[Federal Register Volume 82, Number 32 (Friday, February 17, 2017)]
[Notices]
[Pages 11034-11037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03292]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
Notice of Opportunity for Hearing on Compliance of Alabama State
Plan Provisions Concerning Provision of Terminating Coverage and
Denying Reenrollment to Otherwise Eligible Individuals Based on a
Determination of Fraud or Abuse With Titles XI and XIX (Medicaid) of
the Social Security Act
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice of opportunity for a hearing; compliance of Alabama
Medicaid State Plan--provision of providing medicaid to all individuals
who meet eligibility criteria, and requirements for handling of
suspected fraud and abuse by providers, applicants, and beneficiaries.
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CLOSING DATE: Requests to participate in the hearing as a party must
be received by the presiding officer by March 20, 2017.
FOR FURTHER INFORMATION CONTACT: Benjamin R. Cohen, Hearing Officer,
Centers for Medicare & Medicaid Services, 2520 Lord Baltimore Drive,
Suite L, Baltimore, MD 21244.
SUPPLEMENTARY INFORMATION: This notice announces the opportunity,
pursuant to section 1904 of the Social Security Act (the Act), for an
administrative hearing concerning the finding of the Administrator of
the Centers for Medicare & Medicaid Services (CMS) that the State of
Alabama is significantly out of compliance with the requirements of
section 1902 of the Act in administering its state plan because Alabama
fails to promptly enroll and extend coverage to eligible individuals
who were subject to an agency determination that they previously
engaged in fraud or program abuse, but were never convicted of any act
of fraud. This finding will be the basis for withholding federal
financial participation (FFP) of one percent of the Alabama Medicaid
agency's quarterly claim for administrative expenditures, an amount
that was developed based on the proportion of total state Medicaid
expenditures that are used for expenditures for eligibility
determinations. The withholding percentage will increase by one
percentage point for every quarter in which the Alabama Medicaid agency
remains out of compliance. The withholding will end when the Alabama
Medicaid agency fully and satisfactorily implements a corrective action
plan to bring its procedures for processing eligibility determinations
under its Medicaid program into compliance with the federal
requirements.
The CMS supports state efforts to appropriately address fraud and
abuse, and federal law and regulations provide mechanisms to do so.
Specifically, federal law and regulations allow states to impose
penalties--including suspension, fines and imprisonment--on individuals
who are convicted of concealing or failing to disclose information.
Federal regulations also require that states investigate instances of
beneficiary abuse of program rules and, if confirmed, take appropriate
action authorized under the state plan. These federal provisions both
provide the state with a mechanism to address fraud and abuse and take
precedence over state law and policies.
The CMS has found that Alabama's policies and practices violate
sections 1902(a)(8) and 1902(a)(10) of the Act requiring states to
provide Medicaid to all individuals who meet the eligibility criteria
required under the state plan, consistent with title XIX of the Act and
federal regulations. Specifically, re-enrollment in Alabama's Medicaid
program is denied to otherwise-eligible individuals who were terminated
based on an agency determination that they previously engaged in fraud
or abuse for at least one year or until restitution is made, whichever
is later. Alabama's practice of recouping funds or otherwise imposing
financial penalties or barring otherwise eligible individuals from
Medicaid coverage, absent a criminal conviction, also is not consistent
with or authorized by section 1128B(a) of the
[[Page 11035]]
Act, regulations at 42 CFR 455.15 and 455.16 or Alabama's Medicaid
state plan.
Alabama's practices were not identified in Alabama's approved state
plan, or otherwise submitted to CMS for review. CMS has raised this
issue previously with the state, as we discuss below, but has been
unable to resolve the state's non-compliance.
Alabama will have an opportunity for a hearing on these findings.
Alabama will have 30 days to request such a hearing. If a request for
hearing is timely submitted, the hearing will be convened by the
designated hearing officer below, no later than 60 days after the date
of this Federal Register notice, or a later date by agreement of the
parties and the Hearing Officer, at the CMS Regional Office in Atlanta,
Georgia, in accordance with the procedures set forth in federal
regulations at 42 CFR part 430, subpart D. The Hearing Officer also
should be notified if the Alabama Medicaid agency requests a hearing
but cannot meet the timeframe expressed in this notice. The Hearing
Officer designated for this matter is: Benjamin R. Cohen, Hearing
Officer, Centers for Medicare & Medicaid Services, 2520 Lord Baltimore
Drive, Suite L, Baltimore, MD 21244.
After a final determination that the Alabama Medicaid agency has
failed to comply substantially with these requirements in the
administration of its state Medicaid plan, made after a hearing or
absent a hearing request, consistent with the provisions of section
1904 of the Act, CMS will begin withholding federal funds as specified
above. Such withholding will continue until the Alabama Medicaid agency
comes into compliance with the requirements described in sections
1902(a)(8) and 1902(a)(10) of the Act, requiring states to provide
Medicaid to all individuals who meet eligibility criteria required
under the state plan, and with section 1128B(a) of the Act and
regulations at 42 CFR 455.15 and 455.16, requiring that the agency
refer cases of suspected fraud to appropriate law enforcement, conduct
a full investigation of suspected abuse and limit sanctions to those
permitted under the regulations or specified in its approved state
plan.
Details about the facts relating to Alabama's practices are set
forth in the letter notifying Alabama of the Administrator's finding.
The following issues will be considered at any requested hearing:
1. Whether the penalties set forth in Section 22-6-8 of the Alabama
Code are consistent with the requirements of sections 1902(a)(8) and
1902(a)(10) of the Act.
2. If so, whether an administrative finding of the type described
in section 22-6-8 of the Alabama Code, without a conviction in a court
of law, is a sufficient basis to impose such penalties consistent with
the requirements of sections 1902(a)(8) and 1902(a)(10) of the Act, and
the remedies set forth in sections 1128 and 1128B of the Act,
regulations at 42 CFR 455.15 and 455.16 and the Alabama Medicaid state
plan.
Beginning in early February 2016, CMS notified Alabama that the
state's actions are inconsistent with federal statutory and regulatory
requirements. CMS has communicated with the state both in writing and
by phone on several occasions since that time, including a July 6,
2016, notice of non-compliance in which CMS advised the Alabama
Medicaid agency that if it did not submit a corrective action plan
(CAP) to come into compliance with federal policy and the approved
state plan within 30 days of the notice, formal compliance proceedings
would be initiated. Alabama has consistently defended its policy,
including in an August 1, 2016, letter responding to the notice of non-
compliance in which the Alabama Medicaid agency requested
reconsideration of CMS' determination and a stay of the 30 day deadline
for submission of the CAP. CMS reviewed the Alabama Medicaid agency's
response and, for the reasons stated above, has determined the Alabama
Medicaid agency is not in compliance with the federal statute and
regulations or Alabama's Medicaid state plan.
The letter notifying Alabama of the details concerning this
compliance issue, the proposed withholding of FFP, opportunity for a
hearing, and possibility of postponing and ultimately avoiding
withholding by coming into compliance, reads as follows:
Ms. Stephanie Azar
Commissioner
Alabama Medicaid Agency
501 Dexter Avenue
Montgomery, AL 36116
Dear Ms. Azar:
This letter provides notice and an opportunity for a hearing on
a finding by the Centers for Medicare & Medicaid Services (CMS) of
significant noncompliance with applicable statutory and regulatory
requirements in the operation of the Alabama Medicaid program,
because the Alabama Medicaid agency inappropriately denies coverage
to otherwise eligible individuals who were terminated based on an
agency determination that they previously engaged in fraud or abuse.
The CMS supports state efforts to appropriately address fraud
and abuse, and federal law and regulations provide mechanisms to do
so. As described further in this letter, federal law and regulation
allow states to impose penalties--including suspension, fines and
imprisonment--for individuals who are convicted of concealing or
failing to disclose information. Federal regulations also require
that states conduct a full investigation into instances of
beneficiary abuse of program rules and, if confirmed, take
appropriate action authorized under the state plan. Except in such
conditions, states are required by federal statute to promptly
enroll and provide medical assistance to all eligible individuals.
These federal provisions, discussed in more detail below, take
precedence over state law and policies.
The CMS has learned in discussions with state agency staff that
Alabama's policies and practices are not consistent with the federal
statutory framework governing instances of alleged beneficiary fraud
or abuse. Specifically, Alabama denies enrollment in Alabama's
Medicaid program to otherwise-eligible individuals who were never
convicted of wrong-doing, but were the subject of an agency
determination that they previously engaged in fraud or abuse, for at
least one year or until restitution is made, whichever is later.
This practice is in violation of sections 1902(a)(8) and 1902(a)(10)
of the Social Security Act (the Act) requiring states to provide
Medicaid to all individuals who meet the eligibility criteria
required under the state plan, consistent with title XIX of the Act
and federal regulations. Furthermore, Alabama's practice of
recouping funds or otherwise imposing financial penalties or barring
otherwise eligible individuals from Medicaid coverage, absent a
criminal conviction, is not consistent with or authorized by section
1128B(a) of the Act, regulations at 42 CFR 455.15 and 455.16 or
Alabama's Medicaid state plan.
Alabama's practices were not identified in Alabama's approved
state plan, or otherwise submitted to CMS for review. CMS has raised
this issue previously with the state, as we discuss below, but has
been unable to resolve the state's non-compliance.
Pursuant to section 1904 of the Act and 42 CFR 430.35, CMS is
providing the Alabama Medicaid agency with an opportunity for a
hearing on this finding of noncompliance with statutory and
regulatory requirements. If the finding is upheld or unchallenged
following this opportunity for a hearing, a portion of the federal
financial participation (FFP) of the administrative costs associated
with the operation of the Alabama Medicaid program, as specified in
more detail below, will be withheld until the state ceases this
impermissible practice and CMS makes a finding that the state has
come into compliance with the statute and regulations.
The factual details of the finding, the proposed withholding,
how the Alabama Medicaid agency can request a hearing on the
finding, and the steps Alabama can take to avoid sanctions by coming
into compliance are described below.
Factual Findings
Section 22-6-8 of the Alabama Code provides that ``Upon
determination by a utilization review committee or the designated
state medicaid agency that a
[[Page 11036]]
medicaid recipient has abused, defrauded, or misused the benefits of
the program said recipient shall immediately become ineligible for
Medicaid benefits.'' Section 22-6-8 of the Code further provides
that ``Medicaid recipients whose eligibility has been revoked due to
abuse, fraud or other deliberate misuse of the program shall not be
deemed eligible for future Medicaid services for a period of not
less than one year, and until full restitution has been made to the
designated State Medicaid Agency.''
In implementing section 22-6-8 of the Alabama Code, state agency
staff explained that if a beneficiary does not report a change in
circumstances which the agency determines would have resulted in
termination of eligibility, any payments for services provided to
the beneficiary after the change in circumstances may be considered
to be an ``overpayment.'' State agency staff further explained that
when the Alabama Medicaid agency has made such an overpayment to
providers that exceeds $300, the beneficiary's case record is
referred to the agency's Payment Review Unit for evaluation. If the
Payment Review Unit determines an overpayment has been made, it
forwards the case to the agency's Utilization Review Committee (URC)
with a recommendation for suspension of eligibility. If the URC
votes to suspend, the individual is suspended from Medicaid
eligibility for a minimum of one year or until the overpayment to
the Medicaid providers during the period of eligibility is paid in
full by the beneficiary to the Alabama Medicaid agency, whichever is
later.
Applicable Statutory and Regulatory Provisions
In general, the Medicaid statute at section 1902(a)(10) of the
Act sets out the groups of Medicaid-eligible individuals, and the
conditions under which they are eligible. Some groups are mandatory
for states to cover under the state plan, and other groups are
covered under the state plan at state option. Section 1902(a)(8) of
the Act requires states to provide medical assistance to eligible
individuals with ``reasonable promptness.'' The applicable federal
statutory and regulatory provisions do not authorize states to
impose additional conditions on eligibility, including exclusion of
individuals who meet the conditions of eligibility but are suspected
by the state agency of fraud or abuse, and only permit recovery of
overpayments from providers, not beneficiaries.
Federal law and regulations do provide for state Medicaid
agencies to address instances of beneficiary fraud or abuse.
Specifically, 42 CFR 455.15 and 455.16 require that state Medicaid
agencies refer cases of suspected fraud to an appropriate law
enforcement agency. If an individual is convicted of concealing or
failing to disclose information ``with an intent fraudulently to
secure [Medicaid benefits],'' a fine of up to $25,000 or
imprisonment up to 5 years or both may be imposed under section
1128B of the Act. Further, per section 1128B(a) of the Act, the
agency may limit, restrict or suspend, for up to one year, coverage
of an otherwise-eligible individual convicted of fraud. Absent
conviction, however, there is no authority either to impose
sanctions or deny eligibility under the statute or regulations based
on fraud.
Unlike suspected fraud, suspected abuse does not require
referral to law enforcement or criminal proceedings. Rather, if the
agency believes an individual is abusing the benefits of the
Medicaid program, 42 CFR 455.15(c) directs the agency to conduct a
full investigation. Per 42 CFR 455.16, the agency's investigation
must continue until appropriate legal action has been initiated, the
case has been dropped because of insufficient supporting evidence,
or the case has been otherwise resolved. Per 42 CFR 455.16(c), if,
after a full investigation, the agency finds that an applicant or
beneficiary has abused the program, the agency may issue a warning
letter or impose ``other sanctions provided under the State plan.''
Under 42 CFR 455.16(c), resolution of an investigation into
allegations of abuse may include suspension of and/or recovery of
overpayments from providers. However, these regulations do not
authorize recovery of overpayments from beneficiaries. Further,
while section 1903(d)(2)(C) of the Act and 42 CFR part 433 Subpart F
provide for recovery of overpayments from providers, there is
nothing in the statute or regulations that permits states to recoup
payments to providers directly from beneficiaries.
Alabama's Medicaid State plan does not authorize suspension of
eligibility from the program merely based on a determination by the
Payment Unit or URC that an overpayment has been made or on an
agency finding that an applicant or beneficiary otherwise has abused
the program; nor does it authorize restitution or recovery of
overpayments as a condition of coverage. Instead, Page 36 of Section
4.5 of Alabama's approved Medicaid state plan calls for the agency
to establish and maintain methods, criteria and procedures that meet
all requirements of 42 CFR 455.13 through 455.23 for prevention and
control of program fraud and abuse.
Federal regulations provide for appropriate measures that states
must take whenever the agency obtains information indicating a
beneficiary is no longer eligible for Medicaid. Specifically,
regulations at 42 CFR 435.916(d) provide for a redetermination of
eligibility in such circumstances, and regulations in 42 CFR part
431 Subpart E provide for advance notice and due process protections
for beneficiaries determined no longer eligible. While beneficiaries
are expected to report changes in their circumstances per 42 CFR
435.916(c), failure to do so does not necessarily constitute fraud
or abuse. Some states have instituted periodic data matching with
available data sources in order to proactively detect changes in
beneficiary circumstances. If a change that may impact eligibility
is detected, the Medicaid agency must follow up, in accordance with
42 CFR 435.916(d), to give the beneficiary an opportunity to dispute
the change, and provide documentation of ongoing eligibility if
necessary. Before terminating, the agency must consider whether
there other potential bases for continued eligibility and, for
individuals determined ineligible for Medicaid, the agency must
determine potential eligibility for other insurance affordability
programs in accordance with 42 CFR 435.916(f). We encourage the
Alabama Medicaid agency to consider adopting periodic data matching
with available sources if it believes that failure on beneficiaries
part to report changes in their circumstances poses a program
integrity risk.
Although the Alabama Medicaid agency reported that beneficiaries
terminated per section 22-6-8 of the Alabama Code are given advance
notice prior to being terminated and may appeal their termination,
requiring that an individual pay the agency back for the cost of
services furnished prior to his or her termination from coverage
effectively represents a retroactive termination of eligibility
which renders meaningless the 10-day advance notice of termination
required under 42 CFR 431.211 and is not permitted under the
regulations.\1\ If the agency believes that a beneficiary's failure
to report a change in circumstances rises to the level of fraud or
abuse of the program, referral to law enforcement for investigation
of fraud, or institution of a full investigation into abuse by the
agency, are the only appropriate next steps under the statute and
federal regulations.
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\1\ The advance notice of termination required is reduced to a
minimum 5 days per 42 CFR 431.214 in a case involving probable
fraud; such fraud must be verified if possible through secondary
sources.
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Discussions With the State Medicaid Agency
Beginning in early February 2016, CMS notified Alabama that the
state's actions are inconsistent with federal statutory and
regulatory requirements. CMS has communicated with the state both in
writing and by phone on several occasions since that time, including
a July 6, 2016, notice of non-compliance in which CMS advised the
Alabama Medicaid agency that if it did not submit a corrective
action plan (CAP) to come into compliance with federal policy and
the approved state plan within 30 days of the notice, formal
compliance proceedings would be initiated. Alabama has consistently
defended its policy, including in an August 1, 2016, letter
responding to the notice of non-compliance in which the Alabama
Medicaid agency requested reconsideration of CMS' determination and
a stay of the 30 day deadline for submission of the CAP. CMS
reviewed the Alabama Medicaid agency's response and, for the reasons
stated above, has determined the Alabama Medicaid agency is not in
compliance with the federal statute and regulations or Alabama's
Medicaid state plan.
In a phone call on November 3, 2016, the Alabama Medicaid agency
suggested that CMS' enforcement of the federal statutory and
regulatory provisions at issue would prevent it from taking action
against applicants who intentionally misrepresent information or
beneficiaries who fail to report changes in circumstances. CMS
explained that several tools are available to enable states to
effectively address such situations, including robust verification
procedures, such as instituting periodic data matching with
available data sources in order to proactively detect changes in
beneficiary
[[Page 11037]]
circumstances. CMS also explained the steps which the agency can and
must follow under regulations at 42 CFR 435.916(d) and 42 CFR part
435 subpart E in the event that the agency later discovers
information that suggests someone was not at application, or is no
longer, eligible for coverage. Again, if the agency believes that an
applicant intentionally provided false information on his or her
application, referral to law enforcement for investigation of fraud,
or institution of a full investigation by the agency into potential
abuse, are the only appropriate next steps under the statute and
regulations.
The Alabama Medicaid agency's submission of its quarterly
expenditure reports through the CMS-64 includes a certification that
the Alabama Medicaid agency is operating under the authority of its
approved Medicaid state plan. However, at this time, CMS has not
received information from the agency providing evidence of
compliance with its approved state plan, sections 1902(a)(8),
1902(a)(10) and 1128B(a) of the Act or regulations at 42 CFR 455.15
and 455.16.
Determination of Non-Compliance and FFP Withholding
The CMS has concluded that the Alabama Medicaid agency is
operating its program in substantial noncompliance with federal
requirements described in sections 1902(a)(8) and 1902(a)(10) of the
Act, requiring states to provide Medicaid to all individuals who
meet eligibility criteria required under the state plan, and with
section 1128B(a) of the Act and regulations at 42 CFR 455.15 and
455.16, requiring that the agency refer cases of suspected fraud to
appropriate law enforcement, conduct a full investigation of
suspected abuse, and limit sanctions to those permitted under the
regulations or specified in its approved state plan. Subject to the
state's opportunity for a hearing, CMS will withhold a portion of
federal financial participation (FFP) from the Alabama Medicaid
agency's quarterly claim of expenditures for administrative costs
until such time as the Alabama Medicaid agency is, and continues to
be, in compliance with the federal requirements.
The withholding will initially be one percent of the federal
share of the Alabama Medicaid agency's quarterly claim for
administrative expenditures, an amount that was developed based on
the proportion of total state Medicaid expenditures that are used
for expenditures for eligibility determinations, as reported on Form
CMS-64.10 Line 50. The withholding percentage will increase by one
percentage point for every quarter in which the Alabama Medicaid
agency remains out of compliance. The withholding will end when the
Alabama Medicaid agency fully and satisfactorily implements a
corrective action plan to bring its eligibility policies and
procedures under its Medicaid program into compliance with the
federal requirements.
Opportunity To Request a Hearing
The state has 30 days from the date of this letter to request a
hearing. If a request for hearing is submitted timely, the hearing
will be convened by the designated hearing officer below, no later
than 60 days after the date of the Federal Register notice, or a
later date by agreement of the parties and the Hearing Officer, at
the CMS Regional Office in Atlanta, Georgia, in accordance with the
procedures set forth in federal regulations at 42 CFR part 430,
subpart D. The Hearing Officer also should be notified if the
Alabama Medicaid agency requests a hearing but cannot meet the
timeframe expressed in this notice. The Hearing Officer designated
for this matter is:
Benjamin R. Cohen, Hearing Officer
Centers for Medicare & Medicaid Services
2520 Lord Baltimore Drive, Suite L
Baltimore, MD 21244
At issue in any such hearing will be:
1. Whether the penalties set forth in Section 22-6-8 of the
Alabama Code are consistent with the requirements of sections
1902(a)(8) and 1902(a)(10) of the Act.
2. If so, whether an administrative finding of the type
described in section 22-6-8 of the Alabama Code, without a
conviction in a court of law, is a sufficient basis to impose such
penalties consistent with the requirements of sections 1902(a)(8)
and 1902(a)(10) of the Act, and the remedies set forth in sections
1128 and 1128B of the Act, regulations at 42 CFR 455.15 and 455.16
and the Alabama Medicaid state plan.
If the Alabama Medicaid agency plans to come into compliance
with the approved state plan, the Alabama Medicaid agency should
submit, within 30 days of the date of this letter, an explanation of
how the Alabama Medicaid agency plans to come into compliance with
federal requirements and the timeframe for doing so. If that
explanation is satisfactory, CMS may consider postponing any
requested hearing, which could also delay the imposition of the
withholding of funds as described above. Our goal is to have the
Alabama Medicaid agency come into compliance, and CMS continues to
be available to provide technical assistance to the Alabama Medicaid
agency in achieving this outcome. However, if CMS does not find the
Alabama Medicaid agency's plan or explanation satisfactory, CMS will
not postpone any requested hearing.
Should you not request a hearing within 30 days, a notice of
withholding will be sent to you and the withholding of federal funds
will begin as described above.
If you have any questions or wish to discuss this determination
further, please contact:
Jackie Glaze
Associate Regional Administrator
Division of Medicaid and Children's Health Operations
CMS Atlanta Regional Office, 61 Forsyth Street, Suite 4T20
Atlanta, Georgia 30303
404-562-7417
Sincerely,
Patrick H. Conway
Acting Administrator
(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid
Assistance Program.)
Dated: February 14, 2017.
Patrick H. Conway,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2017-03292 Filed 2-16-17; 8:45 am]
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