[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Notices]
[Pages 4471-4473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02401]
[[Page 4471]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
Centers for Medicare & Medicaid Services
Notice of Opportunity for Hearing on Compliance of Texas
Calculation of Post-Eligibility Treatment of Income With Titles XI and
XIX (Medicaid) of the Social Security Act
AGENCY: Centers for Medicare & Medicaid Services, HHS.
ACTION: Notice of opportunity for a hearing; Compliance of Texas
calculation of post-eligibility treatment of income for
institutionalized individuals and certain participants in home and
community-based services waivers.
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DATES: Requests to participate in the hearing as a party must be
received by the presiding officer by March 18, 2019.
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 for an
administrative hearing concerning the finding of the Administrator of
the Centers for Medicare & Medicaid Services (CMS) that the Texas
Health and Human Services Commission (HHSC) is not properly calculating
the post-eligibility treatment of income (PETI) for institutionalized
individuals and certain participants in home and community-based
services (HCBS) waivers.
Section 1902(r)(1) of the Social Security Act (the Act), codified
at 42 U.S.C. 1396a(r)(1), mandates that, in applying the PETI
calculation against institutionalized individuals and certain
participants of HCBS waivers to determine how much of their income must
be contributed to the cost of their institutional or HCBS waiver
services, states must deduct from their incomes ``amounts for incurred
expenses for medical or remedial care that are not subject to payment
by a third party, including . . . necessary medical or remedial care
recognized under State law but not covered under the State plan[.]''
(Emphasis added.) This statutory mandate is incorporated in the federal
regulations at 42 CFR 435.725(c)(4)(ii) and 435.733(c)(4)(ii) (for the
categorically needy in non-209(b) states).
CMS has consistently interpreted the phrase ``not covered under the
state plan'' as meaning not paid for by the state Medicaid program.
(See Maryland Dept. of Health and Mental Hygiene v. Centers for
Medicare and Medicaid Services, 542 F.3d 424, 432-433 (3rd Cir. 2008)).
Thus, deductions must be made in the PETI calculation for incurred
medical or remedial expenses for services that are not included in the
state plan, or that are included in the state plan but were not paid
for by the state Medicaid agency because the individual was not
eligible for Medicaid when the services were delivered. States are
permitted to limit past medical expenses to those incurred within three
months of an individual applying for Medicaid. 42 CFR 435.831. However,
the Texas HHSC has acknowledged that it limits the mandatory incurred
medical expense deduction in the PETI calculation to those that were
incurred when an individual was eligible under the state plan. This
practice has the effect of excluding services that are covered under
the state plan but which were not paid for by the Texas HHSC because
the individual was not eligible for Medicaid when they were delivered.
Throughout 2017, CMS and the Texas HHSC engaged in several
discussions during which CMS explained its longstanding interpretation
of section 1902(r)(1) of the Act. CMS also provided several documents
supporting that interpretation, including a 2008 decision from the U.S.
Court of Appeals for the Fourth Circuit, in which the court upheld
CMS's disapproval of a Maryland state plan amendment (SPA) that
proposed a PETI calculation method nearly identical to the one that the
Texas HHSC presently imposes. On May 1, 2018, CMS issued a corrective
action letter, informing the Texas HHSC that, if it did not demonstrate
compliance with these requirements within 30 days of the date of the
letter, CMS would initiate formal compliance proceedings. Texas HHSC
asked for several extensions and ultimately submitted a formal response
on August 10, 2018. The August 10, 2018, response did not evidence
compliance with section 1902(r)(1) of the Act.
Absent a hearing request or if, following a hearing requested, the
Administrator determines that the Texas HHSC is not in compliance with
federal Medicaid law and regulations, CMS will begin withholding
federal financial participation (FFP). The FFP withholding will
continue until the Texas HHSC comes into compliance with the
requirement in section 1902(r)(1) of the Act to deduct incurred medical
or remedial expenses for services that are included in the state plan
but were not paid for by the state Medicaid agency in its PETI
calculations.
The notice to Texas containing 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:
Dear Ms. Muth:
This letter provides notice that the Centers for Medicare &
Medicaid Services (CMS) has determined the Texas Health and Human
Services Commission (HHSC) to be out of compliance with federal
Medicaid law in the manner in which it conducts its post-eligibility
treatment of income (PETI) calculations for institutionalized
individuals and certain individuals receiving home and community-based
services (HCBS). The Texas HHSC policy and practice violates section
1902(r)(1) of the Social Security Act (the Act), codified at 42 U.S.C.
1396a(r)(1), which requires generally that incurred medical expenses
not covered by a third party must be taken into account in making the
PETI calculations.
Pursuant to section 1904 of the Act, codified at 42 U.S.C. 1396c,
and 42 CFR 430.35, a portion of the federal financial participation
(FFP) of the administrative costs associated with the operation of the
Texas Medicaid program will be withheld. However, CMS is first
providing the Texas HHSC with an opportunity for a hearing on this
withholding decision. Absent a hearing request or if, following a
hearing requested, the Administrator determines that the Texas HHSC is
not in compliance with federal Medicaid law and regulations, CMS will
begin this FFP withholding. The FFP withholding will continue until the
Texas HHSC comes into compliance with the requirement in section
1902(r)(1) of the Act to deduct incurred medical or remedial expenses
for services that are included in the state plan but were not paid for
by the state Medicaid agency in its PETI calculations. The details of
the finding, proposed withholding, opportunity for Texas to request a
hearing on the finding, and possibility of postponing, and ultimately
avoiding, withholding by coming into compliance are described below.
I. The Finding
Section 1902(r)(1) of the Act mandates that, in applying the PETI
calculation against institutionalized individuals and certain
participants of HCBS waivers to determine how much of their income must
be contributed to the cost of their institutional or HCBS waiver
services, states must deduct from an individual's income ``amounts for
incurred expenses
[[Page 4472]]
for medical or remedial care that are not subject to payment by a third
party, including . . . necessary medical or remedial care recognized
under State law but not covered under the State plan[.]'' (Emphasis
added.) This statutory mandate is incorporated in the federal
regulations at 42 CFR 435.725(c)(4)(ii) and 435.733(c)(4)(ii) (for the
categorically needy in non-209(b) states).
CMS has consistently interpreted the phrase ``not covered under the
state plan'' as meaning not paid for by the state Medicaid program.
(See Maryland Dept. of Health and Mental Hygiene v. Centers for
Medicare and Medicaid Services, 542 F.3d 424, 432-433 (3rd Cir. 2008)).
Thus, deductions must be made in the PETI calculation for incurred
medical or remedial expenses for services that are not included in the
state plan, or that are included in the state plan but were not paid
for by the state Medicaid agency because the individual was not
eligible for Medicaid when the services were delivered. States are
permitted to limit past medical expenses to those incurred within three
months of an individual applying for Medicaid. 42 CFR 435.831. However,
the Texas HHSC has acknowledged that it limits the incurred medical
expense deduction in the PETI calculation to only those expenses
incurred on or after the date on which the individual met all
eligibility requirements for Medicaid. This practice has the effect of
excluding services that are covered under the state plan but which were
not paid for by the Texas HHSC because the individual was not eligible
for Medicaid when they were delivered, regardless of how recently the
services were provided.
Throughout 2017, CMS and the Texas HHSC engaged in several
discussions, during which CMS explained its longstanding interpretation
of section 1902(r)(1) of the Act. CMS also provided several documents
supporting that interpretation, including a 2008 decision from the U.S.
Court of Appeals for the Fourth Circuit, in which the court upheld
CMS's disapproval of a Maryland state plan amendment (SPA) that
proposed a PETI calculation method nearly identical to the one the
Texas HHSC presently imposes. On May 1, 2018, CMS issued a corrective
action letter informing the Texas HHSC that, if it did not demonstrate
compliance with these requirements within 30 days of the date of the
letter, CMS would initiate formal compliance proceedings. The Texas
HHSC asked for several extensions and ultimately submitted a formal
response on August 10, 2018. The August 10, 2018, response did not
evidence compliance with section 1902(r)(1) of the Act.
The Texas HHSC's submission of its quarterly expenditure reports
through the CMS-64 includes a certification that the state is operating
under the authority of its approved Medicaid state plan. However, at
this time, CMS has not received information from the Texas HHSC
providing evidence of compliance with section 1902(r)(1) of the Act.
II. Proposed Withholding
In light of the Texas HHSC's non-compliance with section 1902(r)(1)
of the Act, CMS is moving forward with a formal determination of
substantial noncompliance with federal requirements described in
section 1902(r)(1) of the Act to deduct amounts for incurred expenses
for medical or remedial care recognized under state law but not covered
under the state plan in the PETI calculation. Subject to the Texas
HHSC's opportunity to request a hearing, CMS will withhold a portion of
FFP from the Texas HHSC's quarterly claim of expenditures for
administrative costs until such time as the Texas HHSC is and continues
to be in compliance with the federal requirements. 42 CFR 430.35. The
withholding will initially be 4 percent of the federal share of the
Texas HHSC'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 2 percentage points for every quarter in
which the Texas HHSC remains out of compliance, up to a maximum
withholding percentage of 100 percent (of total administrative
expenditures). The withholding will end when the Texas HHSC
demonstrates that it has implemented a corrective action plan bringing
its procedures to process eligibility determinations under its Medicaid
program into compliance with the federal requirements found at section
1902(r)(1) of the Act.
III. Opportunity to Request a Hearing
Hearing procedures are found at 42 C.F.R. Part 430 Subpart D. As
specified in the accompanying Federal Register notice, the Texas HHSC
may request an administrative hearing within 30 days of the date of
this letter prior to this determination becoming final. 42 CFR 430.70;
42 CFR 430.72(a). Upon receipt of a timely hearing request, the hearing
will be convened by the Hearing Officer designated below no later than
60 days from the date of this letter, unless a later date is agreed to
by the state and CMS. 42 CFR 430.72(a). The hearing will take place at
the CMS Regional Office in Dallas, Texas. 42 CFR 430.72(a). The issue
in any such hearing will be whether, in applying the PETI calculation
against institutionalized individuals and certain participants of HCBS
waiver, Texas HHSC properly deducts from their incomes amounts for
incurred expenses for medical or remedial care recognized under State
law but not covered under the state plan, in accordance with section
1902(r)(1) of the Act. Please note that additional issues may be
considered at the hearing, provided that the additional issues are sent
to the state in writing and published in the Federal Register. 42 CFR
430.74.
Any request for such a hearing should be sent to the designated
Hearing Officer. The Hearing Officer also should be notified if the
Texas HHSC 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
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.
IV. Submission of Plan to Come into Compliance
If the Texas HHSC intends to come into compliance with its approved
state plan and section 1915(c) waivers, the Texas HHSC should submit,
within 30 days of the date of this letter, an explanation of how it
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 Texas HHSC come into compliance with federal law, and CMS
continues to be available to provide technical assistance to the Texas
HHSC to achieve this outcome.
If you have any questions or wish to discuss this determination
further, please contact:
Bill Brooks
Associate Regional Administrator
Division of Medicaid and Children's Health Operations
CMS Dallas Regional Office, 1301 Young Street, Suite 714
[[Page 4473]]
Dallas, TX 75202
214-767-4461
Sincerely,
Seema Verma
cc: Benjamin R. Cohen
Section 1116 of the Social Security Act (42 U.S.C. 1316; 42 CFR
430.18) (Catalog of Federal Domestic Assistance program No. 13.714.
Medicaid Assistance Program.)
Dated: February 11, 2019.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2019-02401 Filed 2-14-19; 8:45 am]
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