through other reasonable verification procedures
consistent with the requirements in Sec. 435.952.
(f) Requesting information.
(1) The State must use electronic sources of data, if available,
before requesting additional information, including paper
documentation, from an individual.
(2) An individual shall not be required to provide additional
information or documentation unless information needed by the State
cannot be obtained electronically or information obtained
electronically is not reasonably compatible with information provided
by or on behalf of the individual. In such cases, the State may seek
additional information, including a statement which reasonably explains
the discrepancy and/or paper documentation, from the individual. The
State must provide the individual a reasonable period to furnish such
information.
(g) Electronic service. To the extent that information sought under
this section is available through the electronic service established by
the Secretary at Sec. 435.949 of this chapter, the State shall access
the information through that service.
(h) Interaction with program integrity requirements. Nothing in
this section should be construed as limiting the State's program
integrity measures or affecting the State's obligation to ensure that
only eligible individuals receive benefits.
(i) Flexibility in information collection and verification. Subject
to approval by the Secretary, the State may modify the methods to be
used for collection of information and verification of information as
set forth in this section, provided that such alternative source will
reduce the administrative costs and burdens on individuals and States
while maximizing accuracy, minimizing delay, meeting applicable
requirements relating to the confidentiality, disclosure, maintenance,
or use of information, and promoting coordination with other insurance
affordability programs.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
[[Page 51199]]
Dated: June 29, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: August 10, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2011-20756 Filed 8-12-11; 8:45 am]
BILLING CODE 4120-01-P