[Federal Register Volume 81, Number 21 (Tuesday, February 2, 2016)]
[Rules and Regulations]
[Pages 5530-5567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01585]



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Vol. 81

Tuesday,

No. 21

February 2, 2016

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 440





Medicaid Program; Face-to-Face Requirements for Home Health Services; 
Policy Changes and Clarifications Related to Home Health; Final Rule

  Federal Register / Vol. 81 , No. 21 / Tuesday, February 2, 2016 / 
Rules and Regulations  

[[Page 5530]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 440

[CMS-2348-F]
RIN 0938-AQ36


Medicaid Program; Face-to-Face Requirements for Home Health 
Services; Policy Changes and Clarifications Related to Home Health

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

ACTION: Final rule.

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SUMMARY: This final rule revises the Medicaid home health service 
definition consistent with section 6407 of the Patient Protection and 
Affordable Care Act of 2010 (the Affordable Care Act) and section 504 
of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to 
add requirements that, for home health services, physicians document, 
and, for certain medical equipment, physicians or certain authorized 
non-physician practitioners (NPP) document the occurrence of a face-to-
face encounter (including through the use of telehealth) with the 
Medicaid eligible beneficiary within reasonable timeframes. This rule 
also aligns the timeframes for the face-to-face encounter with similar 
regulatory requirements for Medicare home health services. In addition, 
this rule amends the definitions of medical supplies, equipment, and 
appliances. We expect minimal impact with the implementation of section 
6407 of the Affordable Care Act and section 504 of MACRA. We recognize 
that states may have budgetary implications as a result of the amended 
definitions of medical supplies, equipment and appliances. 
Specifically, this rule may expand coverage of medical supplies, 
equipment and appliances under the home health benefit. There will be 
items that had previously only been offered under certain sections of 
the Act that will now be covered under the home health benefit.

DATES: Effective date: This rule is effective on July 1, 2016.
    Compliance date: Based on public comments, we recognize that there 
may be operational and budgetary implications with this rule and that 
states and providers may need time to implement this provision. To 
ensure that states and providers are implementing the rule 
appropriately, we are delaying compliance with this rule for up to one 
year if legislature has met in that year, otherwise 2 years.
    Exception for State Legislation.--In the case of a State plan under 
title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), which 
the Secretary determines requires state legislation in order for the 
respective plan to meet one or more additional requirements imposed by 
this rule, the respective state shall not be regarded as failing to 
comply with the requirements of this rule solely on the basis of its 
failure to meet such an additional requirement before the first day of 
the first calendar quarter beginning after the close of the first 
regular session of the state legislature that begins after the date of 
enactment of this rule. For purposes of the previous sentence, in the 
case of a state that has a 2-year legislative session, each year of the 
session shall be considered to be a separate regular session of the 
state legislature. States will be expected to be in compliance by July 
1, 2017 or July 1, 2018 based on legislative timeframes as described 
above.

FOR FURTHER INFORMATION CONTACT: Ali Smilow, (410) 786-0790.

SUPPLEMENTARY INFORMATION: 

I. Executive Summary and Background

A. Executive Summary

1. Purpose
    This final rule implements section 6407 of the Patient Protection 
and Affordable Care Act of 2010 (the Affordable Care Act) (Pub. L. 111-
148), which adds the requirement that physicians document the 
occurrence of a face-to-face encounter (including through the use of 
telehealth) with the Medicaid eligible beneficiary within reasonable 
timeframes when ordering home health services. More specifically, 
section 6407(b) of the Affordable Care Act applies to Medicaid face-to-
face encounter requirements set forth in the Medicare statute. 
Additionally, on April 16, 2015, the Medicare Access and CHIP 
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10), became law. 
Section 504 of this law amended the underlying Medicare requirements at 
section 1834(a)(11)(B)(ii) of the Social Security Act (the Act) to 
allow certain authorized non-physician practitioners (NPP) to document 
the face-to-face encounter. This final rule adopts in large part the 
provisions proposed in the proposed rule issued on July 12, 2011 (76 FR 
41032), but includes conforming changes to the provisions of the 
proposed rule to reflect the revisions made by MACRA to the underlying 
Medicare face-to-face encounter requirements. In addition, this final 
rule clarifies that Medicaid home health services and items are not 
limited to home settings, and makes additional changes to the 
requirements for coverage of medical supplies, equipment and appliances 
under the home health benefit.
2. Summary of the Major Provisions
    The final rule requires that for the initial ordering of home 
health services, the physician must document that a face-to-face 
encounter that is related to the primary reason the beneficiary 
requires home health services occurred no more than 90 days before or 
30 days after the start of services. The final rule requires that for 
the initial ordering of certain medical equipment, the physician or 
authorized NPP must document that a face-to-face encounter that is 
related to the primary reason the beneficiary requires medical 
equipment occurred no more than 6 months prior to the start of 
services. The face-to-face encounter for home health and medical 
equipment may be performed by the physician or certain authorized NPPs. 
The final rule maintains the role of the physician in ordering Medicaid 
home health services and medical equipment.
    The rule also codifies current Medicaid policies for coverage of 
home health services, including clarifying in the definition of medical 
supplies, equipment, and appliances that items must be suitable for use 
in any setting in which normal life activities take place, other than a 
hospital; nursing facility, intermediate care facility for individuals 
with intellectual disabilities; or any setting in which payment is or 
could be made under Medicaid for inpatient services that include room 
and board. Additionally, the rule defines home health supplies, 
equipment, and appliances, to better align with the Medicare program's 
definition of durable medical equipment (DME) at Sec.  414.202.
    The rule codifies the policies set forth in September 4, 1998 
guidance, about the use of lists or other presumptions in determining 
coverage of items under the home health benefit for medical equipment, 
including the following three points: (1) States may have a list of 
preapproved medical equipment, supplies and appliances for 
administrative ease, but not as an absolute limit on coverage; (2) 
States must provide and make available to individuals a reasonable and 
meaningful procedure for beneficiaries to request medical equipment, 
supplies or appliances not on the list based on a showing of medical 
necessity; and (3) Individuals must be informed of their

[[Page 5531]]

right to a fair hearing to appeal an adverse action. Additionally, the 
rule clarifies our interpretation that the Medicaid statute does not 
permit absolute exclusions of coverage as medical equipment, supplies, 
or appliances.
    These clarifications reflect the principles embodied in the 
holdings of the Skubel v. Fuoroli, 113 F.3d 330 (2d. Cir. 1997) and 
Detsel v. Sullivan, 895 F.2d 58 (2d Cir.1990) decisions into the 
requirements for the provision of home health services by clarifying 
that Medicaid home health services may not be limited to services 
furnished in the home and revising the current regulatory language to 
specify that home health services may be provided, as appropriate, in 
any setting in which normal life activities take place, other than a 
hospital, nursing facility; intermediate care facility for individuals 
with intellectual disabilities; or any setting in which payment is or 
could be made under Medicaid for inpatient services that include room 
and board.

                    3--Summary of Costs and Benefits
------------------------------------------------------------------------
    Provision description          Total costs         Total benefits
------------------------------------------------------------------------
Physician and certain non-    Although this         The overall benefit
 physician practitioners       provision applies     of this rule is the
 (NPP) for DME documentation   to Medicaid in the    expected increase
 of face-to-face encounter     same manner and to    in program
 with the Medicaid eligible    the same extent as    integrity resulting
 beneficiary within            the Medicare          in more quality
 reasonable timeframes when    program, no           home health
 ordering home health          estimates (costs or   services for
 services.                     savings) were noted   Medicaid
                               for the Medicaid      beneficiaries.
                               program as data to   Additionally, this
                               determine these       rule will
                               estimates is          potentially serve
                               unavailable. For      to provide
                               Medicare, the         individuals with
                               overall economic      disabilities a
                               impact of this        greater ability to
                               provision is an       engage in normal
                               estimated $920        activities of daily
                               million in savings    living.
                               to the Medicare
                               program from 2010-
                               2014 and $2.29
                               billion in savings
                               from 2010-2019.
------------------------------------------------------------------------

B. Background

    Title XIX of the Act requires that, to receive federal Medicaid 
matching funds, a state must offer certain basic services to the 
categorically needy populations specified in the Act. Home health care 
is a mandatory services for Medicaid-eligible individuals who are 
entitled to nursing facility services, which includes the basic 
categorically needy populations who receive the standard Medicaid 
benefit package, and can also include medically needy populations if 
nursing facility services are offered to the medically needy within a 
state. Home health services include nursing services, home health aide 
services, medical supplies, equipment, and appliances, and may include 
therapy services (physical therapy, occupational therapy, speech 
pathology and audiology services). For a state to receive federal 
Medicaid matching payments for such services, current Medicaid 
regulations require a beneficiary's physician to order home health 
services as part of a written plan of care reviewed every 60 days.
    At section 6407 of the Affordable Care Act, new Medicare 
requirements were set forth for face-to-face encounters to support 
claims for home health services, and for DME, which were also made 
applicable to Medicaid.
    Specifically, sections 1814(a)(2)(C) of the Act under Part A of the 
Medicare program, and section 1835(a)(2)(A) of the Act under Part B of 
the Medicare program were amended to require that the physician, or 
certain allowed NPPs, document a face to-face encounter with the 
individual (including through the use of telehealth, subject to the 
requirements in section 1834(m) of the Act), before making a 
certification that home health services are required under the Medicare 
home health benefit. Section 1814(a)(2)(C) of the Act indicates that in 
addition to a physician, a nurse practitioner (NP) or clinical nurse 
specialist (CNS) (as those terms are defined in section 1861(aa)(5) of 
the Act) who is working in collaboration with the physician in 
accordance with state law, or a certified nurse-midwife (as defined in 
section 1861(gg) of the Act, as authorized by state law), or a 
physician assistant (PA) (as defined in section 1861(aa)(5) of the 
Act), under the supervision of the physician, may conduct the face-to-
face encounters before the start of home health services.
    Section 6407 of the Affordable Care Act also amended section 
1834(a)(11)(B) of the Act to require that physician orders for DME must 
be supported by documentation by the physician of a similar face-to-
face encounter with a physician or specified NPPs. The NPPs authorized 
to conduct a face-to-face encounter on behalf of a physician are the 
same for DME as for home health services, except that certified nurse-
midwives are not included.
    The timing of the face-to-face encounter for either home health or 
DME is specified as being within the 6-month period preceding the 
written order for DME, or other reasonable timeframe specified by the 
Secretary.
    Section 6407(d) of the Affordable Care Act, provides that the 
requirements for face-to-face encounters in the provisions described 
above shall apply in the case of physicians making certifications for 
home health services under title XIX of the Act in the same manner and 
to the same extent as such requirements apply in the case of physicians 
making such certifications under title XVIII of such Act.
    The purpose of this regulation is to implement this statutory 
directive in the Medicaid program.

II. Summary of Provisions of the Proposed Rule

1. New Home Health Face-to-Face Requirements
    In the proposed rule, we sought to implement the face-to-face 
requirements of section 6407 of the Affordable Care Act in a manner 
consistent with existing Medicaid requirements and practices. For 
example, in implementing the face-to-face encounter requirements of 
section 6407 of the Affordable Care Act with respect to home health 
services generally, we took into consideration the longstanding 
regulatory requirements under Sec.  440.70 that provide that a 
physician must order an individual's services under the Medicaid home 
health benefit. We read the term ``order'' to be synonymous with the 
Medicare term ``certify.'' For purposes of this rule, we used the term 
``order'' in place of the Affordable Care Act's use of ``certify.''
    We did not view implementation of section 6407 of the Affordable 
Care Act as supplanting these existing Medicaid regulatory requirements 
related to physician orders; the new face-to-face process is consistent 
with those requirements. We proposed amending the Medicaid regulations 
at Sec.  440.70 to incorporate both the general home health and the 
medical equipment face-to-face requirements. Because DME is

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not a term used in Medicaid in the same manner as in Medicare, we 
proposed to use the Medicaid term ``medical supplies, equipment, and 
appliances'' or the shortened version ``medical equipment.'' 
Additionally, we proposed that the face-to-face encounter can be 
performed through the use of telehealth, which is described in more 
detail in section I. of this final rule.
    As previously indicated, we proposed that for home health services, 
the face-to-face encounter occurred no more than 90 days before or 30 
days after the start of services. To align with Medicare timing 
requirements at Sec.  424.22(a)(1)(v), we revised the timeframes for 
medical equipment and the final rule requires that for the initial 
ordering of medical equipment, the physician must document that a face-
to-face encounter that is related to the primary reason the beneficiary 
requires medical equipment occurred no more than 6 months prior to the 
start of services. These timeframes are applicable to face-to-face 
encounters performed through telehealth.
2. Specification of Non-Physician Practitioners (NPPs) Authorized To 
Perform Face-to-Face Encounters
    Under sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act, face-to-
face encounters for home health services may be conducted by a NP or 
CNS (as those terms are defined in section 1861(aa)(5) of the Act) who 
is working in collaboration with the physician in accordance with state 
law, or a certified nurse-midwife (as defined in section 1861(gg) of 
the Act, as authorized by state law), or a PA (as defined in section 
1861(aa)(5) of the Act), under the supervision of the physician. A 
similar definition of NPPs applies for DME under section 1834(a)(11)(B) 
of the Act, with one exception: Certified nurse-midwives are not 
included in the list of NPPs.
3. Other Medicaid Home Health Policy Changes
a. Codification That Home Health Services Cannot Be Restricted to 
Individuals Who Are Homebound or to Services Furnished Solely in the 
Home
    We proposed that home health services may not be subject to a 
requirement that the individual be ``homebound.'' In addition, we 
proposed that home health services cannot otherwise be restricted to 
services furnished in the home itself. These policies reflect 
longstanding CMS interpretations of the scope of the home health policy 
and were discussed in a July 25, 2000 letter to State Medicaid 
Directors, Olmstead Update No. 3 setting forth federal interpretations 
of applicable law relevant to state efforts to comply with the 
requirements of the Americans with Disabilities Act (ADA) in light of 
the Supreme Court decision in Olmstead v. L.C., 527 U.S. 581 (1999). In 
Attachment 3-g to that letter, we set forth our interpretation that a 
requirement that home health recipients be homebound was inconsistent 
with the mandatory nature of the home health benefit, and the 
longstanding regulatory provisions at 42 CFR 440.230 and 440.240. These 
regulatory provisions provide that mandatory benefits must be 
sufficient in amount, duration and scope to reasonably achieve their 
purpose, may not be arbitrarily denied or reduced in scope based on 
diagnosis, type of illness, or condition, and that the same amount, 
duration and scope must be available to any individual within the group 
of categorically needy individuals and within any group of medically 
needy individuals.
    We also proposed that Medicaid home health services may not be 
limited to services furnished in the home. This policy reflects the 
principles set forth in prior court cases on whether home health 
services and private duty nursing can be limited to services furnished 
in the home. In Skubel v. Fuoroli, 113 F.3d 330 (2d. Cir. 1997) the 
court found that the Medicaid statute did not address the site of care 
for the mandatory home health benefit. The court found that the state 
could not limit coverage of home health services to those provided at 
the individual's residence. Previously, in 1990, the Second Circuit had 
applied similar principles to invalidate a regulation that limited the 
provision of private duty nursing services to an individual's 
residence. The case, Detsel v. Sullivan, 895 F.2d 58 (2d Cir. 1990), 
involved children suffering from severe medical conditions. Following 
the Detsel case, CMS, then the Health Care Financing Administration, 
adopted the court's standard and issued nationwide guidance eliminating 
the at-home restriction on private duty nursing. To date, we have not 
issued similar guidance requiring nationwide adoption of the Skubel 
ruling.
b. Clarification of the Definition of Medical Supplies, Equipment, and 
Appliances
    An important component of the Medicaid home health benefit is 
coverage of medical supplies, equipment, and appliances, under Sec.  
440.70(b)(3). The current regulation does not further define the terms, 
except to indicate that the items should be suitable for use in the 
home. Although CMS has read this phrase to refer only to the type of 
items included in the benefit (excluding those types of items that are 
only furnished in institutional or provider settings), it has been 
susceptible to reading as a prohibition on use of covered items outside 
the home. We proposed revisions to this section to clarify that it is 
not a limitation on the location in which items are used, but rather 
refers to items that are necessary for everyday activities and not 
specialized for an institutional setting. Thus, we proposed to indicate 
that the items must be suitable for use in any non-institutional 
setting in which normal life activities take place. This would clarify 
that although states may continue to establish medical necessity 
criteria to determine the authorization of the items, states may not 
deny requests for the items based on the grounds that they are for use 
outside of the home.
    Current Medicaid regulations do not contain any specific definition 
of medical supplies, equipment, and appliances under the home health 
benefit, other than the language discussed in the prior paragraph. 
States have adopted reasonable definitions of those terms, for example, 
based on the Medicare definition. But in the absence of a generally 
applicable definition of the term, there has been confusion as to the 
proper scope of the benefit.
    We believe that greater alignment of the definitions of home health 
medical supplies, equipment and appliances with the Medicare definition 
of DME will help to streamline beneficiaries' access to receive needed 
items and provide clear and consistent guidance to states to ensure the 
use of the appropriate benefit category. Therefore, we proposed to 
define home health supplies, equipment, and appliances, to better align 
with the Medicare program's definition of DME at Sec.  414.202, as 
items that are primarily and customarily used to serve a medical 
purpose, generally not useful to an individual in the absence of an 
illness or injury, can withstand repeated use, and can be reusable or 
removable. Unlike Medicare, however, we did not propose to define the 
expected life of a piece of equipment and did not propose to limit 
equipment to items used in the home. We also proposed to define 
supplies as health care related items that are consumable or 
disposable, or cannot withstand repeated use by more than one 
individual, based loosely on Medicare principles, but we did not 
propose to require that supplies be incidental to other covered 
services.
    The proposed standard definitions were intended to ensure that such 
items

[[Page 5533]]

will be available to all who are entitled to the mandatory home health 
benefit, and not restricted to individuals receiving targeted benefits 
through section 1915(c) home and community-based services (HCBS) 
waivers or the section 1915(i) HCBS state plan option. Items that meet 
the criteria for coverage under the home health benefit would be 
covered as such.
c. Other Issues
    In the proposed rule, we noted that we were considering whether 
other clarifications to the home health regulations were warranted. In 
particular, we invited comments on whether it would be useful to 
include language to reflect the policies set forth in a September 4, 
1998 letter to State Medicaid Directors, responding in part to a Second 
Circuit decision in DeSario v. Thomas, 139 F. 3d 80 (1998), about the 
use of lists or other presumptions in determining coverage of items 
under the home health benefit for medical equipment. In that letter, we 
indicated our interpretation of the mandatory coverage provisions to 
mean that a state could use such lists or presumptions as an 
administrative convenience but not as an absolute coverage limitation, 
and must provide individuals the opportunity to rebut the list or 
presumption using a process that employs reasonable and specific 
criteria to assess coverage for an item based on individual medical 
needs.
    In addition, in the May 5, 2010 Federal Register (75 FR 24437), we 
issued the ``Medicare and Medicaid Programs: Changes in Provider and 
Supplier Enrollment, Ordering and Referring, and Documentation 
Requirements; and Changes in Provider Agreements'' interim final rule 
which was effective on July 6, 2010. Although we did not incorporate 
changes in the proposed rule to the scope of providers that may order 
medical supplies, equipment, and appliances in the Medicaid program, as 
section 6405(a) of the Affordable Care Act was not applicable to Title 
XIX of the Act, we specifically solicited comments through this rule on 
the merits of doing so. We will address comments received below.

III. Analysis of and Responses to Public Comments

    We received a total of 94 timely items of correspondence from home 
health provider representatives and other professional associations, 
State Medicaid Directors, states, beneficiaries, and other individuals. 
Comments ranged from general support or opposition to the proposed 
rule, to specific questions and detailed comments and recommendations 
regarding the proposed changes. A summary of the public comments and 
our responses are set forth below.

A. General

    Comment: Some commenters expressed general support for the rule. 
One commenter supported CMS' goal of promoting accountability and 
program integrity. Other commenters supported the efforts of the 
Department to move toward consistency between the Medicare and Medicaid 
programs and ensure that home health services are delivered in 
accordance with sound clinical guidelines and recommendations.
    Response: We appreciate the commenters' support.
    Comment: Many commenters recommended that CMS specify that Medicaid 
home health services cannot be contingent upon a beneficiary needing 
skilled nursing care or therapy. Other commenters suggested revising 
Sec.  441.15(c) to specify that Medicaid home health services cannot be 
contingent upon the beneficiary needing skilled nursing care or 
therapy.
    Response: We have revised Sec.  440.70(b) to clarify that coverage 
of Medicaid home health services cannot be contingent upon the 
beneficiary needing nursing or therapy services. We do not believe it 
is an accurate reading of section 1902(a)(10)(D) or the Act, or Sec.  
441.15 to impose such a requirement; the language of those provisions 
requires that the state provide the home health benefit to individuals 
whose benefit package includes nursing facility services, but does not 
require that the individual actually need such services. While it is 
beyond the scope of this rule to clarify and revise Sec.  441.15(b), 
the clarification in Sec.  440.70(b) will inform the reading of Sec.  
441.15(b).
    Comment: Many commenters proposed that CMS amend Sec.  440.230, 
which governs amount, duration, and scope to include language that 
reflects the policies set forth in the 1998 State Medicaid Director's 
letter related to the Desario case.
    Response: We agree with commenters that the principles set forth in 
that letter should be incorporated into Medicaid regulations, although 
we disagree that these principles should be incorporated into Sec.  
440.230 as opposed to the Medicaid home health regulation at Sec.  
440.70. Accordingly, we are revising Sec.  440.70 to include the three 
points made in that letter: (1) States may have a list of preapproved 
medical equipment, supplies, and appliances for administrative ease but 
not as an absolute limit; (2) States must provide and make available to 
individuals a reasonable and meaningful procedure for individuals to 
request items not on the list; and (3) Individuals are informed of 
their right to a fair hearing.
    Comment: Several commenters requested that CMS specify that states 
cannot require a 60-day plan of care for medical supplies, equipment 
and appliances. The commenters also requested that CMS specify that 
states may not impose additional state restrictions that are not part 
of the federal requirements for supplies, equipment, and appliances 
such as requiring that they be limited to services for temporary 
recovery from specific incidents, be limited to non-routine supplies 
necessary for the delivery of a participant's nursing care and 
described in the plan of care, or any other state requirement that is 
not a federal requirement for receiving equipment and supplies.
    Response: As stated in the existing provisions of Sec.  
440.70(a)(2), home health services are required to be provided to a 
beneficiary on his or her physician's orders as part of a written plan 
of care that the physician reviews every 60 days, except as specified 
in paragraph (b)(3). That exception states that a beneficiary's need 
for medical supplies, equipment, and appliances need only be reviewed 
on an annual basis, with more frequent review to be determined on a 
case-by-case basis based on the nature of the item prescribed. It would 
be inappropriate for states to require additional review of medical 
equipment, supplies, and appliances except where indicated on a case-
by-case basis (for example, for supplies that are needed on a short 
term basis).
    Additionally, states may place limits on the amount and duration of 
medical equipment, supplies and appliances, but the limits must meet 
sufficiency requirements set forth at Sec.  440.230. And, as with all 
Medicaid services, states are not required to cover medically 
unnecessary services, and have the discretion to develop medical 
necessity criteria, but these must be based on accepted medical 
practices and standards.
    Comment: Some commenters suggested that CMS apply the proposed 
prohibition on applying a ``homebound'' limitation to all Medicaid home 
care related program benefits, with one commenter suggesting that CMS 
audit state Medicaid programs for noncompliance with the homebound 
prohibition rule. That commenter stated that CMS should specifically 
review whether those state programs that

[[Page 5534]]

utilize a medical necessity standard as proxy for homebound.
    Response: It is beyond the scope of this regulation to revise the 
requirements or definitions applicable to services other than home 
health care services. We are prohibiting the application of a homebound 
requirement for Medicaid home health because we have concluded that the 
resulting benefit would be insufficient to meet the needs of the 
population, and would not achieve the purposes of the mandatory 
benefit. We appreciate the commenters' suggestion and will take under 
advisement as part of our overall compliance strategy. We are revising 
Sec.  440.70(c)(1) to codify the homebound prohibition for Medicaid 
home health services.
    Comment: One commenter requested that CMS pursue the expansion of 
the Medicaid provision of home health services to meet the needs of our 
elderly citizens.
    Response: Medicaid enrollees, regardless of their eligibility 
category, are not required to be homebound to qualify for home health 
benefits. Therefore, the clarification of the definition of medical 
equipment and supplies, and the requirement that home health services 
cannot be restricted to the home helps support the ability of Medicaid 
to best meet the needs of all eligible individuals, including the 
elderly.
    Comment: One commenter believed that models for health care homes 
that compensate medical practices for complex care of chronically ill 
Medicaid beneficiaries should be promoted.
    Response: We agree with the commenter. We have provided states with 
guidance and technical assistance on many initiatives that promote 
better care for the beneficiaries with chronic illness, including 
disease management strategies, health homes, and primary care case 
management systems. In 2014, we established the Medicaid Innovation 
Accelerator Program to support and focus resources on such models. More 
information can be found on our Web site at http://www.medicaid.gov/state-resource-center/innovation-accelerator-program/innovation-accelerator-program.html. Related guidance is also found on our Web 
site at http://www.medicaid.gov/state-resource-center/innovation-accelerator-program/related-tools-and-guidance/related-tools-and-guidance.html. Such models are beyond the scope of this regulation but 
we intend to continue our efforts to provide technical assistance and 
guidance on these models.
    Comment: One commenter recommended that states be required to cover 
certification of home health care (at least initial certification) and 
ongoing care plan oversight as a medical benefit for Medicaid 
beneficiaries and to compensate physicians consistent with Relative 
Value Units for such work.
    Response: Physician certification of the need for home health care 
could be covered by the state as a physician service or could be 
covered as a component part of home health care services. States have 
substantial flexibility to design payment methodologies for covered 
services. These payment methodologies can be tailored to the service 
delivery system in each state.
    Comment: One commenter indicated that the rule should note that 
states must develop a strategy to educate physicians about the 
extension of the face-to-face requirement to Medicaid.
    Response: We recognize the importance of education and expect 
states to educate the physician community on the new requirements 
implemented through the Affordable Care Act. We disagree that this 
administrative activity should be included as a requirement in the 
regulation. It is implicit with any regulation change to a benefit or 
to provider responsibilities that states educate impacted providers and 
beneficiaries about the new requirements.
    Comment: One commenter endorsed adding the phrase ``medically 
necessary'' to Sec.  440.70(b), to read as ``Home health services 
include the following medically necessary services and items.''
    Response: We agree that states may limit covered services to only 
include medically necessary services. This flexibility is already 
provided in regulation at Sec.  440.230(d). Medical necessity is not 
determined by us, but is determined by medical professionals. Many 
states employ medical professionals to establish medical necessity 
criteria and then review individual circumstances in light of those 
criteria. The phrase suggested by the commenter suggests that we would 
review medical necessity determinations. We do not intend to do so, and 
thus we are not accepting the suggestion.
    Comment: One commenter indicated that there are no Current 
Procedural Terminology (CPT) or International Classification of 
Diseases (ICD) codes that specifically represent an evaluation for home 
health services; therefore, another model of demonstrating that a face-
to-face encounter took place is needed.
    Response: The face-to-face encounter can be demonstrated through 
the pre-existing ``evaluation and management'' codes.
    Comment: One commenter expressed concern about how this provision 
will be implemented for those that are dually eligible for Medicare and 
Medicaid. Another commenter urged CMS to consider regulatory waivers, 
demonstrations or other initiatives to consolidate services for a dual 
eligible into a separate program for those beneficiaries with 
proportional funding from the existing federal and state programs. The 
commenter also indicated that CMS should undertake a significant 
education and outreach campaign to reach state officials, physicians, 
hospitals, home health providers, and organizations representing 
beneficiaries. The focus of the campaign would include Medicaid face-
to-face requirements, and important similarities and differences with 
the Medicare face-to-face requirements.
    Response: To the maximum extent possible, we have intentionally 
aligned the Medicaid rule with the Medicare requirements to reduce 
disparities in care and coverage for individuals who are eligible for 
both programs and to make it easier for providers to understand and 
implement the applicable rules. Currently, we are working on and 
publicizing a number of initiatives that speak directly to dual 
eligibles, increasing their continuity of care, and addressing ways in 
which Medicaid and Medicare rules might be better aligned. Such 
initiatives are out of the scope of this rule.
    Comment: One commenter requested that CMS clarify or amend the 
definition of home health services such that this rule would not be 
applicable to non-medical services such as personal care attendant 
services.
    Response: Personal care services are separately defined at Sec.  
440.167. We recognize the potential overlap between personal care 
services and home health aide services authorized under Sec.  440.70. 
However, we disagree with the commenter's suggestion that this rule 
should not be applicable to services qualifying as home health aide 
services.
    Comment: One commenter requested that CMS provide a significant 
amount of time before making effective, or enforcing, the final rule so 
that the state may prepare an accurate budget with sufficient funds for 
implementation and compliance.
    Response: The requirements of section 6407 of the Affordable Care 
Act were effective upon enactment, and applied for home health services 
certified after January 1, 2010, as

[[Page 5535]]

specified in the Affordable Care Act and CMCS Informational Bulletin 
dated July 13, 2011; http://www.medicaid.gov/Federal-Policy-Guidance/downloads/CIB-7-13-11.pdf. However, we will be delaying compliance for 
up to one year from the effective date of the rule if the state's 
legislature has met in that year, otherwise 2 years. Our expectation is 
that states and providers are compliant with the requirements of the 
final rule within the timeframes explained above. We intend to work 
collaboratively with states to ensure compliance with these 
requirements within a reasonable timeframe.
    Comment: One commenter recommended that more productive emphasis be 
placed on training physicians in the home health assessment process so 
that physicians are held accountable for ordering appropriate services. 
The commenter also recommended that a process be put into place to 
audit home health services, and if a home health agency is abusing the 
system by providing questionable services, then a heightened 
authorization system be put into place for those identified high-risk 
agencies.
    Response: As previously stated, it is implicit with any regulation 
change to a benefit that states inform impacted providers of new 
requirements and procedures. In response to the second comment, home 
health agencies must meet conditions of participation as determined 
through our survey process. The structures are designed to ensure that 
such agencies are qualified to furnish high-quality services that are 
medically necessary. To the extent that any provider, including a home 
health agency, is determined through the survey process to be 
furnishing inappropriate or unnecessary services, compliance actions 
can be pursued.
    Comment: One commenter believed that home health services should be 
delivered in a consumer directed manner; the individual should be 
allowed to choose an agency or a consumer directed delivery option.
    Response: A service plan based on a person-centered philosophy will 
support the beneficiary in achieving personally defined outcomes in the 
most integrated community setting available. This approach will reflect 
what is important to the individual receiving the services in terms of 
personal preferences and choices to meet identified support needs. 
Formal participant direction requirements for a home health service 
plan may be required by states as they determine appropriate, and 
consistent with the service delivery and payment system used by the 
state. We did not propose to change the requirement that certain 
components of the home health benefit (specifically nursing, home 
health aide services, and therapy services) must be furnished by a home 
health agency. This requirement is based on the premise that these 
services must be properly supervised and coordinated, consistent with 
the beneficiary's plan of care. Changing this requirement is beyond the 
scope of this rulemaking.
    Comment: One commenter sought CMS guidance on the responsibility of 
the Medicaid Agency as it relates to oversight and monitoring of home 
health agencies to ensure compliance with the regulations.
    Response: Overall compliance with home health agency certification 
requirements is conducted by the state's survey agency, in partnership 
with us. It is expected that State Medicaid Agencies collaborate with 
State Survey Agencies to ensure compliance of all home health providers 
with appropriate requirements, including all aspects of this 
regulation.
    Comment: Some commenters discussed transportation costs. One 
commenter requested clarification on Medicaid coverage of physician 
non-medical transportation costs for face-to-face encounters. One 
commenter stated that the increased need to provide transportation 
services for the face-to-face encounters will result in increased 
costs. Another commenter raised a concern related to the problem of 
transportation costs, stating that the mandate of existing Sec.  431.53 
``that the Medicaid agency will ensure necessary transportation for 
beneficiaries to and from providers,'' when read in connection with the 
proposed Sec.  440.70(c)(1), significantly increases the states' 
financial obligation for service delivery. Additionally, the commenter 
requested that CMS clarify that Sec.  431.53 does not apply for 
location-independent providers such as home health agencies.
    Response: States are required under Sec.  431.53 to assure 
necessary transportation for beneficiaries to and from medical 
providers, and that applies to transportation costs necessary for face-
to-face encounters. This requirement includes transportation to and 
from an appointment with a physician or allowed NPP to receive an 
evaluation for home health services. States may reimburse physicians 
for transportation costs when necessary to make house calls through 
payment rate adjustments. Physicians cannot claim separately for 
transportation costs, since Medicaid reimbursement is not available 
specifically for physician transportation costs. However, many states 
factor in the costs of doing business into the payment rates for 
physician services, and may have higher payment rates to reflect 
physician house calls. Additionally, in response to the commenter's 
concern about transportation, we would note that the face-to-face 
encounter can be performed through the use of telehealth, and states 
may have payment rates that apply specifically for telehealth services 
and take into account the costs of communication lines and other 
necessary components of a telehealth encounter (on both sides of the 
telehealth encounter).
    Comment: Two commenters requested that CMS specify that medical 
supplies, equipment, and appliances are a separate stand-alone home 
health service. The commenter also suggested that CMS emphasize that, 
even if a particular item cannot be covered as medical equipment, 
supplies, or appliances, states should determine whether it can be 
covered under another Medicaid service category, such as prosthetics or 
rehabilitation services. Additionally, the commenter suggested that CMS 
should state explicitly that satisfying the criteria of either one of 
the two definitions (equipment and appliances, or supplies) is 
sufficient to require coverage when the item is medically necessary.
    Response: We appreciate the commenter's suggestions. As indicated 
in the proposed rule, items and services that meet the criteria for 
coverage under the home health benefit must be covered according to 
home health coverage parameters. To ensure full coverage for medical 
equipment and appliances, we will require that, to the extent that 
there is overlap in coverage with another benefit, states must 
nevertheless provide for the coverage of these items under the 
mandatory home health benefit. We understand that this policy may 
require that some states revise their claims processing systems, and we 
will work with those states to assist them in meeting this requirement. 
We reiterate that individuals only requiring medical equipment and 
appliances, and not other components of the home health benefit, may 
receive those services from DME providers authorized by the state, 
without necessitating a relationship with a home health agency. The 
nature of medical supplies and their ability to be provided in a 
variety of situations calls for a more flexible approach. Supplies 
incident to another mandatory benefit, such as physician services or an 
inpatient benefit such as hospital or nursing facility, may be covered 
under that benefit category. Additionally, supplies incident to the 
clinic benefit may be covered under that benefit

[[Page 5536]]

category. However, regardless of coverage category, the expectation 
remains that individuals receive all medically necessary medical 
supplies meeting the definition finalized under this regulation. We are 
available to provide technical assistance to states to work through 
operational issues.
    We added this clarification to the regulatory text at Sec.  
440.70(b).
    Comment: Two commenters indicated that the substantial number of 
hours required for compliance with this rule, in combination with the 
relatively low reimbursement typical for care of Medicaid 
beneficiaries, will lead to barriers to compliance among physicians. 
Commenters anticipated resistance from practitioners and physicians due 
to the additional administrative time it will take to meet the face-to-
face requirement. One commenter indicated that many doctors are stating 
that they do not like the additional documentation requirements and are 
simply not ordering home health services. One commenter stated that 
early indications from the Medicare requirements are that physicians 
have been hostile to the new requirement, particularly the 
documentation standards. Another commenter stated that already there 
are many doctors who do not accept Medicaid beneficiaries. The 
commenter believed that adding additional paperwork and documentation 
requirements like this means there will likely be even more doctors who 
do not participate or who do not order home health services. One 
commenter reported that the home health industry is having problems 
with some doctors not wanting to do the face-to-face, therefore they 
are refusing to refer any beneficiaries to home health. One commenter 
indicated that since the Medicare requirement went into effect their 
members have seen a significant drop in referrals, some as much as 25 
percent. The commenter further stated that unlike Medicare, Medicaid is 
actually 50 different programs with varying sets of rules from state to 
state. The commenter expressed concern that this will cause uneven 
application of the rule across the country and could lead to more 
problems with access to care.
    Response: We fully expect that physicians will comply with the 
requirements and that they will be reasonably compensated for the time 
needed to provide and document the face-to-face encounter. The face-to-
face encounters can be performed by NPPs, as well as done through 
telehealth. Additionally, as previously indicated, for medical 
equipment, NPPs are now authorized to complete the documentation 
requirements. To the extent that physicians may be avoiding ordering 
home health services, or are not cooperating with the home health 
industry on face-to-face documentation requirements, these may be 
temporary responses stemming from the unfamiliarity of the 
requirements. States, home health agencies and DME suppliers may need 
to work with physicians and NPPs to help them to understand the 
requirements. In particular, home health agencies and DME suppliers may 
need to develop ongoing relationships with physicians and NPPs to 
ensure that face-to-face encounters occur and are properly documented.
    Comment: We received many comments pertaining to access to care. 
Commenters expressed that the face-to-face requirement in Medicare 
seems to be doing little to improve oversight of the benefit and is 
instead reducing access to home health for otherwise eligible patients, 
as physicians either refuse to accept the additional paperwork burden 
or do so only after agencies spend additional time and resources to 
obtain the documentation. One commenter believed the manner in which 
CMS is implementing the statutory requirement will significantly affect 
Medicaid beneficiaries' access to care. The commenter further stated 
that they can cite anecdotal examples of physicians who have simply 
decided to no longer refer individuals for home health services because 
of the hassle involved. One commenter believed that Medicaid 
beneficiaries will be the victims of this proposal because citizens who 
are elderly and those with disabilities are at risk for not receiving 
home health services if agencies have concerns about compliance with 
the face-to-face requirement and cannot deliver care. One commenter 
supported the need to align Medicare and Medicaid rules whenever 
possible, but was concerned about requirements that cause barriers to 
access by requiring a face-to-face encounter to initiate and receive 
payment for home health services. Another commenter was not supportive 
of applying the face-to-face requirements under Medicare to Medicaid. 
Another commenter believed that this requirement will negatively impact 
access and serve as a barrier to care because of the additional 
administrative burden to physicians filling out the face-to-face form. 
One commenter indicated that physicians, hospitals, discharge planners, 
home health agencies, and beneficiary groups agree that the physician 
requirements are a barrier to access to home health care for bona fide 
beneficiaries who meet coverage standards. One commenter believed that 
the face-to-face requirement is reducing access to home health for 
otherwise eligible individuals. One commenter was concerned that the 
face-to-face requirement will impede access and provide marginal 
benefit as a tool to eliminate ordering of questionable services.
    Response: The face-to-face requirement is mandated by statute. We 
have attempted to permit maximum flexibility in how the statutory 
requirement can be met and believe that the requirement can be 
accommodated without significant additional burden. We are aligning 
Medicaid requirements with Medicare requirements to maximize 
consistency in service delivery, as well as reduce administrative 
burden on the provider community. As discussed in this final rule, we 
expect states to offer appropriate provider training and for states and 
providers to work together to ensure this provision is implemented in a 
manner that supports the goal of ensuring program integrity while not 
serving as a barrier to access to medically necessary services.
    Comment: One commenter stated that well-mom and baby visits do not 
meet the intent of the physician face-to-face encounter for 
establishing the primary reason for which home health services are 
required and which will ultimately result in the development of a home 
health plan of care.
    Response: If, in the course of such a visit, the physician or other 
practitioner determines that home health services or medical equipment 
is required to address the condition of the mother or child, such a 
visit could be the basis for a documented face-to-face encounter to the 
extent that the visit involves examining the condition of the mother or 
child.
    Comment: One commenter believed that the proposed rule fails to 
take into account the fact that a significant proportion of home health 
services furnished to Medicaid beneficiaries under managed care 
programs are primarily the financial responsibility of managed care 
organizations. Another commenter suggested that, given the increased 
cost associated with the face-to-face encounter requirements, CMS 
should query states as to how they will be adjusting rates paid to 
managed care plans to adjust for the increased costs in an actuarially 
sound manner. Other commenters requested clarification regarding the 
application of the regulation to home health services

[[Page 5537]]

provided through Medicaid managed care plans.
    Response: As previously stated, neither the law nor this rule 
requires that the face-to-face requirement apply to Medicaid managed 
care. We defer to states to determine the application of the face-to-
face requirement in managed care plans to best meet the needs of their 
beneficiaries.
    Comment: One commenter was concerned that more services will be 
shifted to personal care attendant services resulting in potential 
Medicare savings at the expense of state Medicaid budgets.
    Response: We believe that the concern about potential cost shifting 
between Medicare and Medicaid can be address by ensuring that home 
health plans of care include all needed home health aide services. 
Additionally, as indicated in a previous response, to the extent that 
there is overlap in coverage with an optional benefit, states must 
provide for the coverage of services that meet the parameters of home 
health services under the mandatory home health benefit.
    Comment: One commenter stated that the proposed rule at Sec.  
440.70 goes well beyond the scope of statutory authority and should not 
be issued. This commenter requested that CMS revisit its position that 
home health services are a mandatory service.
    Response: We disagree with the commenter. Section 1902(a)(10)(D) of 
the Act sets forth the requirement that a state plan for medical 
assistance must provide for the inclusion of home health services for 
any individual who, under the state plan, is entitled to nursing 
facility services. Because nursing facility services are mandatory for 
categorically needy individuals and the medically needy--if a state 
chooses to cover the medically needy--home health services are 
mandatory for the populations.
    Upon consideration of public comments received, we are finalizing 
Sec.  440.70 with the following revisions:
     We are revising Sec.  440.70(b) to state that home health 
services cannot be contingent upon the beneficiary needing nursing or 
therapy services.
     We are revising Sec.  440.70(b) to codify that items and 
services that meet the criteria for coverage under the home health 
benefit must be covered according to home health coverage parameters.
     We are incorporating into Sec.  440.70(b)(3)(v), three 
basic points set forth in our 1998 guidance relating to the DeSario 
decision: (1) States may have a list of preapproved medical equipment, 
supplies, and appliances for administrative ease but not as an absolute 
limit on coverage; (2) States must provide and make available to 
individuals a reasonable and meaningful procedure for individuals to 
request items not on the list; and (3) Individuals must be informed of 
their right to a fair hearing. Additionally, we are including in the 
final rule the underlying interpretation implicit in these principles 
that the mandatory coverage of this benefit prohibits absolute 
exclusions of coverage as medical equipment, supplies, or appliances.
     We are revising Sec.  440.70(c)(1) to codify our 
longstanding policy that home health services may not be subject to a 
requirement that the individual be homebound.

B. Introductory Text--Medical Supplies, Equipment, and Appliances 
(Sec.  440.70(b)(3))

    Section 440.70(b)(3) proposed to revise the wording of the 
regulation to further define medical equipment, supplies, and 
appliances as suitable for use in any non-institutional setting in 
which normal life activities take place. We also proposed in Sec.  
440.70(b)(3)(i) and (ii) more detailed definitions of the terms 
``medical supplies, equipment, and appliances''.
    Comment: We received many comments in support of revising the 
introductory text of paragraph (b)(3). Several commenters supported the 
policy that medical equipment cannot be restricted to items that are 
useful in the home. One commenter further stated that potentially 
essential products are necessary not only for individuals to function 
in the home but to carry out activities of daily living while out of 
the home and in the community. One commenter stated that such standard 
is consistent with the requirements under the Americans with 
Disabilities Act, the Supreme Court Decision in Olmstead v. LC, and 
good healthcare policy. Another commenter stated that substituting 
suitable for use in any non-institutional setting in which normal life 
activities take place will improve understanding of this required 
characteristic of medical supplies, equipment, and appliances. Another 
commenter stated that this acknowledges that individuals engage in 
daily activities in which they may need such equipment not only in 
their homes, but also as they go about their daily activities in the 
community. Another commenter suggested including this language not only 
in the preamble, but also in the final regulations. Additionally, 
several commenters commended CMS for its statement in the preamble to 
the proposed rule that ``[i]tems that meet the criteria for coverage 
under the home health benefit must be covered as such. States will not 
be precluded from covering items through a section 1915(c) HCBS waiver 
service, such as home modification, or through a section 1915(i) state 
plan option. However, the state must also offer those items as home 
health supplies, equipment, and appliances.''
    Response: We appreciate the perspectives the commenters had in 
support of the proposed revisions to the introductory language in Sec.  
440.70(b)(3). This language has been included in the final regulation.
    Comment: Many commenters requested clarification of the phrase 
``normal life activities.'' One commenter requested that CMS clarify or 
define normal life activities as absent a definition there will likely 
be considerable confusion between this term and activities of daily 
living. Another commenter reported that some states include the 
terminology of activities of daily living in their DME definition which 
enables a focus on a defined area of medical necessity. The commenter 
suggested that this standard is more clearly defined and thus 
preferable. Another commenter indicated that the term ``normal life 
activity,'' if not clearly defined, will result in duplication of 
services and increased expenditures. Another commenter indicated that 
``in which normal life activities take place'' is a subjective 
statement where the state's administration may have to continually 
define and defend its interpretation in utilization management 
practices.
    Response: To clarify, the phrase ``normal life activities'' refers 
to activities that could occur in or out of an individual's home. We 
proposed to revise the phrase ``suitable for use in the home'' to 
``suitable for use in any non-institutional setting in which normal 
life activities take place'' to clarify that although states may 
continue to establish medical necessity criteria to determine the 
authorization of the items, states may not deny requests for the items 
based on the grounds that they are for use outside of the home. This 
clarification would not preclude states from continuing to use 
activities of daily living as medical necessity criteria.
    Comment: One commenter indicated concern with the proposed 
``expansive'' new definition of Medicaid supplies, equipment, and 
appliances which appears to require states to provide supplies, 
equipment, and appliances in any non-institutional setting. Thus, 
states would be required to provide, as just one example, wheelchair 
ramps in

[[Page 5538]]

settings outside the home as well as in the home.
    Response: The new definition of Medicaid supplies, equipment, and 
appliances establishes a framework to serve as a companion to the 
requirement that the benefit is not limited to services and/or items 
suitable for use in the home, rather it is a benefit that is available 
to people in any setting in which normal life activities take place, 
other than facilities specified at Sec.  440.70(c)(1). States may not 
deny requests for the items based on the grounds that they are for use 
outside of the home. States will continue to have flexibility to 
establish a reasonable definition of medical supplies, equipment and 
appliances that is consistent with the regulatory framework, to apply 
medical necessity criteria, and to have reasonable utilization control 
standards. We note that we do not regard this definition to expand the 
scope of medical equipment to include environmental or structural 
housing modifications. Nor does it include equipment that is designed 
to have a general use and will serve more people than just the Medicaid 
beneficiary. And a state's medical necessity and utilization control 
standards could reasonably preclude coverage of duplicative items or 
could provide coverage for rental rather than purchase of items when 
cost effective.
    Comment: One commenter stated that what CMS characterizes in the 
proposed rule as clarifying language in Sec.  440.70(b)(3) is a 
substantive change to the rule that goes well beyond what is 
statutorily allowed under Medicaid. The commenter stated that the 
present language of Sec.  440.70(b)(3) correctly sets forth the scope 
of coverage of medical supplies and equipment as being ``suitable for 
use in the home'' as home health care is the purpose of this coverage 
category.
    Response: We disagree that the proposed changes go beyond the 
statutory authority for CMS to interpret the meaning of the home health 
benefit and establish a framework for states to implement that benefit. 
In addition, while the changes are substantive, the changes incorporate 
principles that have been applied to Medicaid coverage in a number of 
court cases and CMS guidance, as discussed in the Background section 
above. As a result, the changes update the regulations to incorporate 
principles that are already applicable in practice.
    Comment: One commenter raised concern regarding DME issues related 
to abuse of the equipment provided to Medicaid beneficiaries, or 
requests for equipment that exceeds the practical needs of the member.
    Response: States may review requests to ensure that only medically 
necessary equipment is covered. The proposed provisions do not replace 
the existing Medicaid regulatory requirements at Sec.  440.70(a)(2) and 
Sec.  440.70(b)(3)(i) related to physician ordering and review of 
necessary medical equipment. An additional safeguard against 
unnecessary utilization is the face-to-face requirement and subsequent 
documentation requirement, which provides that physicians must describe 
how the health status of the beneficiary at the time of the face-to-
face encounter is related to the primary reason the beneficiary 
requires home health services. This process should identify requests 
for equipment that exceed the practical needs of the individual. With 
regard to abuse of equipment provided to Medicaid beneficiaries, we 
believe it would be reasonable for states to require that the face-to-
face encounter include instruction on how to properly use and care for 
the medical equipment at issue.
    Comment: One commenter requested clarification as to whether the 
existing 16-bed or fewer size standard for determining whether a 
residential setting is an institution will be considered in determining 
whether supplies are suitable for use in ``non-institutional settings'' 
and the applicability for DME that would be used in a school setting.
    Response: This provision does not change the standard for 
determining whether a residential setting is an institution (the16-bed 
standard discussed by the commenter applies only to whether a setting 
is an institution for mental diseases, not whether it is 
institutional). Home health services do not include services for 
individuals receiving inpatient services in a hospital, nursing 
facility, intermediate care facility for individuals with intellectual 
disabilities, or other setting in which payment is or could be made 
under Medicaid for inpatient services that include room and board. Home 
health services would be covered for individuals residing in other 
types of facilities in accordance with this regulation.
    Comment: Several commenters requested clarification about whether a 
state that offers a unique service under a section 1915(c) waiver or 
section 1915(i) state plan amendment must also offer those items as 
home health supplies, equipment, and appliances. Commenters stated that 
on its face, this would suggest the addition of all unique section 1915 
services would also become regular home health services, available to 
all state plan beneficiaries. If this is the intent, it would seem a 
welcome expansion of services, if it is not, then clarification would 
be helpful. Another commenter requested clarification that HCBS waiver 
beneficiaries are exempt from the proposed rule under Sec.  440.310. 
Another commenter asked if the assumption is correct that certain 
equipment and appliances may require installation and would be included 
in the cost of the equipment and appliances. If so, the commenter 
requests a distinction be made between basic installation required for 
equipment and appliances (medical supplies) and structural 
modifications required for HCBS home and vehicle modification.
    Response: States may not restrict access to equipment that meets 
the criteria for coverage under the home health benefit by carving 
certain equipment out of home health and offering it only to 
individuals who qualify for services under a state's section 1915(i) 
and section 1915(c) program. States may implement standards to 
determine coverage under the home health benefit of medical equipment 
based on medical necessity and utilization control. While a state can 
use presumptions in applying medical necessity and utilization control 
criteria, which CMS does not review, the state must provide an 
opportunity for an individualized hearing as to whether the item is 
medically necessary in the particular circumstances. There will be 
items currently coverable under sections 1915(c) and 1915(i) that will 
instead be covered under the home health benefit, but there are other 
items that will not meet the new federal or state definitions of home 
health medical equipment or that may be outside of the coverage 
limitations in the state's approved state plan. These latter items may 
remain covered under a section 1915(c) or 1915(i) benefit. In response 
to the commenter's inquiry regarding the exemption of HCBS waiver 
beneficiaries, to clarify, the requirement of this rule applies to all 
individuals receiving state plan home health services, including those 
eligible for state plan services based on enrollment in a HCBS waiver 
program. We defer to states to establish medical necessity criteria to 
meet the needs of their beneficiaries.
    Comment: One commenter stated concern about the implication that 
states cannot limit the home health benefit to those services and items 
that are sufficient to achieve the purpose of the benefit, as is well 
established in statute, regulation, and case law and

[[Page 5539]]

that the final regulation should clarify that only those items that the 
state chooses to cover within the home health benefit must be provided 
to Medicaid enrollees. The commenter also stated that they were 
concerned about the implication that some home modifications may be 
mandatory through the home health benefit. The commenter suggested that 
CMS should consider limiting that statement to the installation of 
certain appliances and equipment such as grab bars and other items that 
are available through home health agencies, and clarify that home 
remodels and other expensive modifications are not included in the home 
health benefit.
    Response: This regulation clarifies the permissible scope of the 
home health benefit, particularly as it relates to medical supplies, 
equipment, and appliances. But this regulation does not remove state 
flexibility to adopt a reasonable definition of medical supplies, 
equipment, and appliances that is consistent with the regulatory 
framework; nor does it preclude state flexibility to include coverage 
limitations that do not interfere with the overall sufficiency of the 
benefit. Home health is a mandatory benefit and was so before this rule 
or the statutory changes that led to this rule. States may establish 
limits on mandatory benefits in their approved state plan, but must 
demonstrate that, despite the proposed limits, the covered benefits are 
sufficient in amount, duration, and scope. In addition, as we discussed 
in our Desario guidance, because of the unique nature of medical 
supplies, equipment and appliances, scope limitations within the 
applicable federal and state definitions are not consistent with 
sufficiency of the benefit. States should not be implementing policies 
that unreasonably restrict access to specific items of medical 
equipment. We are available to provide technical assistance to states 
looking to implement amount, duration, and scope limitations in home 
health.
    In response to the commenter's concern about the implication that 
some home modifications may be mandatory through the home health 
benefit, we would like to clarify that costs of structural home 
modifications are not covered under the home health benefit because 
they would not be within the new regulatory definition of medical 
equipment, but instead would be costs of shelter. Similarly, vehicular 
modifications are not within the definition of medical equipment; they 
are a component of a vehicle that is not medical in nature.
    In addition, we are clarifying that states may implement standards 
to determine coverage of equipment based on presumptions about medical 
necessity and utilization control, but must provide for an opportunity 
for individuals to have an individualized medical necessity analysis 
that takes into consideration the individual's person-centered plan of 
care. While a state can use presumptions in making applying medical 
necessity and utilization control criteria, which CMS does not review, 
the state must provide an opportunity for an individualized hearing as 
to whether the item is medically necessary in the particular 
circumstances.
    Comment: One commenter stated that the source of confusion as to 
the proper scope of the DME benefit has not been the state's DME 
definition. Since CMS is proceeding on an assumption without factual 
basis, the commenter does not support the proposal to establish a 
regulatory definition of DME.
    Response: This final rule does not define medical equipment, 
supplies and appliances; rather it sets out a framework under which a 
state can adopt a reasonable definition of these items. The framework 
provides some criteria which the state must include in its reasonable 
definition. We believe this framework will provide a more consistent 
approach to categorizing home health medical supplies, equipment, and 
appliances that with this guidance, states will ensure the sufficiency 
of the benefit so that beneficiaries will receive needed items. We have 
aligned the Medicaid definition of medical equipment, supplies, and 
appliances to the best extent possible using key components of 
Medicare's definition which we believe will achieve consistency for 
beneficiaries, providers, and program administration and ensure that 
beneficiaries are receiving needed items.
    Comment: One commenter raised a concern with home modification 
equipment. Specifically, the commenter stated that home modification 
equipment currently is not considered DME in the commenter's state and 
has been covered as an additional service under HCBS waiver programs. 
The commenter asserted that inappropriately expanding the definition to 
non-medical services will deplete public funding requiring states to 
again look at the services they provide and the rates they pay to 
maintain balanced budgets.
    Response: As discussed above, home modifications are not a part of 
this new definition of medical supplies, equipment, and appliances.
    Comment: One commenter stated that the current definition of 
medical supplies, equipment, and appliances includes the verbiage 
``suitable for use in the home'' which is consistent with Medicare's 
requirement ``appropriate for use within the home.'' This definition 
does not restrict the beneficiary to the home but defines the type of 
equipment that is appropriate for reimbursement under the DME 
outpatient program.
    Response: We believe that the revision to the definition of medical 
supplies, equipment, and appliances will clarify the breadth of the 
current definition to include covered items outside of the home.
    After consideration of the public comments, this section is being 
finalized without revisions.

C. Definition--Medical Supplies, Equipment and Appliances (Sec.  
440.70(b)(3)(i) and (ii))

    In Sec.  440.70(b)(3)(i) and (ii), we proposed to revise the 
current regulation text to define what constitutes medical supplies, 
equipment, and appliances.
    Comment: Some commenters expressed support of the revised 
definition. Commenters supported the alignment with Medicare's 
definition of DME. One commenter specifically supported CMS's effort to 
streamline and standardize the requirements for DME across the Medicare 
and Medicaid program, especially as they may apply to dual eligible 
beneficiaries. Another commenter believed the changes will promote 
consistency among different payer groups. A few commenters supported 
the concept advanced by CMS to define medical ``equipment'' separately 
from medical ``supplies.''
    Response: We appreciate the support of the commenters.
    Comment: Many commenters requested that CMS further clarify the 
proposed definition of medical equipment and appliances. CMS's proposed 
language defining medical equipment as ``reusable or removable'' could 
be interpreted by states to allow exclusion of items that are custom 
made or customized, such as wheelchair components for the seating and 
positioning for individuals with the most severe orthopedic 
impairments. The commenters recommended that CMS eliminate this 
restrictive criterion from its definition of medical equipment. Many 
commenters further requested the substitution of the term ``reusable'' 
with ``non-disposable.'' One commenter requested that this rulemaking 
process clarify that items of DME that meet an established definition 
of the service must be covered by

[[Page 5540]]

Medicaid when medically necessary. Additionally, the commenter 
requested that the rules clarify that states cannot characterize items 
of DME as non-covered through the home health benefit because this 
equipment may be eligible through HCBS waiver programs.
    Response: As stated in the preamble to the proposed rule, we have 
set out a framework for the definition of medical equipment and 
appliances to align with Medicare to achieve consistency for 
beneficiaries who may be eligible in both programs, simplify program 
administration and ensure that beneficiaries are receiving needed 
items. But, we have left considerable flexibility for reasonable state 
definitions of the benefit within that framework. We do not agree that 
the terms ``reusable or removable'' should be deleted from the 
framework for medical equipment because these terms have meanings that 
are generally understood based on use in the Medicare program. Although 
we appreciate commenters raising the concern that these terms could be 
read to prohibit the customization of equipment, we do not agree that 
customization would necessarily make the items unusable for other 
individuals.
    In response to the further comment, the home health benefit is 
distinct from items and services that may be available through HCBS 
waiver programs. Medicaid coverage of medical supplies, equipment, and 
appliances under the home health benefit is mandatory and must be 
provided under the state plan to HCBS waiver enrollees. To the extent 
that items are not included under the approved state plan, extended 
coverage could be provided under section 1915(c) waiver programs. We 
also reiterate our statement from the proposed rule that items meeting 
the state plan definition of a medical supply, equipment or appliance 
must be provided under the home health benefit, and may not be 
restricted to enrollees under a section 1915(c) HCBS waiver.
    Comment: We received many comments pertaining to the language 
``illness or injury.'' Many commenters requested that CMS clarify this 
definition to ensure that individuals with congenital conditions or 
developmental disabilities are not denied coverage of equipment or 
appliances because a state determines that they do not have an illness 
or injury.
    Response: It is not our intent to deny coverage of supplies, 
equipment, or appliances to individuals with congenital conditions or 
developmental disabilities. We expect that anyone who is determined, 
based on medical necessity, to need medical supplies, equipment, and 
appliances will receive it. Therefore, in accordance with the comments, 
we are revising the regulation text to include ``disability, illness, 
or injury.''
    Comment: Many commenters raised concern with the proposed criteria 
defining home health supplies, equipment, and appliances to better 
align with the Medicare program's definition of DME. Several commenters 
were concerned that states may take the adoption of a regulatory 
definition for medical supplies, equipment, and appliances as a signal 
to make their policies for covering medical equipment, appliances, and 
supplies more restrictive than they are at present. Commenters urged 
CMS to state in the preamble that this is not the intention of adopting 
this definition. Additionally, the commenters specified their concern 
that the intent to align the definition with the Medicare program will 
lead states to erroneously deny coverage of home health services 
because Medicare does not cover them. Commenters further stated that 
one of the primary purposes of the Medicaid program is to ``furnish . . 
. rehabilitation and other services to help such families and 
individuals attain or retain capability for independence and self-
care'' and there is no corresponding requirement in the Medicare Act. 
One commenter stated that he strongly disagrees with the alignment with 
the Medicare definition and that distinct definitions of ``medical 
equipment and appliances'' between the two programs are warranted. 
Another commenter stated that in the instance of defining medical 
equipment and appliances, alignment between the Medicare and Medicaid 
definition is ill-advised and unnecessary. Another commenter stated 
that he does not believe this clarification meets the goal of better 
alignment with Medicare's program definition and that, in fact, this 
proposed change will cause fragmentation between Medicare and Medicaid.
    Response: We appreciate the commenters' concerns, but we believe 
that a consistent approach to categorizing home health medical 
supplies, equipment, and appliances will ensure beneficiaries are 
receiving needed items and provide clear and consistent guidance to 
states to ensure the use of the appropriate benefit category. 
Additionally, we believe that the alignment with Medicare's definition 
is useful to help minimize inconsistencies between the two programs. We 
confirm that it is not our intent to have this standard restrict the 
receipt of medical supplies, equipment, and appliances, and we have 
included language in the regulation indicating that Medicaid coverage 
of medical equipment is not restricted to items covered as DME in the 
Medicare program. Furthermore, states may choose to cover items that 
are not within the coverage under the home health benefit under other 
authorities, including section 1915(c) waivers or section 1915(i) state 
plan; nothing in this regulation is meant to curtail a state's 
innovation or expansion.
    Comment: Several commenters recommended revisions to the 
definition. One commenter recommended revising the definition to state: 
``equipment and appliances are defined as items that are used to serve 
a medical purpose for the beneficiary, can withstand repeated use, and 
can be reusable or removable''. Many other commenters recommended 
revising the definition of medical equipment and appliances to state 
that equipment and appliances are defined as items that are primarily 
and customarily used to serve a medical purpose, generally not useful 
to an individual in the absence of an illness or injury or disabling 
condition, can withstand repeated use, and can be reusable or 
removable. Another commenter recommended utilizing the current industry 
accepted Medicare definition: (1) Can withstand repeated use; (2) Is 
primarily and customarily used to serve a medical purpose; (3) 
Generally is not useful to an individual in absences of an illness or 
injury; and (4) Is appropriate for use in the home.
    Response: We appreciate the commenters' suggestions and we made a 
change in this final rule that responds to the second suggestion by 
incorporating a reference to disability. We did not accept the first 
suggested revision because it would require coverage of items that were 
not generally regarded as medical in nature, and we did not accept the 
third suggested revision because it would exclude coverage of items 
that would be used in normal life activities outside the home (such as, 
for example, walkers or wheelchairs). As indicated above, we are 
revising the definition of equipment and appliances to reference 
``disability, illness, or injury.'' Otherwise, we will not be revising 
the definitions in the proposed rule.
    Comment: One commenter disagreed with the proposed definition of 
equipment and appliances. The commenter stated that the proposed 
definition is improperly dependent upon how equipment and appliances 
are ``primarily and customarily used,'' and how they might be 
``generally'' not

[[Page 5541]]

useful in the absence of an illness or injury. The standards should be 
dependent upon how equipment and appliances are needed by the 
particular Medicaid beneficiary. Another commenter stated that the 
proposed rule defines covered medical equipment by how an item is 
``primarily and customarily'' or ``generally'' used, rather than 
adopting a person-centered approach that recognizes that people might 
have different medical needs.
    Response: While we agree that the need for equipment and appliances 
should be based on an individual's needs in accordance with a person-
centered plan of care, we are not accepting the suggested change 
because it would require coverage of items that were not generally 
regarded as medical in nature.
    Comment: One commenter stated that the proposed definition of 
medical equipment and appliances would allow individuals in need of 
certain devices greater chance of approval.
    Response: We appreciate the commenter's perspective, but it is not 
clear how the proposed definition would favor some devices over others. 
While a covered device must be within the scope of the definition of 
medical equipment and appliances, the approval of devices within that 
scope is based on a physician judgment of medical need and any state 
prior authorization review process. Moreover, as discussed elsewhere in 
this preamble, we have revised the final regulations to make clear that 
it sets forth a framework for coverage but that there is flexibility 
within that framework for states to define the precise scope of the 
benefit.
    Comment: One commenter recommended adding language to further 
support the use of medically necessary and appropriate DME that has a 
well-established history of efficacy or, in the case of novel or unique 
equipment, valid peer-reviewed evidence that the equipment corrects or 
ameliorates a covered medical condition or functional disability. The 
commenter also suggested that the definition of DME should include 
equipment that is proven, safe, and appropriate for the treatment of a 
medical condition or illness.
    Response: We do not believe that this additional language is 
necessary. This rule does not change the requirement that medical 
equipment must be ordered by a physician. We expect that the physician 
would determine medical necessity based on individual need. We further 
expect that physicians would order appropriate and safe medical 
equipment for individuals that have demonstrated effectiveness. Nothing 
in this rule, however, would preclude a state from establishing a prior 
authorization process to review claims for medical equipment (denying 
authorization when medical necessity is not established, subject to the 
individual's right to an appeal) and to initiate a dialogue with the 
treating physician to ensure appropriate treatment and control 
unnecessary utilization.
    Comment: Some commenters indicated that state Medicaid programs 
should not be restricted to the definition of equipment that is 
consistent with items covered as DME under the Medicare program. The 
commenters recommended that CMS amend the proposed rule to set the 
Medicare coverage standard as the minimum scope of benefits relative to 
coverage of medical equipment, but allow states to provide more 
expansive coverage. Many other commenters cautioned the Secretary in 
applying Medicare's medical equipment definition to Medicaid because of 
the different standards that apply to the coverage of their respective 
home health benefits. The commenters further stated that Medicaid's 
definition of ``equipment and appliances'' should be flexible so that 
beneficiaries' needs can be met.
    Response: We believe that this Medicaid framework for equipment and 
appliances is flexible so that individuals' needs can be met. But, in 
response to this and other comments, we have revised the final 
regulation text to make clear that coverage of medical equipment and 
appliances under state Medicaid programs are not restricted to the 
items covered as DME in the Medicare program. The alignment of the 
Medicaid framework with the Medicare definition is intended to achieve 
consistency for beneficiaries who are eligible in both programs, 
simplify program administration and ensure that beneficiaries are 
receiving needed items. The final regulation text makes clear that 
coverage of medical equipment and appliances are items that meet the 
listed criteria, but that states can elect to cover other items, 
including items that are not covered under the Medicare DME benefit.
    Comment: Many commenters encouraged CMS to include language in the 
final regulation to reflect the policies set forth in the September 4, 
1998 State Medicaid Director letter responding to the DeSario v. Thomas 
decision. One commenter stated that it is essential that CMS restate 
the validity of the DeSario SMD letter: That states may not use 
exclusive lists or irrefutable presumptions to limit or bar coverage of 
items under the DME benefit; and that states must have a reasonable 
process for requesting coverage of items the state has not otherwise 
expressly identified as covered. Another commenter stated that language 
should be provided in this rule if action is necessary to prevent 
states from employing lists and presumptions to deny coverage of 
appropriate medical equipment. Many commenters stated that it is 
necessary that the Secretary incorporate the letter's policy into 
regulation. Several commenters commended CMS for reemphasizing in the 
preamble that states may not use lists or presumptions in limiting 
coverage of items under the home health benefit unless states have a 
reasonable process for requesting exceptions to such lists or 
presumptions that are based upon specific criteria. One commenter 
further stated that codifying the interpretation by CMS contained in 
its State Medicaid Director Letter of September 4, 1998 would enable 
more people with Medicaid who rely upon DME to remain in their homes 
and active in their communities. Another commenter believed that it 
would be highly beneficial to include the principles espoused in the 
September 4, 1998 State Medicaid Director letter in the regulation. 
Another commenter supported the suggestion that federal Medicaid 
regulations should require that if states confine allowable medical 
equipment to items from a list, they allow beneficiaries to appeal for 
items not on that list by demonstrating that the items are medically 
necessary. One commenter stated that CMS appears to conflate a state's 
ability to limit the amount, duration, and scope of a benefit, with a 
determination of whether an item or service falls within the state's 
definition of a covered item or service. The commenter further stated 
that if CMS chooses to add the 1998 guidance to the regulation, it 
should clearly distinguish between benefit exclusions and the use of 
administrative lists for classes of supplies and equipment that are 
covered under the state's benefit.
    Response: We have revised the final rule at Sec.  440.70(b)(3)(v) 
to make clear that the principles we set forth in the 1998 SMD are 
still applicable. If a state has a predetermined list of covered, 
supplies, equipment and appliances, it must have a reasonable process, 
with an opportunity for a fair hearing to allow beneficiaries to 
request and receive items that are not on the state's list. 
Beneficiaries must be afforded the opportunity to establish that the 
item in question is medically necessary and within the overall state 
definition of covered medical equipment, and

[[Page 5542]]

consistent with the federal regulatory framework.
    Comment: One commenter believed that the use of presumptions by 
their very nature moves coverage determinations away from individual-
based considerations and substitutes efficiency for person-based, 
medical necessity determinations.
    Response: Coverage determinations for medical supplies, equipment, 
and appliances should be based on medical necessity criteria as 
established by the state as applied to the individual's particular 
needs. The need for medical supplies, equipment, and appliances should 
be identified by the physician and reviewed at least annually.
    Upon consideration of the public comments received, we are 
finalizing Sec.  440.70(b)(3)(ii) with revisions. We are revising the 
definition of equipment and appliances to include the term 
``disability'' and to specify that state Medicaid programs are not 
restricted to the items covered under DME in the Medicare program. 
Additionally, we have clarified that structural or home modifications 
are not covered under the Medicaid home health benefit and that states 
may not limit access to equipment eligible for coverage under home 
health benefits by restricting some items to only those who qualify for 
section 1915(i) or (c) programs. States may implement standards to 
determine coverage of the specific items previously funded under 
sections 1915(c) or (i), such as ceiling lifts or chair lifts, that 
could now be seen in appropriate circumstances to meet the home health 
definition and be medically necessary for an individual. We have also 
clarified that medical equipment and appliances already coverable under 
the home health benefit will continue to be covered. Not all medical 
equipment and appliances currently coverable under section 1915(c) and 
section 1915(i) will be coverable under the state plan under the 
standards set forth in this rule.

D. Setting Description (Sec.  440.70(c)(1) & (c)(2)

    To reflect the principles expressed by the courts in both the 
Skubel and Detsel decisions discussed above, we proposed to incorporate 
in regulation the longstanding policy that home health services may not 
be subject to a requirement that the individual be ``homebound.'' In 
addition, we proposed to clarify that home health services cannot 
otherwise be restricted to services furnished in the home itself. 
Additionally, in an effort to not limit the ability of states to offer 
a more robust home health benefit, we propose to allow states the 
option to authorize additional services or hours of services to account 
for this flexibility.
    Comment: Many commenters supported the proposal to specify in the 
regulations that Medicaid home health services must not be limited to 
beneficiaries who are ``homebound.'' Additionally, many commenters 
supported the conclusion that Medicaid home health services should not 
be limited to services furnished in the home. One commenter indicated 
that this proposed change provides flexibility for adults to receive 
medically necessary services at the workplace and children to 
participate in the community with their families while receiving 
necessary supports. The commenter further stated that allowing people 
to access home health services in the community will contribute to 
overall health and a reduction in costs for acute services. Commenters 
stated that the clear ability of people with disabilities to use their 
home health benefit in ``any non-institutional setting in which normal 
life activities take place'' will make community integration feasible 
for many people.
    Response: We appreciate the perspectives the commenters provided 
about medically necessary home health services. We also believe that 
with home health services provided in conjunction with other optional 
state plan and section 1915(c) waiver services people can be supported 
to fully integrate into their communities.
    Comment: Many commenters recommended that the regulatory language 
specifically indicate that a homebound requirement is not permitted. 
One commenter suggested revising Sec.  441.15(c) to establish clearly 
that Medicaid home health coverage cannot be contingent on the 
beneficiary being ``homebound.'' Other commenters suggested the 
following language: ``Nothing in this section should be read to 
prohibit a beneficiary from receiving home health services in any non-
institutional setting in which normal life activities take place or to 
permit a state to require that an individual be homebound or unable to 
leave his home to receive home health services.'' One commenter 
recommended that the final regulation amend paragraph (a)(1). The 
commenter believed that it is contradictory and confusing in paragraph 
(a)(1) to state that home health services must be provided ``[a]t [the 
beneficiary's] place of residence,'' and then in paragraph (c)(1) to 
state that services can be provided ``in any non-institutional setting 
in which normal life activities take place.'' The commenter also 
recommended that the proposed language for paragraph (c)(2) be revised 
to specify that services and/or service hours must be authorized to 
account for medical needs arising out of the home.
    Response: We are revising Sec.  440.70(c)(1) to indicate that a 
homebound requirement is not permitted. We believe this revision also 
addresses the request to revise Sec.  441.15(c), as Sec.  441.15(c) 
cross-references Sec.  440.70. In response to the request that we amend 
paragraph (a)(1) as it is contradictory and confusing when read with 
paragraph (c)(1), we do not believe that this revision is necessary as 
Sec.  440.70(a)(1) references paragraph (c) to specify ``place of 
residence.'' While we understand the recommendation that the language 
for paragraph (c)(2) be revised to specify that services and/or service 
hours must be authorized to account for medical needs arising out of 
the home, as long as the amount and duration limits applied by the 
state are either authorized under the approved state plan as consistent 
with a sufficient benefit, or based on an individualized medical 
necessity determination, we do not think such language is appropriate. 
We would, however, allow states the option to authorize additional 
services or hours of services to account for this flexibility to make 
clear that such a policy would not violate comparability requirements.
    Comment: One commenter expressed concerns regarding homebound 
status and beneficiaries who are dually eligible for Medicare and 
Medicaid. The commenter stated that they support the ability of 
Medicaid-enrolled individuals to receive home health services without 
an artificial barrier based on their homebound status. However, because 
the prohibition on requiring a homebound status does not apply to the 
Medicare program, the commenter raised concern about how this will be 
implemented for those that are dual eligibles.
    Another commenter stated that the regulation would require that 
certain programs revise or update existing policies to reflect that 
home health services cannot otherwise be restricted to services 
furnished in the home itself.
    Response: Individuals who are dually eligible for Medicare and 
Medicaid will benefit from this regulation. While the prohibition on 
requiring a homebound status in Medicaid is not new to this regulation, 
codifying the prohibition and strengthening the community integration 
philosophy of the home health benefit will ensure the individuals 
receive quality Medicaid home health services. Individuals eligible for 
both Medicare and Medicaid

[[Page 5543]]

who are not determined to be homebound may not qualify for Medicare 
home health services. Such individuals would still qualify for Medicaid 
home health services, if they meet the state's medical necessity 
criteria for the service. We understand that some state program 
policies may have to be modified or updated to comport with the rule, 
but do not believe that this task will be overly burdensome.
    Comment: One commenter recommended against using the phrase 
``normal life activities.'' The commenter believed that it contains a 
value judgment and could be read as devaluing people who are living in 
institutional settings as not ``normal.'' Therefore, the commenter 
recommended striking the term ``normal'' and simply using ``life 
activities.''
    Response: The phrase ``normal life activities'' is used in this 
rule to clarify that home health services cannot be limited based on 
the location in which home health services are used. We do not believe 
that the term ``normal'' needs to be removed from this phrase. There is 
no negative connotation intended.
    Comment: One commenter suggested a new classification of care. 
Rather than ``home care,'' the commenter suggested that care for 
beneficiaries of covered home-care services when the beneficiary is not 
homebound be called ``community care.'' The commenter further stated 
that better distinguishing between home care and not-at-home-but-in-
the-community care will help with the application of that care. While a 
community-based benefit can be provided within the existing 
infrastructure of home health care, it needs to be administered with 
more scrutiny and monitoring of beneficiaries. Just tracking where the 
care is to be delivered will require more scheduling and monitoring.
    Response: Developing a new classification of care is beyond our 
statutory authority.
    Comment: Some commenters suggested prohibiting any home care 
coverage standard that results in a different and/or greater scope of 
benefits for beneficiaries residing in facility-type residences than 
the scope of benefits for individuals in their own private homes. 
Commenters recommended that CMS clarify its suggestion/allowance that 
states can provide a higher level of home care benefit to individuals 
who reside outside an individual private home such as a rest home or 
assisted living facility. As written, it may be possible for a state to 
interpret the CMS reference on higher levels of coverage for such 
individuals as permitting states to have a different benefit for 
Medicaid beneficiaries in a facility-type residence than for those in a 
private home.
    Response: This rule does not affect or change comparability rules, 
and therefore, we do not believe that individuals will receive a 
different and/or greater scope of benefit based on where an individual 
resides. We also remind commenters that the scope of a benefit that a 
beneficiary is authorized to receive is based on medical necessity, not 
the setting where the beneficiary resides. States have the flexibility 
to determine medical necessity criteria and therefore, the level of 
services a beneficiary receives is based on medical necessity, not 
setting.
    Comment: One commenter indicated that CMS should clarify in 
regulation that Medicaid home health services should not be limited to 
services furnished in the home.
    Response: We clarify that home health services cannot be limited to 
services furnished in the home. Additionally, we have revised Sec.  
440.70(c)(1) to indicate that home health services can be provided in 
any setting in which normal life activities take place, other than a 
hospital, nursing facility; intermediate care facility for individuals 
with intellectual disabilities; or any setting in which payment is or 
could be made under Medicaid for inpatient services that include room 
and board. Therefore, we believe that we have sufficiently communicated 
and regulated the prohibition on restricting services to the home.
    Comment: One commenter requested that CMS clarify whether states 
can specify settings in which home health care can be received. The 
commenter stated that states should be allowed to specify that skilled 
tasks associated with bathing be limited to the client's place of 
residence.
    Response: The purpose of this provision is to ensure the delivery 
of home health services not only in the home, but also in the community 
when the beneficiary is participating in normal life activities. It is 
not meant to mandate service provision in any particular setting. We 
are also permitting states to authorize additional hours of home health 
services to account for medical needs that arise in the setting 
furnished. And, while states may set limits on the amount, duration, 
and scope of home health services, subject to our approval, we do not 
agree that states may put arbitrary limits on the places where home 
health services can be received.
    Comment: One commenter asked, if a child is approved for services 
which will be provided in a school setting, is the school responsible 
for the nursing services, or will a nurse from the approved home health 
agency be required to provide services in a school setting.
    Response: This does not change policy for Medicaid services 
provided in schools. Under the existing rule, nursing services under 
the home health benefit must generally be provided by a home health 
agency. The rule does not limit agreements and arrangements between 
home health agencies and schools to facilitate the provision of such 
services. Nor does it preclude coverage of nursing services provided in 
schools under another benefit category.
    Comment: One commenter reported that currently their state does not 
contract with out-of-state home health providers and inquired as to 
whether a state home health nurse would be required to travel with the 
family, how the state would reimburse the nurses' travel.
    Response: Nothing in this final rule specifically addresses this 
issue but, in general, nursing services are provided under the home 
health benefit only when provided through a home health agency in 
accordance with an physician's order as part of a written plan of care. 
To the extent that there is a medical need documented in the plan of 
care for out of state travel accompanied by a home health nurse, and 
the service can be provided consistent with the approved state plan, 
payment would be made to the home health agency as set forth in the 
approved state plan. We note that coverage of out-of-state services may 
be limited by a state as long as the requirements of 42 CFR 431.52 are 
met.
    Comment: One commenter requested that the plan of care designate 
the home health services as In-Home or Out-of-Home services after a 
physician evaluation of medically necessary accommodations and staffing 
levels to insure the safety of beneficiaries and success of out of home 
services. One commenter raised concern with settings that cannot be 
evaluated as safe, and settings that may result in unnecessary 
duplication of services. The commenter also was concerned with access 
to care issues related to out of state care, as current state policy 
requires that the setting be a safe setting, and may not approve 
services if all health and safety issues cannot be met in the setting. 
The commenter believed that the rule does not address any limitations 
of services outside of the home and wondered whether states would be 
permitted to

[[Page 5544]]

restrict certain services. Another commenter requested that CMS 
consider further clarification of the site of care for home health 
services to acknowledge and reduce the personal risks to health care 
workers and to ensure the site of care selected is appropriate for the 
safe delivery of home health services.
    Response: The plan of care should assist in identifying services 
and settings appropriate for the individual's need. Assessment of 
receipt of the services is based on medical necessity. This regulation 
does not set forth detailed requirements for plans of care; there are 
other resources for guidance on the best practices for person-centered 
care planning. We understand and appreciate the commenters' concerns 
for the personal safety of home care workers. Such concerns exist with 
any home care program, and are not new with this regulation. We 
encourage home care agencies to take measures to reduce risks to 
employees. With regards to duplication of services, section 
1902(a)(30)(A) of the Act requires that payments are economic and 
efficient; payments which duplicate payment for the same service would 
not be economic and efficient, and therefore, would not comport with 
federal statute.
    Comment: We received many comments pertaining to costs within this 
component of the regulation. One commenter stated that Medicare 
regulations continue to require that a beneficiary be ``confined to the 
home'' to qualify for Medicare-covered home health services. Therefore, 
for any dual eligible, state Medicaid programs will bear the entire 
financial burden for home health services provided in another setting 
outside the home. Another commenter believed that the proposed 
regulation goes beyond states' limits and would appear to apply to 
waiver and state plan benefits alike. The commenter was concerned about 
the potential downstream effect of expanding services available through 
HCBS waivers, which are case managed, to coverage of state plan 
benefits, which are not case managed. The commenter also stated that 
expanding beyond the current case-managed limitations on services or 
service hours would have a real and substantial fiscal effect on the 
state's Medicaid program. One commenter expressed concern that the new 
requirement would result in a large increase in cost for Medicaid home 
health services. Another commenter indicated that deleting the existing 
``at home'' requirement for Medicaid home health services represents a 
substantial and unjustified expansion of states' financial liability 
for home health services.
    Response: While most of the Medicare/Medicaid rules are aligned, 
this is an area in which there is a statutory difference between the 
programs. As a result, the rules differ. Sections 1814(a) and 1835(a) 
of the Act impose the Medicare homebound requirement for home health 
services, but there is no parallel homebound requirement under 
Medicaid. We understand that there may be consequences for Medicaid 
programs, but these consequences do not arise from this rulemaking; 
they are inherent in the difference between the two statutes. 
Additionally, we note that we would permit states the flexibility to 
authorize additional hours of home health services to account for 
medical needs that may arise outside of the home.
    Comment: One commenter stated that while the proposed regulation 
purports to incorporate and comply with federal court decisions, the 
new provisions go beyond anything required or contemplated by the 
decisions. The commenter further stated that the proposed regulation 
would vastly expand the program so that the health care provided to 
Medicaid beneficiaries far exceeds anything available to the general 
population. Under the proposed regulations, a beneficiary could receive 
health care anywhere, including the grocery store, a museum, or even an 
amusement park. The proposed regulations essentially transform Medicaid 
from a health care program to a social services program. The commenter 
also believed that the proposed regulations appear to be based on an 
incorrect interpretation of the Olmstead decision. Olmstead cannot 
reasonably be read to require the dramatic expansion that would follow 
from the final issuance of the proposed regulations. The commenter 
stated they believe that the proposed regulations are not supported by 
the cost-neutral rationale espoused by the Skubel decision, and they 
establish a more expansive coverage policy (both substantively and 
geographically), when compared to the Detsel and Skubel decisions and 
CMS's own stated policies.
    Response: This final rule does not mandate provision of services in 
any particular setting, but removes a barrier to the provision of home 
health services outside of the home itself. Removal of this barrier may 
permit individuals whose medical needs are such that they require home 
health services to participate in normal life activities not to be 
restricted to the home. The community integration underpinning of the 
home health benefit is appropriate for the Medicaid program and we 
refer to the principles set forth in court cases discussed herein as 
support for this final rule. Those principles are based on readings of 
the Medicaid statute, and we are adopting those readings. Furthermore, 
in response to the comment that we are expanding the scope of coverage 
more than is required by the court cases, to the extent that this is 
the case it is because such expanded coverage is consistent with both 
the overall purposes of the Medicaid statute, as section 1901 of the 
Act specifies to help families and individuals attain or retain 
capability for independence or self-care, and under section 1902(a)(19) 
of the Act that specifies care and services will be provided, in a 
manner consistent with simplicity of administration and the best 
interests of beneficiaries.
    Comment: Some commenters disagreed with the proposed revision to 
the setting description. One commenter stated that the term ``home 
health care services'' as used in federal Medicaid law has never been 
further defined. In the absence of a definition, it should be assumed 
that the Congress intended it to mean exactly as written--health care 
services delivered in a beneficiary's home. Nothing in the ``face-to-
face'' provision or elsewhere in the Affordable Care Act suggests the 
Congress intended to depart from the clear meaning and long-standing 
interpretation of this term. The commenter also believed that that the 
suggestion that covering home health services outside the home is 
necessary for compliance with ADA as interpreted in the Olmstead 
decision is without foundation. The proposed rule's directive that 
states cover home health services in non-home settings directly 
contravenes the flexibility that was at the heart of the Olmstead 
decision. Additionally, the commenter stated that as CMS acknowledges 
in the preamble, under the proposed rule, ``home health services may 
not be limited to services furnished in the home,'' and ``states may 
not limit home health services to services delivered in the home.'' Any 
language in the proposed rule suggesting a contrary result is 
misleading, and presumably intentionally so. Another commenter stated 
that the proposed regulations go well beyond long-established policy 
and the decisions in Detsel and Skubel, as well as CMS's own stated 
policies.
    Response: As we have indicated previously, we are adopting the 
principles underlying the holdings of the Skubel and Detsel court 
decisions in this final rule. We believe this reading is consistent 
with the purposes of the Medicaid statute. We are being clear

[[Page 5545]]

that home health services may not be limited to services literally 
provided in the home. But we are not mandating that services be 
provided in any particular setting; that is an issue that must be 
addressed in a plan of care that accounts for the individual's needs, 
and may be subject to review by the state.
    Comment: One commenter reported that the regulation would require 
that the Children's Services Program of the state revise or update 
existing policies to reflect that home health services cannot be 
otherwise restricted to services furnished in the home itself.
    Response: While we understand that some state policies may need to 
be revised; such as the restriction of home health services to an 
individual's home. We do not believe that this will be overly 
burdensome.
    Comment: One commenter was concerned with the lack of control in 
non-institutional settings. The commenter believed that issues may 
arise in certain settings considered non-institutional such as college 
dormitories. Additionally, the commenter believed restrictions based on 
funding, safety, distance of travel, and practical feasibility need to 
be addressed.
    Response: Home health services are authorized based on medical 
necessity, not setting. However, we do recognize that there may be 
circumstances in which an individual and/or provider's health or 
welfare may be at risk, and we urge home health agencies and states to 
address the issues on an individual basis should they occur. We are 
available to provide technical assistance and guidance as needed.
    Comment: One commenter stated that, under proposed Sec.  
440.70(c)(1), home health services would be significantly broadened by 
offering services in ``any non-institutional setting in which normal 
activities take place.'' The commenter was concerned that this new 
requirement would result in a large increase in cost for Medicaid home 
health services and DME, prosthetics, orthotics, and supplies.
    Response: As previously stated, home health services, including 
DME, are authorized based on medical necessity, not setting. We 
acknowledge the increased cost associated with our standardizing the 
definition of medical supplies, equipment, and appliances, both 
narratively, and in our characterization of the proposed rule as being 
economically significant, with a likely financial impact of greater 
than $100 million. However, we continue to stand by the necessity of 
the regulatory revisions to ensure that beneficiaries receive the home 
health benefits to which they are entitled under the Medicaid statute.
    Upon consideration of the public comments received, we are revising 
Sec.  440.70(c)(1) to indicate that a homebound requirement is not 
permitted. Additionally, we are clarifying the settings in which 
individuals may receive home health services. Specifically, individuals 
may receive home health services in any setting in which normal life 
activities take place, other than a hospital, nursing facility; 
intermediate care facility for individuals with intellectual 
disabilities; or any setting in which payment is or could be made under 
Medicaid for inpatient services that include room and board.

E. Face-to-Face Encounter (Sec.  440.70(f))

    Section 440.70(f)(1) specifies that for the initial ordering of 
home health services, the physician must document that a face-to-face 
encounter that is related to the primary reason the individual requires 
home health services has occurred no more than 90 days before the start 
of services. We recognize, however, that there may be circumstances 
when it may not be possible to meet this general requirement, and the 
individual's access to needed services must be protected. To account 
for these circumstances, we proposed to allow an opportunity to meet 
the face-to-face encounter requirement through an encounter with the 
beneficiary within 30 days after the start of home health services.
    Comment: Some commenters supported the proposed timeframes. One 
commenter stated that they believe that this timeframe is appropriate 
for authorization of most types of home health services. Another 
commenter stated that the requirements for face-to-face encounters with 
an individual's physician or NPP for approval of home health services 
90 days prior or 30 days after administration will allow for the most 
up-to-date patient information to be incorporated into their plan of 
care.
    Response: We appreciate the commenters' support of the proposed 
timeframes.
    Comment: Many commenters requested that CMS delay implementation. 
Commenters stated that with regard to Medicare, CMS delayed 
implementation of the regulation to afford sufficient time for 
beneficiaries, physicians, hospitals and other providers to understand 
the parameters of the new rule. The commenters recommended that CMS 
employ the same caution in implementing the face-to-face requirement 
for Medicaid's home health benefit. One commenter further suggested 
delaying implementation at least one year.
    Response: We recognize that there may be operational and budgetary 
implications with this rule and that states and providers may need time 
to implement this provision. In order to ensure that states and 
providers are implementing the rule appropriately we have revised the 
effective date of the rule to July 1, 2016 and will delay compliance 
with the rule for up to one year if the state's legislature has met in 
that year, otherwise 2 years. Our expectation is that states and 
providers are compliant with the requirements of the final rule based 
on the timeframes explained above.
    Comment: Many commenters expressed opposition to the face-to-face 
requirement with one commenter requesting that CMS drop the face-to-
face requirement altogether. The commenter believed that it has only 
been a barrier to service for beneficiaries who need care and cannot 
get in to see their physician. Another commenter urged CMS to remove 
the face-to-face requirement for home health services in the Medicaid 
program. One commenter stated that his state expresses opposition to 
CMS' proposed expansion of face-to-face requirement to Medicaid at this 
time. Another commenter stated that CMS's conclusion that the Congress 
intended the face-to-face requirement to apply to physicians' orders 
for home health under Medicaid is unreasonable. The commenter further 
stated that to require a face-to-face encounter within a prescribed 
period of time before a physician orders or prescribes a particular 
course of care or treatment calls into question the physician's 
exercise of professional judgment under applicable state practice acts, 
and undermines the physician-patient relationship. One commenter 
indicated that he does not support the need for a face-to-face contact 
by a physician or other designated health professional prior to the 
initiation of home health services. The commenter stated that the 
proposed regulation cites no substantive reason for this requirement. 
The commenter also recognized that this requirement may be specifically 
mandated by the Affordable Care Act, but reported that he does not see 
how such a requirement will actually serve any beneficial purpose for 
the beneficiary.
    Response: We believe that our interpretation of the applicability 
of the face-to-face requirement in the same manner and to the same 
extent as it applies to Medicare is consistent with,

[[Page 5546]]

and required by, section 6407 of the Affordable Care Act.
    Comment: One commenter supported aligning the timeframes with 
similar regulatory requirements for Medicare home health services. 
Another commenter specified that any face-to-face requirement for 
Medicaid should mirror in timing, information and signature 
requirements for the Medicare program and the one exception should be 
the requirement of homebound criteria which the commenter agrees should 
not be required for Medicaid beneficiaries. Another commenter 
recommended that the Medicaid requirement match the Medicare 
requirement, which would be the 6-month timeframe. One commenter 
recommended that CMS remove the 90-day timeframe and replace it with 
the 6-month timeframe found in the statute. One commenter stated that 
CMS halving the permissible timeframe for the face-to-face encounters 
from 6 months to 90 days is inconsistent with Congressional intent. The 
commenter also stated that requiring a face-to-face encounter within 90 
days of a physician ordering home health services for a Medicaid 
beneficiary is not consistent with the nature and needs of the Medicaid 
population. Additionally, the commenter believes that the provision of 
the proposed rule that would allow for a face-to-face encounter 
``within the 30 days after the start of the services'' is inconsistent 
with the purpose of the Medicaid rule requiring a physician order for 
coverage of home health services. One commenter urged CMS to maintain 
the timeframe window to be 6-months preceding the start of care to 30 
days after the start of care under Medicaid.
    Response: We agree with commenters who asked for alignment between 
Medicare and Medicaid face-to-face timing requirements. In this final 
rule, Medicaid requirements for the timeframes of the face-to-face 
requirement for home health services generally are aligned with 
timeframes adopted for Medicare home health. To maximize the alignment 
between the programs, in this final rule we have also aligned with 
Medicare the timeframe for the face-to-face encounter for Medicaid 
medical equipment, which is 6 months prior to the start of service.
    Comment: A commenter stated that the proposed timeframes for face-
to-face encounters may prove problematic if the visit can occur up to 
30 days after the start of home health services, because under the fee-
for-service system, authorizations for services would be already 
approved and there would be no easy way to make sure this visit, 
complete with documentation requirements was performed. Another 
commenter stated that the timeframes will be much harder to comply with 
for the Medicaid population.
    Response: To clarify, we have extended the face-to-face encounter 
timeframes to permit the encounter to occur within 30 days after the 
start of home health services to account for individual circumstances. 
But we would expect that ordinarily the face-to-face encounter would 
occur before the start of home health services. We understand that in 
the individual circumstances, when the face-to-face encounter occurs 
after the start of services, additional coordination of the medical/
home health team may be required to ensure that the visit, along with 
the required documentation was performed. We encourage states to work 
with the home health provider community to incorporate the face-to-face 
visits in creative and flexible ways to account for individual 
circumstances. We are available to provide technical assistance to 
states in achieving this goal.
    Comment: One commenter suggested allowing longer timeframes for 
Medicaid face-to-face encounters and extending the 30-day post-start of 
care, especially for beneficiaries without a primary care physician.
    Response: The timeframes proposed in this rule are aligned with 
Medicare's timeframes to promote consistency. Additionally, we do not 
agree that the 30-day post-start of care timeframe should be extended. 
The expectation of the rule is that that the timing of the face-to-face 
encounter in normal circumstances should occur within the 90 days 
before the receipt of services. We are providing for the 30-day post-
start of care timeframe to accommodate extenuating circumstances that 
require immediate commencement of home health services before a 
physician encounter can be scheduled.
    Comment: One commenter suggested that CMS state that CMS encourages 
the face-to-face encounter occur within 90 days prior to the start of 
home health services.
    Response: We do not believe that a change in regulation language is 
necessary. We emphasized in the proposed rule and in the responses to 
comments that the timing of the face-to-face encounter in normal 
circumstances should occur within the 90 days before the start of home 
health services.
    Comment: We received many comments regarding the face-to-face 
encounter for individuals who are dually eligible for Medicare and 
Medicaid. One commenter asked whether CMS would accept documentation of 
a face-to-face encounter reimbursed under Medicare when a dually-
eligible individual begins home health services under Medicare and 
transitions to Medicaid. Specifically, since Medicaid does not require 
the beneficiary to be homebound, the commenter questioned whether 
another face-to-face encounter would need to be completed for Medicaid 
home health services. Several commenters recommended that CMS amend the 
proposal to deem the Medicare qualifying face-to-face encounter 
documentation as meeting Medicaid face-to-face requirements or 
establish a standard that the switch to Medicaid as the payer is not a 
``start of care'' that would require a Medicaid qualifying face-to-face 
encounter. Commenters requested that CMS clarify whether there are 
circumstances under which an additional face-to-face encounter would be 
needed when beneficiaries move between Medicare and Medicaid coverage. 
One commenter noted that some individuals are dually eligible and may 
face greater challenges accessing care and services.
    Response: To clarify, the face-to-face encounter is required for 
initial orders for home health services and for all episodes initiated 
with the completion of a Start-of-Care OASIS assessment. OASIS is the 
``Outcome and Assessment Information Set'' applicable for Medicare home 
health services and Medicaid home health services. If a face-to-face 
encounter was performed at the start of home health services, or to 
support the order for medical equipment, a new face-to-face encounter 
is not required if the source of payment has changed to Medicaid. 
Therefore, if a dually eligible individual begins home health services 
under Medicare and transitions to Medicaid, the Medicare face-to-face 
encounter documentation will meet the Medicaid face-to-face 
requirement. Our expectation is that Medicaid providers are aware that 
there is no homebound requirement to be eligible for Medicaid home 
health services. Dually-eligible individuals not meeting Medicare's 
homebound criteria would not be eligible for Medicare home health, but 
could still be eligible for Medicaid home health, assuming medical 
necessity criteria are met. In these cases, the beneficiary's physician 
or authorized NPP would conduct and document the face-to-face 
encounter, and Medicaid home health reimbursement would be appropriate.
    Comment: Some commenters encouraged CMS to provide states with 
flexibility to extend the permissible period for the Medicaid 
beneficiary to secure the required encounter after the

[[Page 5547]]

start of care because of the unique problems often facing Medicaid 
beneficiaries in accessing a physician. This can be done by extending 
the allowable timeframe for compliance or permitting states to apply an 
exception process. Commenters recommended that CMS revise the proposal 
and specifically provide for exceptions, or provide direct authority to 
the states to do so. Some suggestions for exceptions included: (1) 
Medical contraindications to the beneficiary leaving his or her home to 
see a physician/NPP; (2) the beneficiary resides in a frontier area; 
(3) the beneficiary resides in an area designated as medically-
underserved by the state; (4) the beneficiary was discharged from an 
inpatient setting directly into home health services; (5) the home 
health agency is not at fault in the failure to meet the face-to-face 
requirement and noncompliance is beyond the control of the agency; (6) 
the beneficiary enters the hospital before the encounter; or (7) the 
beneficiary is referred to home health from a school nurse or elder 
service networks.
    Another commenter urged CMS to give specific guidance to states 
maximizing the flexibility in timing of face-to-face encounters, 
allowing the timeline to be extended, and allowing states to provide a 
good cause exceptions process in cases where beneficiaries have not 
been able to meet this requirement. One commenter viewed good cause 
exemptions as extremely important and urged that they be put in place 
immediately. Such good cause exemptions might include, but not be 
limited to, situations where the state or federal government declares a 
state of emergency such as a natural disaster or terrorist attack. In 
such a circumstance, lack of electricity, phones and equipment, and 
navigable roads might delay the achievement of a face-to-face encounter 
for more than 30 days. Another commenter indicated that there needs to 
be more flexibility in the timeframes after the start of care.
    Response: We appreciate the comments, but do not believe revising 
the regulation to build in exceptions to the timeframes is necessary. 
We believe that the proposed timeframes will provide states, providers, 
and beneficiaries with the necessary flexibility to meet the face-to-
face requirement. On an individual basis, circumstances beyond control 
(natural disaster, terrorist attack, etc.) would be taken into account 
if the timeframes for a face-to-face encounter for home health services 
were not met.
    Comment: One commenter requested adding some special circumstances 
that allow for payment to the home care agency for efforts made to get 
the face-to-face documentation completed and/or get the beneficiary to 
seek the encounter appointment, but circumstances outside the control 
of the agency occur and the encounter is not completed. Another 
commenter stated that there needs to be flexibility in those situations 
where a Medicaid beneficiary is accepted for care in good faith that a 
face-to-face requirement will be met by the close of the qualifying 
period yet circumstances beyond provider control occur that result in 
failure to comply with this requirement on a timely basis. One 
commenter requested that the final rule provide good-cause exceptions 
in cases where beneficiaries have not been able to meet this 
requirement despite the best efforts of the agency seeking to serve 
them. Another commenter believed there needs to be clearer discussion 
of a hold harmless provision that would allow temporary services to be 
put into place pending the face-to-face encounter.
    Response: We disagree that there is a need to add circumstances or 
situations that allow for payment to home care agencies based on 
unsuccessful efforts made to timely obtain the necessary face-to-face 
documentation, or to otherwise allow for good-cause exceptions. The 
timeframes provided allow enough flexibility to meet the face-to-face 
requirement in a timely manner. We encourage home health agencies to 
document efforts to facilitate face-to-face encounters before home 
health services are furnished, and to collaborate with physicians to 
ensure timely completion of encounter documentation.
    Comment: One commenter stated that in certain circumstances, it 
should suffice that the personal physician's original diagnosis of the 
condition for which the individual needs home health services was based 
on a face-to-face encounter, irrespective of when the face-to-face 
encounter took place.
    Response: The statute requires that a face-to-face encounter must 
occur within prescribed timeframes in relation to the ordering of home 
health services. Therefore, it is beyond our authority to allow an 
encounter that took place outside of those timeframes to suffice.
    Comment: One commenter recommended a more flexible approach for 
states and health plans to follow in verifying the need for home health 
services.
    Response: We believe that the rule provides states and health plans 
with flexibility while adhering to the statutory requirements.
    Comment: One commenter indicated that clarification is necessary 
regarding the face-to-face encounter in reference to the ``start of 
services'' and ``initiation of services,'' because home health services 
can be intermittent, even though the services relate to the same 
episode. The commenter recommended that the face-to-face encounter for 
a service or item can relate back to an encounter with the primary care 
provider that occurred outside the 6-month timeframe, if the service or 
item relates to the same episode of care that occurred within the 6-
month timeframe.
    Response: To clarify, we are aligning Medicaid face-to-face 
requirements with Medicare's face-to-face requirements. A face-to-face 
encounter is required for the initial ordering of a home health service 
and for all episodes initiated with the completion of a Start-of-Care 
OASIS assessment. However, as previously stated, this rule does not 
replace current regulatory requirements, and therefore, the physician 
should be reviewing the plan of care for home health services every 60 
days.
    Comment: One commenter questioned what CMS's guidance would be on 
the face-to-face documentation when the medical condition of the 
beneficiary changes before recertification. The primary reason for 
ordering home health will be different than what was indicated on the 
initial certification of the face-to-face encounter. The commenter 
further questioned if another face-to-face would be required to 
continue home health based upon the change in the individual's 
condition. The commenter also asked what the penalty is if the 
beneficiary is not able to see the physician within the 30 days after 
the start of care. Another commenter questioned whether long-term 
beneficiaries that receive certified nursing assistant (CNA) visits 
need a face-to-face encounter, and if so, whether it would be a one-
time requirement or have to be renewed.
    Response: A face-to-face encounter is required for the initial 
ordering of a home health service and for all episodes initiated with 
the completion of a Start-of-Care OASIS assessment. and must be related 
to the primary reason the patient requires home health services. If an 
individual's medical condition changes and this results in the need for 
an additional home health service, our expectation is that the Home 
Health Agency would communicate the need with the ordering physician 
who would revised the plan of care/orders accordingly. An additional 
face-to-face encounter would not be required. In response to the issue 
regarding a penalty if the beneficiary is not able to see the physician 
within the 30 days after the start of care, we clarify that no payment

[[Page 5548]]

for home health services can be made for which a timely face-to-face 
encounter was not documented. However, we believe that the flexibility 
included in the regulations, allowing NPPs in addition to physicians to 
perform the face-to-face encounter, as well as allowing the use of 
telehealth, should prevent the scenario from happening in a majority of 
cases. The timeframes established in this final rule meet the program 
integrity and quality goals associated with the provision. In response 
to the question about CNA visits, all beneficiaries needing home health 
services are subject to the face-to-face requirement.
    Comment: One commenter requested clarification of the effective 
date for the face-to-face requirement for certification for Medicaid 
home health and DME.
    Response: The statutory provision became effective upon enactment 
on March 23, 2010, but for home health the statute indicated that the 
face-to-face requirements applied to physician certifications after 
January 1, 2010. The provisions specific to this regulation are 
applicable prospectively starting on the effective date. We intend to 
work with states and the provider community to ensure compliance. As 
previously indicated, we are delaying the effective date to July 1, 
2016 and compliance with the rule for up to one year if the state's 
legislature has met in that year, otherwise 2 years. Our expectation is 
that states and providers are compliant with the requirements of the 
final rule based on the timeframes explained above.
    Comment: Commenters requested that CMS clarify the circumstances 
where it is acceptable to perform the face-to-face encounter within 30 
days after the start of home health services. One commenter requested 
clarification regarding the definition or description of circumstances 
precluding a face-to-face visit within the 90 days prior to the start 
of home health services. One commenter recommended that CMS clarify 
that the ``under normal circumstances'' standard reflects permission to 
allow a state flexibility to extend the encounter timetable, but not 
make it more restrictive. Alternatively, the commenter suggested that 
the phrase should be removed to avoid the imposition of stricter 
timetable standards. Another commenter requested that we not use the 
wording ``under normal circumstances,'' as unless this term is defined, 
it can lead to different and varied interpretations and confusion and 
could possibly allow states to impose a strict guideline on allowing 
the encounter within 30 days after the start of care.
    Response: We do not agree that it is necessary to be prescriptive 
in defining ``under normal circumstances'' or the circumstances in 
which it is acceptable to perform the face-to-face encounter within 30 
days after the start of home health services. Allowing flexibility in 
these terms is in the best interest of the beneficiaries. There could 
never be an exhaustive list of circumstances or parameters defining the 
term, and while we encourage face-to-face encounters to occur before 
the start of care, we do not want to unnecessarily restrict the ability 
of the encounter to occur within 30 days after.
    Comment: A few commenters requested that CMS clarify whether the 
face-to-face encounter is only required for the initial visit or for 
recertification as well. Another commenter asked whether the rule would 
also identify recertification timelines such as an annual face-to-face 
thereafter and whether the physician would be required to see the 
beneficiary to reevaluate the need for care after 6 months or the 
proposed 90 day face-to-face encounter timeline. One commenter 
indicated that the requirement that the face-to-face encounters be 
related to the primary reason the beneficiary requires home health 
services will result in additional office visits. The requirement would 
seem to not consider beneficiaries with chronic conditions, as persons 
with chronic, even lifelong conditions would not need such regular 
monitoring for some home health services. One commenter requested 
clarification regarding whether or not the proposed face-to-face visits 
will be a billable item for providers. Another commenter requested that 
CMS clarify or amend the definition of home health services such that 
this rule would not be applicable to non-medical services such as 
personal care attendant services.
    Response: As previously stated, the face-to-face encounter is 
required for the initial ordering of a home health service and for all 
episodes initiated with the completion of a Start-of-Care OASIS 
assessment. There is no recertification face-to-face requirement. This 
final rule has not changed current Medicaid regulations which require 
an individual's physician to review the individual's plan of care every 
60 days. In response to the commenter's question regarding billing for 
the face-to-face encounter, the encounter will be a billable item for 
providers, under the Medicaid physician benefit or the benefit 
authorizing payment for services provided by licensed practitioners. 
Amending or clarifying the definition of home health services in this 
rule is beyond our authority.
    Comment: One commenter requested additional clarification to 
address differences between Medicare and Medicaid regarding ``episode 
of care.'' The commenter indicated that many states use systems other 
than Prospective Payment Systems (PPS) and stated that in these cases, 
additional guidance on the frequency of face-to-face encounters may be 
warranted.
    Response: Regardless of the payment methodology system used by 
states, as indicated in the response above, the face-to-face encounter 
is required for the initial ordering of a home health service and for 
all episodes initiated with the completion of a Start-of-Care OASIS 
assessment.
    Comment: One commenter indicated that their current state Medicaid 
rules require parents to supplement care up to 8 hours in addition to 
the approved direct services hours and questioned whether the proposed 
rule would revise the parent supplementation of care requirement.
    Response: The Medicaid program, rather than the beneficiary or the 
beneficiary's family, is responsible for the provision of medical 
assistance for covered benefits. Although a state can take into account 
available resources in determining the amount of medical assistance 
required by the beneficiary, including any legal liability of third 
parties to provide care, it cannot impose requirements for parents to 
provide care as a condition of a child receiving Medicaid benefits. Nor 
can a state impose an in-kind deductible charge (requiring the 
provision of a certain amount of services as a condition for coverage 
of other services. The face-to-face encounter requirement does not 
change these requirements.
    Comment: Some commenters requested clarification pertaining to 
managed care plans. One commenter requested that CMS clarify that the 
Medicaid face-to-face requirements for home health services required 
under the proposed regulations apply only for home health services 
provided through fee-for-service, and not to home health services 
provided under a Medicaid managed care plan. Another commenter 
requested clarification on how this rule would apply when members are 
enrolled in Medicaid managed care plans and the responsibility of plans 
to report physician encounters to the state.
    Response: To clarify, at a minimum, benefits offered in managed 
care must be the same as the benefits offered in the state plan. 
Therefore, the approved state plan home health benefit must be offered 
in managed care. States must

[[Page 5549]]

follow statutory and regulatory requirements related to the benefits.
    Comment: Commenters were concerned that the face-to-face encounter 
requirement will erect a barrier to timely care for individuals who are 
homebound and have difficulty traveling to a provider. Another 
commenter wanted to ensure that the face-to-face visit requirements do 
not impede access to necessary home health care.
    Response: We recognize that some individuals may have difficulty 
meeting the face-to-face requirement. We believe we have accounted for 
these circumstances while meeting statutory requirements, by extending 
the timeframe of the face-to-face encounter to 30 days after the start 
of home health services, by allowing for NPPs to complete the face-to-
face encounter, and by encouraging telehealth as an alternative for 
ensuring that this new requirement is implemented in a way that 
protects continuity of services. Additionally, as previously stated, 
the face-to-face encounter is required for the initial ordering of a 
home health service and for all episodes initiated with the completion 
of a Start-of-Care OASIS assessment.
    Comment: One commenter recommended that CMS create a standard that 
establishes eligibility for Medicaid coverage of home health services 
30 days prior to the face-to-face encounter.
    Response: Home health services may be covered by Medicaid for up to 
30 days before the face-to-face encounter is conducted; but such 
services are not covered if the required face-to-face encounter is not 
conducted within those 30 days. Furthermore such services are not 
covered in the absence of a physician order for the services, or a 
written plan of care. Medicaid payment is not available if these 
conditions are not met.
    Comment: One commenter urged CMS to provide guidance to health 
professionals who order such care and providers who deliver the care to 
encourage them to include their mutually shared beneficiary in the 
process of creating the service order and care plan. The commenter also 
urged implementation that reasonably encourages a robust three-way 
dialogue among the beneficiary, the ordering health care professional 
and the service provider to promote person-centered and efficient care 
driven by the needs and preferences of the beneficiary.
    Response: We agree with the commenter. It is our expectation that 
services are provided to individuals in a person-centered manner and 
that all providers work collaboratively to ensure that services are 
meeting the needs of the beneficiaries.
    After consideration of the public comments, we are revising this 
section to clarify that for the initial ordering of Medicaid medical 
equipment, the physician must document that a face-to-face encounter 
that is related to the primary reason the beneficiary requires medical 
equipment occurred no more than 6 months prior to the start of 
services. Additionally, we are clarifying that a face-to-face encounter 
is required for initial ordering of both home health services and 
medical equipment. Furthermore, for home health services, a face-to-
face encounter is required for the initial order and for all episodes 
initiated with the completion of a Start-of-Care OASIS assessment. We 
have also delayed compliance with the rule for up to one year if the 
state's legislature has met in that year, otherwise 2 years. Our 
expectation is that states and providers are compliant with the 
requirements of the final rule based on the timeframes explained above.

F. Practitioners (Sec.  440.70(f)(2))

    The statute describes NPPs who may perform this face-to-face 
encounter as an NP or CNS, as those terms are defined in section 
1861(aa)(5) of the Act, who is working in collaboration with the 
physician in accordance with state law, or a certified nurse-midwife 
(as defined in section 1861(gg) of the Act, as authorized by state 
law), or a PA (as defined in section 1861(aa)(5) of the Act), under the 
supervision of the physician. The statutory provision allows the 
permitted NPPs to perform the face-to-face encounter and inform the 
physician, who documents the encounter. Based on the reasoning outlined 
in the Medicare Program; Home Health Prospective Payment System Rate 
Update for Calendar Year 2012; Final Rule (76 FR 68525), for 
beneficiaries admitted to home health upon discharge from a hospital or 
post-acute setting, we proposed to also allow the physician who 
attended to the beneficiary in the hospital or post-acute setting to 
inform the ordering physician regarding their encounters with the 
beneficiary to satisfy the face-to-face encounter requirement, much 
like an NPP. We proposed to add a new Sec.  440.70(f)(2) to list the 
practitioners that may perform the face-to-face encounters.
    Comment: Some commenters supported this interpretation of the face-
to-face encounter requirement.
    Response: We appreciate the support of the commenters.
    Comment: Several commenters requested clarification on the 
guidelines for patients having a face-to-face encounter from a 
physician in another state. One commenter requested that CMS clarify 
whether a state may, through a state plan amendment, choose to limit 
the performance of the face-to-face encounter to a subset of the 
allowed NPPs. Many commenters requested that the rule clarify whether 
the Medicaid face-to-face must be performed by a physician, and also if 
that physician must be registered in the CMS PECOS or any other system. 
If so, the physician community should be alerted, instructed and 
registrations confirmed well before the rule goes into effect.
    Response: Many states have reciprocity agreements with neighboring 
states, which allow Medicaid beneficiaries in one state to receive 
services in another state. Section 431.52 provides the federal 
requirements for payment for services furnished out of state. If the 
beneficiary has a face-to-face encounter with a physician in a 
neighboring state that has a reciprocity agreement, then this would be 
allowed. If a physician practices in a different state that does not 
have a reciprocity agreement, the physician would need to be a 
qualified Medicaid provider in the state in which the beneficiary 
resides. States cannot choose to limit the NPPs approved to complete 
the face-to-face encounter, as the practitioners are mandated through 
statute. We are also clarifying that the face-to-face encounter does 
not need to be conducted by a physician. Per the regulations, any 
physician would need to be qualified to furnish physician services. It 
should be noted that for dually-eligible individuals, the Medicare 
program will likely reimburse for the encounter itself, whether 
conducted by a physician or NPP. Therefore, the practitioners would 
need to adhere to Medicare provider qualifications.
    Comment: One commenter stated that for beneficiaries participating 
in section 1115 demonstrations or section 1915(c) HCBS waivers 
requiring an encounter by a physician or one by the proposed list of 
NPPs, it may be problematic for benefits such as non-skilled home 
health, DME, and supplies. Physicians may not always be able to visit 
beneficiaries in the settings where the benefit determinations are made 
(for example, assisted living, nursing homes, and other residential 
care settings). The commenter also stated that the assumption under 
this proposed rule is that a physician would be the health care 
professional who orders home health services. However, for non-medical 
in-home services such as

[[Page 5550]]

personal care, the healthcare professional ordering the service is 
often not a physician.
    Response: Section 6407 of the Affordable Care Act has changed the 
requirements for a person to receive Medicaid home health services. As 
a condition of receiving covered home health services, a physician or 
NPP must conduct a face-to-face encounter, and the home health services 
must be ordered by a physician. These requirements are applicable 
regardless of where a person lives. Usually people who reside in 
assisted living facilities and residential care settings are still 
responsible for arranging for and attending their own doctor's visits. 
Although dependent upon state licensing standards, assisted living 
facilities and residential care settings are not likely to have 
physicians on staff. Physicians are available by arrangement to people 
who reside in nursing homes if the person does not have a physician in 
the community. The physicians could conduct the face-to-face encounter 
and order the home health service on behalf of the person who lives in 
the nursing home but is transitioning to a setting that comports with 
Sec.  440.70(c)(1). We clarify that personal care services are outside 
the scope of this regulation and are not subject to the face-to-face 
requirements. Any component of home health services would need to be 
authorized in accordance with the requirements.
    Comment: One commenter reported that NPs and PAs can be primary 
care providers in some states for Medicaid.
    Response: Although NPs and PAs may be primary care providers in 
some states, the law requires the certifying physician to document that 
the physician or an allowed NPP has had a face-to-face encounter with 
the beneficiary.
    Comment: Many commenters recommended that CMS establish standards 
to permit physician residents to meet the face-to-face requirements for 
Medicaid beneficiaries, permit Medicare enrolled physicians to perform 
the face-to-face for dual eligible beneficiaries, and permit physicians 
with limited Medicaid and/or Medicare beneficiaries, including 
federally-employed physicians to utilize an abbreviated enrollment 
process.
    Response: Physician residents would be permitted to perform the 
face-to-face encounter as long as state law in which the resident is 
practicing recognizes residents as physicians. We would defer to states 
to make this determination. We recognize the potential issues 
surrounding dually-eligible individuals and the face-to-face 
requirement. To clarify, if a Medicare enrolled physician has completed 
the face-to-face requirement for a dually-eligible individual, an 
additional face-to-face requirement would not be needed by a Medicaid 
enrolled physician, should the benefit change to Medicaid services, as 
long as there was no new start of care. However, if a new face-to-face 
encounter is needed under Medicaid, the physician must be Medicaid-
enrolled. This rule does not change any requirements of the laws 
surrounding the provider enrollment process.
    Comment: Many commenters suggested allowing any physician to 
conduct a face-to-face encounter and certify eligibility for home 
health services, regardless of whether that physician or another 
physician is responsible for the plan of care.
    Response: Any physician enrolled as a Medicaid provider (or in the 
case of a beneficiary dually eligible for Medicare and Medicaid, 
enrolled in the Medicare program) can perform the face-to-face 
encounter and order home health services, provided they also develop 
the written plan of care in accordance with Sec.  440.70.
    Comment: One commenter recommended that CMS clarify that the 
ordering/prescribing physician who completes the plan of care also be 
allowed to rely on the in-person assessment of an emergency department 
physician or of a physician working on behalf of an inpatient rehab or 
skilled nursing facility prior to the beneficiary's discharge.
    Response: To clarify, the commenter's understanding is accurate.
    Comment: Commenters suggested allowing any physician to work with 
another physician colleague sharing the face-to-face encounter and 
documentation responsibilities along with the certification authority.
    Response: We see no reason to prohibit this arrangement.
    Comment: Commenters suggested that audiologists and podiatrists be 
permitted to conduct the face-to-face encounter and then communicate 
the information to the physician who is responsible for documenting the 
face-to-face encounter.
    Response: This is beyond our authority as statute did not include 
audiologists and podiatrists as NPPs.
    Comment: One commenter stated that it is imperative that the 
Medicaid home health face-to-face encounter requirements mirror those 
of the Medicare program in allowing PAs to personally perform the face-
to-face visits.
    Response: Under the supervision of the physician, PAs are 
authorized to perform the face-to-face encounter for Medicaid home 
health.
    Comment: One commenter proposed that the regulation specifically 
state that home care and DME providers can contract with physicians 
(for example, medical directors) or NPP/physician collaborating teams 
to complete the necessary face-to-face visits in the patient's home. 
The home health agency or DME provider should be permitted to 
compensate time associated with such visits in a manner that would 
allow the physician or NPP to earn hourly compensation consistent with 
community standards.
    Response: Such an arrangement would need to include a physician who 
would continue to oversee the provision of home health services in 
accordance with the written plan of care, as specified in Sec.  440.70.
    Comment: Some commenters recommended increasing the role of 
advanced practice nursing in the ordering of home health services. One 
commenter also suggested allowing a wider range of practitioners to 
certify home health care (for example, nurses in advanced practice). 
One commenter suggested allowing states to determine whether physicians 
need to order home care and endorse the performance of a face-to-face 
encounter.
    Response: Section 6407 of the Affordable Care Act requires the 
ordering physician to document that the physician or an allowed NPP has 
had a face-to-face encounter with the patient. However, the Medicare 
Access and CHIP Reauthorization Act of 2015 allows for certain 
authorized NPPs to document the face-to-face encounter for medical 
equipment. We are using this final rule to conform with this change to 
statute. With regard to the ordering of services, a change in the 
statute and current regulatory requirements would be required to allow 
an NPP to order home health services.
    Upon consideration of the public comments received, we are revising 
this section to clarify that any physician, including the physician who 
attended to the beneficiary in the hospital or post-acute setting may 
serve as the ordering physician for home health services provided that, 
in accordance with Sec.  440.70, the ordering physician also completes 
the written plan of care.

G. NPP Communication to Ordering Physician (Sec.  440.70(f)(3))

    We proposed to add Sec.  440.70(f)(3) to indicate that if an 
attending acute or post-acute physician or allowed NPP conducts the 
face-to-face visit, the attending acute or post-acute physician or NPP 
is required to communicate the

[[Page 5551]]

clinical findings of the face-to-face encounter to the physician, for 
the physician to document the face-to-face encounter accordingly. We 
indicated that this requirement is necessary to ensure that the 
physician has sufficient information to determine the need for home 
health services, in the absence of conducting the face-to-face 
encounter himself or herself. We proposed to specify that the clinical 
findings must be reflected in a written or electronic document included 
in the beneficiary's medical record (whether by the physician or by the 
NPP).
    Comment: Many commenters requested additional information regarding 
communication. Several commenters suggested that the rule should 
clarify if there are any limits on what would constitute 
``communication'' under the Medicaid rule with regards to moving 
information from the face-to-face physician to the ordering physician. 
Commenters wondered whether such communications would include fax, 
phone, voice, text, etc., and recommended the broadest definition of 
communication to help assure access for the Medicaid population. One 
commenter asked for CMS to clarify what type of communication would be 
expected to occur between the NPP conducting the face-to-face visit and 
the ordering physician who is documenting the face-to-face encounter. 
One commenter requested that CMS elaborate or further define what 
constitutes communication between the inpatient physician/hospitalist 
and community physician. The commenter inquired whether communication 
necessarily meant a verbal conversation or could it also include 
receipt or access to the beneficiary's discharge summary from the 
hospital. One commenter indicated that the regulation does not specify 
what documentation is to be sent to the ordering physician or specify 
what documentation the home health agency must secure.
    Response: We are not prescribing at the federal level what 
constitutes communication, rather we simply require that the clinical 
findings of the face-to-face encounter must be communicated to the 
ordering physician. This information can be included in clinical and 
progress notes and discharge summaries.
    Comment: One commenter advocated for reducing documentation 
requirements. The commenter believes it is critical that any additional 
changes made to the Medicare rule are also made at the Medicaid level. 
One commenter suggested that CMS consider very clear documentation 
requirements for when a hospitalist would complete a face-to-face 
document and report off to the ordering physician who would sign the 
orders. Another commenter supported that the proposed rule gives states 
flexibility on the content and form of documentation for the Medicaid 
face-to-face. The commenter stated that the proposed rule allows states 
to continue to use their existing form or improve their forms to 
reflect the face-to-face encounter and that this approach reduces 
confusion.
    Response: Our philosophy is to align face-to-face requirements 
across the two programs to the extent feasible and practical. In 
response to the commenter who requested clear documentation 
requirements for a hospitalist completed face-to-face encounter, as 
indicated above, our rule permits states considerable flexibility to 
allow this information to be included in clinical and progress notes 
and discharge summaries. We appreciate the support of the last 
commenter.
    Comment: One commenter believes that the statement ``this enhanced 
communication will result in an improved transition of care from the 
hospital or post-acute setting to the home health setting'' is not 
true. In fact it has decreased the effectiveness of discharge planning 
and cost home health agencies a great deal of time tracking down the 
forms.
    Response: The intent of this provision was not to delay transitions 
from hospitals to community settings. We recognize the importance of 
smooth transitions that do not negatively impact individuals. As 
previously stated, we are clarifying in the final rule, that in 
accordance with Sec.  440.70, home health services must be ordered by 
the individual's physician. We encourage all parties to collaborate in 
ensuring timely transitions to community care, including home health 
services.
    Comment: One commenter stated that the proposal requiring the 
(inpatient) physician to communicate the clinical findings of the face-
to-face to the (community) physician is not clear. The commenter asked 
whether CMS was now precluding the facility physician from documenting 
the face-to-face encounter and certifying the beneficiary. 
Additionally, the commenter stated that the proposal requires the 
findings be communicated to the physician and be in the beneficiary's 
medical record and asked how this documentation will be assured.
    Response: As previously stated, we are finalizing this rule to 
indicate that any physician can order home health services, provided 
that the ordering physician also establishes the written plan of care 
in accordance with Sec.  440.70. Additionally, the ordering physician 
must document that the face-to-face encounter requirements were met 
regardless of whether the physician performed the face-to-face 
encounter himself or herself. It is the physician's responsibility as a 
provider to ensure that the appropriate medical records are kept. 
Additionally, the home health agency should maintain a copy of the 
face-to-face documentation.
    Comment: One commenter urged CMS to clarify this provision to 
clearly state that a NP may conduct the face-to-face evaluation and 
provide written or electronic documentation that will meet the 
requirements of both communicating the clinical findings to the 
physician and including them in the beneficiary's medical record.
    Response: We confirm that the commenter's understanding is correct.
    Comment: Some commenters requested clarification pertaining to 
physicians in the hospital setting and the face-to-face requirement. 
One commenter requested that CMS clarify that it will still be 
acceptable for an inpatient physician or hospitalist to initiate the 
plan of care for home health services, conduct the face-to-face 
encounter, complete and sign the face-to-face form (or support 
personnel completes the form based upon the physician's documentation 
in the medical record and then the inpatient physician or hospitalist 
signs it) and upon the beneficiary's discharge, the community physician 
develops and signs the plan of care and oversees beneficiary care. 
Another commenter questioned why a hospital-employed physician cannot 
complete a face-to-face document on a home health beneficiary.
    Response: To clarify, the inpatient physician or hospitalist may 
also serve as the ordering physician and establish the plan of care. If 
this is the case, then the community physician's role in the 
commenter's scenario would be removed. A hospital-employed physician 
can also complete the face-to-face documentation for a home health 
beneficiary. Additionally, as previously stated, we are clarifying that 
the hospital-employed physician may also order home health services in 
accordance with the written plan of care.
    Comment: One commenter stated that Sec.  440.70(f)(3)(v), which 
stated ``those clinical findings must be incorporated into a written or 
electronic document included in the beneficiary's medical record,'' 
lacks clarity. The commenter stated that normally, documentation of 
clinical findings would be carried out by the NPP or inpatient 
physician in his

[[Page 5552]]

or her own patient medical record, then applicable information 
extracted and transmitted to the ordering physician to incorporate into 
his or her own medical record, followed by extraction of the 
information required at Sec.  440.70(f)(5)(i) into a document that is 
sent to the home health agency for its medical record.
    Response: We agree with the process outlined in this scenario and 
believe that the regulatory requirements support this process.
    Comment: One commenter reported that the inpatient physician 
refuses to provide the necessary information to document a face-to-face 
encounter to an ordering physician frequently, necessitating another 
face-to-face encounter once the beneficiary returns to the community.
    Response: We are establishing a process that meets statutory 
requirements and aligns with Medicare requirements. Issues of physician 
cooperation are beyond the scope of this regulation, and would be 
better raised on an individual, institutional, or state level. While we 
agree that care should be provided in the most effective and efficient 
manner, this rule does not mandate specific roles for treating 
physicians.
    Comment: One commenter suggested removing the documentation 
requirements for beneficiaries who have been in the hospital and 
instead require a statement from the inpatient or post-acute physician 
that the beneficiary had the encounter. Another commenter questioned 
why CMS is requiring the face-to-face encounter at all, since the 
hospital attending physician obviously saw the beneficiary 90 days 
prior to the start of care.
    Response: We thank the commenters for their suggestions. However, 
there is a value to the statutorily required documentation of a 
specific face-to-face encounter that informed the physician ordering 
the home health or DME service. We do not think a blanket exception for 
hospital discharges would ensure that the ordering physician was 
informed by a face-to-face encounter.
    Comment: One commenter recommended that the regulation clarify that 
it is permissible for the home care or DME provider to obtain the 
documentation of a recent face-to-face visit in acute or post-acute 
care and to make that documentation available upon request by the 
ordering physician, rather than require that the acute or post-acute 
physician routinely communicate directly to the ordering physician.
    Response: We believe that it is essential that the practitioner who 
completed the face-to-face encounter communicate the clinical findings 
to the ordering physician to ensure that the physician has sufficient 
information to understand the need for home health services in the 
absence of conducting the face-to-face encounter himself or herself. As 
indicated above, we are not prescribing the communication at a federal 
level. This information can be included in clinical and progress notes 
and discharge summaries. To permit otherwise would not only violate the 
statute, it would facilitate disconnect between beneficiary health 
status and ordering of home health services.
    Comment: One commenter indicated that the rule regarding 
communication of the clinical findings of the encounter to an ordering 
physician, should not apply to Medicaid unless there is a physician 
involved in the beneficiary's care.
    Response: Current regulations at Sec.  440.70(a)(2) require an 
individual's physician to order home health services as part of a 
written plan of care reviewed every 60 days. Therefore, the expectation 
is that there is always a physician involved in the beneficiary's care 
as a physician is required to order home health services.
    Comment: Some commenters stated that NPPs should also be allowed to 
certify the need for home health services.
    Response: The statute sets forth the requirement that only a 
physician is authorized to order the need for home health services. It 
is beyond our statutory authority to expand the role of NPPs.
    Comment: One commenter stated that the proposed policy implies that 
NPs are somehow incapable of authorizing the ordering of appropriate 
home health services. The commenter indicated that states should have 
the flexibility to allow NPs to order home health services as well as 
conducting the face-to-face encounter.
    Response: We disagree that this proposed policy implies that NPs 
are incapable of authorizing the ordering of appropriate home health 
services. Furthermore, the proposed rule does not replace the existing 
regulatory language requiring that a physician order home health 
services. We believe that the statute recognizes the role of NPs 
working in collaboration with the physician by including NPs as NPPs 
authorized to complete the face-to-face encounter. The statute requires 
that physicians order (certify) home health services.
    Comment: One commenter suggested that if a physician extender 
performs the encounter, such as an NP or PA, the extenders should be 
permitted to document on the face-to-face encounter form itself, sign 
and date, followed by a separate physician face-to-face form review, 
signature and date section. The commenter also suggested that reference 
to attached documentation showing that an encounter within the 90 day 
time period occurred (such as an office note), should be permitted.
    Response: As indicated above, we are not prescribing at the federal 
level the communication procedures, rather the requirement that the 
clinical findings of the face-to-face encounter are communicated to the 
ordering physician. This information can be included in clinical and 
progress notes and discharge summaries. There is no federal prohibition 
on a NPP documenting the face-to-face encounter and having the 
physician sign the documentation.
    Comment: Commenters stated that CMS should clarify that inpatient 
physicians retain the authority to perform both the face-to-face 
encounter and complete the documentation and certification for the 
beneficiary's plan of care.
    Response: We agree with the commenters and are revising the final 
rule to clarify that inpatient physicians may perform the face-to-face 
encounter, complete the documentation, and order home health services 
as documented in a written plan of care.
    Comment: One commenter suggested that there should be one universal 
form for everyone.
    Response: To provide states flexibility in administering and 
managing their Medicaid programs, we are not mandating utilization of a 
common form in the documentation of Medicaid services. However, there 
is no prohibition on states agreeing to utilize a common form to 
facilitate standardization.
    Comment: One commenter supported a collaborative relationship 
between a physician and NPP.
    Response: We agree with the commenter.
    Comment: Some commenters expressed concern regarding the scope of 
providers that may order medical supplies, equipment, and appliances in 
the Medicaid program. One commenter believed that home health agencies 
should be permitted to include medical supplies in Medicaid 
beneficiaries' plan of care and be separately paid for those medical 
supplies. Another commenter stated that they believe increasing the 
role of advanced practice nursing would make a valuable contribution to 
the ordering of all service modalities under both Medicare and 
Medicaid.

[[Page 5553]]

    Response: There is no prohibition on home health agencies being 
reimbursed for medical supplies, equipment, and appliances provided to 
a Medicaid beneficiary. They are part of the home health benefit, and 
can be included in a plan of care when ordered by a physician, as 
required in Sec.  440.70. We agree with the value added to the 
provision of health care by advanced practice nurses; their role in the 
ordering of services depends on the benefit authority being utilized. 
In the provision of home health services, services must be ordered by a 
physician.
    After consideration of the public comments and to align with 
Medicare's requirements we are finalizing this section with 
clarifications. Specifically, we are clarifying that we are not 
prescribing the communication between the NPP who performed the face-
to-face encounter and the physician, rather the requirement that the 
clinical findings of the face-to-face encounter are communicated to the 
ordering physician. This information can be included in clinical and 
progress notes and discharge summaries. Additionally, we have clarified 
that attending acute or post-acute physicians may serve as the ordering 
physician of home health services.

H. Physician Documentation of the Face-to-Face Encounter (Sec.  
440.70(f)(4))

    In Sec.  440.70(f)(5)(i), we proposed to require that the 
physician's documentation of the face-to-face encounter must be either 
a separate and distinct area on the written order, an addendum to the 
order that is easily identifiable and clearly titled, or a separate 
document easily identifiable and clearly titled in the beneficiary's 
medical record. The documentation must also describe how the health 
status of the beneficiary at the time of the face-to-face encounter is 
related to the primary reason the beneficiary requires home health 
services. In Sec.  440.70(f)(5)(ii), we proposed to require that the 
physician's documentation of the face-to-face encounter be clearly 
titled, and state that either the physician himself or herself, or the 
applicable NPP, has conducted a face-to-face encounter with the 
beneficiary and include the date of that encounter.
    Comment: One commenter appreciated the modifications to the 
documentation rules and the clarification regarding the ``homebound'' 
requirement.
    Response: We appreciate the commenter's support.
    Comment: We received many comments pertaining to documentation 
requirements. One commenter suggested limiting documentation of a face-
to-face encounter to a statement that services are medically necessary, 
the date of the encounter, the statement that the primary reason for 
home health services was addressed during the encounter, physician's 
signature and date. Another commenter suggested limiting documentation 
of a face-to-face encounter to a physician, NPP, or physician resident 
signature and date, and the date of the encounter. One commenter 
suggested that the face-to-face encounter be documented through a check 
box on the plan of care rather than a separate document. One commenter 
stated that documentation of any face-to-face encounter needs to be 
flexible enough to permit the physician or a physician designee to 
complete the form, prior to the physician review and signature. One 
commenter advocated for reducing documentation requirements. The 
commenter stated that it is critical that any additional changes made 
to the Medicare rule are also made at the Medicaid level. One commenter 
suggested that the documentation be limited to a few basic fields: The 
identity of the physician or NPP who performed the encounter; 
confirmation that the clinical findings support the need for home 
health care; the date of the encounter; and if documentation is by a 
different physician, the name of the physician who sent the 
documentation. One commenter suggested that a more broad certification 
requirement stating that the physician has personally reviewed the 
examination and certifies the need for home health care would be a more 
appropriate and effective use of the physician's time and efforts. One 
commenter believed that the requirement is simply duplicating 
documentation already on the plan of care where the physician is 
certifying the need for skilled care, the services needed, and the 
diagnoses supporting the need.
    Response: To clarify, we are revising the proposed documentation 
requirements to remove the requirement that the documentation be either 
a separate and distinct area on the written order, an addendum to the 
order that is easily identifiable and clearly titled, or a separate 
document easily identifiable and clearly titled in the beneficiary's 
medical record and specify what is required which is described in Sec.  
440.70(f)(5)(i) and (ii). We are not proscribing a specific method of 
capturing the requirements. The documentation should support the need 
for what was ordered. We defer to states for details; we do not see any 
federal barriers to making the documentation requirements 
administratively simple.
    Comment: One commenter stated that leaving the discretion to state 
Medicaid programs to determine what constitutes appropriate 
documentation flies in the face of the desire of attempting to bring 
greater consistency to regulatory requirements. Another commenter 
stated that varying standards for documentation will create problems 
for all. The commenter recommended an effort to create a national 
standard, with an allowance for states to apply for a waiver. One 
commenter requested further clarification prohibiting state from 
requiring additional face-to-face documentation. A few commenters 
indicated that states should not be permitted to require additional 
face-to-face documentation. Some commenters urged CMS to rescind 
guidance that allows states to require information in excess of what is 
proposed by CMS to document the face-to-face encounter. One commenter 
stated that CMS should limit, rather than encourage, a state's 
opportunity to impose additional documentation requirements on home 
health agencies beyond those already included in the regulation. Some 
commenters indicated that with regard to the additional flexibility 
already proposed under the Medicaid face-to-face regulation, such as 
the opportunity for states to limit the face-to-face documentation 
requirements, they certainly support and would encourage CMS in the 
final rule to maximize the flexibility given to the states to be more 
accommodating in their own interpretation of the Medicaid face-to-face 
rule.
    Response: As indicated above, we are revising the proposed 
documentation requirements as described in Sec.  440.70(f)(5)(i) and 
(ii). From the federal perspective, our goal is to ensure that required 
documentation by the state is sufficient to make the linkage between 
the individual's health conditions, the services ordered, an 
appropriate face-to-face encounter, and actual service provision. We 
encourage documentation requirements established by states to meet this 
goal, while not imposing additional actual or perceived administrative 
burden. Electronic Health Records may be of use to support the 
operational requirements and provide a clear audit trail.
    Comment: One commenter believed that the ordering physician should 
be able to rely on the discharge summary identifying a beneficiary's 
need.
    Response: As stated in the proposed rule, we believe that it is 
necessary that clinical findings of the face-to-face encounter are 
communicated to the

[[Page 5554]]

ordering physician to ensure that the physician has sufficient 
information to determine the need for home health services, in the 
absence of conducting the face-to-face encounter himself or herself. We 
are not proscribing the acceptable form of communication to meet this 
requirement.
    Comment: One commenter indicated that residents, NPs, and Pas 
should not only be allowed to perform the face-to-face encounter but 
complete the necessary documentation. Another commenter encouraged CMS 
to honor the laws of states that permit advanced practice registered 
nurses (APRNs) to manage beneficiaries independently and allow APRNs 
not only to conduct the face-to-face visit, but to document that they 
have done so. Another commenter stated that PAs and other NPPs 
authorized to personally perform the face-to-face encounter should be 
able to document the results of the exam in the patient's medical 
record.
    Response: As previously indicated, effective April 16, 2015, for 
medical equipment, certain authorized NPPs are authorized to document 
the face-to-face encounter. For home health services, residents, NPs, 
and PAs, as NPPs defined in statute can complete the necessary face-to-
face documentation, but the physician must sign off as the practitioner 
responsible for ordering home health services.
    Comment: Many commenters indicated that the rule should limit the 
documentation required, and specify where the record of the Medicaid 
face-to-face encounter must be maintained or if there is a requirement 
in that regard. One commenter stated that CMS should revise the 
physician documentation requirements regarding the face-to-face 
encounter to reduce the paperwork burden on physicians. This approach 
would allow the use of the model Physician Certification and Plan of 
Care form with a modification of the form's certification language to 
include certification of the encounter date and reason related to the 
need for home health care. The commenter also stated that physicians, 
hospitals, discharge planners, home health agencies, and beneficiary 
groups agree that the physician requirements are a barrier to access to 
home health care for bona fide beneficiaries who meet coverage 
standards. Additionally, the commenter stated that CMS has 
unnecessarily expanded the scope of the required documentation. The 
additional documentation is not needed because the physician is already 
required to compose a detailed plan of treatment that sets out the 
patient's clinical condition and prescribed care. One commenter stated 
that proposed changes help to ease the burden by a small amount; 
however, it still creates redundant and unnecessary paperwork by 
requiring a certifying physician to restate the findings of the 
hospitalist and/or discharging physician. The commenter stated that do 
not understand how adding a second layer of physician review serves the 
purpose of CMS or the needs of beneficiaries. One commenter believed 
that this requirement will negatively impact access and serve as a 
barrier to care because of the additional administrative burden to 
physicians filling out the face-to-face form. Another commenter stated 
that many doctors are stating that they do not like the additional 
documentation requirements. One commenter indicated that physicians 
have been hostile to the new requirement, particularly the 
documentation standards. The face-to-face-encounters and documentation 
create unnecessary roadblocks to care. Another commenter reported that 
physician compliance with the documentation requirements has been 
``horrific.'' One commenter stated that face-to-face documentation 
itself is viewed as an additional burden by physicians. Some commenters 
stated that CMS must guard against an increase in resistance and 
opposition from community physicians who may view the new rule as 
shifting documentation burdens from one physician sector to another.
    Response: We agree with the goal of assuring the program 
requirements are not overly burdensome. In general, the documentation 
requirements and specifically the provision that the community 
physician retain documentation that describes how the beneficiary's 
health status warranted the ordering of home health services is 
consistent with current standard practice of care. However, we 
recognize that requiring a certifying physician to restate the findings 
of the hospitalist and/or discharging physician could create an 
additional burden. As previously stated, we are revising the final rule 
to allow any attending physician to order home health services, 
therefore, reducing the documentation requirements between inpatient 
physician and community physician as indicated in the proposed rule.
    Comment: A few commenters requested better clarification of the 
requirement that the documentation of the face-to-face encounter be 
separated from the order. Specifically, the commenters requested that 
the regulation explicitly state that a copy of the face-to-face 
encounter documentation which contains required elements be considered 
valid documentation.
    Response: Based on comments we are removing the requirement that 
the face-to-face documentation be on a separate and distinct area on 
the written order. In response to the commenters' second request that a 
copy of the face-to-face encounter documentation be considered valid 
documentation, it is not clear exactly what is intended. The 
documentation of the face-to-face encounter is not necessarily 
sufficient to document the physician order for home health services, 
which should be part of the plan of care. But if the question is 
whether a state would require an original or a copy, while we generally 
defer to states on the operational details, we expect that the 
documentation will generally be included in an individual's electronic 
health records.
    Comment: One commenter stated that CMS should refrain from 
requiring physicians to document a face-to-face visit using specific 
language or by including specific criteria; record of the visit should 
be sufficient. The commenter also discouraged CMS from requiring 
detailed descriptions of the beneficiary's needs for the item the 
doctor orders, as it would be inconsistent with typical physician 
practices and could result in decreased beneficiary access. Another 
commenter suggested that CMS remove the requirement that the physician 
document how the health status relates to the primary reason the 
individual needs home care. The commenter believed that the clinical 
findings are sufficient to describe this necessity and that this 
section adds a documentation burden for the physician when the 
diagnosis and/or medical condition is already included on the plan of 
care the physician signs.
    Response: Based on comments and Medicare requirements, we are 
revising the documentation requirements to align them as much as 
possible with Medicare documentation requirements. Specifically, for 
home health services, the physician responsible for ordering the 
services, and for medical equipment, the physician responsible for 
ordering services or certain authorized NPPs must document that the 
face-to-face encounter was related to the primary reason the patient 
requires home health services, occurred within the required timeframes, 
was performed by an authorized practitioner, and include the date of 
the encounter.
    Comment: One commenter stated that it should suffice that the 
individual's physician saw the individual, and based on that visit and 
the physician's and

[[Page 5555]]

other health care providers' records of the individuals health 
diagnoses and needs, the physician ordered home health care. The 
particular ``primary reason'' for the face-to-face encounter between 
the individual and the physician should be of no relevance to the 
validity of the physician's order and plan of care. The commenter 
believed that with regard to Sec.  440.70(f)(5)(i) it should suffice 
that documentation is made in a manner that is useful to health care 
providers and can be explained to state and federal authorities upon 
request.
    Response: It is important to achieving the purposes of the 
requirement that the face-to-face encounter focus on the medical issues 
that result in the need for home health services. An encounter that 
focuses only on unrelated issues will not ensure accountability and 
utilization control. Therefore, we are retaining the proposed 
requirement that documentation of the encounter include an explanation 
of how the individual's observed health status relates to the primary 
reason the home health services are needed.
    Comment: One commenter suggested expanding the physicians who may 
document this encounter to include partners of the certifying physician 
or urgent care center physician (for non-acute inpatient settings). If 
a patient goes to an outpatient clinic and sees an alternate physician, 
this alternate physician should be allowed to document the encounter 
and hand off to the primary physician to sign the plan of care. The 
commenter also stated that the homebound documentation requirement is 
not clearly addressed. The commenter suggested removing this 
requirement from both Medicare and Medicaid regulations and requested 
that CMS add to the rule that if this section is completed by the 
physician, it is to be disregarded.
    Response: To be able to attest to the completion of the face-to-
face requirement, an urgent care physician must satisfy the general 
requirements of Sec.  440.70 in terms of physician development of plan 
of care and review of the plan of care every 60 days. Otherwise, an 
additional physician performing the functions must be brought in. We 
interpret physician to include partners as well. The homebound 
requirement is an area of disparity between Medicare and Medicaid as 
the homebound requirement is prohibited by Medicaid. However, this 
requirement is part of Medicare statute which we cannot waive.
    Comment: One commenter expressed that specifying the guidelines for 
documentation at the federal level provides an opportunity for greater 
alignment with Medicare requirements.
    Response: We agree and as indicated above, we are revising the 
proposed documentation requirements to align with Medicare 
requirements.
    Comment: One commenter suggested that the face-to-face document be 
permitted to be completed by physician designees, who should sign and 
date the form, followed by the physician reviewing, signing, and 
dating. The commenter also stated that if a physician extender performs 
the encounter, the extenders should be permitted to document on the 
face-to-face encounter form itself, sign and date, followed by a 
separate physician face-to-face form review, signature, and date. One 
commenter requested clarification regarding whether or not an NPP can 
write an order and a physician can simply sign the order, rather than 
writing the order himself or herself.
    Response: We are not prescribing who completes the documentation, 
but the documentation requirements must be met. As previously stated, 
administrative simplification is supported.
    Comment: One commenter indicated that further clarification is 
needed from CMS on the documentation that is required from the 
beneficiary's primary physician, when the face-to-face encounter is 
conducted by NPs or PAs.
    Response: The physician documentation requirements are described in 
Sec.  440.70(f)(5)(i) and (ii). This documentation is required 
regardless of whether the physician or one of the permitted NPPs 
performed the face-to-face encounter.
    Comment: One commenter requested guidance from the federal 
government regarding whether or not a physician must approve findings 
and referrals of NPs in cases where a NP is unable to obtain a 
physician's documented approval of findings to authorize an order of 
home health services.
    Response: To clarify, we are retaining the requirement under Sec.  
440.70(a)(2) that covered Medicaid home health services must be 
supported by a physician order, as part of a written plan of care, 
regardless of whether NPs are authorized under state law to order home 
health services. That order should be based on the physician's own 
professional judgment after reviewing all available information, which 
can include the findings of the NP and patient medical records.
    Comment: One commenter indicated that the documentation 
requirements are not found in statute.
    Response: In accordance with section 6407 of the Affordable Care 
Act, the physician's order must document and be based in part on a 
face-to-face encounter. While it does not specify the form in which the 
face-to-face encounter must be documented, it clearly requires such 
documentation.
    Comment: Some commenters stated that the person-centered-plan of 
care process described will add more quality and integrity to the 
Medicaid services than insisting that physicians add more paperwork.
    Response: We agree that the person-centered-plan of care process is 
integral to ensuring quality Medicaid services are not inconsistent 
with requirements for physician orders, face-to-face encounters, and a 
written plan of care.
    Comment: One commenter requested that CMS consider further 
clarification or definition of the person-centered philosophy with 
regard to the home health plan of care requirements for children and 
youth under the age of 18. The commenter indicated that their state 
program does not discuss clients' protected health information, 
including their medical treatment plans, with non-legal caregivers.
    Response: We have not yet issued guidance on person-centered 
planning as it relates to home health. However, this process should be 
implemented consistent with other federal requirements that protect 
confidential health information such as Health Insurance Portability 
and Accountability Act of 1996 (HIPAA).
    Comment: One commenter stated that the need to collect additional 
documentation could delay urgently needed care and payment for 
services.
    Response: We are confident that providers can determine ways that 
they can work together without delaying services to beneficiaries.
    After consideration of the public comments and to better align with 
Medicare requirements, this section is being finalized with the 
following revisions:
     We are revising the documentation requirements to remove 
the requirement that the documentation be either a separate and 
distinct area on the written order, an addendum to the order that is 
easily identifiable and clearly titled, or a separate document easily 
identifiable and clearly titled in the beneficiary's medical record.
     We are clarifying the documentation requirements and 
specify what is required which is described in Sec.  440.70(f)(5)(i) 
and (ii).
     We are clarifying that for medical equipment, in addition 
to the physician, the allowed NPP, as described in

[[Page 5556]]

paragraph (f)(3)(ii) through (v) are authorized to document the face-
to-face encounter.

I. Face-to-Face Encounter Through Telehealth (Sec.  440.70(f)(6))

    Proposed Sec.  440.70(f)(6) outlined that the face-to-face 
encounters may be performed through the use of telehealth.
    Comment: Several commenters expressed support of the provision. One 
commenter supported CMS's proposal on the use of telehealth to conduct 
a home health face-to-face encounter. Another commenter was encouraged 
that CMS stated that states should ``implement [the telehealth] 
provision in a way that does not result in barriers to service 
delivery'' and that states should ``work with the home health provider 
community to incorporate the face-to-face visits in creative and 
flexible ways to account for individual circumstances.'' The commenter 
was also pleased that CMS is ready to offer technical assistance to 
state Medicaid agencies to use telehealth as an alternative so that the 
requirement may be implemented in a way that protects the continuity of 
services. One commenter supported CMS's decision to permit the face-to-
face encounters to occur through the use of telehealth. Another 
commenter viewed the provision of allowing a telehealth encounter 
instead of a face-to-face encounter as a positive development and would 
like to see this option expanded whenever possible. Yet, another 
commenter appreciated that the proposed rule allows states that 
currently use telehealth or telemedicine when delivering services under 
Medicaid to be able to use the techniques to fulfill the face-to-face 
encounter. One commenter appreciated that the coverage of telehealth is 
discretionary.
    Response: We appreciate the support of the commenters.
    Comment: Commenters believed that the allowance to use telehealth 
or telemedicine should extend to all forms of electronic communication 
in compliance with the face-to-face requirement for home health 
services. Conversely, one commenter indicated that the proposed 
regulation as written could allow managed care plans and FFS providers 
to bill for telephone calls, emails, and faxes with another provider 
when the beneficiary is still at the originating site or not present in 
the room at all, and stated that this would have to be built into 
capitation rates for managed care plans. One commenter indicated that 
telehealth and telemedicine are two different approaches in providing 
health care. The use of the term ``telehealth'' implies that the 
provider will be able to use a telephone, email or other 
telecommunications to contact the beneficiary to provide the face-to-
face requirements. It is unclear if it is the intention of CMS to allow 
telephone calls and emails to replace a face-to-face visit. One 
commenter commended us for the use of the term ``telehealth,'' which 
correctly describes the universe of health services provided by the 
diverse array of providers, versus ``telemedicine,'' which can be 
interpreted to focus on a more limited array of services offered by a 
particular set of providers.
    Response: Telehealth and telemedicine are service delivery 
modalities that have very specific protocols that ensure quality 
patient care, and do not include all electronic communications. We 
recognize that there may be confusion surrounding the terms 
``telehealth'' and ``telemedicine'' as the terms may have different 
meanings as recognized by a state in accordance with Medicaid policy, 
and as recognized under the Medicare statute and regulation. The 
Medicaid ``telemedicine'' description is modeled on Medicare's 
definition of telehealth services located at Sec.  410.78, but allows 
states flexibility in keeping with their general authority to regulate 
the medical professions. It is not our intention to allow telephone 
calls or emails to replace the face-to-face encounter. In other words, 
telehealth and telemedicine are service delivery models and do not 
replace the requirement that a physician or NPP must have a face-to-
face encounter with a beneficiary. Rather, the face-to-face encounter 
can be met though a telehealth delivery model that is recognized by the 
state as a physician or NPP encounter under its approved state plan. 
See http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Delivery-Systems/Telemedicine.html.
    Comment: Commenters urged CMS to allow states to define the form 
and extent of telehealth that can be used for meeting the face-to-face 
requirements. The commenters suggested that the rule should be amended 
to state: ``states can permit the use of any two-way audio/video 
communication medium as allowed by state law to connect the beneficiary 
to the physician/NPP to meet the face-to-face requirements.'' One 
commenter stated that telehealth services should be defined in a way 
that allows a beneficiary to meet the face-to-face encounter 
requirements through modern technologies available in their home, 
including two-way audio and video communications. Another commenter 
recommended that federal telehealth policy be revised to make the home 
an approved site and to encourage state Medicaid programs to pay for 
telehealth visits. Other commenters recommended that CMS require state 
Medicaid programs (and the Medicare program) to allow face-to-face 
encounters to take place via telehealth technology deployed in 
beneficiaries' homes and reimburse agencies and practitioners for the 
costs involved. One commenter expressed concern that the face-to-face 
encounter requirement will erect a barrier to timely care for 
beneficiaries who are homebound and have difficulty traveling to a 
location that is equipped with telehealth technology. One commenter 
requested that for special circumstances, CMS broaden the definition to 
include Skype encounters with beneficiary/physician or allow home 
monitoring devices used by home care agencies to be established in 
physician offices. One commenter believed that it is important that CMS 
maintain the telehealth flexibility which state Medicaid programs 
currently have of not limiting telehealth to rural health professional 
areas. One commenter recommended that the use of telehealth be an 
option in non-rural areas, in addition to rural areas. One commenter 
requested that CMS clarify whether a state may, through a state plan 
amendment, limit the use of telehealth for conducting the face-to-face 
encounters to rural or other geographic areas where there are issues 
related to transportation or access to practitioners. One commenter 
believed that there are many regulatory and procedural constraints 
which will need to be amended to enable full and successful 
implementation of telehealth services by all healthcare providers. One 
commenter stated that the telehealth requirement for Medicaid purposes 
should include sites of service where the patient may receive the home 
care or use the DME. For example, a home visiting or adult day care 
nurse should be permitted to establish a video visit to an office based 
physician, allowing the physician to assess the beneficiary's need for 
home care or DME. Existing tablet computer and wireless technologies 
make such visits practical in any setting. In rural areas, without 
broadband cellular service, portable videoconferencing tools that use 
``plain old telephone service'' exist for this purpose. One commenter 
stated that the benefits of this provision are limited for Medicaid 
beneficiaries due to restrictions on the use of RPM (remote patient 
monitoring) in Medicare law.

[[Page 5557]]

The commenter indicated that CMS should include a provision for dual 
eligibles to have care coordinating access to RPM technologies under 
Medicare and Medicaid.
    Response: In the absence of specific Medicaid statutory 
requirements, we are hesitant to proscribe the locations and/or 
technologies that states may use to meet the face-to-face requirement 
through telehealth. Under Medicaid policy, states have the flexibility 
to define coverage of telehealth including what types of telehealth to 
cover; where in the state it can be covered; and how it is provided. 
Our expectation is that care delivered using various technologies will 
lead to good outcomes and meet the needs of the individual while 
adhering to privacy requirements, including the requirements under the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA). We 
recognize the need for updated Medicaid telehealth guidance, which will 
be forthcoming. In the meantime, we are available to provide technical 
assistance.
    Comment: One commenter indicated that video or recording used in 
telehealth or telemedicine should be confidential and done in a manner 
to protect beneficiary's rights.
    Response: We agree with the commenter. As previously stated, the 
use of telehealth or telemedicine does not negate HIPAA or Medicaid 
privacy requirements.
    Comment: One commenter stated that CMS should monitor and make 
known which state Medicaid agencies permit face-to-face encounters via 
telehealth for certification of home health services under Medicaid. 
The commenter also recommended that CMS develop and implement a 
mechanism to track which states permit the face-to-face encounter to 
occur through telehealth. The commenter believed that CMS should know 
whether and to what extent Medicaid beneficiaries have access to 
services via telehealth. Additionally, the commenter stated that for 
those state Medicaid programs that do not permit the face-to-face 
encounter prior to the ordering for home health services to occur via 
telehealth, CMS should endeavor to learn what barriers exist to prevent 
the use of telehealth and assist states to overcome those barriers. The 
commenter stated that CMS should be proactive in determining what 
states need to realize the goal of expanding the use of telehealth 
services and that CMS should encourage state Medicaid agencies to take 
advantage of the relative flexibility they have regarding implementing 
and paying for telehealth services under Medicaid. The commenter stated 
that when possible, CMS should adopt the innovative and cost-saving 
telehealth systems, as developed and implemented by states, into the 
Medicare regulations and policy for telehealth services. Additionally, 
the commenter indicated that CMS should hold state Medicaid agencies 
accountable for dual eligibles' access to telehealth services in 
general and the face-to-face pre-certification encounter in particular.
    Response: We will consider the recommendations of the commenter for 
future action. We recognize that there are differences between Medicare 
and Medicaid on the issue of telemedicine and telehealth. But the 
general requirements for telehealth and telemedicine are not the 
subject of this rulemaking.
    Comments: One commenter appreciated allowing telehealth as a means 
of meeting the face-to-face requirement, but was concerned that it will 
not be enough.
    Response: We recognize that there may be individual circumstances 
and we encourage states to work with the home health provider community 
to incorporate the use of telehealth to meet the face-to-face 
requirement in creative and flexible ways to account for individual 
circumstances. We are available to provide technical assistance to 
states in achieving this goal.
    Comment: Some commenters requested clarification. One commenter 
requested clarification on Medicaid coverage of telehealth equipment, 
facilities, and transmission costs. Another commenter requested that 
CMS clarify that telehealth encounters would qualify for FFP as a 
reimbursable visit.
    Response: Medicaid does not reimburse for telecommunications 
equipment or facility costs separately. However, states could build 
reimbursement for the costs into the rate and states can include in the 
rate a separate amount for such costs. Reimbursement for services 
provided through telehealth is voluntary on the part of state Medicaid 
agencies as they are viewed as alternative methods of providing 
services, not as a separate type of service. Therefore, reimbursement 
is only available if the state has chosen to cover services provided 
via telehealth or telemedicine and only in the circumstances selected 
by the state.
    After consideration of the public comments, this section is being 
finalized as proposed.

J. Face-to-Face-Encounter for Medical Supplies, Equipment and 
Appliances (Sec.  440.70(g))

    As proposed, Sec.  440.70(g) applies all of the requirements of 
Sec.  440.70(f) to the provision of medical supplies, equipment and 
appliances as described in Sec.  440.70(b)(3), to the extent that a 
face-to-face encounter would be required under the Medicare program for 
DME, with one exception from the requirements at Sec.  440.70(f). Per 
the statute, as amended by the Affordable Care Act, certified nurse 
midwives are not permitted to conduct face-to-face encounters required 
for the items, as proposed at Sec.  440.70(g)(2). To maximize 
consistency between the Medicaid and Medicare programs and reduce the 
administrative burden on the provider community, we proposed to limit 
the face-to-face requirements to items that would be subject to such 
requirements as DME under the Medicare program. Thus, we would only 
require that, for items of DME specified by CMS under the Medicare 
program as subject to a face-to-face encounter requirement, the 
physician must document that a face-to-face encounter that is related 
to the primary reason the beneficiary requires the item has occurred no 
more than 90 days before the order is written or within 30 days after 
the order is written. Medical supplies, equipment and appliances for 
which a face-to-face encounter would not be required under the Medicare 
program as DME, would not require a face-to-face encounter before the 
ordering of items under the Medicaid program. The items will be of a 
smaller dollar value, and at a decreased risk for fraud, waste, and 
abuse.
    Comment: Some commenters supported the proposed requirement that a 
face-to-face encounter must be performed prior to a physician ordering 
medical supplies and DME. One commenter applauded CMS' decision to 
limit the applicability of the face-to-face encounter requirement to 
the medical equipment, supplies, and appliances that are included on 
the Medicare program list of specific DME. Another commenter supported 
the consistency with Medicare timeframes for orders for DME.
    Response: We appreciate the support expressed by the commenters We 
agree that there should be consistency with the timeframes for the 
face-to-face encounter for DME in Medicare and medical equipment in 
Medicaid. Since the proposal and comment period of this rule, Medicare 
has finalized their DME face-to-face rule requiring the face-to-face 
encounter for DME to occur no

[[Page 5558]]

more than 6 months prior to the start of services. Therefore, we have 
revised the Medicaid medical equipment face-to-face timeframes to align 
with the Medicare timeframe.
    Comment: One commenter asked that we clarify the effective date for 
the face-to-face requirement for certification of Medicaid DME 
services. Additionally, the commenter requested clarification as to 
whether the face-to-face encounter for DME applies to DME furnished 
solely as a home health benefit or whether it also applies to DME paid 
for by Medicaid that is not covered as part of the home health benefit. 
Another commenter requested that CMS clarify whether a state may choose 
to extend the face-to-face requirements to include equipment, supplies, 
or appliances that are covered under the state's Medicaid program, but 
are not Medicare benefits. One commenter requested that CMS clarify 
that the proposals, if finalized, would not apply to medical equipment 
under the Medicaid program until CMS has issued a final Medicare face-
to-face rule.
    Response: The provisions of section 6407 of the Affordable Care Act 
became effective in 2010 and added the requirement that physicians 
document the existence of a face-to-face encounter for home health 
services including medical supplies, equipment and appliances. However, 
as previously indicated, we are delaying the effective date of this 
rule to July 1, 2016 and we are allowing states and providers up to one 
year from the effective date of the final rule to come into compliance 
with the rule if the state's legislature has met in that year, 
otherwise 2 years.
    Any medical supplies, equipment, and appliances provided under the 
home health benefit must meet the face-to-face requirement. If the 
state is providing supplies, equipment or appliances under a benefit 
category other than home health, such as the therapy services 
authorized at Sec.  440.110, or prosthetics authorized under Sec.  
440.120, the state would need to adhere to the requirements of that 
particular benefit. In response to the concern that we clarify that the 
final rule will not apply to medical equipment under the Medicaid 
program until we have issued a final Medicare face-to-face rule, 
Medicare's DME face-to-face rule was effective on July 1, 2013. Our 
alignment of the scope of items requiring the face-to-face encounter 
with Medicare does not depend on Medicare regulation. The list of DME 
items subject to the face-to-face encounter can be found at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/Downloads/DME_List_of_Specified_Covered_Items_updated_March_26_2015.pdf. States 
may decide to apply face-to-face requirements to a broader range of 
medical supplies, equipment, and appliances than those for which 
Medicare requires an encounter, but are not required to do so.
    Comment: One commenter stated that with regards to the face-to-face 
requirement for DME, the regulation is vague as to which party is 
responsible for the face-to-face documentation for billing purposes and 
does not sufficiently define the items that will be subject to this 
requirement.
    Response: The physician or the NPP who completed the face-to-face 
encounter is responsible for documenting the encounter. However, as 
previously stated, this rule does not replace the existing Medicaid 
regulatory requirements related to physician orders. In response to the 
comment that the regulation does not sufficiently define the items that 
will be subject to the face-to-face requirement, we intend to issue 
guidance to states indicating how they, and providers, can access the 
current Medicare list of specific DME items subject to the face-to-face 
requirement. Medical supplies, equipment and appliances for which a 
face-to-face encounter would not be required under the Medicare program 
as DME, would not require a face-to-face encounter before the ordering 
of items under the Medicaid program.
    Comment: One commenter stated that it is a rare physician who is 
able to determine what DME is appropriate for a beneficiary without the 
advice of rehabilitation therapists. In addition, almost all DME 
requires training of beneficiaries and caregivers. The commenter 
encouraged reconsideration of state discretion in relation to 
rehabilitation when DME is required.
    Response: We recognize that the recommendation and determination of 
appropriate medical equipment is often made by providers other than the 
physician and we encourage a collaborative approach to determining a 
beneficiary's needs. The statute sets forth the practitioners who are 
authorized to complete the face-to-face encounter for medical supplies, 
equipment, and appliances and maintains the role of the physician in 
the actual ordering of medical supplies, equipment, and appliances. 
However, as stated in the preamble, only items of DME specified by CMS 
under the Medicare program would be subject to a face-to-face encounter 
requirement.
    Comment: Many commenters had suggestions pertaining to CMS's 
proposal of exceptions to the face-to-face encounter for certain DME as 
specified by under the Medicare program. Commenters suggested that the 
face-to-face exceptions for home health medical equipment should be 
expanded so that only those items that are most likely to be abused 
require a face-to-face visit. Another commenter believed that CMS can 
develop a suggested list of DME that requires face-to-face encounters, 
but state Medicaid programs should be able to make the final decision 
on which items will require the face-to-face encounter. Other 
commenters suggested that the requirement of face-to-face encounter 
should apply to all medical supplies and DME.
    Response: We believe that by aligning with Medicare's 
implementation of this provision, we will ensure that beneficiaries are 
receiving needed items and provide clear and consistent guidance to 
states. Therefore, we will not be expanding the exceptions from the 
face-to-face requirement beyond the list used in Medicare. Based on the 
previously stated rationale, state Medicaid programs could require 
face-to-face encounters on more items than would be required under 
Medicare, but not fewer items. In response to the comments suggesting 
that the face-to-face encounter should apply to all medical supplies 
and DME, we disagree as we believe that this alignment and consistency 
will reduce the administrative burden on the provider community.
    Comment: One commenter suggested that CMS look first to its 
Medicare national and local coverage determinations to determine what 
DME items require an in-person physician visit. Additionally, the 
commenter stated that CMS should adhere to already established Medicare 
coverage policies regarding the need for a beneficiary to see his or 
her physician for DME rather than expand the face-to-face requirements 
to more routine types of DME such as canes, walkers, and commodes. The 
commenter also recommended that CMS not require beneficiaries who need 
supplies, refills, repairs, or service of their equipment to have 
follow-up face-to-face physician visits. Another commenter indicated 
that DME and medical supplies items also include basic needs such as 
canes, crutches, walkers, diapers, applicator sticks, just to name a 
few. The commenter specified that to require a physician endorsement of 
each of the items for a population that is already under-served and 
receives care exclusively from NPs in a large number of states, is not 
only unreasonable, but

[[Page 5559]]

increases costs and causes delays in care.
    Response: As previously stated, only items of DME specified by CMS 
under the Medicare program would be subject to a face-to-face encounter 
requirement for the Medicaid program. Additionally, to clarify, an 
additional face-to-face encounter would not be required for refills, 
repairs, or service of equipment. The face-to-face encounter is 
required for the initial ordering of medical supplies, equipment, and 
appliances. As this rule does not preclude existing regulations, the 
need for medical supplies, equipment, and appliances must be reviewed 
by a physician annually. We believe that the requirements may be met 
without causing undue hardship on beneficiaries or the provider 
community.
    Comment: One commenter strongly recommended that there be an 
explicit prohibition on any ownership relationship between the 
physician ordering the equipment/supplies/appliances and the provider 
of those items.
    Response: We thank the commenter for the recommendation, but this 
is beyond the scope of this regulation.
    Comment: One commenter indicated that for beneficiaries 
participating in a section 1115 demonstration or section 1915(c) HCBS 
waiver, benefits such as DME and supplies requiring a physician 
encounter, or one by the proposed list of NPPs, may be problematic as 
the benefits are often determined by non-physician case managers and 
the physician requirement could add additional costs to strained state 
Medicaid budgets.
    Response: We recognize the commenter's concern. However, statute 
mandates the face-to-face encounter for medical supplies, equipment, 
and appliances under the home health services benefit. We note that 
this rule applies to the home health benefit as implemented in the 
Medicaid state plan. To the extent that state plan service is provided 
through a waiver or demonstration, the requirements would continue to 
apply.
    Comment: One commenter stated that PAs should be authorized to 
order medical supplies and equipment for Medicaid beneficiaries, 
consistent with DME supplies and equipment within the Medicare program. 
Another commenter urged CMS to allow NPs to continue to order durable 
medical supplies, equipment, and appliances, as they are able to do 
under current regulations. One commenter was concerned about the limits 
being placed on NPs regarding the ordering of DME. Other commenters 
urged CMS to allow other practitioners who may prescribe medical 
supplies and DME under state law, to do so under Medicaid as well. The 
commenters also suggested that audiologists and podiatrists be 
permitted to conduct the face-to-face encounter and then communicate 
the information to the physician who is responsible for documenting the 
face-to-face encounter.
    Response: We appreciate the suggestions. As previously stated, this 
rule does not supplant existing regulatory requirements that provide 
that a physician must order an individual's services under the Medicaid 
home health benefit. The statute maintains the role of the physician in 
the actual ordering of medical supplies, equipment, and appliances. 
Additionally, the statute sets forth the NPPs who are authorized to 
conduct the face-to-face encounters before the start of home health 
services. It is beyond our authority to change statute.
    Comment: One commenter stated that certified nurse-midwives should 
not be prohibited from ordering DME for their beneficiaries.
    Response: The statute and current regulations maintains the role of 
the physician in the ordering of medical supplies, equipment, and 
appliances.
    Comment: One commenter believed home health agencies should be 
permitted to include medical supplies in their plan of care and be 
separately paid for those medical supplies.
    Response: If the home health agency is a Medicaid provider of 
medical supplies, equipment and appliances, then it can receive payment 
for medical supplies, equipment, and appliances based on the 
physician's order and plan of care.
    Comment: Many commenters recommended that the requisite timeframe 
be extended to 6 months for medical equipment and appliances.
    Response: As indicated above, we are revising the timeframe 
requirements to no more than 6 months prior to the start of services. 
We believe that this alignment will provide consistency among the 
programs and less fragmented services for beneficiaries who are dually 
eligible.
    Comment: Several commenters recommended that when home health care 
is complicated (for example, certain medical equipment), CMS permit a 
greater period of time between the face-to-face visit and receipt of 
services.
    Response: We believe that the 6 month timeframe for the face-to-
face encounter will meet the needs of beneficiaries and permit 
sufficient time for providers to analyze beneficiary needs.
    Comment: One commenter indicated that they are confident that the 
overwhelming majority of orders for medical equipment are already made 
in an appropriate medical context. The commenter believed that it would 
be unnecessary for CMS to create, or require a state to create, new in-
person evaluation or documentation requirements for many categories of 
medical equipment. Additionally, the commenter stated that when medical 
equipment is ordered on discharge from an inpatient stay, it would be 
unnecessary for CMS to impose additional face-to-face physician visit 
or documentation requirements because the beneficiary's need for 
equipment would have been evaluated during their stay.
    Response: The face-to-face requirement is mandated by statute 
regardless of whether the majority of orders for medical equipment are 
already made in an appropriate medical context. We allow for the face-
to-face documentation to be part of the order or an addendum to it. As 
previously stated, we have clarified in this final rule that the 
inpatient physician can order home health services, which would include 
medical equipment, supplies, and appliances, in accordance with Sec.  
440.70. Therefore, if the inpatient physician orders the medical 
equipment following all of the face-to-face requirements, including 
documentation of the face-to-face encounter, there would be no need for 
an additional face-to-face visit upon discharge. However, if the 
inpatient physician was not the ordering physician, it would be 
acceptable for the community physician (or his or her support staff) to 
attach a communication from a physician who cared for the beneficiary 
in an acute or post-acute facility, who performed the encounter (such 
as a discharge summary), to the order as an addendum. If, for example, 
a discharge summary from a physician who cared for the beneficiary in 
an acute or post-acute facility contains all of the needed 
documentation content, the ordering physician would simply need to sign 
and date the discharge summary and ensure it is attached as an addendum 
to the order. We believe that this process will help to insure 
continuity of care between the hospital and the community physician.
    Comment: One commenter stated that there may be times where a 
physician might order an item such as a walker based on self-reports 
from the beneficiary or his or her caregiver. For example, a 
beneficiary may report recent falls within the home and a

[[Page 5560]]

doctor might order a cane or a walker before he examines the 
beneficiary in person. Similarly, the beneficiary may have a 
progressive condition and the physician determines, based on the 
beneficiary's self-reports and clinical history, that he or she needs 
different equipment. When the physician orders DME in these situations, 
CMS should not require a face-to-face encounter because the physician 
prescription is based on the beneficiary's medical history and is made 
in response to predictable changes in the beneficiary's condition.
    Response: We appreciate the comment, however, we do not have the 
authority to revise the requirements of the statute which requires a 
face-to-face encounter for home health services as they apply to 
medical supplies, equipment, and appliances under the home health 
services benefit. Since the encounter can be conducted up to 6 months 
prior to the ordering of equipment, this provision should not prevent 
the provision of timely care.
    Comment: One commenter believed that CMS should not require an 
additional face-to-face visit for DME identified by the home health 
agency nurse or other skilled clinician and communicated to the 
physician overseeing the plan of care. The commenter also believed that 
CMS should not impose a physician visit requirement for prescription 
renewals, supplies, and/or accessories used with a particular device, 
and repairs or replacement of equipment. Additionally, CMS should not 
extend the face-to-face requirement to ongoing supplies or other items 
that are ancillary to the DME prescribed but nonetheless necessary to 
deliver appropriate therapy.
    Response: The statute identifies the authorized NPPs who may 
conduct the face-to-face encounter. It is beyond our authority to 
expand this list to include the home health agency nurse or other 
skilled clinician not included as an authorized NPP. We clarify that an 
additional face-to-face requirement would only be required if a new 
medical equipment, supply or appliance is needed. Renewals, repairs and 
the need for ancillary equipment would not trigger the need for an 
encounter.
    Comment: One commenter stated that the extension of a requirement 
for a physician order to provide DME to Medicaid enrollees is an 
additional barrier to beneficiaries receiving the medical supplies and 
equipment they need.
    Response: We appreciate the commenter's concern. However, as 
previously stated, the statute mandated the face-to-face requirement 
for home health services, including medical equipment, supplies, and 
appliances. The purpose of this regulation is to implement that 
statutory directive.
    After consideration of the public comments, this section is being 
finalized with revisions to the timeframes for the face-to-face 
encounter for DME. Specifically, we are adding Sec.  440.70(f)(5)(ii) 
which indicates that for the initiation of DME, the face-to-face 
encounter must be related to the primary reason the beneficiary 
requires home health services and must occur no more than 6 months 
prior to the start of services.
    Additionally, as previously indicated, we are using this rule to 
conform with the Medicare Access and CHIP Reauthorization Act of 2015 
and clarifying that for medical equipment, in addition to the 
physician, the allowed NPPs, as described in paragraph (f)(3)(ii) 
through (v) are authorized to document the face-to-face encounter.

IV. Provisions of the Final Regulation

    For the most part, this final rule incorporates the July 12, 2011 
provisions of the proposed rule. Those provisions of this final rule 
that differ from the proposed rule are as follows:
     We are revising Sec.  440.70(b) introductory text to state 
that coverage of home health services cannot be contingent upon the 
beneficiary needing a nursing or therapy services.
     We are amending Sec.  440.70(b)(3)(ii) to include the term 
``disability'' to the definition of equipment and appliances and to 
clarify that state Medicaid programs are not restricted to the items 
covered under DME in the Medicare program.
     We are adding Sec.  440.70(b)(3)(v), to state that states 
can have a list of preapproved medical equipment supplies and 
appliances for administrative ease, but not as an absolute limit on 
coverage; states must provide and make available to individuals a 
reasonable and meaningful procedure for individuals to request items 
not on the list; and individuals are informed of their right to a fair 
hearing.
     We are revising Sec.  440.70(c)(1) to codify the homebound 
prohibition for Medicaid home health services; home health services may 
not be subject to a requirement that the individual be ``homebound.'' 
Additionally, we are clarifying the settings in which home health 
services may be provided. Specifically, we are adding the clarification 
that home health services may be provided in settings where normal life 
activities take place, other than a hospital, nursing facility; 
intermediate care facility for individuals with intellectual 
disabilities; or any setting in which payment is or could be made under 
Medicaid for inpatient services that include room and board.
     We are adding 440.70(f)(5)(i) and (ii) to specify that the 
ordering physician must document the face-to-face encounter which is 
related to the primary reason the patient requires home health 
services, occurred within the required timeframes prior to the start of 
home health services; must indicate the practitioner who conducted the 
encounter, and the date of the encounter.
     We are adding Sec.  440.70(f)(2) which indicates that for 
the initiation of DME, the face-to-face encounter must be related to 
the primary reason the beneficiary requires home health services and 
must occur no more than 6 months prior to the start of services.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
publish a 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.
    To fairly evaluate whether an information collection should be 
approved by OMB, PRA section 3506(c)(2)(A) 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 burden estimates.
     The quality, utility, and clarity of the information to be 
collected.
     Our effort to minimize the information collection burden 
on the affected public, including the use of automated collection 
techniques.
    On July 12, 2011 (76 FR 41032), we solicited public comment on each 
of the section 3506(c)(2)(A)-required issues for the following 
information collection requirements (ICRs). See below for a summary of 
the PRA-related comments along with our response.
    Subsequent to the publication of the proposed rule, we have revised 
our cost estimates by using the most current U.S. Bureau of Labor 
Statistics' wage estimates along with our fringe benefit adjustment 
factor. An additional change is discussed in Collection of Information 
section V.B.2.

[[Page 5561]]

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2014 National Occupational Employment and Wage 
Estimates for all salary estimates (www.bls.gov/oes/current/oes_nat.htm). In this regard, the following table presents the mean 
hourly wage, the cost of fringe benefits (calculated at 100 percent of 
salary), and the adjusted hourly wage.

                                             Table 1--Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                                     Adjusted
                Occupation title                    Occupation      Mean hourly   Fringe benefit  hourly wage ($/
                                                       code         wage ($/hr)       ($/hr)            hr)
----------------------------------------------------------------------------------------------------------------
Family and General Practitioners................         29-1062           89.58           89.58          179.16
Nurse Practitioners.............................         29-1171           47.11           47.11           94.22
Physician Assistants............................         29-1071           46.77           46.77           93.54
----------------------------------------------------------------------------------------------------------------

    As indicated, we are adjusting our employee hourly wage estimates 
by a factor of 100 percent. This is necessarily a rough adjustment, 
both because fringe benefits and overhead costs vary significantly from 
employer to employer, and because methods of estimating these costs 
vary widely from study to study. Nonetheless, there is no practical 
alternative and we believe that doubling the hourly wage to estimate 
total cost is a reasonably accurate estimation method.

B. ICRs Carried Over From the July 12, 2011, Proposed Rule

1. ICRs Regarding Home Health Services: Physician Documentation of the 
Face-to-Face Encounter (Sec.  440.70(f) and (g))
    Section 440.70(f) and (g) requires that physicians (or for medical 
equipment, authorized non-physician practitioners (NPPs) including 
nurse practitioners, clinical nurse specialists and physician 
assistants) document that there was a face-to-face encounter with the 
Medicaid beneficiary. The burden associated with this requirement is 
the time and effort to complete and maintain this documentation. The 
documentation must clearly demonstrate that the face-to-face encounter 
occurred within the required timeframes and indicate the practitioner 
who conducted the encounter along with the date of the encounter. The 
burden also includes writing, typing, or dictating the face-to-face 
documentation and signing/dating the documentation. In this regard, we 
estimate 10 minutes for each encounter. We also estimate that there are 
approximately 1,143,443 initial home health episodes in a given year 
(this estimate is based on our 2008 claims data which is also our most 
recent data). Due to the lack of data for each provider type, we are 
dividing our 1,143,443 episode estimate into 3 equal parts of 
381,147.67 for each of the three respondent types (family and general 
practitioners, nurse practitioners, and physician assistants). Our 
estimated burden for documenting, signing, and dating the beneficiary's 
face-to-face encounter is 190,574 hours (this estimate is based on our 
CY 2011 data which is also our most recent data). We acknowledge that 
this figure is inflated by instances in which the physician conducted 
the face-to-face encounter with the beneficiary, making this second 10-
minute documentation burden unnecessary.
    The estimated cost to document the face-to-face encounter, which 
varies by practitioner, consists of $29.74 (0.167 hr x $179.16/hr) for 
a family and general practitioner, $15.64 (0.167 hr x $94.22/hr) for a 
nurse practitioner, and $15.52 (0.167 hr x $93.54/hr) for a physician 
assistant. We estimate an aggregated cost of $23,355,067 (see the 
burden table in section V.C. of this final rule). The requirements and 
burden will be submitted to OMB under control number: 0938-1188 (CMS-
10434).
    Upon consideration of the public comments received, we are 
finalizing this section as proposed.
    Comment: Several commenters reported that the estimated burden does 
not accurately account for home health agency burden. One commenter 
further stated that 35 minutes per beneficiary should be added to home 
care agency time if the form is completed correctly the first time. If 
the form is not correct, 25 to 45 minutes should be added to 25 percent 
of the beneficiaries. Another commenter stated that in reality, the 
face-to-face is already taking up another 30 to 45 minutes on the home 
health agency side plus at least 15 minutes on the physician side. 
Another commenter stated that the estimate does not include the time 
that is required for home health agencies and medical equipment 
companies to ensure that the encounter occurred and that the 
documentation is received and in compliance with federal and state 
requirements. To ensure that the encounter has occurred and the 
required documentation is in place, the commenter reported that state 
home health agencies would need an additional 0.5 FTE in an agency with 
an average census of 100 to 120 beneficiaries. Another commenter stated 
that the estimates do not include the time and effort for the home 
health agency to contact and recontact the physicians to obtain the 
correct documentation. The commenter estimated that the burden on home 
health agencies is at least as much as it is on the physicians and 
requested that this burden be included in our estimate.
    Response: We do not agree that the new requirements will add 
administrative requirements to home health agencies. Home health 
agencies are currently required to obtain the physician's order prior 
to implementing home health services. We do not believe that the 
additional documentation requirements as defined at Sec.  440.70(f)(5) 
will add to the existing requirements.
    Comment: One commenter stated that home health agencies do not 
typically cover costs through Medicaid reimbursement when serving 
Medicaid beneficiaries. Consequently, the additional administrative 
burden that would be placed on home health agencies because of the 
face-to-face requirement would further exacerbate this problem.
    Response: We recognize the commenter's concern. This is a statutory 
requirement that is applicable across Medicare and Medicaid. We 
encourage home care agencies to communicate with their state Medicaid 
agencies to discuss the impact of the requirements on current Medicaid 
reimbursement rates. We also encourage home care agencies to share best 
practices for complying with the requirements in cost effective ways.
    Comment: Many commenters provided feedback on additional items to 
include in our burden estimates. One commenter specified the following 
items: The education of each physician on how to complete the form (10 
minutes); time for the home care agency to audit each form (10 minutes 
per form) and to notify the physician of the

[[Page 5562]]

missing or incomplete information (5 minutes per notification--and 
consider that 25 percent of the forms are inaccurate and must be 
returned to the physician for revision); time for home care intake to 
coordinate and access the form (10 minutes) and time for home care 
office personnel to track and log the form (10 minutes); time for home 
care agency staff to educate beneficiaries on the requirement (5 
minutes); time for home care agency staff to track the appointment 
compliance if the encounter was not completed by the time the 
beneficiary was admitted to home care (10 minutes); if the physician 
did not complete the form correctly the first time, add physician 
office personnel time to communicate the issue to the physician and 
pull the medical records and physician time to review the medical 
record and redocument (10 minutes minimum); and add burden for the home 
care agency to obtain the encounter documentation from the community 
physician if it was performed in a hospital. These commenters indicated 
that this new interpretation could add up to 30 minutes to coordinate. 
Another commenter indicated that additional support personnel time is 
required in physicians' offices as staff field the telephone calls from 
home health beneficiaries and agencies to request documentation, 
schedule encounters, and secure the documentation in an acceptable and 
compliant condition.
    Response: We would like to remind commenters that we do not have 
any standard form that we require to be completed. Rather, we defer to 
state Medicaid agencies to work with the provider community to develop 
a documentation form that will best meet the documentation requirement. 
Since this provision became effective in 2010, we believe that 
documentation forms should be already in place.
    Comment: Many commenters indicated that CMS did not include 
components in its burden estimates. One commenter stated that no impact 
was estimated for the implementation of the requirement for medical 
equipment, supplies, and devices. The commenter also indicated that our 
estimate does not include the cost to both state and federal 
governments of the additional physician visits that will occur and have 
to be paid for in order to meet the requirements. Another commenter 
stated that the burden estimate does not account for the time it may 
take to collect and review pertinent test results, specialist reports 
or assessments performed by clinicians such as physical therapists and 
occupational therapists. Another commenter indicated that there is no 
time identified for getting the documentation from the NP to the 
physician for endorsement and back, nor the time and personnel to 
support such coordination.
    Response: We believe that our estimates accurately reflect new 
burdens. In response to the comment pertaining to the services 
performed by physical therapists and occupational therapists, we did 
not account for additional time for physical therapy and occupational 
therapy services as the services are presumed covered in existing 
regulatory language. We do not believe that the burden for the 
situations described would be significant. We view administrative 
functions such as the transmission of information between NPs and 
physicians as an existing part of the duties of administrative 
personnel and do not need to be quantified as additional burden.
    Comment: One commenter requested that CMS clarify its plans to 
collect the additional documentation from physicians about the face-to-
face encounters and what role states and health plans may have in the 
process.
    Response: The intention of the comment is not clear. We defer 
operational procedures for implementing this provision to the states 
and therefore, the state will communicate to fee-for-service providers 
and managed care plans the details of how it will be implemented. We 
will not be collecting documentation from physicians.
    Comment: One commenter reported that physicians complain that they 
receive different forms from agencies and suggested that there be one 
universal form for everyone. Additionally, the commenter reported that 
the forms are returned incomplete and not timely and the education of 
how to complete the documentation is lengthy.
    Response: We defer to state Medicaid agencies for operational 
details. We encourage states to use universal forms where appropriate. 
As previously indicated, the statutory provision became effective in 
2010 and therefore, states should have appropriate forms in place.
2. ICRs Regarding Home Health Services: Communication of Clinical 
Findings (Sec.  440.70(f)(4))
    Section 440.70(f)(4) requires that NPPs and attending acute or 
post-acute physicians communicate the clinical findings of the face-to-
face encounter to the ordering physician. The clinical findings must be 
incorporated into a written or electronic document that is included in 
the beneficiary's medical record. While we set out burden in the 
proposed rule, we believe the requirement and burden are exempt from 
the PRA in accordance with 5 CFR 1320.3(b)(2). Specifically, we believe 
that the time, effort, and financial resources to communicate the 
findings of the encounter would be incurred by persons during the 
normal course of their activities and, therefore, should be considered 
a usual and customary business practice.
    Comment: Several commenters indicated that the proposed burden is 
underestimated. One commenter further stated that the proposal 
significantly underestimates the burden to both FFS providers and to 
managed care plans. Another commenter stated that not all face-to-face 
encounters will be limited to 10 minutes, depending on the health state 
of the beneficiary being examined. Another commenter indicated that 10 
minutes for NPPs and attending acute or post-acute physicians to 
communicate the findings of the face-to-face encounter to the ordering 
physician does not account for the time required for each face-to-face 
encounter nor for the time for staff to send endorsements back and 
forth between the involved parties.
    Response: We are not attempting to be overly burdensome. We are 
requiring a general description of beneficiary's health condition. We 
believe that 10 minutes on average is an appropriate amount of time as 
this should be a routine provision of care. We note that the time 
required to conduct the actual encounter with the beneficiary could 
vary widely. The 10 minute estimate had referred to the time it would 
take for the health status to be communicated to the ordering 
physician. Although we set out burden in the proposed rule, we believe 
that that the requirement is a usual and customary business practice 
and the burden is therefore exempt from formal OMB approval under the 
authority of the PRA.
    Comment: One commenter recommended that we work to streamline the 
requirements for documenting the in-person visit.
    Response: We believe that providing states with the flexibility to 
determine their own documentation requirements will best meet the 
unique needs of the beneficiaries served, states, and providers. We 
would like to reiterate that we are not prescribing the specific types 
of information that has to be documented, but rather we are requiring 
an overall description of the linkage of the health status and the 
services ordered.

C. Summary of Annual Burden Estimates

[[Page 5563]]



                                                                    Table 2--Annual Recordkeeping and Reporting Requirements
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                  Total capital/
  Regulation section(s) in Title 42 of     OMB Control No.  (CMS ID     Respondents        Total           Time per response       Total annual   Labor rate  ($/   maintenance     Total cost
                 the CFR                             No.)                                responses                                 burden  (hr)         hr)         costs  ($)          ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
440.70(f) and (g).......................  0938-1188 (CMS-10434).....      381,147.67      381,147.67  10 min (0.167 hr).........       63,651.66          179.16               0   11,403,831.41
                                                                          381,147.67      381,147.67  10 min (0.167 hr).........       63,651.66           94.22               0    5,997,259.41
                                                                          381,147.67      381,147.67  10 min (0.167 hr).........       63,651.66           93.54               0    5,953,976.28
                                                                     ---------------------------------------------------------------------------------------------------------------------------
    Total...............................  ..........................    1,143,443.01    1,143,443.01  10 min (0.167 hr).........      190,954.98             n/a               0   23,355,067.10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

D. Submission of PRA-Related Comments

    We have submitted a copy of this rule to 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 collections discussed above, please visit CMS' Web 
site at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995, or call the Reports Clearance Office at 
410-786-1326.
    We invite public comments on these potential information collection 
requirements. If you wish to comment, please identify the rule (CMS-
2348-F) the ICR's CFR citation, CMS ID number and OMB control number, 
and submit your comments to the OMB desk officer via one of the 
following transmissions:
    Mail: OMB, Office of Information and Regulatory Affairs, Attention: 
CMS Desk Officer;
    Fax Number: (202) 395-5806 or
    Email: [email protected].
    ICR-related comments are due March 3, 2016.

VI. Regulatory Impact Statement (or Analysis)

A. Statement of Need

    Section 6407(a) of the Affordable Care Act (as amended by section 
10605) added new requirements to section 1814(a)(2)(C) of the Act under 
Part A of the Medicare program, and section 1835(a)(2)(A) of the Act, 
under Part B of the Medicare program, that the physician, or certain 
allowed NPPs, document a face-to-face encounter with the beneficiary 
(including through the use of telehealth, subject to the requirements 
in section 1834(m) of the Act), before making a certification that home 
health services are required under the Medicare home health benefit. 
Section 1814(a)(2)(C) of the Act indicates that in addition to a 
physician, a NP or CNS (as those terms are defined in section 
1861(aa)(5) of the Act) who is working in collaboration with the 
physician in accordance with state law, or a certified nurse-midwife 
(as defined in section 1861(gg) of the Act, as authorized by state 
law), or a PA (as defined in section 1861(aa)(5) of the Act), under the 
supervision of the physician, may conduct the face-to-face encounters 
before the start of home health services.
    Section 6407(b) of the Affordable Care Act amended section 
1834(a)(11)(B) of the Act to require documentation of a similar face-
to-face encounter with a physician or specific NPPs by a physician 
ordering DME. The NPPs authorized to conduct a face-to-face encounter 
on behalf of a physician are the same for this provision as for the 
provision described above, with one exception. Certified nurse-midwives 
are not permitted to conduct the face-to-face encounter before the 
physician ordering DME. The timing of this face-to-face encounter is 
specified as being within the 6-month period preceding the written 
order for DME, or other reasonable timeframe specified by the 
Secretary. This provision also maintains the role of the physician in 
the actual ordering of DME.
    The Affordable Care Act applied both of the provisions to the 
Medicaid program.

B. Public Comments on the Regulatory Impact Analysis

    Comment: We received many comments pertaining to the fiscal impact 
of this regulation. One commenter stated that the regulation needs to 
look further into the overall cost of changing the common practice for 
in-home care providers and make sure the quoted $100 million is on 
target. One commenter stated that the need for frequent documented 
encounters outlined in the rule will result in a duplication of effort 
and result in unnecessary costs. Increased costs will result from both 
the increase in encounters and from additional administrative oversight 
to monitor compliance with encounter and documentation requirements. 
Another commenter stated that the expansion of services that will 
result from the proposed regulations will come at considerable and 
untenable cost to the states. Another commenter reported that the 
fiscal impact of the face-to-face requirement for the commenter's state 
would be an increase of over $3 million per year in additional 
expenditures. The commenter stated that the regulation specifies that 
home health care services are a mandatory service to all categorically 
needy Medicaid beneficiaries, as well as mandatory to all medically 
needy if the state makes this population eligible for nursing home 
care. The fiscal impact of this change is estimated to be an additional 
$5 million per year for the state. Another commenter reported that 
states will incur costs and administrative burdens regarding the 
following: (1) Providing notice to providers through Medicaid 
bulletins, billing guides and provider handbooks about the face-to-face 
encounter requirement; (2) examining medical records by program 
integrity staff to ensure the face-to-face requirement has been met; 
and (3) providing notice to providers of the updated list of DME items 
that require a face-to-face encounter, as periodically updated by CMS. 
Another commenter stated that the proposed regulation would vastly 
expand the program. If the changes are made, a state and its taxpayers 
would be obligated to pay for a seemingly limitless benefit. One 
commenter recommended that CMS estimate the additional costs associated 
with the proposed expansion of home health services.
    Response: While we recognize that states may have initial increases 
in costs, we do not believe that the potential increases outweigh the 
possible offsetting benefits to both beneficiaries and state budgets. 
The face-to-face encounter provision promotes program integrity and an 
effectively implemented home health benefit will enable beneficiaries 
to receive high quality care in the community, rather than rely on care 
in more expensive institutional settings. However, to allow states time 
for

[[Page 5564]]

budgetary planning and operational changes, we are allowing states up 
to one year to come into compliance with this rule if the state's 
legislature has met in that year, otherwise 2 years.
    Comment: A few commenters reported on the regulatory impact with 
regard to health care providers. One commenter stated that an increased 
cost will be imposed on every order to accommodate the endorsement of a 
physician for the order. Another commenter reported that they expect 
that practitioners and physicians will ask for an increase in their 
fees. Another commenter stated that managed care plans and fee-for-
service providers would also suffer from reduced physician 
productivity, which would increase the cost of treatment authorization. 
Another commenter stated that state Medicaid payment rates for 
physicians are significantly below Medicare rates and additional 
requirements are not likely to encourage practitioners and providers to 
serve the Medicaid population at the current depressed reimbursement 
rates.
    Response: In response to the concerns that an increased cost will 
be imposed on every order to accommodate the endorsement of a physician 
for the order, we do not view implementation of section 6407 of the 
Affordable Care Act as supplanting the existing Medicaid regulatory 
requirements related to current practice for physician orders but is 
consistent with those practices. We do not agree that this rule will 
reduce physician productivity or have an impact on current cost 
structure. We encourage the provider community to collaborate with 
their State Medicaid Agencies to ensure continued dialogue on rate 
structures and reimbursement methodologies.
    Comment: One commenter stated that the additional documentation 
would also impose a burden on the managed care plans and vendors under 
contract to perform billing services. The vendors would have to create 
protocols to ensure review of the appropriate documentation, which may 
include software development and system changes. The commenter 
indicated that the placement of face-to-face documentation into a 
beneficiary's medical record under the proposed rule would require new 
software development. This would occur at significant cost to managed 
care plans, fee-for-service providers, and/or software companies. The 
commenter also stated that the increased cost of treatment 
authorization for managed care plans would have to be incorporated into 
the capitation rates and if face-to-face visits are not billable, plans 
and fee-for-service providers would bear increased costs for treatment 
authorization due to higher transportation expenses and/or costs of 
telehealth equipment, facilities, and transmission. The commenter also 
believed that his state would incur significant costs in staff time and 
system changes to enact the proposed rule, including: (1) Drafting an 
analysis and possible state plan amendment; (2) preparing a regulation 
package; (3) providing training and education materials to providers; 
(4) developing changes to billing systems; (5) revising health plan 
contracts and recalculating capitation rates; and (6) performing 
periodic audits and investigations to ensure compliance. Additionally, 
the commenter stated that the increased cost of treatment authorization 
for managed care plans would have to be incorporated into the 
capitation rates. Another commenter reported that the current level of 
payment for home health agencies does not begin to cover the costs of 
providing services. The commenter stated that adding an additional 
documentation requirement to every admission further diminishes the 
impact of this substandard payment.
    Response: As previously stated, this rule does not require states 
to apply the face-to-face requirement to Medicaid managed care. We 
defer to states to determine the application of the face-to-face 
requirement in managed care plans to best meet the needs of their 
beneficiaries. We are requiring that if states direct their managed 
care plans to comply with face-to-face encounter requirements, the 
plans report on this in a manner similar to fee-for-service. We do 
agree that when states choose to require their managed care plans to 
meet these requirements they should take this into consideration while 
setting actuarially sound rates. While the rates may increase, this is 
not a certainty as managed care prior authorization requirements and/or 
existing reporting structures may already be in place within capitation 
rates to adequately cover the costs. We reiterate that the face-to-face 
encounter is an appropriate activity for which to be reimbursed under 
the Medicaid physician benefit, or, if a NPP is the practitioner 
performing the encounter, under the appropriate benefit established to 
reimburse those providers under the state plan. This reimbursement is 
provided for the face-to-face encounter. If a NPP performs the face-to-
face encounter, there is no additional reimbursement available for the 
physician to document that the face-to-face encounter occurred. Managed 
care plans, providers, and State Medicaid Agencies are encouraged to 
collaborate to determine appropriate reimbursement structures and once 
those are determined, the state's actuary should be informed in order 
to consider those assumptions during the capitation rate development.
    Comment: One commenter stated that the face-to-face encounter 
increases the burden on home care agencies by placing the onus on the 
providers to ensure that the encounter takes place in the manner 
prescribed by the final rule. Additionally, the commenter stated that 
the proposed rule did not address or consider the financial and 
operational burdens imposed on agencies and that it is home care 
agencies and not physicians that risk non-payment for services rendered 
if discrepancies regarding the face-to-face encounter arise. The 
commenter further stated that much of the Medicare face-to-face 
education was done by home care providers, resulting in even greater 
burden on agencies. Another commenter stated that the entirety of the 
face-to-face requirement is extraordinarily burdensome on small home 
health agencies and unnecessary for quality care outcomes and cost 
savings. Additionally, the commenter indicated that the face-to-face 
requirement penalizes home health agencies that are unable, due to size 
or geographic location, to secure the services of an independent 
physician.
    Response: We do not view the implementation of the face-to-face 
requirement as replacing existing regulatory requirements, but rather 
enhancing existing regulatory language. We believe that aligning with 
Medicare's implementation of this requirement will allow for 
consistency and reduce the burden on providers. Additionally, the rule 
expands the providers who may complete the face-to-face encounter to 
include NPPs and allows for the use of telehealth, which we believe 
will reduce the burden on home health agencies securing the services of 
an independent physician.
    Comment: One commenter stated that they believe that the existing 
Medicare face-to-face requirement has proven in many ways to be an 
ineffective and burdensome requirement on physicians, home health 
agencies, and patients, with little positive impact on program 
integrity, which should not be replicated for Medicaid cases.
    Response: The face-to-face requirement for both the Medicare and 
the Medicaid programs is required by statute, and we anticipate that 
Medicaid agencies will work with providers to

[[Page 5565]]

effectively and efficiently implement the provision.
    Comment: Some commenters reported that many providers have needed 
to devote full-time staff to the task of tracking down paperwork and 
following up with the physicians' offices on face-to-face documentation 
that is already duplicative of long-established service authorization 
records and standards.
    Response: We appreciate the commenters' concerns. We believe that 
providers have established administrative procedures in place, and 
therefore, do not believe that the additional face-to-face requirements 
will be overly burdensome or result in significant costs.
    After consideration of the public comments, this section is being 
finalized without revisions. However, as previously indicated, to allow 
time for budgetary planning and operational changes, we are allowing 
states up to one year to come into compliance with this rule if the 
state's legislature has met in that year, otherwise 2 years.

C. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995, Pub. L. 104-4), and Executive Order 13132 on Federalism (August 
4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. A regulatory impact analysis (RIA) must be prepared for 
major rules with economically significant effects ($100 million or more 
in any 1 year). We estimate that this rulemaking is ``economically 
significant'' as measured by the $100 million threshold, and, 
therefore, is a major rule under the Congressional Review Act. 
Accordingly, we have prepared a final Regulatory Impact Analysis which 
to the best of our ability presents the costs and benefits of the 
rulemaking.
    According to the CMS Actuarial estimates, section 6407 of the 
Affordable Care Act would bring an estimated $920 million in savings to 
the Medicare program from 2010-2014 and $2.29 billion in savings from 
2010-2019. Although this provision applies to Medicaid in the same 
manner and to the same extent as the Medicare program, there were no 
estimates (costs or savings) generated for the Medicaid program as data 
to determine these estimates is unavailable.
    The certification of the need for home health care by a physician 
would be a covered physician service or, at state option, could be 
covered as a component part of home health care services. States have 
substantial flexibility to design payment methodologies for covered 
services. These payment methodologies can be tailored by benefit and/or 
provider type. Therefore, there may be an increase in costs, but the 
scope of these increases are not measurable due to state flexibilities.
    Although there is no quantitative data to arrive at a specific 
dollar figure to attribute to the additional medical supplies, 
equipment, and appliances that may now be authorized in accordance with 
Sec.  440.70(b)(3), we acknowledge the potential for this provision to 
surpass the threshold for economic significance. We wish to note 
however, that this provision may result in offsetting benefits to both 
beneficiaries and state budgets, including the ability for 
beneficiaries to return to or enter the workforce, thereby increasing 
the pool of taxpayers, and decreasing reliance on other Medicaid 
benefits, including institutional care. Although there is no specific 
estimate regarding the benefits, they nonetheless should be taken into 
account. In the proposed rule, we specifically solicited comment 
regarding the potential increased costs and benefits associated with 
this provision, as well as the various sections throughout the RIA. 
After consideration of public comments, we are finalizing the burden 
costs estimates associated with the provisions in this regulation with 
no revision.
    The RFA requires agencies to analyze options for regulatory relief 
for small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small government 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$7.5 million to $38.5 million in any 1 year. For details, see the Small 
Business Administration's final rule that set forth size standards for 
health care industries, (65 FR 69432, November 17, 2000). Individuals 
and states are not included in the definition of a small entity. We are 
not preparing an analysis for the RFA because the Secretary has 
determined that this final rule will not have a significant economic 
impact on a substantial number of small entities. Entities affected by 
this rule should already be administering these changes for Medicare 
purposes as the statutory change was effective in 2010. Entities should 
already have systems in place to accommodate this change for the 
Medicaid population.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside 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 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any one year of $100 
million in 1995 dollars, updated annually for inflation. In 2015, that 
threshold level is $144 million. This final rule will not result in an 
impact of $144 million or more on state, local, or tribal governments, 
in the aggregate, or on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on state 
or local governments, the requirements of Executive Order 13132 are not 
applicable.

D. Conclusion

    We estimate that this final rule will be ``economically 
significant'' as measured by the $100 million threshold as set forth by 
Executive Order 12866, as well

[[Page 5566]]

as the Congressional Review Act. The analysis above provides our final 
Regulatory Impact Analysis. We have not prepared an analysis for the 
RFA, section 1102(b) of the Act, section 202 of the UMRA, and Executive 
Order 13132 because the provisions are not impacted by this rule.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 440

    Grant programs-health, Medicaid.

    The Centers for Medicare & Medicaid Services amends 42 CFR chapter 
IV as follows:

PART 440--SERVICES: GENERAL PROVISIONS

0
1. The authority citation for part 440 continues to read as follows:

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


0
2. Section 440.70 is amended by--
0
a. Revising paragraph (b) introductory text.
0
b. Revising paragraph (b)(3) introductory text.
0
c. Redesignating paragraphs (b)(3)(i) and (ii) as paragraphs 
(b)(3)(iii) and (iv), respectively.
0
d. Adding new paragraphs (b)(3)(i) and (ii) and paragraph (b)(3)(v).
0
e. Adding paragraphs (c)(1) and (2).
0
f. Adding paragraphs (f) and (g).
    The revisions and additions read as follows:


Sec.  440.70  Home health services.

* * * * *
    (b) Home health services include the following services and items. 
Paragraphs (b)(1), (2) and (3) of this section are required services 
and items that must be covered according to the home health coverage 
parameters. Services in paragraph (b)(4) of this section are optional. 
Coverage of home health services cannot be contingent upon the 
beneficiary needing nursing or therapy services.
* * * * *
    (3) Medical supplies, equipment, and appliances suitable for use in 
any setting in which normal life activities take place, as defined at 
Sec.  440.70(c)(1).
    (i) Supplies are health care related items that are consumable or 
disposable, or cannot withstand repeated use by more than one 
individual, that are required to address an individual medical 
disability, illness or injury.
    (ii) Equipment and appliances are items that are primarily and 
customarily used to serve a medical purpose, generally are not useful 
to an individual in the absence of a disability, illness or injury, can 
withstand repeated use, and can be reusable or removable. State 
Medicaid coverage of equipment and appliances is not restricted to the 
items covered as durable medical equipment in the Medicare program.
* * * * *
    (v) States can have a list of preapproved medical equipment 
supplies and appliances for administrative ease but States are 
prohibited from having absolute exclusions of coverage on medical 
equipment, supplies, or appliances. States must have processes and 
criteria for requesting medical equipment that is made available to 
individuals to request items not on the State's list. The procedure 
must use reasonable and specific criteria to assess items for coverage. 
When denying a request, a State must inform the beneficiary of the 
right to a fair hearing.
    (c) * * *
    (1) Nothing in this section should be read to prohibit a 
beneficiary from receiving home health services in any setting in which 
normal life activities take place, other than a hospital, nursing 
facility; intermediate care facility for individuals with intellectual 
disabilities; or any setting in which payment is or could be made under 
Medicaid for inpatient services that include room and board. Home 
health services cannot be limited to services furnished to 
beneficiaries who are homebound.
    (2) Additional services or service hours may, at the State's 
option, be authorized to account for medical needs that arise in the 
settings home health services are provided.
* * * * *
    (f) No payment may be made for services referenced in paragraphs 
(b)(1) through (4) of this section, unless the physician referenced in 
paragraph (a)(2) of this section or for medical equipment, the allowed 
non-physician practitioner, as described in paragraph (f)(3)(ii) 
through (v), with the exception of certified nurse-midwives, as 
described in paragraph (f)(3)(iii) documents that there was a face-to-
face encounter with the beneficiary that meets the following 
requirements:
    (1) For the initiation of home health services, the face-to-face 
encounter must be related to the primary reason the beneficiary 
requires home health services and must occur within the 90 days before 
or within the 30 days after the start of the services.
    (2) For the initiation of medical equipment, the face-to-face 
encounter must be related to the primary reason the beneficiary 
requires medical equipment and must occur no more than 6 months prior 
to the start of services.
    (3) The face-to-face encounter may be conducted by one of the 
following practitioners:
    (i) The physician referenced in paragraph (a)(2) of this section;
    (ii) A nurse practitioner or clinical nurse specialist, as those 
terms are defined in section 1861(aa)(5) of the Act, working in 
collaboration with the physician referenced in paragraph (a) of this 
section, in accordance with State law;
    (iii) A certified nurse midwife, as defined in section 1861(gg) of 
the Act, as authorized by State law;
    (iv) A physician assistant, as defined in section 1861(aa)(5) of 
the Act, under the supervision of the physician referenced in paragraph 
(a) of this section; or
    (v) For beneficiaries admitted to home health immediately after an 
acute or post-acute stay, the attending acute or post-acute physician.
    (4) The allowed non-physician practitioner, as described in 
paragraph (f)(3)(ii) through (v) of this section, performing the face-
to-face encounter must communicate the clinical findings of that face-
to-face encounter to the ordering physician. Those clinical findings 
must be incorporated into a written or electronic document included in 
the beneficiary's medical record.
    (5) To assure clinical correlation between the face-to-face 
encounter and the associated home health services, the physician 
responsible for ordering the services must:
    (i) Document the face-to-face encounter which is related to the 
primary reason the patient requires home health services, occurred 
within the required timeframes prior to the start of home health 
services.
    (ii) Must indicate the practitioner who conducted the encounter, 
and the date of the encounter.
    (6) The face-to-face encounter may occur through telehealth, as 
implemented by the State.
    (g)(1) No payment may be made for medical equipment, supplies, or 
appliances referenced in paragraph (b)(3) of this section to the extent 
that a face-to-face encounter requirement would apply as durable 
medical equipment (DME) under the Medicare program, unless the 
physician referenced in paragraph (a)(2) of this section or allowed 
non-physician practitioner, as described in paragraph (f)(3)(ii) 
through (v) of this section documents a face-to-face encounter with

[[Page 5567]]

the beneficiary consistent with the requirements of paragraph (f) of 
this section except as indicated in paragraph (g)(2) of this section.
    (2) The face-to-face encounter may be performed by any of the 
practitioners described in paragraph (f)(3) of this section, with the 
exception of certified nurse-midwives, as described in paragraph 
(f)(3)(iii) of this section.

    Dated: July 28, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: December 21, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-01585 Filed 1-27-16; 4:15 pm]
 BILLING CODE 4120-01-P