[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Rules and Regulations]
[Pages 86382-86466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27844]



[[Page 86381]]

Vol. 81

Wednesday,

No. 230

November 30, 2016

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 407, 430, 431, et al.





Medicaid and Children's Health Insurance Programs: Eligibility Notices, 
Fair Hearing and Appeal Processes for Medicaid and Other Provisions 
Related to Eligibility and Enrollment for Medicaid and CHIP; Final Rule 
and Proposed Rule

Federal Register / Vol. 81 , No. 230 / Wednesday, November 30, 2016 / 
Rules and Regulations

[[Page 86382]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 407, 430, 431, 433, 435, and 457

[CMS-2334-F2]
RIN 0938-AS27


Medicaid and Children's Health Insurance Programs: Eligibility 
Notices, Fair Hearing and Appeal Processes for Medicaid and Other 
Provisions Related to Eligibility and Enrollment for Medicaid and CHIP

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

ACTION: Final rule.

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SUMMARY: This final rule implements provisions of the Affordable Care 
Act that expand access to health coverage through improvements in 
Medicaid and coordination between Medicaid, CHIP, and Exchanges. This 
rule finalizes most of the remaining provisions from the ``Medicaid, 
Children's Health Insurance Programs, and Exchanges: Essential Health 
Benefits in Alternative Benefit Plans, Eligibility Notices, Fair 
Hearing and Appeal Processes for Medicaid and Exchange Eligibility 
Appeals and Other Provisions Related to Eligibility and Enrollment for 
Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing; 
Proposed Rule'' that we published in the January 22, 2013, Federal 
Register. This final rule continues our efforts to assist states in 
implementing Medicaid and CHIP eligibility, appeals, and enrollment 
changes required by the Affordable Care Act.

DATES: These regulations are effective on January 20, 2017.

FOR FURTHER INFORMATION CONTACT: Sarah deLone, (410) 786-0615.

Executive Summary

    This final rule implements provisions of the Patient Protection and 
Affordable Care Act of 2010 and the Health Care and Education 
Reconciliation Act of 2010 (collectively referred to as the Affordable 
Care Act), and the Children's Health Insurance Program Reauthorization 
Act of 2009 (CHIPRA). This final rule codifies in regulation certain 
statutory eligibility provisions set forth in the Affordable Care Act; 
changes regulatory requirements to provide states more flexibility to 
coordinate Medicaid and the Children's Health Insurance Program (CHIP) 
eligibility notices, appeals, and other related administrative 
procedures with similar procedures used by other health coverage 
programs authorized under the Affordable Care Act; modernizes and 
streamlines existing rules, eliminates obsolete rules, and updates 
provisions to reflect the various Medicaid eligibility pathways; and 
codifies certain CHIPRA eligibility-related provisions, including 
eligibility for newborns whose mothers were eligible for and receiving 
Medicaid or CHIP coverage at the time of birth.

Table of Contents

    To assist readers in referencing sections contained in this 
document, we are providing the following table of contents.

Executive Summary
I. Background
II. Provisions of the Proposed Rules and Responses to Comments
    A. Appeals
    B. Notices
    C. Medicaid Eligibility Changes Under the Affordable Care Act
    D. Medicaid Enrollment Changes Under the Affordable Care Act 
Needed To Achieve Coordination With the Exchange: Accessibility for 
Individuals Who Are Limited English Proficient
    E. Medicaid Eligibility Requirements and Coverage Options 
Established by Other Federal Statutes
    F. Verification Exceptions for Special Circumstances
    G. Verification Procedures for Individuals Attesting to 
Citizenship or Satisfactory Immigration Status
    H. Elimination or Changes to Unnecessary and Obsolete 
Regulations
    I. Electronic Submission of the Medicaid and CHIP State Plan
    J. Changes to MAGI
    K. Medical Support and Payments
III. Provisions of the Final Regulations
IV. Collection of Information Requirements
    A. Background
    B. ICRs Carried Over From the January 22, 2013 Proposed Rule
    C. Summary of Annual Burden Estimates
    D. Submission of PRA-Related Comments
V. Regulatory Impact Analysis
    A. Overall Impact
    B. Estimated Impact of the Medicaid and CHIP Eligibility 
Provisions
    C. Alternatives Considered
    D. Limitations of the Analysis
    E. Accounting Statement
    F. Regulatory Flexibility Analysis
    G. Unfunded Mandates
    H. Federalism
    I. Congressional Review Act
Regulation Text

Acronyms and Terms

    Because of the many organizations and terms to which we refer by 
acronym in this final rule, we are listing these acronyms and their 
corresponding terms in alphabetical order below:

ABP Alternative Benefit Plans
ACF U.S. Department of Health and Human Services, Administration for 
Children and Families
[the] Act The Social Security Act
AFDC Aid to Families with Dependent Children
Affordable Care Act The Affordable Care Act of 2010, which is the 
collective term for the Patient Protection and Affordable Care Act 
(Pub. L. 111-148, enacted on March 23, 2010) as amended by the 
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-
152)
APTC Advanced Payment of the Premium Tax Credit
BCCEDP Breast and Cervical Cancer Early Detection Program
BHP Basic Health Program
CDC Centers for Disease Control and Prevention
CE Continuous Eligibility
CHIPRA Children's Health Insurance Program Reauthorization Act of 
2009
CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
CNMI Commonwealth of the Northern Mariana Islands
COI Collection of Information
CSEA Child Support Enforcement Agency
CSR Cost-Sharing Reductions
DHS Department of Homeland Security
DOJ Department of Justice
DSH Federal Data Services Hub
EDL Enhanced Driver's License
EPSDT Early and Periodic Screening, Diagnosis, and Treatment
FFE Federally Facilitated Exchange
FFP Federal Financial Participation
FPL Federal Poverty Level
HHS Department of Health and Human Services
HIV Human Immunodeficiency Virus
ICR Information Collection Requirements
INA Immigration and Nationality Act
IRC Internal Revenue Code of 1986
IRS Internal Revenue Service
LTSS Long-Term Care Services and Supports
MAGI Modified Adjusted Gross Income
MNIL Medically Needy Income Level
MOE Maintenance of Effort
MOU Memorandums of Understanding
MSIS Medicaid Statistical Information System
OACT Office of the Actuary
OMB Office of Management and Budget
PE Presumptive Eligibility
PRA Paperwork Reduction Act of 1995
PRWORA Personal Responsibility and Work Opportunity Reconciliation 
Act of 1996
QHP Qualified Health Plan
RIA Regulatory Impact Analysis
SAVE Systematic Alien Verification for Entitlements
SBA Small Business Administration
SHO State Health Official
SMD State Medicaid Director
SPA State Plan Amendment
SSA Social Security Administration
SSI Supplemental Security Income
SSN Social Security Number
TAG Technical Advisory Groups
TMA Transitional Medical Assistance

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I. Background

    The Patient Protection and Affordable Care Act (Pub. L. 111-148, 
enacted on March 23, 2010), was amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 
30, 2010). These laws are collectively referred to as the Affordable 
Care Act. The Affordable Care Act extends and simplifies Medicaid 
eligibility and, in the March 23, 2012, Federal Register, we issued a 
final rule entitled ``Medicaid Program; Eligibility Changes Under the 
Affordable Care Act of 2010'' (referred to as the ``March 23, 2012, 
Medicaid eligibility final rule'') addressing certain key Medicaid 
eligibility issues.
    In the January 22, 2013 Federal Register, we published a proposed 
rule entitled ``Essential Health Benefits in Alternative Benefit Plans, 
Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and 
Exchange Eligibility Appeals and Other Provisions Related to 
Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and 
Medicaid Premiums and Cost Sharing'' (78 FR 4594) (hereinafter referred 
to as ``January 22, 2013 proposed rule''), that addressed a number of 
Medicaid eligibility provisions not addressed in the March 23, 2012, 
Medicaid eligibility final rule. This proposed rule included additional 
requirements related to the statutory eligibility provisions created by 
the Affordable Care Act; proposed changes to provide states more 
flexibility to coordinate Medicaid and the Children's Health Insurance 
Program (CHIP) procedures related to eligibility notices, appeals, and 
other related administrative actions with similar procedures used by 
other health coverage programs authorized under the Affordable Care 
Act.
    In the July 15, 2013 Federal Register, we issued the ``Medicaid and 
Children's Health Insurance Programs: Essential Health Benefits in 
Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal 
Processes, and Premiums and Cost Sharing; Exchanges: Eligibility and 
Enrollment; final rule'' (78 FR 42160) (referred to as the ``July 15, 
2013 Medicaid and CHIP final rule'') that finalized certain key 
Medicaid and CHIP eligibility provisions included in the January 22, 
2013 proposed rule. In this final rule, we are addressing most of the 
remaining provisions of the January 22, 2013 proposed rule. We will not 
be finalizing in this rule the definition of ``lawfully present'' in 
Sec.  435.4, or provisions finalizing the option states have to cover 
lawfully residing children and pregnant women in Medicaid and CHIP 
under section 214 of the Children's Health Insurance Program 
Reauthorization Act (CHIPRA) at Sec.  435.406(b) and Sec.  457.320, or 
the provision relating to benefits for those individuals who are non-
citizens proposed at Sec.  435.406(c). We will consider addressing 
these provisions in future guidance. We also are not finalizing 
proposed technical changes to the introductory text in Sec.  
435.201(a).
    We discuss below only those public comments associated with the 
provisions addressed in this final rule. For a complete and full 
description of the proposed Medicaid and CHIP eligibility and expansion 
provisions as required by the statute, see the January 22, 2013 
proposed rule.

II. Provisions of the Proposed Rule and Responses to Comments

    We received a total of 741 timely comments to the proposed rule 
from individuals, state Medicaid agencies, advocacy groups, health care 
providers, employers, health insurers, and health care associations. 
The comments ranged from general support or opposition to the proposed 
provisions to very specific questions or comments regarding the 
proposed changes.
    After careful consideration of the comments received we are 
revising some of the proposed regulations and finalizing other 
regulations as proposed. Many comments were addressed in the July 15, 
2013 Medicaid and CHIP final rule Part I. Some comments were outside 
the scope of the proposed rule. In some instances, commenters raised 
policy or operational issues that will be addressed through future 
regulatory and subregulatory guidance to be provided subsequent to this 
final rule. Therefore, some, but not all, comments are addressed in 
this final rule.
    Brief summaries of the provisions that are being finalized in this 
rule, a summary of the public comments we received on those provisions 
(except specific comments on the paperwork burden or the economic 
impact analysis), and our responses to the comments follows. Comments 
related to the paperwork burden and the impact analyses are addressed 
in the ``Collection of Information Requirements'' and ``Regulatory 
Impact Analysis'' sections in this final rule.

A. Appeals

1. Coordination of Appeals
    Consistent with sections 1413 and 2201 of the Affordable Care Act, 
we proposed regulations to promote coordination of Medicaid fair 
hearings under section 1902(a)(3) of the Social Security Act (the Act) 
with appeals of eligibility determinations for enrollment in a 
Qualified Health Plan (QHP) and for advance payment of the premium tax 
credit (APTC) and cost-sharing reductions (CSR) under section 1411(f) 
of the Affordable Care Act, as well as appeals related to other 
insurance affordability programs. We proposed revisions to the CHIP 
regulations to achieve similar coordination of CHIP reviews under 42 
CFR part 457 subpart K with Exchange-related appeals, as well as 
appeals related to other insurance affordability programs. In this 
final rule, we refer to an Exchange operating in the state in which the 
applicant has applied for coverage as ``an Exchange.'' We use the term 
``Exchange-related appeal'' to refer both to an appeal of a 
determination of ineligibility to enroll in a QHP through an Exchange 
as well as an appeal of eligibility for, or an amount awarded of, APTC 
or CSRs. The terms ``Medicaid appeal'' and ``Medicaid fair hearing'' 
have the same meaning in this final rule. The terms ``CHIP appeal'' and 
``CHIP review'' have the same meaning in this final rule.
    To ensure the coordination of appeals when both an Exchange-related 
and a Medicaid appeal are pending, we proposed to permit Medicaid 
agencies to delegate authority to conduct fair hearings of eligibility 
denials for individuals whose income eligibility is based on the 
applicable modified adjusted gross income (MAGI) standard, to an 
Exchange or Exchange appeals entity (provided that an Exchange or 
Exchange appeals entity is a governmental agency, which maintains 
personnel standards on a merit basis). This proposal was finalized in 
revisions to Sec.  431.10 and Sec.  431.206(d) in the July 2013 
Eligibility final rule, along with conforming changes to Sec.  
431.205(b)(1). Consistent with section 1902(a)(3) of the Act and Sec.  
431.10(c)(1)(ii), if the agency does delegate such authority to an 
Exchange or Exchange appeals entity, individuals must be given the 
choice to have their Medicaid appeal conducted by the Medicaid agency. 
As we explained in the proposed rule, states currently have broad 
flexibility under Sec.  457.1120 to delegate the CHIP review process to 
other entities; thus, no revision of the CHIP regulations was needed to 
permit delegation of review authority to an Exchange or Exchange 
appeals entity.
    We proposed several other revisions to regulations in 42 CFR part 
431 subpart E that were not finalized in the July 2013 Eligibility 
final rule. These revisions would maximize coordination of appeals 
involving different insurance affordability programs and minimize

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burden on consumers and states, regardless of whether the Medicaid of 
CHIP agency has delegated such authority to an Exchange or Exchange 
appeals entity, including:
     To avoid the need for individuals to request multiple 
appeals related to a MAGI-based eligibility determination, we proposed 
at Sec.  431.221(e) that, whenever an individual who has been 
determined ineligible for Medicaid requests an appeal related to his 
eligibility for the APTC or CSR level, this Exchange-related appeal 
will automatically be treated as an appeal of the Medicaid denial, 
without the individual having to file a separate fair hearing request 
with the Medicaid agency. We proposed a similar provision for CHIP at 
Sec.  457.1180.
     For simultaneous Exchange-related and Medicaid appeals in 
which an Exchange appeals entity is not adjudicating the Medicaid 
appeal, we proposed at Sec.  431.244(f)(2) that the agency must take 
final administrative action on a Medicaid fair hearing request within 
45 days from the date an Exchange appeals entity issues its decision 
relating to eligibility to enroll in a QHP and for APTC and CSRs. The 
purpose of proposed Sec.  431.244(f)(2) was to enable the Medicaid 
agency to defer conducting the Medicaid fair hearing until an Exchange-
related appeal had been decided, which could significantly reduce the 
burden on both consumers and states, particularly in the case of 
Medicaid fair hearing requests automatically triggered for individuals 
with income significantly above the applicable Medicaid income 
standard, many of whom would not likely choose to appeal their Medicaid 
denial or be found Medicaid eligible by the hearing officer. 
Recognizing the competing interests of consumers in different 
situations, we set forth several alternatives--including not modifying 
the 90-day timeframe at all--and solicited comments on the different 
approaches. Because there is broad flexibility under title XXI for 
reviews of CHIP determinations, we did not propose similar provisions 
for CHIP.
     We proposed revisions to the definition of ``electronic 
account'' in Sec. Sec.  435.4 and 457.10 (to include information 
collected or generated as part of Medicaid fair hearing or Exchange 
appeals processes) and to Sec.  431.242(a)(1)(i) (to ensure individuals 
would have access to the information in their electronic account, as 
well as the information in their ``case record''). (Current Sec.  
457.1140(d)(2) ensures individuals have the right to review their files 
and all other ``applicable information'' relevant to their eligibility 
or coverage for CHIP, which would include information in the 
individual's electronic account.)
     In situations in which the Medicaid agency has delegated 
to an Exchange or an Exchange appeals entity authority both to make 
eligibility determinations and to conduct Medicaid fair hearings, we 
proposed revisions at Sec.  435.1200(c) to clarify that the Medicaid 
agency must receive and accept a decision of an Exchange appeals entity 
finding an individual eligible for Medicaid, just as it accepts a 
determination of Medicaid eligibility made by an Exchange. We also 
proposed revisions at Sec.  435.1200(c)(3) to provide that, if an 
Exchange appeals entity has adjudicated both an Exchange-related and 
Medicaid appeal, an Exchange or Exchange appeals entity would issue a 
combined appeals decision. We proposed similar revisions for CHIP at 
Sec.  457.348(c).
     For states that have not delegated authority to an 
Exchange to determine Medicaid eligibility, we proposed revisions at 
Sec.  435.1200(d) (introductory text) to require that the agency treat 
an assessment of eligibility by an Exchange appeals entity in the same 
manner as an assessment of eligibility by an Exchange and, at Sec.  
435.1200(d)(4), to require that the Medicaid agency accept findings 
relating to a criterion of eligibility made by another insurance 
affordability program's appeals entity, if such findings were made in 
accordance with the same policies and procedures as those applied or 
approved by the Medicaid agency. We proposed similar revisions for CHIP 
at Sec.  457.348(d).
     We proposed revisions to Sec.  435.1200(e)(1) to provide 
that the agency must assess individuals for potential eligibility for 
other insurance affordability programs when they have been determined 
ineligible for Medicaid in the course of a fair hearing conducted by 
the Medicaid agency in the same manner as is required for individuals 
determined ineligible for Medicaid at initial application or renewal. 
We proposed similar revisions for CHIP at Sec.  457.350(b) 
(introductory text).
     We proposed to add a new paragraph (g) to Sec.  435.1200, 
to ensure coordination between appeals entities. Proposed paragraph 
(g)(1) requires that the Medicaid agency establish a secure electronic 
interface through which an Exchange appeals entity can notify the 
Medicaid agency of a Medicaid fair hearing request and can transfer the 
individual's electronic account and information contained therein 
between programs or appeals entities. Proposed Sec.  435.1200(g)(2) 
requires that, in conducting a Medicaid fair hearing under part 431 
subpart E, the Medicaid agency not request information or documentation 
from the individual already included in the individual's electronic 
account or provided to an Exchange or Exchange appeals entity. Proposed 
Sec.  435.1200(g)(3) requires that the Medicaid agency transmit to an 
Exchange a Medicaid fair hearing decision issued by the agency when 
necessary to ensure an appellant is not enrolled in both programs (that 
is, when the appellant either had been denied Medicaid by an Exchange, 
or by the agency and transferred to an Exchange for a determination of 
eligibility for enrollment in a QHP and for APTC and CSRs). Similar 
provisions for CHIP were proposed at Sec.  457.351.
     In addition, we proposed conforming amendments to Sec.  
435.1200(b)(1) related to the coordination of appeals between the 
Medicaid agency and an Exchange and Exchange appeals entity to 
incorporate new paragraph (g) in the delineation of general 
requirements that the Medicaid agency must meet to effectuate a 
coordinated eligibility system. We proposed revisions to Sec.  
435.1200(b)(3) to specify that the goal of minimizing burden on 
consumers through coordination of insurance affordability programs also 
relates to coordination of appeals processes and that the agreement 
entered into between the Medicaid agency and an Exchange per Sec.  
435.1200(b)(3) must also ensure compliance with new paragraph (g). We 
proposed similar revisions for CHIP at Sec.  457.348(b).
    We received the following comments on these proposed provisions, 
which are summarized below. We respond to comments and describe the 
provisions included in this final rule related to coordination of 
appeals processes across insurance affordability programs as they 
relate to coordination between Medicaid and Exchange-related appeals or 
appeals related to other insurance affordability programs. The policies 
discussed in this section and reflected in the final rule for Medicaid 
also apply to coordination between CHIP and Exchange-related appeals or 
appeals related to other insurance affordability programs.
    Comment: Commenters generally supported the goal of coordinating 
the appeals processes across insurance affordability programs to reduce 
burden on consumers, states and the Exchanges. Several commenters noted 
particular support for the proposed revisions at Sec.  435.1200(b)(3) 
that require the agreement(s) between the agency and other insurance 
affordability programs to delineate the responsibilities of each 
program to achieve a coordinated appeals process. One commenter

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supported the proposed revisions at Sec.  435.1200(c) specifying that 
the Medicaid agency must accept a decision of an Exchange appeals 
entity finding an individual eligible for Medicaid to the same extent 
as it accepts determination of Medicaid eligibility made by an 
Exchange. Another commenter commended the clarifications at proposed 
Sec.  435.1200(d)(2), precluding duplicative information requests, and 
at proposed Sec.  435.1200(d)(4), requiring the Medicaid agency to 
accept findings relating to a criterion of eligibility made by another 
insurance affordability program's appeals entity if such findings were 
made in accordance with the same policies and procedures as those 
applied or approved by the Medicaid agency.
    Some commenters also supported the requirement at proposed Sec.  
431.221(e) to automatically consider an Exchange-related appeal to 
trigger a Medicaid fair hearing request when a determination of 
Medicaid ineligibility has been made by either an Exchange or the 
Medicaid agency (referred to below as the proposed ``auto-appeal'' 
provision). These commenters believed that this provision is important 
(1) to reduce burden and confusion for consumers, who otherwise would 
have to request two separate appeals of what they may perceive as a 
single adverse action, and (2) to ensure that consumers don't miss the 
deadline to appeal a denial of Medicaid. One commenter suggested 
technical revisions to proposed Sec.  431.221(e) to ensure that an 
appeal to ``an Exchange'' (as well as to ``an Exchange appeals 
entity'') and an appeal involving eligibility for ``enrollment in a 
QHP'' (as well as an appeal related to eligibility for the ``advanced 
payment of premium tax credit or cost sharing reductions'') be treated 
as a request for a Medicaid fair hearing under this provision.
    Other commenters cautioned against requiring a high degree of 
coordination, which they believed would not be consistent with existing 
state capacity and resources. Some of these commenters also stated that 
such coordination would be difficult given the variation in state laws, 
policies and operations. For example, one commenter stated that a high 
degree of coordination was unrealistic because Medicaid fair hearings 
are subject not only to federal law and regulations, but also to state 
administrative procedures acts, thereby creating differences in the 
rules applicable to appeals in each state. Accordingly, these 
commenters strongly opposed the ``auto appeal'' provision at proposed 
Sec.  431.221(e). The commenters believe that the provision would 
result in a substantial increase in the number of Medicaid fair 
hearings that state agencies will have to conduct, adding further 
pressure on state Medicaid budgets, even though many applicants would 
not have been interested in having a Medicaid hearing, and in many 
cases the hearings would not likely result in a reversal of the 
Medicaid denial. The commenters noted that states do not have resources 
to expand their capacity to handle such an increased volume of appeals 
and recommended that the provision be removed from the final rule. A 
few commenters also believed that proposed Sec.  431.221(e) would be 
inconsistent with the ability of states to retain responsibility for 
all Medicaid fair hearing requests (rather than delegating authority to 
an Exchange to decide any Medicaid appeals); the commenters suggested 
that in states that do not delegate fair hearing authority to an 
Exchange or Exchange appeals entity, requiring submission of a separate 
request to the Medicaid agency would be appropriate. Several commenters 
recommended that if we finalize Sec.  431.221(e) as proposed, we delay 
implementation until January 1, 2015, or later. One commenter believed 
that such a delay also would allow states to gather experience in how 
administrative efficiencies can be achieved through technical 
efficiencies using the shared case file and the informal resolution 
process at an Exchange.
    Some commenters recommended that an Exchange appeals entity be 
required to offer applicants an opportunity to request a fair hearing 
of a Medicaid denial. Another commenter suggested that only applicants 
and beneficiaries appealing an Exchange-related determination who were 
found to have income within a specified threshold of the applicable 
Medicaid standard be treated as automatically having requested a fair 
hearing of their Medicaid denial. In other situations, the commenter 
suggested that, if an Exchange appeals entity, in conducting the 
Exchange-related appeal, determines the appellant to be eligible for 
Medicaid, the Medicaid agency could accept such determination effective 
as of the date of application.
    Response: The Affordable Care Act requires coordination between 
insurance affordability programs in determining eligibility. We 
interpret this statutory requirement to apply when simultaneous appeals 
related to eligibility for multiple programs are pending. The goal of 
such coordination is to reduce the burden on consumers, state agencies, 
and Exchanges that administer the programs; achieving the optimal 
balance requires that we take into consideration the interests and 
capacity of all parties.
    We agree with commenters who voiced concerns, similar to those that 
we raised in the proposed rule, that proposed Sec.  431.221(e) could 
result in a substantial increase in the volume of fair hearing requests 
that Medicaid agencies would be responsible for adjudicating, even 
though in many cases it would be unlikely that the appellant would have 
independently requested a Medicaid hearing in the absence of the 
``auto-appeal provision'' or be found eligible for Medicaid as a result 
of the hearing. As stated in the proposed rule, our intent was to 
reduce the need for an individual to submit multiple appeal requests. 
To address the concerns of commenters, we have decided not to include 
proposed Sec.  431.221(e) in the final rule. We provide instead an 
alternative simple mechanism for individuals appealing an Exchange-
related appeal to also request a Medicaid fair hearing,
    We are not accepting the commenter's suggestion that an Exchange-
related appeal should trigger an automatic Medicaid fair hearing 
request when the appellant has income within a specified threshold of 
the applicable Medicaid standard. We do not believe it is feasible to 
establish an appropriate income threshold for all applicants and 
beneficiaries in light of the many factors that apply in determining 
income eligibility depending on each individual's circumstances. 
Instead, consistent with the policy objectives we identified in the 
proposed rule, this final rule provides that applicants and 
beneficiaries requesting an Exchange-related appeal who also want to 
appeal a Medicaid denial may do so by making a single ``joint fair 
hearing request'' to an Exchange or Exchange appeals entity when an 
Exchange has provided a combined eligibility notice which includes a 
Medicaid denial, as well as a determination of eligibility for 
enrollment in a QHP with (or without) an award of APTC. This policy is 
effectuated through the following provisions:
     We provide a definition of a ``joint fair hearing 
request'' in Sec.  431.201 to mean a request for a Medicaid fair 
hearing that is included in an appeal request submitted to an Exchange 
or Exchange appeals entity under 45 CFR 155.520. We also add a cross-
reference to the definition of ``joint fair hearing request'' in Sec.  
431.201 at Sec.  435.1200(a)(2)(ii) of the final rule. Note that a 
``joint fair hearing request'' may be made both in states that have 
elected and states that have not elected

[[Page 86386]]

to delegate authority to conduct Medicaid fair hearings to an Exchange 
or Exchange appeals entity. Note also that a joint fair hearing request 
does not constitute a request for the Medicaid and Exchange-related 
appeals to both be heard by an Exchange appeals entity in states which 
have delegated Medicaid fair hearing authority. The joint fair hearing 
request simply allows applicants and beneficiaries to request a 
Medicaid fair hearing at the same time as they file an Exchange-related 
appeal with an Exchange or Exchange appeals entity. If a joint fair 
hearing request is submitted and authority to conduct the Medicaid fair 
hearing has been delegated to an Exchange or Exchange appeals entity, 
the individual must be provided with a choice to have the Medicaid fair 
hearing conducted by the Medicaid agency, consistent with Sec.  
431.10(c)(1)(ii) and Sec.  431.10(d)(4) of the July 2013 final 
eligibility rule.
     Revisions at paragraph (g)(1) of Sec.  435.1200 of the 
final rule provide that the agency must include in the agreement 
consummated per Sec.  435.1200(b)(3) that, if an Exchange (or other 
insurance affordability program) provides an applicant or beneficiary 
with a combined eligibility notice which includes a denial of Medicaid 
eligibility, an Exchange or Exchange appeals entity (or other insurance 
affordability program or appeals entity) will (1) provide the applicant 
or beneficiary with an opportunity to submit a joint fair hearing 
request, including an opportunity to request expedited review of his or 
her fair hearing request consistent with Sec.  431.221(a)(1)(ii) of the 
final rule; and (2) notify the Medicaid agency of the request for a 
Medicaid fair hearing, unless the hearing will be conducted by an 
Exchange appeals entity in accordance with a delegation of Medicaid 
fair hearing authority under Sec.  431.10(c)(1)(ii). Section 
431.221(a)(1)(ii) (relating to requests for expedited review of a fair 
hearing request) is discussed in section I.A.(b) of this final rule.
    Under the final regulation, if a combined eligibility notice, 
including a Medicaid denial, is not provided by an Exchange, but 
instead it is the Medicaid agency that provides notice of the Medicaid 
denial, the Medicaid agency is responsible for providing notice of fair 
hearing rights in accordance with existing regulations at Sec.  435.917 
and part 431 subpart E, and the individual would need to submit a fair 
hearing request to the agency in accordance with Sec.  431.221. Note 
that, as discussed in section II.B. of this final rule, while states 
are permitted to implement a system of combined eligibility notices in 
coordination with an Exchange operating in the state at any time, we do 
not expect that states and Exchanges will be able to provide combined 
notices in all situations immediately, but will phase in increased use 
of single coordinated eligibility notices over time as systems mature 
and resources become available. Because provision of a joint fair 
hearing request is contingent upon issuance of a combined eligibility 
notice by an Exchange, the requirement to permit individuals to make a 
joint fair hearing request is effective only to the extent that a 
combined eligibility notice is provided. In some instances, an Exchange 
already may be providing a combined eligibility notice of a Medicaid 
denial together with notice of eligibility to enroll in a QHP and 
receive APTC and CSRs, even in the absence of a requirement that it do 
so. Where combined eligibility notices are being provided, the Medicaid 
agency must work with an Exchange operating in the state to ensure that 
the Exchange provides individuals receiving a combined notice with an 
opportunity to request a Medicaid fair hearing using a joint fair 
hearing request. In states that have delegated authority to make MAGI-
based Medicaid eligibility determinations to the Federally-facilitated 
Exchange (FFE), for example, the FFE currently provides a combined 
eligibility notice to individuals who submit their application to the 
FFE and accepts joint fair hearing requests from individuals determined 
by the FFE to be ineligible for Medicaid based on MAGI.
     We add new paragraph Sec.  435.1200(g)(3) to provide that 
the agency must accept and act on a joint fair hearing request 
submitted to an Exchange or Exchange appeals entity in the same manner 
as a request for a fair hearing submitted to the agency in accordance 
with Sec.  431.221.
     Section 435.1200(g)(1)(i) of the proposed rule provided 
for the establishment of a secure electronic interface through which an 
Exchange or Exchange appeals entity would notify the Medicaid agency 
whenever an Exchange-related appeal is filed, because under the 
proposed rule, this would have triggered an automatic Medicaid appeal, 
as well as providing a mechanism through which the individual's 
electronic account could be transmitted. We are revising proposed Sec.  
435.1200(g)(1)(i), redesignated at Sec.  435.1200(g)(2)(i) of the final 
rule, instead to provide that the state agency establish a secure 
electronic interface through which an Exchange or Exchange appeals 
entity can notify the agency that it has received a joint fair hearing 
request. Per Sec.  435.1200(g)(2)(ii) of this final rule, the secure 
electronic interface also must support transmission of the individual's 
electronic account and other information relevant to conducting an 
appeal between the agency and an Exchange or Exchange appeals entity 
(or other insurance affordability program or appeals entity). Discussed 
in more detail below, Sec.  435.1200(g)(2) is subject to a delayed 
compliance date, 6 months after the date we publish a Federal Register 
notice alerting states of the compliance date for paragraph (g)(2).
    For individuals determined ineligible for Medicaid who have 
requested only an Exchange-related appeal, it also is critical to 
prevent any possibility of an ``appeals gap,'' if an Exchange appeals 
entity issues a decision finding an individual eligible for Medicaid. 
To prevent such a gap, Sec.  435.1200(g)(6) of the final rule provides 
that, if an Exchange made the initial determination of Medicaid 
ineligibility in accordance with a delegation of authority under Sec.  
431.10(c)(1)(i)(A)(3), the agency must accept a decision made by an 
Exchange appeals entity that an appellant is eligible for Medicaid in 
the same manner as if the determination of Medicaid eligibility had 
been made by an Exchange. Per Sec.  435.915 of the current regulations, 
the effective date of eligibility will be based on the date the 
application was filed. If the Medicaid agency made the initial 
determination of Medicaid ineligibility, Sec.  435.1200(g)(7) of the 
final rule provides the Medicaid agency with an option either to accept 
determinations of Medicaid eligibility made by an Exchange appeals 
entity in accordance with Sec.  435.1200(c), or to accept such 
determinations as an assessment of potential Medicaid eligibility and 
to then re-determine the individual's Medicaid eligibility in 
accordance with Sec.  435.1200(d). If the agency opts to re-determine 
the individual's eligibility, it must take into account any additional 
information obtained by an Exchange appeals entity in conducting an 
Exchange-related appeal. Such information should be provided by an 
Exchange appeals entity to the Medicaid agency, via the secure 
electronic interface established per Sec.  435.1200(g)(2), in 
accordance with the agreement described in paragraph (b)(3) to minimize 
burden on consumers. However, if an Exchange appeals entity does not 
transmit or otherwise furnish information relevant to the agency's 
redetermination, the agency must attempt to obtain the information 
directly from the individual. We are finalizing proposed revisions to

[[Page 86387]]

Sec.  435.1200(d) (introductory text) and Sec.  435.1200(d)(2), 
accordingly, to provide that, in making a determination of eligibility 
for an individual transferred from another insurance affordability 
program, the agency may not request information or documentation from 
the individual that is in the individual's electronic account or that 
has been provided to the agency by another insurance affordability 
program or appeals entity. Section 435.1200(d)(4) of the proposed rule, 
also finalized without revision in this final rule, similarly requires 
that the agency accept any finding relating to a criterion of 
eligibility made by another insurance affordability program or appeals 
entity, without further verification, if such finding was made in 
accordance with policies and procedures which are the same as those 
applied by the agency or approved by it in the agreement consummated 
with the other program or appeals entity described in Sec.  
435.1200(b)(3). Paragraphs (g)(4) and (g)(5) of Sec.  435.1200 of the 
final rule are discussed below.
    Note that the option provided in paragraph (g)(7) applies when the 
Medicaid agency has made the determination of ineligibility, regardless 
of whether or not the agency has authorized an Exchange to make 
Medicaid eligibility determinations in accordance with a delegation of 
authority under Sec.  431.10(c)(1)(i)(A)(3). States must apply the 
option they elect consistently to all individuals in the situation 
described. Regardless of the option elected, for individuals ultimately 
approved for Medicaid in accordance with Sec.  435.1200(g)(7), the 
effective date of eligibility is based on the date the application was 
filed, consistent with Sec.  435.915.
    We proposed revisions to the introductory text of Sec.  435.1200(c) 
to require the agency to accept a determination of Medicaid eligibility 
by an Exchange appeals entity in adjudicating a Medicaid fair hearing 
in accordance with a delegation of fair hearing authority under Sec.  
431.10(c)(1)(ii). We did not receive comments on these proposed 
revisions, which are included in the final rule. We also include a 
cross-reference to new paragraphs (g)(6) and (7) in the introductory 
text of Sec.  435.1200(c) to reflect the additional circumstances in 
which the agency must or may accept a determination of Medicaid 
eligibility by an Exchange appeals entity.
    We note that in a state that has not delegated authority to make 
Medicaid eligibility determinations to an Exchange, if an Exchange 
assesses the individual as ineligible for Medicaid and the individual 
elects to withdraw his or her Medicaid application in accordance with 
Sec.  155.302(b)(4), there is no possibility of a Medicaid fair hearing 
to be heard (by either the agency or an Exchange appeals entity) 
because there has been no determination of Medicaid ineligibility by an 
Exchange. Under the proposed revisions to the introductory text of 
Sec.  435.1200(d), finalized as proposed, the Medicaid agency must 
accept and treat an assessment of Medicaid eligibility made by an 
Exchange appeals entity in the same manner as if the assessment had 
been made by an Exchange. Per Sec.  435.907(h), finalized in the July 
2013 Medicaid and CHIP eligibility final rule, if an Exchange appeals 
entity assesses such an individual as eligible for Medicaid, the 
individual's application is automatically reinstated and transferred to 
the Medicaid agency to make a final determination. If the agency denies 
Medicaid eligibility at that point, notice of fair hearing rights would 
be provided by the agency.
    For consumers who request both a Medicaid and an Exchange-related 
appeal, coordination of the appeals processes can be achieved when an 
Exchange or Exchange appeals entity is able to conduct both appeals 
together in accordance with a delegation of authority under Sec.  
431.10(c)(1)(ii). However, in some cases, the Medicaid agency and 
Exchange appeals entity each will be responsible for adjudicating 
separate appeals. We appreciate the commenters' concern regarding the 
significant practical challenges to achieving the degree of 
coordination required under the proposed regulations. We therefore are 
revising the proposed Sec.  435.1200(g)(2), redesignated at paragraph 
(g)(4) in the final rule, to require that, in conducting a fair hearing 
in accordance with subpart E or part 431, the agency must minimize, to 
the maximum extent possible consistent with guidance issued by the 
Secretary, any requests for information or documentation from the 
individual that is already included in the individual's electronic 
account or otherwise provided to the agency by an Exchange or Exchange 
appeals entity. Over time, as state system capabilities increase, we 
anticipate that the degree of coordination possible between the state 
and an Exchange or Exchange appeals entity will increase, and we will 
issue additional guidance on coordination procedures as appropriate.
    To address potentially conflicting decisions issued by the two 
appeals entities, current Exchange regulations at Sec.  155.345(h) 
provide that an Exchange and Exchange appeals entity must accept a fair 
hearing decision issued by the Medicaid agency regarding the 
appellant's Medicaid eligibility, even if it conflicts with the 
decision reached by an Exchange appeals entity.
    We did not receive any comments on proposed revisions to the 
introductory text in Sec.  435.1200(c), which is finalized without 
revision in this final rule.
    We remind states that, while the decision to delegate appeals 
authority to an Exchange or Exchange appeals entity means that the 
agency must accept a decision regarding eligibility issued by an 
Exchange appeals entity under a delegation of authority, it does not 
relieve the agency of its responsibility to conduct any fair hearings 
requested by Medicaid applicants and beneficiaries in the state. For 
example, notwithstanding a delegation of appeals authority, per current 
Sec.  431.10(c)(1)(ii), individuals who request a fair hearing are 
entitled to request that their hearing be conducted by the agency, and 
not by the delegated entity. In addition, Medicaid agencies are not 
required to delegate appeals authority to an Exchange or Exchange 
appeals entity and the Exchanges and Exchange appeals entities 
respectively are not obligated to accept such delegations. Per current 
Sec.  431.10(c)(3)(ii), agencies that enter into an agreement with an 
Exchange or Exchange appeals entity to do so must exercise appropriate 
oversight over, and ultimately remain responsible for, the Medicaid 
fair hearing process.
    As provided under Sec.  435.1200(g)(4) of the final rule, in 
conducting a fair hearing in accordance with subpart E or part 431 of 
the regulations, the agency must minimize any requests for information 
or documentation from the individual which already are included in the 
individual's electronic account or otherwise provided to the agency by 
an Exchange or Exchange appeals entity. However, in the event that the 
Medicaid agency has not received information from an Exchange or 
Exchange appeals entity needed to conduct a fair hearing, the agency 
would need to obtain such information directly from the individual, and 
would be authorized under the regulations to do so.
    Commenters did not raise concerns with the following proposed 
revisions to Sec.  435.1200(d) (introductory text), Sec.  
435.1200(d)(4) or Sec.  435.1200(e)(1) (introductory text), which are 
finalized as proposed. Revisions to Sec.  435.1200(d) require that the 
agency treat findings, assessments and decisions made by an Exchange 
appeals entity in the same manner and to the same extent as eligibility 
determinations made by an Exchange or Medicaid agency for the

[[Page 86388]]

purposes of the coordination described in Sec.  435.1200(d). Revisions 
to Sec.  435.1200(e) require that the agency treat fair hearing 
decisions made by the Medicaid appeals entity the same as 
determinations made by the Medicaid agency for purposes of the 
coordination described in Sec.  435.1200(e). We also are finalizing as 
proposed conforming revisions to Sec.  435.1200(b) relating to the 
basic responsibilities of the agency to minimize burden on consumers 
who have requested appeals related to more than one insurance 
affordability program and to address such coordination in an agreement 
between the agency and other applicable appeals entities.
    The proposed revision at Sec.  435.1200(c)(3) providing for a 
combined appeals decision when an Exchange or Exchange appeals entity 
adjudicates a fair hearing request in accordance with a delegation of 
authority is moved to a new paragraph (b)(3)(v) of Sec.  435.1200. 
Consistent with the proposed rule, under Sec.  435.1200(b)(3)(v) of the 
final rule, if the agency has delegated authority to conduct fair 
hearings to an Exchange or Exchange appeals entity, the agreement 
between the entities must provide for a combined appeals decision by an 
Exchange or Exchange appeals entity in the case of individuals whose 
fair hearing is conducted by an Exchange or Exchange appeals entity. 
Note that this requirement applies regardless of whether the Medicaid 
agency or Exchange made the underlying determination of Medicaid 
ineligibility.
    The policies relating to coordination of appeals across insurance 
affordability programs previously discussed and codified in the final 
rule also apply to states' separate CHIP programs, except that the 
right to have to an appeal adjudicated by the state agency even if the 
agency has delegated authority to an Exchange or Exchange appeals 
entity does not apply in the case of any delegation of authority to 
conduct appeals of a CHIP determination. Table 1 provides a cross walk 
between the provisions of the final rule which accomplish the 
application of these policies to Medicaid and CHIP.

      Table 1--Crosswalk Between the Policies to Medicaid and CHIP
------------------------------------------------------------------------
        Medicaid final  regulation             CHIP final  regulation
------------------------------------------------------------------------
Sec.   431.201 (Definition of ``joint fair  Sec.   457.10 (Definition of
 hearing request'').                         ``joint review request'').
Sec.   431.242............................  No comparable provision.
Sec.   435.4 (Definition of ``electronic    Sec.   457.10 (Definition of
 account'').                                 ``electronic account'').
Sec.   435.1200(b)(3).....................  Sec.   457.348(a).
Sec.   435.1200(c) and (d)................  Sec.   457.348(b) and (c).
Sec.   435.1200(e)........................  Sec.   457.350(b)
                                             (introductory text).
Sec.   435.1200(g)........................  Sec.   457.351(a).
------------------------------------------------------------------------

    Proposed revisions to Sec.  457.1180, which would have provided for 
an automatic review of a CHIP denial based on a request for an 
Exchange-related appeal, are not included in this final rule for the 
same reason that proposed changes to Sec.  431.221(e) are not 
finalized.
    Comment: A commenter requested clarification regarding whether an 
assessment of Medicaid ineligibility by an Exchange is considered to be 
a Medicaid denial and, if so, whether an appeal of an Exchange-related 
determination to an Exchange appeals entity would trigger an automatic 
request for a Medicaid fair hearing when an Exchange had assessed the 
individual as not eligible for Medicaid. The commenter questioned how 
the Medicaid agency could conduct a fair hearing when it had not made 
an initial determination of ineligibility.
    Response: As noted, we are not finalizing the auto-appeal provision 
at Sec.  431.221(e) of the proposed rule. Therefore, no ``Exchange 
related appeal'' requests will result in automatic requests for 
Medicaid fair hearings. For assessments, we agree that, in a state that 
has not delegated authority to make Medicaid eligibility determinations 
to an Exchange, an assessment of Medicaid ineligibility by the Exchange 
does not constitute a denial of Medicaid subject to appeal. Per Sec.  
155.302(b)(4), an individual who has been assessed ineligible for 
Medicaid by an Exchange has the option either to accept that assessment 
and withdraw his or her Medicaid application or request that his or her 
Medicaid application be transferred to the Medicaid agency to make a 
final eligibility determination. If an individual who requests a final 
determination by the Medicaid agency is denied eligibility by the 
Medicaid agency, he or she at that point would have the right to 
request a fair hearing of the agency's denial. If an individual who 
chooses to withdraw his or her Medicaid application files an appeal 
relating to his or her eligibility for APTC and the Exchange appeals 
entity finds that the individual's income is at or below the applicable 
MAGI standard for Medicaid, per Sec.  435.1200(d) the agency would 
accept such finding as an assessment of Medicaid eligibility and make a 
final determination of eligibility, in the same manner as if an 
Exchange had assessed the applicant as Medicaid eligible based on the 
initial application. The same result would ensue for CHIP per Sec.  
457.348(c).
    Comment: A few commenters recommended that CMS clarify whether the 
regulatory requirements at Sec.  435.1200 require only coordination of 
eligibility and enrollment between Medicaid and CHIP, or also require 
coordination of eligibility and enrollment between Medicaid and other 
insurance affordability programs, including the Basic Health Program 
(BHP) and APTC and CSRs for coverage through the Marketplace.
    Response: At Sec.  435.1200, which set forth the Medicaid agency's 
responsibilities to establish a seamless and coordinated system of 
eligibility and enrollment with respect both to an initial 
determination of eligibility and to any appeals of such initial 
determinations, we require Medicaid coordination with all other 
insurance affordability programs, including CHIP, BHP and APTCs and 
CSRs for coverage in a QHP. Similarly, the CHIP regulations at 
Sec. Sec.  457.348 through 457.351, as revised in this final rule, 
provide for the coordination of eligibility determinations and appeals 
between CHIP and all other insurance affordability programs, not just 
for coordination between the CHIP and Medicaid programs.
    Comment: A commenter believed that the establishment of an 
electronic interface between an Exchange appeals entity and the 
Medicaid eligibility system could take considerable time in some 
states, which would delay the ability of these states to come into full 
compliance with the policy reflected in the proposed rule.
    Response: As noted in the proposed rule, the secure electronic 
interface required for use in exchanging information between the 
Medicaid agency and an Exchange appeals entity under proposed Sec.  
435.1200(g)(1) (redesignated at Sec.  435.1200(g)(2) in this final 
rule) can be the same interface as that established between the 
Medicaid agency and Exchange for exchange of information related to the 
initial determination of eligibility; a separate secure interface 
directly between the Medicaid agency and Exchange appeals entity may be 
established, but is not required. Due to the considerable work which is 
ongoing in many states relating

[[Page 86389]]

to multiple aspects of their eligibility and enrollment systems, we 
agree that a delay in the compliance date of this requirement is 
appropriate. Thus, we are providing for a delayed compliance date of 
the requirement in Sec.  435.1200(g)(2) to establish a secure 
electronic interface between the Medicaid agency and the Exchange 
appeals entity, which is incorporated at Sec.  457.351(a) for CHIP. 
Under Sec.  435.1200(i), states will be required to establish a secure 
interface for electronic transfer of information between insurance 
affordability programs and appeals entities within 6 months from the 
date of a published Federal Register notice alerting states of the 
compliance date for paragraph (g)(2).
    Comment: In situations involving simultaneous Exchange-related and 
Medicaid appeals, no commenters supported the policy at proposed Sec.  
431.244(f)(2) to give state Medicaid agencies up to 45 days from the 
date an Exchange appeals entity issues an Exchange-related appeals 
decision to decide a Medicaid fair hearing. Some commenters were 
concerned that 45 days from the date of the Exchange appeals decision 
would not provide the Medicaid agency adequate time to conduct the 
Medicaid fair hearing. To meet the 45-day timeframe, the commenters 
stated that fair hearings may need to be scheduled prior to the 
issuance of a decision by an Exchange appeals entity, thereby 
undermining the goal to prevent duplication of effort. One commenter 
added that, if following the initiation of the Medicaid fair hearing 
process, the appellant withdraws his fair hearing request upon 
receiving an Exchange appeal decision, the State will have incurred 
unnecessary expense; this commenter recommended that CMS allow up to 90 
days from the date of an Exchange appeal decision for the Medicaid 
agency to issue a decision on the fair hearing request. One commenter 
recommended that the timeframe generally permitted for fair hearing 
decisions be extended from 90 to 120 days, with the Medicaid agency 
receiving an Exchange's decision relating to eligibility for other 
insurance affordability programs no less than 60 days before the 
expiration of the 120-day period.
    Others commenters were concerned that proposed Sec.  431.244(f)(2) 
would result in excessive delays in fair hearing decisions for many 
individuals who were wrongfully denied Medicaid. Some of these 
commenters believed that the Medicaid fair hearing often should go 
first. Other commenters recommended that consumers should be given a 
choice as to whether their Exchange appeal or Medicaid fair hearing is 
conducted first. In support of a Medicaid-first policy, a few 
commenters pointed to the requirement at Sec.  155.345(h) of the 
Exchange regulations that the Medicaid fair hearing decision must be 
accepted by an Exchange even if it conflicts with a decision rendered 
by an Exchange appeals entity.
    Response: Proposed Sec. Sec.  431.244(f)(2) and 431.221(e) 
represented two integral components of an overarching policy to achieve 
coordinated appeals processes across insurance affordability programs, 
in particular between Medicaid fair hearings and Exchange-related 
appeals. Because we were concerned that the automatic Medicaid appeals 
that would be generated under proposed Sec.  431.221(e) would overwhelm 
the resources of Medicaid agencies' fair hearing processes, we proposed 
to permit Medicaid agencies to defer acting on such Medicaid fair 
hearing requests until the resolution of an Exchange-related appeal. 
Since we are not adopting the automatic appeal provision at proposed 
Sec.  431.221(e) in this final rule, we do not believe this 
accommodation is necessary. Under this final regulation, a Medicaid 
fair hearing will be conducted only for individuals who affirmatively 
request such hearing--either through submission of a joint fair hearing 
request to an Exchange or directly to the agency. In this context, the 
potential harm to applicants and beneficiaries of delaying fair 
hearings as proposed at Sec.  431.244(f)(2), outweighs the value of any 
potential administrative efficiencies gained. Accordingly, we are not 
finalizing proposed Sec.  431.244(f)(2). Rather, this final rule, at 
Sec.  431.244(f)(1)(ii), applies the standard 90 day time frame for 
taking final administrative action on all fair hearing requests, 
regardless of whether a simultaneous Exchange-related appeal has been 
filed, unless an expedited decision (discussed below) is required under 
Sec.  431.244(f)(2). This overall time frame does not preclude the 
Medicaid agency and an Exchange from agreeing on the sequencing of 
related simultaneous appeals to maximize efficiency and reduce the 
burden on the agency and consumers. Protocols for sequencing of appeals 
can be included in the agreement between the two programs under Sec.  
435.1200(b)(3) of the final regulation, provided that the 90-day time 
frame for taking final administrative action in Sec.  431.244(f) is 
met. As noted, because there is broad flexibility under CHIP regarding 
the timing of appeals decisions, we had not proposed similar changes in 
the CHIP regulations.
    Comment: A commenter believed that the existence of two levels of 
the Exchange appeals process would make coordination of appeals between 
Medicaid and the Exchange difficult; the commenter believed that the 
Medicaid and Exchange appeal processes inevitably will diverge, and 
that expecting too much coordination could create confusion and the 
potential for someone to miss their opportunity to appeal, particularly 
in households in which one member has an appealable Exchange-related 
adverse action and another an appealable Medicaid-related adverse 
action. Another commenter recommended that we clarify that the informal 
review process runs concurrently with the timeframe for issuing a fair 
hearing decision, unless the appellant withdraws his request for a fair 
hearing. A third commenter sought clarification that the informal 
review process at the Exchange appeals entity may not interfere with an 
applicant's right to timely request a separate Medicaid appeal.
    Response: The Exchange appeals process provides for an informal 
resolution process prior to the Exchange appeals entity engaging in a 
formal hearing process. Appellants who are not satisfied with the 
result of the informal resolution process are entitled to a hearing. 
(See Sec.  155.535.)
    We do not agree that the existence of such an informal resolution 
process will undermine coordination of the appeals process, or 
jeopardize individuals' right to request a Medicaid fair hearing. If an 
Exchange or Exchange appeals entity is conducting a Medicaid fair 
hearing in accordance with a delegation of authority under Sec.  
431.10(c)(1)(ii), the Exchange or Exchange appeals entity may choose to 
provide an informal resolution process for individuals appealing a 
Medicaid eligibility determination made by the Exchange. If an Exchange 
or Exchange Appeals Entity is providing an opportunity for informal 
resolution prior to a fair hearing, the process must be conducted 
consistent with Medicaid fair hearing rights and timeframes in 
accordance with part 431, subpart E, as required under the requirements 
of a delegation at Sec.  431.10(c)(3)(i)(A). Thus, the time permitted 
to render a final decision (measured from the date of the appeal 
request) would not be affected. Appellants who are not satisfied with 
the result from the informal process at an Exchange or Exchange appeals 
entity would have the right to proceed to a formal hearing, as required 
under the Exchange regulations at Sec.  155.535(a)(2).

[[Page 86390]]

Appellants satisfied with the result of the informal resolution process 
would need to withdraw their request for a Medicaid fair hearing in 
accordance with Sec.  431.223(a); if the appellant is not satisfied, 
the Exchange appeals entity would proceed with a hearing. If the state 
has not delegated authority to conduct fair hearings to the Exchange or 
Exchange appeals entity, the informal resolution process established by 
the Exchange appeals entity will not be relevant, as the Medicaid 
agency will conduct the fair hearing in accordance with the processes 
established by the state agency.
    We understand that a number of state Medicaid agencies employ 
informal resolution processes prior to holding a fair hearing. While 
not required, we believe informal resolution processes reflect an 
efficient mechanism to resolve appeals without incurring the cost or 
time needed for a formal hearing process. Whether employed by an 
Exchange or Exchange appeals entity or the Medicaid agency, use of an 
informal resolution process does not affect (1) the timeliness 
requirements set forth in in Sec.  431.244(f) for issuance of a final 
fair hearing decision, measured against the date the fair hearing is 
requested; or (2) individuals' right to request that their fair hearing 
be conducted by the Medicaid agency, despite a delegation of fair 
hearing authority under Sec.  431.10(c)(1)(ii).
    Comment: Some commenters were concerned about an inconsistency in 
the period of time states must provide individuals to request a 
Medicaid fair hearing and the period of time permitted for individuals 
to file an Exchange-related appeal with an Exchange appeals entity. 
Commenters pointed to the regulation at Sec.  431.221(d), which 
provides flexibility for state Medicaid agencies to allow applicants 
and beneficiaries ``a reasonable time, not to exceed 90 days'' to 
request a fair hearing, whereas under the proposed Exchange regulation 
at Sec.  155.520(b), individuals are given 90 days to appeal an 
Exchange-related determination. Several commenters recommended that 
language be added at the end of proposed Sec.  431.221(a)(5) to require 
that, for individuals receiving both a Medicaid and Exchange-related 
determination, any request for a Medicaid hearing be deemed timely if 
made within 90 days of the date of the notice relating to the 
individual's Exchange-related determination, regardless of the State's 
deadline for requesting a Medicaid hearing.
    Response: In this final rule, we refer to the period of time 
individuals are provided to request an Exchange-related appeal or a 
Medicaid fair hearing as the ``appeals period.'' Current Sec.  
431.221(d) requires only that the agency establish an appeals period 
not to exceed 90 days. The 90-day Exchange appeals period provided at 
proposed Sec.  155.520(b) was finalized, with revision, in the Exchange 
appeals final regulation which was published on August 30, 2013. Under 
Sec.  155.520(b)(2) of that regulation, an Exchange or Exchange appeals 
entity may align the appeals period for an Exchange-related 
determination with the appeals period for a Medicaid fair hearing, 
provided that such period is not less than 30 days. This flexibility 
will enable, although not require, an Exchange appeals entity and 
Medicaid agency to adopt the same appeals period for both programs. 
States also have broad flexibility under Sec.  457.1180 of the CHIP 
regulations to establish a reasonable appeal period, making alignment 
across all insurance affordability programs possible.
    As previously discussed, we are not finalizing proposed Sec.  
431.221(e), which would have required the Medicaid agency to treat an 
Exchange-related appeal as automatically triggering a Medicaid fair 
hearing request in certain circumstances. Conversely, we agree that 
vastly different appeals periods could cause confusion, particularly 
for individuals who receive a single combined eligibility notice 
relating to their eligibility for multiple programs. However, we did 
not propose revisions to Sec.  431.221(d) in the January 22, 2013 
proposed rule. Therefore, to promote alignment between the appeals 
period permitted by all insurance affordability programs, we propose 
elsewhere in this Federal Register, revisions to Sec.  431.221(d) under 
which the agency would be required to provide individuals with no less 
than 30 days nor more than 90 days to request a fair hearing. We also 
are proposing elsewhere in this Federal Register a similar requirement 
at a new Sec.  457.1185(a)(3)(i) of the CHIP regulations.
    We also agree with commenters that, when a combined eligibility 
notice including a Medicaid denial is issued, enabling the individual 
to submit a joint fair hearing request to an Exchange or Exchange 
appeals entity in accordance with Sec.  435.1200(g)(1) of the final 
rule, a shorter appeals period for requesting a Medicaid fair hearing 
than that permitted for requesting an Exchange-related appeal could 
create confusion and result in someone inadvertently missing the 
deadline for requesting a Medicaid fair hearing. Therefore, we also are 
proposing elsewhere in this Federal Register a new paragraph (d)(2) in 
Sec.  431.221, under which the Medicaid agency, whether or not it has 
delegated fair hearing authority to an Exchange or Exchange appeals 
entity, must accept as timely a request for a Medicaid fair hearing 
submitted to an Exchange or Exchange appeals entity (or to another 
insurance affordability program or appeals entity) as part of a joint 
fair hearing request within the time frame permitted for filing a 
timely appeal of an Exchange-related determination under Sec.  
155.520(b) (or for filing a timely appeal with such other insurance 
affordability program or appeals entity); a similar provision is 
proposed elsewhere in this Federal Register as a new Sec.  
457.1185(a)(3)(ii) of the CHIP regulations.
    Comment: Several commenters supported the proposed regulation at 
Sec.  431.221(a) to enable applicants and beneficiaries to request a 
Medicaid fair hearing via all the same modalities as are available for 
individuals to submit an application per Sec.  435.907(a). Other 
commenters believed that requiring additional modalities (that is, 
other than by mail) for fair hearing requests was unnecessary, would 
impose undue burden on states, and should be available only at state 
option. A few noted their concern, in particular, about states' ability 
to track telephone requests, as well as the additional staff time 
required to gather information from individuals requesting a fair 
hearing in person or over the phone. They recommended that CMS 
eliminate the requirement that states accept hearing requests by phone 
or in person in favor of providing states with flexibility to determine 
their own capacity to offer these modalities for consumers to request 
hearings.
    Some commenters suggested CMS include a requirement that the 
Medicaid agency be required to document and confirm all telephonic 
hearing requests in writing and that such confirmation occur within one 
business day of receipt of the telephonic hearing request. Some of 
these commenters believed that states should provide all individuals 
with confirmation of their fair hearing request, regardless of the 
modality through which the request was made. One commenter (mistakenly) 
stated that the Exchange regulations at Sec.  155.520 do not allow 
individuals to submit a Medicaid hearing request via the Internet. The 
commenter, concerned that reliance on the Federally-facilitated 
Exchange might affect the permissibility of Medicaid fair hearing 
requests via the internet, encouraged CMS to amend the Exchange 
regulations to provide for appeal requests via the internet for both 
programs.

[[Page 86391]]

    Response: We believe that facilitating consumers' ability to 
exercise their fair hearing rights through modernizing the means by 
which a fair hearing request can be made is as important as, and no 
more inherently burdensome to states than, modernizing the means by 
which an application can be filed. While individuals will be afforded 
an opportunity to request a fair hearing through the same modalities 
that can be used to submit an application, states retain flexibility in 
the mechanisms available to appellants to provide documentation 
supporting their position. For example, supporting documentation could 
be provided in connection with an informal resolution process, if 
applicable, or during the evidentiary hearing conducted by the hearing 
officer. Thus, we disagree with some commenters' concern regarding the 
particular burden of telephonic or in-person requests. Given the broad 
availability and use of the Internet for filing applications, we 
believe that this modality also should be available for appeals in all 
states. Therefore, we are finalizing the policy as proposed at Sec.  
431.221(a)(1) through (5) in the final rule. However, inasmuch as the 
modalities identified for submission of a fair hearing request at 
proposed Sec.  431.221(a)(1) through (5) mirror the modalities that 
states must make available to applicants under Sec.  435.907(a), we 
have revised proposed Sec.  431.221(a)(1) through (5), redesignated at 
Sec.  431.221(a)(1)(i) in the final rule, to instead provide a cross-
reference to the modalities described in Sec.  435.907.
    We are aware that states will need time to upgrade their systems to 
accept fair hearing requests through these additional modalities. Thus, 
we are adding a delayed effective date for the new modalities for fair 
hearing requests required under the final rule. Per Sec. Sec.  
431.221(a)(1)(i) and 435.1200(i) of the final rule, telephonic and 
online fair hearing requests, as well as requests via other commonly 
available electronic means (if any) will not be required until 6 months 
from the date of the publication of the Federal Register notice 
requiring their implementation.
    We note that our expectation is that the same modalities for 
requesting an appeal be available also in CHIP. However, we did not 
propose revisions to the CHIP regulations requiring that individuals 
applying for or receiving CHIP be able to request a review under 
subpart K of the CHIP regulations via all modalities available to 
individuals seeking to apply for CHIP. Therefore, we propose elsewhere 
in this Federal Register a new Sec.  457.1185(a) to require that states 
must provide individuals with the opportunity to request a review of a 
denial or termination of CHIP or other CHIP-related matter via all such 
modalities. The proposed regulation at Sec.  457.1185(a)(1)(ii) also 
includes a right to request an expedited completion of a review in 
accordance with current Sec.  457.1160, similar to the right provided 
Medicaid applicants and beneficiaries at Sec.  431.221(a)(1)(ii) of 
this final rule. Under the broad authority states currently have to 
establish a review process under part 457 subpart K, the option for 
states to accept review requests of CHIP-related matters through all 
modalities already is available.
    We did not propose that the state Medicaid or CHIP agency provide 
confirmation of fair hearing requests and therefore we are not 
including such a requirement in this final rule. However, we agree that 
confirmation of fair hearing requests, which we note is required under 
the Exchange regulations at Sec.  155.520(d), would strengthen the 
procedural protections afforded beneficiaries. Therefore, we propose 
elsewhere in this Federal Register further revisions to Sec.  
431.221(a) and a new Sec.  457.1185(a)(2) to include this requirement.
    Comment: A few commenters requested clarification regarding the 
ability of individuals to request a fair hearing through ``other 
commonly available electronic means.'' One commenter believed that the 
proposed regulation fails to address commonly available social media, 
which some might reasonably conclude are included in the definition of 
``commonly available electronic means,'' which would be burdensome for 
states to accommodate. Another commenter recommended that Sec.  
431.221(a)(4) be revised to insert ``designated by the state'' after 
``through other commonly available electronic means'' to make clear 
that it is states, not consumers, that have authority to designate what 
is considered to be a ``commonly available electronic means'' through 
which a fair hearing may be requested. Another commenter supported the 
requirement to make fair hearing requests available through other 
commonly available electronic means, but recommended delaying 
implementation of the requirement to allow time for the state to make 
the necessary systems changes to support such requests.
    Response: We appreciate commenters' concern that the phrase 
``commonly available electronic means'' may be interpreted differently 
by different states, consumers and other stakeholders. As noted, in 
proposing Sec.  431.221(a), we intended to propose that the same 
modalities available for submission of applications under Sec.  435.907 
also be made available for individuals to request a fair hearing, and 
we have revised the final rule at Sec.  431.221(a)(1)(i) to instead 
cross-reference the modalities listed in Sec.  435.907. Since we did 
not propose revisions to the identical existing language in the 
regulations at Sec.  435.907(a)(5) (requiring that agencies accept 
applications ``through other commonly available electronic means''), we 
are not revising the language we proposed in Sec.  431.221(a)(4) 
pertaining to the modalities applicable to fair hearing requests in 
this rulemaking. However, we will take the comments under advisement in 
future rulemaking.
    Comment: One commenter requested CMS to clarify its expectations 
regarding how states should ensure that requests made via telephone, 
the Internet or other commonly available electronic means are made only 
by the affected applicant beneficiary or a properly designated 
authorized representative.
    Response: To ensure that fair hearing requests are submitted only 
by the affected applicant or beneficiary or person authorized to act on 
their behalf, states are expected to employ the same policies and 
practices regarding the authority of the individual submitting a fair 
hearing request as those applied by the state regarding the submission 
of applications and renewal forms by authorized representatives, under 
Sec.  435.923. We believe it is important that a person or entity is 
not submitting an appeal request form on behalf of the individual 
without the consent of the individual. For example, it would not be 
permissible for a nursing home provider to submit an appeal request 
form on behalf of a beneficiary if no consent has been obtained from 
the individual. We also note that an individual serving in the role of 
an authorized representative under Sec.  435.923 may limit the scope of 
his or her representation. For example, such an individual could be an 
attorney and only represent the individual in conducting the fair 
hearing or any informal resolution of that issue, but not receive an 
individual's notices or otherwise be responsible for filing change 
reporting or a renewal form. We have revised the introductory text of 
proposed Sec.  431.221(a), redesignated at Sec.  431.221(a)(1) of the 
final rule, to cross-reference the definition of ``authorized 
representative'' in Sec.  435.923 for clarity.
    Comment: Section 431.223 provides that a request for a hearing may 
be withdrawn in writing. One commenter sought clarification regarding 
whether a request to withdraw a fair hearing request can be effectuated 
in the same manner as a request for a fair hearing,

[[Page 86392]]

as provided at proposed Sec.  431.221(a). A number of commenters 
recommended that Sec.  431.223 be revised to provide additional 
protection against inadvertent or erroneous dismissals, similar to 
those provided in Sec.  155.530(b) and (d), which requires an Exchange 
appeals entity to provide notice of dismissal, including information 
about how a dismissal may be vacated. The commenters believed that, 
given the inevitable complexity of states' hearing systems and changes 
that are being made to achieve greater coordination with an Exchange, 
there is a significant possibility that confusion on the part of 
individuals, as well as on the part of the navigators and insurance 
brokers helping them, will result in erroneous withdrawals. The 
commenters believed that individuals with both Exchange-related and 
Medicaid appeals pending would be particularly vulnerable to erroneous 
withdrawal. The commenters also recommended that dismissals not be 
accepted for individuals who have a disability and may therefore 
qualify in a category to which MAGI does not apply.
    Response: In the proposed rule, we indicated our expectation that 
withdrawal of a Medicaid fair hearing request would be permitted 
through all of the modalities identified in Sec.  435.907 (related to 
submission of an application); these modalities mirror those at 
proposed Sec.  431.221(a) relating to a request for a Medicaid fair 
hearing. We provide in this final rule at Sec.  431.223(a) that states 
must offer individuals who have requested a fair hearing the ability to 
withdraw their request via any of the modalities available in 
accordance with Sec.  431.221(a)(1)(i). Under the regulation, the 
requirement to accept telephonic, online, or other electronic 
withdrawals is effective at the same time as the requirement to make 
those modalities available to individuals to make a fair hearing 
request. Under Sec.  431.223(a), telephonic hearing withdrawals must be 
recorded, including the appellant's statement and telephonic signature. 
We expect the agency to retain as part of the individual's electronic 
file the voice signature recording along with either a voice recording 
of the appellant's complete statement requesting the withdrawal, a 
written transcript of the appellant's statement, or a summary statement 
indicating that the appellant requested his or hearing be withdrawn. 
For telephonic, online, and other electronic withdrawals, the agency 
must send the appellant a written confirmation of such withdrawal, via 
regular mail or electronic notification in accordance with the 
individual's election under Sec.  435.918(a) of this chapter. We 
propose elsewhere in this Federal Register that such confirmation must 
be provided within 5 business days of the agency's receipt of a 
telephonic withdrawal. Appellants always will retain the right to 
request a withdrawal in writing, regardless of other modalities 
available.
    States currently have the flexibility under subpart K of the CHIP 
regulations to accept withdrawal of a request for review via multiple 
modalities. We did not discuss our expectation in the proposed rule 
that states necessarily would be required to do so. Therefore, we 
propose a new Sec.  457.1185(b) elsewhere in this Federal Register that 
states must accept a withdrawal of a request for review under CHIP via 
all modalities that are available to submit a request for review, and 
that the state provide the individual with written confirmation of such 
request within 5 business days.
    Comment: A commenter sought clarification regarding the 
continuation of benefits pending an appeal when an individual is denied 
or terminated from Medicaid and transferred to an Exchange.
    Response: The extent to which an individual is entitled to 
continued receipt of Medicaid pending the outcome of an appeal depends 
on whether the individual has been denied Medicaid eligibility at 
initial application or terminated from Medicaid during a regular 
renewal or eligibility redetermination triggered by a change in 
circumstance in accordance with regulations at Sec.  435.916. Current 
Sec. Sec.  431.230 and 431.231 provide for continuation of Medicaid 
benefits for beneficiaries who timely request a fair hearing of a 
termination of coverage or other action. Individuals who appeal a 
denial of Medicaid at initial application are not entitled to benefits 
pending the outcome of their hearing. Nothing in the Affordable Care 
Act affected the policies reflected in these existing regulations, and 
we did not propose any modifications in the January 22, 2013 proposed 
rule.
    Codified at Sec.  155.305(f)(1)(ii)(B) and (g)(1)(i)(B), 
individuals who are eligible for Medicaid are not eligible for APTCs or 
CSRs. Under Sec.  155.345(h), an Exchange must adhere to an eligibility 
determination or fair hearing decision made by the Medicaid agency. 
There is no difference under the Exchange regulations between the 
treatment of individuals receiving Medicaid benefits pending the 
outcome of their fair hearing and the treatment of Medicaid 
beneficiaries generally.
    Applicants determined ineligible for Medicaid and CHIP generally 
will be eligible for enrollment in a QHP (provided that they meet all 
requirements for QHP enrollment), and will be eligible for a 
determination of eligibility for APTCs and CSRs in accordance with 
Exchange regulations at 45 CFR part 155, subpart D. Per Sec.  
435.1200(e)(1) of the regulations (revised in this final rule), the 
agency must transfer to an Exchange the electronic account of 
applicants determined ineligible for Medicaid (irrespective of whether 
they appeal that determination) whom the agency determines potentially 
eligible for Exchange financial assistance, so that the Exchange can 
make a final determination of eligibility to enroll in a QHP and 
receive APTC and CSRs. Eligible applicants who appeal their Medicaid 
denial may enroll in a QHP and receive APTC and CSRs pending the 
outcome of their Medicaid appeal. Proposed Sec.  435.1200(g)(3), 
redesignated at Sec.  435.1200(g)(5) of this final rule, requires that 
the agency notify the Exchange or Exchange appeals entity operating in 
the state of the fair hearing decision for individuals transferred to 
the Exchange following a denial or termination of Medicaid. This 
requirement is retained in the final rule at Sec.  
435.1200(g)(5)(i)(C). If the Medicaid fair hearing results in approval 
of Medicaid eligibility, under the Exchange regulations, the individual 
no longer would be eligible for APTC or CSRs.
    A different result ensues for Medicaid beneficiaries who appeal 
their Medicaid termination and are eligible for continuation of 
Medicaid benefits pending the outcome of their appeal. Per Sec.  
435.1200(e), the agency must transfer the electronic account of a 
beneficiary terminated from coverage to an Exchange for a determination 
of eligibility for enrollment in a QHP with APTC and CSRs. If the 
beneficiary makes a timely request for a fair hearing on his or her 
Medicaid termination, resulting in continued eligibility for Medicaid 
benefits pending the outcome of the fair hearing in accordance with 
Sec.  431.230, the beneficiary will not be eligible for APTC or CSR 
unless and until the Medicaid termination is upheld following the 
conclusion of the Medicaid fair hearing.
    Proposed Sec.  435.1200(g)(3), redesignated at Sec.  435.1200(g)(5) 
of this final rule, requires that the agency notify the Exchange or 
Exchange appeals entity operating in the state of the fair hearing 
decision for individuals transferred to the Exchange following a denial 
or termination of Medicaid. This

[[Page 86393]]

requirement is retained in the final rule at Sec.  
435.1200(g)(5)(i)(C). However, to ensure that Medicaid beneficiaries 
who are entitled to continued Medicaid coverage pending the outcome of 
their fair hearing are not inappropriately determined eligible for 
Exchange financial assistance, Sec.  435.1200(g)(5) of the final rule 
also requires at clauses (g)(5)(i)(A) and (B) that the Medicaid agency 
notify the Exchange operating in the state (1) that an individual who 
has been transferred to the Exchange has requested a fair hearing and 
(2) whether or not such individual is entitled to Medicaid coverage 
pending the outcome of the hearing. If the individual's termination 
from Medicaid is upheld, per Sec.  435.1200(e)(1) and (g)(5)(i)(C), the 
agency must notify the Exchange of the decision and that the individual 
has been terminated from Medicaid, at which point the Exchange would 
proceed with a determination of eligibility for enrollment in a QHP 
with APTC and CSRs.
    Comment: A commenter was concerned that the proposed rules on the 
timing and sequencing of appeals could lead to overlapping program 
eligibility, resulting in confusion about payment responsibilities. The 
commenter recommended that CMS issue guidance about how administrative 
costs and payment of services will be handled during the appeal process 
when overlapping eligibility between programs occurs.
    Response: As previously discussed, we are not finalizing proposed 
Sec.  431.221(e) which would have facilitated, although not required, a 
sequencing of hearings. When an individual requests both an Exchange-
related and Medicaid-related (or CHIP-related) appeal, there will be 
times when two appeals affecting the same individual will be pending 
before different appeals entities (because an Exchange appeals entity 
has not been delegated authority to hear the Medicaid or CHIP-related 
appeal or, because the individual requests that the Medicaid agency 
conduct the fair hearing when an Exchange appeals entity has been 
delegated authority to conduct certain Medicaid-related appeals). In 
such situations, each entity will bear its own costs of adjudicating 
the appeal before it. Payment for services provided to an individual 
pending the outcome of an appeal generally is borne by the program in 
which the individual is enrolled. However, because Medicaid eligibility 
may be retroactively effective as far back as the third month prior to 
the month of application, for any period of time involving dual 
coverage under Medicaid and a QHP, Medicaid would pay secondary to the 
QHP for any unpaid bills. Thus, if an applicant denied Medicaid elects 
to enroll in a QHP pending the outcome of his Medicaid fair hearing, 
the QHP will pay claims for covered services unless and until the 
individual is disenrolled from the QHP, subject to any applicable 
deductions or cost sharing charges associated with the QHP coverage. If 
the Medicaid fair hearing ultimately results in a determination of 
Medicaid eligibility, Medicaid coverage would be available to cover any 
unpaid medical expenses furnished by Medicaid providers back to the 
date or month of application, as well as during the 3 months prior to 
the month of application consistent with Sec.  435.915.
    In situations involving simultaneous Medicaid and Exchange-related 
appeals being adjudicated separately, there also could be a gap in time 
between the issuance of the two appeals decisions. As noted, under 
Sec. Sec.  435.1200(g)(5)(i)(C) and 457.351(a), the Medicaid or CHIP 
agency must notify an Exchange of the Medicaid or CHIP appeals decision 
and if the decision results in approval of Medicaid or CHIP 
eligibility, per Sec. Sec.  155.305(f)(1)(ii)(B), 155.305(g)(1)(i)(B), 
and 155.345(h), an Exchange must terminate APTC and CSR for the 
individual's enrollment in the QHP--regardless of the outcome of any 
Exchange-related appeal. (Individuals are responsible for termination 
of their enrollment in the QHP, which is requested through the 
Exchange. While we assume that individuals found Medicaid or CHIP 
eligible as a result of their appeal will not opt to continue their QHP 
enrollment without an APTC or CSR, they may do so.) If, as a result of 
the fair hearing, the individual is determined eligible for Medicaid, 
under Sec.  435.915, Medicaid eligibility would be effective no later 
than the date of initial application (with up to 3 months of 
retroactive eligibility prior to the month of application, if the 
conditions specified in Sec.  435.915 are met). For the period of time 
prior to disenrollment from the QHP, Medicaid would serve as a 
secondary payer, subject to general coordination of benefits 
requirements at section 1902(a)(25) of the Act. The Medicaid program 
will pay for services or costs covered under the state plan that were 
furnished by Medicaid providers and not covered by the QHP, including 
unpaid beneficiary cost-sharing amounts exceeding Medicaid limitations. 
Medicaid would have no liability to reimburse the QHP for any payments 
made or benefits provided for the individual pending the outcome of the 
fair hearing decision. If the individual choses to remain enrolled in 
the QHP despite termination of the APTC and CSR, Medicaid would 
continue to serve as a secondary payer consistent with section 
1902(a)(25) of the Act. If the individual had not elected to enroll in 
a QHP pending the outcome of the Medicaid fair hearing, no coordination 
of benefits would be required, and Medicaid would be available for 
payment for covered services received pending the outcome of the 
appeal, back to the date or month of application (or up to 3 months 
before the month of application if the conditions set forth at Sec.  
435.915(a) are met). If, as a result of a CHIP appeal, the individual 
is determined eligible for CHIP, eligibility for CHIP would be 
effective under the policy adopted by the state in its CHIP state plan 
per Sec.  457.340(f). Reflected in Sec.  457.310(b)(2)(ii), individuals 
are not eligible for CHIP if they are enrolled in other coverage; 
therefore, an individual cannot be enrolled in a separate CHIP until 
QHP enrollment is terminated.
    Per Sec.  435.1200(e)(1)(i) and Sec.  457.351(a) of this final 
rule, if the Medicaid or CHIP appeals entity upholds the initial 
denial, the agency is required to assess the appellant's eligibility 
for other insurance affordability programs and transfer the 
individual's account to the appropriate program. If assessed as 
eligible for enrollment in a QHP through an Exchange, per Sec. Sec.  
435.1200(g)(5)(i)(C) and 457.351(a), the agency must notify the 
Exchange or Exchange appeals entity of the outcome of the appeal. Per 
Sec.  155.345(h) of the Exchange regulation, an Exchange and Exchange 
appeals entity must accept the Medicaid or CHIP appeals decision.
    Comment: A commenter believed that the proposed rule assumes that 
all applicants will submit an online application to an Exchange. The 
commenter questioned whether that is the expectation and, if not, how 
applications filed with the Medicaid agency will be coordinated with an 
Exchange. The commenter also questioned whether there would be 
circumstances where the application will go to the Medicaid agency 
first, especially if the individual is just initially applying for 
Medicaid.
    Response: Per Sec.  435.907, as stated in the final eligibility 
regulation published on March 23, 2012, states must accept paper, 
electronic and telephonic single streamlined applications filed with 
the Medicaid agency via an internet Web site, mail, telephone or in 
person. The responsibilities of the agency to coordinate eligibility 
and enrollment

[[Page 86394]]

with the Exchange and other insurance affordability programs--set forth 
in Sec.  435.1200, as revised in the July 2013 final eligibility rule 
as well as this rulemaking--are the same regardless of the modality 
through which an individual applies for coverage. We would expect that 
applications not submitted online will be converted by the agency into 
an electronic format so that it can become part of the individual's 
electronic account and the agency can fulfill the requirements set 
forth in Sec.  435.1200. Similar provisions for CHIP are found at 
Sec. Sec.  457.330, 457.348 and 457.350.
(2) Related Changes to Medicaid Fair Hearing Rules
    We proposed various modifications to our fair hearing regulations 
at current Sec.  431.200, et seq. to modernize our regulations and to 
clarify certain provisions for consistency with the March 23, 2012, 
Medicaid eligibility final rule. We also proposed to add a new 
regulation at Sec.  431.224, ``Expedited Appeals,'' to provide for an 
expedited fair hearing process similar to the expedited process 
currently provided at Sec. Sec.  431.244(f)(2), 438.408, and 438.410 
(related to managed care). This would permit individuals who have 
urgent health needs to have their eligibility and fee-for-service 
related appeals addressed under expedited timeframes. Under the 
proposed rule, an expedited appeal process would be required if the 
time otherwise permitted under Sec.  431.244(f)(1) could jeopardize the 
individual's life or health or ability to attain, maintain, or regain 
maximum function. We proposed to revise Sec.  431.244(f)(2) to require 
that the agency take final administrative action within 3 working days 
when the standard for expedited review is met, the same timeframe 
provided for expedited appeals in the managed care context at Sec.  
431.244(f)(2). The proposed revisions are discussed in greater detail 
in section I.B.1(b) of the January 22, 2013 proposed rule. We received 
the following comments on these proposed provisions:
    Comment: We proposed revisions at Sec.  431.244(f)(1)(ii) to 
clarify that the 90-day timeframe to issue a decision after an 
individual files an appeal applies broadly to appeals decisions, not 
only to managed care appeals decisions. The application of the 90-day 
timeframe allowed for Medicaid fair hearing decisions generally 
(including fair hearings related to eligibility and fee-for-service 
matters) was inadvertently removed in a previous rulemaking.
    Response: We received no comments on this provision and are 
finalizing the policy to apply the same standard 90-day timeframe for 
state Medicaid agencies to issue all types of fair hearing decisions 
(other than those which must be decided on an expedited basis). 
However, following publication of the January 22, 2013 proposed rule, 
we finalized other revisions to Sec.  431.244(f)(1) in the ``Medicaid 
and Children's Health Insurance Program (CHIP) Programs; Medicaid 
Managed Care, CHIP Delivered in Managed Care, and Revisions Related to 
Third Party Liability; Final Rule,'' published in the May 6, 2016, 
Federal Register (hereinafter referred to as ``May 6, 2016 managed care 
final rule''). The revisions to Sec.  431.244(f)(1) finalized in that 
rulemaking also are reflected in Sec.  431.244(f)(1) of this final 
rule.
    Comment: We proposed revisions at Sec.  431.220(a)(1) to clarify 
that a hearing is required (if requested) when the Medicaid agency has 
denied eligibility, level of benefits, services, or has failed to act 
with reasonable promptness, as required under section 1902(a)(3) of the 
Act, and to specify that a determination of eligibility may include a 
determination of a spend down liability or a determination of income 
used for purposes of premiums, enrollment fees, or cost-sharing under 
part 447 of this chapter. To align with the modification of Sec.  
431.220, we also proposed revisions at Sec.  431.201 (definition of 
``action'') and Sec.  431.206(c)(2) (when information in Sec.  
431.206(b) must be provided to applicants and beneficiaries). We also 
proposed cross-referencing Sec.  431.220(a)(1) at Sec.  431.241(a) (the 
issues to be considered at a hearing) for further alignment. We 
proposed to add a definition of ``local evidentiary hearing'' to Sec.  
431.201 and to add reference to section 1943 of the Act and section 
1413 of the Affordable Care Act in Sec.  431.200 (Basis and Scope).
    Commenters overwhelmingly supported these proposed revisions and no 
commenters opposed our proposed revisions in these sections. However, 
some commenters recommended a few changes to our proposals that were 
technical or intended to further clarify the regulation text of our 
proposed modifications. A few commenters recommended that we adopt the 
same language used to describe income determinations for premium and 
cost-sharing purposes in Sec.  431.220(a)(1)(ii) as that in proposed 
Sec.  431.241(a)(3). Another commenter requested clarification 
regarding the term ``claim,'' which appeared in both Sec. Sec.  
431.220(a)(1) and 431.241(a). The commenter questioned if ``claim'' 
refers to a claim made on an application (that is, disability, 
blindness etc.), or to a claim for payment submitted by a provider. 
Some commenters were concerned that the revised definition of 
``action'' does not include denials of eligibility, services, or 
benefits, and sought clarification that such denials do provide a basis 
for a fair hearing request. A few commenters also recommended a 
technical revision to the definition of ``action'' to insert the words, 
``termination or suspension of, or'' prior to ``reduction in the level 
of benefits and services;'' the commenters believed this was important 
to ensure our revised definition is not read as excluding termination 
or suspension of a service or benefit. We did not receive any comments 
on the proposed definition of ``local evidentiary hearing'' or on the 
addition of section 1943 of the Act and section 1413 of the Affordable 
Care Act to Sec.  431.200.
    Response: We appreciate the support for the proposed revisions at 
Sec.  431.220(a)(1), Sec.  431.206(c)(2), Sec.  431.241(a) and (b), and 
the definition of ``action'' in Sec.  431.201, which we are finalizing 
as proposed with a few minor revisions. Specifically, we are 
streamlining the language in Sec.  431.220(a)(1)(iii) to provide a 
cross-reference to the definitions of ``premiums'' and ``cost sharing'' 
in Sec.  447.51 and are making revisions for clarity in Sec. Sec.  
431.206(c)(2), 431.220(a)(1) (introductory text) and 431.241(a). In 
Sec.  431.220(a)(1), we are replacing the word ``applicant'' with 
``individual'' to apply this provision to applicants and beneficiaries, 
when applicable. We are moving the content of current Sec.  
431.221(a)(2) (relating to beneficiaries) to paragraph (a)(1), removing 
paragraph (a)(2), and redesignating paragraphs (a)(3) to (a)(7) at 
paragraphs (a)(2) to (a)(6). Similarly, for clarity we have removed 
paragraph (b) of Sec.  431.241 and placed the content regarding changes 
in type or amount of benefits and services in Sec.  431.220(a)(1)(iv). 
We have also redesignated paragraphs (c) and (d) at paragraphs (b) and 
(c). We revise for clarity the reference to ``any determination of 
income for the purposes of imposing any premiums, enrollment fees or 
cost-sharing under subpart A of part 447'' in the definition of 
``action'' in Sec.  431.201 to apply if a beneficiary ``is subject to 
an increase in premiums or cost-sharing charges under subpart A of part 
447 of this chapter'' and have added the phrase ``an increase in 
beneficiary liability'' to clarify the language related to spend down 
liability, premiums and cost-sharing amount. We are accepting 
commenters' suggestion to insert the words ``termination or suspension 
of, or'' prior

[[Page 86395]]

to the phrase ``reduction in the level of benefits or services'' in the 
definition of ``action'' in Sec.  431.201.
    We note that we have added the term ``benefits'' to encompass items 
or other Medicaid benefits for which individuals have a right to a fair 
hearing if a state terminates, suspends, reduces, denies, or delays 
such a benefit. Examples of ``benefits'' include prescription drugs, 
prosthetic devices or cost-sharing, which would not be ordinarily 
considered a ``service.'' Accordingly, the term ``benefit'' has been 
added to the following regulations Sec.  431.201 (definition of 
action), Sec.  431.206(c)(2) (informing applicants and beneficiaries), 
Sec.  431.220(a)(when a hearing is required) and Sec.  431.241 (matters 
to be considered at a hearing) (through cross-reference to Sec.  
431.220(a)(1)). Further, ``covered benefits and services'' as described 
in Sec.  431.201, include any covered benefits or services provided for 
in the state plan or under a state's approved waiver. We note that we 
have also removed the term ``in the level of'' which we proposed as it 
relates to ``benefits'' as unnecessary and confusing, from the same 
regulations. We have made conforming modifications to align the 
language described above in Sec. Sec.  431.206(c)(2) and 431.220(a)(1). 
We also clarify in Sec. Sec.  431.206(c)(2), 431.220(a)(1)(v) and 
431.241(a) (through cross-reference to Sec.  431.220(a)(1)) that a 
denial of a request for exemption from mandatory enrollment in an 
Alternative Benefit Plan provides a basis for a fair hearing request. 
We finalize the definition of ``local evidentiary hearing'' in Sec.  
431.201 and the revisions to the basis and scope at Sec.  431.200, as 
proposed.
    The reference to a ``claim'' in Sec. Sec.  431.220(a)(1) and 
431.241(a) (through cross-reference to Sec.  431.220(a)(1)) refers 
broadly to any claim by an applicant or beneficiary for Medicaid, 
whether such claim be for eligibility for coverage in general, or for a 
particular benefit or service, consistent with use of the term in 
section 1902(a)(3) of the Act. The definition of ``action'' does not 
include denials because beneficiaries are entitled to 10 days advance 
notice of an ``action'' under Sec.  431.211 and, in the event a 
beneficiary requests fair hearing of an ``action,'' benefits must be 
continued in the circumstances described in Sec.  431.230 and may be 
reinstated in in the circumstances described in Sec.  431.231. Because 
denials of eligibility for new applicants and denials of a particular 
service or benefit for beneficiaries do not require advance notice, nor 
does a request for a fair hearing of such denials result in a 
continuation or reinstatement of benefits or services, it would be 
erroneous to include denials in the definition of ``action''. Under 
Sec.  431.220 and Sec.  431.241(through cross-reference to Sec.  
431.220(a)(1)), as revised in this rulemaking, we clearly specify that 
individuals are entitled to request a fair hearing of denials of 
eligibility, benefits and services. The term `denial of a claim' in 
Sec.  431.220(a)(1) includes situations in which the agency authorizes 
an amount, duration or scope of a service which is less than that 
requested by the beneficiary or provider. For example, if the 
individual has requested 20 physical therapy visits and the state 
denies the individual's coverage of 20 visits, covering instead only 10 
visits--this is considered a denial of a service, which could be 
appealed under Sec.  431.221(a)(1).
    We had proposed revisions to the introductory text in Sec.  
431.206(b) (relating to information that must be provided to applicants 
and recipients) to add ``or entity'' after ``the agency.'' We did not 
receive any comments on this proposed revision. However, we are not 
including this proposed revision in the final regulation as it is 
unnecessary; generally, the Medicaid agency is responsible for 
providing information described in Sec.  431.206. To the extent that 
responsibility is delegated to another entity, the delegated entity 
would be required to comply with all Medicaid rules in accordance with 
Sec.  431.10(c)(3)(i)(A), including providing this information. If the 
Medicaid agency and the delegated entity agreed to have the Medicaid 
agency provide certain information, that would be specified in the 
agreement effectuating a delegation of fair hearing authority in 
accordance with Sec.  431.10(d).
    Comment: Several commenters supported our proposed regulation at 
Sec.  431.205(e) to require that the hearing system be accessible to 
individuals who are limited English proficient and individuals with 
disabilities, in accordance with Sec.  435.905(b). A few commenters 
raised concerns that phone hearings may be an inadequate hearing forum, 
particularly for individuals with certain disabilities. The commenters 
recommended that for such individuals, reasonable accommodations, 
including video conferencing, should be provided without cost to the 
appellant. These commenters recommended that our regulation specify 
that the agency shall not abridge an individual's right to confront and 
cross-examine adverse witnesses, or request an individual to waive any 
provisions of federal or state fair hearing regulations because of a 
request for a reasonable accommodation. They recommended our rules 
clarify that a request for reasonable accommodation cannot be used to 
limit the application of any other protections provided to individuals 
requesting a fair hearing under the regulations or otherwise alter the 
state's fair hearing rules, except as needed to accommodate the request 
for accommodation.
    A number of commenters strongly recommended the addition of a new 
paragraph (f) to Sec.  431.205 specifying that the hearing process may 
not discriminate on the basis of race, color, national origin, 
language, sex, sexual orientation, gender identity, age or disability 
and must comply with the relevant federal statutes, including Title VI 
of the Civil Rights Act of 1964, the Rehabilitation Act, the Americans 
with Disabilities Act, and section 1557 of the Affordable Care Act.
    Response: We appreciate the support for our proposed addition of 
Sec.  431.205(e), which we are finalizing as proposed. Under Sec.  
431.205(e) of the final rule, states must ensure accessibility to their 
fair hearing process for individuals with disabilities (including, but 
not limited to use of auxiliary aids) and for individuals with limited 
English proficiency through language assistance services, consistent 
with Sec.  435.905(b). For states relying on telephonic hearings, the 
provision of video conferencing or an in-person hearing, use of which 
is common in states today, could be used to ensure access to effective 
communication for those individuals needing auxiliary aids and 
services. We are not accepting the commenters recommendation to add 
regulation text relating to protections for individuals requesting a 
reasonable accommodation, because we do not believe it is necessary. 
The rules do not provide a mechanism for states to waive any 
protections or to otherwise limit such protections for any reason. 
Moreover, we understand that the current regulations issued under Title 
II of the Americans with Disabilities Act, which apply to the state 
hearing system, address this issue. See 28 CFR 35.130(b)(1). For 
additional information on reasonable modifications and auxiliary aids 
and services to ensure accessibility of state and local government 
activities and services for individuals with disabilities, we direct 
readers to regulations at 28 CFR 35.101 et seq. An adverse action based 
on a request for a reasonable modification would violate the Title II 
regulations, as would setting aside or limiting the applicability of 
any protections provided in part 431, subpart E or in accordance with 
the state's fair hearing procedures. See 28 CFR 35.134 for more detail.

[[Page 86396]]

    We are accepting the comment to add a new paragraph (f) to Sec.  
431.205, clarifying that the hearing system established under section 
1902(a)(3) of the Act and part 431 subpart E must be conducted in a 
manner that complies with all applicable federal statutes and 
implementing regulations, including Title VI of the Civil Rights Act of 
1964, the Americans with Disabilities Act of 1990, the Rehabilitation 
Act of 1973, the Age Discrimination Act of 1975, and section 1557 of 
the Affordable Care Act. This is consistent with the technical 
revisions, discussed in section D of this final rule, which we are 
making at Sec.  435.901, that the state's eligibility standards and 
methods are consistent with the rights of individuals under all of 
these statutes and implementing regulations. We also note that, for 
individuals who believe they have been discriminated against in the 
appeals and hearings process, these individuals can use the grievance 
process established by each state agency operating a Medicaid program 
or CHIP. This grievance process must operate in accordance with Section 
1557 of the Affordable Care Act and implementing regulations, among 
other existing Federal civil rights authorities. These individuals may 
also file complaints of discrimination directly with the HHS Office for 
Civil Rights at www.HHS.gov/OCR.
    Comment: Several commenters supported our proposed addition of 
paragraph (e) to Sec.  431.206 to require that information provided to 
applicants and beneficiaries be accessible to individuals who are 
limited English proficient and individuals with disabilities, 
consistent with section Sec.  435.905(b) of this chapter. A number of 
commenters suggested that more detailed requirements be added at 
paragraph (e) related to accessibility of information for individuals 
who are limited English proficient and individuals with disabilities.
    Response: We appreciate the support for proposed paragraph (e) to 
require that information be provided accessibly, which we are 
finalizing as proposed. We note that we added paragraph (e) to Sec.  
431.206 in the July 2013 final eligibility rule to authorize states to 
provide electronic notices in accordance with Sec.  435.918. Section 
431.206(e) of this final rule amends paragraph (e) to also require that 
states provide information (whether in electronic or paper form) in a 
manner that is accessible to individuals who are limited English 
proficient and to individuals with disabilities. We also are making a 
technical modification to this provision, replacing the word 
``section'' with ``subpart'' to apply the accessibility requirements as 
well as the permissibility of electronic notices under paragraph (e) to 
all appeals notices described in part 431, subpart E, as intended. We 
address the comment to add more specific requirements related to 
accessibility in section D of this final rule, relating to 
accessibility of program information under Sec.  435.905(b).
    Comment: A number of commenters recommend amending Sec.  431.220(a) 
to add the specific phrase ``de novo'' to the regulation to specify 
that the state agency must grant an opportunity for a de novo hearing 
before the agency, consistent with Goldberg v. Kelly and constitutional 
due process principles, as all individuals have the right to a de novo 
hearing.
    Response: The comment is beyond the scope of this rulemaking. 
However, we agree all applicants and beneficiaries who request a fair 
hearing are entitled to a de novo hearing, which must take place either 
before the agency or an entity to which fair hearing authority has been 
delegated under Sec.  431.10(c)(1)(ii) or an ICA waiver. This is 
consistent with current regulations at Sec. Sec.  431.240 through 
431.244, which require that hearings be conducted by an impartial 
official; that individuals be afforded an opportunity to submit 
evidence and arguments without interference; and that hearing decisions 
be based only on evidence introduced at the hearing. Together, these 
provisions effectively require a de novo hearing. However, to further 
clarify the current policy, we propose elsewhere in this Federal 
Register to add the words ``de novo'' before hearing in Sec.  
431.205(b) to clarify that the fair hearing provided by the state's 
hearing system must be a ``de novo'' hearing, which is defined in 
current regulations at Sec.  431.201.
    Comment: A few commenters were concerned about individuals being 
denied fair hearing rights when there is a change in law or policy, 
even if the individual may have a factual or other issue that should be 
considered at a fair hearing. The commenters suggested that we modify 
the regulation (1) to clarify that cases can only be dismissed if there 
can be no disagreement regarding the application of that change to the 
appellant; (2) to permit only an impartial, independent hearing officer 
or administrative law judge to determine that a fair hearing can be 
denied under Sec.  431.220(b); and (3) to require that an appellant be 
provided an opportunity to orally oppose the dismissal of the appeal.
    Response: The comment is beyond the scope of this final rule. 
Please see proposed modification of Sec.  431.220 elsewhere in this 
Federal Register for more discussion on this issue.
    Comment: Several commenters supported proposed Sec. Sec.  431.224 
and 431.244(f)(3) to establish an expedited fair hearing process that 
aligns with Exchange appeals regulations at Sec.  155.540 as well as 
with a similar process provided for Medicaid managed care enrollees at 
Sec.  438.410. Commenters supported establishing an expedited fair 
hearing process that would provide applicants and fee-for-service 
beneficiaries the same right to an expedited hearing process of a 
Medicaid denial or other adverse action (as defined in Sec.  431.201) 
when there is an urgent health need, as is provided under Exchange 
regulations at Sec.  155.540, as well as to Medicaid beneficiaries 
enrolled in managed care and CHIP beneficiaries for whom coverage of a 
service is limited or denied in accordance with Sec. Sec.  
438.408(b)(3), 438.410 and 457.1160(b)(2). Several commenters supported 
this provision, which they believe was critical to ensuring the request 
is acted upon promptly. Many other commenters expressed concern about 
states' ability to implement an expedited fair hearing process within 3 
working days, as required at proposed Sec.  431.244(f)(3). These 
commenters disagreed that existing processes for expedited managed care 
appeals would make compliance with the proposed expedited appeals 
process easy, stating that Medicaid appeals entities generally do not 
possess the medical expertise needed to evaluate if an expedited 
hearing should be granted. Some commenters were also concerned that an 
appeals entity wouldn't be able to obtain sufficient information on 
which to base a fair hearing decision in a 3-day timeframe. One 
commenter supported the language at proposed Sec.  431.244(f)(3) that 
expedited decisions be made ``as expeditiously as the individual's 
health condition requires,'' but expressed concern that 3 days may not 
allow time for the individual or agency to prepare properly for the 
hearing. Others commenters were concerned that a 3-day timeframe also 
may pose a burden on individual appellants to gather information 
necessary to prepare for the hearing. One commenter suggested that 
requiring a hearing within 3 working days and a decision 3 working days 
after that would be more reasonable. Another commenter recommended that 
the expedited timeframe for taking final action if the expedited 
hearing is granted, be changed from 3 days to at least 45 days. A few 
commenters were concerned that the proposed expedited

[[Page 86397]]

fair hearing process will require extensive staffing increases, 
including skilled medical personnel, as well as updates to current 
tracking mechanisms. One commenter recommended eliminating the proposed 
expedited fair hearing process.
    One commenter requested clarification regarding the relationship 
between (1) the 2 days at proposed Sec.  431.224(b) for the state to 
determine if an individual meets the standard for an expedited review 
and to inform the individual if his or her request for expedited review 
is denied, and (2) the 3-day timeframe to take administrative action on 
an expedited fair hearing. Some commenters also suggested that CMS 
require data reporting on the timeliness of Medicaid fair hearing 
decisions, and to make this information available to the public. We did 
not receive any comments regarding Sec.  431.242(f), which adds the 
request of an expedited review to the procedural rights that must be 
afforded to individuals requesting a fair hearing.
    Response: Exchange appeals regulations at Sec.  155.540 provide for 
an expedited appeals process for individual eligibility appeals of 
determinations for coverage through the Marketplace, APTC, and CSRs. 
Medicaid regulations at Sec. Sec.  431.244(f)(2), 438.408(b)(3) and 
438.410 currently provide for an expedited appeals process when a 
beneficiary has been denied coverage of, or payment for, a benefit or 
service by a managed care organization and allowing the time generally 
permitted to resolve enrollee grievances could seriously jeopardize the 
enrollee's life or health or ability to attain, maintain, or regain 
maximum function. Current CHIP regulations at Sec.  457.1160(b)(2) 
provide for similar expedited review of health services matters, as 
defined at Sec.  457.1130(b). The current regulations, however, do not 
apply to Medicaid applicants and beneficiaries who are denied 
eligibility or terminated from coverage, whose coverage is reduced, or 
for whom coverage of a benefit or service by the agency in a fee-for-
service context is denied, terminated, reduced, or delayed. We agree 
with commenters supporting the proposed regulation that having an 
expedited review process is an important consumer protection for 
applicants and beneficiaries with urgent health care needs, regardless 
of the nature of the appeal or the type of delivery system employed. 
Therefore, we are including at Sec.  431.224 of the final rule a 
requirement that states establish an expedited fair hearing process for 
individuals with appeals of eligibility determinations and fee-for 
service beneficiaries similar to the regulations currently in place for 
individuals enrolled in coverage through the Marketplace, as well as 
Medicaid managed care and CHIP. We note that such an expedited fair 
hearing process could be included in the delegation of fair hearings at 
Sec.  431.10(c)(1)(ii) and addressed in an agreement between the 
agencies that would include responsibilities of the parties described 
at Sec.  431.10(d).
    At the same time, we appreciate the concerns raised regarding the 
operational challenges to implementing the proposed time frames and are 
revising proposed Sec. Sec.  431.224 and 431.244(f)(3) to provide 
states with more flexibility in notifying individuals whether their 
request for an expedited hearing has been granted and in establishing a 
reasonable time frame for conducting expedited hearings. Under Sec.  
431.224(a)(1) of the final rule, states must establish and maintain an 
expedited fair hearing process for individuals who request an expedited 
fair hearing if the agency determines that the standard time permitted 
for resolution of an appeal in Sec.  431.244(f)(1) could jeopardize the 
individual's life, health or ability to attain, maintain, or regain 
maximum function. We do not propose specific criteria which states may 
or must take into account in determining whether this standard is met. 
However, we note that, in addition to the medical urgency of an 
individual's situation, we believe appropriate considerations also 
could include whether the individual currently is enrolled in health 
insurance that will cover most of the costs of the requested treatment, 
whether or not the individual has a needed procedure or treatment 
scheduled, or whether the individual is unable to schedule a procedure 
or treatment due to lack of coverage. Paragraph (a)(2) of Sec.  431.224 
provides that states must take final administrative action within the 
time period established under Sec.  431.244(f)(3) if the individual 
meets the urgent health standard described in Sec.  431.224(a)(1). 
Under Sec.  431.224(b) of the final regulation, the agency must inform 
individuals whether their request for an expedited fair hearing is 
granted or denied as expeditiously as possible, orally or through 
electronic means in accordance with the individual's election under 
Sec.  435.918 (relating to receipt of electronic notices). If oral 
notice is provided, the state must follow up with written notification, 
which may be through electronic means if consistent with the 
individual's election under Sec.  435.918. For individuals whose 
expedited fair hearing request is approved, the state must provide 
notice of a hearing date that allows adequate time for the individual 
to participate, consistent with current Sec.  431.240(a)(2). States can 
inform the individuals that their request for expedited fair hearing 
has been granted and the date of such hearing in the same notice. Note 
that we propose elsewhere in this Federal Register further modification 
of Sec.  431.224(b) regarding expedited fair hearing notices.
    Section 431.244(f)(3)(i) of the final rule provides that, for 
individuals whose request for an expedited fair hearing related to an 
eligibility matter described in Sec.  431.220(a)(1) or to any matter 
described in Sec.  431.220(a)(2) or (3) is approved, the agency must 
take final administrative action as expeditiously as possible. 
Effective no earlier than 6 months after the release of a Federal 
Register notice described in Sec.  435.1200(i) of the final rule, final 
administrative action for such hearings under Sec.  431.244(f)(3)(i) 
must be taken as expeditiously as possible, but no later than 7 working 
days from the date the agency receives the expedited fair hearing 
request. Section 431.244(f)(3)(ii) of the final rule provides that, for 
individuals whose request for an expedited fair hearing related to a 
services or benefits matter described in Sec.  431.220(a)(1) is 
approved, the agency must take final administrative action as 
expeditiously as possible. Effective no earlier than 6 months after the 
release of a Federal Register notice described in Sec.  435.1200(i) of 
the final rule, final administrative action for such hearings under 
Sec.  431.244(f)(3)(ii) must be taken as expeditiously as possible and 
within the timeframe specified in Sec.  431.244(f)(2) of the current 
regulations (that is, within 3 working days from the date the agency 
receives the expedited hearing request). In Sec.  431.244(f)(3)(iii), 
we provide that for individuals whose request for an expedited fair 
hearing of a claim related to a services or benefits matter described 
in Sec.  431.220(a)(4) through (6) is granted, the agency must take 
final administrative action in accordance with Sec.  431.244(f)(2).
    We believe that the 7 working days timeframe provided (with a 
delayed effective date) under Sec.  431.244(f)(3)(i) of the final rule 
results in comparable treatment for individuals appealing eligibility-
related and managed care appeals. Individuals appealing a decision of a 
managed care plan are required in some states to exhaust their plan 
level appeal before requesting a fair hearing of the plan's decision 
before the agency. Under current Sec.  438.408(b)(3), managed care 
plans must resolve

[[Page 86398]]

expedited appeals of an adverse action taken by the plan within 72 
hours. Under current Sec.  431.244(f)(2), the agency has 3 working days 
to take final administrative action if the individual appeals the 
plan's decision to the agency. Allowing for one working day for 
transmission of the case file from the plan to the agency, this results 
in a 7-day time frame for reaching final administrative action on 
expedited appeals filed by enrollees in a managed care plan who are 
appealing an action taken by the plan. In Sec.  431.244(f)(3)(ii), we 
have aligned the timeframe to take final administrative action in an 
expedited fair hearing request between managed care and fee-for-service 
delivery systems (3 working days), so that all individuals appealing a 
service-related appeal will be able to get a resolution from at least a 
first-level review in 3 working days when there is an urgent health 
need, whether such review is at the level of the managed care plan or, 
for a fee-for-service appeal, before the agency. We believe that these 
timeframes strike a reasonable balance between needed consumer 
protections and state administrative concerns. Because we recognize 
that some claims (both those that meet the standard for expedited 
hearing in Sec.  431.224(a)(1) and those that do not), are more urgent 
than others, elsewhere in this Federal Register, we also are proposing 
that states establish more detailed timeliness and performance 
standards for both expedited and non-expedited fair hearings. We also 
note that states may, within the limits provided at Sec.  431.10 and 
subject to other legal requirements regarding the use of contractors by 
the single state agency, use contractors to perform clerical duties, 
such as receiving and tracking expedited hearing requests and preparing 
case files for hearing, which may help the state to meet applicable 
time frames.
    Finally, we are finalizing the addition of new paragraph (f) in 
Sec.  431.242, providing for the right of applicants and beneficiaries 
to request an expedited hearing; we have removed the words ``if 
appropriate'' from Sec.  431.242(f) in the final rule, as there are no 
conditions which constrain an individual's right to request an 
expedited fair hearing. We also (1) add a conforming revision at Sec.  
431.221 (related to requests for hearing) to require that individuals 
be provided an opportunity to include a request for an expedited 
hearing in their request for a fair hearing; and (2) make similar 
conforming revisions in Sec.  431.206(b)--revising Sec.  431.206(b)(1) 
and adding paragraph (b)(4)--to provide that individuals must be 
informed of the opportunity to request an expedited review of their 
fair hearing request and of the time frames upon which the state will 
take final administrative action in accordance with Sec.  431.244(f). 
We expect that the process established by a state under Sec.  
431.224(a)(1) for an individual to request an expedited fair hearing 
would include providing the opportunity for an individual to make such 
a request after the individual has requested their fair hearing, if the 
individual has not indicated a request for an expedited fair hearing in 
the initial fair hearing request in Sec.  431.221(a)(1). No additional 
hearing would be required in response to a subsequent request for an 
expedited hearing, if a hearing on the initial request already had been 
held.
    Comment: Some commenters recommended that CMS require data 
reporting on the timeliness of Medicaid fair hearing decisions, and 
that this information be made available to the public.
    Response: We will take this suggestion, which is beyond the scope 
of this rulemaking, into future consideration.
    Comment: Several commenters expressed concern about the proposed 
standard for when an expedited fair hearing would be required, that is, 
whenever the time otherwise permitted to take final administrative 
action on a fair hearing request would jeopardize the individual's 
ability to attain, maintain or regain maximum function. These 
commenters indicated that this standard is overbroad and would 
encompass many conditions.
    Response: This standard for an expedited fair hearing is aligned 
with the standard used for Exchange eligibility appeals at Sec.  
155.540 and similar to the standard currently used in our managed care 
appeals rules at Sec.  438.410. To maintain consistency and alignment 
across insurance affordability program eligibility appeals and similar 
treatment between FFS beneficiaries and managed care enrollees, we 
finalize the standard in Sec.  431.224(a) as proposed.
    Comment: A few commenters requested clarification regarding 
implementation of the expedited fair hearing process. One commenter 
questioned whether there needs to be an intermediate level of review of 
the expedited hearing request. Additionally, the commenter sought 
clarification about whether appeals staff would have to be available on 
an ``on-call'' basis. Another commenter questioned if individuals may 
appeal an adverse decision related to granting an expedited fair 
hearing request.
    Response: There is no specific requirement for states to establish 
an intermediate level of review for an expedited fair hearing request, 
or to have staff on call at all times to receive requests for expedited 
review of a fair hearing. There is flexibility under the regulations 
for each state to establish policies and procedures best tailored to 
its own situation, provided that such policies and procedures comply 
with the requirements set forth in the regulations, including meeting 
the timeframe consistent with Sec.  431.244(f)(2). Section 431.224(b) 
of the final regulation requires states to inform individuals whether 
the state is granting or denying their request for an expedited review, 
but does not require that the individual be given an opportunity to 
appeal the agency's denial of their request. We note that a denial of a 
request for an expedited hearing is not required under the definition 
of ``action'' at Sec.  431.201 nor identified as a basis for requesting 
a fair hearing under Sec.  431.220.
    Comment: A few commenters recommended that we require individuals 
to provide medical evidence justifying the need for an expedited fair 
hearing process, which they believed would minimize the burden on 
states. One commenter requested clarification whether individuals can 
be required to submit the medical records as part of the expedited 
hearing request or whether self-attestation must be accepted.
    Response: States have flexibility under the regulations to 
establish policies and procedures for an expedited review process, and 
we neither require nor preclude submission of medical documentation as 
may be appropriate. We note that elsewhere in this Federal Register, we 
propose that states will be required to establish an expedited appeals 
plan, which must discuss when an individual requesting an expedited 
fair hearing would need to provide medical documentation of their 
urgent health need.
    Comment: A few commenters requested clarification about the 
individuals for whom the expedited fair hearing process applies. One 
commenter requested clarification regarding whether the expedited fair 
hearing process would only apply to beneficiaries, and only when there 
is a denial of services, not when an adverse eligibility determination 
has been made. Another commenter questioned whether the requirement for 
expedited fair hearing process applies also to non-MAGI populations 
whose Medicaid eligibility may be based upon multiple criteria such as 
assets, disability status,

[[Page 86399]]

and functional level of care, many of which may be difficult to verify 
or adjudicate on an expedited basis.
    Response: The expedited review process established in Sec.  431.224 
is available when warranted based on an urgent health need for all 
individuals who can request a fair hearing of an action, as defined in 
Sec.  431.201, or when a hearing is required under Sec.  431.220 (which 
includes denials of eligibility, benefits or services, as well as when 
a claim is not acted upon with reasonable promptness). The expedited 
review process is available both to those enrolled in, or seeking 
coverage under, a MAGI-related eligibility category and to those 
enrolled in, or seeking coverage under, a non-MAGI based category.
    Comment: Several commenters supported our proposed revisions to 
Sec.  431.232 to provide that the agency must inform an applicant or 
beneficiary that he or she has 10 days from the notice of an adverse 
decision of a local evidentiary hearing to appeal that decision to the 
state agency and to adopt language similar to that proposed at 
Sec. Sec.  431.231 and 435.956 and finalized in the July 2013 
eligibility final rule, regarding the date an individual is considered 
to receive a notice sent by the agency.
    Response: We appreciate the support for our proposed regulation at 
Sec.  431.232(b) which we are finalizing as proposed, except for a 
grammatical revision for clarity to move reference to the requirement 
that the notice required be ``in writing.''
    Comment: We received many comments in support of our proposed 
modification to Sec.  431.242(a)(1) that gives an appellant access to 
the content in his or her electronic account, in addition to his or her 
case file.
    Response: We appreciate the commenters' support and are finalizing 
Sec.  431.242(a)(1) as proposed. We note that access to this content 
could be provided in a variety of methods, including providing 
electronic access to this information or mailing copies of the 
information contained in the electronic account to an appellant or 
other authorized individual who requests it.
    Comment: We proposed revisions to the definition of ``electronic 
account'' in Sec.  435.4 to include information collected or generated 
as part of a fair hearing process. One commenter suggested that the 
specific data elements that will be added to the electronic account be 
defined so that states can build or modify their systems accordingly.
    Response: There are many data elements that must or may be included 
in an electronic account, and we do not believe that this level of 
specificity is appropriate for inclusion in the regulations. Specific 
data elements for inclusion in an electronic account are discussed in 
relevant technical documents related to account transfers of 
eligibility determinations between Exchanges and state agencies.
    Comment: Several commenters recommended adding language in Sec.  
431.244(g), to require that the public must have ``free'' access to all 
hearing decisions. The commenters also suggested clarifying that the 
agency may satisfy this requirement by making hearing decisions 
available through a free indexed and searchable database posted online.
    Response: The comment is beyond the scope of this final rule. 
However, elsewhere in this Federal Register, we propose revisions to 
Sec.  431.244(g) relating to public access to hearing decisions. We 
also note that, because hearing decisions may contain confidential 
information about the appellant, any disclosure would need to adhere to 
privacy protections and disclosure rules at section 1902(a)(7) of the 
Act and part 431 subpart F. We understand that a number of states 
redact Personally Identifiable Information (PII) and information 
otherwise subject to privacy and disclosure protections to provide 
public access to hearing decisions in accordance with current Sec.  
431.244(g).
    Comment: A commenter suggested that CMS identify areas in which 
requirements could be established to promote greater consistency in 
state Medicaid appeals processes for beneficiaries and permit Medicaid 
health plans to maintain efficient systems to provide beneficiary 
appeal rights across the country.
    Response: We appreciate the comment suggesting consistency in 
Medicaid fair hearings rules across states. Section 431.205 sets out 
broad requirements that fair hearing procedures must be consistent with 
Goldberg v. Kelly, and federal authorities including the Civil Rights 
Act of 1964, Americans with Disabilities Act, and section 1557 of the 
Affordable Care Act and implementing regulations. Although there are 
areas of state flexibility in operationalizing and implementing the 
fair hearing process (for example, flexibility regarding how to 
organize hearing functions within the state agency or to delegate 
appeals functions to an Exchange or Exchange appeals entity per Sec.  
431.10(c) or another state agency through an Intergovernmental 
Cooperation Act of 1968 waiver), much of the regulations in part 431 
subpart E reflect standard definitions and requirements that must be 
applied across states, including a common definition of ``action'' in 
Sec.  431.201; when a hearing is required at Sec.  431.220; 
requirements relating to the procedural protections during a hearing at 
Sec.  431.242; and standards governing various aspects of hearing 
decisions at Sec.  431.244. In revising the regulations in part 431 
subpart E, we also have worked to establish, to the extent possible, 
consistency and coordination with the regulations for Exchange-related 
appeals, as well as comparability between the protections afforded to 
Medicaid beneficiaries in a FFS and managed care environment.
    Comment: A commenter suggested that we include a cross-reference in 
Sec.  431.221(a) to Sec.  435.923 (added to the regulations in the July 
2013 final rule) to clearly define who can request a fair hearing on 
behalf of another person as their ``authorized representative.''
    Response: We are accepting the comment and adding the recommended 
cross-reference to Sec.  431.221(a). We also make a technical revision 
to Sec.  457.340(a) to add a cross-reference to Sec.  435.923 (relating 
to authorized representatives) to the list of Medicaid regulations 
which apply equally to the state in administering a separate CHIP. 
Application of the regulations to authorized representatives was 
inadvertently excluded from the January 22, 2013 Eligibility and 
Appeals proposed rule and the July 15, 2013 Medicaid and CHIP final 
rule Part I.

B. Notices

1. Content Standards (Sec. Sec.  435.917 and 431.210)
    Effective notices must be clear and understandable to consumers and 
deliver appropriate, comprehensive eligibility information that enables 
the reader to understand the action being taken, the reason for the 
action, any required follow-up, and the process to appeal. Such notices 
are a key component of a coordinated and streamlined eligibility and 
enrollment process required under section 1943 of the Act and 1413 of 
the Affordable Care Act. Therefore, we proposed (1) to revise Sec.  
431.210(b) to provide that notices must contain a clear statement of 
the specific reasons supporting an intended adverse action; and (2) to 
revise Sec.  435.913, redesignated at proposed Sec.  435.917, to 
clarify the agency's responsibilities to communicate specific content 
in a clear and timely manner to applicants and beneficiaries when 
issuing notices affecting their eligibility, benefits or services, 
including notices involving the approval, denial or suspension of

[[Page 86400]]

eligibility and the denial or change in benefits and services.
    We proposed at Sec.  435.917(a) that eligibility notices must be 
written in plain language, be accessible to individuals who are limited 
English proficient and individuals with disabilities consistent with 
Sec.  435.905(b), comply with regulations relating to notices in part 
431 subpart E and, if the notice is provided in electronic format, 
comply with Sec.  435.918(b). Proposed paragraph (b) sets forth the 
specific content required for notices. Proposed paragraph (c) provides 
that eligibility notices relating to a determination of eligibility 
based on the applicable MAGI standard include a plain language 
description of other potential bases of eligibility (for example, 
eligibility based on being aged, blind or disabled or eligibility for 
medically needy coverage based on incurred medical expenses), and how 
to request a determination on such other bases. Under proposed 
paragraph (d), the agency's responsibility to provide notice is 
satisfied by a combined eligibility notice (defined in proposed Sec.  
435.4 and discussed in section II.B.2 of this final rule) provided by 
another insurance affordability program, provided that the agency 
provide supplemental notice of certain information required under Sec.  
435.917(b)(1) if the information is not included in the combined notice 
provided by the other program. Similar policies were proposed for CHIP 
through proposed revisions to Sec.  457.340(e). We are also finalizing 
as proposed the removal of Sec. Sec.  435.913 and 435.919 pertaining to 
timely and adequate notice concerning adverse actions and moved the 
provisions therein to Sec.  435.917. We also make a conforming 
technical revision in Sec.  435.945(g) to remove the cross reference to 
Sec.  435.913.
    The provisions, except as noted below, are finalized as proposed. 
We received the following comments on these proposed provisions:
    Comment: A commenter stated that detailed information on out-of-
pocket costs across insurance affordability programs should be included 
in the eligibility notice. Another commenter noted that states should 
be given flexibility in terms of additional benefit and cost-sharing 
information that could be included in the eligibility notice and the 
format in which such information can be provided, such as in a 
brochure.
    Response: States need to customize eligibility notices to deliver 
sufficient information on benefits and cost sharing, without creating 
overly-complex and lengthy notices. We are revising proposed Sec.  
435.917(b)(1)(iv) to clarify that eligibility notices must contain 
basic information regarding the level of benefits available and the 
cost-sharing obligations associated with the eligibility status that 
has been determined, as well as how the individual can receive more 
detailed information, which could be provided in another format, such 
as a brochure. We also are revising Sec.  435.917(b)(1)(iv) in this 
final rule to provide that a notice of eligibility also include, if 
applicable, basic information regarding the differences in coverage 
available to individuals enrolled in benchmark or benchmark-equivalent 
coverage or in an Alternative Benefit Plan as opposed to coverage 
available to individuals described in Sec.  440.315 (relating to 
exemptions from mandatory enrollment in benchmark or benchmark-
equivalent coverage). The agency could provide more detailed 
information in a brochure included with the eligibility notice or make 
it available online, through a supplemental mailing or upon request.
    Comment: A commenter noted that the information on potential 
eligibility on non-MAGI bases which must be included in notices 
involving a determination of eligibility or ineligibility based on MAGI 
under proposed Sec.  435.917(c) should explain the eligibility rules 
for these other groups, including any applicable resource test, so that 
individuals can know whether to pursue eligibility under these 
categories or seek coverage elsewhere. The commenter recommended that 
eligibility notices for individuals found eligible under the new adult 
group described in Sec.  435.119 should explain that the individual may 
be eligible for different benefits based on their healthcare condition 
and how they should request a review of their status.
    Response: We agree with the commenter that eligibility notices 
approving eligibility based on MAGI need to include information 
regarding other bases of eligibility. However, the amount of detail 
provided must also take into account the need to provide a clear and 
understandable notice. We believe that proposed Sec.  435.917(c), which 
is finalized as proposed, strikes the right balance. A notice of 
approval, denial, or termination of eligibility based on MAGI must 
contain basic information sufficient to enable the individual to pursue 
a determination on a non-MAGI basis, without undermining the goal of 
clarity and simplicity.
    Through our efforts to provide support and technical assistance to 
states in modernizing eligibility notices, we developed Medicaid and 
CHIP model notices to include content depicting how information on non-
MAGI bases of eligibility could be written and displayed. Our model 
notices, while not required, include information describing non-MAGI 
eligibility criteria and suggest that individuals who believe they are 
potentially eligible on a non-MAGI basis contact the state Medicaid 
agency for further information. These model notices can be obtained at 
http://www.medicaid.gov/State-Resource-Center/MAC-Learning-Collaboratives/Learning-Collaborative-State-Toolbox/State-Toolbox-Expanding-Coverage.html.
    Comment: A commenter recommended that approval notices should be 
required to include a clear explanation of any restrictions based on 
the availability of medical treatment that may be in place if the 
individual is in a managed care plan, including utilization control 
mechanisms and whether the plan has stated any moral or religious 
exceptions. The commenter requested that CMS further clarify a state's 
responsibility to notify all potential enrollees of these limits and 
provide information about how to access covered services.
    Response: Due to the variation which may exist between managed care 
plans, we do not believe such detailed plan-specific information should 
be included in eligibility notices. This information is more 
appropriate to include in a subsequent notice regarding the 
individual's enrollment options, which is the subject of regulations 
relating to managed care at Sec.  438.10.
    Comment: We received a few comments regarding our proposed 
revisions to Sec.  431.210(b) to require that an adverse action notice 
contain ``a clear statement of the specific reason supporting the 
intended action.'' One commenter supported the proposed paragraph, 
noting that agencies often provide only a regulation citation to 
justify an action, which is not meaningful to most consumers. Another 
commenter was concerned that proposed Sec.  431.210(b) would lead to 
litigation because notices would lack the clarity required. No comments 
were received on proposed revisions at Sec.  431.210(a) (replacing 
reference to ``the State'' with ``the agency'' and requiring adverse 
notices to include the effective date of the action) or Sec.  
431.210(d)(1) (adding the word ``local'' before ``evidentiary'').
    Response: Providing both a clear statement, as well as specific 
legal authority (required per current Sec.  431.210(c)) for an adverse 
action is critical to enable consumers to understand an agency's 
decisions

[[Page 86401]]

regarding their case. Therefore, we are finalizing Sec.  431.210(b) as 
proposed. Current Sec.  431.210(c) (which is not revised in this 
rulemaking) continues to require that a notice of adverse action 
include specific legal authority supporting the action. Under the 
regulations, such notices must include both a plain language 
description and a specific citation supporting why the agency has 
determined that an individual's eligibility is denied or terminated, or 
whose benefits are reduced, suspended or terminated. Sections Sec.  
431.210(a) and (d)(1) are finalized as proposed. We remind states 
operating Medicaid and CHIP programs that in addition to the program 
notice requirements discussed in this final rule, states must comply 
with other applicable notice requirements, such as those under Section 
1557 of the Affordable Care Act and implementing regulation.
2. Combined and Coordinated Notices (Sec. Sec.  435.4, 435.917, 
435.1200, 457.10, 457.348, and 457.350)
    A coordinated system of notices is important to a high quality 
consumer experience and a coordinated eligibility and enrollment 
system, as provided for under section 1413 of the Affordable Care Act 
and section 1943 of the Act. We proposed a coordinated system of 
notices across all insurance affordability programs to maximize the 
extent to which individuals and families receive a single notice 
communicating the determination or denial of eligibility for all 
applicable insurance affordability programs and for enrollment in a QHP 
through the Exchange. This is regardless of where the individual 
initially submits an application or renews eligibility or whether the 
Exchange is authorized to make Medicaid and CHIP eligibility 
determinations or for which program an individual ultimately is 
approved eligible. In support of this policy objective, we proposed to 
add definitions in Sec.  435.4 of ``combined eligibility notice'' (to 
mean an eligibility notice that informs an individual, or household of 
his or her eligibility for multiple insurance affordability programs) 
and ``coordinated content'' (to refer to information included in an 
eligibility notice relating to the transfer of an individual's or 
household's electronic account to another program). We explained that 
coordinated content is needed when the eligibility determination for 
all programs cannot be finalized for inclusion in a single combined 
eligibility notice. Definitions of ``combined eligibility notice'' and 
``coordinated content'' were proposed for CHIP in Sec.  457.10.
    We proposed various revisions to Sec.  435.1200 specifying the 
circumstances in which a coordinated eligibility notice or coordinated 
content would be required for Medicaid determinations and similar 
revisions at Sec.  457.348 and Sec.  457.350 for CHIP. In Sec.  
435.1200, we proposed to redesignate paragraph (a) at paragraph (a)(1) 
and to add a new paragraph (a)(2) to provide cross-references to the 
definitions added at Sec.  435.4. We proposed a new paragraph Sec.  
435.1200(b)(3)(iv) to provide that the agreements between the Medicaid 
agency and other insurance affordability programs delineate the 
responsibilities of each program to provide combined eligibility 
notices (including a combined notice for multiple household members to 
the extent feasible) and coordinated content, as appropriate. At Sec.  
435.1200(b)(4) we proposed that if a combined eligibility notice cannot 
be provided for all members of the same household, the coordinated 
content must be provided about the status of other members. Proposed 
Sec.  435.1200(c)(3) provides that when an Exchange or other insurance 
affordability program makes a final determination of Medicaid 
eligibility or ineligibility, the agreement between the agency and 
Exchange or other program consummated under Sec.  435.1200(b)(3) must 
stipulate that the Exchange or other program will provide the applicant 
with a combined eligibility notice including the Medicaid 
determination. Similar provisions for CHIP were proposed at Sec.  
457.348(a), (b)(3)(i) and (ii), and (c)(3).
    We proposed incorporating, for clarity, the content of Sec.  
435.1200(d)(5) (relating to notification of the receipt of an 
electronic account transferred to the agency) into Sec.  
435.1200(d)(1). We proposed to add new language at Sec.  
435.1200(d)(3)(i) specifying that, when an individual is assessed by an 
Exchange or other program as potentially Medicaid eligible and the 
account is transferred to the Medicaid agency for a final 
determination, if the Medicaid agency approves eligibility, the 
Medicaid agency will provide the combined eligibility notice for all 
applicable programs. We proposed revisions to Sec.  435.1200(e) to 
provide at new paragraph (e)(1)(ii) and (e)(1)(iii)(B) that, effective 
January 1, 2015, or earlier, at state option, the Medicaid agency 
include in the agreement consummated under Sec.  435.1200(b)(3) that 
the Exchange or other program will issue a combined eligibility notice, 
including the Medicaid agency's denial of Medicaid eligibility, for 
individuals denied eligibility by the agency at initial application (or 
terminated at renewal) and assessed and transferred to the Exchange or 
other insurance affordability program as potentially eligible for such 
program. Per proposed Sec.  435.1200(e)(1)(iii)(A), prior to January 1, 
2015, the agency would provide notice of a Medicaid denial or 
termination and coordinated content relating to the individual's 
transfer to another insurance affordability program if such other 
program would not be providing a coordinated eligibility notice 
containing such denial or determination. Finally, under proposed Sec.  
435.917(d) the agency's responsibility to provide notice of an 
eligibility determination, as required under Sec.  431.210 or proposed 
Sec.  431.917, is satisfied by a combined notice provided by an 
Exchange or another insurance affordability program in accordance with 
an agreement between the agency and the Exchange or such program. 
Similar revisions were proposed for CHIP at Sec. Sec.  457.348(d)(1) 
and (d)(3)(i), 457.350(i)(2) and (3).
    The proposed policy of a single combined eligibility notice would 
not apply in the case of individuals determined ineligible for Medicaid 
on the basis of MAGI but being evaluated for eligibility on a non-MAGI 
basis, because the Medicaid agency typically would be continuing its 
evaluation of the individual's eligibility on the non-MAGI bases at the 
same time that the individual was being evaluated for, and potentially 
enrolled in, another insurance affordability program. In this 
situation, under proposed Sec.  435.1200(e)(2)(ii), the Medicaid agency 
would provide notice to the individual explaining that the agency has 
determined the individual ineligible for Medicaid on the basis of MAGI 
and that the agency is continuing to evaluate Medicaid eligibility on 
other bases. This notice also would contain coordinated content 
advising the applicant that the agency has assessed the individual as 
potentially eligible for, and transferred the individual's electronic 
account to, the other program. Proposed Sec.  435.1200 (e)(2)(iii) 
requires the agency to provide the individual with notice of the final 
eligibility determination on the non-MAGI bases considered. If the 
individual is later determined eligible for Medicaid on a basis other 
than MAGI, proposed paragraph (e)(2)(iii) provides that that agency 
include coordinated content in the notice of eligibility on the non-
MAGI basis that the agency has notified the applicable insurance 
affordability program of the Medicaid determination, as well as the 
impact that the Medicaid determination

[[Page 86402]]

will have on the individual's eligibility for the other program. For 
CHIP, we proposed to redesignate Sec.  457.350(j)(3) at Sec.  
457.350(j)(4) and to add a new paragraph (j)(3) providing for the 
coordination of notices for individuals assessed by the CHIP agency as 
not eligible for Medicaid based on having income below the applicable 
MAGI standard, but as potentially eligible for Medicaid on a non-MAGI 
basis.
    Comment: We received many comments regarding our proposed policy to 
establish a coordinated system of notices across insurance 
affordability programs. Commenters generally supported the policy goal 
as an important part of a coordinated eligibility and enrollment system 
and we received no comments recommending specific revisions to the 
proposed regulations. Many commenters, however, were concerned about 
current systems capabilities to coordinate single combined notices 
between different insurance affordability programs. One commenter was 
concerned that the need to provide a combined eligibility notice could 
undermine provision of timely notice. Commenters also found the 
proposed regulations confusing and were unsure of exactly when a 
combined eligibility notice is required.
    Response: We appreciate commenters' support of the goal of 
achieving a coordinated system of notices, as well as the concerns 
about the ability of multiple programs to provide a single combined 
eligibility notice to the extent envisioned in the proposed rule, 
particularly in states that do not operate a shared service for 
determining eligibility for all programs, including all states which 
rely on the FFE to determine eligibility for enrollment in a QHP and 
for APTC and CSRs. We also agree with commenters that the regulatory 
provisions implementing a coordinated system of notices proposed in 
Sec.  435.1200, which were spread across several paragraphs of that 
section, are confusing. We make two basic changes in the final rule to 
address commenters' concerns. First, we are not finalizing the key 
provisions relating to coordinated notices as proposed at paragraphs 
(b)(4), (c)(3), (d)(3)(i), (e)(1)(ii) and (e)(1)(iii) in Sec.  
435.1200. Instead, the final rule anticipates that states and Exchanges 
will phase in increased use of single coordinated eligibility notices, 
to be provided by the last entity to ``touch'' an application or 
renewal, more gradually over time, as provided in a new paragraph Sec.  
435.1200(h) of the final rule. Specifically, Sec.  435.1200(h)(1) of 
the final rule provides that the agency include in the agreements with 
other programs, under Sec.  435.1200(h)(1) that, to the maximum extent 
feasible, the agency, Exchange or other insurance affordability program 
will provide a combined eligibility notice to individuals, as well as 
to multiple members of the same household included on the same 
application or renewal form. Section 435.1200(h)(2) provides that, for 
individuals and other household members who will not receive a combined 
eligibility notice, the agency must include appropriate coordinated 
content in the notice it provides under Sec.  435.917. To ensure that 
applicants and beneficiaries are fully informed of the status of their 
application or renewal, we clarify in the definition at Sec.  435.4 of 
the final rule that, in addition to information relating to the 
transfer of an individual's or household's electronic account to 
another program, coordinated content also includes, if applicable, any 
notice sent by the agency to another insurance affordability program 
regarding an individual's eligibility for Medicaid, the ways in which 
eligibility for the different programs may impact each other, and the 
status of household members on the same application or renewal form 
whose eligibility is not yet determined.
    For example, because applicants and current beneficiaries 
determined ineligible for Medicaid have different rights--both in terms 
of the continuation of benefits pending an appeal of the Medicaid 
agency's determination, as well as the right to a special enrollment 
period in the Exchange--we do not expect that states necessarily will 
be able to provide for a combined notice right away for individuals 
determined ineligible for Medicaid by the Medicaid agency and 
transferred to an Exchange that does not share a common eligibility 
system. As systems mature, and the communication between the programs 
can differentiate individuals denied eligibility by the agency at 
initial application from those being terminated at renewal or due to a 
change in circumstances, a combined notice would be required under 
Sec.  435.1200(h)(1).
    Rather than finalize the amendments to Sec.  435.1200(e)(2) 
pertaining to notices as proposed, existing Sec.  435.1200(e)(2) 
remains unchanged and we have specifically accounted for one 
particularly complex situation, involving the need for multiple 
notices, in the final regulation at Sec.  435.1200(h)(3). We did not 
finalize as proposed Sec. Sec.  435.1200(e)(2)(ii) and 
435.1200(e)(2)(iii), but added Sec.  435.1200(h)(3), which describes 
the notice requirements for individuals determined ineligible for 
Medicaid based on having household income above the applicable MAGI 
standard (at initial application or renewal), but who are undergoing a 
determination on a basis other than MAGI. Section 435.1200(h)(3) 
directs the agency to first provide notice to the individual, 
consistent with Sec.  435.917, that the agency has determined that the 
individual is not eligible for Medicaid based on MAGI, but is 
continuing to evaluate eligibility on other bases. This notice must 
include a plain language explanation of the other bases being 
considered and coordinated content that the agency has transferred the 
individual's electronic account to the Exchange or other insurance 
affordability program (as required under Sec.  435.1200(e)(2)) and an 
explanation that eligibility for or enrollment in the other program 
will not affect the determination of Medicaid eligibility on a non-MAGI 
basis. Once the agency has made a final determination of eligibility on 
all bases, per Sec.  435.1200(h)(3)(ii), the agency must provide the 
individual with notice of the final determination of eligibility on all 
bases, consistent with Sec.  435.917. The notice must also contain 
coordinated content that the agency has notified the Exchange or other 
program of its final determination (required under Sec.  
435.1200(e)(2)(ii)) and, if applicable, an explanation of any impact 
that the agency's approval of Medicaid eligibility may have on the 
individual's eligibility for the other program or the transfer of the 
individual's electronic account to the Exchange or other program 
(required under Sec.  435.1200(e)(1) if the agency ultimately denies or 
terminates the individual's eligibility).
    Initially, under the standard established at Sec.  435.1200(h)(1) 
of this final rule, we expect that states that have delegated authority 
to the FFE to make MAGI-based eligibility determinations will provide 
in the agreement entered into per Sec.  435.1200(b) that the FFE will 
provide a combined eligibility notice for all applicants it determines 
are eligible for Medicaid, as well as applicants that it determines are 
ineligible for Medicaid based on MAGI whose account is not transferred 
to the Medicaid agency for a full determination of eligibility 
including non-MAGI bases. States currently operating a state-based 
Exchange in which all insurance affordability programs access shared 
services for determining eligibility are expected to provide a single 
combined eligibility notice in all instances. As systems mature, we 
expect that all

[[Page 86403]]

states, including both assessment and determination states using the 
FFE, as well as states operating a state-based Exchange both with and 
without a shared eligibility service, will develop more integrated 
notices capabilities able to provide combined eligibility notices in a 
wider range of circumstances. Enhanced federal match is available for 
Medicaid agencies to develop such capabilities and we will work with 
states through the Advance Planning Documents associated with obtaining 
federal match for systems development to achieve this goal.
    Finally, we make conforming revisions in the final rule at Sec.  
435.1200(b)(3)(ii) to cross-reference paragraphs (d) though (h) (rather 
than (d) through (g)) and to streamline the language in proposed Sec.  
435.1200(b)(3)(iv) (relating to the general requirement that the 
agreements between insurance affordability programs provided for a 
combined eligibility notice and opportunity to submit a joint fair 
hearing request consistent with the regulations). Proposed Sec.  
435.917(d) is finalized as proposed, with a non-substantive 
modification replacing ``through'' with ``and''.
    We note that in proposing new Sec.  435.1200(c)(3) in the proposed 
rule, we neglected to propose that current Sec.  435.1200(c)(3) 
(relating to the responsibility of an agency electing to delegate 
eligibility determination authority to maintain oversight of the 
Medicaid program) be redesignated at Sec.  435.1200(c)(4). We did not 
intend to remove current Sec.  435.1200(c)(3), which is retained 
(without revision or redesignation) in this rulemaking.
    We have made similar revisions to the proposed provisions relating 
to establishment of a coordinated system of notices in CHIP, as well as 
similar reorganizational changes. Thus, we revise the definitions of 
``combined eligibility notice'' and ``coordinated content'' at Sec.  
457.10 to align with the definitions finalized at Sec.  435.4. Proposed 
Sec.  457.348(b)(3)(i) and (ii) (relating to the requirement that the 
agreements between the state and other insurance affordability programs 
delineate the responsibilities of each to effectuate a coordinated 
system of notices) are finalized at Sec.  457.348(a)(4) of the final 
rule. We are not finalizing the addition of proposed Sec.  457.348(a) 
or revisions to current regulations proposed at Sec.  457.348(b)(3)(i) 
and (ii), (c)(3) and (d)(3)(i) and Sec.  457.350(i)(2) and (3) and 
(j)(3). Instead, we are adding a new paragraph at Sec.  457.340(f) 
adopting the same coordinated policy for CHIP as is adopted for 
Medicaid at Sec.  435.1200(h)(1) and (2) of the final rule.
    Similar to Sec.  435.1200(h)(3) of the final rule, we are revising 
Sec.  457.350(i)(3) (redesignated at Sec.  457.350(i)(2) in this final 
rule) to provide that, in the case of individuals subject to a period 
of uninsurance under Sec.  457.805, the state must (1) notify the 
Exchange or other insurance affordability program to which the 
individual was referred in accordance with Sec.  457.350(i) of the date 
on which the individual's required period of uninsurance ends and the 
individual will be eligible to enroll in CHIP; and (2) provide the 
individual with an initial notice that the individual is not currently 
eligible to enroll in CHIP (and why); the date on which the individual 
will be eligible to enroll in the CHIP; and that the individual's 
account has been transferred to another insurance affordability program 
for a determination of eligibility to enroll in such program pending 
eligibility to enroll in CHIP. Such notice also must contain 
coordinated content informing the individual of the notice provided to 
an Exchange or other program to which the individual's account was sent 
and the impact that the individual's eligibility to enroll in the CHIP 
will have on the individual's eligibility for the other program. Prior 
to the end of the period of uninsurance, the state must send a second 
notice reminding the individual of the information contained in the 
first notice, as appropriate. The notice must be sent sufficiently in 
advance of the date the individual is eligible to enroll in CHIP such 
that the individual is able to disenroll from the insurance 
affordability program to which the individual's account was transferred 
prior to that date. We also make a technical revision to redesignated 
Sec.  457.350(i)(2) to add a cross-reference to Sec.  457.805 (relating 
to periods of uninsurance as a strategy to ameliorate substitution of 
coverage) and to clarify that the state must transfer individuals 
subject to a period of uninsurance to the Exchange or other insurance 
affordability program (that is, the BHP, in a state which has 
implemented a BHP).
    In the case of individuals identified as potentially eligible for 
Medicaid on a non-MAGI basis, we are revising Sec.  457.350(j)(3) of 
the final rule to provide that states must include in the notice of 
CHIP eligibility or ineligibility provided by the state coordinated 
content relating to (1) the transfer of the individual's electronic 
account to the Medicaid agency (for a full Medicaid determination); (2) 
if applicable, the transfer of the individual's account to another 
insurance affordability program (that is, to the Exchange or BHP if the 
state determines the individual is not eligible for CHIP); and (3) the 
impact that an approval of Medicaid eligibility will have on the 
individual's eligibility for CHIP or the insurance affordability 
program to which the individual's account was transferred, as 
appropriate. We make a technical revision at Sec.  457.350(j)(2) to 
reflect the requirement that, if an individual identified as 
potentially eligible for Medicaid on a non-MAGI basis is determined not 
eligible for CHIP, the state must identify whether the individual may 
be eligible for other insurance affordability programs.
    We are not finalizing the proposed redesignation of current Sec.  
457.350(f)(2) and (3) or the addition of a new paragraph (f)(2) in 
Sec.  457.350, which would have required the Medicaid agency to issue a 
combined eligibility notice for individuals assessed by the State as 
eligible for Medicaid based on MAGI and transferred to the Medicaid 
agency, because such assessments and transfers do not constitute a 
denial of CHIP. We neglected to include regulation text in the proposed 
CHIP regulations similar to the proposed provision at Sec.  435.917(d), 
specifying that the provision of a combined eligibility notice 
including a determination of CHIP eligibility or ineligibility 
satisfies the state's responsibility to provide such notice under Sec.  
457.340(e). This proposal was implied in the proposed rule. We are 
revising Sec.  457.340(e)(2) in this final rule to finalize the policy 
implied in the proposed rule.
    Comment: Several commenters supported our proposal to include the 
content of Sec.  435.1200(d)(5) in Sec. Sec.  435.1200(d)(1) and 
457.348(d)(5) in Sec.  457.348(d)(1), respectively.
    Response: We are finalizing Sec. Sec.  435.1200(d)(1) and 
457.348(d)(1) as proposed. Proposed Sec. Sec.  435.1200(d)(5) and 
457.348(d)(5), finalized in the July 2013 final eligibility rule at 
Sec. Sec.  435.1200(d)(6) and 457.348(c)(6), are redesignated at 
Sec. Sec.  435.1200(d)(5) and 457.348(d)(5) in this final rule, 
accordingly.
    Comment: A number of commenters were concerned about the effective 
date (January 1, 2015, in the proposed rule) for the requirement to 
provide combined notices, including an eligibility determination made 
by another program. The commenters recommended that additional time is 
needed for the systems builds needed to support this policy.
    Response: We appreciate the concerns that combined notices will be

[[Page 86404]]

challenging to implement in states with a state-based Exchange that do 
not have a shared eligibility service, as well as all states using a 
Federally-Facilitated Exchange and agree that additional time is needed 
for the development, testing and deployment of the systems needed to 
support provision of such notices. We are not providing for a delayed 
effective date of the regulations relating to coordinated notices per 
se. However, as explained above, Sec. Sec.  435.1200(h) and 457.340(f) 
of the final rule require the use of combined eligibility notices to 
the extent feasible, taking into account whether the state uses a 
shared eligibility service or the FFE, whether the FFE is determining 
or assessing eligibility for Medicaid and CHIP, and the maturity of the 
eligibility and enrollment systems operated by the state and the 
Exchange. As state and Exchange systems mature, greater use of combined 
eligibility notices is required. Under the final regulations, it should 
be feasible for a state using a shared eligibility service for all 
insurance affordability programs to provide a single combined 
eligibility notice, which therefore is required under the final rule. 
Similarly, when the FFE has been authorized to make and has made a 
final determination of eligibility for Medicaid or CHIP for applicants 
who have applied for coverage through the Exchange, the agreement 
between the state and the FFE must provide for a combined eligibility 
notice from the FFE. We may revisit these requirements in future 
rulemakings as states' systems develop and states gain more experience 
with issuing combined notices.
    Comment: While supporting the ability to provide combined 
eligibility notices to consumers, several commenters, noting the 
complexity of the policy, recommended that CMS provide guidance and 
technical assistance to states. Another commenter recommended that 
notices need to clearly state whom the notice is for, such as for one 
individual or multiple people in the household. The commenters 
recommended CMS consult with states and stakeholders to develop 
guidance on combined and coordinated notices and to conduct consumer 
testing on model notices.
    Response: We agree with the commenters and, since issuing the 
proposed rule, we have developed a tool kit to provide states with 
consumer-tested model notices for Medicaid and CHIP, as well as 
guidance on developing, and a framework for structuring, effective 
notices in a coordinated and streamlined eligibility and enrollment 
system. The tool kit also includes resources on key messages based on 
communication requirements and eligibility scenarios, and consumer 
tested best practices and tips. In developing these resources, we 
worked closely with the Medicaid and CHIP Coverage Expansion Learning 
Collaborative, which includes representatives from a dozen states, and 
with consumer advocates and other stakeholders. The tool kit can be 
obtained at http://www.medicaid.gov/State-Resource-Center/MAC-Learning-Collaboratives/Learning-Collaborative-State-Toolbox/State-Toolbox-Expanding-Coverage.html.
    Comment: A commenter noted the importance of providing denial 
notices in a timely manner to individuals when appropriate, especially 
in cases where the individuals may be eligible for other insurance 
affordability programs.
    Response: Per Sec.  431.210 (revised in this final rule) and Sec.  
457.340(e), Medicaid and CHIP agencies are required to provide notice 
whenever an applicant or beneficiary is determined ineligible for 
coverage and, if such determination is made by the state agency, such 
applicant or beneficiary must be assessed for eligibility for, and 
transferred as appropriate to, other insurance affordability programs, 
consistent with Sec. Sec.  435.1200(e) and 457.350. If a coordinated 
eligibility notice is not provided by another program under an 
agreement between the agency and such other program, the state agency 
must provide the notice required under the regulations; per Sec. Sec.  
435.1200(h)(2) and 457.340(f)(2), such notice must contain coordinated 
content explaining that the individual's account has been transferred 
to the other insurance affordability program for consideration. We 
remind states operating Medicaid and CHIP programs and Exchanges that 
in addition to the program notice requirements discussed in this final 
rule, states and Exchanges must comply with other applicable notice 
requirements, such as those under Section 1557 of the Affordable Care 
Act and its implementing regulation.
3. CHIP Notice and Information Requirements (Sec. Sec.  457.110 and 
457.350)
    We proposed to redesignate Sec.  457.350(f)(2) at (3) and to revise 
redesignated Sec.  457.350(f)(3) to clarify that the requirement to 
find an individual ineligible, provisionally ineligible, or suspend the 
individual's application for CHIP unless and until the Medicaid 
application for the individual is denied, applies only at application. 
We proposed revisions at Sec.  457.350(g) to clarify that the 
requirement to provide information sufficient to enable families 
applying for CHIP to make an informed choice about applying for 
Medicaid also applies to providing such information about other 
insurance affordability programs. We proposed to revise Sec.  
457.350(h)(2) to clarify that the responsibility to inform applicants 
placed on a waiting list for enrollment in a separate CHIP that, if 
their circumstances change while on such list, they may be eligible for 
Medicaid or other insurance affordability programs. Finally, we 
proposed a technical correction in Sec.  457.805(b)(3)(v) to replace 
``and'' with ``or''.
    We received no comments on these proposed provisions and we are 
revising Sec. Sec.  435.350(g), 435.350(h)(2) and 457.805(b)(3)(v) as 
proposed, except that we are making a technical revision at Sec.  
457.350(h), as revised in the July 2013 Eligibility final rule, to 
redesignate paragraph (h)(2) at (h)(3) and add a new paragraph (h)(2), 
providing that the procedures developed by states which have instituted 
a waiting list or enrollment cap or otherwise closed enrollment ensure 
that affected children placed on a waiting list or for whom action on 
their application is otherwise deferred are transferred to another 
appropriate insurance affordability program in accordance with Sec.  
457.350 (i). As discussed above, we are not adding a new paragraph 
(f)(2) at Sec.  457.350 or redesignating current Sec.  457.350(f)(2) at 
(3). We had proposed revisions to current Sec.  457.350(f)(2) to 
clarify that the requirement to find an individual ineligible, 
provisionally ineligible, or suspend the individual's application for 
CHIP unless and until the Medicaid application for the individual is 
denied, applies only at application in response to concerns expressed 
by states that at renewal such a requirement could result in a gap in 
coverage. However, we do not believe that the current Sec.  
457.350(f)(2), which refers explicitly to ``applicants'' is unclear, 
and therefore, we are not revising Sec.  457.350(f)(2) in the final 
rule.
    We also are making a technical revisions to Sec.  457.110, which 
was finalized in the July 15, 2013 Medicaid and CHIP final rule. 
Paragraph (a)(1) is revised to clarify that the state must (instead of 
``may'') provide, at beneficiary option, notices to applicants and 
beneficiaries in electronic format, as long as the state establishes 
safeguards in accordance with Sec.  435.918 of this chapter.

[[Page 86405]]

C. Medicaid Eligibility Changes Under the Affordable Care Act

1. Former Foster Care Children (Sec.  435.150)
    We proposed new Sec.  435.150 to implement section 
1902(a)(10)(A)(i)(IX) of the Act, added by sections 2004 and 10201(a) 
and (c) of the Affordable Care Act, under which states must provide 
Medicaid coverage starting in 2014 to a new eligibility group for 
``former foster care children.'' Under proposed Sec.  435.150, this 
mandatory group covers individuals under age 26 who were in foster care 
under the responsibility of ``the State'' or Tribe and were enrolled in 
Medicaid under ``the State's'' Medicaid State plan or section 1115 
demonstration upon attaining either age 18 or a higher age at which an 
individual will age out of foster care based on the state's or Tribe's 
election under title IV-E of the Act. We proposed to provide states 
with the option to cover under this group individuals who aged out of 
foster care while receiving Medicaid in ``any state'' at either of the 
relevant points in time. For additional discussion, see section 
I.B.3.(a) of the proposed rule. We received no comments on proposed 
Sec. Sec.  435.150 (a) (basis), (b)(1) (age required for coverage), and 
(b)(2) (limitation on eligibility for individuals eligible for 
mandatory coverage under another group described in part 435 subpart A, 
other than the adult group described in Sec.  435.119), which are 
finalized as proposed.
    Comment: Several commenters suggested we make the ``any state'' 
option in proposed Sec.  435.150(b)(3) a requirement, so that states 
would be required to cover individuals under this group if they aged 
out of foster care while receiving Medicaid in ``any state'' at either 
of the relevant points in time. Some commenters were particularly 
concerned about children in foster care under the responsibility of one 
state, who were placed in another state and either were enrolled in 
Medicaid in the receiving state or chose to remain in the receiving 
state when they aged out of foster care. These commenters believe that 
former foster youth should be eligible for coverage regardless of 
changes in state of residence. One commenter recommended that states 
ensure eligibility in either the state placing the youth in foster care 
or the state in which the child was placed, whichever is the child's 
state of residence upon leaving foster care. A few commenters supported 
retaining the ``any state'' option as a state option. Another commenter 
recognized the challenge of states confirming eligibility for youth who 
were in foster care in another state.
    Response: Section 1902(a)(10)(A)(i)(IX) of the Act provides that, 
to be eligible under this group, an individual must have been ``in 
foster care under the responsibility of the State'' and to have been 
``enrolled in the State plan under this title or under a waiver of the 
plan while in such foster care[.]'' Because the statute mandates 
coverage specifically for individuals in foster care in the state--not 
in a or any state--who were receiving Medicaid under the state plan or 
waiver of such plan--not a state plan or any state plan--we do not have 
flexibility to require that states provide coverage to individuals who 
aged out of foster care while under the responsibility of, or receiving 
Medicaid in, another state. Based on this specific statutory language, 
we also do not believe that the statute supports providing states with 
the option to do so under this eligibility group. Therefore, we are 
removing the ``any state'' option that was proposed. We remain 
committed to working with states to continue coverage of these 
individuals. States that wish to continue existing coverage or to 
extend eligibility to former foster care children from another state 
may do so through 1115 demonstration authority, and we are releasing 
concurrently with this final rule subregulatory guidance providing 
additional detailed information on state flexibility to cover these 
individuals, including releasing an 1115 waiver template to help states 
to transition this group to 1115 authority without any gaps in 
coverage.
    To provide state flexibility in other respects, we are revising 
Sec.  435.150(c) in the final rule to provide states with new options 
to provide coverage under this group. States may elect to provide 
coverage to individuals who meet the requirements in Sec.  
435.150(b)(1) and (2), were in foster care under the responsibility of 
the state or a tribe located within the state, at either of the ages 
specified in Sec.  435.150(b)(3)(i) and (ii), and were:
     Enrolled in Medicaid under the state's Medicaid state plan 
or under a section 1115 demonstration project at some time during the 
period in foster care during which the individual attained such age; or
     Placed by the state or tribe in another state and, while 
in such placement, were enrolled in the other state's Medicaid state 
plan or under a section 1115 demonstration project.
    Comment: One commenter believed that requiring that the child be 
receiving Medicaid at the time he or she turned 18 or aged out of 
foster care was unnecessarily restrictive. The commenter stated that 
the statute requires only that the child have been enrolled in Medicaid 
in the state at some point during his or her receipt of foster care 
assistance.
    Response: We agree that clauses (cc) and (dd) of section 
1902(a)(10)(A)(i)(IX) of the Act can be read independently such that, 
under clause (cc) to be eligible for coverage under the former foster 
care group, an individual must be in foster care on the date of 
attaining the age described in clause (cc), whereas clause (dd) would 
require only that the individual have been enrolled in Medicaid ``while 
in such foster care,'' but not necessarily that the individual have 
been enrolled in Medicaid at the time of attaining the age described in 
clause (cc). However, we do not believe it appropriate to finalize this 
interpretation in this final rule without opportunity for broader 
public comment. Therefore, we are including the commenter's suggestion 
as an option for states in Sec.  435.150(c) of this final rule and will 
consider proposed revised revisions to Sec.  435.150 to require only 
that an individual must have been enrolled in the state's Medicaid 
program at some point during the period in foster care which ended upon 
the individual's attaining the age described in Sec.  435.150(b)(3)(i) 
or (ii). We note that the option provided states at Sec.  435.150(c) of 
the final rule would extend coverage in the state responsible for 
foster care placement under Sec.  435.150 to former foster care youth 
who were enrolled in Medicaid when they ran away from a foster care 
placement. Runaway youth may remain in foster care (receiving child 
locator services), even though their Medicaid coverage may lapse, and, 
if remaining in a foster care status upon attaining age 18, they could 
be eligible for coverage in such state under Sec.  435.150 of the final 
rule provided that the other criteria are met.
    Comment: Several commenters requested CMS to issue guidance to 
assist states in establishing procedures to ensure automatic or passive 
eligibility verification and enrollment, and to recommend various 
outreach procedures to identify current and former foster care 
children. Several specific ways to conduct this outreach were 
suggested, including establishing a toll-free number for former foster 
youth to call and ensuring that child welfare agencies are informing 
youth about their eligibility and assisting with their enrollment 
during foster care transition planning. One commenter suggested HHS 
should encourage states to enact procedures to ensure that verification 
of

[[Page 86406]]

eligibility and enrollment for former foster youth be as automatic as 
possible. The commenter included outreach strategies and recommended 
that state Medicaid agencies take steps to identify former foster youth 
and collaborate with child welfare agencies in their state plans and in 
the healthcare oversight plan that child welfare agencies develop with 
state Medicaid agencies. Another commenter supported automatic 
enrollment upon eligibility, continuing until the individual's 26th 
birthday. Three commenters raised concerns regarding the difficulty 
states will have in verifying past foster care placements and Medicaid 
eligibility for youths from another state.
    Response: Under Sec.  435.916(f)(1) of the current regulations, 
states may not determine a current beneficiary to be ineligible before 
considering all bases of eligibility. In the case of individuals aging 
out of foster care on or after January 1, 2014 (the effective date for 
coverage under the former foster care group), this means that states 
cannot terminate Medicaid eligibility of an individual in foster care 
who attains age 18 or otherwise ages out of their foster care status 
without determining first whether such individual retains eligibility 
under another eligibility group. Individuals who age out or leave 
foster care may be eligible under the mandatory group for children 
under Sec.  435.118, as a disabled individual under Sec.  435.120 or 
Sec.  435.121, as a pregnant woman under Sec.  435.116, or as a parent 
or other caretaker relative under Sec.  435.110. If the state can 
determine that an individual who otherwise satisfies the requirements 
for coverage under the former foster care group at Sec.  435.150 is 
eligible for any of these other mandatory eligibility groups, it should 
transfer the individual to such group. If the individual is eligible 
for the former foster care group and either the state determines the 
individual is ineligible for these other mandatory groups or does not 
have sufficient information to determine eligibility under the other 
groups, the state should transition the individual to the former foster 
care group without interruption in Medicaid coverage or need to submit 
additional information. If a state does not know whether the individual 
remains a state resident upon leaving foster care and cannot 
electronically verify state residency, the state may require 
attestation and/or documentation of state residency, consistent with 
the state's verification plan developed per Sec.  435.945(j). We 
recommend the use of automated transition of individuals to the former 
foster care group within a state, and we remind states of the 
availability of enhanced federal funding for Medicaid eligibility and 
enrollment systems (``90/10'' funding) to support such automated 
systems. If automated transition is not possible, a manual process is 
acceptable at this time. A manual process may involve caseworker action 
at the state foster care agency.
    Some individuals who may be eligible for coverage under this group 
may need to apply with a new application--for example, because they 
left foster care prior to January 1, 2014. For such individuals, states 
may accept attestation of their former status under Sec.  435.945(a). 
If the state does not accept self-attestation, electronic verification 
of the individual's former foster care status, as well as his or her 
receipt of Medicaid while in foster care is required if available or if 
establishing an electronic data match would be effective within the 
meaning of Sec.  435.952(c)(2)(ii). If electronic verification is not 
available or establishing a data match would not be effective, states 
may require that applicants provide documentation of their former 
status. We note that the verification procedures followed in each state 
should be set forth in the verification plan developed by the state in 
accordance with Sec.  435.945(j).
    Comment: A few commenters recommended that a specific Medicaid 
benefits package be established for former foster care youth, rather 
than the adult benefits package, due to their unique health concerns.
    Response: While the statute does not authorize us to require a 
specific Medicaid benefit package for former foster care youth, 
individuals eligible under the former foster care group are exempt from 
mandatory enrollment in benchmark or benchmark-equivalent coverage 
under section 1937(b)(2)(B)(viii) of the Act. Thus, while a state may 
establish benchmark or benchmark equivalent coverage for individuals 
enrolled in this group, which the state believes is better tailored to 
their needs, the state cannot require enrollment in such coverage. We 
note also that individuals enrolled in the former foster care group who 
are under age 21 are entitled to early and periodic screening, 
diagnosis, and treatment (EPSDT) services under part 441 subpart B.
    Comment: Several commenters stated that coverage under this group 
also should include individuals who at their 18th birthday were 
receiving Medicaid coverage through an adoption or guardianship 
subsidy. One commenter stated that eligibility should be expanded to 
include youth who left foster care at age 16 or older when they were 
adopted or placed in legal guardianship with kin, and that eligibility 
requirements for foster care should be universal among states.
    Response: Section 1902(a)(10)(A)(i)(IX) of the Act limits 
eligibility under this group to individuals who were in foster care at 
the specified ages; therefore, we do not have the authority to expand 
Medicaid coverage under this group to include individuals who were not 
in foster care at either of the relevant points in time but were 
instead receiving adoption or guardianship assistance, nor do we have 
the authority to require uniform foster care eligibility requirements 
across all states. Adopted children up to age 26 generally may be 
covered as dependents under their adoptive parents' insurance.
2. Individuals Excepted From MAGI (Sec. Sec.  435.601 and 435.602)
    We proposed technical amendments to Sec.  435.601 and Sec.  435.602 
necessitated by the Affordable Care Act's requirements that MAGI-based 
financial methodologies be applied in determining Medicaid eligibility, 
unless the individual is excepted from application of MAGI-based 
methods under Sec.  435.603(j). We proposed to redesignate Sec.  
435.601(b) at Sec. Sec.  435.601(b)(2) and 435.602(a) at Sec.  
435.602(a)(2) and to add new paragraphs Sec.  435.601(b)(1) and Sec.  
435.602(a)(1) to clarify that the methodologies set forth in Sec.  
435.601 (related to application of the methodologies of the most 
closely-related cash assistance program) and Sec.  435.602 (related to 
financial responsibility of relatives and other individuals) apply only 
to individuals excepted from application of MAGI-based methodologies in 
accordance with Sec.  435.603(j). A conforming revision to the heading 
for redesignated Sec.  435.601(b)(2) also was proposed. We also 
proposed to remove Sec.  435.601(d)(1)(i) and (ii) (relating to 
pregnant women and children, who are not excepted from application of 
MAGI-based methods) and to redesignate Sec.  435.601(d)(1)(iii) through 
(vi) at Sec.  435.601(d)(1)(i) through (iv). We received no comments on 
these revisions, which are finalized as proposed. We also make a non-
substantive revision for clarity in redesignated Sec.  
435.602(a)(2)(ii) to replace reference to ``the State's approved AFDC 
plan'' with reference to ``the State's approved State plan under title 
IV-A of the Act in effect as of July 16, 1996.'' Discussed in section 
II.A.3 of this final rule, we make other revisions

[[Page 86407]]

at redesignated Sec.  435.601(b)(2) and (d)(1) related to revisions 
made to Sec.  435.831 related to financial methodologies for medically 
needy individuals.
    Comment: One commenter requested clarification about the rules for 
post-eligibility treatment of income for an institutionalized 
individual. The commenter also questioned whether the eligibility 
requirements for payment of long-term care services will apply to MAGI 
individuals whose coverage includes long-term care services, such as 
nursing homes.
    Response: On February 21, 2014, we issued State Medicaid Director 
(SMD) letter #14-001 regarding the application of transfer-of-asset 
rules and post-eligibility treatment of income rules to individuals 
eligible for Medicaid on the basis of MAGI. The commenter is directed 
to this letter, available at http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-14-001.pdf.
3. Family Planning (Sec. Sec.  435.214, 435.603, and 457.310)
    We proposed to add Sec.  435.214, codifying a new optional family 
planning eligibility group for non-pregnant individuals under sections 
1902(a)(10)(A)(ii)(XXI) and 1902(ii) of the Act, as added by section 
2303 of the Affordable Care Act. Benefits for individuals enrolled in 
this group are limited to family planning or family planning-related 
services under the first clause (XVI) in the matter following section 
1902(a)(10)(G) of the Act. Section 1902(ii)(3) of the Act permits 
states to consider only the income of the individual applying for 
coverage in determining eligibility for this group, and we proposed to 
codify that option by adding a new paragraph (k) to Sec.  435.603. We 
also proposed to amend the definition of a targeted low-income child at 
Sec.  457.310(b)(2)(i) to provide that eligibility for limited coverage 
of family planning services under Sec.  435.214 would not preclude an 
individual from being eligible for CHIP. We received several comments 
on these provisions.
    Comment: Several commenters supported the proposed regulations to 
codify this new group. Several commenters strongly supported the 
amendment to Sec.  457.310(b)(2)(i) to ensure that eligibility for 
family planning coverage under Medicaid will not undermine eligibility 
for comprehensive coverage under CHIP. Other commenters expressed 
strong support for inclusion of the income eligibility standards for 
pregnant women under section 1115 demonstration projects in determining 
the highest income standard for purposes of setting income eligibility 
for services under this section.
    Response: We appreciate the commenters' support and are finalizing 
Sec.  435.214, Sec.  435.603(k) and the revisions to Sec.  
457.310(b)(2)(i) as proposed, with the exception of minor technical 
revisions. We are revising the section heading and the introductory 
text in Sec.  435.214(b) to reflect that individuals eligible for 
Medicaid under Sec.  435.214 are eligible only for the limited family 
planning services described in Sec.  435.214(d); removing the phrase 
``meet all of the following requirements;'' and adding a parenthetical 
clarifying that coverage is provided to individuals ``of any gender.''
    Comment: A commenter stated that CMS should finalize the proposed 
provision so that states can consider only the income of the applicant 
or recipient when determining eligibility for coverage under a family 
planning State Plan Amendment (SPA). Another commenter requested that 
the final rule provide a detailed explanation as to why eligibility for 
a particular service should be treated differently than others. The 
commenter believed that such exceptions result in greater confusion and 
costs.
    Response: Under section 1902(ii)(3) of the Act, states have the 
option to consider only the individual applicant's or beneficiary's 
income. The statute thus specifically authorizes, at state option, a 
deviation from the household composition and household income rules 
associated with MAGI-based methodologes for this population only, at 
state option. This option is codified at Sec.  435.603(k) of the final 
rule. In addition, we note that under pre-Affordable Care Act rules, 
many states applied this methodology under their section 1115 family 
planning demonstration programs, finding it critical to enable 
vulnerable populations, such as women experiencing domestic abuse and 
teens to obtain family planning services based on their own income. We 
note that states that elect to cover more than one group under Sec.  
435.214 may exercise the options provided at Sec.  435.603(k) 
differently for each group adopted under Sec.  435.214.
    Comment: A commenter requested clarification on how coverage under 
this group will be coordinated between the Medicaid agency and the 
Exchange, since family planning is not full Medicaid coverage.
    Response: We are not certain whether the commenter is questioning 
about coordination of benefits for individuals who may be eligible for 
APTC and CSR for enrollment in a QHP and also for Medicaid coverage of 
family planning benefits under the state plan or whether the commenter 
is questioning about coordination of the application process to obtain 
coverage for family planning benefits. We therefore will respond to 
both questions.
    For individuals who are eligible for enrollment in a QHP and also 
for coverage of family planning benefits under the state plan, Internal 
Revenue Service (IRS) regulations at 26 CFR 1.5000A-2(b)(ii)(A) provide 
that coverage of family planning services under section 
1902(a)(10)(A)(ii)(XXI) of the Act is not minimum essential coverage. 
Therefore, individuals who are eligible for coverage of family planning 
services under the optional state plan group per Sec.  435.214 may also 
be eligible to receive APTC and CSR for enrollment in a QHP through the 
Exchange. For individuals enrolled in both, the rules governing 
coordination of benefits and third party liability section 1902(a)(25) 
of the Act and implementing regulations would apply, with Medicaid 
serving as a secondary payer for covered family planning services 
furnished by Medicaid-participating providers.
    For the application process, to apply for coverage through the 
Exchange, an individual must submit a single streamlined application. 
The Exchange regulations at Sec.  155.302(b)(1) and Sec.  155.305(c) 
require that, in assessing or determining an applicant's financial 
eligibility for Medicaid, the Exchange must use the applicable Medicaid 
MAGI standard, as defined in Sec.  435.911(b) of the Medicaid 
regulations. See the definition of ``applicable Medicaid MAGI-based 
income standard'' in Sec.  155.300. The applicable MAGI standard under 
Sec.  435.911(b), in turn, represents the highest income standard under 
which an applicant may be determined eligible for coverage under the 
MAGI-based eligibility groups for adults under age 65 at Sec.  435.119; 
parents and caretaker relatives at Sec.  435.110 or Sec.  435.220; 
pregnant women at Sec.  435.116; children at Sec.  435.118; or 
individuals under 65 with income over 133 percent of the FPL at Sec.  
435.218. The income standard for several optional MAGI-based 
eligibility groups--including the new family planning group at Sec.  
435.214--is not taken into account in establishing the applicable MAGI 
standard which is used by the Exchange in assessing or determining the 
Medicaid eligibility of new applicants. Therefore, while the Exchange 
regulations do not preclude the Exchange from determining or making an 
assessment of eligibility for coverage

[[Page 86408]]

under the family planning group, they do not require that it do so.
    The FFE is not currently programmed to assess or determine 
eligibility under the optional family planning group. If the FFE does 
not assess or determine an applicant as eligible for Medicaid based on 
the applicable MAGI standard, the applicant can request a full 
determination by the Medicaid agency per Sec. Sec.  155.302(b)(4)(i)(A) 
and 155.345(c), and if the applicant requests such determination or if 
the FFE identifies the applicant based on information provided on the 
application as potentially eligible for Medicaid on a MAGI-exempt basis 
(that is, based on being aged, blind or disabled or having high medical 
expenses), the FFE must transfer the applicant to the Medicaid agency 
under Sec. Sec.  155.302(b)(4)(ii) and 155.345(d).
    Under Sec.  435.911(c)(2), if the Medicaid agency finds that an 
applicant is not eligible on the basis of the applicable MAGI standard, 
the agency is directed to evaluate eligibility on bases other than the 
applicable MAGI standard, which includes not only eligibility on a 
basis excepted from application of MAGI-based methods per Sec.  
435.603(j), but also eligibility for MAGI-based groups which are not 
reflected in the applicable MAGI standard, such as the family planning 
group. If additional information not collected on the single 
streamlined application submitted to the FFE is needed, the agency 
would request such information per Sec.  435.911(c)(2).
    While the FFE does not have immediate plans to determine or assess 
eligibility for optional family planning coverage, we encourage states 
using a State-Based Exchange to do so. But we understand that the 
experience of states with section 1115 family planning demonstrations 
indicates that most individuals who are enrolled for family planning 
coverage were not determined for this coverage following submission of 
a regular application, but as a result of a referral from clinics and 
other providers of family planning services, using a designated 
application. To maximize access to this coverage, we allow the use of a 
targeted application designed for the family planning group, which can 
be distributed through providers of family planning services and 
submitted directly to the state Medicaid agency, regardless of the 
capacity of the Exchange to determine eligibility under Sec.  435.214. 
As an alternative to the single streamlined application described in 
Sec.  435.907(b)(1), such targeted applications must be approved by the 
Secretary per Sec.  435.907(b)(2).
4. Determination of Eligibility (Sec.  435.911)
    We proposed several revisions to the regulations at Sec.  435.911. 
We proposed revisions at Sec.  435.911(b)(1)(i) to reflect that, in 
states that have adopted coverage for parents and caretaker relatives 
under the optional group at Sec.  435.220 with an income standard above 
the standard for coverage under the mandatory group at Sec.  435.110, 
the applicable MAGI standard for parents and caretaker relatives will 
be the standard adopted for coverage under the optional eligibility 
group (unless the state also has adopted and phased in coverage of 
parents and caretaker relatives under the optional group described at 
Sec.  435.218 for individuals with income over 133 percent FPL up to a 
higher standard, in which case the applicable MAGI standard for parents 
and caretaker relatives will be the standard applied to coverage under 
that optional group, as set forth at Sec.  435.911(b)(1)(iv), added by 
the March 23, 2012, Medicaid eligibility final rule).
    We also proposed to revise the introductory text in Sec.  
435.911(b)(1), to add new paragraph (b)(2), and to revise paragraph 
(c)(1) of Sec.  435.911, added by the March 23, 2012, Medicaid 
eligibility final rule, to extend use of the MAGI screen to elderly 
adults, as well as adults who are eligible for Medicare and excluded 
from coverage in the adult group on that basis. Individuals who are age 
65 or older may be eligible based on MAGI as a parent or caretaker 
relative, but were unintentionally excluded from the MAGI screen rules 
established in the March 23, 2012, Medicaid eligibility final rule. (A 
proposed technical revision in the introductory text of paragraph (c) 
relating to the cross-reference to the reasonable opportunity period 
for documentation of citizenship and immigration status is discussed in 
section 6(b) of this final rule.) We received the following comments on 
these proposed provisions which are summarized below.
    Comment: Several commenters supported, and no commenters opposed, 
the proposed revisions. Several commenters expressed support for the 
requirement that Medicaid agencies furnish Medicaid to eligible 
individuals consistent with timeliness standards under Sec.  435.912 
and recommended that we issue guidance explaining this requirement and 
clarifying the applicability of timely determinations for non-citizen 
applicants. The commenters also recommended that CMS apply the 
timeliness standards in Sec.  435.912 to individuals undergoing non-
MAGI eligibility determinations by adding a cross-reference to Sec.  
435.912(c)(2).
    Response: We appreciate the commenters' support and are finalizing 
the regulation as proposed, except as noted below. We also agree with 
the importance of the timeliness requirements for eligibility 
determinations at Sec.  435.912, as added by the March 23, 2012 
Medicaid eligibility final rule. The timeliness requirements in Sec.  
435.912 apply both to determinations of eligibility based on MAGI, as 
well as to determinations of eligibility for individuals excepted from 
application of MAGI-based methods. Therefore, we are making a technical 
revision to include a cross-reference to Sec.  435.912 at Sec.  
435.911(c)(2), as suggested. We note that the single streamlined 
application generally does not provide sufficient information for 
states to make a determination of eligibility on a non-MAGI basis. For 
an applicant to be approved on a non-MAGI basis, the state will need to 
request, and applicants will need to provide, additional information in 
accordance with Sec.  435.911(c)(2). We will take into consideration 
the commenters' suggestion that we issue interpretive guidance on the 
timeliness requirements at Sec.  435.912.
    Comment: A commenter requested clarification of the relationship 
between Sec.  435.110(c) and Sec.  435.911(b)(2). The commenter 
interpreted Sec.  435.911(b) as setting a minimum applicable MAGI 
income standard floor of 133 percent FPL, whereas Sec.  435.110(c) 
establishes both a minimum and maximum permissible income standard for 
the mandatory parent and caretaker relative eligibility group, which 
may be lower than 133 percent FPL.
    Response: In addition to establishing a minimum and maximum 
permissible income standard for mandatory coverage of parents and 
caretaker relatives Sec.  435.110(c) requires that each state adopt in 
its state plan an income standard between the minimum and maximum 
levels permitted, and this standard may be--indeed, in most states is--
less than 133 percent FPL. As a general rule, the minimum applicable 
MAGI income standard under Sec.  435.911(b) is 133 percent FPL. This 
will be the case for parents and caretaker relatives who are under age 
65 and not eligible for Medicare, who may be eligible under the 
mandatory group for parents and caretaker relatives at Sec.  435.110, 
the adult group at Sec.  435.119 or the optional group for parents and 
caretaker relatives at Sec.  435.220, but for whom the minimum 
applicable MAGI standard will be the 133 percent FPL standard for 
coverage under the adult

[[Page 86409]]

group. For parents and caretaker relatives who are 65 years of age or 
older or who are eligible for Medicare, the applicable MAGI standard 
will be the income standard established by the state per Sec.  
435.110(c) or Sec.  435.220(c), if the state has adopted the optional 
group under Sec.  435.220. The proposed addition to the introductory 
text in Sec.  435.911(b)(1) (which reads, ``Except as provided in 
paragraph (b)(2) of this section'') allows for an exception to the 
general rule that the minimum applicable MAGI standard is 133 percent 
FPL. This exception is set forth in proposed paragraph (b)(2), which 
establishes the applicable MAGI standard for adults who are not 
eligible for coverage under the adult group because they either are 
eligible for Medicare or they are age 65 or older. For such adults who 
are parents or caretaker relatives, the applicable MAGI standard per 
paragraph (b)(2)(ii) is the income standard established by the state 
under Sec.  435.110(c) or, if higher, the standard established by the 
state under Sec.  435.220(c).
    Comment: A commenter suggested that the word ``and'' following the 
phrase ``individuals who are at least 65 and 19'' in proposed Sec.  
435.911(b)(2) should be changed to ``or.''
    Response: We disagree with the suggestion. The purpose of proposed 
Sec.  435.911(b)(2) is to define an applicable MAGI standard for 
individuals excluded from application of the MAGI screen in Sec.  
435.911 because they are ineligible for coverage under the adult group 
based either on being at least age 65 or eligible for Medicare. 
Individuals who are under age 19 are eligible for coverage under the 
MAGI-based eligibility group for children, described in Sec.  435.118, 
regardless of whether or not they are eligible for Medicare, and should 
not be impacted by the addition of paragraph (b)(2) to Sec.  435.911. 
The commenter's suggestion, if adopted, would result in the applicable 
MAGI standard for such children being established in paragraph (b)(2) 
instead of paragraph (b)(1)(iii), as is the case under the current 
regulations.
    Comment: The same commenter also suggested that the word ``and'' at 
the end of proposed paragraph (b)(2)(i) should be changed to ``or.''
    Response: We agree with this comment and are replacing ``and'' with 
``or'' at the end of paragraph (b)(2)(i) in the final regulation.
    Comment: A commenter requested that CMS address disabled children 
in Sec.  435.911. The commenter stated that disabled children should 
first be placed in the MAGI-based eligibility group for children at 
Sec.  435.118, similar to disabled parents and caretaker relatives who 
may be eligible based on MAGI under Sec.  435.110.
    Response: We believe that children with disabilities were correctly 
addressed in the March 23, 2012 Medicaid eligibility final rule and did 
not make any proposed revisions to the treatment of disabled children 
in Sec.  435.911 in the proposed rule. Children, whether disabled or 
not, may be eligible under Sec.  435.118. A child applying for coverage 
using the single streamlined application must be evaluated for 
eligibility using the applicable MAGI standard for children, which is 
based on the income standard adopted for children of the relevant age 
group under Sec.  435.118(c) (unless the state has adopted the optional 
eligibility group at Sec.  435.218 to a higher income standard and has 
phased in coverage of children under that group) and, under Sec.  
435.911(c)(1), must be promptly enrolled in Medicaid if eligible on 
that basis. Under Sec.  435.911(c)(2), if the child may be eligible on 
the basis of disability and enrollment on such basis would be better 
for the child or the family requests such determination, the state must 
proceed with evaluating the child's eligibility on that basis. We note 
that, if a disabled child is eligible for mandatory coverage as an SSI 
recipient under section 1902(a)(10)(A)(i)(II) of the Act and Sec.  
435.120 or meets the more restrictive criteria applied for mandatory 
coverage as a disabled individual in a 209(b) state in accordance with 
section 1902(f) of the Act and Sec.  435.121, then the child should be 
enrolled in the mandatory group for disabled individuals in the state. 
However, it would be unusual for a child already receiving SSI to apply 
for coverage using the single streamlined application, and we would not 
expect that disabled children who do not receive SSI but are determined 
eligible and enrolled for coverage on the basis of the applicable MAGI 
standard per Sec.  435.911(c)(1) would have any reason to complete a 
determination based on disability.
    Comment: A commenter requested that we clarify that, in accordance 
with the definition of ``applicable MAGI standard'' in Sec.  
435.911(b), some aged and disabled adults will be subject to the MAGI 
screening process required under Sec.  435.911.
    Response: We agree that some aged and disabled adults will be 
determined eligible on the basis of MAGI and the applicable MAGI 
standard in accordance with the MAGI screen established at Sec.  
435.911, as revised in this rulemaking. Under Sec.  435.911, disabled 
adults who are not eligible for Medicare and who submit the single 
streamlined application may be determined eligible and enrolled in 
Medicaid on the basis of MAGI using the applicable MAGI standard, which 
will be the 133 percent FPL standard for the new adult group or the 
higher standard applied under the optional group described in Sec.  
435.218, if adopted by the state and if adults have been phased into 
coverage under that group. In accordance with Sec.  435.911(c)(2), for 
those adult applicants who are identified, based on information in the 
single streamlined application, as potentially eligible based on 
disability or who otherwise request such determination, the state must 
make the disability-based determination, provided that the applicant 
provides all information necessary and completes the disability 
determination process. Because of the longer period of time typically 
required to make a determination based on disability, disabled adults 
often may be enrolled temporarily in coverage based on MAGI (for 
example, under the adult group) pending a final determination based on 
disability. In other cases, such adults may choose not to complete the 
disability determination or may not be eligible on that basis, in which 
case they will remain enrolled in coverage based on MAGI. Under the 
proposed revisions to Sec.  435.911, finalized in this final rule, 
elderly parents and caretaker relatives, as well as disabled parents 
and caretaker relatives who are eligible for Medicaid similarly may be 
determined eligible and enrolled in Medicaid on the basis of MAGI using 
the applicable MAGI standard, which will be the standard applied in the 
state for mandatory coverage of parents and caretaker relatives under 
Sec.  435.110 or, if adopted by the state, the higher income standard 
applied to optional coverage of parents and caretaker relatives under 
Sec.  435.220. As with disabled adults not eligible for Medicare, such 
parents and caretakers may also then be determined eligible on the 
basis of disability in accordance with Sec.  435.911(c)(2).

D. Medicaid Enrollment Changes Under the Affordable Care Act Needed To 
Achieve Coordination With the Exchange: Accessibility for Individuals 
Who Are Limited English Proficient (Sec. Sec.  435.901 and 435.905)

    We proposed to revise regulations relating to the provision of 
information to persons who are limited English proficient to ensure 
access to coverage for eligible individuals and to achieve alignment 
with existing Exchange regulations at Sec.  155.205(c). We proposed to 
specify at Sec.  435.905(b)(1) that

[[Page 86410]]

providing language services for individuals who are limited English 
proficient means providing oral interpretation, written translations, 
and taglines, which are brief statements in a non-English language that 
inform individuals how to obtain information in their language. We also 
proposed to apply the accessibility requirements in Sec.  435.905(b) to 
the provision of a hearing system and hearing procedures under 
Sec. Sec.  431.205 and 431.206, to the notices required under proposed 
Sec.  435.917, and to the notice of a reasonable opportunity period 
required under proposed Sec.  435.956(b)(1) by adding a cross-reference 
to Sec.  435.905(b) at proposed Sec. Sec.  431.205(e), 431.206(e), 
435.917(a)(2), and 435.956(b)(1). We received the following comments 
concerning our proposed provisions.
    Comment: Several commenters supported our proposal to specify 
certain types of language services that must be provided to individuals 
who are limited English proficient. Some commenters recommended 
additional requirements related to providing language services, 
including requiring that states hire bilingual staff and provide 
taglines in 15 languages. Several commenters suggested that we add a 
requirement that, for any individual who the agency knows or should 
reasonably know is limited English proficient, the agency must provide 
information in that individual's language. A number of commenters also 
recommended that we include specific types of services which must be 
provided to make information accessible to individuals with visual 
impairments or other disabilities.
    Other commenters sought more detailed explanation of what steps 
states must take to satisfy the general accessibility requirements set 
forth in the regulation. One commenter requested that we clarify that 
states are not required to provide written translations of applicable 
forms in more languages than is their current practice. Some commenters 
recommended that we provide additional guidance on how to implement 
this requirement in the future. One commenter suggested that we refer 
states to guidance issued by the HHS Office of Civil Rights for federal 
financial aid recipients.
    We received similar comments on other sections of the proposed rule 
regarding accessibility for individuals with disabilities and 
individuals who are limited English proficient in Sec. Sec.  431.206, 
435, 917, 435.918, and 435.956.
    Response: We appreciate the support for the proposed revisions to 
Sec.  435.905(b)(1), which are finalized as proposed, except that the 
requirement to provide taglines proposed in paragraph (b)(1) has been 
moved to paragraph (b)(3). Individuals who are limited English 
proficient must be provided information accessibly through language 
services, which means providing oral interpretation and written 
translations. The purpose of the proposed rule was to specify the 
approaches used to provide language services, through oral 
interpretation and written taglines, and to require that states must 
inform individuals that such accessible information is available. Our 
modification to Sec.  435.905(b) is consistent with requirements in the 
Medicaid managed care regulations at Sec.  438.10(c) and the Exchange 
regulation relating to accessibility standards at Sec.  155.205(c). We 
will consider more detailed accessibility requirements in future 
rulemaking. States should consult the guidance issued on August 8, 
2003, by the HHS Office for Civil Rights for recipients of federal 
financial assistance, which include Medicaid and CHIP agencies, related 
to provision of services to limited English proficient persons, 
available at http://www.gpo.gov/fdsys/pkg/FR-2003-08-08/pdf/03-20179.pdf, and regulations implementing section 1557 of the Affordable 
Care Act at 45 CFR 92.201, 92.8(a)(3) and 92.8(d) though (h), regarding 
meaningful access for individuals with limited English proficiency, 
language assistance and the use of taglines. The latter regulations 
were issued by the HHS Office for Civil Rights on May 18, 2016 (81 FR 
31375).
    Comment: Several commenters supported the inclusion of proposed 
Sec.  435.905(b)(3), which requires individuals be informed of the 
accessibility services available, in accordance with Sec.  
435.905(b)(1) and (2), to individuals with disabilities and individuals 
who are limited English proficient. We received one technical comment 
recommending that our proposed language at Sec.  435.905(b)(3), should 
be redesignated at paragraph (c) of this section.
    Response: We appreciate the support for Sec.  435.905(b)(3), which 
we are finalizing as proposed, except to move the requirement relating 
to taglines from proposed Sec.  435.905(b)(1) to paragraph (b)(3), as 
discussed above, because taglines are a method to inform individuals of 
the availability of, and how to access, language services through a 
brief statement in a non-English language.
    Comment: Commenters supported the application of the accessibility 
requirements described in Sec.  435.905(b) to the accessibility and 
availability of the hearing system, processes, and notices described in 
Sec. Sec.  431.205, 431.206, Sec.  435.917 and 435.956(b)(1).
    Response: We appreciate the commenters' support and are finalizing 
inclusion of a cross-reference to Sec.  435.905(b) at Sec. Sec.  
431.205(e), 431.206(e), 435.917(a), and 435.956(g) (redesignated at 
Sec.  435.956(b)), as proposed. We note that the accessibility 
requirements in Sec.  435.905(b), as revised in this rulemaking, also 
apply to the availability of applications and supplemental forms, 
renewal forms and notices per the cross cite in current Sec. Sec.  
435.907(g) and 435.916(g), as well as to the Web site and any 
interactive kiosks and other information systems established by the 
state to support Medicaid information and enrollment activities per the 
cross-reference to Sec.  435.905(b) at Sec.  435.1200(f)(2).
    Comment: Several commenters recommended inserting a reference to 
section 1557 of the Affordable Care Act, in addition to the citations 
to the Civil Rights Act and the Rehabilitation Act in the regulation, 
as other federal statutes with which states must comply in 
administering their programs.
    Response: We agree that reference to these federal statutes is 
appropriate and are revising Sec.  435.901 to add reference to the 
Americans with Disabilities Act of 1990, the Age Discrimination Act of 
1975, and section 1557 of the Affordable Care Act and their respective 
implementing regulations.
    Comment: Several commenters also suggested renaming Sec.  435.905 
as ``Accessibility for Individuals who are Limited English Proficient 
and Individuals with Disabilities,'' noting that the scope of Sec.  
435.905 is broader than accessibility of program information to 
individuals who are limited English proficient.
    Response: Section 435.905 prescribes what information generally 
must be provided to applicants and beneficiaries in writing 
(electronically and in paper), and orally as appropriate, as well as 
the accessibility of that information. Thus, we agree with the 
commenters to a limited degree and have revised the title to Sec.  
435.905 to read, ``Availability and accessibility of program 
information.'' We do not believe it is appropriate to include reference 
to individuals with limited English proficiency or to disabled 
individuals in the title, as this would suggest a narrower scope of the 
provision than it actually has.

[[Page 86411]]

E. Medicaid Eligibility Requirements and Coverage Options Established 
by Other Federal Statutes

1. Coverage of Children and Families
a. Mandatory Coverage of Children With Adoption Assistance, Foster 
Care, or Guardianship Care Under Title IV-E (Sec.  435.145)
    We proposed to amend Sec.  435.145 of the current regulations to 
reflect that children for whom kinship guardianship assistance payments 
are made under title IV-E of the Act are entitled to automatic Medicaid 
eligibility to the same extent as children for whom an adoption 
assistance agreement under title IV-E is in effect or for whom foster 
care maintenance payments under title IV-E are made, in accordance with 
the statutory requirement under section 473(b)(3)(C) of the Act. Per 
Sec.  435.403(g), such children are eligible for Medicaid in the state 
where the child resides without regard to whether the child would be 
eligible for kinship guardianship assistance under title IV-E in that 
state. For example, if State A provides kinship guardianship payments 
under title IV-E for a child now living with a relative in State B, 
State B must automatically enroll the child in its Medicaid program 
regardless of whether State B has elected to provide title IV-E kinship 
guardianship assistance payments or it ends such assistance at an 
earlier age than State A. We also proposed revisions of the description 
of eligibility for Medicaid based on receipt of adoption assistance 
under title IV-E, included in current Sec.  435.145 and redesignated at 
Sec.  435.145(b)(1) of the proposed rule, for consistency with the 
statutory language at section 473(b)(3) of the Act. Proposed new Sec.  
435.145(a) provides the basis for eligibility under this section. No 
comments were received on the proposed revisions to Sec.  435.145, 
which are finalized without modification.
b. Families With Medicaid Eligibility Extended Because of Increased 
Collection of Spousal Support (Sec.  435.115)
    Sections 408(a)(11)(B) and 1931(c)(1) of the Act, implemented at 
Sec.  435.115, require a 4-month Medicaid extension for low-income 
families eligible under section 1931 of the Act who otherwise would 
lose coverage due to increased income from collection of child or 
spousal support under title IV-D of the Act. We proposed to revise 
Sec.  435.115 to eliminate increased income from collection of child 
support as a reason for a 4-month Medicaid extension because child 
support is not counted as income under MAGI-based methodologies; to 
remove obsolete, duplicative, and unnecessary paragraphs; to replace 
references to eligibility under AFDC with references to coverage under 
the regulations implementing section 1931 of the Act; and generally to 
streamline and simplify the regulatory language.
    Comment: One commenter believed that, because states cannot 
terminate pregnant women from Medicaid due to a change in income under 
section 1902(e)(6) of the Act, implemented at proposed Sec.  435.170, 
the 4-month extension under Sec.  435.115 should not apply to pregnant 
women.
    Response: We agree with the commenter that, under Sec.  435.170 and 
sections 1902(e)(5) and (6) of the Act, pregnant women are covered at 
least for pregnancy-related services through the end of the month in 
which their post-partum period ends, regardless of changes in income 
(including increased spousal support). We are revising Sec.  435.115 to 
remove proposed paragraph (b)(2)(i), accordingly.
    Comment: A commenter disagreed with the proposed revision to limit 
the extension required under Sec.  435.115 to individuals losing 
coverage due to increased spousal support.
    Response: We do not agree with the comment. Because child support 
is not counted in the MAGI-based income used in determining eligibility 
for coverage under section 1931 of the Act, an increase in child 
support cannot result in loss of eligibility under section 1931 of the 
Act, and therefore, can never trigger the 4-month extension available 
under Sec.  435.115.
    Comment: A commenter requested guidance on how transitional 
assistance would work in the case of an adult moving from the section 
1931-related group to the adult group under section 
1902(a)(10)(A)(i)(VIII) of the Act, implemented at Sec.  435.119, 
because of an increase in earnings. Specifically, the commenter 
questioned whether such an individual would be eligible for TMA under 
section 1925 of the Act, or if the individual would only be eligible if 
his or her MAGI exceeded the income standard of 133 percent of the FPL 
for the adult group.
    Response: Transitional Medical Assistance under section 1925 of the 
Act or the 4-month Medicaid extension provided under Sec.  435.115 is 
required only if the individual would otherwise lose Medicaid. For 
example, if a parent who loses coverage under Sec.  435.110 due to an 
increase in income becomes eligible for coverage under the adult group, 
TMA would not be required, unless the individual subsequently lost 
eligibility under the adult group prior to the end of the 12-month TMA 
period, measured from the point at which the parent lost eligibility 
under Sec.  435.110.
c. Extended and Continuous Eligibility for Pregnant Women (Sec.  
435.170) and Hospitalized Children (Sec.  435.172)
(1) Pregnant Women Eligible for Extended or Continuous Eligibility 
(Sec.  435.170)
    Current Sec.  435.170 implements section 1902(e)(5) of the Act, 
relating to extended eligibility for pregnant women postpartum. We 
proposed revisions to Sec.  435.170 to include implementation of 
section 1902(e)(6) of the Act, relating to continuous coverage of 
pregnant women for pregnancy-related services until the end of the 
month that the post-partum period ends, regardless of changes in 
income. We also proposed new paragraph Sec.  435.170(d) to clarify that 
neither extended nor continuous eligibility applies to pregnant women 
covered only during a period of presumptive eligibility.
    Comment: Several commenters noted that this extended coverage under 
Sec.  435.170 is limited to ``pregnancy-related'' services, which are 
defined in Sec.  435.116(d)(3), and which means that states could 
provide benefits less comprehensive than the benefits provided under 
other categorically needy groups. The commenter recommended that CMS do 
as much as it can to ensure that pregnant women receive benefits that 
are at least equal to the services they would be entitled to receive if 
they were not pregnant. Another commenter recommended that the 
authority used by CMS under Sec.  435.116 to consolidate the 
eligibility groups for pregnant women into one group should also be 
applied to require that a full set of benefits be available in the 
prenatal and post-partum periods.
    Response: Section 1902(e)(5) of the Act expressly provides that 
women eligible under that section are covered for pregnancy-related and 
postpartum services and section 1902(e)(6) of the Act provides that 
women eligible under that section are treated as a pregnant women 
eligible under section 1902(a)(10)(A)(10)(i)(IV) or 
1902(a)(10)(A)(ii)(IX) of the Act; per clause (VII) in the matter 
following section 1902(a)(10)(G) of the Act, coverage for such pregnant 
women is limited to pregnancy-related and postpartum services. 
Therefore, we cannot require states to provide full coverage for 
pregnant women described in sections 1902(a)(10)(A)(i)(IV) or 
1902(a)(10)(A)(ii)(IX) of the Act or

[[Page 86412]]

eligible under sections 1902(e)(5) or (e)(6) of the Act. However, 
because the health of a pregnant woman and the fetus are inextricably 
intertwined, we have made it clear that we expect pregnancy-related 
services to constitute a robust benefit package (see the discussion in 
the preamble to March 23, 2012 Medicaid eligibility rule at 77 FR 
17144, 17149). We have also made clear at Sec.  435.116(d)(1) that 
states can provide all state plan benefits as ``pregnancy-related,'' 
and most states have elected to do so. States that seek approval of 
limited benefit packages for pregnant women must explain how the 
services excluded from the benefit are not ``pregnancy-related.''
    Comment: One commenter expressed strong support for the provisions 
in Sec.  435.170. Another commented that the cross-reference to Sec.  
435.116(d)(3) in proposed Sec.  435.170(b) and (c) does not align with 
the flexibility states have to provide full Medicaid benefits to all 
pregnant women.
    Response: We agree with the commenter and are revising Sec.  
435.170 to clarify that if a state elects to provide full coverage for 
all pregnant women eligible under Sec.  435.116, the state would also 
provide full coverage during an extended or continuous eligibility 
period for pregnant women under Sec.  435.170. If a state elects to 
provide pregnancy-related services to pregnant women whose income 
exceeds the applicable income limit adopted by the state per Sec.  
435.116(d)(4) for full coverage, it would provide the same pregnancy-
related services to women covered during an extended or continuous 
eligibility period for pregnant women under Sec.  435.170. Paragraph 
(a) (basis) is finalized as proposed. Proposed paragraph (d)(1) 
(applicability to pregnant women covered during a presumptive 
eligibility period) is redesignated at Sec.  435.170(e) of the final 
rule.
(2) Continuous Eligibility for Hospitalized Children (Sec.  435.172)
    We proposed a new regulation of Sec.  435.172 implementing section 
1902(e)(7) of the Act, which requires states to continue eligibility 
for children who are eligible under Sec.  435.118 when admitted to a 
hospital through the end of the inpatient stay if they would otherwise 
lose eligibility due to age.
    Comment: One commenter expressed strong support for the provisions 
in Sec.  435.172. Another commented that the cited authority of section 
1902(e)(7) of the Act does not authorize continued coverage for 
children who otherwise would lose eligibility due to household income, 
because the cited authority requires that the individual would remain 
eligible ``but for attaining such age.'' The commenter also requested 
clarification regarding duration limits and commented that, as written, 
the regulation would provide that an individual could remain eligible 
as a hospitalized child for 20 years regardless of age and income.
    Response: We agree with the commenter and are removing reference to 
``household income'' from Sec.  435.172 of the final rule, which 
otherwise is finalized as proposed. Under the statute, the duration of 
this extended eligibility period lasts until the end of the inpatient 
stay during which the child would have lost Medicaid eligibility under 
Sec.  435.118 solely due to age. We do not have flexibility to limit 
the extension of eligibility provided under the statute to a shorter 
period, though we note that a single inpatient stay for a period as 
long as that suggested by the commenter seems highly unlikely.
d. Optional Eligibility Groups and Coverage Options
(1) Optional Medicaid Eligibility Groups and Coverage Options 
(Sec. Sec.  435.213, 435.215, Sec.  435.220, 435.222, 435.226, 435.227, 
435.229, and 435.926)
    We proposed to codify new regulations or revise existing 
regulations for optional Medicaid eligibility to implement statutory 
requirements, including the use of MAGI effective in 2014 for 
individuals not excepted from MAGI. We proposed a new regulation Sec.  
435.213 for individuals needing treatment for breast or cervical cancer 
(implementing section 1902(a)(10)(A)(ii)(XVIII) of the Act) and 
clarified that men may be covered under this group if they meet the 
eligibility requirements. We proposed new Sec.  435.215 for individuals 
infected with tuberculosis who are not eligible for enrollment under a 
group which covers full Medicaid benefits (including an alternative 
benefit or benchmark benefits plan); Sec.  435.226 for independent 
foster care adolescents; and Sec.  435.926 for states' option to 
provide continuous eligibility for children. We proposed revisions to 
Sec.  435.220 to replace an obsolete optional group with provisions for 
an optional eligibility group for parents and other caretaker 
relatives. We proposed revisions to the following regulations to 
implement the shift from an AFDC-based net income standard to an 
equivalent MAGI-based income standard, to revise the language for 
clarity, and to remove any obsolete language: Sec.  435.222 (optional 
eligibility for individuals under age 21 or for reasonable 
classifications thereof); Sec.  435.227 (state adoption assistance 
children); and Sec.  435.229 (optional targeted low-income children). 
We also proposed to remove inclusion of pregnant women, ``specified 
relatives'' (that is, parents and other caretaker relatives), and 
individuals under age 21 from the list of categorical populations for 
whom states may opt to provide coverage under Sec.  435.210, since 
optional coverage of these individuals is provided at current Sec.  
435.116 (pregnant women) and Sec.  435.220 and Sec.  435.222, as 
revised in this rulemaking. This proposed revision results in Sec.  
435.210 applying only to optional SSI-related eligibility groups for 
aged, blind and disabled individuals. We received the following 
comments on these provisions, which, except as noted below, we are 
finalizing as proposed without substantive modification. We also make 
several non-substantive revisions for clarity.
    Comment: A commenter believes that the addition of Sec.  435.226 
for independent foster care adolescents appears unnecessary because 
such persons will be covered in the new mandatory group for former 
foster care children under Sec.  435.150.
    Response: While there is significant overlap, there are also 
differences between these eligibility groups, which we explained in the 
proposed rule. While the definition of the optional group described at 
Sec.  435.226 requires that an individual be in foster care upon 
attaining age 18, the mandatory group requires that an individual be in 
both foster care and Medicaid upon attaining either age 18 or any 
higher age adopted by the state for federal foster care assistance 
under title IV-E of the Act. For the optional group, the individual may 
have been in foster care in any state, while the mandatory group 
requires that the individual was in foster care and Medicaid in ``the'' 
state where the individual now resides. The optional group covers 
individuals up to age 19, 20, or 21, as specified by the state; the 
mandatory group covers individuals up to age 26.
    Comment: A commenter noted that proposed Sec.  435.226 imposes an 
income limit on the optional group for independent foster care 
adolescents, but the governing statutory language provides states with 
flexibility not to require an income test.
    Response: Upon review of the statutory requirements for this group 
at section 1905(w)(1)(C) of the Act, we agree with the commenter. 
Therefore, we are revising Sec.  435.226 to provide that a state may 
elect to have no income standard for this group. If the state

[[Page 86413]]

elects to establish an income standard, it may be no lower than the 
state's income standard under Sec.  435.110 for the mandatory group of 
parents and other caretaker relatives under section 1931 of the Act.
    Although we did not receive comments on proposed Sec.  435.227, we 
realize that the reference in paragraph (c) to the payment standard in 
every state under the former AFDC program will never be higher than the 
highest income standard which would have been applied to children under 
the state plan as of March 23, 2010 or December 31, 2013. This is 
because since 1990 the lowest income standard permitted for any age 
group of children under section 1902(l)(2) of the Act was 100 percent 
FPL. Therefore, we have removed reference to the AFDC payment standard 
in Sec.  435.227(c) of the final rule. We also have streamlined the 
regulation text in paragraph (c) for increased readability.
    Comment: Several commenters supported applying MAGI-based 
methodologies to the eligibility group for individuals infected with 
tuberculosis at proposed Sec.  435.215, provided that states convert 
their current net income standard to a MAGI-equivalent standard. The 
commenters requested CMS to apply continuous eligibility for 
tuberculosis patients throughout the course of their treatment, since 
losing coverage substantially increases the chance of abandoned or 
interrupted treatment. A few commenters requested clarification on 
whether a state may continue to apply a resource test for this group, 
as has historically been required, unless a state chose to disregard 
all assets under section 1902(r)(2) of the Act.
    Response: Because individuals infected with tuberculosis are not 
included in the list of exceptions from MAGI specified under section 
1902(e)(14)(D) of the Act, implemented at Sec.  435.603(j), effective 
January 1, 2014, determinations of financial eligibility under this 
optional group are subject to MAGI-based methodologies set forth at 
Sec.  435.603, including the elimination of any resource test, as 
specified at Sec.  435.603(g)(1). Each state's previous net income 
limits for this and other MAGI-related eligibility groups have been 
converted to a MAGI-equivalent standard. Because maintenance of effort 
ended in 2014 for eligibility groups for which being a child is not a 
condition of eligibility, states may elect to lower their income 
standard for coverage under Sec.  435.215 of the final rule. The 
statute does not authorize continuous eligibility for this group under 
the state plan. We are willing to work with states interested in 
pursuing demonstration authority under section 1115 of the Act to 
support continuous eligibility for this group.
    The statute and proposed regulation provide that individuals 
eligible for coverage under a mandatory eligibility group are not 
eligible under this optional group for individuals infected with 
tuberculosis. We are making a technical revision at Sec.  435.215 in 
the final rule to specify that an individual is only eligible for this 
group (which only covers treatment for tuberculosis) if the individual 
is not eligible for full coverage under the state plan, defined as all 
services which the state is required to cover under Sec.  440.210(a)(1) 
and all services which it has opted to cover under Sec.  440.225, or an 
approved alternative benefits plan under Sec.  440.325, whether such 
full coverage is available through enrollment in a mandatory or 
optional categorical eligibility group under the state's Medicaid plan. 
Full coverage necessarily will include the services available to 
individuals enrolled under Sec.  435.215. Therefore, consistent with 
section 1902(a)(19) of the Act, it will be in beneficiaries' best 
interests to be enrolled in this limited-scope benefits group only if 
they are not eligible for full coverage.
    We received no comments on proposed Sec.  435.229. However, we are 
making technical revisions at Sec.  435.229 in the final rule for 
consistency with the statute; specifically, the option to cover, under 
section 1902(a)(10)(A)(ii)(XIV) of the Act, ``optional targeted low-
income children,'' as defined in section 1905(u)(2)(B) of the Act. The 
definition in section 1905(u)(2)(B) of the Act cross-references the 
definition of a ``targeted low-income child'' for purposes of a 
separate CHIP in section 2110(b)(1) of the Act. Per section 
2110(b)(1)(B) of the Act, the definition of a ``targeted low-income 
child,'' in turn, incorporates the applicable maximum income standard 
permitted under a state's separate CHIP. Thus, the maximum income 
standard a state may adopt for the optional group of optional targeted 
low-income children under sections 1902(a)(10)(A)(ii)(XIV) and 
1905(u)(2)(B) of the Act is not the net income standard for this 
optional group under the Medicaid state plan or waiver prior to January 
1, 2014, converted to an equivalent MAGI-based standard; rather, if 
higher, it is the maximum income standard, converted for MAGI, now 
permitted for eligibility under a separate child health plan in the 
state. Therefore, we are revising paragraph (c)(3) of Sec.  435.229 in 
the final rule to reference the highest effective income level under a 
CHIP state plan or 1115 demonstration, in addition to Medicaid, 
converted to a MAGI-equivalent standard. This revision is key to 
preserve the option for states to transition children from coverage 
under a separate CHIP program to coverage under a Medicaid expansion 
program up to an income level higher than coverage of children under 
the mandatory children's group at Sec.  435.118.
    We also are making technical revisions at Sec.  435.213 in the 
final rule for optional eligibility for individuals needing treatment 
for breast or cervical cancer. Proposed Sec.  435.213(c) provided that 
an individual is considered to need treatment for breast or cervical 
cancer if the Centers for Disease Control and Prevention (CDC) screen 
determines that the individual needs treatment for breast or cervical 
cancer. Because need for such treatment is a condition for eligibility 
under this group, we clarify in Sec.  435.213(c) of the final rule that 
an individual is considered to need treatment for breast or cervical 
cancer if the initial screen by the CDC's breast and cervical cancer 
early detection program determines that the individual needs treatment 
for breast or cervical cancer. For eligibility subsequent to the 
initial eligibility period, the individual's treating health 
professional would determine that the individual needs treatment for 
breast or cervical cancer.
(2) Continuous Eligibility Under CHIP (Sec.  457.342)
    We proposed to adopt a new regulation at Sec.  457.342 to codify 
states' option to elect continuous eligibility for children under their 
separate CHIP. Consistent with existing policy, we proposed the same 
policies at Sec.  457.342 as those at proposed Sec.  435.926, except 
that states also may elect to terminate CHIP during a continuous 
eligibility period due to non-payment of a premium or enrollment fee 
required under the CHIP state plan. In addition, in this final rule, we 
are clarifying in proposed paragraph (a) that continuous eligibility 
under CHIP is subject to a child remaining ineligible for Medicaid, as 
required by section 2110(b)(1) of the Act and Sec.  457.310, relating 
to the definition and standards for being a targeted low-income child, 
and the requirements of section 2102(b)(3) of the Act and Sec.  
457.350, relating to eligibility screening and enrollment. Thus, if a 
state has elected the option of continuous eligibility in CHIP, but 
during the continuous eligibility period receives information regarding 
a change in household size or income that would potentially result in 
eligibility of the

[[Page 86414]]

child for Medicaid, the state would redetermine eligibility using this 
information and enroll the child in Medicaid, if found to be eligible.
    Comment: Several commenters expressed strong support for proposed 
Sec.  457.342. The commenters also recommended that for children 
disenrolled due to non-payment of a premium, a new continuous 
eligibility period begins when the child is reenrolled in CHIP 
following payment of the unpaid premiums or at the end of a lock-out 
period.
    Response: If a child is subject to requirements for payment of 
premiums or an enrollment fee at Sec.  457.510, the state may terminate 
the child from CHIP for failure to pay the required amounts at the end 
of a premium grace period (of at least 30 days), as permitted under 
section 2103(e)(3)(C) of the Act. States may also impose a premium 
lock-out period (which may not exceed 90 days per Sec. Sec.  457.10 and 
457.570) on individuals terminated for failure to pay premiums or 
enrollment fees. If the state requires a new application following 
disenrollment due to unpaid premiums or enrollment fees after payment 
is made or at the end of a premium lock-out period, and the individual 
is determined to be eligible for CHIP based on that application, a new 
continuous eligibility period would begin. However, if the state does 
not require a new application in these circumstances, then the previous 
continuous eligibility period would resume, extending through the same 
date as would have been the case had the individual not been terminated 
and then reenrolled.
    We are clarifying at proposed paragraph (b) that the continuous 
eligibility period may be terminated for failure to pay premiums or 
enrollment fees, subject to a premium grace period of at least 30 days 
and the disenrollment protections at section 2103(e)(3)(C) of the Act 
and Sec.  457.570.
2. Presumptive Eligibility
a. Proposed Amendments to Medicaid Regulations for Presumptive 
Eligibility
    We proposed to revise Medicaid regulations in part 435 subpart L 
related to basis, definitions, and the option for states to cover 
services for children during a presumptive eligibility period at 
Sec. Sec.  435.1100 through 435.1102; to add a new Sec.  435.1103, 
implementing the state option to provide presumptive eligibility for 
pregnant women and individuals needing treatment for breast or cervical 
cancer, as well as six new options for Medicaid presumptive eligibility 
provided by the Affordable Care Act; to add a new Sec.  435.1110, 
implementing section 1902(a)(47)(B) of the Act, added by the Affordable 
Care Act, which gives hospitals the option to make presumptive 
eligibility determinations for Medicaid; and to revise Sec. Sec.  
435.1001 and 435.1002 in subpart K, regarding the availability of 
federal financial participation (FFP) related to presumptive 
eligibility. In the July 2013 Eligibility final rule, we finalized the 
proposed revisions to Sec.  435.1102, as well as the addition of new 
Sec.  435.1103 and Sec.  435.1110. In this final rule, we finalize the 
proposed revisions at Sec. Sec.  435.1001, 435.1002, 435.1100, and 
435.1101.
(1) FFP for Administration and for Services (Sec. Sec.  435.1001 and 
435.1002)
    We proposed to amend Sec. Sec.  435.1001 and 435.1002 to clarify 
that, consistent with current policy and federal statutory authority, 
FFP is available for the necessary administrative costs a state incurs 
in administering all types of presumptive eligibility and for services 
covered for individuals determined presumptively eligible for any type 
of presumptive eligibility, not just for such costs associated with 
presumptive eligibility for children.
    Comment: A commenter requested that for individuals determined 
presumptively eligible, a state receive 100 percent federal funding for 
services provided unless and until the individual completes the 
eligibility determination process for Medicaid. The commenter stated 
that this is particularly important for states expanding Medicaid to 
the new adult group under Sec.  435.119, as it will be difficult to 
determine whether the presumptively eligible individual should be 
claimed at 100 percent federal funding for those ``newly eligible'' or 
the state's regular Medicaid match rate.
    Response: There is no federal statutory authority to reimburse 
states at a higher match rate than the state's regular Medicaid match 
under title XIX of the Act for services covered for individuals 
determined to be presumptively eligible, including those determined 
presumptively eligible for the adult group at Sec.  435.119. However, 
if the individual submits a regular application and is subsequently 
determined to be Medicaid eligible, the state may claim the regular or 
enhanced match, as appropriate, for services provided beginning on the 
effective date of eligibility based on the regular application, 
including during any period of retroactive eligibility. For example, if 
an adult under age 65 is determined presumptively eligible under the 
adult group, the state would claim services provided during the 
presumptive eligibility period at the state's regular match. If, based 
on a regular application, the individual subsequently is determined to 
be retroactively eligible during the presumptive eligibility period and 
is determined to meet the definition of a ``newly eligible'' individual 
for purposes of claiming enhanced FFP under part 433, subpart E, the 
state may adjust its claims to reflect the newly eligible enhanced 
match for services provided during the overlapping retroactive and 
presumptive eligibility periods. Similarly, if the individual is 
determined retroactively eligible as a Medicaid expansion child meeting 
the definition of optional targeted low-income child at Sec.  435.4, 
the state may claim the title XXI enhanced match for services provided 
during the period of retroactive eligibility. No comments were received 
on proposed Sec.  435.1101. We are finalizing both Sec. Sec.  435.1001 
and 435.1002 as proposed.
(2) Basis for Presumptive Eligibility (Sec.  435.1100)
    We proposed to revise Sec.  435.1100 to include the statutory basis 
for provision of presumptive eligibility for all populations who may 
receive services during a period of presumptive eligibility under part 
435 subpart L, as revised in the July 15, 2013 Medicaid and CHIP 
eligibility final rule. No public comments were received. We are 
finalizing Sec.  435.1100 as proposed.
(3) Definitions (Sec.  435.1101)
    We proposed to revise Sec.  435.1101 to replace the definition of 
``application form'' with ``application'' for consistency with 
terminology used in Sec.  435.907 and to clarify that the definition of 
``qualified entity'' includes a health facility operated by the Indian 
Health Service, a Tribe or Tribal organization, or an Urban Indian 
Organization.
    Comment: One commenter recommended that safety net health plans, 
defined in section 9010(c)(2)(C) of the Affordable Care Act, be clearly 
identified in Sec.  435.1101 as a type of ``qualified entity'' eligible 
to conduct presumptive eligibility determinations.
    Response: We are not accepting this comment since safety net health 
plans are not specifically included in the definition of ``qualified 
entity'' in section 1920A of the Act. We note, however, that, as 
reflected in the current definition of ``qualified entity'' in Sec.  
435.1101, and subject to approval by the Secretary, states may 
designate entities other than those specifically identified as a 
qualified entity authorized to make presumptive

[[Page 86415]]

eligibility determinations in accordance with Sec. Sec.  435.1102 and 
435.1103. We are finalizing the proposed revisions to the definition in 
Sec.  435.1101 without modification.
b. Proposed Amendments to CHIP Regulations for Presumptive Eligibility 
(Sec. Sec.  457.355 and 457.616)
    To align the regulations governing presumptive eligibility for 
children under CHIP with Medicaid, we proposed to revise Sec.  457.355 
to specify that presumptive eligibility for children under a separate 
title XXI CHIP program is determined in the same manner as Medicaid 
presumptive eligibility for children under Sec. Sec.  435.1101 and 
435.1102 of this chapter. In addition, we proposed to revise Sec.  
457.355 and to remove Sec.  457.616(a)(3) to implement the amendment to 
section 2105(a)(1) of the Act that was made by the CHIPRA. Prior to the 
passage of CHIPRA, states were authorized to claim enhanced federal 
matching funds under their title XXI allotment for coverage of children 
during a Medicaid presumptive eligibility period. This authority was 
implemented in current Sec. Sec.  457.355 and 457.616(a)(3). Section 
113(a) of CHIPRA, however, amended section 2105(a)(1) of the Act to 
eliminate this authority and, effective April 1, 2009, states must 
claim their regular FFP under title XIX for services provided to all 
children determined presumptively eligible for Medicaid (including 
those eligible for a Medicaid expansion program) during a presumptive 
eligibility period. We proposed to implement this change in the federal 
statute through the deletion of Sec. Sec.  457.355(b) and 
457.616(a)(3).
    Comment: We received no comments on the proposed revisions to Sec.  
457.355(a), which are finalized at Sec.  457.355 with technical 
revisions for consistency with the Medicaid regulation at Sec.  
435.1102 of this chapter. Several commenters requested that we revise 
the proposed Sec.  457.355 to clarify that states may claim title XXI 
funds for children covered during a presumptive eligibility period 
under either a title XXI-funded Medicaid expansion program or a 
separate title XXI child health program. Another commenter requested 
clarification on whether regular Medicaid match rather than enhanced 
CHIP match must be claimed for children ages 6 through 18 with income 
over 100 percent FPL and at or below 133 percent FPL who would have 
been eligible under the state's separate title XXI CHIP prior to 
implementation of the expansion of Medicaid for this age group up to 
133 percent FPL under the Affordable Care Act.
    Response: As previously explained, prior to passage of CHIPRA, 
states were authorized to claim enhanced federal matching funds under 
their title XXI allotment for coverage of children during a Medicaid 
presumptive eligibility period. CHIPRA, however, eliminated this 
authority and, effective April 1, 2009, states must claim their regular 
FFP under title XIX for services provided to all children determined 
presumptively eligible for Medicaid during a presumptive eligibility 
period. This includes children determined presumptively eligible based 
on having family income in the range of a state's Medicaid expansion 
program for optional targeted low-income children. We proposed to 
implement this change in the federal statute through the deletion of 
Sec.  457.355(b) and Sec.  457.616(a)(3), which we finalize in this 
rulemaking as proposed. If a child, who is determined presumptively 
eligible for Medicaid and subsequently approved for Medicaid 
eligibility (based on a regular application), meets the definition of 
optional targeted low-income child at Sec.  435.4, the state may claim 
enhanced title XXI match for services received on or after the 
effective date of regular Medicaid eligibility, including during a 
period of retroactive eligibility described in Sec.  435.915. This 
includes uninsured children covered under the Medicaid state plan 
effective January 1, 2014, as a result of the expansion of coverage for 
children ages 6 through 18 up to 133 percent FPL under the Affordable 
Care Act, but it does not include expanded coverage of insured 
children, since insured children do not meet the definition of an 
``optional targeted low-income child'' under section 1905(u)(2)(B) of 
the Act or Sec.  435.4. Section 435.1002(c) of the Medicaid 
regulations, as revised in this rulemaking and discussed above, is 
consistent with this policy.
3. Financial Methodologies for Medically Needy (Sec. Sec.  435.601 and 
435.831)
    In determining financial eligibility for medically needy pregnant 
women, children, parents, and other caretaker relatives, the 
methodologies of the former AFDC program historically have been applied 
as the cash assistance program most closely related to these 
populations. Under section 1902(r)(2) of the Act and current Sec.  
435.601(d), states also have the flexibility to adopt other reasonable 
methodologies, provided that for aged, blind and disabled individuals 
such methodologies are less restrictive than the SSI methodologies 
applied to medically needy aged, blind and disabled individuals per 
section 1902(a)(10)(C)(iii) of the Act and Sec.  435.601, and for 
medically needy children, pregnant women, parents and caretaker 
relatives, such methodologies are less restrictive than the AFDC-based 
methods. Because of the elimination of the AFDC program in 1996 and the 
replacement under the Affordable Care Act of AFDC-based methodologies 
with MAGI-based methodologies for determining financial eligibility for 
categorically needy pregnant women, children, parents, and other 
caretaker relatives, we proposed revisions at Sec.  435.831 to provide 
states with flexibility to apply, at state option, either AFDC-based 
methods or MAGI-based methods for determining income eligibility for 
medically needy children, pregnant woman, and parents and other 
caretaker relatives.
    However, section 1902(a)(17)(D) of the Act prohibits state plans 
from taking into account the financial responsibility of any individual 
for any applicant or recipient of assistance under the plan unless such 
applicant or recipient is the individual's spouse or the individual's 
child who is under age 21, blind or disabled. In requiring the adoption 
of MAGI-based methodologies for most individuals, section 
1902(e)(14)(A) of the Act provides for an exception to the limitations 
on financial responsibility in section 1902(a)(17)(D) of the Act, and 
under section 1902(e)(14)(D)(i)(IV) of the Act, medically needy 
individuals are exempt from the mandatory application of MAGI-based 
methods. Therefore, the limitation on deeming to an applicant or 
beneficiary the income of individuals other than the applicant's or 
beneficiary's spouse or parents under section 1902(a)(17)(D) of the Act 
continues to apply to the medically needy, and states must ensure that 
there is no deeming of income or attribution of financial 
responsibility that would conflict with the requirements of that 
section of the Act. We suggested possible ways that states could apply 
MAGI-based methodologies in determining eligibility for the medically 
needy without violating section 1902(a)(17)(D) of the Act. We 
suggested, for example, that when application of the MAGI-based 
methodologies set forth in Sec.  435.603 would result in impermissible 
deeming, the state could subtract from total household income the 
income of the individual which may not be counted under section 
1902(a)(17)(D) of the Act. Alternatively, we suggested that the state 
could remove the individual whose income may not be counted under 
section1902(a)(17)(D) of the Act, from

[[Page 86416]]

the household altogether, such that the individual's income would not 
be counted in total household income and the individual himself or 
herself would not be included in household size. Under the proposed 
rule, per section 1902(r)(2) of the Act and Sec.  435.601(d), states 
would have the option to apply methodologies to medically needy parents 
and caretaker relatives, pregnant women and children that are less 
restrictive than either AFDC-based methods or the MAGI-based 
methodologies permitted under the proposed revisions at Sec.  435.831.
    To meet the MOE requirement in section 1902(gg) of the Act, we 
explained in the proposed rule that states would have to ensure that 
the application of MAGI-based methodologies to medically needy 
populations would be no more restrictive than the AFDC-based 
methodologies applied by the state prior to enactment of the Affordable 
Care Act. Because the MOE has expired for adults, this requirement 
currently applies only to the determination of eligibility of medically 
needy children until the expiration of the MOE for children in 2019. We 
explained that, for purposes of the MOE, states may replace current 
AFDC-based disregards applied to medically needy individuals with a 
single block-of-income disregard such that in the aggregate the same 
number of people are covered, which will satisfy the MOE.
    Finally, we noted that, under the regulations adopted in the March 
23, 2012, Eligibility final rule, eligibility under section 1931 of the 
Act, like all other bases of eligibility, is determined on an 
individual basis. For consistency, we proposed to remove the reference 
to ``family'' in Sec.  435.831(c) so that parents and other caretaker 
relatives similarly will be evaluated for medically needy eligibility 
as individuals, as currently is the case for medically needy pregnant 
women and children.
    Nothing in the proposed rule would change the methodologies applied 
to determining medically needy eligibility for aged, blind, and 
disabled individuals, when being aged, blind or disabled also is a 
condition of such eligibility.
    Comment: Commenters were generally supportive of states having the 
option to apply MAGI-based methods in determining eligibility for 
medically needy children, pregnant women, and parent/caretaker 
relatives. Commenters also supported the policy in the proposed rule 
that states must ensure there is no deeming of income or attribution of 
financial responsibility that would conflict with requirements in 
section 1902(a)(17)(D) of the Act, but noted that this requirement 
would complicate development of streamlined systems of eligibility 
rules and procedures. One commenter expressed concern that AFDC-based 
rules relating to financial responsibility of relatives would continue 
to be required, even in states electing to use MAGI-like methods under 
Sec.  435.831(b)(1)(ii).
    Response: We appreciate the support, and are finalizing the policy 
described in the proposed rule. We are making some revisions to 
proposed Sec.  435.831 to more clearly reflect the policy and options 
described in the proposed rule. First, as explained in the proposed 
rule, the revisions to Sec.  435.831 were intended to provide states 
with an option to adopt the financial methodologies used to determine 
household income for MAGI-based eligibility groups, except where 
application of the MAGI-based methodologies would violate the 
limitation on deeming to an applicant or beneficiary income from anyone 
other than a spouse or, in the case of an individual under age 21, a 
parent living with the applicant or beneficiary. Proposed Sec.  
435.831(b)(1) provided only that states could apply the MAGI-based 
methodologies in Sec.  435.603(e), which provides generally for 
application of the methodologies set forth in section 36B(d)(2)(B) of 
the IRC in calculating the income attributed to a given individual. The 
rules governing household composition, family size and household income 
described in paragraphs (b), (c), (d) and (f) of Sec.  435.603 are also 
integral to the determination of income eligibility using MAGI-based 
methodologies; indeed, it is household composition and deeming rules in 
Sec.  435.603(d) and (f), not the income methods at Sec.  435.603(e), 
which may conflict with the limits on deeming set forth in section 
1902(a)(17)(D) of the Act. Therefore, we are replacing the reference to 
the ``MAGI-based methodologies defined in Sec.  435.603(e)'' in 
proposed Sec.  435.831(b)(1) with reference to the ``MAGI-based 
methodologies defined in Sec.  435.603(b) through (f)'' in the final 
rule.
    Also, to ensure compliance with section 1902(a)(17)(D) of the Act, 
we proposed at Sec.  435.831(b)(1) that states electing to apply MAGI-
like methodologies to medically needy parents and caretaker relatives, 
pregnant women and individuals under age 21, also comply with Sec.  
435.602 (relating to the financial responsibility of relatives and 
other individuals), as revised in this rulemaking. We agree with the 
commenter, however, that the reference to all of Sec.  435.602 was 
overly broad.
    Under section 1902(a)(17)(D) of the Act, except as provided in 
paragraphs (e)(14), (l)(3), (m)(3) and (m)(4), in determining an 
individual's financial eligibility for Medicaid, the state may consider 
only the income and resources of the individual, the individual's 
spouse (if living with the individual) and, in the case of individuals 
under age 21, the individual's parents (if living with the individual). 
Under Sec.  435.602(a)(2)(ii), the income and resources of parents and 
spouses of individuals under age 21 is considered only if the parent's 
or spouse's income would have been counted under the state's approved 
AFDC state plan for a dependent child. Thus, for example, under Sec.  
435.602(a)(2)(ii), the income of a child's stepparent is considered 
only to the extent to which stepparent income was counted under AFDC. 
This is more limiting, however, than the restrictions on deeming 
provided under section 1902(a)(17)(D) of the Act, which does not 
prohibit stepparent deeming. Accordingly, we are revising Sec.  
435.831(b)(1) in the final rule to accurately reflect the terms of the 
limitation under section 1902(a)(17)(D) of the Act. Under Sec.  
435.831(b)(1)(ii) of the final rule, if the state exercises the option 
to apply MAGI-based methodologies defined in Sec.  435.603(b) through 
(f) to certain medically needy individuals, the state must comply with 
the terms of Sec.  435.602, except that in applying Sec.  
435.602(a)(2)(ii) to individuals under age 21, the agency may, at state 
option, include in the individual's household all parents as defined in 
Sec.  435.603(b) (including stepparents) who are living with the 
individual without regard to whether such parent's or stepparent's 
income and resources would have been counted under AFDC if the 
individual would be considered a dependent child under the AFDC State 
plan.
    Under the final rule, states may elect to apply more stringent 
limitations on deeming for individuals under age 21 applied in effect 
under the state's AFDC program, but are not required to do so. In 
determining financial eligibility of medically needy parents and 
caretaker relatives, pregnant women and individuals under 21, this will 
provide states with greater latitude to adopt either the household 
composition and deeming rules applied under the state's AFDC state plan 
or the MAGI-based household composition and deeming rules set forth in 
Sec.  435.603(b), (c), (d) and (f), subject to the specific limitation 
on deeming set forth at section 1902(a)(17)(D) of the Act. Thus, under 
the final regulation, states may not

[[Page 86417]]

count the income of a child in determining the medically needy 
eligibility of a parent or another sibling. States may, however, count 
a stepparent's income in determining the medically needy eligibility of 
a child if the state elects to apply MAGI-like methodologies to such 
individuals in accordance with Sec.  435.831(b)(1)(ii) of the final 
rule.
    We agree with the commenters that compliance with the deeming 
provisions in section 1902(a)(17)(D) of the Act adds some complication 
to the streamlined system of eligibility rules. However, as the 
commenters noted, this limitation is grounded in statute. For this 
reason, we suggested two relatively simple approaches (noted above) 
which we believe states could use to integrate medically needy coverage 
into a streamlined eligibility system for MAGI-based coverage without 
running afoul of the deeming restrictions.
    We also are making a technical revision to paragraph (b)(2) of 
Sec.  435.601 (relating to application of financial methodologies for 
individuals excepted from application of MAGI-based methodologies, 
discussed earlier in this final rule) to cross-reference the state 
option to apply MAGI-like methodologies to certain medically needy 
individuals under Sec.  435.831.
    Comment: For states electing application of MAGI-like methodologies 
to medically needy pregnant women, parents and caretaker relatives and 
children, several commenters questioned exactly what methodology we 
envision states using to convert their current AFDC-based net medically 
needy income level (MNIL) into MAGI-equivalent standards to comply with 
the MOE requirement in section 1902(gg) of the Act. Several commenters 
questioned whether we intend to require application of the guidance we 
provided to states in the December 28, 2012, State Health Official 
(SHO) Letter (SHO #12-003 and Affordable Care Act #22) regarding 
Conversion of Net Income Standards to MAGI Equivalent Income Standards. 
The commenters noted that in the proposed rule we stated that states 
may replace current disregards applied for medically needy eligibility 
under an AFDC-related group with a block-of income disregard to satisfy 
the MOE in the aggregate, but the preamble does not require that they 
do so. The commenters requested clarification that states wishing to 
take up the option to apply a MAGI-based methodology to medically needy 
pregnant women, parents and caretaker relatives and children, must 
convert current AFDC income standards according to approved 
methodologies, and suggested that we reconsider use of the average 
disregard method and consider instead a methodology that would minimize 
the number of persons who would potentially lose eligibility under a 
MAGI-based standard. One commenter stated that it is unclear how states 
could calculate the block disregard in a way that would definitively 
show that it is not more restrictive than the current methodology. 
Another commenter supported use of a conversion methodology to 
establish an equivalent MAGI-based MNIL that satisfies the MOE 
requirement in the aggregate. A few commenters expressed support of the 
requirement that states must comply with the maintenance of effort 
requirement for medically needy children.
    Response: To comply with the MOE at section 1902(gg) of the Act, 
which remains applicable to children through September 30, 2019, states 
that elect to adopt MAGI-based methodologies for medically needy 
parents and caretaker relatives, pregnant women and children will need 
to ensure that the application of MAGI-based standards and 
methodologies to medically needy children will be no more restrictive 
than the AFDC-based standards and methodologies applied by the state 
prior to enactment of the Affordable Care Act. As noted, one way for a 
state to satisfy this provision would be to retain the MNIL currently 
established in the state plan and replace the disregards applied to 
children in establishing medically needy eligibility as of the 
enactment of the Affordable Care Act (or, if less restrictive, applied 
subsequent to that date) with a single block-of-income disregard such 
that, in the aggregate, children are no worse off when the MAGI-based 
methods are applied. States could also apply this method to medically 
needy pregnant women, parents and other caretaker relatives (since the 
MOE for adults has expired, states would not be required to do so for 
these populations.) Alternatively, a state could raise the MNIL by a 
conversion factor--as was done in accordance with the December 28, 
2012, SHO in converting the pre-Affordable Care Act net income 
standards for previously AFDC-related categorically needy groups to a 
MAGI-based equivalent standard--such that children in the aggregate 
would not be harmed. We note, however, that states cannot adopt a 
different converted MNIL for each medically needy group: The same MNIL 
must be applied to the medically needy groups for pregnant women and 
children and the same MNIL must be applied to the medically needy 
groups for parents and other caretaker relatives, or aged, blind, and 
disabled individuals. In addition, under section 1903(f)(1) of the Act, 
the MNIL cannot exceed 133\1/3\ percent of the former AFDC payment 
standard. These limitations likely make the first approach, replacing 
current disregards with an in-the-aggregate-equivalent block-of-income 
disregard, though not required, more practical.
    The December 28, 2012, SHO was not issued with conversion of the 
MNIL for medically needy groups in mind, and its terms are not 
uniformly applicable to the present situation, in which a state may 
elect to replace current AFDC-based methodologies with MAGI-based 
methodologies for certain medically needy individuals. However, we 
believe the basic principles outlined in the SHO are relevant, and that 
the standardized MAGI conversion methodology described in the SHO can 
be applied in this situation to yield a converted medically needy 
income level that satisfies the MOE requirements under section 1902(gg) 
of the Act, and we have worked with states with medically needy 
programs to determine an appropriate conversion factor for their 
medically needy programs using that methodology. We also believe that 
states should have the option to suggest an alternative state proposed 
methodology, as we also had permitted in the December 28, 2012, SHO for 
converting the income standards applied to categorically needy 
eligibility groups, and we will work with any state interesting in 
applying an alternative method to ensure compliance with the MOE set 
forth in section 1902(gg) of the Act, as well as other applicable 
provisions of the statute and regulations relating to coverage of 
medically needy individuals.
    Comment: Several commenters requested clarification on whether 
states may continue to apply a resource test for medically needy 
eligibility. The commenters state that because other, less vulnerable 
populations subject to MAGI-based methodologies under the Affordable 
Care Act will be exempt from asset tests, the same exemption should 
apply to medically needy populations.
    Response: Section 1902(a)(10)(C)(i)(III) of the Act, implemented 
for resources at Sec. Sec.  435.840 through 435.845, provides that 
states electing to cover medically needy individuals establish a 
resource standard and methodologies for determining resource 
eligibility for all medically needy groups. In giving states the option 
to align the income methodologies used in determining medically needy 
eligibility for the historically AFDC-related populations

[[Page 86418]]

of parents and caretaker relatives, pregnant women and children with 
the new MAGI-based income methodologies now used for determining the 
categorically-needy eligibility of these same populations, we did not 
eliminate the ability of states to apply a resource test to all of 
their medically needy groups, nor could we have done so, as there is 
nothing in the Affordable Care Act which supersedes section 
1902(a)(10)(C)(i)(III) of the Act. Thus, while section 1902(e)(14)(C) 
of the Act prohibits application of a resource test to any individual 
for whom the state is required to apply MAGI-based methodologies under 
section 1902(e)(14) of the Act, providing states with the option to 
apply MAGI-like income methodologies established per paragraphs (G) and 
(H) of section 1902(e)(14) of the Act, as implemented in Sec.  435.603, 
to certain medically needy groups does not result in full application 
of section 1902(e)(14)(C) of the Act or the elimination of any 
applicable resource test in states electing that option. As there is no 
resource test under MAGI, we did not propose any revisions to existing 
regulations relating to permissible medically needy resource standards 
and methodologies, and these regulations remain in effect. States may, 
at their option, elect to effectively eliminate the resource test for 
any or all medically needy eligibility groups by adopting a less 
restrictive methodology to disregard all of an individual's resources 
under section 1902(r)(2) of the Act and Sec.  435.601(d).
    Similarly, as explained in the proposed rule, a state's election to 
apply MAGI-like income methodologies under Sec.  435.831 does not 
eliminate the option states currently have under section 1902(r)(2) of 
the Act and Sec.  435.601(d) to adopt less restrictive financial 
methodologies in determining the financial eligibility of medically 
needy parents and caretaker relatives, pregnant women and children. In 
this final rule, we are making a conforming revision to the 
introductory text of Sec.  435.601(d)(1) to reflect the state 
flexibility available under the statute.
4. Deemed Newborn Eligibility (Sec. Sec.  435.117 and 457.360)
    Section 1902(e)(4) of the Act, implemented in current Sec.  
435.117, provides that babies born to mothers eligible for and 
receiving covered services under the Medicaid state plan for the date 
of birth (including during a period of retroactive coverage in 
accordance with Sec.  435.915) be automatically deemed eligible for 
Medicaid without an application until the child's first birthday. 
Before the year of deemed newborn eligibility ends, the agency is 
required, in accordance with Sec.  435.916, to determine whether the 
child remains Medicaid eligible for any other eligibility groups, such 
as for the mandatory children's group under Sec.  435.118. Section 211 
of CHIPRA made several revisions to section 1902(e)(4) of the Act and 
also added a new requirement at section 2112 of the Act, relating to 
deemed eligibility for babies born to targeted low-income pregnant 
women covered under CHIP. We proposed to revise Sec.  435.117 and to 
add a new Sec.  457.360 implementing the CHIPRA amendments, as follows:
     In accordance with section 1903(x)(5) of the Act, as added 
by section 211(b)(3)(A)(ii) of CHIPRA, we proposed revisions at Sec.  
435.117(b) to require that a child born to a mother covered by Medicaid 
for labor and delivery as an emergency medical service in accordance to 
section 1903(v)(3) of the Act is automatically eligible until the 
child's first birthday under Sec.  435.117 (in the same manner as any 
infant born to a mother eligible for and receiving full Medicaid 
benefits on the date of birth).
     We proposed revisions at Sec.  435.117(b) to eliminate the 
requirement, based on a previous provision of statute, that deemed 
newborn eligibility continue only as long as the baby is a member of 
the mother's household and the mother either remained eligible for 
Medicaid or would remain eligible if still pregnant, as these 
limitations were removed from section 1902(e)(4) of the Act by section 
113(b)(1) of CHIPRA.
     Section 2112(e) of the Act, as added by section 111 of 
CHIPRA, requires that babies born to pregnant women covered by a state 
as targeted low-income pregnant women under a separate CHIP similarly 
be deemed automatically eligible for Medicaid or CHIP, as appropriate. 
We proposed to amend Sec.  435.117(b) and to add a new Sec.  457.360 
implementing this requirement, based on whether household income at the 
time of the birth is at or below or above the income standard 
established by the state for eligibility of infants under Sec.  
435.118.
     Consistent with section 1902(a)(19) of the Act to promote 
simplicity of administration and the best interest of beneficiaries, we 
proposed at Sec.  435.117(b)(1)(iii) and (iv) that states be provided 
with the option to cover as deemed newborns under Medicaid or CHIP, as 
appropriate based on the mother's household income, babies born to 
mothers covered for the date of the child's birth as a targeted low-
income child under a separate CHIP state plan or to mothers covered 
under a Medicaid or CHIP demonstration waiver under section 1115 of the 
Act. The state would have to provide an assurance that, based on the 
income levels of eligibility, the state believes that the children 
would meet the applicable eligibility standard if a full eligibility 
determination were performed.
     We proposed at Sec.  435.117(c) that states be provided 
with the option to provide deemed newborn eligibility under Medicaid to 
babies born to mothers receiving Medicaid in another state and at Sec.  
457.360(c) that states be provided with the option to provide deemed 
newborn eligibility under CHIP to babies born to mothers receiving CHIP 
or coverage under a CHIP or Medicaid section 1115 demonstration program 
in another state.
     Finally, we proposed at Sec. Sec.  435.117(d) and 
457.360(d) that states be required to use the mother's Medicaid or CHIP 
identification number for a deemed newborn unless and until the state 
assigns a separate identification number to the child, as provided at 
section 1902(e)(4) and section 2112(e) of the Act.
    Comment: Several commenters strongly supported the option at 
Sec. Sec.  435.117(b) and 457.360(b) for states to extend automatic 
enrollment to babies born to mothers covered as a targeted low-income 
child under a separate CHIP state plan, but recommended that we require 
states to provide deemed newborn eligibility for such babies, as well 
as to babies born to mothers who are eligible through a section 1115 
demonstration (rather than simply providing states with the option to 
do so). A few commenters encouraged us to require that states alert 
women who become pregnant while enrolled under a section 1115 
demonstration of the importance of informing the state of their 
pregnancy to be evaluated for eligibility under the state plan, 
including the opportunity to receive a year of stable coverage for 
their newborns. Some commenters stated that states that take up the 
option to cover targeted low-income pregnant women under a separate 
CHIP should be required to provide automatic deemed eligibility to the 
newborns of mothers enrolled in CHIP as targeted-low income children. 
Two commenters, who supported the option to deem eligibility to a 
newborn of a mother who was covered as a targeted low-income child 
under a separate CHIP, indicated that this option would eliminate the 
administrative burden that is otherwise involved in the process of 
enrolling the baby in Medicaid or CHIP if a new

[[Page 86419]]

application for the newborn is required. One of these commenters 
maintained that virtually all of these newborns (who are born to a 
targeted low-income child in a separate CHIP) meet Medicaid eligibility 
requirements, and should automatically be deemed eligible for Medicaid, 
while the other took the position that all such newborns should 
automatically be deemed eligible for CHIP.
    Several commenters stated that the proposed Sec. Sec.  435.117(c) 
and 457.360(c) would violate the woman's right to travel because they 
would not require deemed newborn eligibility when the mother had been 
enrolled in Medicaid or CHIP in another state. One commenter encouraged 
CMS to work with states to avoid the disruptions to coverage that may 
result from leaving this at state option. Another commenter supported 
making deemed newborn eligibility for infants born in another state 
optional. The commenter stated that, for such infants, a new 
application and verification of citizenship is important.
    Response: We are finalizing the extension of deemed newborn 
eligibility beyond the statutory requirements at state option, as 
proposed. Since eligibility levels for pregnant women and children vary 
between the states, we are revising proposed Sec.  435.117(b)(1)(ii) 
and (iii) to provide an additional option for states to deem Medicaid 
eligible a newborn child of a mother covered under another state's CHIP 
state plan (as a targeted low-income pregnant woman or child) for the 
date of the child's birth. We also are moving the content of proposed 
paragraph (c) to Sec.  435.117(b)(1)(i), and redesignating paragraph 
(d) at paragraph (c). In addition, we are revising paragraph (b)(2) to 
be clearer that newborns who must be deemed under paragraph (b)(1) are 
not optional for deeming under paragraph (b)(2).
    Under Sec.  457.360, we are making organizational revisions to be 
consistent with the changes in Medicaid at Sec.  435.117. We are 
redesignating the proposed paragraph (b)(2) as a new paragraph (b)(3) 
and moving the content of the proposed paragraph (c) to a new paragraph 
at Sec.  457.360(b)(2)(i). Also, we are adding a new paragraph at Sec.  
457.360(b)(2)(ii) to include a requirement that states electing CHIP 
optional newborn deeming provisions must also elect the comparable 
options in Medicaid. This clarification is designed to ensure that 
states deem newborns to the appropriate program and prevent the 
claiming of enhanced federal matching funds under their title XXI 
allotment for coverage of newborns who are eligible for Medicaid. We 
are also redesignating the proposed paragraph (d) regarding the CHIP 
identification number as paragraph (c).
    Comment: A commenter stated that proposed Sec. Sec.  435.117(d) and 
457.360(d), requiring states to use the mother's Medicaid or CHIP 
identification number for a deemed newborn unless and until the state 
assigns a separate identification number to the child, are overly 
prescriptive and would require change to the states' current 
functionality. The commenter requested that this requirement be omitted 
from the final rule.
    Response: This provision, which serves to ensure that deemed 
newborns do not experience any gap in coverage for needed services, is 
expressly required under sections 1902(e)(4) and 2112(e) of the Act. 
States are permitted to immediately assign a separate identification 
number to a deemed newborn, thereby avoiding any need for the mother's 
identification number to be used temporarily for the baby. We are 
retaining this provision in both Medicaid and CHIP, although moving the 
content proposed at Sec. Sec.  435.117(d) and 457.360(d) to Sec. Sec.  
435.117(c) and 457.360(c), respectively, as previously discussed.
    Comment: A commenter requested clarification about whether a 
newborn who was covered under the state's separate CHIP as an unborn 
child is deemed eligible for one year. The commenter also questioned 
about the availability of enhanced title XXI funding for postpartum 
care for the mothers of these newborns.
    Response: A newborn who was covered as an unborn child under a 
separate CHIP, and whose mother was not covered by Medicaid for the 
date of the child's birth, cannot be deemed eligible for Medicaid or 
CHIP for the period extending until the child's first birthday, since 
the mother was not covered for the date of birth. Without coverage of 
the mother, there is no basis for providing deemed newborn eligibility. 
If a pregnant woman gives birth to a newborn who was covered as an 
unborn child under a separate CHIP state plan, and the woman is 
determined eligible for Medicaid for coverage of the labor and 
delivery, as authorized under section 401(b)(1) of PRWORA, codified at 
8 U.S.C. 1611(b)(1), and sections 1903(v)(2) and 1903(v)(3) of the Act, 
the baby is entitled to be deemed eligible for Medicaid under Sec.  
435.117. Given (1) the requirements at Sec.  457.626(a)(2) (prohibiting 
payment for services that can reasonably be expected to be paid under 
another federally-financed program) and Sec.  457.626(a)(3) 
(specifically prohibiting payment for services that are payable under 
Medicaid as a service to a pregnant woman), (2) the express requirement 
added at section 1903(x)(5) of the Act by section 211(b)(3)(A)(ii) of 
CHIPRA to provide deemed newborn eligibility to infants born to 
pregnant women covered only for labor and delivery for the child's 
birth, and (3) the enhanced degree of coordination required between the 
eligibility and enrollment systems for all insurance affordability 
programs per Sec. Sec.  457.348 and 457.350, we expect states to 
evaluate whether the pregnant woman of an unborn child covered under a 
separate CHIP is eligible for Medicaid coverage for the labor and 
delivery of the baby as treatment of an emergency medical condition, 
consistent with Sec.  435.139. If the woman is determined to be 
eligible for Medicaid coverage (including during a retroactive 
eligibility period), the state must deem the baby eligible for Medicaid 
under Sec.  435.117 until the child's first birthday. In cases 
involving retroactive Medicaid coverage of the labor and delivery of 
the child and retroactive deemed eligibility for the child, states may 
make adjustments to claiming through the customary financial management 
processes. Once determined eligible for and enrolled in Medicaid, the 
child's eligibility for CHIP must be terminated. To ensure coordination 
of coverage and care, consistent with sections 2101(a) and 
2102(b)(3)(E) of the Act, the child's eligibility may not be terminated 
prior to enrollment in Medicaid.
    With regard to the coverage of postpartum care for mothers of 
newborns who had been covered in the state's separate CHIP under the 
unborn child option, section 2112(f)(2) of the Act permits states to 
provide postpartum services beginning on the last day of the pregnancy 
through the end of the month in which the 60-day postpartum period 
ends, in the same manner as provided in Medicaid, if the mother, except 
for age, would otherwise satisfy the eligibility requirements of the 
separate CHIP state plan. If the mother does not meet the eligibility 
requirements (other than age) for coverage under the CHIP state plan, 
FFP under title XXI is available to cover postpartum care only if the 
state usually pays for pregnancy and delivery services through a 
bundled payment or global fee method which includes postpartum care 
together with prenatal care, labor and delivery. (Global fees are 
commonly used in reimbursing for obstetrical care cover all prenatal 
visits, delivery, and at least one postnatal

[[Page 86420]]

visit.) FFP similarly is available for capitation rates that reflect 
the use of bundled payments or global fees by managed care entities. 
For states that do not pay using such a bundled payment or global fee 
methodology, FFP is not available for postpartum care. In addition, FFP 
is not available for post-hospitalization postpartum care that is not 
included in the bundled or capitated payment. As explained in SHO 
Letter #02-004 (November 12, 2002), the option to cover unborn children 
from conception to birth was not meant to alter existing payment 
methodologies, and states are not permitted to establish a bundled 
payment methodology applicable only to coverage for unborn children.
    Comment: Several commenters did not understand why paragraph 
(b)(1)(iii) of Sec.  435.301, relating to deemed newborns of medically 
needy mothers, is being deleted from the current rules. The commenters 
stated that this rule should be left in place, or, it should be 
clarified that mothers eligible for Medicaid as medically needy are 
considered to be covered under the state plan and, therefore, their 
babies would qualify as deemed newborns under Sec.  435.117.
    Response: Effective April 1, 2009, CHIPRA eliminated the Medicaid 
requirement at section 1902(e)(4) of the Act that the baby remains 
eligible as a deemed newborn only so long as the mother remains 
eligible for Medicaid (or would remain eligible if still pregnant). 
Removing this requirement means that all newborns born to women covered 
by Medicaid for the child's birth, including a mother covered as 
medically needy, are now covered as mandatory categorically needy 
deemed newborns. Therefore, all infants born to pregnant women who are 
eligible for Medicaid for the date of the child's birth, including 
pregnant women who are eligible as medically needy, are covered under 
Sec. Sec.  435.117 and 435.301(b)(1)(iii) for medically needy deemed 
newborns no longer is consistent with the statute. SHO Letter 09-009, 
issued on August 31, 2009, provides additional explanation on the 
policy changes made by CHIPRA to deemed newborn eligibility, including 
the change for babies born to medically needy pregnant women (see 
http://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/SHO083109b.pdf).

F. Verification Exceptions for Special Circumstances (Sec.  435.952)

    Under Sec.  435.952(c), states are permitted to request additional 
information from individuals, including documentation, to verify most 
eligibility criteria if data obtained electronically by the state is 
not reasonably compatible with attested information or electronic data 
is not available. However, there are individuals for whom providing 
documentation even in such limited circumstances would create an 
insurmountable procedural barrier to accessing coverage. In accordance 
with section 1902(a)(19) of the Act (relating to simplicity of 
administration and best interest of individuals), we proposed revisions 
at Sec.  435.952(c)(3) under which states must accept self-attestation 
(and may not require documentation) if documentation does not exist or 
is not reasonably available at the time of application or renewal, for 
example, as may be the case for victims of domestic violence or natural 
disasters and homeless individuals. Under the proposed revisions, this 
self-attestation policy would not apply, for example, in the case of 
citizenship or immigration status, when documentation is (or may be) 
expressly required under the Act.
    Comment: A commenter requested clarification as to whether the 
exception at proposed Sec.  435.952(c) requiring that states accept 
self-attestation in special circumstances applies to all individuals 
regardless of whether their eligibility is based on MAGI or non-MAGI 
methodologies.
    Response: The regulations relating to verification of eligibility 
at Sec. Sec.  435.940, et seq., including Sec.  435.952, as revised in 
this final rule, applies to all applicants and beneficiaries, 
regardless of the methodology used to determine financial eligibility. 
We note that the regulations relating to verification apply equally at 
application, as well as renewals and redeterminations due to a change 
in circumstances, and we have revised Sec.  435.952(c)(3) in the final 
rule to clarify that the proposed revision also applies both at 
application and renewal.
    Comment: Several commenters recommended that CMS amend Sec.  
435.952(c)(3) to permit states to apply the special circumstances 
exception to allow self-attestation of eligible immigration status and 
not require states to collect documentary evidence of eligible 
immigration status. Several commenters also suggested that the final 
rule require states to accept a photocopy, facsimile, scanned, or other 
copy of a document used to verify immigration status.
    Response: Section 1137 of the Act requires states to verify a 
written declaration (made under penalty of perjury) of satisfactory 
immigration status. Section 1902(a)(46)(B) of the Act requires states 
to verify an attestation of citizenship in accordance with sections 
1903(x) or 1902(ee) of the Act. Thus, we do not have authority, even 
under special circumstances, to permit states to accept self-
attestation of these criteria. Neither section 1137 of the Act, DOJ 
guidance, the Systematic Alien Verification for Entitlements (SAVE), 
which is the Department of Homeland Security's (DHS) system of record 
used by agencies to verify immigration status, nor our regulations 
require individuals to submit original or certified copies of documents 
as evidence of satisfactory immigration status, and states may accept 
copies of documents if necessary to complete the verification of 
immigration status.
    Comment: A commenter recommended CMS clarify that dependents may 
also qualify for an exception for special circumstances and be able to 
self-attest in lieu of providing documents at the time of application.
    Response: Section 435.952, including the ``special circumstance 
exception'' at Sec.  435.952(c)(3), does not distinguish between 
different members of a household or family, but applies to all 
individuals applying for or renewing coverage. In addition, the legal 
capacity of dependents who are minors or who have diminished cognitive 
ability to attest to information (which must be done under penalty of 
perjury) is a matter of state law. Therefore, we do not believe that 
further clarification in the regulation text is required. We also note 
that, under Sec.  435.945, other specified individuals can attest to 
information on behalf of a child (or other individual), including an 
adult in the child's or other individual's household (as defined in 
Sec.  435.603) or family (as defined in section 36(B)(d)(1) of the 
IRC), an authorized representative, or if a minor or incapacitated, 
someone acting responsibly for the individual.

G. Verification Procedures for Individuals Attesting to Citizenship or 
Satisfactory Immigration Status (Sec. Sec.  435.3, 435.4, 435.406, 
435.407, 435.911, 435.956, 435.1008, 457.320, 457.380)

    In our proposed rule we noted that verification of citizenship and 
immigration status is governed by sections 1137, 1902(a)(46)(B), 
1902(ee), and 1903(x) of the Act, and by section 1943 of the Act, which 
cites to section 1413(c) of the Affordable Care Act. Sections 1943 and 
2107(e)(1)(O) of the Act and section 1413(c) of the Affordable Care Act 
require that there be a coordinated eligibility, verification, and 
enrollment system between Medicaid, CHIP, the Exchanges, and the BHP, 
if applicable. More specifically section 1413(c) of the Affordable Care 
Act, which is incorporated into titles

[[Page 86421]]

XIX and XXI via cross references at sections 1943(b)(3) and 
2107(e)(1)(O) of the Act, requires that all insurance affordability 
programs verify certain information in a manner compatible with the 
method established under section 1411(c)(4) of the Affordable Care Act, 
that is by data matches with certain federal agencies, including the 
Social Security Administration (SSA), DHS, and the Internal Revenue 
Service (IRS), through an electronic service established by the 
Secretary (referred to as the ``federal data services hub'' or 
``FDSH''). The requirement to use the FDSH is implemented at current 
Sec.  435.949 for Medicaid and Sec.  457.380(g) for CHIP. Current 
Sec. Sec.  435.952(c) and 457.380(f) also require state Medicaid and 
CHIP agencies to rely on electronic data sources to verify eligibility 
information to the maximum extent possible and limit the instances when 
paper documentation can be requested.
    The verification rules related to citizenship and immigration 
status as proposed in the January 22, 2013 proposed rule (78 FR 4615) 
were an extension of the current verification rules and were intended 
to develop a consistent and cohesive set of verification rules to the 
greatest extent possible for all factors of eligibility. These rules 
are part of the streamlined and coordinated eligibility, verification, 
and enrollment system that will be used among all health insurance 
affordability programs as required by section 1413 of the Affordable 
Care Act. In response to public comments, however, we are providing 
states greater flexibility in using an alternative mechanism to verify 
citizenship and immigration status under our final rule at Sec.  
435.956.
    Prior to enactment of the Affordable Care Act, section 211 of 
CHIPRA also had made several important changes to the statute for 
verification of citizenship. Specifically, CHIPRA section 211 revised 
section 1902(a)(46) of the Act and added a new section 1902(ee) of the 
Act to provide states an option to verify citizenship through an 
electronic data match between the agency and SSA in lieu of requiring 
documentation in accordance with section1903(x) of the Act. Section 
1903(x) was also revised to exempt infants deemed eligible for Medicaid 
under section 1902(e)(4) of the Act from the requirement to verify 
citizenship and to require that states provide individuals declaring 
U.S. citizenship with a ``reasonable opportunity period'' to provide 
documentation of their status, similar to the ``reasonable 
opportunity'' afforded individuals declaring satisfactory immigration 
status under section 1137(d) of the Act. Section 211 of CHIPRA also 
clarified the acceptability of documentation issued by a federally-
recognized Indian tribe for purposes of citizenship verification and 
extended the requirements to verify citizenship to CHIP.
    Implementation of the changes made by section 211 of CHIPRA and the 
establishment of a more streamlined and coordinated verification 
process through the FDSH for citizenship and immigration status among 
all insurance affordability programs are not yet addressed in the 
regulations, and we proposed various revisions and additions to current 
regulations as follows:
     Consistent with sections 1413(c) and 1411(c)(4) of the 
Affordable Care Act, and Sec.  435.949, we proposed to add paragraph 
Sec.  435.956(a) (reserved in prior rulemaking) to codify the 
requirement that states must verify citizenship and immigration status 
with SSA and DHS through the FDSH if available;
     We proposed regulations implementing a 90-day reasonable 
opportunity period for individuals declaring U.S. citizenship or 
satisfactory immigration status at Sec.  435.956(a)(2) and (g) and a 
conforming amendment to Sec.  435.1008 was proposed providing that 
states are entitled to receive FFP for benefits provided to individuals 
declaring citizenship or satisfactory immigration status during the 
reasonable opportunity period, regardless of whether eligibility 
ultimately is approved for such period.
     We proposed various revisions to Sec.  435.406, Sec.  
435.407 and Sec.  435.956, and a conforming revision at Sec.  
435.911(c), to streamline and revise the regulations for consistency, 
reduce administrative burden on states and individuals, and to 
implement revisions to section 1903(x) of the Act made by CHIPRA. We 
also proposed to simplify and streamline the regulations governing the 
documentation of citizenship under section 1903(x) of the Act, 
eliminating restrictions in the current regulations that are not 
required under the statute, reducing administrative burden and removing 
unnecessary barriers to successful documentation, without compromising 
program integrity.
     We proposed to extend the requirement to verify 
citizenship or nationality and immigration status to CHIP at Sec.  
457.320 and Sec.  457.380; and
     We proposed to add definitions of ``citizenship,'' ``non-
citizen,'' and ``qualified non-citizen'' at Sec.  435.4, and to add 
applicable statutory references to the basis at Sec.  435.3.
     We also proposed a technical correction at Sec.  
435.910(g), to put back the reference to the verification of SSNs with 
SSA, which was inadvertently removed in the March 2012 eligibility 
final rule and at Sec.  435.911(c) to replace the reference in Sec.  
435.911(c) to section 1903(x), section 1902(ee) or section 1137(d) of 
the Act with a cross-reference to Sec.  435.956(g), which implements 
the cited sections of the statute.
    A complete description of the proposed revisions to Sec.  435.407 
and the terms of proposed Sec.  435.956(a) and (g)--redesignated in 
this final rule as paragraph (b)--can be found in section I.B.7 of the 
January 22, 2013 proposed rule (78 FR 4615). We received the following 
comments concerning the proposed verification policies for individuals 
attesting to citizenship or satisfactory immigration status, which we 
are generally finalizing as proposed except as noted below as well as 
some technical revisions for clarity.
    Comment: Several commenters supported the replacement of the terms 
``alien(s)'' with the terms ``non-citizen(s).''
    Response: We appreciate the commenters' support and have finalized 
the change we proposed from the terms ``alien(s)'' to the terms ``non-
citizen(s).'' We also are finalizing the proposed definitions of ``non-
citizen'' and ``qualified non-citizen,'' except to revise the language 
in the definition of ``qualified non-citizen'' in this final rule to 
provide that qualified non-citizen ``includes'' rather than ``has the 
same meaning as'' the term qualified alien, as defined in the 
Immigration and Nationality Act (INA) at 8 U.S.C. 1641(b) and (c). We 
are making this change because the Congress has made full Medicaid 
benefits available to other categories of non-citizens without making 
conforming changes to include the new categories in the definition of 
qualified alien in the INA. For instance, under 22 U.S.C. 7105 certain 
victims of a severe form of trafficking are eligible for Medicaid 
benefits to the same as extent as refugees (who are included in the 
definition of qualified alien in the INA) ``notwithstanding title IV of 
the Personal Responsibility and Work Opportunity Act of 1996.'' The use 
of the term ``includes'' is designed to ensure that the term qualified 
non-citizen for purposes of the Medicaid program will be broad enough 
to include all of the non-citizen groups that are expressly addressed 
in other Federal statutes and who may be eligible for Medicaid even 
though those groups are not expressly mentioned in 1641(b) and (c). We 
also are making non-substantive revisions to the proposed definition of 
``citizenship'' in Sec.  435.4 of the final rule to eliminate

[[Page 86422]]

redundant language in the proposed definition.
    Comment: One commenter suggested that states should not be required 
to use the FDSH to verify citizenship and immigration status rather 
than using an existing interface with the SSA and the DHS, especially 
since information from the FDSH cannot be used to make eligibility 
determinations for other human services programs.
    Response: We agree with the commenter that states should not be 
required to use only the FDSH to verify citizenship and immigration 
status rather than using an existing interface with SSA and DHS. 
Although our proposed rule stated that the agency must verify 
citizenship and immigration status through the electronic service 
established in Sec.  435.949 if available, we also recognized 
alternative approaches that could be used if the FDSH was not 
available. Moreover, some flexibility is permitted under the current 
regulations at Sec. Sec.  435.949 and 457.380. Those rules generally 
require use of the FDSH to obtain information from the Social Security 
Administration (SSA) and the Department of Homeland Security (DHS) 
which can be used to verify citizenship and immigration status, unless 
the state has obtained approval from the HHS Secretary to obtain needed 
information through another mechanism in accordance with Sec.  
435.945(k) or Sec.  457.380(i). We have approved state requests to use 
other verification mechanisms under those rules. No commenters 
supported eliminating the flexibility for states to obtain approval to 
verify citizenship or immigration status through an alternative 
mechanism and we do not intend to eliminate the flexibility provided 
under those regulations in this final rule. In response to the comment, 
we are revising the regulation text to provide at Sec.  
435.956(a)(1)(i) and (a)(2)(i) of the final rule that states can verify 
citizenship and immigration status through the FDSH or alternative 
mechanism authorized in accordance with Sec.  435.945(k), so that 
states would be able to use the existing interfaces with SSA and DHS.
    Comment: A few commenters suggested that requiring additional 
electronic verification of citizenship or immigration status if 
verification through the FDSH fails is redundant.
    Response: We understand the commenters to be raising a situation in 
which SSA or DHS has been queried, via the FDSH, and has sent a 
response that it has no information to verify the individual's declared 
status. SSA and DHS only return a response that the status is verified 
or that it cannot verify the status; neither will return a response 
that the individual is not a ``citizen'' or not in a satisfactory 
immigration status. We agree that in such situations, when verification 
via the FDSH fails, attempting electronic verification again with SSA 
or DHS would be redundant and is not required. Under Sec.  
435.956(a)(1)(ii) of the final regulation, if the state already has 
received a response to an electronic query from SSA through the FDSH, 
which was unable to verify citizenship based on the applicant's Social 
Security number, verification in accordance with section 1902(ee) would 
be redundant, and the state would need to verify citizenship status in 
accordance with Sec.  435.407.
    We are also making a change in the final regulation to simplify the 
language. Inasmuch as section 1902(ee) of the Act provides for 
verification of citizenship through a data match with SSA, we have 
replaced the reference to verifying ``citizenship in accordance with 
section 1902(ee) of the Act'' in proposed Sec.  435.956(a)(1)(i) to 
refer more plainly to verifying citizenship ``through a data match with 
the Social Security Administration'' in Sec.  435.956(a)(1)(ii)(A) of 
the final rule.
    Unlike citizenship status, for which states are provided an option 
under title XIX to verify an individual's status with SSA or based on a 
number of other forms of documentation, states are required to verify 
immigration status with DHS in accordance with section 1137(d) of the 
Act. DHS has developed a service, the ``Systematic Alien Verification 
for Entitlements Program'' (SAVE) for states to use for this purpose. 
SAVE can be accessed electronically, either through the FDSH or via a 
direct interface with the state. Accordingly, we have revised proposed 
Sec.  435.956(a)(1) for immigration status to provide in Sec.  
435.956(a)(2)(i) of the final rule that states must verify immigration 
status, in accordance with section 1137 of the Act, through the service 
established in accordance with Sec.  435.949, or alternative mechanism 
authorized in accordance with Sec.  435.945(k). If SAVE is unable to 
verify an individual's attested status, the state is not required to 
query SAVE a second time with the same information; instead, the 
individual must be provided with an opportunity to provide other 
documentation of status as discussed further below.
    Comment: Several commenters supported requiring states to exhaust 
all available electronic data sources to verify citizenship and 
immigration status before requesting for paper documentation. One 
commenter believed that a data match with the state's vital statistics 
agency should be optional.
    Response: Under section 1411(c) of the Affordable Care Act and 
section 1943 of the Act, incorporating section 1413 of the Affordable 
Care Act, states are required to first attempt verification of 
citizenship and immigration status via the FDSH, or through an 
alternative mechanism authorized in accordance with Sec.  435.945(k) of 
the current regulations, which implements sections 1411(c)(4)(B) and 
1413(c)(1) of the Affordable Care Act (applicable to Medicaid via 
section 1943(b)(3) of the Act). If such verification is not successful, 
we believe the cross reference in proposed Sec.  435.952(a)(1) to Sec.  
435.952(c)(2)(ii) to require additional electronic verification before 
paper documentation is requested was in error, and we have eliminated 
this cross-reference in the final rule. If verification with SSA via 
the FDSH or alternative approved mechanism is not successful, states 
may obtain other evidence of citizenship by other means, as set forth 
in section 1903(x) of the Act. We do not have authority to nullify the 
choice provided to states under section 1902(a)(46)(B) of the Act. 
Thus, while a data match with a state's vital statistics agency is one 
source of permissible evidence, we agree with the commenter that states 
are not required to attempt such a match before requesting other types 
of documentary evidence under the statute. We note that Sec.  435.407 
of the proposed and final rule, provides a number of electronic 
evidentiary sources which states may use to obtain evidence of U.S. 
citizenship, including a data match with DHS (related to an 
individual's naturalized citizenship). If verification of immigration 
status with SAVE through the FDSH or alternative mechanism is not 
successful, states have the option under section 1137(d)(2) of the Act 
to require other proof of immigration status issued by DHS or such 
other documentation as the state determines constitutes reasonable 
evidence of satisfactory status.
    Comment: A commenter questioned whether the FDSH would replace 
states' current processes to verify immigration status with the SAVE 
system. The commenter also questioned generally what processes states 
should follow to verify immigration status.
    Response: Before responding to the commenter's questions, it will 
be helpful to explain the requirements under section 1137(d) of the Act 
for verification of immigration status. In general, section 1137(d) of 
the Act requires that non-citizens applying for Medicaid must provide a 
declaration of satisfactory immigration status and that

[[Page 86423]]

states, in determining eligibility for Medicaid, must verify such 
status with DHS. DHS has developed a service, the ``Systematic Alien 
Verification for Entitlements Program'' (SAVE) which can be accessed 
electronically and which is used for this purpose. SAVE includes 3 
possible steps to complete verification of immigration status, all of 
which can be accessed through the FDSH or via a direct interface. The 
status of most non-citizens can be verified at step 1, which occurs in 
real-time and is effectuated by the agency sending a query through the 
FDSH or directly to SAVE. If verification is not obtained in Step 1, 
the process moves to Step 2, which generally takes 2-3 business days to 
complete. At the end of SAVE step 2, DHS will return a response to the 
state either verifying the individual's immigration or naturalized 
citizen status or indicating that the status was not verified in 
requiring the state to ``submit additional verification.'' If 
verification at SAVE step 2 is not successful, at SAVE step 3 the state 
must provide evidence of the individual's immigration document for DHS 
to review. Currently this can be done using a pre-populated form 
developed by DHS, the G845 form, or utilizing the ``scan and upload'' 
feature DHS has newly made available for states to initiate SAVE step 
3. In May 2018, DHS has indicated that it will no longer accept the 
paper G845 form or any other paper alternative form at SAVE step 3. 
SAVE step 3, which requires a DHS employee to research paper records, 
generally takes 10 to 21 business days for DHS to complete and return a 
response to the state.
    Prior to implementation of the Affordable Care Act, all states 
queried the SAVE system through a direct interface with SAVE. A web-
based query system is also available. States can now query SAVE through 
the FDSH's Verify Lawful Presence (VLP) service, which can verify 
immigration status through all three steps of SAVE, as needed. States 
are required under Sec.  435.949 of the current regulations to use the 
FDSH VLP service unless we have authorized the state to use an 
alternative mechanism (such as a pre-existing interface) in accordance 
with Sec.  435.945(k). Over half of all states currently are or have 
been authorized by us under Sec.  435.945(k) to use their own interface 
to query SAVE. Some states have received authorization to use their own 
interface for all three steps. Other states have received authorization 
to use their own interface only for steps 2 and 3; a few have received 
authorization to use their own interface only for step 3.
    If a state uses the FDSH VLP service for all three steps of SAVE, 
the state could retire its own interface, which effectively would mean 
that the FDSH has replaced the state's previous connection to SAVE, 
although the three steps involved remain the same. In a state which 
receives approval under Sec.  435.945(k) to continue to use its pre-
existing connection for any step, the FDSH would not replace the 
state's previous connection. In addition, if the FDSH is down, a state 
which uses the FDSH but also has maintained a direct connection with 
SAVE, could use that connection rather than waiting for the FDSH to be 
available.
    Comment: One commenter requested that the rules at proposed Sec.  
435.956(a), requiring states to use the FDSH to verify citizenship and 
immigration status if the data is available, and Sec.  435.952(c), 
requiring the use of electronic data sources over documentation, not 
apply to individuals whose eligibility is determined manually.
    Response: We are unclear what the commenter means by ``individuals 
whose eligibility is determined manually.'' It may be that the 
commenter is referring to individuals who have submitted a paper 
application by mail or in person. Or perhaps the commenter is referring 
to individuals for whom either DHS or SSA is unable to return a 
positive match verifying citizenship or immigration status. In either 
case, we note that the verification rules at Sec. Sec.  435.940 through 
435.956, apply equally to all applicants and beneficiaries, regardless 
of the mode through which they submit their application. Per Sec.  
435.956(a)(1) of the final rule, states first must attempt verification 
of citizenship or immigration status through the FDSH or alternative 
mechanism approved by us under Sec.  435.945(k), regardless of the mode 
through which an application was filed. However, the state retains the 
option to request the individual to submit documentation if that 
attempt is not successful.
    Comment: A commenter disagreed with the policy at proposed Sec.  
435.406(a)(iv)(E) to exempt individuals who received medical assistance 
as a deemed newborn in any state from the citizenship verification 
requirements because it would be more administratively burdensome for 
states to verify status as a deemed newborn in another state rather 
than conducting an electronic data match with SSA. The commenter also 
indicated that only exempting individuals who received eligibility 
based on such status after July 1, 2006 would represent a change in 
policy. Another commenter questioned what resources will be available 
to identify individuals who were deemed eligible as a newborn in other 
states.
    Response: Section 1903(x) of the Act requires states to exempt 
deemed newborns from the citizenship verification requirements, which 
we implement at Sec.  435.406(a)(1)(iii)(E) of the final rule. Under 
Sec.  435.117(b) of the final rule, states have the option to provide 
deemed newborn eligibility to a child if the child's mother was 
eligible for and receiving Medicaid or CHIP in another state for the 
date of the child's birth. However, in response to the concern raised 
by the commenter, we are revising Sec.  435.406(a)(1)(iii)(E), as 
redesignated in the final rule, to provide that states have the option 
to apply the exemption to individuals who were eligible as a deemed 
newborn in another state provided that the state has verified the 
individual was eligible as a deemed newborn in the other state. For 
example, if state A has taken up the option under Sec.  
435.117(b)(2)(i) of the final rule to provide deemed eligibility to 
babies born to pregnant women on Medicaid in another state, and accepts 
self-attestation of the deemed newborn status in the other state (state 
B), state A must verify the baby's citizenship in accordance with the 
regulations--for example, via the FDSH or alternative approved 
mechanism, or based on documentary evidence described in Sec.  435.407 
of the regulations. FFP at the administrative match (50 percent) is 
available to verify that an individual was eligible as a deemed newborn 
in another state.
    We do not agree with the commenter that only exempting individuals 
who received deemed newborn status on or after July 1, 2006 would be a 
change in policy. As discussed in a SHO Letter issued in December 2009, 
SHO #09-016, the deemed newborn exemption added to section 1903(x) of 
the Act by section 211 of CHIPRA, went into effect on July 1, 2006, as 
if it had been included in the Deficit Reduction Act of 2005. We have 
consistently maintained that the exemption applies only to individuals 
deemed eligible under section 1902(e)(4) of the Act on or after July 1, 
2006.
    Comment: Several commenters supported proposed Sec.  435.407 to 
consolidate and streamline the types of documents required to verify 
citizenship and identity in the event that citizenship cannot be 
verified through the FDSH. Several commenters also supported the 
proposal to allow individuals to present copies of documents rather 
than originals. One commenter questioned if states can start

[[Page 86424]]

accepting copies prior to January 1, 2014, to relieve the 
administrative burden of the current policy.
    Response: We are finalizing with slight modification the list of 
acceptable documents in Sec.  435.407 of the proposed rule, including 
the requirement that states accept copies of documents an effective 
date on or after the effective date of this final rule, except when the 
state has reason to question the validity of the document provided. 
Originals are not required under the statute and we are not aware of 
any evidence establishing that this requirement enhances program 
integrity. In a study conducted by the Government Accountaility Office 
(GAO) in 2007, states overwhelmingly reported that the requirement to 
obtain original documents was one of two aspects of the current 
regulations that significantly increased burden on states and 
beneficiaries (the other was the complexity of the list of acceptable 
documents provided in the regulations), with the primary result being 
not increased program integrity but an undue barrier to coverage for 
eligible individuals. Forty-two of 44 states reported to the GAO that 
original documents posed a barrier to eligible citizens proving their 
status. See States Reported That Citizenship Documentation Requirement 
Resulted in Enrollment Declines for Eligible Citizens and Posed 
Administrative Burdens, Report to Congressional Requesters, United 
States Government Accountability Office, GAO-07-889, June 2007. 
Further, requiring original documents effectively results in a 
requirement to provide documentation in person for individuals who are 
reluctant to send an original through the mail and undermines achieving 
a real-time online application process. Many states are able to 
complete the electronic verification in real-time and notify the 
individual if documents are needed, which enables applicants to upload 
documents immediately. Requiring originals would greatly hamper 
realization of the real-time online application experience which the 
regulations are designed to facilitate. We note that over 90 percent of 
electronic queries to SSA result in successful verification, such that 
paper documentation is only necessary in limited circumstances.
    We are making technical changes at Sec.  435.407(b)(1), and 
retaining some of the language in the current rule related to 
establishing that an individual is a collectively naturalized citizen 
from Puerto Rico or CNMI. We had erroneously proposed to remove this 
language as no longer relevant. We are also making a technical change 
at Sec.  435.407(b)(7) to refer more simply to ``A Northern Marianas 
Identification Card issued by DHS or a predecessor agency,'' removing 
the requirement that the individual have been born in the CNMI before 
November 4, 1986, because only collectively naturalized citizens who 
were born in the CNMI before that date will be issued such a card. We 
also are replacing the word ``satisfactory'' with ``sufficient'' in the 
introductory language in Sec.  435.407(a) to be clearer that the 
documents listed in paragraph (a) are sufficient to document 
citizenship.
    Comment: We solicited comments on whether two affidavits, rather 
than one as proposed should be required to verify citizenship under 
Sec.  435.407(b)(18). Several commenters supported the proposed rule of 
requiring just one affidavit. No commenters supported retaining the 
requirement for two affidavits. Nor did any commenters oppose the other 
proposed changes to eliminate the administrative barriers to use of 
affidavits, such as eliminating language indicating that affidavits be 
used only as a last resort in rare circumstances.
    Response: We agree with the commenters and are finalizing without 
modification the provision at Sec.  435.407(b)(18) that only one 
affidavit is needed to verify citizenship. We also are finalizing the 
elimination of other limitations currently placed on the use of 
affidavits as compared to other forms of documentation listed in Sec.  
435.407. We previously limited states' flexibility to accept affidavits 
as a reliable source of documentation for individuals who do not have 
ready access to more common types of citizenship documentation, such as 
a passport or birth certificate. However, since the 2006 issuance of 
Sec.  435.407 implementing section 1903(x) following passage of the 
Deficit Reduction Act of 2005, we are aware of no information to 
support the proposition that one affidavit is any less reliable than 
two, or that the other restrictions placed on use of affidavits in the 
current regulations enhance their reliability. Nor did any commenters 
point out any such information or concerns. Therefore, we are 
finalizing the revisions to Sec.  435.407(d)(5) of the current 
regulations which were proposed at redesignated Sec.  435.407(b)(18) in 
this rulemaking.
    Comment: A commenter suggested that rules pertaining to the process 
for verification of citizenship used by the Exchange and Medicaid be 
consistent.
    Response: We agree and believe the rules as finalized at Sec.  
435.956 do align with the citizenship verification rules applicable to 
the Exchange to the fullest extent possible. We note, in particular, 
that Medicaid and CHIP agencies and the Exchange must verify 
citizenship and immigration status through the FDSH (if available) or 
an alternative approved approach and provide a reasonable opportunity 
period (referred to in Exchange regulations as an ``inconsistency 
period'') of up to 90 days, with the provision of benefits pending the 
opportunity for applicants to resolve any inconsistencies and complete 
verification of their status. One notable difference is that, to 
receive Medicaid or CHIP benefits during a reasonable opportunity 
period, an applicant has to be determined to meet all other eligibility 
requirements (for example, income), whereas the Exchange regulations 
provide for APTC and CSR eligibility during a 90-day inconsistency 
period for other factors of eligibility (such as income), as well. 
However, this is not a matter of verification processes, but of the 
extent to which assistance is authorized under the separate statutory 
authorities governing Medicaid, CHIP and coverage through an Exchange. 
We note that we are revising the proposed paragraph at Sec.  
435.956(b)(2)(ii)(B), which provided states the option to extend the 
reasonable opportunity if the individual is making a good faith effort 
to provide documentation or the agency needs more time to complete the 
verification of citizenship or immigration status. In the final rule we 
are only allowing this option for individuals who declare satisfactory 
immigration status because we do not have the statutory authority to 
extend the reasonable opportunity period for citizenship verification 
beyond 90 days as prescribed in section 1902(ee) of the Act. Under 
section 1902(ee)(1)(B)(ii)(III) of the Act, individuals who have made a 
declaration of citizeship must be disenrolled from coverage within 30 
days from the end of the 90 day period, if no such documentary evidence 
is presented or the inconsistency is not resolved. Section 1137 of the 
Act, which governs verification of immigration status does not 
prescribe a definitive time period for the reasonable opportunity 
period, so the flexibility exists for states to provide a good faith 
extension when necessary beyond the 90-day reasonable opportunity 
period defined in this rule.
    Comment: A commenter questioned whether a state can accept as 
verification of citizenship and immigration status, information from 
SSA indicating that the individual

[[Page 86425]]

provided a declaration of citizenship or lawful presence when the 
person applied for SSI or low-income subsidies under Medicare Part D.
    Response: Under section 1903(x) of the Act and Sec.  
435.406(a)(1)(v), redesignated at Sec.  435.406(a)(1)(iii) of this 
final rule, individuals receiving SSI as well as individuals entitled 
to or enrolled in Medicare under title XVIII of the Act are exempt from 
the Medicaid citizenship verification requirements. Under 8 U.S.C. 
1612(a)(2)(F), non-citizens receiving SSI payments are eligible for 
full Medicaid benefits to the same extent as citizens who are receiving 
SSI; thus, states do not need to verify the immigration status of non-
citizens receiving SSI. The immigration status of non-citizens entitled 
to or eligible for Medicare, including those receiving low-income 
subsidies under Medicare Part D, must be verified consistent with the 
requirements in Sec.  435.956.
    Comment: A commenter suggested that neither Sec.  435.406 nor Sec.  
435.407 address the verification of lawful presence, though section 
1137(d)(2) of the Act appears to require that hard copy documentation 
of lawful presence be presented. The commenter requested confirmation 
that if DHS verifies that the person is lawfully present, the state is 
not required to obtain other documentation.
    Response: ``Lawfully present' is not an immigration status per se, 
but rather a term we used in earlier guidance in interpreting the 
phrase ``lawfully residing in the United States'' in section 214 of 
CHIPRA, which added sections 1903(v)(4) and 2107(e)(1)(J) of the Act to 
provide states with an option to cover otherwise-eligible pregnant 
women and children who are ``lawfully residing in the United States.'' 
See the July 1, 2010 State Health Official Letter (SHO #10-006, CHIPRA 
#17) and the August 28, 2012 State Health Official Letter (SHO #12-
002). Section Sec.  435.956(a) addresses verification of immigration 
status for most non-citizens, regardless of whether they are declaring 
an immigration status qualifying them for coverage as a qualified non-
citizen or as a lawfully present pregnant woman or child. Section 
1137(d) of the Act requires that documentary evidence, which may 
include electronic confirmation of immigration status from DHS, be 
provided. We agree with the commenter that the proposed rule did not 
adequately convey that states must attempt to verify immigration status 
for both qualified non-citizens and other lawfully residing individuals 
through the FDSH or alternative mechanism approved under Sec.  
435.945(k). Therefore, we have added a new paragraph Sec.  435.406(c) 
in the final regulation to provide that agency must verify a 
declaration of satisfactory immigration status in accordance with Sec.  
435.956; per Sec.  435.956(a)(2) of the final rule, that is, through 
the FDSH or approved alternative mechanism. Under the final regulation, 
if the state is able to verify an individual is in satisfactory 
immigration status through SAVE, additional documentation is not 
required.
    We also removed proposed Sec.  435.406(a)(1)(ii), requiring that 
the agency verify a declaration of citizenship, and instead added a new 
paragraph (c) to consolidate the requirement to verify both a 
declaration of citizenship and satisfactory immigration status. We 
redesignated proposed Sec.  435.406(a)(1)(iii) and (iv) at Sec.  
435.406(a)(1)(ii) and (iii) in the final rule accordingly.
    Comment: One commenter was concerned that the proposed regulation 
requires that a 90-day reasonable opportunity period be given to 
individuals for whom the state is unable to promptly verify citizenship 
or immigration status, but does not specify that individuals must have 
first made a declaration that they are a citizen, national or lawfully 
residing non-citizen.
    Response: Sections 1137(d) and 2105(c) of the Act requires 
individuals seeking coverage under Medicaid or CHIP to provide a 
declaration of citizenship or satisfactory immigration status under 
penalty of perjury; such declaration is generally provided on the 
single streamlined application for Medicaid, CHIP, and the Exchanges, 
either on paper with a signature in writing, over the phone using a 
telephonic signature, or online using an electronic signature. Such 
declaration is required whether an individual is in an immigration 
status included in the definition of ``qualified non-citizen'' or in a 
status which is included in the definition of ``lawfully present'' in 
the July 1, 2010 and August 28, 2012 State Health Official Letters. 
Consistent with the statute and the current regulations, Sec.  
435.406(a)(1)(i) of the proposed rule requires that individuals make a 
declaration of status as a citizen or national of the United States, 
and this requirement is retained in the final rule. The current 
regulations at Sec.  435.406(a)(2)(i) require that qualified non-
citizens (referred to in the current regulations as ``qualified 
aliens,'' using the term employed by PRWORA) make a declaration that 
they are in a satisfactory immigration status. Sections 1137(d)(4), 
1902(ee)(1) and 1903(x)(1) are clear that individuals must first 
declare citizenship or satisfactory immigration status before a 
reasonable opportunity period is provided. However, the proposed 
regulation did not, as the commenter points out, clearly reflect this 
requirement. Therefore, we have revised Sec.  435.956(b) to clarify 
that the agency must provide a reasonable opportunity period to 
otherwise eligible individuals who have made a declaration of 
citizenship or satisfactory immigration status in accordance with Sec.  
435.406(a), as revised in this final rule, but whose status the agency 
is unable to promptly verify following the process set forth in Sec.  
435.956(a) of the final rule.
    Comment: A commenter questioned if the expectation is for states to 
check their records to ascertain whether citizenship has already been 
verified for an individual, and if so, block the citizenship 
verification request to the FDSH. The commenter is concerned that this 
would impede the expectation of a streamlined application and real-time 
eligibility determinations for most applicants.
    Response: It is a longstanding policy, currently at Sec.  
435.407(i)(5) and maintained with slight modifications in the proposed 
and this final rule at Sec.  435.956(a)(4), that verification of 
citizenship is a one-time occurrence and states should not re-verify 
citizenship at renewal or subsequent application for Medicaid or CHIP 
unless later evidence raises a question of the person's citizenship. As 
part of the state's dynamic online application process, states should 
check existing records for those who are known to the system and 
determine whether citizenship has already been verified. For 
individuals whose citizenship has already been verified, states should 
suppress sending a new verification request to SSA, unless the 
individual reports, or the state otherwise has learned of, a change in 
their citizenship status, in which case the state may act upon the 
information.
    Comment: We solicited comments on the most appropriate procedures 
for verification of active duty service or veteran status for qualified 
non-citizens, as well as their spouses and dependents that are exempt 
from the 5-year waiting period applicable to certain qualified 
noncitizens on the basis of such service or veteran status. One 
commenter supported the approach of allowing states to accept self-
attestation unless the state has information that is not reasonably 
compatible with such attestation, subject to the requirements of Sec.  
435.952. Another commenter suggested that the FDSH obtain this

[[Page 86426]]

information from the Department of Defense and Veteran's 
Administration.
    Response: We believe that, if electronic verification of active 
duty or veteran status becomes available through the FDSH, states 
should be required first to attempt verification of this status through 
the FDSH. This is consistent both with the verification requirements 
for immigration status generally, finalized in Sec.  435.956(a)(2) of 
this final rule, as well as the requirement under Sec.  435.952(c) 
generally to access electronic verification sources before requiring 
other forms of documentation or additional information from the 
individual. Until electronic verification is available, we agree with 
the commenter that state flexibility to accept self-attestation of 
active duty or veteran status is appropriate, unless the state has 
information contrary to the individual's attestation. We, therefore, 
are adding a new paragraph at Sec.  435.956(a)(3) to require states to 
verify through the FDSH (or alternative mechanism authorized under 
Sec.  435.945(k)) that an individual is an honorably discharged veteran 
or in active military duty status, or the spouse or unmarried dependent 
child of such person as described in 8 U.S.C. 1612(b)(2), if such 
verification is available through the FDSH. If verification through the 
FDSH or alternative authorized mechanism is not available, Sec.  
435.956(a)(3) provides that states may accept attestation that an 
applicant, or the spouse or parent of an unmarried dependent child 
applying for coverage, is in active duty or veteran status for purposes 
of the exemption from the 5-year waiting period. Consistent with 
current regulations at Sec.  435.952(c), if electronic verification via 
the FDSH or otherwise is not available, states also retain the 
flexibility to require documentation of active duty or veteran status.
    Comment: A commenter suggested that permitting coverage under 
Medicaid or CHIP for individuals without an SSN or a verified SSN 
creates fiscal and program integrity risks. Another commenter opposed 
the policy that a reasonable opportunity period for verification of 
citizenship be triggered when an individual is unable to provide a SSN 
because a state cannot conduct electronic verifications without a SSN. 
One commenter recommended amending Sec.  435.956(g)(1) to require a 90-
day reasonable opportunity period pending verification of an 
individual's SSN.
    Response: We do not agree with the comments and are finalizing the 
rule as proposed at Sec.  435.956(b)(1) with the exception of minor 
revisions for clarity. While electronic verification with SSA cannot be 
done without an SSN, citizenship can be verified using other 
documentation specified in Sec.  435.407; income and other eligibility 
criteria also can be verified without an SSN, in accordance with the 
state's verification plan. Indeed, section 1902(ee)(2)(C) of the Act 
specifically requires states to provide a reasonable opportunity period 
pending verification of citizenship when an individual has not 
submitted an SSN. Further, the requirement to enroll otherwise eligible 
individuals in Medicaid or CHIP pending receipt and verification of an 
SSN reflects longstanding Medicaid policy, codified at Sec.  
435.910(f), which is also applied to CHIP per Sec.  457.340. This 
policy applies both to individuals whose citizenship or immigration 
status has been verified as well as to individuals in a reasonable 
opportunity period. Individuals determined eligible for Medicaid who do 
not have an SSN, or whose SSN cannot be verified at the time of 
application, must cooperate with the agency in obtaining an SSN or 
resolving any inconsistencies with SSA records, with the limited 
exceptions of those individuals exempt from furnishing an SSN per Sec.  
435.910(h). The eligibility of individuals whose citizenship or 
immigration status is verified (electronically or otherwise), but who 
fail to cooperate in obtaining or verifying their SSN when required may 
be terminated, provided that advance notice and fair hearing rights are 
afforded in accordance with part 431 subpart E.
    Comment: A commenter questioned whether state agencies that issue 
drivers' licenses are held to the same standards of verification of 
citizenship or SSNs that apply to the Medicaid agency, and if so, 
whether states are required to accept a state-issued driver's license 
as documentary evidence of citizenship. Further, the commenter 
questioned if our regulations refer only to the Enhanced Driver's 
License (EDL) under the Western Hemisphere Travel Initiative or also to 
``REAL IDs'' established under the REAL ID Act of 2005, and whether 
there is a standard that all states must use in designating that a 
driver's license meets the EDL or REAL ID requirements.
    Response: Section 1903(x)(3)(B)(iv) of the Act, implemented at 
current Sec.  435.407(a)(4), requires states to accept a driver's 
license as proof of citizenship if the state issuing the license 
requires proof of U.S. citizenship, or obtains and verifies a social 
security number from the applicant who is a citizen before issuing such 
license. The state Medicaid agency is responsible for determining if 
the state agency issuing drivers' licenses meets the requirements of 
Sec.  435.407(a)(4), and if so, such licenses must be accepted as proof 
of citizenship. The DHS has issued regulations governing EDLs and REAL 
IDs at 8 CFR 235.1 and 6 CFR part 37 respectively. An EDL issued in 
accordance with the DHS regulations would meet the requirements in 
Sec.  435.407(a)(4). We understand that a REAL ID may be issued to non-
citizens and therefore would not constitute evidence of citizenship 
under Sec.  435.407(a)(4).
    Comment: A commenter requested that states be allowed to maintain a 
45-day timeframe to process applications prior to beginning a 90-day 
reasonable opportunity period, including the provision of benefits, to 
resolve inconsistencies and verify citizenship and immigration status. 
The commenter suggests that requiring states to begin benefits and 
provide notice to applicants sooner creates administrative burden and 
expense if the inconsistency is resolved within 45 days. The commenter 
believes that states should have flexibility to determine when the 90-
day reasonable opportunity period should begin. Another commenter 
opposed the policy to require states to fund benefits for individuals 
during the reasonable opportunity period pending verification of 
citizenship and immigration status.
    Response: As discussed in previous guidance (SHO #09-016, December 
2009), the reasonable opportunity period pending verification of 
citizenship and immigration status is a statutory requirement that is 
distinct from the 45-day timeliness standard under Sec.  435.912, which 
refers to the maximum period of time in which most applicants are 
entitled to an eligibility determination. Per sections 1137(d), 
1902(ee) and 1903(x) of the Act, implemented at Sec.  
435.956(a)(5)(ii), for applicants declaring citizenship or satisfactory 
immigration status, whose status the state is unable to verify 
electronically in accordance with Sec.  435.956(a)(1), benefits must be 
furnished as soon as the state determines that the applicant meets all 
other eligibility requirements; per conforming revisions at Sec.  
435.1008, which we finalize as proposed, FFP is available for benefits 
provided during a reasonable opportunity. The determination of such 
other eligibility requirements is subject to the same timeliness 
standards as apply to applicants generally under Sec.  435.912. Once a 
state has completed its review of the application, and conducted other

[[Page 86427]]

relevant verifications--which often will be much sooner than 45 days--
it must promptly enroll applicants who have made a declaration of 
citizenship or satisfactory immigration status, even if the 
verification of such status is still pending. Resolution of an 
inconsistency relating to verification of citizenship or immigration 
status which takes more than 45 days does not trigger a violation of 
the timeliness standards provided that benefits are not delayed or 
denied during the reasonable opportunity period because of such 
inconsistency. States have the option under current regulations at 
Sec.  435.915(b) to begin furnishing benefits to applicants determined 
eligible for Medicaid effective the date of application or the first 
day of the month of application. Reflected at Sec.  435.956(a)(5)(iii) 
of the final rule, the agency must apply the same election made under 
Sec.  435.915(b) to applicants who have been provided a reasonable 
opportunity to provde citizenship or immigration status once they are 
determined otherwise-eligible for coverage--that is, the agency must 
provide benefits during a reasonable opportunity period to applicants 
determined otherwise eligible for coverage effective the date of 
application or the first day of the month of application, consistent 
with the agency's election under Sec.  435.915(b). Retroactive 
eligibility during the 90 days preceding the month of application is 
not available to individuals during a reasonable opportunity period, 
but would be available once their status is successfully verified and 
the determination of eligibility is complete.
    Comment: A commenter questioned whether the electronic data source 
or paper documentation provided by the applicant takes precedence if 
the two conflict. Further, the commenter questioned if the paper source 
can be used to initiate the 90-day reasonable opportunity with 
provision of benefits so the recipient can attempt to resolve the 
discrepancy with the federal agency providing the electronic data.
    Response: If data obtained through an electronic data match is 
inconsistent with attested information provided by the individual, 
Sec.  435.952(c)(2) requires that the agency obtain additional 
information from the individual, including paper documentation. The 
very purpose of such additional information is to substantiate the 
individual's claim despite the existence of electronic data to the 
contrary. In the case of income, for example, if quarterly wage data 
through an electronic match is not reasonably compatible with an 
individual's attested wages, pay stubs showing current wages would take 
precedence over the quarterly wage data (unless the agency had reason 
to question their authenticity). In the case of citizenship, SSA will 
never respond to an electronic query with a finding that an individual 
is not a citizen. Rather, SSA will respond to an electronic query with 
a response that the individual's citizenship status is verified or that 
SSA cannot verify citizenship status. Similarly, an electronic query at 
Step 1 or 2 to SAVE status will never return a finding that a non-
citizen is not in a qualified or otherwise lawfully-present status; 
rather, SAVE will only return a positive verification, or indicate that 
it cannot verify the individual's status. The reasonable opportunity 
period is triggered under the statute and Sec.  435.956(a)(5) of the 
final rule if the individual's status cannot be promptly verified 
through either the FDSH or alternative mechanism. Paper documentation 
typically serves to verify the status of an individual once a 
reasonable opportunity has been triggered, and states may not wait 
until receipt of paper documentation of citizenship or immigration 
status to initiate benefits during a reasonable opportunity period.
    Comment: We solicited comments on when states should begin the 
reasonable opportunity period for citizenship and immigration status 
when inconsistencies arise from an electronic data source. One 
commenter suggested that states should be allowed to resolve data or 
process inconsistencies prior to triggering the reasonable opportunity 
period, including time to verify through SAVE. The commenter also 
supports an alternative to the proposed policy, in which the reasonable 
opportunity period would begin after electronic verifications have been 
exhausted. The commenter also disagreed that a reasonable opportunity 
should be triggered if the FDSH or SSA or DHS databases are unavailable 
because technological difficulties should not drive policy decisions, 
especially if the result may be inappropriate costs to the state. 
Another commenter stated that a reasonable opportunity period should be 
allowed when there is a discrepancy with a data source, as well as when 
electronic verifications are unavailable. Several commenters recommend 
not allowing states more than 1 or 2 business days to resolve 
inconsistencies before the reasonable opportunity period is triggered 
so benefits are not unnecessarily delayed.
    Response: Both sections 1137(d) and 1902(ee) of the Act require 
states to provide a reasonable opportunity period with the provision of 
benefits to otherwise eligible individuals pending verification of 
immigration status or citizenship, respectively, if the state is unable 
to verify the individual's declaration with SSA or DHS. Section 
1903(x)(4) of the Act provides that individuals who make a declaration 
of citizenship or national status be provided at least the reasonable 
opportunity to present documentation of citizenship status as is 
provided non-citizens under section 1137(d) of the Act. At Sec.  
435.956(g)(1) of the proposed rule, we proposed that notice of such 
reasonable opportunity period must be provided if the individual's 
status cannot be ``promptly verified'' with these data sources through 
the FDSH or alternative mechanism authorized in accordance with Sec.  
435.945(k). We explained that we believed this struck the right balance 
between applicants' interests in accessing coverage in a timely manner 
and states' interests in not being required to take steps to enroll 
someone in coverage immediately whenever electronic verification cannot 
be achieved in real time, if inconsistencies preventing successful 
verification with SSA or DHS can be quickly resolved.
    We are not persuaded by the commenters to change the proposed 
policy, which is finalized at Sec.  435.956(a)(5) of the final rule. We 
agree that states should be given time to resolve simple 
inconsistencies preventing successful verification of status with SSA 
or DHS prior to initiating the reasonable opportunity period, such as 
correcting inverted numbers in an individual's SSN or immigrant 
identification number or a misspelled name, and we have moved the text 
at proposed Sec.  435.956(g)(1)(ii) to Sec.  435.956(a)(1)(i)(B) and 
(a)(2)(ii) of the final rule, which makes clear that efforts to resolve 
inconsistencies through such measures must be done promptly, and that 
initiation of the reasonable opportunity period occurs after such 
attempts are made. However, if inconsistencies preventing a successful 
match cannot be promptly resolved, resolution could take days or even 
weeks. We do not believe that delaying start of a reasonable 
opportunity period, including the provision of benefits to otherwise-
eligible individuals, while the state continues more time-consuming 
efforts to verify the individual's status with SSA or DHS is consistent 
with the intent of the statute, or that such a policy would strike the 
right balance between administrative efficiency and best interests of 
beneficiaries.
    We also do not believe that it is in the interests of either states 
or applicants that states be limited to 2-3 days to

[[Page 86428]]

resolve inconsistencies preventing a successful match. Applicants whose 
status cannot be promptly verified with SSA or DHS are given 90 days to 
establish their status. During this time states are required under 
Sec.  435.956(b)(1) to continue its efforts to complete verification of 
the individual's status, or request documentation if necessary. We 
agree with the commenter who stated that a reasonable opportunity 
period should be allowed when there is a discrepancy with a data 
source, as well as when electronic verifications are unavailable; a 
reasonable opportunity is provided under proposed Sec.  435.956(g)(1), 
finalized at Sec.  435.956(a)(5) of the final rule.
    Comment: A commenter was concerned that the proposed rules could be 
interpreted to allow multiple (and unlimited) reasonable opportunity 
periods through subsequent applications despite failure by the 
individual to provide proof of citizenship or immigration status. 
Another commenter questioned if CMS considered limiting the number of 
reasonable opportunity periods that can be provided.
    Response: The reasonable opportunity period may only be granted 
based on an attestation by the applicant that he or she is a citizen or 
in a satisfactory immigration status which cannot be promptly verified 
because (1) the individual does not have the necessary information to 
conduct an electronic data match; (2) electronic data is not available 
and the state must collect additional information from the individual; 
or (3) there is an inconsistency between the individual's attestation 
and information from an electronic data source. An attestation that the 
applicant knows to be untrue could result in criminal or other 
penalties for fraud. If fraud is suspected, states should rely on the 
program integrity measures they have in place to deal with such 
situations. In response to the comment, we are adding Sec.  
435.956(b)(4) to the final rule to allow states to request approval 
from CMS to place limitations on the number of reasonable opportunity 
periods to verify citizenship and immigration status that a given 
person may receive if the state can demonstrate a program integrity 
concern related to applicants receiving multiple reasonable opportunity 
periods.
    Comment: A commenter recommended that CMS allow a reasonable 
opportunity period for other factors of eligibility beyond citizenship 
and immigration status to align with the policies of the Exchanges.
    Response: We do not have the statutory authority to apply a 
reasonable opportunity for factors other than citizenship and 
immigration status.
    Comment: A commenter suggested that CMS also allow for self-
attestation of membership in a tribe to provide cost sharing and other 
protections during the 90-day reasonable opportunity period.
    Response: The 90-day reasonable opportunity period only applies to 
verification of citizenship and immigration status and is not relevant 
to cost sharing protections for American Indians. Cost sharing 
exemptions are outside the scope of this regulation but are discussed 
in the July 15, 2013 Medicaid and CHIP final rule.
    Comment: A commenter supported proposed Sec.  435.956(g)(4), giving 
states the option whether or not to provide continuation of benefits if 
an appeal is filed following a termination of eligibility at the end of 
the reasonable opportunity period because citizenship or immigration 
status had not been verified. One commenter suggested adding ``during 
any appeal process'' to the list of triggers for a reasonable 
opportunity period.
    Response: We are maintaining in the final rule the option, 
redesignated at Sec.  435.956(b)(3), for states to continue to furnish 
benefits during the appeals process if an individual is terminated due 
to citizenship or immigration status not being verified before the 
reasonable opportunity period ends. We do not agree with the commenter 
that ``during any appeal process'' should be added to the list of what 
triggers a reasonable opportunity period. Generally an appeals process 
would come after the reasonable opportunity period has been exhausted 
and a final eligibility determination has been made, so it is not a 
relevant ``trigger'' of a reasonable opportunity period.
    Comment: We solicited comments on how long states should be 
expected to retain records indicating that citizenship and immigration 
status of a given applicant has been previously verified. Several 
commenters recommended that the records should be kept indefinitely. 
Several commenters recommended that states be required to retain 
documentation of citizenship for a period of no less than 10 years. One 
commenter stated states should not be required to retain records of 
citizenship indefinitely, but rather for a more limited time period, 
such as 5 years.
    Response: We appreciate the suggestions that verification records 
for citizenship and immigration status be retained by states for 
specific periods of time. The suggested comments provided a range of 
options from 5 years to indefinitely. In light of the diverse opinions 
concerning the optimal time period, we are finalizing proposed Sec.  
435.956(a)(3), redesignated at Sec.  435.956(a)(4), without revision 
and are not prescribing a specific length of time for which states must 
maintain such records. We note that, while a hardcopy of a document 
verifying citizenship or immigration status need not be retained, 
states should maintain a notation in their electronic case records of 
responses received from the FDSH or other electronic sources, or that 
paper documentation was furnished, verifying citizenship or immigration 
status, so that the individual's status will not need to be re-verified 
following a break in coverage, unless the individual's particular 
status is subject to change. States must maintain an electronic record 
of successful citizenship or immigration status verification in 
accordance with the record retention policies generally applied by the 
state in accordance with Sec.  431.17.
    Comment: Several commenters recommended prohibiting states from re-
verifying immigration status at renewal because the status for most 
lawfully present immigrants does not change from year to year, and 
existing change reporting requirements already obligate individuals to 
report any change in immigration status.
    Response: We did not propose and are not finalizing a prohibition 
on states re-verifying immigration status at renewal for those statuses 
that are subject to change, such as non-citizens with Temporary 
Protected Status. States are not required to verify immigration status 
at renewal if an individual has a permanent status, unless a change is 
reported.
    Comment: Several commenters stated that the additional requirement 
at proposed Sec. Sec.  435.406(a)(3) and 457.320(d) that the 
application filer attest that he or she has a reasonable basis for 
making the declaration of citizenship or immigration status on behalf 
of another applicant is an unnecessary burden. The commenters stated 
that if someone is ``acting responsibly'' for the applicant, then by 
definition he or she would have a reasonable basis for declaring an 
applicant's immigration status.
    Response: We disagree than someone acting responsibly for a minor 
or incapacitated individual necessarily is competent to make a sworn 
declaration of citizenship or immigration status on their behalf. In 
order to make such declaration on behalf of another person, someone 
must actually know the person's status. We therefore are

[[Page 86429]]

finalizing the provision proposed at 435.406(a)(3). However, we are 
revising the language in the final rule to be clear that to make a 
declaration on another person's behalf, someone must attest to having 
knowledge of the other person's status, not merely to having a 
``reasonable basis'' for their status, as proposed. We also are 
removing the word ``family'' from Sec. Sec.  435.406(a)(3) and 
457.320(d), as proposed because it is redundant and are making minor 
revisions to Sec.  457.320(d) to clarify that an individual applying 
for CHIP must make a declaration of citizenship or immigration status. 
Examples of individuals who might have knowledge of another person's 
citizenship or immigration status on behalf, and could make the 
declaration permitted under Sec. Sec.  435.406(a)(3) and 457.320(d) of 
the final rule, include a parent, spouse or other family member, friend 
or acquaintance who can attest to knowing the individual's status. We 
would not generally expect application assistors, who are not 
personally acquainted with the applicant, to have the requisite 
knowledge to make such a declaration.
    Comment: A commenter questioned whether the FDSH will provide 
verification of domestic violence for applicants who attest to being a 
qualified alien.
    Response: The FDSH will provide responses indicating whether SAVE 
has verified that the individual has a satisfactory immigration status 
for purposes of full Medicaid and/or CHIP benefits, whether the 
individual is subject to the 5-year bar, and whether the 5-year bar has 
been met. While domestic violence per se is not verified, SAVE does 
verify if the individual meets the criteria as a qualified non-citizen 
under 8 U.S.C. 1641(c) (relating to treatment of certain ``battered 
aliens'' as a qualified non-citizen), or is the spouse or child of such 
an individual.
    Comment: A commenter questioned what type(s) of assistance states 
are expected to provide under proposed Sec.  435.407(e) and how 
community-based organizations assisting these clients can maximize such 
assistance. The commenter suggested that states be required to pay for 
or waive the cost of obtaining documents from federal government 
agencies or other states needed to verify citizenship. Several 
commenters suggested the assistance required be limited to persons who 
are limited English proficient and individuals with disabilities.
    Response: We believe it is appropriate to provide states with 
flexibility to determine when applicants need assistance with securing 
documentation, as well as the best means for providing that assistance, 
and we are finalizing Sec.  435.407(e) as proposed. Examples of 
individuals who may need such assistance are discussed in section I.B.7 
of the January 22, 2013 proposed rule, which may include, but is not 
limited to, individuals with limited English proficiency and 
individuals with disabilities. We also encourage states to work with 
community-based organizations to assist individuals in obtaining needed 
documentation.
    Comment: One commenter recommended CMS offer federal assistance to 
states to ensure that their electronic verification systems are in good 
working order and able to access the FDSH in a timely manner.
    Response: Subject to limitations, enhanced federal funding is 
available to assist states with the modernizing or building new 
eligibility systems in accordance with Sec.  433.112.
    Comment: Several commenters also recommended adding a paragraph at 
Sec.  435.956 to prescribe specific parameters states must follow when 
providing a notice of reasonable opportunity period to individuals who 
are limited English proficient and individuals with disabilities.
    Response: Proposed Sec.  435.956(g)(1) requires that the notice of 
the reasonable opportunity period be accessible to persons who are 
limited English proficient and individuals with disabilities consistent 
with Sec.  435.905(b), and we are finalizing that provision at Sec.  
435.956(b)(1), with minor editorial revision. Accessibility standards 
under Sec.  435.905(b) are discussed in section II.D of this final 
rule.
    Comment: Several commenters recommended requiring states to have 
Memorandums of Understanding (MOU) with DHS that protect applicants' 
due process and privacy rights under section 1137(d) of the Act before 
directly verifying information with DHS in the event verification is 
not done through the FDSH.
    Response: Current statute and regulations already provide 
safeguards which protect applicants' privacy. Section 1137(d) of the 
Act requires states to protect an individual's privacy when conducting 
a match with SAVE. Section 435.945(i) requires Medicaid agencies to 
execute written agreements with other agencies before releasing data 
to, or requesting data from, those agencies. In addition, Sec.  431.300 
requires safeguards to be in place when agencies exchange information 
to verify eligibility.
    Comment: Several commenters suggested that Medicaid and CHIP 
agencies and the Exchange be required to establish agreements for 
sharing information about verified citizenship or immigration status to 
minimize duplicative verification requirements.
    Response: Current Sec.  435.1200 requires all insurance 
affordability programs to transfer all information obtained by the 
program that is relevant to eligibility for other programs, which would 
include an individual's verified citizenship or immigration status. 
Under Sec. Sec.  435.1200(d)(4), 457.348, 600.330 and 155.345, findings 
related to a criterion of eligibility made by one program must be 
accepted without further verification.
    Comment: A commenter recommended that Sec.  435.406 be revised to 
indicate that beneficiaries who are no longer exempt from citizenship 
verification requirements must make a declaration of citizenship and 
have it verified, such as former foster care children.
    Response: We do not completely agree with the commenter. While we 
recognize that applicants will need to make a declaration of 
citizenship, section 1903(x)(2)(C) of the Act exempts individuals from 
the requirement to present satisfactory documentation of citizenship 
for whom child welfare services are made available under part B of 
Title IV, or adoption or foster care assistance is made available under 
part E of title IV of the Act. We interpret this to mean that such 
services or assistance was made available at some time, not that the 
individual must currently be receiving them to qualify for the 
exemption. However, if the state received information that Title IV-B 
or E services or assistance was terminated due to citizenship, the 
exemption would no longer apply and the state wound need to verify the 
individual's status. In contrast, sections 1903(x)(2)(A) and (B) of the 
Act explicitly require that individuals must be currently entitled to 
or enrolled in Medicare, or receiving SSI or Title II disability 
benefits. Therefore, we believe it would be appropriate for states to 
verify the citizenship of individuals no longer entitled to or enrolled 
in Medicare or receiving SSI or Title II disability benefits. We note 
that per Sec.  435.407(d) of the final rule, states may rely on 
verification of citizenship by a federal agency or another state 
agency, if such verification was done on or after July 1, 2006.
    Comment: Several commenters stated that Sec.  435.910 was not clear 
in describing how states should verify SSNs, or what procedures states 
must follow in the event that a different SSN is found to have been 
issued to the individual. The commenters also suggested that the 
regulations should, but currently do not, require that the agency must 
provide clear notice to

[[Page 86430]]

applicants and beneficiaries if there is a problem in verifying their 
SSN, and that individuals be given a reasonable opportunity period to 
verify his or her SSN. Finally, the commenters stated the regulations 
should be revised to require the state to provide clear instructions or 
assistance to the applicant or beneficiary to correct his or her SSA 
records in the event of an inconsistency with the attested to SSN.
    Response: We did not propose revisions to Sec.  435.910, except to 
remedy the inadvertent deletion in prior rulemaking of the 
identification of the statute as the source for states to verify SSNs, 
which identification is restored at Sec.  435.910(g) in the final rule. 
Therefore, the comment is beyond the scope of this rulemaking.
    Comment: Several commenters recommended deleting Sec.  435.910(g) 
and conducting future rulemaking that fully addresses the requirements 
for verification of SSN, in particular what protections and procedures 
the state is required to provide an applicant or beneficiary in the 
event of a problem with his or her SSN verification.
    Response: We did not propose to remove Sec.  435.910(g) and do not 
agree that any further rulemaking is necessary. Section 435.910, in 
conjunction with the verification regulations at Sec. Sec.  435.940 
through 435.956 provides comprehensive guidance on who must present an 
SSN, the procedures for verification of an SSN, and the obligations of 
states to assist individuals who do not have or cannot remember their 
SSN or to resolve inconsistencies between their attested SSN and 
information received from SSA.

H. Elimination or Changes to Unnecessary and Obsolete Regulations 
(Sec. Sec.  407.42, 435.113, 435.114, 435.201, 435.210, 435.211, 
435.220, 435.223, 435.310, 435.401, Sec.  435.510, 435.522, 435.909, 
and 435.1004)

    We proposed to revise or eliminate various regulations, in whole or 
in part, as obsolete or no longer applicable due to the expansion of 
Medicaid coverage under the Affordable Care Act to most individuals 
with income at or below 133 percent FPL, the previous de-linkage of 
Medicaid eligibility from receipt of AFDC cash assistance, the 
replacement of AFDC-based with MAGI-based financial eligibility 
methodologies effective January 1, 2014, the simplification of multiple 
eligibility groups, and the streamlining of eligibility determinations. 
We received no public comments on these proposed revisions. We are 
finalizing these revisions without modification with one exception. We 
are not finalizing proposed changes to introductory language in Sec.  
435.201(a) because, in removing the obsolete reference to AFDC cash 
assistance, we proposed alternative regulation language that is not 
consistent with the statute. Specifically, we proposed that the agency 
may choose to cover under an optional eligibility group individuals who 
are ``not eligible and enrolled for mandatory coverage'' under state 
plan. Section 1902(a)(10)(A)(ii) of the Act, however, precludes 
coverage under an optional group as long as an individual is be 
eligible for coverage under a mandatory group, whether or not the 
individual has actually enrolled under the mandatory group. We will 
address revisions to the introductory language in Sec.  435.201(a) in 
future guidance. We are finalizing revisions to Sec.  435.201(a)(4), 
(5) and (6) as proposed.

J. Electronic Submission of the Medicaid and CHIP State Plan 
(Sec. Sec.  430.12, 457.50 and 457.60)

    We proposed to revise Sec. Sec.  430.12, 457.50, and 457.60 to 
reflect our implementation of an automated transmission process for the 
Medicaid and CHIP state plan amendment (SPA) business process. 
Historically, we have accepted state plan amendments on paper, using a 
pre-printed template supplemented by additional state-specific paper 
submissions. This process was not transparent to states or other 
stakeholders because it was not easily shared in an increasingly 
electronic environment. To move to a more modern, efficient and 
transparent business process, in consultation with states, we are 
developing the MACPro (Medicaid and CHIP Program) system to 
electronically receive and manage state plan amendments, as well as 
other Medicaid and CHIP business documents. The proposed revisions 
direct states to use the automated format for submission of SPAs, 
replacing previous paper based state plan pages and documents, and give 
states a period of time to make the transition to the new system with 
technical support from CMS. We received the following comments 
concerning the proposed automated transmission process for the Medicaid 
and CHIP business process provisions, which are revised in the final 
rule as indicated:
    Comment: Several commenters supported the requirement for the 
electronic submission of SPAs, as a step toward increased transparency. 
Commenters encouraged CMS to add a provision to the final rule 
specifying that Medicaid and CHIP state plans, including amendments, be 
made available to the public at the time that they are submitted, 
providing consumers and advocates acting on their behalf, as well as 
researchers and policy analysts, with access to the basic, descriptive 
information contained in state plans and amendments as soon as they 
become available. Commenters further recommended that there be a 30-day 
public notice and comment period followed by a 15-day period of state 
review of the comments received.
    Response: We appreciate the comment and share the commenters' 
interest in increased transparency. CHIP State Plans and Medicaid SPAs 
are currently posted on the Medicaid.gov Web site and are available for 
consumers, advocates, researchers, and others once approved, and we are 
exploring whether, under the new automated system, the entire approved 
Medicaid state plan can be made publicly available. Providing public 
access and an opportunity to comment on SPA submissions prior to 
approval is outside the scope of this final rule, which narrowly 
addresses the modality through which SPAs are submitted to CMS.
    Comment: Several commenters expressed concern that the requirement 
for states to convert from approved paper state plans to the automated 
format in one year would cause undue hardship on the states. The 
commenters believe that it will take individuals knowledgeable about 
the program areas to input the state plan, necessarily diverting 
limited state resources from the many tasks associated with 
implementing provisions of the Affordable Care Act. While some were not 
opposed to the conversion of state plans to MACPro, they noted that 
completion of this target would depend on the availability of timely 
technical assistance from CMS.
    Response: We understand states' concerns about use of limited 
resources and have removed the specific timelines for implementation of 
the automated templates described in proposed Sec. Sec.  430.12(a)(1) 
and (2) and 457.50 and 457.60 from the final rule, under which the 
Secretary will provide further guidance when the MACPro templates are 
issued. We also have delayed full implementation of the MACPro system 
as states and we have focused on other priorities related to 
implementation of the Affordable Care Act, instead employing an interim 
solution that collects the data for the MAGI-related SPAs in a 
structured format so that the information can be converted later to 
MACPro. We also intend to release templates incrementally, to give 
states time to adapt to the new format. As the

[[Page 86431]]

system and templates become available, we will provide technical 
assistance to help states meet applicable deadlines.
    Comment: Several commenters recommended that paper state plan 
formats be allowed until such time that states are required to submit a 
state plan amendment electronically through MACPro.
    Response: As noted above, we have revised the expectations under 
the final rule for states' transition to use of standardized state plan 
templates and a fully automated SPA submission process. As the new 
electronic templates are released, states will be expected to 
transition from the current to the new formats, consistent with future 
guidance to be provided by the Secretary. We will provide states with 
technical support needed to ensure a successful transition.

K. Changes to MAGI (Sec.  435.603)

    We proposed several revisions to Sec.  435.603 in the January 22, 
2013, proposed rule. First, we proposed to add definitions of 
``child,'' ``parent'' and ``sibling'' in paragraph (b) to include 
natural, adopted, step and half relationships, and to streamline 
regulation text throughout Sec.  435.603 to use these terms. We 
finalized inclusion of the definitions of ``parent'' and ``sibling'' in 
Sec.  435.603(b) of the July 15, 2013, Eligibility final rule (78 FR 
42160), but did not respond to comments on the definitions, nor did we 
finalize use of the newly-defined terms elsewhere in Sec.  435.603. We 
will do so in this final rule. Second, we proposed to clarify the 
exception from application of MAGI-based financial methodologies 
provided in section 1902(e)(14)(D)(iv) of the Act and implemented at 
paragraph (j)(4) of Sec.  435.603 for individuals needing long-term 
care services. Specifically, we proposed to clarify that the exception 
from application of MAGI-based methods at Sec.  435.603(j)(4) applies 
only in the case of individuals who request coverage for long-term care 
services and supports (LTSS) for the purpose of being evaluated for an 
eligibility group for which meeting a level-of-care need is a condition 
of eligibility or under which long-term care services not covered for 
individuals determined eligible using MAGI-based financial methods are 
covered. The proposed clarification was to make clear that the 
exception does not apply to someone who could be determined eligible 
using MAGI-based methodologies under a MAGI-based eligibility group 
which covers the needed long-term care services, simply because the 
individual requests such services.
    Although we did not propose specific changes to the regulation 
text, we also requested comments on whether we should make other 
revisions to the household composition provisions of the March 23, 
2012, Eligibility final rule at Sec.  435.603(f) to address potential 
inequities in situations in which an individual is included as a member 
of two households for purposes of determining each household's Medicaid 
eligibility, such that the individual's income is ``double counted'' as 
being wholly available to the members in each household, when, in 
reality, only a portion of the individual's income may actually be 
available to each household.
    Finally, we also had proposed revisions to the application of the 5 
percent disregard under section 1902(e)(14)(I) of the Act. Those 
proposed revisions were finalized in the July 15, 2013, Medicaid and 
CHIP final rule (78 FR 42160).
    Comment: Commenters supported the technical corrections to how 
parents and siblings are defined in determining households for Medicaid 
eligibility, noting that the proposed definitions were consistent with 
the treatment of families under the IRC for purposes of eligibility for 
the premium tax credits and cost-sharing reductions and that such 
consistency was important for achieving coordination between all 
insurance affordability programs. Another commenter stated that 
changing the definition of parent will impact the assistance unit 
determinations and budgeting methodologies, requiring changes to 
systems already in design.
    Response: We appreciate the commenters' support and, as noted 
above, we finalized the definitions of ``child,'' ``parent,'' and 
``sibling'' in the July 15, 2013 Medicaid and CHIP final rule. We are 
finalizing in this regulation use of these terms in Sec.  
435.603(f)(2)(i), (f)(3)(ii) and (f)(3)(iii), as proposed. We neglected 
to propose a similar use of the word parent in place of reference to 
the term ``natural, adopted or step parent'' in Sec.  435.603(d)(2)(i) 
of the March 23, 2012, Medicaid eligibility final rule, but also are 
making this technical streamlining revision to the regulation text in 
this final rule.
    Comment: Several commenters responded to our request for comment on 
the situation involving individuals who are included in more than one 
household.
    Response: We have decided not to revise the regulations to address 
this issue at this time, but will consider this issue again, and the 
comments received, in subsequent rulemaking.
    Comment: We received a few comments on the proposed revisions to 
the exception from application of MAGI-based methods at proposed Sec.  
435.603(j)(4). One commenter supported the proposed clarification that 
an individual who is otherwise eligible under a MAGI-based category is 
not exempted from MAGI-based methodologies simply because he or she 
requests certain long-term care services. Another commenter appreciated 
the clarification, but expressed continued concerns about the clarity 
of the proposed revision. The commenter requested clarification on: (1) 
Whether and how the exception at proposed Sec.  435.603(j)(4) relates 
to eligibility under sections 1915(i) and 1915(k) of the Act; and (2) 
the interaction of this exception from application of MAGI-based 
methods with the spousal anti-impoverishment requirements in section 
2404 of the Affordable Care Act.
    Response: The revisions to Sec.  435.603(j)(4) clarify when MAGI-
based financial methodologies may be applied to individuals who will 
receive certain LTSS. We interpret section 1902(e)(14)(D)(iv) of the 
Act as providing that seeking coverage for LTSS or meeting a level-of-
care need for such services does not necessarily result in the 
exception of an individual from application of MAGI-based financial 
methodologies. An exception to MAGI-based methods applies under the 
statute based on our analysis only to the extent that an eligibility 
determination requires that the individual be institutionalized or is 
made for purposes of receiving LTSS.
    Under proposed paragraph Sec.  435.603(j)(4), individuals who are 
eligible under a MAGI-based eligibility group (that is, an eligibility 
group to which MAGI-based methodologies generally apply, for example, 
the eligibility groups for parents and other caretaker relatives, 
pregnant women, children and adults under age 65 at Sec.  Sec.  
435.110, 435.116, 435.118 and 435.119) are not excepted from 
application of MAGI-based methodologies simply because they require 
LTSS covered for the MAGI-based group in which they are enrolled. 
Individuals are excepted from MAGI-based methodologies only if the need 
for LTSS or institutional status results in application for coverage 
under a different eligibility group related to that need or status. For 
example, an individual who meets the requirements for eligibility under 
the adult group at Sec.  435.119 is not excepted from application of 
MAGI-based methods simply because of a need for LTSS. If the LTSS 
needed are covered under the

[[Page 86432]]

ABP adopted by the state for the adult group, and the individual does 
not have to establish financial eligibility for such services (as would 
be the case if the state has elected to cover home and community-based 
services similar to those described in section 1915(i)(1) of the Act 
under an ABP for individuals enrolled in the adult group), the 
individual's need for LTSS provided under the ABP does not result in an 
exception from MAGI for purposes of determining eligibility for 
coverage generally under the adult group. (Discussed below, 
determinations of financial eligibility for services described in 
section 1915(i)(1) of the Act are excepted from mandatory application 
of MAGI-based methods under Sec.  435.603(j)(4)). Similarly, if an 
individual enrolled in the adult group becomes institutionalized and is 
eligible for coverage of the institutional services needed through the 
adult group, she does not become exempt from MAGI-based methods due to 
her institutionalization. Conversely, if the individual is unable to 
access needed institutional care or other LTSS through enrollment in 
the adult group or could obtain services more appropriate to his needs 
through enrollment in another eligibility group for which being in an 
institution or meeting a level-of-care need for LTSS is required, MAGI-
based methodologies would not apply for purposes of determining 
eligibility for such other eligibility group.
    We realize that the text of proposed Sec.  435.603(j)(4) could be 
read in a way that would result in application of MAGI-based 
methodologies to individuals being determined for eligibility under the 
``Special Income Level'' group described in section 
1902(a)(10)(A)(ii)(V) of the Act and Sec.  435.236 because meeting a 
level-of-care need is not per se a condition of eligibility for this 
group (rather, being institutionalized is). Similarly, proposed Sec.  
435.603(j)(4) could be read to require that eligibility under section 
1915(i), implemented at Sec.  435.219 of the regulations (relating to 
optional coverage for individuals meeting an institutional level of 
care or satisfying defined needs-based criteria for home and community 
based services) must be determined using MAGI-based methodologies. Such 
result clearly would be contrary to the exception for LTSS individuals 
from application of MAGI-based methods provided in section 
1902(e)(14)(D)(iv) of the Act as well as the flexibility afforded to 
states to adopt SSI-related or other financial methodologies, if 
approved by the Secretary, for coverage under section Sec.  435.219(c). 
Therefore, we are making a technical revision for increased clarity and 
consistency with the statute in Sec.  435.603(j)(4) to include within 
the scope of the exception from MAGI described therein individuals 
being evaluated for an eligibility group for which being 
institutionalized, meeting an institutional level of care, or 
satisfying needs-based criteria for home and community based services 
is a condition of eligibility. We note that states typically require 
that an individual be in a medical institution or nursing facility for 
at least 30 days to be considered ``institutionalized,'' which we note 
is consistent with the standard for institutionalized status under the 
Supplemental Security Income (SSI) program (see 20 CFR 416.414(a)(1)), 
as well as the definition of ``institutionalized spouse'' in section 
1924(h) of the Act (relating to eligibility and post-eligibility 
treatment of income for certain married individuals who need long-term 
services and supports).
    Section 1915(i) of the Act, implemented in the Home and Community-
Based Services final rule (79 FR 2947) published in the January 16, 
2014, Federal Register (``January 16, 2014 HCBS final rule''), enables 
states to cover home and community-based services under the state plan 
instead of through a waiver. First, implemented at Sec.  440.182 of the 
regulations, section 1915(i) of the Act, authorizes states to cover 
home and community-based services described in section 1915(i)(1) of 
the Act (``1915(i) services'') to individuals who meet needs-based 
criteria, are eligible under the Medicaid state plan and have income at 
or below 150 percent FPL. Notwithstanding the general requirement in 
section 1902(a)(10)(B) of the Act and Sec.  440.240 (relating to 
comparability of services), states are permitted to cover section 
1915(i) services for individuals eligible under one or more 
categorically needy eligibility groups described in section 
1902(a)(10)(A) of the Act and 42 CFR part 435 subparts B and C, without 
covering the services for individuals eligible under all other 
categorically needy eligibility groups. (If a state covers section 
1915(i) services for medically needy individuals, it must cover such 
services for all individuals eligible under the state plan, with the 
exception of individuals eligible for the adult group described in 
Sec.  435.119 who are enrolled in an ABP which does not cover the 
services in question.) States also can opt to cover section 1915(i) 
services for a defined subset of individuals eligible under a given 
eligibility group. In addition, states that elect to cover section 
1915(i) services in accordance with Sec.  440.182 may also elect to 
cover individuals in one or both categories described in Sec.  435.219. 
Meeting needs-based criteria is a requirement for coverage under the 
category described in Sec.  435.219(a); meeting a level-of care need is 
a requirement for coverage under the category described in Sec.  
435.219(b).
    Section 1915(k) of the Act, implemented at Sec.  441.500 et seq., 
authorizes states to cover certain home and community-based services 
(``section 1915(k) services'') for individuals eligible under the state 
plan. States exercising the option provided at section 1915(k) of the 
Act must comply with the comparability of services requirements in 
section 1902(a)(10)(B) of the Act and Sec.  440.240 such that, if 
section 1915(k) services are covered for individuals eligible under any 
categorically needy eligibility group, the services must be covered for 
individuals eligible under all categorically needy eligibility groups 
which are covered under the state plan. However, under Sec.  
441.510(b)(2), if an individual is enrolled in an eligibility group for 
which nursing facility services are not covered, an additional income 
test is applied, and the individual's income must be at or below 150 
percent FPL to receive coverage of the section 1915(k) services.
    If a state has opted to cover section 1915(i) services for a MAGI-
based eligibility group that is not restricted to benchmark benefits, 
or to cover section 1915(i)-like benefits in an ABP provided to an 
individual in the new adult group, the state would apply MAGI to 
determine financial eligibility. Similarly, in a state that has opted 
to cover section 1915(k) services for a MAGI-based eligibility group 
not restricted to benchmark benefits or to cover section 1915(k)-like 
services through an ABP for medically frail individuals in a group that 
is restricted to benchmark benefits, MAGI would apply. Other than 
eligibility groups which confer only a limited set of benefits (for 
example, coverage of family planning services under section 
1902(a)(10)(A)(ii)(XXI) of the Act and Sec.  435.214 of this 
rulemaking), coverage of nursing facility services is mandatory for all 
MAGI-based eligibility groups. Therefore, as a practical matter, the 
150 percent FPL income test for section 1915(k) services provided to 
individuals eligible for coverage under a group that does not cover 
nursing facility services (for example, under a group for medically 
needy individuals) will never be applicable.

[[Page 86433]]

    We interpret the needs-based criteria which must be met as a 
condition of eligibility for receipt of section 1915(i) services under 
Sec.  435.219(a) of the January 16, 2014, HCBS final rule to be a 
level-of-care requirement for purposes of the exception from mandatory 
application of MAGI-based methodologies in Sec.  435.603(j)(4). 
Accordingly, states are not required to apply MAGI in determining 
eligibility under either option described in Sec.  435.219. We note 
that under Sec. Sec.  435.219(c) and 441.715(d)(2) of the January 16, 
2014, HCBS final rule, states have flexibility to apply reasonable 
income methodologies in determining eligibility under Sec.  435.219(a), 
which could include MAGI-like methodologies, subject to the limitations 
on deeming income described in section 1902(a)(17)(D) of the Act and 
Secretarial approval in an approved state plan amendment.
    We intend to address in future guidance the interaction of MAGI-
based methods, including the exception from application of such methods 
at Sec.  435.603(j)(4), with the spousal impoverishment rules of 
section 1924 of the Act.
    Comment: A commenter believed that the definition of ``long-term 
care services'' contained in Sec.  435.603(j)(4) is confusing. The 
commenter noted that section 1902(e)(14)(D)(iv) of the Act, upon which 
proposed Sec.  435.603(j)(4) is based, incorporates, by reference, the 
services described in section 1917(c)(1)(C)(ii) of the Act, but that 
the proposed Sec.  435.603(j)(4) does not do so. The commenter believes 
that our proposed definition omits 2 services which should be reflected 
in the regulation by virtue of the cross-reference to section 
1917(c)(1)(C)(ii) of the Act. The commenter suggests that we revise 
proposed Sec.  435.603(j)(4) to explicitly cross-reference section 
1917(c)(1)(C)(ii) of the Act, or explain the rationale for excluding 
some of the services identified therein.
    Response: We did not propose revisions to the definition of ``long-
term care services and supports'' contained in Sec.  435.603(j)(4), 
which generally tracks the definition of services provided in section 
1902(e)(14)(D)(iv) of the Act, except that section 1902(e)(14)(D)(iv) 
of the Act cross-references services described in section 
1917(c)(1)(C)(ii) of the Act, whereas the regulatory definition at 
Sec.  435.603(j)(3) refers instead to home health services as described 
in sections 1905(a)(7) of the Act and personal care services described 
in sections 1905(a)(24) of the Act. We replaced the statutory reference 
to section 1917(c)(1)(C)(ii)of the Act for clarity; we did not 
eliminate any LTSS from inclusion in the definition used for purposes 
of Sec.  435.603(j)(4) in so doing.
    The commenter's concern may relate to the omission, from the 
definition of LTSS in the regulation, of the services described in 
section 1905(a)(22) of the Act. Section 1905(a)(22) of the Act permits 
states to include in their definition of ``medical assistance'' home 
and community care for ``functionally disabled elderly individuals,'' 
to the extent described and allowed under section 1929 of the Act. 
However, inasmuch as FFP for these services under section 1929 of the 
Act expired at the end of federal fiscal year 1995 per section 1929(m) 
of the Act, home and community care services are no longer authorized 
for coverage under section 1905(a)(22) of the Act.
    Other optional long-term care services are those that can be 
covered under section 1915 of the Act and are reflected in the 
definition contained in Sec.  435.603(j)(4). Therefore, we are not 
accepting the comment. We note, however, that proposed Sec.  
435.603(j)(4) inadvertently replaced the phrase ``Long-term services 
and supports'' at the beginning of the second sentence in Sec.  
435.603(j)(4) with the phrase ``Long-term care services.'' The first 
sentence in Sec.  435.603(j)(4) uses the phrase ``long-term care 
services and supports.'' No substantive difference was intended in 
these different variations and we are making a technical change in this 
final rule for consistency to use the language contained in the first 
sentence of Sec.  435.603(j)(4) in the second sentence as well.

L. Medical Support and Payments (Sec. Sec.  433.138, 433.145, 433.147, 
433.148, 433.152 and 435.610)

    We proposed to amend Sec.  433.148(a)(2) to provide that, 
consistent with the practice in many states today, individuals (unless 
exempt per existing regulations) must agree to cooperate in 
establishing paternity and obtaining medical support at application, 
but that further action to pursue support, as appropriate, will occur 
after enrollment in coverage.
    We proposed to make technical corrections to Sec. Sec.  433.138, 
433.145, 433.147, and 435.610 to update references to eligibility of 
pregnant women under section 1902(a)(10)(A)(i) of the Act with a 
reference to Sec.  435.116 and to update or eliminate references to 
verification regulations in subpart J of part 435 which were eliminated 
or revised in the March 23, 2012, Medicaid eligibility final rule.
    We proposed to remove Sec.  433.152(b)(1) because 45 CFR part 306 
no longer exists. We also proposed to revise Sec.  433.147(c)(1) and 
remove Sec.  433.147(d) to eliminate references to factors applicable 
to waiving the cooperation requirement contained in 45 CFR part 232 
because 45 CFR part 232 was removed from the regulations following with 
the passage of the PRWORA. Finally, we proposed to remove Sec.  
435.610(c) as no longer necessary.
    We received a number of comments concerning the proposed changes to 
the medical support and payments provisions, which are finalized as 
proposed except as indicated below.
    Comment: Many commenters recommended that the requirement to 
cooperate with establishing paternity not apply in situations where the 
child was conceived through assisted reproduction by a donor or that a 
good cause exception be provided. Further, the commenters recommended 
leaving ``assisted reproduction'' undefined, and that the language of 
these provisions be made gender neutral by referring to the child's 
other ``parent'' rather than the ``father'' because they believe this 
language creates confusion about whether this requirement is met by 
establishing the maternity of another mother rather than the child's 
father when the child has same-sex female parents.
    Response: We agree with the recommendation that gender-neutral 
language should be used and are revising Sec. Sec.  433.145(a)(2), 
433.147 and 433.148 in the final rule, accordingly. In addition, we 
note that state law applies in determining who meets the definition of 
parent under federal Medicaid regulations, including in instances of 
assisted reproduction.
    Comment: One commenter was concerned with the requirement that 
states must determine whether a parent is cooperating with child 
support enforcement only after determining eligibility. The commenter 
believed this post-eligibility requirement could create a churning 
effect whereby a parent who is enrolled and then subsequently 
terminated from Medicaid for failing to cooperate with the state child 
support enforcement agency, subsequently reapplies for Medicaid, 
requiring that the state must enroll the parent again, creating a 
repeating cycle. The commenter recommended that when there is a 
previous finding of non-cooperation, the applicant be determined 
ineligible for Medicaid if they reapply.
    Response: We appreciate the concern raised by the commenter, but 
are finalizing the rule as proposed. As discussed in the January 22, 
2013

[[Page 86434]]

proposed rule, states must align the eligibility rules for all 
insurance affordability programs to the maximum extent possible, to 
achieve a highly coordinated and streamlined eligibility and enrollment 
system. Because all insurance affordability programs will use the same 
streamlined application and eligibility determinations and enrollment 
will be coordinated, an eligibility determination for Medicaid should 
not be delayed by the cooperation requirements. Parents must only be 
required to agree to cooperate with medical support enforcement during 
the application process. States may pursue administrative and 
operational solutions to expedite the determination of noncooperation 
with child support enforcement or to suspend, rather than terminate, 
eligibility of an individual who refuses to cooperate without cause, 
until the required cooperation is offered.
    Comment: One commenter questioned what is considered a concerted 
effort by the state to establish paternity, and whether states must 
document written and verbal attempts to communicate with the parent in 
attempting to establish paternity. The commenter also requested 
clarification on how often the state must attempt to contact the absent 
parent. The commenter suggested that states should be able to define 
what constitutes a concerted effort to establish paternity.
    Response: Rules governing establishment of paternity are outside 
the scope of the proposed regulations. We note, however, that states 
have been required to implement laws regarding paternity establishment 
beginning with the Family Support Act of 1988. HHS' Administration for 
Children and Families (ACF) regulations address state programs for 
establishment of paternity. Under Sec.  433.152, as revised in this 
final rule, agreements between the state Medicaid agency and the child 
support enforcement agency in the state must provide for the Medicaid 
agency to reimburse the state CSEA for those child support services 
that are not reimbursable by the federal Office of Child Support 
Enforcement and which are necessary for the collection of medical 
support for the state Medicaid program.
    Comment: One commenter was concerned that any change in policy to 
deny or terminate Medicaid coverage of a child for parental non-
cooperation without good cause would violate MOE requirements for 
children.
    Response: Children cannot be denied or terminated from coverage 
under the statute due to lack of parental cooperation in obtaining 
medical child support. This prohibition is reflected at Sec.  
433.148(b)(1) and (b)(2), under which the agency must provide Medicaid 
to any individual who cannot legally assign his or her own rights to 
medical support payments and who would otherwise be eligible for 
Medicaid but for the refusal of another person to assign the 
individual's rights or to cooperate in obtaining medical support.

III. Provisions of the Final Regulations

    We are finalizing the provisions of the January 22, 2013 proposed 
rule as proposed with the following exceptions:
Change to Sec.  407.42
     Remove the reference to Sec.  435.114, which is an 
obsolete regulation. Changes to Sec.  430.12
     Revised to reflect changes to the Medicaid state plan 
template.
Changes to Sec.  431.201
     Provided definition of a ``joint fair hearing request.''
     Revised for clarity the definition of ``action.''
Change to Sec.  431.205
     Added a new paragraph (f), clarifying that the hearing 
system established under section 1902(a)(3) of the Act and part 431 
subpart E, must be conducted in a manner that complies with applicable 
federal statutes and implementing regulations.
Changes to Sec.  431.206
     Revised paragraph (b)(1) and added paragraph (b)(4) to 
provide that individuals must be informed of the opportunity to request 
an expedited review of their fair hearing request, and informed of the 
timeframes upon which the state will take final administrative action.
     Made non-substantive revisions for clarity in paragraph 
(c)(2).
Changes to Sec.  431.220
     Revised paragraph (a)(1) to allow an individual to request 
a fair hearing if an agency takes an action erroneously.
     Added a cross-reference to the definitions of ``premiums'' 
and ``cost sharing'' in Sec.  447.51.
     Added paragraph (a)(1)(v) to clarify that a hearing is 
required when an individual's request for exemption from mandatory 
enrollment in an Alternative Benefit Plan is denied or not acted upon 
with reasonable promptness.
     Added paragraph (a)(1)(iv) to clarify that a change in the 
amount or type of benefits or services is another basis on which the 
agency must grant a hearing.
     Made other non-substantive revisions for clarity in 
paragraph (a)(1).
Changes to Sec.  431.221
     Redesignated and combined proposed paragraphs (a)(1) 
through (5) at paragraph (a)(1)(i).
     Revised paragraph (a)(1)(ii) to provide that a fair 
hearing request made in any modality under Sec.  431.221(a)(1) must 
include an opportunity to request an expedited review of such a 
request.
     Paragraph (e) is not included in the final rule.
Change to Sec.  431.223
     Revised this section to reflect that states must offer a 
withdrawal of a fair hearing in all modalities that it offers a request 
for a fair hearing in accordance with Sec.  431.221(a). When a state 
offers a telephonic hearing withdrawal, it must record appellant's 
statement and telephonic signature. For telephonic, online and other 
electronic withdrawals, the agency must send the individual written 
confirmation, via regular mail or electronic notification in accordance 
with the individual's election.
Changes to Sec.  431.224
     Revised paragraph (a) with minor revisions for clarity on 
the expedited appeals standard.
     Revised paragraph (b) to provide clarity that the state 
must inform an individual whether an expedited review will be granted 
as expeditiously as possible and shall do so orally or through 
electronic means in accordance with Sec.  435.918.
Change to Sec.  431.232
     Made minor revisions for clarity in paragraph (b).
Changes to Sec.  431.241
     Made revisions to cross-reference Sec.  431.220(a)(1) for 
clarity in paragraph (a).
     Removed changes to paragraph (b) and placed content 
regarding changes in the amount or type of benefits or services in 
Sec.  431.220(a)(1)(iv).
Change to Sec.  431.244
     Made revisions to paragraph (f)(1) to incorporate changes 
to this paragraph finalized in the May 6, 2016 managed care final rule.
     Added paragraph (f)(3) to provide that --
    ++ For individuals whose request for expedited appeal is based on 
an eligibility issue, the state must take final administrative action 
as expeditiously as possible, but no later than 7 working days from the 
date the agency receives the expedited fair hearing request;
    ++ For individuals whose request for an expedited appeal is based 
on a

[[Page 86435]]

benefits or services related fee-for-service issue, the state must take 
final administrative action in accordance with the time frame at 
current (f)(2) (which is 3 working days);
    ++ For individuals whose request for an expedited appeal is based 
on a managed care appeal, the state must take final administrative 
action, in accordance with current rules at paragraphs (f)(2) of this 
section.
     The expedited time frame in paragraph (f)(3)(i) and 
(f)(3)(ii) are subject to a delayed effective date in accordance with 
the policy described in Sec.  435.1200(i) of this rule.
     Proposed paragraph (f)(2) is not being finalized in this 
rule.
     Added paragraph (f)(4) to discuss exceptional 
circumstances when the agency does not have to take the final action 
within the required time frame.
Change to Sec.  433.145
     Amended paragraph (a)(2) to reflect that medical support 
and payments may be obtained or derived from the non-custodial parent 
of the child, regardless of the gender of the non-custodial parent.
Changes to Sec.  435.4
     Modified the definitions of ``non-citizen'' and 
``qualified non-citizen,'' to use the word ``includes'' rather than the 
phrase ``has the same meaning as'' to further simplify the regulation 
text.
     Modified the definition of ``citizenship'' to eliminate 
repetitive language.
Change to Sec.  435.115
     Removed paragraph (b)(2)(i) concerning pregnant women 
because they retain Medicaid eligibility until the end of the 
postpartum period through Sec.  435.170.
Changes to Sec.  435.117
     Redesignated paragraph (b)(2) as (b)(3) and redesignated 
and revised paragraphs (b)(1)(iii) and (iv) as (b)(2)(ii), including 
revised introductory language in (b)(2).
     Added at paragraph (b)(2)(ii)(B) the state option to cover 
as a deemed newborn the child of a mother covered under another state's 
CHIP state plan for the date of birth.
     Redesignated paragraph (c) as paragraph (b)(2)(i).
     Redesignated paragraph (d) as (c).
Change to Sec.  435.150
     Revised paragraph (b)(3) to clarify the requirements.
     Removed the parenthetical in paragraph (b)(3) with the 
state option to determine an individual eligible under this group if in 
foster care and/or Medicaid in any state upon attaining either age 18 
or any higher age that title IV-E foster care ends in the state.
     Revised paragraph (c) to provide additional state options 
for coverage under the former foster care group.
Change to Sec.  435.170
     Revised this section to reference Sec.  435.116(d)(2) and 
(4), rather than just Sec.  435.116(d)(3) to clarify that if a state 
elects to provide full coverage for all pregnant women eligible under 
Sec.  435.116, it would also provide full coverage during an extended 
or continuous eligibility period for pregnant women.
Change to Sec.  435.172
     Removed ``or household income'' from paragraph (b)(1), for 
consistency with the requirements at section 1902(e)(7) of the Act.
Changes to Sec.  435.213
     Revised paragraph (c) to clarify that a screen based on 
which an individual is determined to need treatment for breast or 
cervical cancer is either an initial screen under the Centers for 
Disease Control and Prevention breast and cervical cancer early 
detection program or a subsequent screen by the individual's treating 
health professional.
Changes to Sec.  435.214
     Revised section heading to be more descriptive.
     Redesignated paragraph (b) as paragraph (b)(1).
     Removed the phrase ``meet all of the following 
requirements'', added a phrase to describe that eligibility is limited 
to the covered services under paragraph (d), and added a parenthetical 
clarifying that this coverage is provided to individuals ``of any 
gender''.
Changes to Sec.  435.215
     Revised paragraph (b)(2) to clarify that an individual is 
only eligible for this group (which only covers treatment for 
tuberculosis) if the individual is not eligible for full coverage under 
the state plan.
Changes to Sec.  435.226
     Revised paragraphs (b) and (c) to clarify that a state may 
elect to have no income standard for this group or may elect any income 
standard that is equal to or more than the state's income standard for 
parents and other caretaker relative under Sec.  435.110.
Changes to Sec.  435.227
     Revised paragraph (b)(3)(i) to specify eligibility ``under 
the Medicaid state plan of the state with the adoption assistance 
agreement''.
     Revised paragraph (c) to remove reference to the state's 
AFDC payment standard as of 1996 and made other streamlinine revisions 
for increased readability.
Changes to Sec.  435.229
     Revised paragraph (c)(2) to clarify that the income 
standard established by a state under this group is a MAGI-equivalent 
standard.
     Revised paragraph (c)(3) to reference a CHIP State plan or 
1115 demonstration, in addition to Medicaid, as a technical correction 
consistent with state flexibility provided by federal statute.
Changes to Sec.  435.406
     Revised paragraph (a)(1)(iii)(E) to require states to 
allow states to exempt deemed newborns from another state from the 
citizenship verification requirements if the state has verified that 
the individuals were eligible as deemed newborns in the other state.
     Revised paragraphs (a) and added a new paragraph (c), to 
clearly state that the declaration of citizenship and immigration 
status must be presented and verified in accordance with Sec.  
435.956(b), redesignated from Sec.  435.956(g) in this final rule.
Changes to Sec.  435.407
     Added paragraph (a)(6) to allow a data match with SSA as 
stand-alone evidence of citizenship and identity.
     Revised paragraph (b)(7) to read as, ``A Northern Marianas 
Identification Card issued by the U.S. Department of Homeland Security 
(or predecessor agency).''
     Removed the proposed language requiring the individual 
having to be born in the CNMI before November 4, 1986, because only 
collectively naturalized citizens who were born in the CNMI before that 
date will be issued such a card.
Changes to Sec.  435.603
     Made a technical streamlining revision to use the word 
``parent'' in place of reference to ``natural, adopted or step parent'' 
in Sec.  435.603(d)(2)(i)
     Made a technical modification to clarify that the 
exception from mandatory application of MAGI-based methods described in 
Sec.  435.603(j)(4) applies only to individuals who are seeking 
coverage either in an eligibility group that requires applicants to 
meet a level-of-care need or that covers long-term care services and 
supports not otherwise available through a MAGI-based group.

[[Page 86436]]

Change to Sec.  435.901
     Revised to provide clarity that information provided to 
applicants and beneficiaries and eligibility standards and methods must 
reflect all appropriate federal laws.
Changes to Sec.  435.905
     Revised the requirement to provide taglines in paragraph 
(b)(1) to include this requirement in paragraph (b)(3) of this section.
     Modified the current title of the regulation to clarify 
that the regulation is also related to providing accessible information 
to applicants and beneficiaries by adding the term ``accessibility'' in 
the title. The finalized regulation title of Sec.  435.905 reads 
``Availability and accessibility of program information.''
Changes to Sec.  435.911
     Made a technical revision to include a cross-reference to 
Sec.  435.912 at Sec.  435.911(c)(2).
     Replaced ``and'' with ``or'' at the end of paragraph 
(b)(2)(i).
Change to Sec.  435.952
     Modified the proposed regulation to clarify who can 
provide attestation of information when there is a special 
circumstance.
Changes to Sec.  435.956
     Added an option for states to verify citizenship status 
through the electronic service established in accordance with Sec.  
435.949 or an alternative mechanism authorized in accordance with Sec.  
435.945(k).
     For purposes of exemption of the 5-year waiting period, 
added a new Sec.  435.956(a)(3) to require states to verify that an 
individual is an honorably discharged veteran or in active military 
status, or the spouse or unmarried dependent child of such person as 
described in 8 U.S.C. 1612(b)(2), through the FDSH or other electronic 
data source if and when available and permitting states to accept self-
attestation if electronic verification is not available.
     Redesignated paragraph (g) as paragraph (b) and revised 
paragraph (b) to clarify that the agency must provide a reasonable 
opportunity period to otherwise eligible individuals who have made a 
declaration of citizenship or immigration status in accordance with 
Sec.  436.406(a), to limit the option for states to extend the 
reasonable opportunity if the individual is making a good faith effort 
to provide documentation or the agency needs more time to complete the 
verification to only those individuals attesting to satisfactory 
immigration status, and to allow states to place reasonable limits on 
the number of reasonable opportunity periods if the agency demonstrates 
a program integrity risk.
Changes to Sec.  435.1200
     Added new paragraph at Sec.  435.1200(i) in the final 
rule, to provide that the notice of applicability date for the 
compliance of Sec. Sec.  435.1200(g)(2), 431.221(a)(1)(i), and 
431.244(f)(3)(i) and (ii) of this chapter is 6 months from the date of 
a published Federal Register, which at its earliest, will be published 
May 30, 2017.
     In paragraph (a)(2)(iii), added a cross-reference to the 
definition of ``joint fair hearing request'' in Sec.  431.201.
     Revised paragraph (g)(1) to provide that the agency must 
include in the agreement consummated per Sec.  435.1200(b)(3) between 
the agency and the Exchange that, if the Exchange or other insurance 
affordability program provides an applicant or beneficiary with a 
combined eligibility notice which includes a denial of Medicaid 
eligibility, the Exchange or Exchange appeals entity (or other 
insurance affordability program or appeals entity) will (1) provide the 
applicant or beneficiary with an opportunity to submit a joint fair 
hearing request; and (2) notify the Medicaid agency of such request for 
a Medicaid fair hearing (unless the hearing will be conducted by the 
Exchange appeals entity per a delegation of authority under Sec.  
435.10(c)(1)(ii).
     Revised proposed Sec.  435.1200(g)(2), redesignated at 
Sec.  435.1200(g)(4) in the final rule, to establish a more dynamic 
standard in this final rule such that, in conducting a fair hearing in 
accordance with subpart E or part 431, the agency must minimize, to the 
maximum extent possible consistent with guidance issued by the 
Secretary, any requests for information or documentation from the 
individual which are already included in the individual's electronic 
account or which have been provided to the Exchange or Exchange appeals 
entity.
     Revised proposed Sec.  435.1200(g)(1)(i), redesignated at 
Sec.  435.1220(g)(2)(i), to provide that the state agency establish a 
secure electronic interface through which the Exchange or Exchange 
appeals entity can notify the agency that it has received a joint fair 
hearing request.
     Added new paragraph (g)(3), which requires the agency to 
accept and act on a joint fair hearing request submitted to the 
Exchange or Exchange appeals entity in the same manner as a request for 
a fair hearing submitted to the agency in accordance with Sec.  
431.221.
     Added new paragraph (g)(6) to provide that, if the 
Exchange made the initial determination of Medicaid ineligibility in 
accordance to a delegation of authority under Sec.  
431.10(c)(1)(i)(A)(3), the agency must accept a decision made by the 
Exchange appeals entity that an appellant is eligible for Medicaid in 
the same manner as if the determination of Medicaid eligibility had 
been made by the exchange.
     Included a cross-reference in new paragraphs (g)(6) and 
(g)(7) in the introductory text of Sec.  435.1200(c) to require that 
the agency also accept a determination of Medicaid eligibility by the 
Exchange appeals entity in the situations described.
Change to Sec.  457.50
     Amended to include periodic updates to CHIP state plan 
format.
Change to Sec.  457.60
     Amended to include periodic updates to the format of CHIP 
state plan amendments.
Change to Sec.  457.110
     Amended paragraph (a)(1) to clarify that it is a 
requirement that the state provide, at beneficiary option, notices to 
applicants and beneficiaries in electronic format.
Change to Sec.  457.342
     Clarified, in paragraph (a), that continuous eligibility 
in CHIP is subject to a child remaining ineligible for Medicaid, as 
required by section 2110(b)(1) of the Act and Sec.  457.310 (related to 
the definition and standards for being a targeted low-income child) and 
the requirements of section 2102(b)(3) of the Act and Sec.  457.350 
(related to eligibility screening and enrollment).
     Clarified, in paragraph (b), that the continuous 
eligibility period may be terminated for failure to pay premiums or 
enrollment fees, subject to a premium grace period of at least 30 days 
and the disenrollment protections at section 2103(e)(3)(C) of the Act 
and Sec.  457.570.
Change to Sec.  457.355
     Made technical revisions to the wording for consistency 
with the Medicaid regulation at Sec.  435.1102.
Changes to Sec.  457.360
     Made organizational revisions to be consistent with the 
changes in Medicaid at Sec.  435.117.
     Redesignated the proposed paragraph (b)(2) as a new 
paragraph (b)(3).

[[Page 86437]]

     Moved the content of the proposed paragraph (c) to a new 
paragraph at Sec.  457.360(b)(2).
     Added a new paragraph at Sec.  457.360(b)(2)(ii) to 
provide that states may elect the CHIP optional newborn deeming 
provisions only if they have also elected the same options in Medicaid.
     Redesignated the proposed paragraph (d) regarding the CHIP 
identification number as paragraph (c).
Changes to Sec.  457.380
     Made technical revisions to expand the proposed paragraph 
(b)(1) to include introductory text and new paragraphs at Sec.  
457.380(b)(1)(i) and (ii).
     Amended the regulatory cross-reference to newborns exempt 
from citizenship verification to be consistent with changes made to 
Sec.  435.406 in Medicaid.
     Clarified that benefits must be provided during the 
reasonable opportunity period.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), we are required to provide 30-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, section 3506(c)(2)(A) of the PRA 
requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We solicited public comment on each of these issues for the 
following information collection requirements (ICRs) within our January 
22, 2013 (78 FR 4594) proposed rule. While extensive comments were 
received on various provisions within that rule, we did not receive any 
PRA-specific comments.
    This final rule codifies provisions set out in the January 22, 2013 
(78 FR 4594) proposed rule that were not adopted in the July 15, 2013 
(78 FR 42159) final rule. Overall, this final rule will result in a 
reduction in burden for individuals applying for and renewing coverage, 
as well as for states, since the Medicaid program and CHIP will be made 
easier for states to administer and for individuals to navigate by 
streamlining and simplifying Medicaid and CHIP eligibility rules for 
most individuals. Even though there are short-term burdens associated 
with the implementation of this final rule, the Medicaid program and 
CHIP will be easier for states to administer over time due to the 
streamlined eligibility and coordinated efforts for Medicaid, CHIP, and 
the new affordable insurance exchanges.

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2015 National Occupational Employment and Wage 
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 2 presents the mean hourly wage, 
the cost of fringe benefits (calculated at 100 percent of salary), and 
the adjusted hourly wage.

                          Table 2--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                      Fringe         Adjusted
                Occupation title                    Occupation     Mean  hourly    benefit  ($/     hourly wage
                                                       code        wage  ($/hr)         hr)           ($/hr)
----------------------------------------------------------------------------------------------------------------
Business Operations Specialist..................         13-1000           35.48           35.48           70.96
Computer Programmer.............................         15-1131           40.56           40.56           81.12
General and Operations Managers.................         11-1021           57.44           57.44          114.88
Lawyer..........................................         23-1011           65.51           65.51          131.02
Training and Development Manager................         11-3131           53.69           53.69          107.38
Training and Development Specialist.............         13-1151           30.03           30.03           60.06
Management Analyst..............................         13-1111           44.12           44.12           88.24
----------------------------------------------------------------------------------------------------------------

    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 other 
practical alternative and we believe that doubling the hourly wage to 
estimate total cost is a reasonably accurate estimation method.

B. Burden Related to ICRs Carried Over From the January 22, 2013 
Proposed Rule

    Many provisions codified in this final rule do not set out any new 
or revised burden estimates because the burden is exempt from the PRA 
or is currently approved by OMB. Additional information on these 
provisions can be found below under section IV.D. The burden associated 
with all other provisions codified in this final rule is set out below.
1. ICRs Regarding Individuals Who Are Ineligible for AFDC Because of 
Requirements That Do Not Apply Under Title XIX of the Act (Sec.  
435.113), Individuals Who Would Be Eligible for AFDC Except for 
Increased OASDI Income Under Public Law 92-336 (July 1, 1972) (Sec.  
435.114), and Individuals Who Would Be Eligible for AFDC if Coverage 
Under the State's AFDC Plan Were as Broad as Allowed Under Title IV-A 
(Sec.  435.223)
    We are removing the following state plan amendment (SPA) related 
provisions from current regulation: The provision of Medicaid to 
individuals denied AFDC based on certain policies (Sec.  435.113), the 
provision of Medicaid to certain individuals entitled to OASDI (Sec.  
435.114), the provision of Medicaid to certain group or groups of 
individuals (Sec.  435.223), and the determination of dependency for 
families with certain dependent children who are not receiving AFDC 
(Sec.  435.510). Because we are eliminating these regulations, states 
will no longer be required to submit these SPAs to CMS. The SPA 
provisions are approved by OMB under control number 0938-0193 (CMS-
179). This final rule will remove the portion of the burden related to 
the requirements of Sec. Sec.  435.113, 435.114, 453.223, and 435.510.

[[Page 86438]]

2. ICRs Regarding Adverse Action (Sec.  431.210), Notice of Agency's 
Decision Concerning Eligibility (Sec.  435.917), and Application for 
and Enrollment in CHIP (Sec.  457.340)
    In Sec.  431.210, 435.917, and 457.340, the agency is required to 
provide a timely combined notice to individuals regarding their 
eligibility determination or any adverse action.
    Current Sec.  431.210(a) has been amended to require that the 
notice provide the effective date of the action. In Sec.  431.210(b), 
the notice must provide a clear statement that supports the reasons for 
the intended action. In Sec.  431.210(d)(1), the explanation must 
communicate the right to request a local evidentiary hearing.
    Section 435.917(b) has been added to clarify the agency's 
responsibilities to communicate specific content in a clear and timely 
manner when issuing a notice of approved eligibility, denial, or 
suspension. In Sec.  435.917(c), the notice must contain information 
regarding the basis of eligibility (other than MAGI) so individuals can 
make an informed choice as to whether they should request a 
determination on another basis. The notice must include reasons for the 
action, the specific supporting action, and an explanation of hearing 
rights.
    Section 457.340(e) has been revised to align the content of CHIP 
notices with that of Medicaid notices.
    The burden associated with the preceding requirements is the time 
for the state staff to: Review the requirements related to notices; 
develop the language for approval, denial, termination, suspension, and 
change of benefits notices; and program the language in the Medicaid 
and CHIP notice systems so that the notice can be populated and 
generated based on the outcome of the eligibility determination or 
adverse action.
    We estimate 56 state Medicaid agencies (the 50 states, the District 
of Columbia, and 5 Territories) and 42 CHIP agencies (in states that 
have a separate or combined CHIP), totaling 98 agencies are subject to 
the preceding requirements. We estimate that it will take each Medicaid 
and CHIP agency 194 hours to develop and automate the notice of 
eligibility determination or adverse action. Of those hours, we 
estimate it will take a business operations specialist 138 hours at 
$70.96/hr, a general and operations manager 4 hours at $114.88/hr, a 
lawyer 20 hours at $131.02/hr, and a computer programmer 32 hours at 
$81.12/hr to complete the notices. The estimated one-time cost for each 
agency is $15,468.24. In aggregate, the total estimated cost is 
$1,515,888 (rounded), while the total time is 19,012 hours.
    Over the course of OMB's anticipated 3-year approval period, we 
estimate an annual burden of 6,337 hr (19,012 hours/3 years) at a cost 
of $505,296 ($1,515,888/3 years). We are annualizing the one-time 
estimate since we do not anticipate any additional burden after the 3-
year approval period expires. The preceding requirements and burden 
estimates will be submitted to OMB for approval under control number 
0938-New (CMS-10456).
    The provision of the written notices under Sec.  431.206(b) and 
(c)(2) is an information collection requirement that is associated with 
an administrative action pertaining to specific individuals or entities 
(5 CFR 1320.4(a)(2) and (c)). Consequently, the burden for forwarding 
the notifications is exempt from the requirements of the PRA.
3. ICRs Regarding Presumptive Eligibility (Sec. Sec.  435.1101(b) and 
457.355)
    In Sec. Sec.  435.1101(b) and 457.355 (by reference to Sec.  
435.1101) states are required to provide qualified entities with 
training in all applicable policies and procedures related to 
presumptive eligibility. The burden associated with this provision is 
the time and effort necessary for the states and territories to develop 
training materials and to provide training to application assistors.
    We estimate 50 states and the District of Columbia will be subject 
to this requirement. As part of this estimate, we assumed that state 
Medicaid agencies and CHIP agencies, when they are separate agencies, 
will develop and use the same training.
    We also estimate it will take a training and development specialist 
40 hours at $60.06/hr and a training and development manager 10 hours 
at $107.38/hr to develop training materials for the qualified entities, 
for a total time burden of 2,550 hours. The estimated cost for each 
state or territory is $3,476.20 while the total estimated cost is 
$177,286.20.
    Over the course of OMB's anticipated 3-year approval period, we 
estimate an annual burden of 17 hr (50 hours/3 years) at a cost of 
$59,095 ($177,286/3 years). We are annualizing the one-time estimate 
since we do not anticipate any additional burden after the 3-year 
approval period expires.
    We also estimate that each state or territory will offer 50 hours 
of annual training sessions to qualified entities, for a total burden 
of 2,550 hours. We also estimate it will take a training and 
development specialist 50 hours at $60.06/hr to train the application 
assistors. While the cost for each agency is estimated at $3,003, the 
total (aggregate) cost is approximately $153,153.
    The preceding burden estimates will be submitted to OMB for their 
approval under control number 0938-New (CMS-10456).
4. ICRs Regarding the Submittal of State Plans and Plan Amendments 
(Sec.  430.12), State Plan (Sec.  457.50), and [State Plan] Amendments 
(Sec.  457.60)
    Historically, we have accepted state plan amendments on paper 
following paper-pre-prints. This process was not transparent to states 
or other stakeholders. To move to a more modern, efficient and 
transparent business process, in consultation with states, we are 
developing the MACPro (Medicaid and CHIP Program) system to 
electronically receive and manage state plan amendments, as well as 
other Medicaid and CHIP business documents.
    While the amendments to Sec. Sec.  430.12, 457.50, and 457.60 
direct states to use the automated format to submit SPAs, full 
implementation of the MACPro system is being phased in over time. The 
phase-in will provide states with the time needed to successfully 
transition to the new system with technical support from CMS. The 
burden associated with the transition from paper-based to electronic 
SPA processing is the time and effort necessary for states and 
territories to be trained on use of the MACPro system, to establish 
user roles and access to MACPro for each user, and to review data 
imported into MACPro from other formats. As new templates become 
available, states will be required to utilize the new electronic system 
if they are seeking to amend their state plans. We believe that the 
time, effort, and financial resources required for future SPA 
submissions will be incurred in the absence of this final rule during 
the normal course of Medicaid and CHIP agency activities, and 
therefore, should be considered as a usual and customary business 
practice.
    We estimate 56 state Medicaid agencies (the 50 states, the District 
of Columbia, and 5 Territories) and 42 CHIP agencies (in states that 
have a separate or combined CHIP), totaling 98 agences are subject to 
the new electronic SPA submission requirements. We estimate that it 
will take each agency approximately 64 hours to implement the new 
electronic SPA submission process. Of those hours, we estimate it will 
take a business operations specialist 2 hours at $70.96/hr and a 
general and operations manager 2 hours

[[Page 86439]]

at $114.88/hr to establish user roles for the agency. We estimate that 
4 hours of training will be required for each staff member utilizing 
the new system. With an estimated 6 business operations specialists 
requiring 4 hours of training at $70.96/hr, 3 management analysts 
requiring 4 hours of training at $88.24/hr and 1 general and operations 
manager requiring 4 hours of training at $114.88/hr. And we estimate 
that it will take 2 management analysts 10 hours each at $88.24/hr to 
review the data initially imported in the system. The estimated cost 
burden for each agency is $5,357.92. The total estimated cost burden is 
$525,076.16, while the total time is 6,272 hours.
    Over the course of OMB's anticipated 3-year approval period, we 
estimate an annual burden of 2,091 hours (6,272 hours/3 years) at a 
cost of $175,025.39 ($525,076.16/3 years). We are annualizing the one-
time estimate since we do not anticipate any additional burden after 
the 3-year approval period expires. The preceding requirements and 
burden estimates will be submitted to OMB for approval under control 
number 0938-New (CMS-10456).
    As new SPA templates become available in MACPro, states will be 
required to utilize the new electronic system when they seek to amend 
their state plans. We believe that the time, effort, and financial 
resources required for future SPA submissions will be incurred in the 
absence of this final rule during the normal course of Medicaid and 
CHIP agency activities, and therefore, should be considered as a usual 
and customary business practice.
5. ICRs Regarding Deemed Newborn Children (Sec. Sec.  435.117 and 
457.360)
    In Sec. Sec.  435.117(b) and 457.360(b), states have the option to 
cover babies (as deemed newborns under the Medicaid or CHIP state plan, 
as appropriate) born to mothers covered on the date of birth as 
targeted low-income children under a separate CHIP state plan or to 
mothers covered under a Medicaid or CHIP demonstration waiver under 
section 1115 of the Act.
    In Sec.  435.117(b)(1)(ii) and (iii), states have the option to 
cover (as a deemed newborn) the child of a mother covered under another 
state's CHIP state plan on the date of birth.
    In Sec. Sec.  435.117(c) and 457.360(c), states have the option to 
recognize deemed newborn status from another state without requiring a 
new application for enrolling babies born in another state.
    Eligibility for deemed newborn children is already included in both 
Medicaid and CHIP state plans. This information can be found at 
Attachment 2.2-A, page 6, of the current state Medicaid plan, which is 
approved under control number 0938-0193 (CMS-179), and CS13 of the 
current CHIP state plan, which is approved under control number 0938-
1148 (CMS-10398). These templates are planned for inclusion in the 
electronic state plan being developed by CMS as part of the MACPro 
system. When the MACPro system is available, these Medicaid and CHIP 
SPA templates will be updated to include all of the options described 
in Sec. Sec.  435.117 and 457.360 and will be submitted to OMB for 
approval with the revised MACPro PRA package under control number 0928-
1188 (CMS-10434).
    Prior to release of the new MACPro templates, states may need to 
make changes to their Medicaid or CHIP state plans to reflect adoption 
of the new options finalized in this rule. States electing these 
options will use the current state plan templates. For the purpose of 
the cost burden, we estimate it will take a management analyst 1 hour 
at $88.24 an hour and a general and operations manager 0.5 hours at 
$114.88 an hour to complete, submit, and respond to questions regarding 
the state plan amendment. The estimated cost burden for each agency is 
$145.68. We anticipate 15 state Medicaid agencies and 5 state CHIP 
agencies may submit amendments to reflect changes to eligibility for 
deemed newborn children. The total estimated cost burden is $2,913.60, 
while the total time is 30 hours.
    Over the course of OMB's anticipated 3-year approval period, we 
estimate an annual burden of 10 hours (30 hours/3 years) at a cost of 
$971.20 ($2,913.60/3 years). We are annualizing the one-time estimate 
since we do not anticipate any additional burden after the 3-year 
approval period expires. Because the currently approved state plan 
templates are not changing at this time, the preceding requirements and 
burden estimates will be submitted to OMB for approval under control 
number 0938-New (CMS-10456).
    In Sec. Sec.  435.117(d) and 457.360(d), states are required to 
issue separate Medicaid identification numbers to covered babies as 
``deemed newborns'' if the mother, on the date of the child's birth, 
was receiving Medicaid in another state, was covered in the state's 
separate CHIP, or was covered for only emergency medical services. 
Also, the state must issue a separate Medicaid identification number to 
a deemed newborn prior to the effective date of any termination of the 
mother's eligibility or prior to the date of the child's first 
birthday, whichever is sooner. Under such circumstances, a separate 
Medicaid identification number must be assigned to the infant so the 
state may reimburse providers for covered services, document the 
state's expenditures, and request FFP.
    While states are required to issue Medicaid identification numbers 
to these children, we believe the associated burden is exempt from the 
PRA in accordance with 5 CFR 1320.3(b)(2). The time, effort, and 
financial resources necessary to issue identification numbers will be 
incurred in the absence of this final rule by persons during the normal 
course of their activities and should, therefore, be considered a usual 
and customary business practice.
6. ICRs Regarding Income Eligibility (Sec.  435.831)
    Section 435.831(b) has been amended by providing states with the 
option to apply either AFDC-based methods or MAGI-based methods for 
determining income eligibility for medically needy children, pregnant 
woman, and parents and other caretaker relatives. States electing to 
use an MAGI-based methodology for these populations must ensure that 
there is no deeming of income or attribution of financial 
responsibility that would conflict with the requirements that prohibit 
counting the income of a child in determining the eligibility of the 
child's parents or siblings or deeming the income of a parent to a 
child if the parent is not living with the child.
    The financial methodologies used to determine eligibility for 
medically needy individuals are currently described in the Medicaid 
state plan on Attachment 2.6-A, page 14a, which is approved under 
control number 0938-0193 (CMS-179). This template is planned for 
inclusion in the electronic state plan being developed by CMS as part 
of the MACPro system. When the MACPro system is available, this 
Medicaid state plan template will be updated to include the new option 
described in Sec.  435.831 and will be submitted to OMB for approval 
with the revised MACPro PRA package under control number 0928-1188 
(CMS-10434).
    Prior to release of the new MACPro templates, states may need to 
make changes to their Medicaid state plan to reflect election of the 
MAGI methodology and they would submit such changes using the currently 
approved template. For the purpose of the cost burden, we estimate it 
will take a management analyst 1 hour at $88.24 an hour and a general 
and operations manager 0.5 hours at $114.88 an hour to

[[Page 86440]]

complete, submit, and respond to questions regarding the state plan 
amendment. The estimated cost burden for each agency is $145.68. We 
anticipate 8 state Medicaid agencies may submit state plan changes to 
elect to utilize MAGI-based methods for determining income eligibility 
for medically needy children, pregnant woman, and parents and other 
caretaker relatives. The total estimated cost burden is $1,165.44, 
while the total time is 12 hours.
    Over the course of OMB's anticipated 3-year approval period, we 
estimate an annual burden of 4 hours (12 hours/3 years) at a cost of 
$388.48 ($1,165.44/3 years). We are annualizing the one-time estimate 
since we do not anticipate any additional burden after the 3-year 
approval period expires. Because the currently approved state plan 
templates are not changing at this time, the preceding requirements and 
burden estimates will be submitted to OMB for approval under control 
number 0938-New (CMS-10456).
7. ICRs Regarding Former Foster Care Children (Sec.  435.150), 
Eligibility for Family Planning Services (Sec.  435.214), Application 
of Financial Eligibility Methodologies (Sec.  435.601), Financial 
Responsibility of Relatives and Other Individuals (Sec.  435.602), and 
[the] Determination of Eligibility (Sec.  435.911)
    States must submit a state plan amendment for any new eligibility 
groups or changes to existing eligibility groups. Mandatory groups, 
such as Former Foster Care Children (Sec.  435.150), require a state 
plan amendment from every Medicaid agency. Optional eligibility groups, 
including the new Family Planning group (Sec.  435.214), only trigger 
the need for a state plan amendment in states that choose to offer 
them. Because the mandatory eligibility group for former foster care 
children became effective on January 1, 2014, all states have already 
included this new group in their state plan on page S33, which is 
approved under control number 0938-1148 (CMS-10398). Similarly, the 
optional eligibility group limited to family planning coverage also 
became effective on January 1, 2014, and a number of states have 
elected this group in their state plan on page S59, which is approved 
under control number 0938-1148 (CMS-10398). The state plan templates 
for the former foster care children and family planning eligibility 
groups are planned for inclusion in the electronic state plan being 
developed by CMS as part of the MACPro system. When the MACPro system 
is available, these templates will be updated to include all of the 
options described in Sec. Sec.  435.150 and 435.214 and will be 
submitted to OMB for approval with the revised MACPro PRA package under 
control number 0928-1188 (CMS-10434).
    Prior to release of the new MACPro templates, amendments to the 
Medicaid state plan may be necessary to reflect a state's adoption of 
the new options finalized in this rule. States electing these options 
will use the current state plan templates. For the purpose of the cost 
burden, we estimate it will take a management analyst 1 hour at $88.24 
an hour and a general and operations manager 0.5 hours at $114.88 an 
hour to complete, submit, and respond to questions regarding the state 
plan amendment. The estimated cost burden for each agency is $145.68. 
We anticipate that 25 state Medicaid agencies may submit state plan 
amendments to modify their coverage of the former foster care group, 
and we anticipate that 3 state Medicaid agencies may submit state plan 
changes to elect or modify coverage of the family planning group. The 
total estimated cost burden is $4,079.04, while the total time is 42 
hours.
    Over the course of OMB's anticipated 3-year approval period, we 
estimate an annual burden of 14 hours (42 hours/3 years) at a cost of 
$1,359.68 ($4,079.04/3 years). We are annualizing the one-time estimate 
since we do not anticipate any additional burden after the 3-year 
approval period expires. Because the currently approved state plan 
templates are not changing at this time, the preceding requirements and 
burden estimates will be submitted to OMB for approval under control 
number 0938-New (CMS-10456).

C. Summary of Annual Burden Estimates

                                                Table 3--Annual Reporting and Recordkeeping Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Total
                                      OMB control number                    Responses     Burden per      annual    Labor cost of reporting   Total cost
 Section(s) in Title 42 of the CFR     (CMS ID number)       Respondents       (per        response       burden             ($/hr)              ($)
                                                                           respondent)     (hours)       (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
431.210, 435.917, and 457.340.....  0938-New (CMS-10456).              98            1          194      \1\ 6,337  varies \2\.............  \1\ 505,296
435.1101(b) and 457.355 (dev.       0938-New (CMS-10456).              51            1           50         \1\ 17  varies \3\.............   \1\ 59,095
 training materials).
435.1101(b) and 457.355 (provide    0938-New (CMS-10456).              51            1           50          2,550  60.06..................      153,153
 training).
430.12, 457.50 and 457.60.........  0938-New (CMS-10456).              98            1           64      \1\ 2,091  varies \4\.............  \1\ 175,025
435.117 and 457.360...............  0938-New (CMS-10456).              20            1            1.5        \1\10  varies \5\.............      \1\ 971
435.831...........................  0938-New (CMS-10456).               8            1            1.5        \1\ 4  varies \5\.............      \1\ 388
435.150 and 435.214...............  0938-New (CMS-10456).              28            1            1.5       \1\ 14  varies \5\.............    \1\ 1,360
                                                          ----------------------------------------------------------------------------------------------
    Total.........................  .....................              98            1          362.5       11,023  .......................      898,288
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ One-time estimate annualized over OMB's 3-year approval period (see text for details).
\2\ 138 hr at $70.96/hr for a business operations specialist, 4 hr at $114.88/hr for a general and operations manager, 20 hr at $131.02/hr for a lawyer,
  and 32 hr at $81.12/hr for computer programmer.
\3\ 40 hours at $60.06/hr for a training and development specialist and 10 hours at $107.38/hr for a training and development manager.
\4\ 26 hours at $70.96/hr for business operations specialists, 32 hours at $88.24/hr for management analysts, and 6 hours at $114.88 for a general and
  operations manager.
\5\ 1 hour at $88.24/hr for a management analyst and 0.5 hours at $114.88/hr for a general and operations manager.


[[Page 86441]]

D. Other ICRs Carried Over From the January 22, 2013 Proposed Rule

    Unlike section IV.B. of this final rule, which sets out burden for 
this rule's final provisions, this section IV.D. does not provide any 
burden estimates. Instead, the burden under this section is either 
exempt from the PRA, is currently approved by OMB, or will be submitted 
to OMB at a later date (independent from this rule).
1. ICRs Regarding Informing Applicants and Beneficiaries (Sec.  
431.206)
    Section 431.206(b) has been amended to require any agency taking 
action on an eligibility claim, or setting type or level of benefits or 
services, to inform every applicant or beneficiary in writing of his or 
her right to a hearing or expedited review and the date by which the 
agency must take administrative action. Section 431.206(c)(2) has been 
amended to clarify that the responsible agency/entity must provide 
notice to individuals regarding adverse actions.
    The burden for developing the notice is set out above in our 
estimates under Sec. Sec.  431.210, 435.917, and 457.340.
    The provision of the written notices under Sec.  431.206(b) and 
(c)(2) is an information collection requirement that is associated with 
an administrative action pertaining to specific individuals or entities 
(5 CFR 1320.4(a)(2) and (c)). Consequently, the burden for forwarding 
the notifications is exempt from the requirements of the PRA.
    Section 431.206(e) requires that the notices issued under this 
subpart E are accessible to individuals who are limited English 
proficient and to individuals with disabilities, and may be provided in 
electronic format.
    States must administer their programs in compliance with federal 
civil rights law. This includes ensuring that states receiving federal 
financial assistance from CMS take reasonable steps to provide persons 
with limited English proficiency meaningful access to States' programs. 
States also have specific legal obligations for serving qualified 
individuals with disabilities. Consequently, we believe that the time, 
effort, and financial resources necessary to comply with this 
requirement will be incurred in the absence of the provisions in this 
final rule by persons during the normal course of their activities, and 
therefore, should be considered a usual and customary business 
practice.
2. ICRs Regarding the Availability of Program Information for 
Individuals Who Are Limited English Proficient (Sec. Sec.  431.206(e) 
and 435.905(b))
    While states are required to provide language services to 
individuals who are limited English proficient, this regulation 
clarifies the approaches to providing these services. Specifically, the 
identified approaches (oral interpretation, written translations, and 
taglines) are standard practice for the provision of services to those 
with limited English proficiency. We believe that the time, effort, and 
financial resources necessary to comply with this requirement will be 
incurred in the absence of this final rule by persons during the normal 
course of their activities and should, therefore, be considered a usual 
and customary business practice. Consequently, we believe the 
associated burden is exempt from the PRA in accordance with 5 CFR 
1320.3(b)(2).
3. ICRs Regarding the Denial or Termination of Eligibility (Sec.  
433.148)
    Section 433.148(a)(2) has been amended to specify that individuals 
must agree to cooperate in establishing paternity and obtaining medical 
support at application as a condition of eligibility unless cooperation 
has been waived, but that further action to pursue support, as 
appropriate, will occur after enrollment in coverage. Individuals are 
required by Sec.  435.610 to provide information to assist in securing 
payment from third parties unless the individual establishes good cause 
for not cooperating.
    The provisions do not create any new or revised reporting, 
recordkeeping, or third party disclosure requirements or burden. The 
requirements are addressed as part of the single streamlined 
application that is approved by OMB under control number 0938-1191 
(CMS-10440).
4. ICRs Regarding Verification Exceptions for Special Circumstances 
(Sec.  435.952)
    Section 435.952 has been amended to permit self-attestation (on a 
case-by-case basis) in special circumstances for individuals who do not 
have access to documentation (for example: victims of natural 
disasters). The provisions do not create any new or revised reporting, 
recordkeeping, or third party disclosure requirements or burden. The 
requirements are addressed as part of the single streamlined 
application that is approved by OMB under control number 0938-1191 
(CMS-10440).
5. ICRs Regarding Verification Procedures for Individuals Attesting to 
Citizenship or Satisfactory Immigration Status (Sec. Sec.  435.3, 
435.4, 435.406, 435.407, 435.940, 435.952, 435.956, 457.320, and 
457.380)
    The provisions establish guidelines for the verification of 
Medicaid and CHIP eligibility based on citizenship or immigration 
status.
    The provisions do not create any new or revised reporting, 
recordkeeping, or third party disclosure requirements or burden. The 
requirements are addressed as part of the single streamlined 
application that is approved by OMB under control number 0938-1191 
(CMS-10440).
6. ICRs Regarding Adoption Assistance Agreements (Sec. Sec.  435.145 
and 435.227)
    In Sec. Sec.  435.145 and 435.227, we have amended Medicaid 
eligibility group provisions to be consistent with statutory 
requirements. Among the eligibility requirements and alternatives for 
these groups is that an adoption assistance agreement must be in 
effect. Importantly, this final rule is not making any revision to 
states' adoption assistance agreements. These agreements are between 
state agencies and the adoptive parents and are specific to the rules 
and laws in place in each state. We do not govern these agreements; 
therefore, we are not setting out any burden associated with these 
provisions.
7. ICRs Regarding Citizenship and Non-Citizen Eligibility (Sec.  
435.406)
    Section 435.406(a) and (c) has been amended to require that the 
declaration of citizenship and immigration status must be presented and 
verified in accordance with Sec.  435.956(g). The provisions do not 
create any new or revised reporting, recordkeeping, or third party 
disclosure requirements or burden. The requirements are addressed as 
part of the single streamlined application that is approved by OMB 
under control number 0938-1191 (CMS-10440).
8. ICRs Regarding the Types of Acceptable Documentary Evidence of 
Citizenship (Sec.  435.407)
    Section 435.407(a)(4) has been amended by specifying that states 
must accept a driver's license as proof of citizenship, only if the 
state issuing the license requires proof of U.S.

[[Page 86442]]

citizenship or if that state obtains and verifies a social security 
number from the applicant who is a citizen before issuing such license. 
In Sec.  435.407(b)(18), only one affidavit can be required to verify 
citizenship if it cannot be verified electronically and the individual 
does not have any of the documents listed in Sec.  435.407. In Sec.  
435.407(f), states must accept copies of documents rather than limiting 
documentation to originals.
    The provisions do not create any new or revised reporting, 
recordkeeping, or third party disclosure requirements or burden. The 
requirements are addressed as part of the single streamlined 
application that is approved by OMB under control number 0938-1191 
(CMS-10440).
9. ICRs Regarding the Verification of Other Non-Financial Information 
(Sec.  435.956)
    Section 435.956(a)(1)(ii) has been amended by specifying that 
states may accept self-attestation that an individual is an honorably 
discharged veteran or in active military duty status, or the spouse or 
unmarried dependent child of such person as described in 8 U.S.C. 
1612(b)(2) for purposes of exemption from the 5-year waiting period 
until such time as verification can be conducted through the Hub or 
through another electronic data source.
    Section 435.956(g) has been amended by specifying that the agency 
must provide a reasonable opportunity period to otherwise eligible 
individuals who have made a declaration of citizenship or immigration 
status in accordance with Sec.  435.406(a) or (b).
    Section 435.956 has been amended by specifying that states must 
first attempt to verify citizenship and immigration status 
electronically in accordance with Sec.  435.949 and, if unable, to 
verify citizenship in accordance with Sec.  435.407 and immigration 
status is accordance with Sec.  435.406 and section 1137(d) of the Act. 
In Sec.  435.956(a)(4), the agency must maintain a record of having 
verified citizenship or immigration status for each individual in a 
case record or electronic database.
    If a reasonable opportunity period is provided, Sec.  435.956(b) 
has been amended by providing states with the option to furnish 
benefits to otherwise eligible individuals prior to the date described 
in Sec.  435.956(g)(2)(i). This date could extend back to and include 
the date the notice in Sec.  435.956(g)(1) is sent, the date of 
application, or the first day of the month of application.
    The preceding provisions do not create any new or revised 
reporting, recordkeeping, or third party disclosure requirements or 
burden. The requirements and burden are addressed as part of the single 
streamlined application that is approved by OMB under control number 
0938-1191 (CMS-10440).
10. ICRs Regarding Eligibility Screening and Enrollment in Other 
Insurance Affordability Programs (Sec.  457.350)
    In Sec.  457.350(i)(2)(i), states must notify the other insurance 
affordability program of the date on which the period of uninsurance 
ends and the individual is eligible to enroll in CHIP. In Sec.  
457.350(i)(2)(ii) states must also provide the individual with an 
initial notice indicating: That the individual is not currently 
eligible to enroll in the state's separate child health plan and the 
reasons thereof; the date on which the individual will be eligible to 
enroll in the state's separate child health plan; and that the 
individual's account has been transferred to another insurance 
affordability program for a determination of eligibility to enroll in 
such program during the period of underinsurance. The notice also must 
contain coordinated content informing the individual of the notice 
being provided to the other insurance affordability program and the 
impact that the individual's eligibility to enroll in the state's 
separate child health plan will have on the individual's eligibility 
for such other program.
    Prior to the end of the individual's period of uninsurance the 
individual must be provided notice that reminds the individual of the 
information described in Sec.  457.350(i)(2)(i)(A), as appropriate.
    In Sec.  457.350(j), the notice of CHIP eligibility or 
ineligibility must contain coordinated content, as applicable, relating 
to: The transfer of the individual's electronic account to the Medicaid 
agency, the transfer of the individual's account to another insurance 
affordability program, and the impact that an approval of Medicaid 
eligibility will have on the individual's eligibility for CHIP or 
another insurance affordability program, as appropriate.
    The preceding provisions do not create any new or revised 
reporting, recordkeeping, or third party disclosure requirements or 
burden. The requirements and burden are addressed under Sec.  457.340 
which is approved by OMB under control number 0938-0841 (CMS-R-308).

E. Submission of PRA-Related Comments

    We submitted a copy of this rule to OMB for its review of the 
rule's information collection and recordkeeping requirements. The 
requirements are not effective until they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed above, please visit CMS' Web 
site at www.cms.hhs.gov/Paperwork@cms.hhs.gov">www.cms.hhs.gov/Paperwork@cms.hhs.gov, or call the Reports 
Clearance Office at 410-786-1326.
    We invite public comment on these potential information collection 
requirements. If you wish to comment, please submit your comments to 
the OMB desk officer via one of the following transmissions and 
identify the rule (CMS-2334-F2):
    OMB, Office of Information and Regulatory Affairs.
    Attention: CMS Desk Officer.
    Fax Number: (202) 395-5806 OR.
    Email: OIRA_submission@omb.eop.gov.
    PRA-related comments must be received on/by December 30, 2017.

V. Regulatory Impact Analysis

A. Overall Impact

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993) and 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011). 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). A 
regulatory impact analysis (RIA) must be prepared for rules with 
economically significant effects ($100 million or more in any 1 year). 
The OMB has determined that this final rule is ``economically 
significant'' within the meaning of section 3(f)(1) of Executive Order 
12866, because it is likely to have an annual effect of $100 million in 
any one year. Accordingly, we have prepared a Regulatory Impact 
Analysis that presents the costs and benefits of this final rule.

B. Estimated Impact of the Medicaid and CHIP Eligibility Provisions

    The RIA published with the March 23, 2012, Medicaid eligibility 
final rule detailed the impact of the Medicaid eligibility changes 
related to implementation of the Affordable Care Act. The majority of 
provisions included in this final rule were described in that detailed 
RIA. It included a comparison of estimates prepared by the CMS Office 
of the

[[Page 86443]]

Actuary (OACT) and the Congressional Budget Office (CBO) regarding the 
new Medicaid coverage groups, simplified eligibility policies for 
Medicaid and CHIP, streamlined eligibility and enrollment processes, 
and coordination of eligibility procedures with those of the Exchanges. 
OACT estimated that by 2016, an additional 24 million people would be 
enrolled in Medicaid, while CBO estimated that an additional 16 million 
people would be enrolled in Medicaid. Those impacts are not repeated in 
this section.
1. Anticipated Effects on Medicaid Enrollment
    With the exception of the new eligibility groups for former foster 
care children and family planning, the Affordable Care Act's 
anticipated effects on Medicaid enrollment were described in the March 
23, 2012, RIA of the final rule. The former foster care group and the 
family planning group were not covered in the March 23, 2012, Medicaid 
eligibility final rule, and therefore, were not included in the RIA for 
that rule. Estimates for both new groups are provided below. We note 
that the estimates for the family planning group were inadvertently 
left out of the proposed rule RIA. In addition, the estimates included 
in the March 23, 2012 RIA of the final rule, and those for the former 
foster care group and the family planning group, reference the Medicaid 
baseline for the FY 2013 President's Budget.
    As described in Table 4, the CMS Office of the Actuary (OACT) 
estimates that by 2018, an additional 75,000 individuals will be 
enrolled in Medicaid under the new eligibility group for former foster 
care children. An additional 359,000 individuals will be enrolled under 
the family planning group with benefits limited to family planning and 
family planning related services.

           Table 4--Estimated Effects of This Final Rule on Medicaid Enrollment, Fiscal Year 2016-2018
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                           Enrollment                                  2016            2017            2018
----------------------------------------------------------------------------------------------------------------
Former Foster Care Group........................................              73              74              75
Family Planning Group...........................................             348             354             359
----------------------------------------------------------------------------------------------------------------
Source: CMS Office of the Actuary (OACT).

    The estimates for the former foster care group were developed at 
the time of the passage of the Affordable Care Act. OACT used data from 
the Medicaid Statistical Information System (MSIS) for 2007, which was 
the most recent available data at that time. The MSIS data was used to 
calculate the number of children in foster care and enrolled in 
Medicaid up to age 18 (and up to age 21 in states that allowed children 
to remain in foster care at older ages), and to calculate the Medicaid 
expenditures per enrollee for adults ages 19 to 20 and 21 to 44.
    The number of children in foster care and enrolled in Medicaid that 
would be eligible to receive Medicaid coverage was estimated to be 
about 190,000 in 2007. The number of potential persons eligible under 
this section was projected forward by the projected growth rate in the 
U.S. population (about 1 percent per year) to 2016 through 2018. To 
calculate the number of new Medicaid enrollees, OACT estimated the 
number of persons who would not be new Medicaid enrollees because they 
either would already have been enrolled in Medicaid (as they would have 
been eligible under paragraphs (I) through (VIII)) or would decline to 
enroll in Medicaid (which would include those who would have other 
forms of coverage, such as employer-sponsored insurance, or would 
otherwise not enroll in Medicaid). After these adjustments, OACT 
estimated that there would be about 55,000 new enrollees (on a person-
year equivalent basis) for FY 2014 (which would include 9 months of 
eligibility) and about 75,000 new enrollees by FY 2018. In projecting 
the new population that would be served under the family planning 
group, OACT used data available from Pennsylvania, allowing for 
assumptions about the number of states that would elect to cover this 
group and the proportion of the population those states that would seek 
coverage and would meet the income guidelines. These enrollment 
estimates also allow for a phase-in period. OACT notes that any 
enrollment estimates are inherently uncertain, since they depend on 
future economic, demographic, and other factors that cannot be 
precisely determined in advance. Moreover, the actual behavior of 
individuals and the actual operation of the new enrollment processes 
and Exchanges could differ from OACT's assumptions.
    The net increase in enrollment in the Medicaid program and the 
resulting reduction in the number of uninsured individuals will produce 
several benefits. For new enrollees, eligibility for Medicaid will 
improve access to medical care. Evidence suggests that improved access 
to medical care will result in improved health outcomes and greater 
financial security for these individuals and families. Evidence on how 
Medicaid coverage affects medical care utilization, health, and 
financial security comes from a recent evaluation of an expansion of 
Oregon's Medicaid program.\1\ In 2008, Oregon conducted a lottery to 
expand access to uninsured adults with incomes below 100 percent of the 
FPL. Approximately 10,000 low-income adults were newly enrolled in 
Medicaid as a result. The evaluation is particularly strong because it 
was able to compare outcomes for those who won the lottery with 
outcomes for those who did not win, and contains an estimate of the 
benefits of Medicaid coverage. The evaluation concluded that those 
enrolled in Medicaid had ``substantial and statistically significantly 
higher health care utilization, lower out-of-pocket medical 
expenditures and medical debt, and better self-reported health.''
---------------------------------------------------------------------------

    \1\ Amy Finkelstein & Sarah Taubman & Bill Wright & Mira 
Bernstein & Jonathan Gruber & Joseph P. Newhouse & Heidi Allen & 
Katherine Baicker, 2012. ``The Oregon Health Insurance Experiment: 
Evidence from the First Year,'' The Quarterly Journal of Economics, 
Oxford University Press, vol. 127(3), pages 1057-1106.
---------------------------------------------------------------------------

    While there are limitations on the ability to extrapolate from 
these results to the likely impacts of the Affordable Care Act's 
expansion of Medicaid coverage, these results provide evidence of 
health and financial benefits associated with coverage expansions for a 
population of non-elderly adults.
    The results of the Oregon study are consistent with prior research, 
which has found that health insurance coverage improves health 
outcomes. The Institute of Medicine (2002) analyzed several population 
studies and found that people under the age 65 who

[[Page 86444]]

were uninsured faced a 25 percent higher risk of mortality than those 
with private coverage. This pattern was found when comparing deaths of 
uninsured and insured patients from heart attack, cancer, traumatic 
injury, and Human immunodeficiency virus (HIV) infection.\2\ The 
Institute of Medicine also concluded that having insurance leads to 
better clinical outcomes for diabetes, cardiovascular disease, end-
stage renal disease, HIV infection and mental illness, and that 
uninsured adults were less likely to have regular checkups, recommended 
health screening services and a usual source of care to help manage 
their disease than a person with coverage. Other research has found 
that birth outcomes for women covered by Medicaid are not different 
than those achieved for privately insured patients, adjusting for risk 
variables.\3\
---------------------------------------------------------------------------

    \2\ Institute of Medicine, Care without coverage: too little, 
too late (National Academies Press, 2002).
    \3\ E. A. Anum, et al, ``Medicaid and Preterm Birth and Low 
Birth Weight: The Last Two Decades'' Journal of Women's Health Vol. 
19 (November 2010).
---------------------------------------------------------------------------

    In addition to being able to seek treatment for illnesses when they 
arise, Medicaid beneficiaries will be able to more easily obtain 
preventive care, which will help maintain and improve their health. 
Research demonstrates that when uninsured individuals obtain coverage 
(including Medicaid), the rate at which they obtain needed care 
increases substantially.4 5 6 Having health insurance also 
provides significant financial security. Comprehensive health insurance 
coverage provides a safety net against the potentially high cost of 
medical care, and the presence of health insurance can mitigate 
financial risk. The Oregon study found people who gained coverage were 
less likely to have unpaid medical bills referred to a collection 
agency. Again, this study is consistent with prior research showing the 
high level of financial insecurity associated with lack of insurance 
coverage. Some recent research indicates that illness and medical bills 
contribute to a large and increasing share of bankruptcies in the 
United States.\7\ Another recent analysis found that more than 30 
percent of the uninsured report having zero (or negative) financial 
assets and uninsured families at the 90th percentile of the asset 
distribution report having total financial assets below $13,000--an 
amount that can be quickly depleted with a single hospitalization.\8\ 
Other research indicates that uninsured individuals who experience 
illness suffer on average a loss of 30 to 50 percent of assets relative 
to households with insured individuals.\9\
---------------------------------------------------------------------------

    \4\ S.K. Long, et al., ``How well does Medicaid work in 
improving access to care?'' HSR: Health Services Research 40:1 
(February 2005).
    \5\ Henry J. Kaiser Family Foundation, ``Children's Health--Why 
Health Insurance Matters.'' Washington, DC: KFF, 2002.
    \6\ C. Keane, et al., ``The impact of Children's Health 
Insurance Program by age,'' Pediatrics 104:5 (1999).
    \7\ D.U. Himmelstein, et al., ``Medical bankruptcy in the United 
States, 2007: Results of a National Study,'' The American Journal of 
Medicine 122 no. 8, (2009).
    \8\ ASPE. The Value of Health Insurance: Few of the Uninsured 
Have Adequate Resources to Pay Potential Hospital Bills. (2011).
    \9\ Cook, K. et al., ``Does major illness cause financial 
catastrophe?,'' Health Services Research 45, no. 2 (2010).
---------------------------------------------------------------------------

2. Anticipated Effects on States
    The major state impacts from this final rule were covered in the 
RIA of the March 23, 2012, Medicaid eligibility final rule. However, 
OACT estimates that state expenditures on behalf of the additional 
individuals gaining Medicaid coverage as a result of the establishment 
of the new eligibility group for former foster care children and the 
new eligibility group for family planning coverage will total $51 
million in FY 2016 and $162 million over 3 years (2016-2018), as 
described in Table 5.

         Table 5--Estimated State Budgetary Effects of Increased Medicaid Benefit Spending FY 2016-2018
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
     Net effect on Medicaid benefit spending           2016            2017            2018          2016-2018
----------------------------------------------------------------------------------------------------------------
Former Foster Care Group........................             109             117             125             351
Family Planning Group...........................             -58             -63             -68            -189
                                                 ---------------------------------------------------------------
    Total.......................................              51              54              57             162
----------------------------------------------------------------------------------------------------------------
Source: CMS Office of the Actuary.

    In developing the estimates for the former foster care group, per 
enrollee costs were first estimated by calculating the per enrollee 
costs for adults ages 19 to 20 and 21 to 44 from the 2007 MSIS data; 
OACT assumed that the new enrollees under this section of the law would 
have similar costs. The costs were projected forward to 2016 through 
2018 using the projected growth rate of Medicaid expenditures per 
enrollee for adults in the Mid-Session Review of the President's FY 
2010 Budget (which was the basis for the estimates used by OACT to 
estimate the impacts of the Affordable Care Act). The average per 
enrollee costs for these enrollees were projected to be about $3,000 in 
2014 and about $3,900 in 2018. The total costs for these new enrollees 
were calculated by multiplying the projected number of enrollees by the 
projected expenditures per enrollee for each year. The federal costs, 
which are discussed below, were calculated by multiplying the total 
costs by the average federal share of Medicaid expenditures (about 57 
percent).
    The costs of the family planning group are based on data available 
from Pennsylvania. Utilizing this data, OACT projected the cost of the 
program providing family planning services, as well as savings from 
reduced delivery costs and infant care services.
    These cost estimates do not take into account the reduced 
administrative burden which will result from simplifying Medicaid and 
CHIP eligibility policies, such as by eliminating obsolete and 
unnecessary eligibility groups and establishing streamlined 
verification procedures and notice and appeals processes. The 
coordination of Medicaid and CHIP eligibility policy and processes with 
those of the new Exchanges, including processes to allow for 
consistency in the provision of notices and appeal rights, and the 
movement to simplify verification processes with less reliance on paper 
documentation should all result in a Medicaid eligibility system that 
is far easier for states to administer than Medicaid's current, more 
complex system. These changes could generate administrative savings and 
increase efficiency. The new system through which states will verify 
certain information with other federal agencies, such as income data 
from the IRS, will

[[Page 86445]]

also relieve state Medicaid agencies of some current responsibilities, 
creating further efficiencies for the states. Currently more than 40 
states use an electronic data match with the SSA in lieu of requiring 
paper documentation, and many states have found savings from this 
electronic verification process. In addition, the option to provide 
electronic notices, combined with coordination of notice processes 
among all insurance affordability programs, may improve consumer access 
to information while decreasing burden and costs to the states.
    These administrative simplifications are expected to lower state 
administrative costs, although we expect that states may incur short 
term increases in administrative costs (depending on their current 
systems and practices) as they implement these changes. States that 
elect new options finalized in this rule with respect to eligibility 
for deemed newborns (Sec. Sec.  435.117 or 457.360), former foster care 
youth (Sec.  435.150), or family planning (Sec.  435.214), and those 
states that elect to apply MAGI-based methods when determining 
eligibility for medically needy children, pregnant women, and parents 
will need to submit a state plan amendment (SPA) to formalize those 
elections. Submission of a new SPA would result in minimal 
administrative costs for personnel to prepare the SPA submission and 
respond to questions, as described in section IV, Collection of 
Information Requirements. However, election of certain options, such as 
the application of MAGI-based methods for the medically needy will also 
result in simplification of the application and enrollment process, 
which may result in future cost savings. Implementation of the 
electronic SPA submission process is expected to result in additional 
administrative simplification once fully implemented, though during the 
initial phase-in states will incur both administrative costs and staff 
training costs to complete the transition. The extent of these initial 
costs will depend on current state policy and practices. As described 
in section IV of this final rule, the estimated cost for all states is 
$175,000 per year for 3 years.
    Federal support is available for administrative costs and to help 
states finance system modifications. Notably, in previous rulemaking, 
we increased federal funding to states to better support state efforts 
to develop significantly upgraded eligibility and enrollment systems. 
To anticipate and support these efforts, we published the ``Federal 
Funding for Medicaid Eligibility Determination and Enrollment 
Activities'' final rule (75 FR 21950) in the April 19, 2011, Federal 
Register. That rule amended the definition of Mechanized Claims 
Processing and Information Retrieval Systems to include systems used 
for eligibility determination, enrollment, and eligibility reporting 
activities by Medicaid, and made this work eligible for enhanced 
funding with a federal matching rate of 90 percent for development and 
75 percent for ongoing maintenance and operations costs. Systems must 
meet certain standards and conditions to qualify for the enhanced 
match.
3. Anticipated Effects on Providers
    As expansion and simplification of Medicaid and CHIP eligibility 
could result in more individuals obtaining health insurance coverage, 
health centers, hospitals, clinics, physicians, and other providers are 
likely to experience a significant increase in their insured patient 
volume. We expect providers that serve a substantial share of the low-
income population to realize the most substantial increase in insured 
patients. Providers, such as hospitals that serve a low-income 
population, may financially benefit from having a higher insured 
patient population and providing less uncompensated care, and the 
establishment of a PE option for hospitals will further simplify access 
to coverage for patients. In addition, we expect continuity of coverage 
to improve providers' ability to maintain their relationship with 
patients and to reduce provider administrative burdens such as time 
spent helping patients to access information on coverage options and to 
apply for Medicaid or CHIP.
    The improved financial security provided by health insurance also 
helps ensure that patients can pay their medical bills. The Oregon 
study found that coverage significantly reduces the level of unpaid 
medical bills sent to a collection agency.\10\ Most of these bills are 
never paid, so this reduction in unpaid bills means that one of the 
important effects of expanded health insurance coverage, such as the 
coverage that will be provided through the Exchanges, is a reduction in 
the level of uncompensated care provided.
---------------------------------------------------------------------------

    \10\ A. Finkelstein, et al., ``The Oregon Health Insurance 
Experiment: Evidence from the First Year,'' National Bureau of 
Economic Research Working Paper Series No. 17190(2011).
---------------------------------------------------------------------------

    Because the majority of individuals gaining coverage under this 
provision are likely to have been previously uninsured, we do not 
anticipate that the provisions of this final rule will impose new costs 
on providers. Medicaid generally reimburses providers at a lower rate 
than employer-sponsored health insurance or other forms of private 
health insurance. For the minority of individuals who become eligible 
for Medicaid under this provision who are currently covered by 
employer-sponsored health insurance, there is thus a possibility that 
their providers may experience lower payment rates. Conversely, 
Medicaid generally reimburses federally qualified health centers at a 
higher rate than employer-sponsored insurance and many new Medicaid 
enrollees may seek treatment in this setting, which will increase 
payment to these providers. At the same time, the increased federal 
financial support for Medicaid, the growth in Medicaid enrollment, and 
the potential that many plans will operate in both the Exchange and in 
Medicaid may result in states electing to increase Medicaid payment 
rates to providers.\11\
---------------------------------------------------------------------------

    \11\ D. Bachrach, et al., ``Medicaid's role in the Health 
Benefits Exchange: A road map for States,'' A Maximizing Enrollment 
Report, National Academy for State Health Policy and Robert Wood 
Johnson Foundation (March 2011). Available online at http://www.nashp.org/sites/default/files/maxenroll%20Bachrach%20033011.pdf.
---------------------------------------------------------------------------

4. Anticipated Effects on Federal Budget
    Table 6 presents estimates of the federal budget effect of this 
final rule beyond the impact provided in the March 23, 2012, Medicaid 
eligibility final rule RIA. The federal financial impact of proposed 
changes to CHIP will be small; as CHIP expenditures are capped under 
current law, any increases in spending could be expected to be offset 
by less available funding in the future. The costs provided below are 
primarily attributable to the impact of the eligibility groups for 
former foster care children and family planning on net federal spending 
for Medicaid benefits. The impact of other Affordable Care Act 
provisions was detailed in the prior Medicaid eligibility final rule 
RIA. As a result of the establishment of the eligibility group for 
former foster care children and the new eligibility group covering 
family planning, OACT estimates an increase in net federal spending on 
Medicaid benefits for the period FY 2016 and later, with the increase 
estimated to be about $135 million in 2016 and about $429 million over 
the 3-year period from FY 2016 through 2018. The family planning group 
generates cost savings to both state and federal government because the 
cost of providing Medicaid-covered,

[[Page 86446]]

pregnancy-related care is much larger than the cost of providing 
contraceptive services.

               Table 6--Estimated Net Increase in Federal Medicaid Benefit Spending, FY 2016-2018
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
     Net effect on Medicaid benefit spending           2016            2017            2018          2016-2018
----------------------------------------------------------------------------------------------------------------
Former Foster Care Group........................             144             155             166             465
Family Planning Group...........................              -9             -12             -15             -36
                                                 ---------------------------------------------------------------
    Total.......................................             135             143             151             429
----------------------------------------------------------------------------------------------------------------
Source: CMS Office of the Actuary.

C. Alternatives Considered

    The majority of Medicaid and CHIP eligibility provisions proposed 
in this rule serve to implement the Affordable Care Act. All of the 
provisions in this final rule are a result of the passage of the 
Affordable Care Act and are largely self-implementing. Therefore, 
alternatives considered for this final rule were constrained due to the 
statutory provisions.
    In developing this final rule, we considered alternatives to some 
of the simplified eligibility policies proposed here, as well as to the 
streamlined, coordinated process and eligibility policies this rule 
established between Medicaid, the Exchange, and other insurance 
affordability programs. One alternative was to allow Medicaid agencies 
to provide notices to individuals independently of the notices provided 
by other insurance affordability programs. This option would allow 
states to maintain current Medicaid notice practices, but could result 
in multiple communications from different entities regarding each 
individual's eligibility determination process. This could create 
significant confusion for applicants and beneficiaries. Another 
alternative was to consolidate all notice responsibilities within the 
Exchanges and require one clear line of communication between 
applicants and the entities determining eligibility for insurance 
affordability programs. However, this would reduce state flexibility 
relative to the flexibility already offered in the prior Medicaid 
eligibility rule and would mandate significant coordination among 
insurance affordability programs that could stretch beyond just the 
provision of notices.
    We considered several alternatives related to appeals. For example, 
we initially proposed an ``auto-appeal'' provision such that a request 
for a fair hearing related to eligibility for premium tax credits would 
trigger a Medicaid appeal. However, we determined that this policy 
would likely result in a substantial increase in the volume of Medicaid 
fair hearing requests heard by state agencies, including for many 
individuals not interested in appealing their Medicaid determinations. 
In establishing requirements for an expedited review process, we 
considered several different timeframes including 3, 5, and 7 days, 
which would ensure adequate consumer protections for applicants and 
beneficiaries with urgent health care needs. Balancing the needs of the 
consumer with the operational challenges in implementing an expedited 
review process, we are finalizing a timeframe of 7 working days (with a 
delayed effective date) for eligibility appeals under Sec.  
431.244(f)(3)(i) of this final rule, while having a 3 working day 
timeframe for benefits and services appeals. However, in the notice of 
proposed rule making published concurrently with this final rule, we 
are requesting comment on the 3 and 5 day timeframes for eligibility 
appeals.

D. Limitations of the Analysis

    A number of challenges face estimators in projecting Medicaid and 
CHIP benefits and costs under the Affordable Care Act and the final 
rule. Health care cost growth is difficult to project, especially for 
people who are currently not in the health care system--the population 
targeted for the Medicaid eligibility changes. Such individuals could 
have pent-up demand and thus have costs that may be initially higher 
than other Medicaid enrollees, while they might also have better health 
status than those who have found a way (for example, ``spent down'') to 
enroll in Medicaid.
    There is also considerable uncertainty about behavioral responses 
to the Medicaid and CHIP changes. Individuals' participation rates are 
particularly uncertain. Medicaid participation rates for people already 
eligible tend to be relatively low (estimates range from 75 to 86 
percent), despite the fact that there are typically no premiums and low 
to no cost sharing for comprehensive services. It is not clear how the 
proposed changes will affect those already eligible, or the interest in 
participating for those newly eligible, as previously described.

E. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4/), in Table 7 we have 
prepared an accounting statement table showing the classification of 
the impacts associated with implementation of this final rule. 
Consistent with standard practice, we show all direct effects as 
transfer payments.

          Table 7--Accounting Statement: Classification of Estimated Net Costs, From FY 2016 to FY 2018
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
                                                                                   Discount rate
                    Category                         Estimate       Year dollar         (%)       Period covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers from Federal                  143            2016               7       2016-2018
 Government to States on Behalf of Beneficiaries             143            2016               3       2016-2018
Annualized Monetized Transfers from States on                 54            2016               7       2016-2018
 Behalf of Beneficiaries........................              54            2016               3       2016-2018
----------------------------------------------------------------------------------------------------------------


[[Page 86447]]

F. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
requires agencies to prepare an initial regulatory flexibility analysis 
to describe the impact of the final rule on small entities, unless the 
head of the agency can certify that the rule will not have a 
significant economic impact on a substantial number of small entities. 
The Act generally defines a ``small entity'' as: (1) A proprietary firm 
meeting the size standards of the Small Business Administration (SBA); 
(2) a not-for-profit organization that is not dominant in its field; or 
(3) a small government jurisdiction with a population of less than 
50,000. States and individuals are not included in the definition of 
``small entity.'' HHS uses as its measure of significant economic 
impact on a substantial number of small entities a change in revenues 
of more than 3 to 5 percent.
    For the purposes of the regulatory flexibility analysis, we do not 
expect small entities to be directly affected by this final rule. The 
additional options for Medicaid eligibility and streamlined eligibility 
and enrollment processes finalized in this rule are expected to improve 
access to coverage, which would be likely to have a positive indirect 
impact on small entities.
    Additionally, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a final rule may have a significant 
economic 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 final rule will not have a direct 
economic impact on the operations of a substantial number of small 
rural hospitals.

G. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation, by state, 
local, or tribal governments, in the aggregate, or by the private 
sector. In 2016, the threshold level is approximately $146 million. 
This final rule does not mandate expenditures by state governments, 
local governments, tribal governments, in the aggregate, or the private 
sector, of $146 million. The majority of state, local, and private 
sector costs related to implementation of the Affordable Care Act were 
described in the RIA accompanying the March 23, 2012 Medicaid 
eligibility final rule.

H. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a final rule that imposes substantial 
direct effects on states, preempts state law, or otherwise has 
federalism implications. We wish to note again that the impact of 
changes related to implementation of the Affordable Care Act were 
described in the RIA of the March 23, 2012, Medicaid eligibility final 
rule. As discussed in the March 23, 2012 RIA, we have consulted with 
states to receive input on how the various Affordable Care Act 
provisions codified in this final rule will affect states. We continue 
to engage in ongoing consultations with Medicaid and CHIP Technical 
Advisory Groups (TAGs), which have been in place for many years and 
serve as a staff level policy and technical exchange of information 
between CMS and the states. Through consultations with these TAGs, we 
have been able to get input from states specific to issues surrounding 
the changes in eligibility groups and rules that became effective in 
2014.
    In accordance to the requirements set forth in section 8(a) of 
Executive Order 13132, and by the signatures affixed to this 
regulation, the Department certifies that CMS has complied with the 
requirements of Executive Order 13132 for the attached proposed 
regulation in a meaningful and timely manner.

I. Congressional Review Act

    This final rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.), which specifies that before a rule can 
take effect, the federal agency issuing the rule shall submit to each 
House of the Congress and to the Comptroller General a report 
containing a copy of the rule along with other specified information, 
and has been transmitted to Congress and the Comptroller General for 
review.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 407

    Supplemental medical insurance (SMI) enrollment and entitlement.

42 CFR Part 430

    Administrative practice and procedure, Grant programs--health, 
Medicaid Reporting and recordkeeping requirements.

42 CFR Part 431

    Grant programs--health, Health facilities, Medicaid, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 433

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

42 CFR Part 435

    Aid to Families with Dependent Children, Grant programs--health, 
Medicaid, Reporting and recordkeeping requirements, Supplemental 
Security Income (SSI), Wages.

42 CFR Part 457

    Administrative practice and procedure, Grant programs--health, 
Health insurance, Reporting and recordkeeping requirements.

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

PART 407--SUPPLEMENTAL MEDICAL INSURANCE (SMI) ENROLLMENT AND 
ENTITLEMENT

0
1. The authority citation for part 407 continues to read as follows:

    Authority:  Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


0
2. Section 407.42 is amended by revising paragraph (a)(5) to read as 
follows:


Sec.  407.42   Buy-in groups available to the 50 States, the District 
of Columbia, and the Northern Mariana Islands.

    (a) * * *
    (5) Category E: Individuals who, in accordance with Sec.  435.134 
of this chapter, are covered under the State's Medicaid plan despite 
the increase in social security benefits provided by Public Law 92-336.
* * * * *

PART 430--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

0
3. The authority citation for part 430 continues to read as follows:

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


0
4. Section 430.12 is amended by revising paragraph (a) to read as 
follows:

[[Page 86448]]

Sec.  430.12   Submittal of State plans and plan amendments.

    (a) Format. A State plan for Medicaid consists of a standardized 
template, issued and updated by CMS, that includes both basic 
requirements and individualized content that reflects the 
characteristics of the State's program. The Secretary will periodically 
update the template and format specifications for State plans and plan 
amendments through a process consistent with the requirements of the 
Paperwork Reduction Act.
* * * * *

PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION

0
5. The authority citation for part 431 continues to read as follows:

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


0
6. Section 431.200 is amended by adding paragraph (d) to read as 
follows:


Sec.  431.200   Basis and scope.

* * * * *
    (d) Implements section 1943(b)(3) of the Act and section 1413 of 
the Affordable Care Act to permit coordinated hearings and appeals 
among insurance affordability programs.

0
7. Section 431.201 is amended by--
0
a. Revising the definition of ``Action''; and
0
b. Adding the definitions of ``Joint fair hearing request'' and ``Local 
evidentiary hearing'' in alphabetical order.
    The revision and additions to read as follows:


Sec.  431.201   Definitions.

* * * * *
    Action means a termination, suspension of, or reduction in covered 
benefits or services, or a termination, suspension of, or reduction in 
Medicaid eligibility or an increase in beneficiary liability, including 
a determination that a beneficiary must incur a greater amount of 
medical expenses in order to establish income eligibility in accordance 
with Sec.  435.121(e)(4) or Sec.  435.831 of this chapter or is subject 
to an increase in premiums or cost-sharing charges under subpart A of 
part 447 of this chapter. It also means a determination by a skilled 
nursing facility or nursing facility to transfer or discharge a 
resident and an adverse determination by a State with regard to the 
preadmission screening and resident review requirements of section 
1919(e)(7) of the Act.
* * * * *
    Joint fair hearing request means a request for a Medicaid fair 
hearing which is included in an appeal request submitted to an Exchange 
or Exchange appeals entity under 45 CFR 155.520 or other insurance 
affordability program or appeals entity, in accordance with the signed 
agreement between the agency and an Exchange or Exchange appeals entity 
or other program or appeals entity described in Sec.  435.1200(b)(3) of 
this chapter .
    Local evidentiary hearing means a hearing held on the local or 
county level serving a specified portion of the State.
* * * * *

0
8. Section 431.205 is amended by adding paragraphs (e) and (f) to read 
as follows:


Sec.  431.205   Provision of hearing system.

* * * * *
    (e) The hearing system must be accessible to persons who are 
limited English proficient and persons who have disabilities, 
consistent with Sec.  435.905(b) of this chapter.
    (f) The hearing system must comply with the United States 
Constitution, the Social Security Act, title VI of the Civil Rights Act 
of 1964, section 504 of the Rehabilitation Act of 1973, the Americans 
with Disabilities Act of 1990, the Age Discrimination Act of 1975, and 
section 1557 of the Affordable Care Act and implementing regulations.

0
9. Section 431.206 is amended by--
0
a. Revising paragraphs (b)(1), (c)(2), and (e).
0
b. Adding paragraph (b)(4).
0
c. Removing ``and'' at the end of paragraph (b)(2) and removing the 
period at the end of paragraph (b)(3) and adding in its place ``; 
and''.
    The revisions and addition read as follows:


Sec.  431.206   Informing applicants and beneficiaries.

* * * * *
    (b) * * *
    (1) Of his or her right to a fair hearing and right to request an 
expedited fair hearing;
* * * * *
    (4) Of the time frames in which the agency must take final 
administrative action, in accordance with Sec.  431.244(f).
    (c) * * *
    (2) At the time the agency denies an individual's claim for 
eligibility, benefits or services; or denies a request for exemption 
from mandatory enrollment in an Alternative Benefit Plan; or takes 
other action, as defined at Sec.  431.201; or whenever a hearing is 
otherwise required in accordance with Sec.  431.220(a);
* * * * *
    (e) The information required under this subpart must be accessible 
to individuals who are limited English proficient and to individuals 
with disabilities, consistent with Sec.  435.905(b) of this chapter, 
and may be provided in electronic format in accordance with Sec.  
435.918 of this chapter.

0
10. Section 431.210 is amended by revising paragraphs (a), (b), and 
(d)(1) to read as follows:


Sec.  431.210   Content of notice.

* * * * *
    (a) A statement of what action the agency, skilled nursing 
facility, or nursing facility intends to take and the effective date of 
such action;
    (b) A clear statement of the specific reasons supporting the 
intended action;
* * * * *
    (d) * * *
    (1) The individual's right to request a local evidentiary hearing 
if one is available, or a State agency hearing; or
* * * * *

0
11. Section 431.220 is amended by--
0
a. Revising paragraph (a)(1).
0
b. Removing paragraph (a)(2).
0
c. Redesignating paragraphs (a)(3) through (7), as paragraphs (a)(2) 
through (6) respectively.
    The revision reads as follows:


Sec.  431.220   When a hearing is required.

    (a) * * *
    (1) Any individual who requests it because he or she believes the 
agency has taken an action erroneously, denied his or her claim for 
eligibility or for covered benefits or services, or issued a 
determination of an individual's liability, or has not acted upon the 
claim with reasonable promptness including, if applicable--
    (i) An initial or subsequent decision regarding eligibility;
    (ii) A determination of the amount of medical expenses that an 
individual must incur in order to establish eligibility in accordance 
with Sec.  435.121(e)(4) or Sec.  435.831 of this chapter; or
    (iii) A determination of the amount of premiums and cost sharing 
charges under subpart A of part 447 of this chapter;
    (iv) A change in the amount or type of benefits or services; or
    (v) A request for exemption from mandatory enrollment in an 
Alternative Benefit Plan.
* * * * *

0
12. Section 431.221 is amended by revising paragraph (a) to read as 
follows:


Sec.  431.221   Request for hearing.

    (a)(1) The agency must establish procedures that permit an 
individual, or an authorized representative as defined at Sec.  435.923 
of this chapter, to--

[[Page 86449]]

    (i) Submit a hearing request via any of the modalities described in 
Sec.  435.907(a) of this chapter, except that the requirement to 
establish procedures for submission of a fair hearing request described 
in Sec.  435.907(a)(1), (2) and (5) of this chapter (relating to 
submissions via Internet Web site, telephone and other electronic 
means) is effective no later than the date described in Sec.  
435.1200(i) of this chapter; and
    (ii) Include in a hearing request submitted under paragraph 
(a)(1)(i) of this section, a request for an expedited fair hearing.
    (2) [Reserved]

0
13. Section 431.223 is amended by revising paragraph (a) to read as 
follows:


Sec.  431.223   Denial or dismissal of request for a hearing.

* * * * *
    (a) The applicant or beneficiary withdraws the request. The agency 
must accept withdrawal of a fair hearing request via any of the 
modalities available per Sec.  431.221(a)(1)(i). For telephonic hearing 
withdrawals, the agency must record the individual's statement and 
telephonic signature. For telephonic, online and other electronic 
withdrawals, the agency must send the affected individual written 
confirmation, via regular mail or electronic notification in accordance 
with the individual's election under Sec.  435.918(a) of this chapter.
* * * * *

0
14. Section 431.224 is added to read as follows:


Sec.  431.224   Expedited appeals.

    (a) General rule. (1) The agency must establish and maintain an 
expedited fair hearing process for individuals to request an expedited 
fair hearing, if the agency determines that the time otherwise 
permitted for a hearing under Sec.  431.244(f)(1) could jeopardize the 
individual's life, health or ability to attain, maintain, or regain 
maximum function.
    (2) The agency must take final administrative action within the 
period of time permitted under Sec.  431.244(f)(3) if the agency 
determines that the individual meets the criteria for an expedited fair 
hearing in paragraph (a)(1) of this section.
    (b) Notice. The agency must notify the individual whether the 
request is granted or denied as expeditiously as possible. Such notice 
must be provided orally or through electronic means in accordance with 
Sec.  435.918 of this chapter, if consistent with the individual's 
election under such section; if oral notice is provided, the agency 
must follow up with written notice, which may be through electronic 
means if consistent with the individual's election under Sec.  435.918.

0
15. Section 431.232 is amended by revising paragraph (b) to read as 
follows:


Sec.  431.232   Adverse decision of local evidentiary hearing.

* * * * *
    (b) Inform the applicant or beneficiary in writing that he or she 
has a right to appeal the decision to the State agency within 10 days 
after the individual receives the notice of the adverse decision. The 
date on which the notice is received is considered to be 5 days after 
the date on the notice, unless the individual shows that he or she did 
not receive the notice within the 5-day period; and
* * * * *

0
16. Section 431.241 is amended by--
0
a. Revising paragraph (a);
0
b. Removing paragraph (b); and
0
c. Redesignating paragraphs (c) and (d) as paragraphs (b) and (c), 
respectively.
    The revision reads as follows:


Sec.  431.241   Matters to be considered at the hearing.

* * * * *
    (a) Any matter described in Sec.  431.220(a)(1) for which an 
individual requests a fair hearing.
* * * * *

0
17. Section 431.242 is amended by revising paragraph (a)(1) and adding 
paragraph (f) to read as follows:


Sec.  431.242   Procedural rights of the applicant or beneficiary.

* * * * *
    (a) * * *
    (1) The content of the applicant's or beneficiary's case file and 
electronic account, as defined in Sec.  435.4 of this chapter; and
* * * * *
    (f) Request an expedited fair hearing.

0
18. Section 431.244 is amended by revising paragraph (f)(1) and adding 
paragraphs (f)(3) and (4) to read as follows:


Sec.  431.244   Hearing decisions.

* * * * *
    (f) * * *
    (1) Ordinarily, within 90 days from:
    (i) The date the enrollee filed an MCO, PIHP, or PAHP appeal, not 
including the number of days the enrollee took to subsequently file for 
a State fair hearing; or
    (ii) For all other fair hearings, the date the agency receives a 
request for a fair hearing in accordance with Sec.  431.221(a)(1).
* * * * *
    (3) In the case of individuals granted an expedited fair hearing in 
accordance with Sec.  431.224(a)--
    (i) For a claim related to eligibility described in Sec.  
431.220(a)(1), or any claim described in Sec.  431.220(a)(2) (relating 
to a nursing facility) or Sec.  431.220(a)(3) (related to preadmission 
and annual resident review), as expeditiously as possible and, 
effective no later than the date described in Sec.  435.1200(i) of this 
chapter, no later than 7 working days after the agency receives a 
request for expedited fair hearing; or
    (ii) For a claim related to services or benefits described in Sec.  
431.220(a)(1) as expeditiously as possible and, effective no later than 
the date described in Sec.  435.1200(i) of this chapter, within the 
time frame in paragraph (f)(2) of this section.
    (iii) For a claim related to services or benefits described in 
Sec.  431.220(a)(4), (5) or (6), in accordance with the time frame in 
paragraph (f)(2) of this section.
    (4)(i) The agency must take final administrative action on a fair 
hearing request within the time limits set forth in this paragraph 
except in unusual circumstances when--
    (A) The agency cannot reach a decision because the appellant 
requests a delay or fails to take a required action; or
    (B) There is an administrative or other emergency beyond the 
agency's control.
    (ii) The agency must document the reasons for any delay in the 
appellant's record.
* * * * *

PART 433--STATE FISCAL ADMINISTRATION

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

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


0
20. Section 433.138 is amended by revising paragraphs (d)(1) 
introductory text, (d)(3), (f), and (g)(1)(i) to read as follows:


Sec.  433.138   Identifying liable third parties.

* * * * *
    (d) * * *
    (1) Except as specified in paragraph (d)(2) of this section, as 
part of the data exchange requirements under Sec.  435.945 of this 
chapter, from the State wage information collection agency (SWICA) 
defined in Sec.  435.4 of this chapter and from the SSA wage and 
earnings files data as specified in Sec.  435.948(a)(1) of this 
chapter, the agency must--
* * * * *
    (3) The agency must request, as required under Sec.  435.948(a)(2) 
of this

[[Page 86450]]

chapter, from the State title IV-A agency, information not previously 
reported that identifies those Medicaid beneficiaries who are employed 
and their employer(s).
* * * * *
    (f) Data exchanges and trauma code edits: Frequency. Except as 
provided in paragraph (l) of this section, the agency must conduct the 
data exchanges required in paragraphs (d)(1) and (3) of this section, 
and diagnosis and trauma edits required in paragraphs (d)(4) and (e) of 
this section on a routine and timely basis. The State plan must specify 
the frequency of these activities.
    (g) * * *
    (1) * * *
    (i) Within 45 days, the agency must follow up (if appropriate) on 
such information to identify legally liable third party resources and 
incorporate such information into the eligibility case file and into 
its third party data base and third party recovery unit so the agency 
may process claims under the third party liability payment procedures 
specified in Sec.  433.139 (b) through (f); and
* * * * *

0
21. Section 433.145 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  433.145   Assignment of rights to benefits--State plan 
requirements.

    (a) * * *
    (2) Cooperate with the agency in establishing the identity of a 
child's parents and in obtaining medical support and payments, unless 
the individual establishes good cause for not cooperating, and except 
for individuals described in Sec.  435.116 of this chapter (pregnant 
women), who are exempt from cooperating in establishing the identity of 
a child's parents and obtaining medical support and payments from, or 
derived from, the non-custodial parent of a child; and
* * * * *

0
22. Section 433.147 is amended by revising the section heading and 
paragraphs (a)(1) and (c)(1) and by removing paragraph (d).
    The revisions read as follows:


Sec.  433.147   Cooperation in establishing the identity of a child's 
parents and in obtaining medical support and payments and in 
identifying and providing information to assist in pursuing third 
parties who may be liable to pay.

    (a) * * *
    (1) Except as exempt under Sec.  433.145(a)(2), establishing the 
identity of a child's parents and obtaining medical support and 
payments for himself or herself and any other person for whom the 
individual can legally assign rights; and
* * * * *
    (c) * * *
    (1) For establishing the identity of a child's parents or obtaining 
medical care support and payments, or identifying or providing 
information to assist the State in pursuing any liable third party for 
a child for whom the individual can legally assign rights, the agency 
must find that cooperation is against the best interests of the child.
* * * * *

0
23. Section 433.148 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  433.148   Denial or termination of eligibility.

* * * * *
    (a) * * *
    (2) In the case of an applicant, does not attest to willingness to 
cooperate, and in the case of a beneficiary, refuses to cooperate in 
establishing the identity of a child's parents, obtaining medical child 
support and pursuing liable third parties, as required under Sec.  
433.147(a) unless cooperation has been waived;
* * * * *

0
24. Section 433.152 is amended by revising paragraph (b) to read as 
follows:


Sec.  433.152   Requirements for cooperative agreements for third party 
collections.

* * * * *
    (b) Agreements with title IV-D agencies must specify that the 
Medicaid agency will provide reimbursement to the IV-D agency only for 
those child support services performed that are not reimbursable by the 
Office of Child Support Enforcement under title IV-D of the Act and 
that are necessary for the collection of amounts for the Medicaid 
program.

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE 
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA

0
25. The authority citation for part 435 continues to read as follows:

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


0
26. Section 435.3(a) is amended by--
0
a. Adding entries for ``1902(a)(46)(B),'' ``1902(ee),'' and ``1905(a)'' 
in numerical order; and
0
b. Revising 1903(v).
    The revisions and additions read as follows:


Sec.  435.3   Basis.

    (a) * * *
    1902(a)(46)(B) Requirement to verify citizenship.
* * * * *
    1902(ee) Option to verify citizenship through electronic data 
sharing with the Social Security Administration.
* * * * *
    1903(v) Payment for emergency services under Medicaid provided to 
non-citizens.
* * * * *
    1905(a) Definition of medical assistance.
* * * * *

0
27. Section 435.4 is amended by--
0
a. Adding the definitions of ``Citizenship'', ``Combined eligibility 
notice'', and ``Coordinated content'' in alphabetical order;
0
b. Revising the definition of ``Electronic account''; and
0
c. Adding the definitions of ``Non-citizen'', and ``Qualified non-
citizen'' in alphabetical order.
    The revision and additions read as follows:


Sec.  435.4   Definitions and use of terms.

* * * * *
    Citizenship includes status as a ``national of the United States,'' 
and includes both citizens of the United States and non-citizen 
nationals of the United States described in 8 U.S.C. 1101(a)(22).
    Combined eligibility notice means an eligibility notice that 
informs an individual or multiple family members of a household of 
eligibility for each of the insurance affordability programs and 
enrollment in a qualified health plan through the Exchange, for which a 
determination or denial of eligibility was made, as well as any right 
to request a fair hearing or appeal related to the determination made 
for each program. A combined notice must meet the requirements of Sec.  
435.917(a) and contain the content described in Sec.  435.917(b) and 
(c), except that information described in Sec.  435.917(b)(1)(iii) and 
(iv) may be included in a combined notice issued by another insurance 
affordability program or in a supplemental notice provided by the 
agency. A combined eligibility notice must be issued in accordance with 
the agreement(s) consummated by the agency in accordance with Sec.  
435.1200(b)(3).
    Coordinated content means information included in an eligibility 
notice regarding, if applicable -
    (1) The transfer of an individual's or household's electronic 
account to another insurance affordability program;
    (2) Any notice sent by the agency to another insurance 
affordability program

[[Page 86451]]

regarding an individual's eligibility for Medicaid;
    (3) The potential impact, if any, of--
    (i) The agency's determination of eligibility or ineligibility for 
Medicaid on eligibility for another insurance affordability program; or
    (ii) A determination of eligibility for, or enrollment in, another 
insurance affordability program on an individual's eligibility for 
Medicaid; and
    (4) The status of household members on the same application or 
renewal form whose eligibility is not yet determined.
* * * * *
    Electronic account means an electronic file that includes all 
information collected and generated by the agency regarding each 
individual's Medicaid eligibility and enrollment, including all 
documentation required under Sec.  435.914 and including any 
information collected or generated as part of a fair hearing process 
conducted under subpart E of this part, the Exchange appeals process 
conducted under 45 CFR part 155, subpart F or other insurance 
affordability program appeals process.
* * * * *
    Non-citizen has the same meaning as the term ``alien,'' as defined 
at 8 U.S.C. 1101(a)(3) and includes any individual who is not a citizen 
or national of the United States, defined at 8 U.S.C. 1101(a)(22).
* * * * *
    Qualified non-citizen includes the term ``qualified alien'' as 
defined at 8 U.S.C. 1641(b) and (c).
* * * * *


Sec.  435.113   [Removed]

0
28. Section 435.113 is removed.


Sec.  435.114   [Removed]

0
29. Section 435.114 is removed.

0
30. Section 435.115 is revised to read as follows:


Sec.  435.115   Families with Medicaid eligibility extended because of 
increased collection of spousal support.

    (a) Basis. This section implements sections 408(a)(11)(B) and 
1931(c)(1) of the Act.
    (b) Eligibility. (1) The extended eligibility period is for 4 
months.
    (2) The agency must provide coverage during an extended eligibility 
period to a parent or other caretaker relative who was eligible and 
enrolled for Medicaid under Sec.  435.110, and any dependent child of 
such parent or other caretaker relative who was eligible and enrolled 
under Sec.  435.118, in at least 3 out of the 6 months immediately 
preceding the month that eligibility for the parent or other caretaker 
relative under Sec.  435.110 is lost due to increased collection of 
spousal support under title IV-D of the Act.

0
31. Section 435.117 is amended by--
0
a. Revising the section heading;
0
b. Revising paragraphs (a), (b), and (c); and
0
c. Amending paragraph (d) to add a paragraph heading.
    The revisions and additions read as follows:


Sec.  435.117   Deemed newborn children.

    (a) Basis. This section implements sections 1902(e)(4) and 2112(e) 
of the Act.
    (b) Eligibility. (1) The agency must provide Medicaid to children 
from birth until the child's first birthday without application if, for 
the date of the child's birth, the child's mother was eligible for and 
received covered services under--
    (i) The Medicaid State plan (including during a period of 
retroactive eligibility under Sec.  435.915) regardless of whether 
payment for services for the mother is limited to services necessary to 
treat an emergency medical condition, as defined in section 1903(v)(3) 
of the Act; or
    (ii) The CHIP State plan as a targeted low-income pregnant woman in 
accordance with section 2112 of the Act, with household income at or 
below the income standard established by the agency under Sec.  435.118 
for infants under age 1.
    (2) The agency may provide coverage under this section to children 
from birth until the child's first birthday without application who are 
not described in (b)(1) of this section if, for the date of the child's 
birth, the child's mother was eligible for and received covered 
services under--
    (i) The Medicaid State plan of any State (including during a period 
of retroactive eligibility under Sec.  435.915); or
    (ii) Any of the following, provided that household income of the 
child's mother at the time of the child's birth is at or below the 
income standard established by the agency under Sec.  435.118 for 
infants under age 1:
    (A) The State's separate CHIP State plan as a targeted low-income 
child;
    (B) The CHIP State plan of any State as a targeted low-income 
pregnant woman or child; or
    (C) A Medicaid or CHIP demonstration project authorized under 
section 1115 of the Act.
    (3) The child is deemed to have applied and been determined 
eligible under the Medicaid State plan effective as of the date of 
birth, and remains eligible regardless of changes in circumstances 
until the child's first birthday, unless the child dies or ceases to be 
a resident of the State or the child's representative requests a 
voluntary termination of eligibility.
    (c) Medicaid identification number. (1) The Medicaid identification 
number of the mother serves as the child's identification number, and 
all claims for covered services provided to the child may be submitted 
and paid under such number, unless and until the State issues the child 
a separate identification number.
    (2) The State must issue a separate Medicaid identification number 
for the child prior to the effective date of any termination of the 
mother's eligibility or prior to the date of the child's first 
birthday, whichever is sooner, except that the State must issue a 
separate Medicaid identification number in the case of a child born to 
a mother:
    (i) Whose coverage is limited to services necessary for the 
treatment of an emergency medical condition, consistent with Sec.  
435.139 or Sec.  435.350;
    (ii) Covered under the State's separate CHIP; or
    (iii) Who received Medicaid in another State on the date of birth.
    (d) Renewal of eligibility.
* * * * *

0
32. Section 435.145 is revised to read as follows:


Sec.  435.145   Children with adoption assistance, foster care, or 
guardianship care under title IV-E.

    (a) Basis. This section implements sections 1902(a)(10)(A)(i)(I) 
and 473(b)(3) of the Act.
    (b) Eligibility. The agency must provide Medicaid to individuals 
for whom--
    (1) An adoption assistance agreement is in effect with a State or 
Tribe under title IV-E of the Act, regardless of whether adoption 
assistance is being provided or an interlocutory or other judicial 
decree of adoption has been issued; or
    (2) Foster care or kinship guardianship assistance maintenance 
payments are being made by a State or Tribe under title IV-E of the 
Act.

0
33. Section 435.150 is added to read as follows:


Sec.  435.150   Former foster care children.

    (a) Basis. This section implements section 1902(a)(10)(A)(i)(IX) of 
the Act.
    (b) Eligibility. The agency must provide Medicaid to individuals 
who:
    (1) Are under age 26;
    (2) Are not eligible and enrolled for mandatory coverage under 
Sec. Sec.  435.110 through 435.118 or Sec. Sec.  435.120 through 
435.145; and

[[Page 86452]]

    (3) Were in foster care under the responsibility of the State or a 
Tribe within the State and enrolled in Medicaid under the State's 
Medicaid State plan or under a section 1115 demonstration project upon 
attaining:
    (i) Age 18; or
    (ii) A higher age at which the State's or such Tribe's foster care 
assistance ends under title IV-E of the Act.
    (c) Options. At the State option, the agency may provide Medicaid 
to individuals who meet the requirements at paragraphs (b)(1) and (2) 
of this section, were in foster care under the responsibility of the 
State or Tribe within the State upon attaining either age described in 
paragraph (b)(3)(i) or (ii) of this section, and were:
    (1) Enrolled in Medicaid under the State's Medicaid State plan or 
under a section 1115 demonstration project at some time during the 
period in foster care during which the individual attained such age; or
    (2) Placed by the State or Tribe in another State and, while in 
such placement, were enrolled in the other State's Medicaid State plan 
or under a section 1115 demonstration project:
    (i) Upon attaining either age described in paragraph (b)(3)(i) or 
(ii) of this section; or
    (ii) At state option, at some time during the period in foster care 
during which the individual attained such age.

0
34. Section 435.170 is revised to read as follows:


Sec.  435.170   Pregnant women eligible for extended or continuous 
eligibility.

    (a) Basis. This section implements sections 1902(e)(5) and 
1902(e)(6) of the Act.
    (b) Extended eligibility for pregnant women. For a pregnant woman 
who was eligible and enrolled under subpart B, C, or D of this part on 
the date her pregnancy ends, the agency must provide coverage described 
in paragraph (d) of this section through the last day of the month in 
which the 60-day postpartum period ends.
    (c) Continuous eligibility for pregnant women. For a pregnant woman 
who was eligible and enrolled under subpart B, C, or D of this part and 
who, because of a change in household income, will not otherwise remain 
eligible, the agency must provide coverage described in paragraph (d) 
of this section through the last day of the month in which the 60-day 
post-partum period ends.
    (d) Covered Services. The coverage described in this paragraph (d) 
consists of--
    (1) Full Medicaid coverage, as described in Sec.  435.116(d)(2); or
    (2) Pregnancy-related services described in Sec.  435.116(d)(3), if 
the agency has elected to establish an income limit under Sec.  
435.116(d)(4), above which pregnant women enrolled for coverage under 
Sec.  435.116 receive pregnancy-related services described in Sec.  
435.116(d)(3).
    (e) Presumptive Eligibility. This section does not apply to 
pregnant women covered during a presumptive eligibility period under 
section 1920 of the Act.

0
35. Section 435.172 is added to subpart B to read as follows:


Sec.  435.172   Continuous eligibility for hospitalized children.

    (a) Basis. This section implements section 1902(e)(7) of the Act.
    (b) Requirement. The agency must provide Medicaid to an individual 
eligible and enrolled under Sec.  435.118 until the end of an inpatient 
stay for which inpatient services are furnished, if the individual:
    (1) Was receiving inpatient services covered by Medicaid on the 
date the individual is no longer eligible under Sec.  435.118 based on 
the child's age; and
    (2) Would remain eligible but for attaining such age.

0
36. Section 435.201 is amended by--
0
a. Amending paragraph (a)(4) by removing ``;'' and adding in its place 
``; and'';
0
b. Revising paragraph (a)(5); and
0
c. Removing paragraph (a)(6).
    The revisions read as follows:


Sec.  435.201   Individuals included in optional groups.

    (a) * * *
* * * * *
    (5) Parents and other caretaker relatives (as defined in Sec.  
435.4).
* * * * *

0
37. Section 435.210 is revised to read as follows:


Sec.  435.210   Optional eligibility for individuals who meet the 
income and resource requirements of the cash assistance programs.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii)(I) of 
the Act.
    (b) Eligibility. The agency may provide Medicaid to any group or 
groups of individuals specified in Sec.  435.201(a)(1) through (3) who 
meet the income and resource requirements of SSI or an optional State 
supplement program in States that provide Medicaid to optional State 
supplement recipients.

0
38. Section 435.211 is revised to read as follows:


Sec.  435.211   Optional eligibility for individuals who would be 
eligible for cash assistance if they were not in medical institutions.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii)(IV) 
of the Act.
    (b) Eligibility. The agency may provide Medicaid to any group or 
groups of individuals specified in Sec.  435.201(a)(1) through (3) who 
are institutionalized in a title XIX reimbursable medical institution 
and who:
    (1) Are ineligible for the SSI or an optional State supplement 
program in States that provide Medicaid to optional State supplement 
recipients, because of lower income standards used under the program to 
determine eligibility for institutionalized individuals; but
    (2) Would be eligible for aid or assistance under SSI or an 
optional State supplement program (as specified in Sec.  435.232 or 
Sec.  435.234) if they were not institutionalized.

0
39. Section 435.213 is added to read as follows:


Sec.  435.213   Optional eligibility for individuals needing treatment 
for breast or cervical cancer.

    (a) Basis. This section implements sections 
1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the Act.
    (b) Eligibility. The agency may provide Medicaid to individuals 
who--
    (1) Are under age 65;
    (2) Are not eligible and enrolled for mandatory coverage under the 
State's Medicaid State plan in accordance with subpart B of this part;
    (3) Have been screened under the Centers for Disease Control and 
Prevention (CDC) breast and cervical cancer early detection program 
(BCCEDP), established in accordance with the requirements of section 
1504 of the Public Health Service Act, and found to need treatment for 
breast or cervical cancer; and
    (4) Do not otherwise have creditable coverage, as defined in 
section 2704(c) of the Public Health Service Act, for treatment of the 
individual's breast or cervical cancer. An individual is not considered 
to have creditable coverage just because the individual may:
    (i) Receive medical services provided by the Indian Health Service, 
a tribal organization, or an Urban Indian organization; or
    (ii) Obtain health insurance coverage after a waiting period of 
uninsurance.
    (c) Need for treatment. An individual is considered to need 
treatment for breast or cervical cancer if the initial screen under 
BCCEDP or, subsequent to the initial period of eligibility, the 
individual's treating health professional determines that:

[[Page 86453]]

    (1) Definitive treatment for breast or cervical cancer is needed, 
including treatment of a precancerous condition or early stage cancer, 
and including diagnostic services as necessary to determine the extent 
and proper course of treatment; and
    (2) More than routine diagnostic services or monitoring services 
for a precancerous breast or cervical condition are needed.

0
40. Section 435.214 is added to read as follows:


Sec.  435.214   Eligibility for Medicaid limited to family planning and 
related services.

    (a) Basis. This section implements sections 1902(a)(10)(A)(ii)(XXI) 
and 1902(ii) and clause (XVI) in the matter following section 
1902(a)(10)(G) of the Act.
    (b) Eligibility. (1) The agency may provide Medicaid limited to the 
services described in paragraph (d) of this section to individuals (of 
any gender) who--
    (i) Are not pregnant; and
    (ii) Meet the income eligibility requirements at paragraph (c) of 
this section.
    (2) [Reserved]
    (c) Income standard. (1) The income standard established in the 
State plan may not exceed the higher of the income standard for 
pregnant women in effect under--
    (i) The Medicaid State plan in accordance with Sec.  435.116.
    (ii) A Medicaid demonstration under section 1115 of the Act.
    (iii) The CHIP State plan under section 2112 of the Act.
    (iv) A CHIP demonstration under section 1115 of the Act.
    (2) The individual's household income is determined in accordance 
with Sec.  435.603. The agency must indicate in its State plan the 
options selected by it under Sec.  435.603(k).
    (d) Covered services. Individuals eligible under this section are 
covered for family planning and family planning-related benefits as 
described in clause (XVI) of the matter following section 
1902(a)(10)(G) of the Act.

0
41. Section 435.215 is added to read as follows:


Sec.  435.215   Individuals infected with tuberculosis.

    (a) Basis. This section implements sections 1902(a)(10)(A)(ii)(XII) 
and 1902(z)(1) of the Act.
    (b) Eligibility. The agency may provide Medicaid to individuals 
who--
    (1) Are infected with tuberculosis;
    (2) Are not eligible for full coverage under the State's Medicaid 
State plan (that is, all services which the State is required to cover 
under Sec.  440.210(a)(1) of this chapter and all services which it has 
opted to cover under Sec.  440.225 of this chapter, or which the State 
covers under an approved alternative benefits plan under Sec.  440.325 
of this chapter), including coverage for tuberculosis treatment as 
elected by the State for this group; and
    (3) Have household income that does not exceed the income standard 
established by the State in its State plan, which standard must not 
exceed the higher of--
    (i) The maximum income standard applicable to disabled individuals 
for mandatory coverage under subpart B of this part; or
    (ii) The effective income level for coverage of individuals 
infected with tuberculosis under the State plan in effect as of March 
23, 2010, or December 31, 2013, if higher, converted, at State option, 
to a MAGI-equivalent standard in accordance with guidance issued by the 
Secretary under section 1902(e)(14)(A) and (E) of the Act.
    (c) Covered Services. Individuals eligible under this section are 
covered for the following services related to the treatment of 
infection with tuberculosis:
    (1) Prescribed drugs, described in Sec.  440.120 of this chapter;
    (2) Physician's services, described in Sec.  440.50 of this 
chapter;
    (3) Outpatient hospital and rural health clinic described in Sec.  
440.20 of this chapter, and Federally-qualified health center services;
    (4) Laboratory and x-ray services (including services to confirm 
the presence of the infection), described in Sec.  440.30 of this 
chapter;
    (5) Clinic services, described in Sec.  440.90 of this chapter;
    (6) Case management services defined in Sec.  440.169 of this 
chapter; and
    (7) Services other than room and board designated to encourage 
completion of regimens of prescribed drugs by outpatients including 
services to observe directly the intake of prescription drugs.

0
42. Section 435.220 is revised to read as follows:


Sec.  435.220   Optional eligibility for parents and other caretaker 
relatives.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii)(I) of 
the Act for optional eligibility of parents and other caretaker 
relatives as defined at Sec.  435.4.
    (b) Eligibility. The agency may provide Medicaid to parents and 
other caretaker relatives defined in Sec.  435.4 and, if living with 
such parent or other caretaker relative, his or her spouse, whose 
household income is at or below the income standard established by the 
agency in its State plan, in accordance with paragraph (c) of this 
section.
    (c) Income standard. The income standard under this section--
    (1) Must exceed the income standard established by the agency under 
Sec.  435.110(c); and
    (2) May not exceed the higher of the State's AFDC payment standard 
in effect as of July 16, 1996, or the State's highest effective income 
level for eligibility of parents and other caretaker relatives in 
effect under the Medicaid State plan or demonstration program under 
section 1115 of the Act as of March 23, 2010, or December 31, 2013, if 
higher, converted to a MAGI-equivalent standard in accordance with 
guidance issued by the Secretary under section 1902(e)(14)(A) and (E) 
of the Act.

0
43. Section 435.222 is revised to read as follows:


Sec.  435.222   Optional eligibility for reasonable classifications of 
individuals under age 21.

    (a) Basis. This section implements sections 1902(a)(10)(A)(ii)(I) 
and (IV) of the Act for optional eligibility of individuals under age 
21.
    (b) Eligibility. The agency may provide Medicaid to all--or to one 
or more reasonable classifications, as defined in the State plan, of--
individuals under age 21 (or, at State option, under age 20, 19 or 18) 
who have household income at or below the income standard established 
by the agency in its State plan in accordance with paragraph (c) of 
this section.
    (c) Income standard. The income standard established under this 
section may not exceed the higher of the State's AFDC payment standard 
in effect as of July 16, 1996, or the State's highest effective income 
level, if any, for such individuals under the Medicaid State plan or a 
demonstration program under section 1115 of the Act as of March 23, 
2010, or December 31, 2013, if higher, converted to a MAGI-equivalent 
standard in accordance with guidance issued by the Secretary under 
section 1902(e)(14)(A) and (E) of the Act.


Sec.  435.223   [Removed]

0
44. Section 435.223 is removed.

0
45. Section 435.226 is added to read as follows:


Sec.  435.226   Optional eligibility for independent foster care 
adolescents.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii)(XVII) 
of the Act.
    (b) Eligibility. The agency may provide Medicaid to individuals 
under age 21 (or, at State option, under age 20

[[Page 86454]]

or 19) who were in foster care under the responsibility of a State or 
Tribe (or, at State or Tribe option, only to such individuals for whom 
Federal foster care assistance under title IV-E of the Act was being 
provided) on the individual's 18th birthday and have household income 
at or below the income standard, if any, established by the agency in 
its State plan in accordance with paragraph (c) of this section.
    (c) Income standard. (1) The income standard established under this 
section may not be lower than the State's income standard established 
under Sec.  435.110.
    (2) The State may elect to have no income standard for eligibility 
under this section.

0
46. Section 435.227 is revised to read as follows:


Sec.  435.227  Optional eligibility for individuals under age 21 who 
are under State adoption assistance agreements.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii)(VIII) 
of the Act.
    (b) Eligibility. The agency may provide Medicaid to individuals 
under age 21 (or, at State option, under age 20, 19, or 18):
    (1) For whom an adoption assistance agreement (other than an 
agreement under title IV-E of the Act) between a State and the adoptive 
parent(s) is in effect;
    (2) Who the State agency which entered into the adoption agreement 
determined could not be placed for adoption without Medicaid coverage 
because the child has special needs for medical or rehabilitative care; 
and
    (3) Who, prior to the adoption agreement being entered into--
    (i) Were eligible under the Medicaid State plan of the State with 
the adoption assistance agreement; or
    (ii) Had household income at or below the income standard 
established by the agency in its State plan in accordance with 
paragraph (c) of this section.
    (c) Income standard. The income standard established under this 
section may not exceed the effective income level (converted to a MAGI-
equivalent standard in accordance with guidance issued by the Secretary 
under section 1902(e)(14)(A) and (E) of the Act) under the State plan 
or under a demonstration program under section 1115 of the Act as of 
March 23, 2010 or December 31, 2013, whichever is higher, that was 
applied by the State to the household income of a child prior to the 
execution of an adoption assistance agreement for purposes of 
determining eligibility of children described in paragraphs (b)(1) and 
(2) of this section.
    (d) Limit Eligibility The agency may limit eligibility under this 
section to children for whom the State, or another State identified in 
the State plan, has entered into an adoption assistance agreement.

0
47. Section 435.229 is revised to read as follows:


Sec.  435.229   Optional targeted low-income children.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii)(XIV) 
of the Act.
    (b) Eligibility. The agency may provide Medicaid to individuals 
under age 19, or at State option within a range of ages under age 19 
established in the State plan, who meet the definition of an optional 
targeted low-income child in Sec.  435.4 and have household income at 
or below the income standard established by the agency in its State 
plan in accordance with paragraph (c) of this section.
    (c) Income standard. The income standard established under this 
section may not exceed the higher of--
    (1) 200 percent of the Federal poverty level (FPL);
    (2) A percentage of the FPL which exceeds the State's Medicaid 
applicable income level, defined at Sec.  457.10 of this chapter, by no 
more than 50 percentage points (converted to a MAGI-equivalent standard 
in accordance with guidance issued by the Secretary under section 
1902(e)(14)(A) and (E) of the Act); and
    (3) The highest effective income level for coverage of such 
individuals under the Medicaid State plan or demonstration program 
under section 1115 of the Act or for coverage of targeted low-income 
children, defined in Sec.  457.10 of this chapter, under the CHIP State 
plan or demonstration program under section 1115 of the Act, as of 
March 23, 2010, or December 31, 2013, converted to a MAGI-equivalent 
standard in accordance with guidance issued by the Secretary under 
section 1902(e)(14)(A) and (E) of the Act.

0
48. Section 435.301 is amended by--
0
a. Removing paragraph (b)(1)(iii).
0
b. Redesignating paragraph (b)(1)(iv) as paragraph (b)(1)(iii); and
0
c. Revising paragraph (b)(2)(ii).
    The revisions read as follows:


Sec.  435.301   General rules.

* * * * *
    (b) * * *
    (2) * * *
    (ii) Parents and other caretaker relatives (Sec.  435.310).
* * * * *

0
49. Section 435.310 is revised to read as follows:


Sec.  435.310   Medically needy coverage of parents and other caretaker 
relatives.

    If the agency provides Medicaid for the medically needy, it may 
provide Medicaid to parents and other caretaker relatives who meet:
    (a) The definition of ``caretaker relative'' at Sec.  435.4, or are 
the spouse of a parent or caretaker relative; and
    (b) The medically needy income and resource requirements at subpart 
I of this part.


Sec.  435.401   [Amended]

0
50. Section 435.401 is amended by removing and reserving paragraph 
(c)(1).

0
51. Section 435.406 is amended by--
0
a. Revising the section heading;
0
b. Revising paragraphs (a) introductory text, (a)(1) introductory text, 
(a)(1)(i) and (a)(1)(ii);
0
c. Removing paragraphs (a)(1)(iii) and (a)(1)(iv);
0
d. Redesignating paragraph (a)(1)(v) as paragraph (a)(1)(iii);
0
e. Revising newly redesignated paragraph (a)(1)(iii) introductory text;
0
f. Adding paragraph (a)(1)(iii)(E);
0
g. In paragraph (a)(2)(i) and (ii), removing the terms ``alien'' and 
``aliens'' each time they appear and adding in their place the terms 
``non-citizen'' or ``non-citizens,'' as appropriate;
0
h. In paragraph (a)(2)(i), removing the phrase ``Qualified Alien 
status'' and adding in its place the phrase ``Qualified Non-Citizen 
status'';
0
i. Adding paragraphs (a)(3) and (c); and
0
j. In paragraph (b), removing the terms ``aliens,'' ``qualified 
aliens'' and ``non-qualified aliens'' and adding in their place ``non-
citizen,'' ``qualified non-citizen'' and ``non-qualified non-citizen,'' 
respectively.
    The additions and revisions read as follows:


Sec.  435.406   Citizenship and non-citizen eligibility.

    (a) The agency must provide Medicaid to otherwise eligible 
individuals who are--
    (1) Citizens and nationals of the United States, provided that--
    (i) The individual has made a declaration of United States 
citizenship, as defined in Sec.  435.4, or an individual described in 
paragraph (a)(3) of this section has made such declaration on the 
individual's behalf, and such status is verified in accordance with 
paragraph (c) of this section; and
    (ii) For purposes of the declaration and citizenship verification 
requirements discussed in paragraphs

[[Page 86455]]

(a)(1)(i) of this section, an individual includes applicants under a 
section 1115 demonstration (including a family planning demonstration 
project) for which a State receives Federal financial participation in 
its expenditures.
    (iii) The following groups of individuals are exempt from the 
requirement to provide documentation to verify citizenship in paragraph 
(c) of this section:
* * * * *
    (E)(1) Individuals who are or were deemed eligible for Medicaid in 
the State under Sec.  435.117 or Sec.  457.360 of this chapter on or 
after July 1, 2006, based on being born to a pregnant woman eligible 
under the State's Medicaid or CHIP state plan or waiver of such plan;
    (2) At State option, individuals who were deemed eligible for 
coverage under Sec.  435.117 or Sec.  457.360 of this chapter in 
another State on or after July 1, 2006, provided that the agency 
verifies such deemed eligibility.
* * * * *
    (3) For purposes of paragraphs (a)(1) and (2), of this section, a 
declaration of citizenship or satisfactory immigration status may be 
provided, in writing and under penalty of perjury, by an adult member 
of the individual's household, an authorized representative, as defined 
in Sec.  435.923, or if the applicant is a minor or incapacitated, 
someone acting responsibly for the applicant provided that such 
individual attests to having knowledge of the individual's status.
* * * * *
    (c) The agency must verify the declaration of citizenship or 
satisfactory immigration status under paragraph (a)(1) or (2) of this 
section in accordance with Sec.  435.956.

0
52. Section 435.407 is revised to read as follows:


Sec.  435.407   Types of acceptable documentary evidence of 
citizenship.

    (a) Stand-alone evidence of citizenship. The following must be 
accepted as sufficient documentary evidence of citizenship:
    (1) A U.S. passport, including a U.S. Passport Card issued by the 
Department of State, without regard to any expiration date as long as 
such passport or Card was issued without limitation.
    (2) A Certificate of Naturalization.
    (3) A Certificate of U.S. Citizenship.
    (4) A valid State-issued driver's license if the State issuing the 
license requires proof of U.S. citizenship, or obtains and verifies a 
SSN from the applicant who is a citizen before issuing such license.
    (5)(i) Documentary evidence issued by a Federally recognized Indian 
Tribe identified in the Federal Register by the Bureau of Indian 
Affairs within the U.S. Department of the Interior, and including 
Tribes located in a State that has an international border, which--
    (A) Identifies the Federally recognized Indian Tribe that issued 
the document;
    (B) Identifies the individual by name; and
    (C) Confirms the individual's membership, enrollment, or 
affiliation with the Tribe.
    (ii) Documents described in paragraph (a)(5)(i) of this section 
include, but are not limited to:
    (A) A Tribal enrollment card;
    (B) A Certificate of Degree of Indian Blood;
    (C) A Tribal census document;
    (D) Documents on Tribal letterhead, issued under the signature of 
the appropriate Tribal official, that meet the requirements of 
paragraph (a)(5)(i) of this section.
    (6) A data match with the Social Security Administration.
    (b) Evidence of citizenship. If an applicant does not provide 
documentary evidence from the list in paragraph (a) of this section, 
the following must be accepted as satisfactory evidence to establish 
citizenship if also accompanied by an identity document listed in 
paragraph (c) of this section--
    (1) A U.S. public birth certificate showing birth in one of the 50 
States, the District of Columbia, Guam, American Samoa, Swain's Island, 
Puerto Rico (if born on or after January 13, 1941), the Virgin Islands 
of the U.S. or the CNMI (if born after November 4, 1986, (CNMI local 
time)). The birth record document may be issued by a State, 
Commonwealth, Territory, or local jurisdiction. If the document shows 
the individual was born in Puerto Rico or the Northern Mariana Islands 
before the applicable date referenced in this paragraph, the individual 
may be a collectively naturalized citizen. The following will establish 
U.S. citizenship for collectively naturalized individuals:
    (i) Puerto Rico: Evidence of birth in Puerto Rico and the 
applicant's statement that he or she was residing in the U.S., a U.S. 
possession, or Puerto Rico on January 13, 1941.
    (ii) Northern Mariana Islands (NMI) (formerly part of the Trust 
Territory of the Pacific Islands (TTPI)):
    (A) Evidence of birth in the NMI, TTPI citizenship and residence in 
the NMI, the U.S., or a U.S. Territory or possession on November 3, 
1986, (NMI local time) and the applicant's statement that he or she did 
not owe allegiance to a foreign State on November 4, 1986 (NMI local 
time);
    (B) Evidence of TTPI citizenship, continuous residence in the NMI 
since before November 3, 1981 (NMI local time), voter registration 
before January 1, 1975, and the applicant's statement that he or she 
did not owe allegiance to a foreign State on November 4, 1986 (NMI 
local time);
    (C) Evidence of continuous domicile in the NMI since before January 
1, 1974, and the applicant's statement that he or she did not owe 
allegiance to a foreign State on November 4, 1986 (NMI local time). 
Note: If a person entered the NMI as a nonimmigrant and lived in the 
NMI since January 1, 1974, this does not constitute continuous domicile 
and the individual is not a U.S. citizen.
    (2) At State option, a cross match with a State vital statistics 
agency documenting a record of birth.
    (3) A Certification of Report of Birth, issued to U.S. citizens who 
were born outside the U.S.
    (4) A Report of Birth Abroad of a U.S. Citizen.
    (5) A Certification of birth in the United States.
    (6) A U.S. Citizen I.D. card.
    (7) A Northern Marianas Identification Card issued by the U.S. 
Department of Homeland Security (or predecessor agency).
    (8) A final adoption decree showing the child's name and U.S. place 
of birth, or if an adoption is not final, a Statement from a State-
approved adoption agency that shows the child's name and U.S. place of 
birth.
    (9) Evidence of U.S. Civil Service employment before June 1, 1976.
    (10) U.S. Military Record showing a U.S. place of birth.
    (11) A data match with the SAVE Program or any other process 
established by DHS to verify that an individual is a citizen.
    (12) Documentation that a child meets the requirements of section 
101 of the Child Citizenship Act of 2000 as amended (8 U.S.C. 1431).
    (13) Medical records, including, but not limited to, hospital, 
clinic, or doctor records or admission papers from a nursing facility, 
skilled care facility, or other institution that indicate a U.S. place 
of birth.
    (14) Life, health, or other insurance record that indicates a U.S. 
place of birth.
    (15) Official religious record recorded in the U.S. showing that 
the birth occurred in the U.S.
    (16) School records, including pre-school, Head Start and daycare, 
showing the child's name and U.S. place of birth.
    (17) Federal or State census record showing U.S. citizenship or a 
U.S. place of birth.

[[Page 86456]]

    (18) If the applicant does not have one of the documents listed in 
paragraphs (a) or (b)(1) through (17) of this section, he or she may 
submit an affidavit signed by another individual under penalty of 
perjury who can reasonably attest to the applicant's citizenship, and 
that contains the applicant's name, date of birth, and place of U.S. 
birth. The affidavit does not have to be notarized.
    (c) Evidence of identity. (1) The agency must accept the following 
as proof of identity, provided such document has a photograph or other 
identifying information sufficient to establish identity, including, 
but not limited to, name, age, sex, race, height, weight, eye color, or 
address:
    (i) Identity documents listed at 8 CFR 274a.2 (b)(1)(v)(B)(1), 
except a driver's license issued by a Canadian government authority.
    (ii) Driver's license issued by a State or Territory.
    (iii) School identification card.
    (iv) U.S. military card or draft record.
    (v) Identification card issued by the Federal, State, or local 
government.
    (vi) Military dependent's identification card.
    (vii) U.S. Coast Guard Merchant Mariner card.
    (viii) For children under age 19, a clinic, doctor, hospital, or 
school record, including preschool or day care records.
    (ix) A finding of identity from an Express Lane agency, as defined 
in section 1902(e)(13)(F) of the Act.
    (x) Two other documents containing consistent information that 
corroborates an applicant's identity. Such documents include, but are 
not limited to, employer identification cards; high school, high school 
equivalency and college diplomas; marriage certificates; divorce 
decrees; and property deeds or titles.
    (2) Finding of identity from a Federal or State governmental 
agency. The agency may accept as proof of identity a finding of 
identity from a Federal agency or another State agency (not described 
in paragraph (c)(1)(ix) of this section), including but not limited to 
a public assistance, law enforcement, internal revenue or tax bureau, 
or corrections agency, if the agency has verified and certified the 
identity of the individual.
    (3) If the applicant does not have any document specified in 
paragraph (c)(1) of this section and identity is not verified under 
paragraph (c)(2) of this section, the agency must accept an affidavit 
signed, under penalty of perjury, by a person other than the applicant 
who can reasonably attest to the applicant's identity. Such affidavit 
must contain the applicant's name and other identifying information 
establishing identity, as described in paragraph (c)(1) of this 
section. The affidavit does not have to be notarized.
    (d) Verification of citizenship by a Federal agency or another 
State. The agency may rely, without further documentation of 
citizenship or identity, on a verification of citizenship made by a 
Federal agency or another State agency, if such verification was done 
on or after July 1, 2006.
    (e) Assistance with obtaining documentation. States must provide 
assistance to individuals who need assistance in securing satisfactory 
documentary evidence of citizenship in a timely manner.
    (f) Documentary evidence. A photocopy, facsimile, scanned or other 
copy of a document must be accepted to the same extent as an original 
document under this section, unless information on the copy submitted 
is inconsistent with other information available to the agency or the 
agency otherwise has reason to question the validity of, or the 
information in, the document.


Sec.  435.510   [Removed]

0
53. Section 435.510 and the undesignated center heading of 
``Dependency'' are removed.


Sec.  435.522   [Removed]

0
54. Section 435.522 is removed.

0
55. Section 435.601 is amended by--
0
a. Revising paragraph (b) and (d)(1) introductory text.
0
b. Removing paragraphs (d)(1)(i) and(ii); and
0
c. Redesignating paragraphs (d)(1)(iii) through (vi) as paragraphs 
(d)(1)(i) through (iv), respectively.
    The revisions read as follows:


Sec.  435.601   Application of financial eligibility methodologies.

* * * * *
    (b) Basic rule for use of non-MAGI financial methodologies. (1) 
This section only applies to individuals excepted from application of 
MAGI-based methods in accordance with Sec.  435.603(j).
    (2) Except as specified in paragraphs (c) and (d) of this section 
or in Sec.  435.121 or as permitted under Sec.  435.831(b)(1), in 
determining financial eligibility of individuals as categorically or 
medically needy, the agency must apply the financial methodologies and 
requirements of the cash assistance program that is most closely 
categorically related to the individual's status.
* * * * *
    (d) * * *
    (1) At State option, and subject to the conditions of paragraphs 
(d)(2) through (5) of this section, the agency may apply income and 
resource methodologies that are less restrictive than the cash 
assistance methodologies or methodologies permitted under Sec.  
435.831(b)(1) in determining eligibility for the following groups:
* * * * *

0
56. Section 435.602 is amended by--
0
a. Redesignating paragraph (a)(1) through (4) as paragraphs (a)(2)(i) 
through (iv) respectively and redesignating paragraph (a) introductory 
text as new paragraph (a)(2) introductory text.
0
b. Adding a new paragraph (a)(1).
0
c. Revising newly redesignated paragraph (a)(2)(ii).
    The revisions and addition read as follows:


Sec.  435.602   Financial responsibility of relatives and other 
individuals.

    (a) * * *
    (1) This section only applies to individuals excepted from 
application of MAGI-based methods in accordance with Sec.  435.603(j).
    (2) * * *
    (ii) In relation to individuals under age 21 (as described in 
section 1905(a)(i) of the Act), the financial responsibility 
requirements and methodologies that apply include considering the 
income and resources of parents or spouses whose income and resources 
will be considered if the individual under age 21 were dependent under 
the State's approved State plan under title IV-A of the Act in effect 
as of July 16, 1996, whether or not they are actually contributed, 
except as specified under paragraph (c) of this section. These 
requirements and methodologies must be applied in accordance with the 
provisions of the State's approved title IV-A State plan as of July 16, 
1996.
* * * * *

0
57. Section 435.603 is amended by revising paragraphs (f)(2)(i), 
(f)(3)(ii) and (iii), and (j)(4) and adding paragraph (k) to read as 
follows:


Sec.  435.603   Application of modified adjusted gross income (MAGI)

* * * * *
    (f) * * *
    (2) * * *
    (i) Individuals other than a spouse or child who expect to be 
claimed as a tax dependent by another taxpayer; and
* * * * *
    (3) * * *
    (ii) The individual's children under the age specified in paragraph 
(f)(3)(iv) of this section; and
    (iii) In the case of individuals under the age specified in 
paragraph (f)(3)(iv)

[[Page 86457]]

of this section, the individual's parents and siblings under the age 
specified in paragraph (f)(3)(iv) of this section.
* * * * *
    (j) * * *
    (4) Individuals who request coverage for long-term care services 
and supports for the purpose of being evaluated for an eligibility 
group under which long-term care services and supports not covered for 
individuals determined eligible using MAGI-based financial methods are 
covered, or for individuals being evaluated for an eligibility group 
for which being institutionalized, meeting an institutional level of 
care or satisfying needs-based criteria for home and community based 
services is a condition of eligibility. For purposes of this paragraph, 
``long-term care services and supports'' include nursing facility 
services, a level of care in any institution equivalent to nursing 
facility services; and home and community-based services furnished 
under a waiver or State plan under sections 1915 or 1115 of the Act; 
home health services as described in sections 1905(a)(7) of the Act and 
personal care services described in sections 1905(a)(24) of the Act.
* * * * *
    (k) Eligibility. In the case of an individual whose eligibility is 
being determined under Sec.  435.214, the agency may--
    (1) Consider the household to consist of only the individual for 
purposes of paragraph (f) of this section;
    (2) Count only the MAGI-based income of the individual for purposes 
of paragraph (d) of this section.
    (3) Increase the family size of the individual, as defined in 
paragraph (b) of the section, by one.

0
58. Section 435.610 is amended revising paragraphs (a) introductory 
text and (a)(2) and removing paragraph (c) to read as follows:


Sec.  435.610   Assignment of rights to benefits.

    (a) Consistent with Sec. Sec.  433.145 through 433.148 of this 
chapter, as a condition of eligibility, the agency must require legally 
able applicants and beneficiaries to:
* * * * *
    (2) In the case of applicants, attest that they will cooperate, 
and, in the case of beneficiaries, cooperate with the agency in--
    (i) Establishing the identity of a child's parents and in obtaining 
medical support and payments, unless the individual establishes good 
cause for not cooperating or is a pregnant woman described in Sec.  
435.116; and
    (ii) Identifying and providing information to assist the Medicaid 
agency in pursuing third parties who may be liable to pay for care and 
services under the plan, unless the individual establishes good cause 
for not cooperating.
* * * * *

0
59. Section 435.831 is amended by revising paragraph (b) introductory 
text, (b)(1), and (c) to read as follows:


Sec.  435.831   Income eligibility.

* * * * *
    (b) Determining countable income. For purposes of determining 
medically needy eligibility under this part, the agency must determine 
an individual's countable income as follows:
    (1) For individuals under age 21, pregnant women, and parents and 
other caretaker relatives, the agency may apply--
    (i) The AFDC methodologies in effect in the State as of August 16, 
1996, consistent with Sec.  435.601 (relating to financial 
methodologies for non-MAGI eligibility determinations) and Sec.  
435.602 (relating to financial responsibility of relatives and other 
individuals for non-MAGI eligibility determinations); or
    (ii) The MAGI-based methodologies defined in Sec.  435.603(b) 
through (f). If the agency applies the MAGI-based methodologies defined 
in Sec.  435.603(b) through (f), the agency must comply with the terms 
of Sec.  435.602, except that in applying Sec.  435.602(a)(2)(ii) to 
individuals under age 21, the agency may, at State option, include all 
parents as defined in Sec.  435.603(b) (including stepparents) who are 
living with the individual in the individual's household for purposes 
of determining household income and family size, without regard to 
whether the parent's income and resources would be counted under the 
State's approved State plan under title IV-A of the Act in effect as of 
July 16, 1996, if the individual were a dependent child under such 
State plan.
* * * * *
    (c) Eligibility based on countable income. If countable income 
determined under paragraph (b) of this section is equal to or less than 
that applicable income standard under Sec.  435.814, the individual is 
eligible for Medicaid.
* * * * *

0
60. Section Sec.  435.901 is revised to read as follows:


Sec.  435.901   Consistency with objectives and statutes.

    The Medicaid agency's standards and methods for providing 
information to applicants and beneficiaries and for determining 
eligibility must be consistent with the objectives of the program and 
with the rights of individuals under the United States Constitution, 
the Social Security Act, title VI of the Civil Rights Act of 1964, 
section 504 of the Rehabilitation Act of 1973, the Americans with 
Disabilities Act of 1990, the Age Discrimination Act of 1975, section 
1557 of the Affordable Care Act, and all other relevant provisions of 
Federal and State laws and their respective implementing regulations.

0
61. Section 435.905 is amended by--
0
a. Revising the section heading and paragraph (b)(1);
0
b. Amending paragraph (b)(2) by removing the period at the end of the 
paragraph and adding ``; and'' in its place ``; and
0
c. Adding paragraph (b)(3)
    The revision and addition read as follows:


Sec.  435.905   Availability and accessibility of program information.

* * * * *
    (b) * * *
    (1) Individuals who are limited English proficient through the 
provision of language services at no cost to the individual including, 
oral interpretation and written translations;
* * * * *
    (3) Individuals must be informed of the availability of the 
accessible information and language services described in this 
paragraph and how to access such information and services, at a minimum 
through providing taglines in non-English languages indicating the 
availability of language services.
* * * * *


Sec.  435.909   [Amended]

0
62. Section 435.909 is amended by removing and reserving paragraph (a).

0
63. Section 435.910 is amended by revising paragraph (g) to read as 
follows:


Sec.  435.910   Use of social security number.

* * * * *
    (g) The agency must verify the SSN furnished by an applicant or 
beneficiary with SSA to ensure the SSN was issued to that individual, 
and to determine whether any other SSNs were issued to that individual.
* * * * *

0
64. Section 435.911 is amended by--
0
a. Revising paragraphs (b)(1) introductory text, and (b)(1)(i);
0
b. Adding paragraph (b)(2); and
0
c. Revising paragraphs (c) introductory text, and (c)(1).
    The revisions and additions read as follows:


Sec.  435.911   Determination of eligibility.

* * * * *

[[Page 86458]]

    (b)(1) Except as provided in paragraph (b)(2) of this section, 
applicable modified adjusted gross income standard means 133 percent of 
the Federal poverty level or, if higher -
    (i) In the case of parents and other caretaker relatives described 
in Sec.  435.110(b), the income standard established in accordance with 
Sec.  435.110(c) or Sec.  435.220(c);
* * * * *
    (2) In the case of individuals who have attained at least age 65 
and individuals who have attained at least age 19 and who are entitled 
to or enrolled for Medicare benefits under part A or B or title XVIII 
of the Act, there is no applicable modified adjusted gross income 
standard, except that in the case of such individuals--
    (i) Who are also pregnant, the applicable modified adjusted gross 
income standard is the standard established under paragraph (b)(1) of 
this section; or
    (ii) Who are also a parent or caretaker relative, as described in 
Sec.  435.4, the applicable modified adjusted gross income standard is 
the higher of the income standard established in accordance with Sec.  
435.110(c) or Sec.  435.220(c).
    (c) For each individual who has submitted an application described 
in Sec.  435.907 or whose eligibility is being renewed in accordance 
with Sec.  435.916 and who meets the non-financial requirements for 
eligibility (or for whom the agency is providing a reasonable 
opportunity to verify citizenship or immigration status in accordance 
with Sec.  435.956(b)) of this chapter, the State Medicaid agency must 
comply with the following--
    (1) The agency must, promptly and without undue delay consistent 
with timeliness standards established under Sec.  435.912, furnish 
Medicaid to each such individual whose household income is at or below 
the applicable modified adjusted gross income standard.
    (2) For each individual described in paragraph (d) of this section, 
the agency must collect such additional information as may be needed 
consistent with Sec.  435.907(c), to determine, consistent with the 
timeliness standards in Sec.  435.912, whether such individual is 
eligible for Medicaid on any basis other than the applicable modified 
adjusted gross income standard, and furnish Medicaid on such basis.
* * * * *


Sec.  435.913   [Removed]

0
65. Section 435.913 is removed.

0
66. Section 435.917 is added to read as follows:


Sec.  435.917   Notice of agency's decision concerning eligibility, 
benefits, or services.

    (a) Notice of eligibility determinations. Consistent with 
Sec. Sec.  431.206 through 431.214 of this chapter, the agency must 
provide all applicants and beneficiaries with timely and adequate 
written notice of any decision affecting their eligibility, including 
an approval, denial, termination or suspension of eligibility, or a 
denial or change in benefits and services. Such notice must--
    (1) Be written in plain language;
    (2) Be accessible to persons who are limited English proficient and 
individuals with disabilities, consistent with Sec.  435.905(b), and
    (3) If provided in electronic format, comply with Sec.  435.918(b).
    (b) Content of eligibility notice. (1) Notice of approved 
eligibility. Any notice of an approval of Medicaid eligibility must 
include, but is not limited to, clear statements containing the 
following information--
    (i) The basis and effective date of eligibility;
    (ii) The circumstances under which the individual must report, and 
procedures for reporting, any changes that may affect the individual's 
eligibility;
    (iii) If applicable, the amount of medical expenses which must be 
incurred to establish eligibility in accordance with Sec.  435.121 or 
Sec.  435.831.
    (iv) Basic information on the level of benefits and services 
available based on the individual's eligibility, including, if 
applicable--
    (A) The differences in coverage available to individuals enrolled 
in benchmark or benchmark-equivalent coverage or in an Alternative 
Benefits Plan and coverage available to individuals described in Sec.  
440.315 of this chapter (relating to exemptions from mandatory 
enrollment in benchmark or benchmark-equivalent coverage);
    (B) A description of any premiums and cost sharing required under 
Part 447 Subpart A of this chapter;
    (C) An explanation of how to receive additional detailed 
information on benefits and financial responsibilities; and
    (D) An explanation of any right to appeal the eligibility status or 
level of benefits and services approved.
    (2) Notice of adverse action including denial, termination or 
suspension of eligibility or change in benefits or services. Any notice 
of denial, termination or suspension of Medicaid eligibility or change 
in benefits or services must be consistent with Sec.  431.210 of this 
chapter.
    (c) Eligibility. Whenever an approval, denial, or termination of 
eligibility is based on an applicant's or beneficiary's having 
household income at or below the applicable modified adjusted gross 
income standard in accordance with Sec.  435.911, the eligibility 
notice must contain--
    (1) Information regarding bases of eligibility other than the 
applicable modified adjusted gross income standard and the benefits and 
services afforded to individuals eligible on such other bases, 
sufficient to enable the individual to make an informed choice as to 
whether to request a determination on such other bases; and
    (2) Information on how to request a determination on such other 
bases;
    (d) Combined Eligibility Notice. The agency's responsibility to 
provide notice under this section is satisfied by a combined 
eligibility notice, as defined in Sec.  435.4, provided by the Exchange 
or other insurance affordability program in accordance with an 
agreement between the agency and such program consummated in accordance 
with Sec.  435.1200(b)(3), except that, if the information described in 
paragraph (b)(1)(iii) and (iv) of this section is not included in such 
combined eligibility notice, the agency must provide the individual 
with a supplemental notice of such information, consistent with this 
section.


Sec.  435.919   [Removed]

0
67. Section 435.919 is removed.

0
68. Section 435.926 is added to read as follows:


Sec.  435.926   Continuous eligibility for children.

    (a) Basis. This section implements section 1902(e)(12) of the Act.
    (b) Eligibility. The agency may provide continuous eligibility for 
the period specified in paragraph (c) of this section for an individual 
who is:
    (1) Under age 19 or under a younger age specified by the agency in 
its State plan; and
    (2) Eligible and enrolled for mandatory or optional coverage under 
the State plan in accordance with subpart B or C of this part.
    (c) Continuous eligibility period. (1) The agency must specify in 
the State plan the length of the continuous eligibility period, not to 
exceed 12 months.
    (2) A continuous eligibility period begins on the effective date of 
the individual's eligibility under Sec.  435.915 or most recent 
redetermination or renewal of eligibility under Sec.  435.916

[[Page 86459]]

and ends after the period specified by the agency under paragraph 
(c)(1) of this section.
    (d) Applicability. A child's eligibility may not be terminated 
during a continuous eligibility period, regardless of any changes in 
circumstances, unless:
    (1) The child attains the maximum age specified in accordance with 
paragraph (b)(1) of this section;
    (2) The child or child's representative requests a voluntary 
termination of eligibility;
    (3) The child ceases to be a resident of the State;
    (4) The agency determines that eligibility was erroneously granted 
at the most recent determination, redetermination or renewal of 
eligibility because of agency error or fraud, abuse, or perjury 
attributed to the child or the child's representative; or
    (5) The child dies.

0
69. Section 435.940 is amended by revising the first sentence to read 
as follows:


Sec.  435.940   Basis and scope.

    The income and eligibility verification requirements set forth at 
Sec. Sec.  435.940 through 435.960 are based on sections 1137, 
1902(a)(4), 1902(a)(19), 1902(a)(46)(B), 1902(ee), 1903(r)(3), 1903(x), 
and 1943(b)(3) of the Act, and section 1413 of the Affordable Care Act. 
* * *


Sec.  435.945   [Amended]

0
70. Section 435.945(g) is amended by removing the reference ``Sec.  
435.910, Sec.  435.913, and Sec.  435.940 through Sec.  435.965 of this 
subpart'' and adding in its place the reference ``Sec.  435.910 and 
Sec.  435.940 through Sec.  435.965''.

0
71. Section 435.952 is amended by adding paragraph (c)(3) to read as 
follows:


Sec.  435.952   Use of information and requests of additional 
information from individuals.

* * * * *
    (c) * * *
    (3) Exception for special circumstances. The agency must establish 
an exception to permit, on a case-by-case basis, self-attestation of 
individuals for all eligibility criteria when documentation does not 
exist at the time of application or renewal, or is not reasonably 
available, such as in the case of individuals who are homeless or have 
experienced domestic violence or a natural disaster. This exception 
does not apply if documentation is specifically required under title XI 
or XIX, such as requirements for verifying citizenship and immigration 
status, as implemented at Sec.  435.956(a).
* * * * *

0
72. Section 435.956 is amended by adding paragraphs (a) and (b) to read 
as follows:


Sec.  435.956   Verification of other non-financial information.

    (a) Citizenship and immigration status. (1)(i) The agency must--
    (A) Verify citizenship status through the electronic service 
established in accordance with Sec.  435.949 or alternative mechanism 
authorized in accordance with Sec.  435.945(k), if available; and
    (B) Promptly attempt to resolve any inconsistencies, including 
typographical or other clerical errors, between information provided by 
the individual and information from an electronic data source, and 
resubmit corrected information through such electronic service or 
alternative mechanism.
    (ii) If the agency is unable to verify citizenship status in 
accordance with paragraph (a)(1)(i) of this section, the agency must 
verify citizenship either--
    (A) Through a data match with the Social Security Administration; 
or
    (B) In accordance with Sec.  435.407.
    (2) The agency must--
    (i) Verify immigration status through the electronic service 
established in accordance with Sec.  435.949, or alternative mechanism 
authorized in accordance with Sec.  435.945(k);
    (ii) Promptly attempt to resolve any inconsistencies, including 
typographical or other clerical errors, between information provided by 
the individual and information from an electronic data source, and 
resubmit corrected information through such electronic service or 
alternative mechanism.
    (3) For purposes of the exemption from the five-year waiting period 
described in 8 U.S.C. 1613, the agency must verify that an individual 
is an honorably discharged veteran or in active military duty status, 
or the spouse or unmarried dependent child of such person, as described 
in 8 U.S.C. 1612(b)(2) through the electronic service described in 
Sec.  435.949 or alternative mechanism authorized in accordance with 
Sec.  435.945(k). If the agency is unable to verify such status through 
such service the agency may accept self-attestation of such status.
    (4)(i) The agency must maintain a record of having verified 
citizenship or immigration status for each individual, in a case record 
or electronic database in accordance with the State's record retention 
policies in accordance with Sec.  431.17(c) of this chapter.
    (ii) Unless the individual reports a change in citizenship or the 
agency has received information indicating a potential change in the 
individual's citizenship, the agency may not re-verify or require an 
individual to re-verify citizenship at a renewal of eligibility under 
Sec.  435.916 of this subpart, or upon a subsequent application 
following a break in coverage.
    (5) If the agency cannot promptly verify the citizenship or 
satisfactory immigration status of an individual in accordance with 
paragraph (a)(1) or (2) of this section, the agency--
    (i) Must provide a reasonable opportunity in accordance with 
paragraph (b) of this section; and
    (ii) May not delay, deny, reduce or terminate benefits for an 
individual whom the agency determines to be otherwise eligible for 
Medicaid during such reasonable opportunity period, in accordance with 
Sec.  435.911(c).
    (iii) If a reasonable opportunity period is provided, the agency 
may begin to furnish benefits to otherwise eligible individuals, 
effective the date of application, or the first day of the month of 
application, consistent with the agency's election under Sec.  
435.915(b).
    (b) Reasonable opportunity period. (1) The agency must provide a 
reasonable opportunity period to individuals who have made a 
declaration of citizenship or satisfactory immigration status in 
accordance with Sec.  435.406(a), and for whom the agency is unable to 
verify citizenship or satisfactory immigration status in accordance 
with paragraph (a) of this section. During the reasonable opportunity 
period, the agency must continue efforts to complete verification of 
the individual's citizenship or satisfactory immigration status, or 
request documentation if necessary. The agency must provide notice of 
such opportunity that is accessible to persons who have limited English 
proficiency and individuals with disabilities, consistent with Sec.  
435.905(b). During such reasonable opportunity period, the agency must, 
if relevant to verification of the individual's citizenship or 
satisfactory immigration status--
    (i) In the case of individuals declaring citizenship who do not 
have an SSN at the time of such declaration, assist the individual in 
obtaining an SSN in accordance with Sec.  435.910, and attempt to 
verify the individual's citizenship in accordance with paragraph (a)(1) 
of this section once an SSN has been obtained and verified;
    (ii) Promptly provide the individual with information on how to 
contact the electronic data source described in paragraph (a) of this 
section so that he or she can attempt to resolve any inconsistencies 
defeating electronic verification directly with such source, and pursue 
verification of the

[[Page 86460]]

individual's citizenship or satisfactory immigration status if the 
individual or source informs the agency that the inconsistencies have 
been resolved; and
    (iii) Provide the individual with an opportunity to provide other 
documentation of citizenship or satisfactory immigration status, in 
accordance with section 1137(d) of the Act and Sec.  435.406 or Sec.  
435.407.
    (2) The reasonable opportunity period--
    (i) Begins on the date on which the notice described in paragraph 
(b)(1) of this section is received by the individual. The date on which 
the notice is received is considered to be 5 days after the date on the 
notice, unless the individual shows that he or she did not receive the 
notice within the 5-day period.
    (ii)(A) Ends on the earlier of the date the agency verifies the 
individual's citizenship or satisfactory immigration status or 
determines that the individual did not verify his or her citizenship or 
satisfactory immigration status in accordance with paragraph (a)(2) of 
this section, or 90 days after the date described in paragraph 
(b)(2)(i) of this section, except that,
    (B) The agency may extend the reasonable opportunity period beyond 
90 days for individuals declaring to be in a satisfactory immigration 
status if the agency determines that the individual is making a good 
faith effort to obtain any necessary documentation or the agency needs 
more time to verify the individual's status through other available 
electronic data sources or to assist the individual in obtaining 
documents needed to verify his or her status.
    (3) If, by the end of the reasonable opportunity period, the 
individual's citizenship or satisfactory immigration status has not 
been verified in accordance with paragraph (a) of this section, the 
agency must take action within 30 days to terminate eligibility in 
accordance with part 431 subpart E (relating to notice and appeal 
rights) of this chapter, except that Sec.  431.230 and Sec.  431.231 of 
this chapter (relating to maintaining and reinstating services) may be 
applied at State option.
    (4)(i) The agency may establish in its State plan reasonable limits 
on the number of reasonable opportunity periods during which medical 
assistance is furnished which a given individual may receive once 
denied eligibility for Medicaid due to failure to verify citizenship or 
satisfactory immigration status, provided that the conditions in 
paragraph (b)(4)(ii) of this section are met.
    (ii) Prior to implementing any limits under paragraph (b)(4)(i) of 
this section, the agency must--
    (A) Demonstrate that the lack of limits jeopardizes program 
integrity; and
    (B) Receive approval of a State plan amendment prior to 
implementing limits.
* * * * *

0
73. Section 435.1001 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  435.1001   FFP for administration.

    (a) * * *
    (2) Administering presumptive eligibility.
* * * * *

0
74. Section 435.1002 is amended by revising paragraphs (c)(1) and (4) 
to read as follows:


Sec.  435.1002   FFP for services.

* * * * *
    (c) * * *
    (1) During a presumptive eligibility period to individuals who are 
determined to be presumptively eligible for Medicaid in accordance with 
subpart L of this part;
* * * * *
    (4) Regardless of whether such individuals file an application for 
a full eligibility determination or are determined eligible for 
Medicaid following the period of presumptive eligibility.

0
75. Section 435.1004 is amended by revising paragraph (b) to read as 
follows:


Sec.  435.1004   Beneficiaries overcoming certain conditions of 
eligibility.

* * * * *
    (b) FFP is available for a period not to exceed--
    (1) The period during which a recipient of SSI or an optional State 
supplement continues to receive cash payments while these conditions 
are being overcome; or
    (2) For beneficiaries, eligible for Medicaid only and recipients of 
SSI or an optional State supplement who do not continue to receive cash 
payments, the second month following the month in which the 
beneficiary's Medicaid coverage will have been terminated.

0
76. Section 435.1008 is revised to read as follows:


Sec.  435.1008   FFP in expenditures for medical assistance for 
individuals who have declared citizenship or nationality or 
satisfactory immigration status.

    (a) This section implements sections 1137 and 1902(a)(46)(B) of the 
Act.
    (b) Except as provided in paragraph (c) of this section, FFP is not 
available to a State for expenditures for medical assistance furnished 
to individuals unless the State has verified citizenship or immigration 
status in accordance with Sec.  435.956.
    (c) FFP is available to States for otherwise eligible individuals 
whose declaration of U.S. citizenship or satisfactory immigration 
status in accordance with section 1137(d) of the Act and Sec.  
435.406(c) has been verified in accordance with Sec.  435.956, who are 
exempt from the requirements to verify citizenship under Sec.  
435.406(a)(1)(iii), or for whom benefits are provided during a 
reasonable opportunity period to verify citizenship, nationality, or 
satisfactory immigration status in accordance with section Sec.  
435.956(b), including the time period during which an appeal is pending 
if the State has elected the option under Sec.  435.956(b)(3).

0
77. Section 435.1100 is revised to read as follows:


Sec.  435.1100   Basis for presumptive eligibility.

    This subpart implements sections 1920, 1920A, 1920B, 1920C, and 
1902(a)(47)(B) of the Act.

0
78. Remove the undesignated center heading ``Presumptive Eligibility 
for Children'' that immediately precedes Sec.  435.1101.

0
79. Section 435.1101 is amended by--
0
a. Revising the section heading;
0
b. Adding introductory text for the section;
0
c. Adding the definition of ``Application'';
0
d. Removing the definition of ``Application form'';
0
e. Amending the definition of ``Qualified entity'' by amending 
paragraph (9)(iii) by removing ``; and'' and adding in its place ``;'', 
redesignating paragraph (10) as paragraph (11), and adding a new 
paragraph (10).
    The revision and additions read as follows:


Sec.  435.1101   Definitions related to presumptive eligibility.

    For the purposes of this subpart, the following definitions apply:
    Application means, consistent with the definition at Sec.  435.4, 
the single streamlined application adopted by the agency under Sec.  
435.907(a); and
* * * * *
    Qualified entity * * *
    (10) Is a health facility operated by the Indian Health Service, a 
Tribe or Tribal organization under the Indian Self Determination and 
Education Assistance Act (25 U.S.C. 450 et seq.), or an Urban Indian 
Organization under title V of the Indian Health Care

[[Page 86461]]

Improvement Act (25 U.S.C. 1651 et seq.).
* * * * *

0
80. Section 435.1200 is amended by--
0
a. Revising the section heading and paragraphs (a), (b), (c) 
introductory text, (d), and (e)(1);
0
b. Amending paragraph (e)(2) introductory text by removing the comma 
after ``electronic interface'';
0
c. Revising paragraph (e)(3); and
0
d. Adding paragraphs (g) through (i).
    The additions and revisions to read as follows:


Sec.  435.1200   Medicaid agency responsibilities for a coordinated 
eligibility and enrollment process with other insurance affordability 
programs.

    (a) Statutory basis, purpose, and definitions.
    (1) Statutory basis and purpose. This section implements section 
1943(b)(3) of the Act as added by section 2201 of the Affordable Care 
Act to ensure coordinated eligibility and enrollment among insurance 
affordability programs.
    (2) Definitions. (i) Combined eligibility notice has the meaning as 
provided in Sec.  435.4.
    (ii) Coordinated content has the meaning as provided in Sec.  
435.4.
    (iii) Joint fair hearing request has the meaning provided in Sec.  
431.201 of this chapter.
    (b) General requirements and definitions. The State Medicaid agency 
must--
    (1) Fulfill the responsibilities set forth in paragraphs (d) 
through (h) of this section and, if applicable, paragraph (c) of this 
section.
    (2) Certify for the Exchange and other insurance affordability 
programs the criteria applied in determining Medicaid eligibility.
    (3) Enter into and, upon request, provide to the Secretary one or 
more agreements with the Exchange, Exchange appeals entity and the 
agencies administering other insurance affordability programs as are 
necessary to fulfill the requirements of this section, including a 
clear delineation of the responsibilities of each program to--
    (i) Minimize burden on individuals seeking to obtain or renew 
eligibility or to appeal a determination of eligibility for enrollment 
in a QHP or for one or more insurance affordability program;
    (ii) Ensure compliance with paragraphs (d) through (h) of this 
section and, if applicable, paragraph (c) of this section;
    (iii) Ensure prompt determinations of eligibility and enrollment in 
the appropriate program without undue delay, consistent with timeliness 
standards established under Sec.  435.912, based on the date the 
application is submitted to any insurance affordability program;
    (iv) Provide for a combined eligibility notice and opportunity to 
submit a joint fair hearing request, consistent with paragraphs (g) and 
(h) of this section; and
    (v) If the agency has delegated authority to conduct fair hearings 
to the Exchange or Exchange appeals entity under Sec.  431.10(c)(1)(ii) 
of this chapter, provide for a combined appeals decision by the 
Exchange or Exchange appeals entity for individuals who requested an 
appeal of an Exchange-related determination in accordance with 45 CFR 
part155 subpart F and a fair hearing of a denial of Medicaid 
eligibility which is conducted by the Exchange or Exchange appeals 
entity.
    (c) Provision of Medicaid for individuals found eligible for 
Medicaid by another insurance affordability program. If the agency has 
entered into an agreement in accordance with Sec.  431.10(d) of this 
chapter under which the Exchange or other insurance affordability 
program makes final determinations of Medicaid eligibility, for each 
individual determined so eligible by the Exchange (including as a 
result of a decision made by the Exchange or Exchange appeals entity in 
accordance with paragraph (g)(6) or (7)(i)(A) of this section) or other 
program, the agency must--
* * * * *
    (d) Transfer from other insurance affordability programs to the 
State Medicaid agency. For individuals for whom another insurance 
affordability program has not made a determination of Medicaid 
eligibility, but who have been assessed by such program (including as a 
result of a decision made by the Exchange appeals entity) as 
potentially Medicaid eligible, and for individuals not so assessed, but 
who otherwise request a full determination by the Medicaid agency, the 
agency must--
    (1) Accept, via secure electronic interface, the electronic account 
for the individual and notify such program of the receipt of the 
electronic account;
    (2) Not request information or documentation from the individual in 
the individual's electronic account, or provided to the agency by 
another insurance affordability program or appeals entity;
    (3) Promptly and without undue delay, consistent with timeliness 
standards established under Sec.  435.912, determine the Medicaid 
eligibility of the individual, in accordance with Sec.  435.911, 
without requiring submission of another application and, for 
individuals determined not eligible for Medicaid, comply with paragraph 
(e) of this section as if the individual had submitted an application 
to the agency;
    (4) Accept any finding relating to a criterion of eligibility made 
by such program or appeals entity, without further verification, if 
such finding was made in accordance with policies and procedures which 
are the same as those applied by the agency or approved by it in the 
agreement described in paragraph (b)(3) of this section; and
    (5) Notify such program of the final determination of the 
individual's eligibility or ineligibility for Medicaid.
    (e) * * *
    (1) Individuals determined not eligible for Medicaid. For each 
individual who submits an application or renewal to the agency which 
includes sufficient information to determine Medicaid eligibility, or 
whose eligibility is being renewed in accordance to a change in 
circumstance in accordance with Sec.  435.916(d), and whom the agency 
determines is not eligible for Medicaid, and for each individual 
determined ineligible for Medicaid in accordance with a fair hearing 
under subpart E of part 431 of this chapter, the agency must promptly 
and without undue delay, consistent with timeliness standards 
established under Sec.  435.912, determine potential eligibility for, 
and, as appropriate, transfer via a secure electronic interface the 
individual's electronic account to, other insurance affordability 
programs.
* * * * *
    (3) The agency may enter into an agreement with the Exchange to 
make determinations of eligibility for enrollment in a QHP through the 
Exchange, advance payments of the premium tax credit and cost-sharing 
reductions, consistent with 45 CFR 155.110(a)(2).
* * * * *
    (g) Coordination involving appeals entities. The agency must--
    (1) Include in the agreement into which the agency has entered 
under paragraph (b)(3) of this section that, if the Exchange or other 
insurance affordability program provides an applicant or beneficiary 
with a combined eligibility notice including a determination that the 
individual is not eligible for Medicaid, the Exchange or Exchange 
appeals entity (or other insurance affordability program or other 
program's appeals entity) will--
    (i) Provide the applicant or beneficiary with an opportunity to 
submit a joint fair hearing request, including an opportunity to a 
request

[[Page 86462]]

expedited review of his or her fair hearing request consistent with 
Sec.  431.221(a)(1)(ii) of this chapter; and
    (ii) Notify the Medicaid agency of any joint fair hearing request 
and transmit to the agency the electronic account of the individual who 
made such request, unless the fair hearing will be conducted by the 
Exchange or Exchange appeals entity in accordance to a delegation of 
authority under Sec.  431.10(c)(1)(ii) of this chapter; and
    (2) Beginning on the applicability date described in paragraph (i) 
of this section, establish a secure electronic interface the through 
which--
    (i) The Exchange or Exchange appeals entity (or other insurance 
affordability program or appeals entity) can notify the agency that an 
individual has submitted a joint fair hearing request in accordance 
with paragraph (g)(1)(ii) of this section;
    (ii) The individual's electronic account, including any information 
provided by the individual as part of an appeal to either the agency or 
Exchange appeals entity (or other insurance affordability program or 
appeals entity), can be transferred from one program or appeals entity 
to the other; and
    (iii) The agency can notify the Exchange, Exchange appeals entity 
(or other insurance affordability program or appeals entity) of the 
information described in paragraphs (g)(5)(i)(A), (B) and (C) of this 
section.
    (3) Accept and act on a joint fair hearing request submitted to the 
Exchange or Exchange appeals entity and transferred to the agency as if 
the request for fair hearing had been submitted directly to the agency 
in accordance with Sec.  431.221 of this chapter;
    (4) In conducting a fair hearing in accordance with subpart E or 
part 431 of this chapter, minimize to the maximum extent possible, 
consistent with guidance issued by the Secretary, any requests for 
information or documentation from the individual included in the 
individual's electronic account or provided to the agency by the 
Exchange or Exchange appeals entity.
    (5)(i) In the case of individuals described in paragraph (g)(5)(ii) 
of this section who submit a request a fair hearing under subpart E of 
part 431 of this chapter to the agency or who submit a joint fair 
hearing request to the Exchange or Exchange appeals entity (or other 
insurance affordability program or appeals entity), if the fair hearing 
is conducted by the Medicaid agency, transmit, through the electronic 
interface established under paragraph (g)(1) of this section, to the 
Exchange, Exchange appeals entity (or other insurance affordability 
program or appeals entity), as appropriate and necessary to enable such 
other entity to fulfill its responsibilities under 45 CFR part 155, 42 
CFR part 457 or 42 CFR part 600--
    (A) Notice that the individual has requested a fair hearing;
    (B) Whether Medicaid benefits will be furnished pending final 
administrative action on such fair hearing request in accordance with 
Sec.  431.230 or Sec.  431.231 of this chapter; and
    (C) The hearing decision made by the agency.
    (ii) Individuals described in this paragraph include individuals 
determined ineligible for Medicaid--
    (A) By the Exchange; or
    (B) By the agency and transferred to the Exchange or other 
insurance affordability program in accordance with paragraph (e)(1) or 
(2) of this section.
    (6)(i) In the case of individuals described in paragraph (g)(6)(ii) 
of this section, if the agency has delegated authority under Sec.  
431.10(c)(1)(i) to the Exchange to make Medicaid eligibility 
determinations, the agency must accept a determination of Medicaid 
eligibility made by the Exchange appeals entity and comply with 
paragraph (c) of this section in the same manner as if the 
determination of Medicaid eligibility had been made by the Exchange.
    (ii) Individuals described in this paragraph are individuals who 
were determined ineligible for Medicaid by the Exchange in accordance 
with 45 CFR 155.305(c), who did not request a fair hearing of such 
determination, and whom the Exchange appeals entity determines are 
eligible for Medicaid in deciding an appeal requested by the individual 
in accordance with 45 CFR part 155 subpart F.
    (7)(i) In the case of individuals described in paragraph (g)(7)(ii) 
of this section, the agency must either--
    (A) Accept a determination of Medicaid eligibility made by the 
Exchange appeals entity and comply with paragraph (c) of this section 
in the same manner as if the determination of Medicaid eligibility had 
been made by the Exchange; or
    (B) Accept a determination of Medicaid eligibility made by the 
Exchange appeals entity as an assessment of Medicaid eligibility made 
by the Exchange and make a determination of eligibility in accordance 
with paragraph (d) of this section, taking into account any additional 
information provided to or obtained by the Exchange appeals entity in 
conducting the Exchange-related appeal.
    (ii) Individuals described in this paragraph are individuals who 
were determined ineligible for Medicaid by the Medicaid agency in 
accordance with paragraph (e) of the section, who did not request a 
fair hearing of such determination of Medicaid ineligibility, and whom 
the Exchange appeals entity determines are eligible for Medicaid in 
deciding an appeal requested by the individual in accordance with 45 
CFR part 155 subpart F.
    (h) Coordination of eligibility notices. The agency must--
    (1) Include in the agreement into which the agency has entered 
under paragraph (b)(3) of this section that, to the maximum extent 
feasible, the agency, Exchange or other insurance affordability program 
will provide a combined eligibility notice, as defined in Sec.  435.4, 
to individuals, as well as to multiple members of the same household 
included on the same application or renewal form.
    (2) For individuals and other household members who will not 
receive a combined eligibility notice, include appropriate coordinated 
content, as defined in Sec.  435.4, in any notice provided by the 
agency in accordance with Sec.  435.917.
    (3) For individuals determined ineligible for Medicaid based on 
having household income above the applicable MAGI standard, but who are 
undergoing a Medicaid eligibility determination on a basis other than 
MAGI in accordance with (e)(2) of this section, the agency must--
    (i) Provide notice to the individual, consistent with Sec.  
435.917--
    (A) That the agency--
    (1) Has determined the individual ineligible for Medicaid due to 
household income over the applicable MAGI standard; and
    (2) Is continuing to evaluate Medicaid eligibility on other bases, 
including a plain language explanation of the other bases being 
considered.
    (B) Include in such notice coordinated content that the agency has 
transferred the individual's electronic account to the other insurance 
affordability program (as required under paragraph (e)(2) of this 
section) and an explanation that eligibility for or enrollment in such 
other program will not affect the determination of Medicaid eligibility 
on a non-MAGI basis; and
    (i) Provide the individual with notice, consistent with Sec.  
435.917, of the final determination of eligibility on all bases, 
including coordinated content regarding, as applicable--

[[Page 86463]]

    (A) The notice being provided to the Exchange or other program in 
accordance with paragraph (e)(2)(ii) of this section;
    (B) Any impact that approval of Medicaid eligibility may have on 
the individual's eligibility for such other program; and
    (C) The transfer of the individual's electronic account to the 
Exchange in accordance with paragraph (e)(1) of this section.
    (i) Notice of applicability date. The date described in this 
paragraph is 6 months from the date of a published Federal Register 
document alerting States of the requirement to comply with paragraphs 
(g)(2) of this section and Sec. Sec.  431.221(a)(1)(i), 
431.244(f)(3)(i) and (ii) of this chapter. The earliest we will publish 
such notice will be May 30, 2017, which would result in an earliest 
effective date of November 30, 2017.

PART 457--ALLOTMENTS AND GRANTS TO STATES

0
81. The authority citation for part 457 continues to read as follows:

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

0
82. Section 457.10 is amended by--
0
a. Adding the definitions of ``Combined eligibility notice'', and 
``Coordinated content'';
0
b. Revising the definition of ``Electronic account''; and
0
c. Adding the definition of ``Joint review request'' in alphabetical 
order.
    The additions and revision read as follows:


Sec.  457.10   Definitions and use of terms.

* * * * *
    Combined eligibility notice means an eligibility notice that 
informs an individual, or multiple family members of a household of 
eligibility for each of the insurance affordability programs and 
enrollment in a qualified health plan through the Exchange, for which a 
determination or denial of eligibility was made, as well as any right 
to request a review, fair hearing or appeal related to the 
determination made for each program. A combined notice must meet the 
requirements of Sec.  457.340(e) and contain the content described in 
Sec.  457.340(e)(1), except that information described in Sec.  
457.340(e)(1)(i)(C) may be provided in a combined notice issued by 
another insurance affordability program or in a supplemental notice 
provided by the State. A combined eligibility notice must be issued in 
accordance with the agreement(s) consummated by the State in accordance 
with Sec.  457.348(a).
* * * * *
    Coordinated content means information included in an eligibility 
notice regarding, if applicable--
    (1) The transfer of an individual's or household's electronic 
account to another insurance affordability program;
    (2) Any notice sent by the State to another insurance affordability 
program regarding an individual's eligibility for CHIP;
    (3) The potential impact, if any, of--
    (i) The State's determination of eligibility or ineligibility for 
CHIP on eligibility for another insurance affordability program; or
    (ii) A determination of eligibility for, or enrollment in, another 
insurance affordability program on an individual's eligibility for 
CHIP; and
    (iii) [Reserved]
    (4) The status of household members on the same application or 
renewal form whose eligibility is not yet determined.
* * * * *
    Electronic account means an electronic file that includes all 
information collected and generated by the State regarding each 
individual's CHIP eligibility and enrollment, including all 
documentation required under Sec.  457.380 and including any 
information collected or generated as part of a review process 
conducted in accordance with subpart K of this part, the Exchange 
appeals process conducted under 45 CFR part 155, subpart F or other 
insurance affordability program appeals process.
* * * * *
    Joint review request means a request for a review under subpart K 
of this part which is included in an appeal request submitted to an 
Exchange or Exchange appeals entity or other insurance affordability 
program or appeals entity, in accordance with the signed agreement 
between the State and an Exchange or Exchange appeals entity or other 
program or appeals entity in accordance with Sec.  457.348(b).
* * * * *

0
83. Section 457.50 is revised to read as follows:


Sec.  457.50   State plan.

    The State plan is a comprehensive written statement, submitted by 
the State to CMS for approval, that describes the purpose, nature, and 
scope of the State's CHIP and gives an assurance that the program is 
administered in conformity with the specific requirements of title XXI, 
title XIX (as appropriate), and the regulations in this chapter. The 
State plan contains all information necessary for CMS to determine 
whether the plan can be approved to serve as a basis for Federal 
financial participation (FFP) in the State program. The Secretary will 
periodically specify updated requirements on the format of State plan 
through a process consistent with the requirements of the Paperwork 
Reduction Act.

0
84. Section 457.60 is amended by revising the first sentence and adding 
a new second sentence in the introductory text to read as follows:


Sec.  457.60   Amendments.

    A State may seek to amend its approved State plan in whole or in 
part at any time through the submission of an amendment to CMS. The 
Secretary will periodically specify updated requirements on the format 
of State plan amendments through a process consistent with the 
requirements of the Paperwork Reduction Act. * * *
* * * * *

0
85. Section 457.110 is amended by revising paragraph (a) to read as 
follows:


Sec.  457.110   Enrollment assistance and information requirements.

    (a) Information disclosure. The State must make accurate, easily 
understood, information available to families of potential applicants, 
applicants and enrollees, and provide assistance to these families in 
making informed decisions about their health plans, professionals, and 
facilities. This information must be provided in plain language and is 
accessible to individuals with disabilities and persons who are limited 
English proficient, consistent with Sec.  435.905(b) of this chapter.
    (1) The State must provide individuals with a choice to receive 
notices and information required under this subpart and subpart K of 
this part, in electronic format or by regular mail, provided that the 
State establish safeguards in accordance with Sec.  435.918 of this 
chapter.
    (2) [Reserved]
* * * * *

0
86. Section 457.310 is amended by revising paragraph (b)(2)(i) to read 
as follows:


Sec.  457.310   Targeted low-income child.

* * * * *
    (b) * * *
    (2) * * *
    (i) Found eligible or potentially eligible for Medicaid under 
policies of the State plan (determined through either the Medicaid 
application process or the screening process described at Sec.  
457.350), except for eligibility under Sec.  435.214 of this chapter 
(related to coverage for family planning services);
* * * * *

0
87. Section 457.320 is amended by--

[[Page 86464]]

0
a. Redesignating paragraphs (c) (d), and (e) as paragraphs (d), (e), 
and (f), respectively.
0
b. Reserving paragraph (c); and
0
c. Revising newly redesignated paragraph (d).
    The addition and revisions read as follows:


Sec.  457.320   Other eligibility standards.

* * * * *
    (c) [Reserved]
    (d) Citizenship and immigration status. All individuals seeking 
coverage under a separate child health plan must make a declaration of 
United States citizenship or satisfactory immigration status. Such 
declaration may be made by an adult member of the individual's 
household, an authorized representative, as defined in Sec.  435.923 of 
this chapter (referenced at Sec.  457.340), or if the individual is a 
minor or incapacitated, someone acting responsibly for the individual 
provided that such individual attests to having knowledge of the 
individual's status.
* * * * *

0
88. Section 457.340 is amended by--
0
a. Revising paragraph (a);
0
b. Revising paragraph (e);
0
c. Redesignating paragraph (f) as paragraph (g); and
0
d. Adding a new paragraph (f).
    The revisions and addition read as follow:


Sec.  457.340   Application for and enrollment in CHIP.

    (a) Application and renewal assistance, availability of program 
information, and Web site. The terms of Sec. Sec.  435.905, 435.906, 
435.908, and 435.1200(f) of this chapter apply equally to the State in 
administering a separate CHIP.
* * * * *
    (e) Notice of eligibility determinations. The State must provide 
each applicant or enrollee with timely and adequate written notice of 
any decision affecting his or her eligibility, including an approval, 
denial or termination, or suspension of eligibility, consistent with 
Sec. Sec.  457.315, 457.348, and 457.350. The notice must be written in 
plain language; and accessible to persons who are limited English 
proficient and individuals with disabilities, consistent with Sec.  
435.905(b) of this chapter and Sec.  457.110.
    (1) Content of eligibility notice.
    (i) Any notice of an approval of CHIP eligibility must include, but 
is not limited to, the following--
    (A) The basis and effective date of eligibility;
    (B) The circumstances under which the individual must report and 
procedures for reporting, any changes that may affect the individual's 
eligibility;
    (C) Basic information on benefits and services and if applicable, 
any premiums, enrollment fees, and cost sharing required, and an 
explanation of how to receive additional detailed information on 
benefits and financial responsibilities; and
    (D) Information on the enrollees' right and responsibilities, 
including the opportunity to request a review of matters described in 
Sec.  457.1130.
    (ii) Any notice of denial, termination, or suspension of CHIP 
eligibility must include, but is not limited to the following--
    (A) The basis supporting the action and the effective date,
    (B) Information on the individual's right to a review process, in 
accordance with Sec.  457.1180;
    (iii) In the case of a suspension or termination of eligibility, 
the State must provide sufficient notice to enable the child's parent 
or other caretaker to take any appropriate actions that may be required 
to allow coverage to continue without interruption.
    (2) The State's responsibility to provide notice under this 
paragraph is satisfied by a combined eligibility notice, as defined in 
Sec.  457.10, provided by an Exchange or other insurance affordability 
program in accordance with paragraph (f) of this section, except that, 
if the information described in paragraph (e)(1)(i)(C) of this section 
is not included in such combined eligibility notice, the State must 
provide the individual with a supplemental notice of such information, 
consistent with this section.
    (f) Coordination of notices with other programs. The State must--
    (1) Include in the agreement into which the State has entered under 
Sec.  457.348(a) that for individuals who are transferred between the 
State and another insurance affordability program in accordance with 
Sec.  457.348 or Sec.  457.350, the State, Exchange or other insurance 
affordability program will provide, to the maximum extent feasible, a 
combined eligibility notice to individuals, as well as to multiple 
members of the same household included on the same application or 
renewal form.
    (2) For individuals and other household members who will not 
receive a combined eligibility notice, include appropriate coordinated 
content, as defined in Sec.  457.10, in any notice provided by the 
State in accordance with paragraph (e)(1) of this section.
* * * * *

0
89. Section 457.342 is added to read as follows:


Sec.  457.342   Continuous eligibility for children.

    (a) A State may provide continuous eligibility for children under a 
separate CHIP in accordance with the terms of Sec.  435.926 of this 
chapter, and subject to a child remaining ineligible for Medicaid, as 
required by section 2110(b)(1) of the Act and Sec.  457.310 (related to 
the definition and standards for being a targeted low-income child) and 
the requirements of section 2102(b)(3) of the Act and Sec.  457.350 
(related to eligibility screening and enrollment).
    (b) In addition to the reasons provided at Sec.  435.926(d) of this 
chapter, a child may be terminated during the continuous eligibility 
period for failure to pay required premiums or enrollment fees required 
under the State plan, subject to the disenrollment protections afforded 
under section 2103(e)(3)(C) of the Act (related to premium grace 
periods) and Sec.  457.570 (related to disenrollment protections).

0
90. Section 457.348 is amended by revising paragraphs (a), (b), and (c) 
to read as follows:


Sec.  457.348   Determinations of Children's Health Insurance Program 
eligibility by other insurance affordability programs.

    (a) Agreements with other insurance affordability programs. The 
State must enter into and, upon request, provide to the Secretary one 
or more agreements with an Exchange and the agencies administering 
other insurance affordability programs as are necessary to fulfill the 
requirements of this section, including a clear delineation of the 
responsibilities of each program to--
    (1) Minimize burden on individuals seeking to obtain or renew 
eligibility or to appeal a determination of eligibility for one or more 
insurance affordability program;
    (2) Ensure compliance with paragraphs (b) and (c) of this section 
and Sec.  457.350;
    (3) Ensure prompt determination of eligibility and enrollment in 
the appropriate program without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), based on the 
date the application is submitted to any insurance affordability 
program, and
    (4) Provide for coordination of notices with other insurance 
affordability programs, consistent with Sec.  457.340(f), and an 
opportunity for individuals to submit a joint review request, as 
defined in Sec.  457.10, consistent with Sec.  457.351.
    (5) Provide for a combined appeals decision by an Exchange or 
Exchange

[[Page 86465]]

appeals entity (or other insurance affordability program or appeals 
entity) for individuals who requested an appeal of an Exchange-related 
determination in accordance with 45 CFR part 155 subpart F (or of a 
determination related to another program) and an appeal of a denial of 
CHIP eligibility which is conducted by an Exchange or Exchange appeals 
entity (or other program or appeals entity) in accordance with the 
State plan.
    (b) Provision of CHIP for individuals found eligible for CHIP by 
another insurance affordability program. If a State accepts final 
determinations of CHIP eligibility made by another insurance 
affordability program, for each individual determined so eligible by 
the other insurance affordability program (including as a result of a 
decision made by an Exchange appeals entity authorized by the State to 
adjudicate reviews of CHIP eligibility determinations), the State 
must--
    (1) Establish procedures to receive, via secure electronic 
interface, the electronic account containing the determination of CHIP 
eligibility and notify such program of the receipt of the electronic 
account;
    (2) Comply with the provisions of Sec.  457.340 to the same extent 
as if the application had been submitted to the State; and
    (3) Maintain proper oversight of the eligibility determinations 
made by the other program.
    (c) Transfer from other insurance affordability programs to CHIP. 
For individuals for whom another insurance affordability program has 
not made a determination of CHIP eligibility, but who have been 
screened as potentially CHIP eligible by such program (including as a 
result of a decision made by an Exchange or other program appeals 
entity), the State must--
    (1) Accept, via secure electronic interface, the electronic account 
for the individual and notify such program of the receipt of the 
electronic account;
    (2) Not request information or documentation from the individual in 
the individual's electronic account, or provided to the State by 
another insurance affordability program or appeals entity;
    (3) Promptly and without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), determine the 
CHIP eligibility of the individual, in accordance with Sec.  457.340, 
without requiring submission of another application and, for 
individuals determined not eligible for CHIP, comply with Sec.  
457.350(i) of this section;
    (4) Accept any finding relating to a criterion of eligibility made 
by such program or appeals entity, without further verification, if 
such finding was made in accordance with policies and procedures which 
are the same as those applied by the State in accordance with Sec.  
457.380 or approved by it in the agreement described in paragraph (a) 
of this section; and
    (5) Notify such program of the final determination of the 
individual's eligibility or ineligibility for CHIP.
* * * * *

0
91. Section 457.350 is amended by--
0
a. Revising paragraphs (b) introductory text;
0
b. Amending paragraph (h)(1) by removing ``; and'' and adding in its 
place ``;'';
0
c. Revising paragraph (h)(2);
0
d. Adding paragraph (h)(3);
0
e. Revising paragraph (i) introductory text;
0
f. Adding paragraph (i)(2);
0
g. Revising paragraph (j)(2) and (3); and
0
h. Adding paragraph (j)(4).
    The additions and revisions read as follows:


Sec.  457.350   Eligibility screening and enrollment in other insurance 
affordability programs.

* * * * *
    (b) Screening objectives. A State must, promptly and without undue 
delay, consistent with the timeliness standards established under Sec.  
457.340(d), identify potential eligibility for other insurance 
affordability programs of any applicant, enrollee, or other individual 
who submits an application or renewal form to the State which includes 
sufficient information to determine CHIP eligibility, or whose 
eligibility is being renewed due to a change in circumstance in 
accordance with Sec.  457.343 or who is determined not eligible for 
CHIP in accordance to a review conducted in accordance with subpart K 
of this part, as follows:
* * * * *
    (h) * * *
    (2) Children placed on a waiting list or for whom action on their 
application is otherwise deferred are transferred to other insurance 
affordability programs in accordance with paragraph (i) of this 
section; and
    (3) Families are informed that a child may be eligible for other 
insurance affordability programs, while the child is on a waiting list 
for a separate child health program or if circumstances change, for 
Medicaid.
    (i) Individuals found potentially eligible for other insurance 
affordability programs. For individuals identified in paragraph (b)(3) 
of this section, including during a period of uninsurance imposed by 
the State under Sec.  457.805, the State must--
* * * * *
    (2) In the case of individuals subject to a period of uninsurance 
under Sec.  457.805 and transferred to another insurance affordability 
program in accordance with paragraph (i)(1) of this section, the State 
must--
    (i) Notify such program of the date on which such period ends and 
the individual is eligible to enroll in CHIP; and
    (ii) Consistent with Sec.  457.340(e), provide the individual 
with--
    (A) An initial notice that the individual is not currently eligible 
to enroll in the State's separate child health plan and the reasons 
therefor; the date on which the individual will be eligible to enroll 
in the State's separate child health plan; and that the individual's 
account has been transferred to another insurance affordability program 
for a determination of eligibility to enroll in such program during the 
period of underinsurance. Such notice also must contain coordinated 
content informing the individual of the notice being provided to the 
other insurance affordability program per paragraph (i)(3)(i) of this 
section and the impact that the individual's eligibility to enroll in 
the State's separate child health plan will have on the individual's 
eligibility for such other program.
    (B) Prior to the end of the individual's period of uninsurance 
(sufficient to enable the individual to disenroll from the insurance 
affordability program to which the individual's account was transferred 
per paragraph (i)(1) of this section), notice reminding the individual 
of the information described in paragraph (i)(2)(A) of this section, as 
appropriate.
    (j) * * *
    (2) Complete the determination of eligibility for CHIP in 
accordance with Sec.  457.340 or evaluation for potential eligibility 
for other insurance affordability programs in accordance with paragraph 
(b) of this section.
    (3) Include in the notice of CHIP eligibility or ineligibility 
provided under Sec.  457.340(e), as appropriate, coordinated content 
relating to--
    (i) The transfer of the individual's electronic account to the 
Medicaid agency per paragraph (j)(1) of this section;
    (ii) The transfer of the individual's account to another insurance 
affordability program in accordance with paragraph (i)(1) of this 
section, if applicable; and

[[Page 86466]]

    (iii) The impact that an approval of Medicaid eligibility will have 
on the individual's eligibility for CHIP or another insurance 
affordability program, as appropriate.
    (4) Dis-enroll the enrollee from CHIP if the State is notified in 
accordance with Sec.  435.1200(d)(5) of this chapter that the applicant 
has been determined eligible for Medicaid.
* * * * *

0
92. Section 457.351 is added to read as follows:


Sec.  457.351   Coordination involving appeals entities for different 
insurance affordability programs.

    (a) The terms of Sec.  435.1200(g) of this chapter apply equally to 
the State in administering a separate CHIP. References to a ``fair 
hearing'' and ``joint fair hearing request'' in Sec.  435.1200(g) of 
this chapter are treated as references to a ``review'' under subpart K 
of this part and to a ``joint appeal request'' as defined in Sec.  
457.10. Reference to ``expedited review of a fair hearing request 
consistent with Sec.  431.221(a)(1)(ii) of this chapter'' is considered 
a reference to ``expedited review of an eligibility or enrollment 
matter under Sec.  457.1160(a)''. Reference to Sec.  435.1200(b)(3), 
(c), (d) and (e) are treated as a reference to Sec.  457.348(b), (c) 
and (d) and Sec.  457.350(c), respectively.
    (b) [Reserved.]

0
93. Section 457.355 is revised to read as follows:


Sec.  457.355   Presumptive eligibility for children.

    The State may provide coverage under a separate child health 
program for children determined by a qualified entity to be 
presumptively eligible for the State's separate CHIP in the same manner 
and to the same extent as permitted under Medicaid under Sec.  435.1101 
and Sec.  435.1102 of this chapter.

0
94. Section 457.360 is added to read as follows:


Sec.  457.360   Deemed newborn children.

    (a) Basis. This section implements section 2112(e) of the Act.
    (b) Eligibility. (1) The State must provide CHIP to children from 
birth until the child's first birthday without application if--
    (i) The child's mother was eligible for and received covered 
services for the date of the child's birth under the State plan as a 
targeted low-income pregnant woman in accordance with section 2112 of 
the Act; and
    (ii) The child is not eligible for Medicaid under Sec.  435.117 of 
this chapter.
    (2)(i) The State may provide coverage under this section to 
children who are not eligible for Medicaid under Sec.  435.117 from 
birth until the child's first birthday without application if the 
requirement in paragraph (b)(2)(ii) of this section is met and if, for 
the date of the child's birth, the child's mother was eligible for and 
received covered services under--
    (A) The State plan as a targeted low-income child;
    (B) CHIP coverage in another State; or
    (C) Coverage under the State's demonstration under section 1115 of 
the Act as a Medicaid or CHIP population.
    (ii) For purposes of paragraph (b)(2)(i) of this section, the State 
may only elect the optional populations described if it elects to cover 
the corresponding optional populations in Medicaid under Sec.  
435.117(b)(2)(ii) of this chapter.
    (3) The child is deemed to have applied and been determined 
eligible under the State's separate CHIP State plan effective as of the 
date of birth, and remains eligible regardless of changes in 
circumstances (except if the child dies or ceases to be a resident of 
the State or the child's representative requests a voluntary 
termination of the child's eligibility) until the child's first 
birthday.
    (c) CHIP identification number. (1) The CHIP identification number 
of the mother serves as the child's identification number, and all 
claims for covered services provided to the child may be submitted and 
paid under such number, unless and until the State issues a separate 
identification number for the child.
    (2) The State must issue a separate CHIP identification number for 
the child prior to the effective date of any termination of the 
mother's eligibility or prior to the date of the child's first 
birthday, whichever is sooner, except that the State must issue a 
separate CHIP identification number for the child if the mother was 
covered in another State at the time of birth.

0
95. Section 457.380 is amended by adding paragraph (b) to read as 
follows:


Sec.  457.380   Eligibility verification.

* * * * *
    (b) Status as a citizen, national or a non-citizen. (1) Except for 
newborns identified in Sec.  435.406(a)(1)(iii)(E) of this chapter, who 
are exempt from any requirement to verify citizenship, the agency 
must--
    (i) Verify citizenship or immigration status in accordance with 
Sec.  435.956(a) of this chapter, except that the reference to Sec.  
435.945(k) is read as a reference to paragraph (i) of this section; and
    (ii) Provide a reasonable opportunity period to verify such status 
in accordance with Sec.  435.956(a)(5) and (b) of this chapter and 
provide benefits during such reasonable opportunity period to 
individuals determined to be otherwise eligible for CHIP.
    (2) [Reserved]
* * * * *


Sec.  457.616   [Amended]

0
96. Section 457.616 is amended by removing and reserving paragraph 
(a)(3).


Sec.  457.805   [Amended].

0
97. Section 457.805(b)(3)(vi) is amended by removing the word ``and'' 
and by adding in its place the word ``or''.

    Dated: October 24, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: November 8, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-27844 Filed 11-21-16; 4:15 pm]
 BILLING CODE 4120-01-P