[Federal Register Volume 89, Number 64 (Tuesday, April 2, 2024)]
[Rules and Regulations]
[Pages 22780-22878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06566]



[[Page 22779]]

Vol. 89

Tuesday,

No. 64

April 2, 2024

Part II





Department of Health and Human Services





-----------------------------------------------------------------------





Centers for Medicare & Medicaid Services





-----------------------------------------------------------------------





42 CFR Parts 431, 435, 436, et al.





Medicaid Program; Streamlining the Medicaid, Children's Health 
Insurance Program, and Basic Health Program Application, Eligibility 
Determination, Enrollment, and Renewal Processes; Final Rule

  Federal Register / Vol. 89 , No. 64 / Tuesday, April 2, 2024 / Rules 
and Regulations  

[[Page 22780]]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 431, 435, 436, 447, 457, and 600

[CMS-2421-F2]
RIN 0938-AU00


Medicaid Program; Streamlining the Medicaid, Children's Health 
Insurance Program, and Basic Health Program Application, Eligibility 
Determination, Enrollment, and Renewal Processes

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This is the second part of a two-part final rule that 
simplifies the eligibility and enrollment processes for Medicaid, the 
Children's Health Insurance Program (CHIP), and the Basic Health 
Program (BHP). This rule aligns enrollment and renewal requirements for 
most individuals in Medicaid; establishes beneficiary protections 
related to returned mail; creates timeliness requirements for 
redeterminations of eligibility; makes transitions between programs 
easier; eliminates access barriers for children enrolled in CHIP by 
prohibiting premium lock-out periods, benefit limitations, and waiting 
periods; and modernizes recordkeeping requirements to ensure proper 
documentation of eligibility determinations.

DATES: These regulations are effective on June 3, 2024.

FOR FURTHER INFORMATION CONTACT: Stephanie Bell, (410) 786-0617, 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Since 1965, Medicaid has been a cornerstone of America's health 
care system. The program provides free or low-cost health coverage to 
low-income individuals and families and helps meet the diverse health 
care needs of children, pregnant individuals, parents, older adults, 
and people with disabilities. For over 25 years, the Children's Health 
Insurance Program (CHIP) has stood on the shoulders of Medicaid with 
the goal of ensuring that all children have health insurance. Together 
these programs play a major role in making health care available and 
affordable to millions of Americans.
    Access to health coverage expanded significantly in 2010 with 
enactment of 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, enacted on March 
30, 2010), together referred to as the Affordable Care Act (ACA). The 
ACA expanded Medicaid eligibility to low-income adults under age 65 
without regard to parenting or disability status, simplified Medicaid 
and CHIP enrollment processes, and established health insurance 
Marketplaces where individuals without access to Medicaid, CHIP, or 
other comprehensive coverage could purchase coverage in a Qualified 
Health Plan (QHP). Many individuals with household income above the 
Medicaid and CHIP income standards became eligible for premium tax 
credits and/or cost-sharing reductions to help cover the cost of the 
coverage. In addition, the ACA provided States with the option of 
establishing a Basic Health Program (BHP), which can provide affordable 
health coverage to individuals whose household income is greater than 
133 percent but does not exceed 200 percent of the Federal Poverty 
Level (FPL) (that is, lower income individuals who would otherwise be 
eligible to purchase coverage through the Marketplaces with financial 
subsidies). BHPs allow States to provide more affordable coverage for 
these individuals and to improve the continuity of care for those whose 
income fluctuates above and below the Medicaid and CHIP levels. To 
date, two States, New York and Minnesota, have established BHPs.
    In addition to coverage expansion, the ACA also required the 
establishment of a seamless system of coverage for all insurance 
affordability programs (that is, Medicaid, CHIP, BHP, and the insurance 
affordability programs available through the Marketplaces). In 
accordance with sections 1943 and 2107(e)(1)(T) of the Social Security 
Act (the Act) and sections 1413 and 2201 of the ACA, individuals must 
be able to apply for, and enroll in, the program for which they qualify 
using a single application submitted to any program. We issued 
implementing regulations on March 23, 2012, titled ``Medicaid program; 
Eligibility Changes Under the Affordable Care Act of 2010'' final rule 
(77 FR 17144) (referred to hereafter as the ``2012 eligibility final 
rule''), and July 15, 2013, titled ``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 hereafter as the ``2013 
eligibility final rule''). These regulations focused on establishing a 
single streamlined application, aligning financial methodologies and 
procedures across insurance affordability programs, and maximizing 
electronic verification in order to create a streamlined, coordinated, 
and efficient eligibility and enrollment process for eligibility 
determinations based on modified adjusted gross income (MAGI).
    Significant progress has been made in simplifying eligibility, 
enrollment, and renewal processes for applicants and enrollees, as well 
as reducing administrative burden on State agencies administering 
Medicaid, CHIP, and BHP, since the issuance of these regulations. The 
dynamic online applications developed by States and the Federally 
Facilitated Marketplace, which ask only those questions needed to 
determine eligibility, have reduced burden on applicants. Of the 48 
States that reported application processing time data for the April 
2023-June 2023 period, over half (57 percent) of all MAGI-based 
eligibility determinations at application were processed in under 24 
hours.\1\ By comparison, for the February 2018-April 2018 period, of 
the 42 States reporting application processing time data, only 31 
percent of all MAGI-based eligibility determinations at application 
were processed in under 24 hours. Greater reliance on electronic 
verifications has reduced the need for individuals to find and submit, 
and for eligibility workers to review, copies of paper documentation, 
decreasing burden on both States and individuals and increasing \2\ 
program integrity. Renewals completed using electronic information 
available to States have increased retention of eligible individuals, 
while also decreasing the administrative burden on both States and 
enrollees.
---------------------------------------------------------------------------

    \1\ MAGI Application Processing Time Snapshot Report: April 
2023-June 2023; accessed on 11/17/2023 at https://www.medicaid.gov/sites/default/files/2023-10/magi-app-process-time-snapshot-rpt-apr-jun-2023.pdf.
    \2\ MAGI Application Processing Time Snapshot Report: April 
2023-June 2023; accessed on 1/18/2024 at https://www.medicaid.gov/sites/default/files/2020-04/magi-application-time-report.pdf.
---------------------------------------------------------------------------

    The critical role of Medicaid and CHIP in providing timely health 
care access was highlighted as the coronavirus disease 2019 (``COVID-
19'') spread across our country beginning in early 2020. Medicaid and 
CHIP ensured people who may have lost their jobs or been exposed to 
COVID-19, or both, had access to coverage, playing a critical role in 
the national response. States were

[[Page 22781]]

eligible for a temporary increase in the Federal Medical Assistance 
Percentage (FMAP) throughout the COVID-19 public health emergency 
(PHE), if they met certain conditions specified in section 6008 of the 
Families First Coronavirus Response Act (FFCRA) (Pub. L. 116-127, March 
18, 2020), amended by section 5131 of Division FF of the Consolidated 
Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117-328, December 29, 
2022). One such condition was the continuous enrollment condition 
described at section 6008(b)(3) of the FFCRA. This condition required 
States to maintain enrollment, through March 31, 2023, for all Medicaid 
beneficiaries who enrolled on or after March 18, 2020, with limited 
exceptions.
    Under the CAA, 2023, the FFCRA's temporary FMAP increase was 
extended through December 31, 2023, at a gradually reducing rate, for 
States that continued to meet the conditions specified in subsections 
6008(b)(1), (2), and (4) of the FFCRA, along with new conditions at 
subsection 6008(f) of the FFCRA.\3\ Among the new conditions for 
enhanced FMAP were requirements to (a) complete eligibility 
redeterminations in accordance with all applicable Federal requirements 
(or alternative processes and procedures approved by CMS), (b) update 
beneficiary contact information, and (c) make a good faith effort to 
contact beneficiaries whose mail was returned to the State. Since early 
2023, States have been engaged in an effort to unwind their continuous 
enrollment policies and return to normal eligibility and enrollment 
operations (this process has commonly been referred to as 
``unwinding''). CMS worked actively with States during this period to 
review their redetermination processes, approve alternatives when 
needed, and ensure that the enrollment protections established by the 
ACA were available to all applicants and beneficiaries during the 
unwinding period. This final rule builds upon these protections to 
promote enrollment and reduce churn.
---------------------------------------------------------------------------

    \3\ See the January 2023 State Health Official (SHO) #23-002, 
``RE: Medicaid Continuous Enrollment Condition Changes, Conditions 
for Receiving the FFCRA Temporary FMAP Increase, Reporting 
Requirements, and Enforcement Provisions in the Consolidated 
Appropriations Act, 2023, for additional information on the 
``unwinding period.'' Available online at https://www.medicaid.gov/sites/default/files/2023-08/sho23002.pdf.
---------------------------------------------------------------------------

    The Biden-Harris Administration is committed to protecting and 
strengthening Medicaid and CHIP and has demonstrated this commitment 
through multiple executive actions. For example, on January 20, 2021, 
President Biden issued Executive Order 13985 on advancing racial equity 
and support for underserved communities.\4\ It charged Federal agencies 
with identifying potential barriers that underserved communities may 
face to enrollment in programs like Medicaid and CHIP. This was 
followed on January 28, 2021, by Executive Order 14009 with a specific 
call to strengthen Medicaid and the ACA and remove barriers to 
obtaining coverage for the millions of individuals who are potentially 
eligible for coverage but remain uninsured.\5\ In April 2022, President 
Biden issued another Executive order, building on progress and 
reflecting new Medicaid and CHIP flexibilities established by the 
American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2). Executive Order 
14070, ``Continuing to Strengthen Americans' Access to Affordable, 
Quality Health Coverage,'' charges Federal agencies with identifying 
ways to help more Americans enroll in quality health coverage.\6\ It 
calls upon Federal agencies to examine policies and practices that make 
it easier for individuals to enroll in and retain coverage. Building on 
this charge, we reviewed the improvements made to implement the ACA, 
examined States' successes and challenges in enrolling eligible 
individuals, considered the changes brought about by the COVID-19 
pandemic, and looked for gaps in our regulatory framework that continue 
to impede access to coverage.
---------------------------------------------------------------------------

    \4\ E.O. 13985, 86 FR 7009. Accessed online on July 19, 2022, at 
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
    \5\ E.O. 14009, 86 FR 7793. Accessed online on July 19, 2022, at 
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/28/executive-order-on-strengthening-medicaid-and-the-affordable-care-act/.
    \6\ E.O. 14070, 87 FR 20689. Accessed online on July 19, 2022, 
at https://www.whitehouse.gov/briefing-room/presidential-actions/2022/04/05/executive-order-on-continuing-to-strengthen-americans-access-to-affordable-quality-health-coverage/.
---------------------------------------------------------------------------

    We have learned through our experiences working with States and 
other interested parties that certain policies continue to result in 
unnecessary administrative burden and create barriers to enrollment and 
retention of coverage for eligible individuals. For example:
     Individuals whose eligibility is not based on MAGI (non-
MAGI individuals)--such as, those whose eligibility is based on being 
age 65 or older, having blindness, or having a disability--generally 
were not included in the enrollment simplifications established under 
the ACA or our implementing regulations (the 2012 and 2013 eligibility 
final rules). This left such individuals at greater risk of being 
denied or losing coverage due to procedural reasons, including, for 
example, failure to return paperwork,\7\ than their MAGI-based 
counterparts, even though we believe many are likely to continue to 
meet the substantive Medicaid eligibility criteria due to low 
likelihood of changes in their income or other circumstances.\8\
---------------------------------------------------------------------------

    \7\ Procedural reasons include instances where a beneficiary 
fails to provide the information necessary to complete a Medicaid or 
CHIP renewal. This many include a renewal form with information 
about the individual's continued eligibility or documentation to 
verify continued eligibility.
    \8\ Assistant Secretary for Planning and Evaluation (ASPE) 
(2019). Loss of Medicare-Medicaid dual eligible status: Frequency, 
contributing factors and implications. Accessed on August 4, 2023, 
at https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//189201/DualLoss.pdf.
---------------------------------------------------------------------------

     Current regulations do not consistently provide clear 
timeframes for applicants and enrollees to return information needed by 
the State to make a determination of eligibility or for States to 
process and act upon information received. This may lead to unnecessary 
delays in processing applications and renewals and some individuals 
being denied increased assistance for which they have become eligible.
     Recordkeeping regulations, which are critical to ensuring 
appropriate and effective oversight to identify errors in State 
policies and operations, were last updated in 1986 and are both 
outdated and lacking in needed specificity. We believe these outdated 
requirements have contributed to inconsistent documentation policies 
across States, which may have furthered the incidence of improper 
Medicaid payments.
     Barriers to coverage that are not permitted under any 
other insurance affordability program--including lock-outs for 
individuals terminated due to non-payment of premiums, required periods 
of uninsurance prior to enrollment, and annual or lifetime caps on 
benefits--remain a State option in separate CHIPs.
    Through the proposed rule that appeared in the Federal Register on 
September 7, 2022, entitled ``Streamlining the Medicaid, Children's 
Health Insurance Program, and Basic Health Program Application, 
Eligibility Determination, Enrollment, and Renewal Processes'' (87 FR 
54760) (referred to hereafter as the ``September 2022 proposed rule''), 
we proposed policies designed to address these and other gaps, thereby 
streamlining Medicaid and CHIP eligibility and enrollment processes, 
reducing

[[Page 22782]]

administrative burden on States and enrollees, and increasing 
enrollment and retention of eligible individuals. We also sought to 
improve the integrity of Medicaid and CHIP. Through the Payment Error 
Rate Measurement (PERM) program, the Medicaid Eligibility Quality 
Control (MEQC) program, and other CMS eligibility reviews, we have 
regular opportunities to work with States in reviewing their 
eligibility and enrollment processes. As a result of these reviews and 
other program integrity efforts, States are continually making 
improvements to their eligibility and enrollment systems both to 
enhance functionality and to correct any newly identified issues. We 
believe the changes finalized in this rule will further these efforts, 
and we will continue to work closely with States throughout 
implementation.
    Current regulations at 42 CFR 433.112 establish conditions that 
State eligibility and enrollment systems must meet to qualify for 
enhanced Federal matching funds. Among these conditions, Sec.  
433.112(b)(14) requires that each State system support accurate and 
timely processing and adjudications of eligibility determinations, and 
effective communications with providers, beneficiaries, and the public. 
As States submit proposed changes to their eligibility and enrollment 
systems and implement new and/or enhanced functionality, we will 
continue to provide them with technical assistance on the policy 
requirements, conduct ongoing reviews of both the State policy and 
State systems, and ensure that all proposed changes support more 
accurate and timely processing of eligibility determinations.
    We will also continue to explore other opportunities for reducing 
the incidence of beneficiary eligibility-related improper payments, 
including leveraging the enhanced funding available for design, 
implementation, and operation of State eligibility and enrollment 
systems, as well as mitigation and corrective action plans that address 
specific State challenges. Our goal is to ensure that eligible 
individuals can enroll and stay enrolled without unnecessary burden and 
that ineligible individuals are redirected to the appropriate coverage 
programs as quickly as possible.
    On September 21, 2023, the ``Streamlining Medicaid; Medicare 
Savings Program Eligibility Determination and Enrollment'' final rule 
(88 FR 65230) (referred to hereafter as the ``2023 Streamlining MSP 
Enrollment final rule'') appeared in the Federal Register, which 
finalized provisions of our September 2022 proposed rule that were 
specific to individuals dually eligible for both Medicaid and Medicare. 
This rule addresses the remaining provisions of the September 2022 
proposed rule. It is focused on aligning enrollment and renewal 
requirements for most individuals in Medicaid; improving access for 
medically needy individuals; establishing expectations for timely 
renewals and redeterminations of eligibility for individuals 
experiencing a change in circumstances; streamlining transitions 
between Medicaid and CHIP; eliminating access barriers for children 
enrolled in CHIP; removing unnecessary administrative barriers; and 
modernizing recordkeeping requirements to ensure proper documentation 
of eligibility determinations.
    If any provision of this final rule is held to be invalid or 
unenforceable by its terms, or as applied to any person or 
circumstance, it shall be severable from this final rule and not affect 
the remainder thereof or the application of the provision to other 
persons not similarly situated or to other, dissimilar circumstances.

II. Summary of the Proposed Provisions and Analysis of and Responses to 
Public Comments

    We received a total of 7,055 timely comments from State Medicaid 
and CHIP agencies, advocacy groups, health care providers and 
associations, health insurers and plans, and the general public.
    Comment: We received many comments supporting the September 2022 
proposed rule. Commenters supported the changes proposed to reduce 
barriers to coverage, make the eligibility and enrollment process 
easier and faster, and help eligible individuals to retain coverage. 
The commenters highlighted the benefits our proposed policies would 
have on individuals, families, providers, States, and communities. On 
the individual level, commenters stated that the proposed rule would 
reduce individual burdens and worries, save money, and even make people 
happier. The commenters noted that it would help families by removing 
some of the barriers to accessing health care services during periods 
of great stress and economic insecurity, and that it would ensure their 
children have access to the health care services they need. Commenters 
noted that a reduction in churning will not only improve the health of 
beneficiaries, but it will also protect individual beneficiaries, and 
their families, from medical debt and associated stressors. Maximizing 
coverage for individuals, these commenters stated, will not only ensure 
better outcomes for the people enrolled in Medicaid and CHIP but may 
even save lives. Several commenters described the proposed changes as a 
long-term complement to our current efforts to minimize inappropriate 
coverage losses during the unwinding period following the end of the 
continuous enrollment condition.
    Commenters also stated that these regulations would reduce burdens 
on States, save taxpayer dollars, and serve as a practical step toward 
ensuring the long-term sustainability of Medicaid and CHIP. Some 
commenters noted their belief that the current rules place an outsized 
emphasis on preventing the enrollment of ineligible individuals and 
that this rule will balance that interest with the ultimate goal of 
ensuring coverage for those who are eligible.
    From the provider perspective, commenters explained that the 
reduction in enrollment churn resulting from the proposed streamlining 
of Medicaid and CHIP eligibility and enrollment processes would reduce 
administrative burdens on physicians and their practices. One commenter 
stated that it would help providers to maintain continuity of care and 
trust in their relationships with their patients. Another commenter 
stated that the September 2022 proposed rule would diminish the harmful 
consequences of churning, including disruptions in physician care and 
medication adherence; increased administrative costs for providers, 
Medicaid managed care plans, and States; and higher health costs when 
delayed care forces more expensive interventions. One commenter noted 
that eliminating barriers to enrollment in Medicaid and CHIP could lead 
to an increase in the number of Medicaid and CHIP beneficiaries and a 
reduction in uncompensated care costs, thereby protecting the viability 
of the medical safety net. Hospitals also commented that reduced churn 
from the policies proposed in the September 2022 proposed rule would 
lessen the workload for hospital staff who assist patients with program 
and financial assistance applications.
    At the broader community level, commenters supported the proposed 
steps to promote health equity by eliminating barriers to initial and 
continuing enrollment in Medicaid (that is, form submission 
requirements rather than reliance on electronic data and verification). 
The commenters explained that because people of color are 
disproportionately likely to be enrolled in Medicaid and CHIP for 
health

[[Page 22783]]

coverage, lowering administrative burdens to make it easier to enroll 
in coverage and to reduce coverage disruptions could be critical to 
advancing health and racial equity. One commenter noted that by 
enabling low-income households to access the benefits to which they are 
entitled under law, the September 2022 proposed rule would effectively 
result in a transfer of funding (spending described in the regulatory 
impact analysis) from the Federal Government to Medicaid and CHIP 
beneficiaries through additional health care spending by those 
programs. The commenter explained that this transfer will not only 
enhance the health of the United States' low-income population but will 
also likely improve their financial well-being. Commenters also 
supported the proposal to address institutional bias by allowing for 
the projection of predictable costs in the community for home and 
community-based services.
    Response: We appreciate commenters' support for the September 2022 
proposed rule. As discussed in the background section of this final 
rule, Medicaid and CHIP play a key role in the United States health 
care system. While Medicaid and CHIP coverage can have a huge impact on 
the individuals served by these programs, we agree that the full value 
of the programs goes well beyond the individual beneficiaries.
    We agree with commenters that the streamlined eligibility and 
enrollment processes established by this rule will help to reduce the 
churning of eligible individuals on and off Medicaid and CHIP. We agree 
with commenters that reduced churn has the potential to reduce 
administrative burdens for beneficiaries and their health care 
providers, improve the ability of beneficiaries and their providers to 
form lasting relationships, reduce the need for high-cost interventions 
that can result from delayed care, and protect beneficiaries from 
medical debt and providers from non-payment. We also agree with 
comments on the broader community impact of this rule. After completing 
the upfront investment in systems and training needed to implement the 
changes in this final rule, States should begin to see savings from the 
reduced administrative burden. In addition, we believe that healthier 
beneficiaries can be more productive in their homes, their work, and 
their communities.
    Recognizing the benefits of this rule, we are finalizing (with some 
modifications) the changes included in the September 2022 proposed rule 
that were not included in the 2023 Streamlining MSP Enrollment final 
rule. Some of the proposed changes are modified in response to 
comments, and all modifications are discussed in the comment responses 
that follow.
    Comment: We also received many comments that generally opposed the 
September 2022 proposed rule and urged CMS to withdraw the rule in its 
entirety. Commenters opposing the rule cited concerns about increased 
enrollment of ineligible individuals, increased program costs, reduced 
program integrity, and reduced flexibility for States. Other concerns 
raised were that the proposed rule would increase doctors' and 
hospitals' profits, take away individuals' choices, and decrease the 
quality of health care.
    Some commenters stated that this rule would prohibit critical 
program integrity protections. These commenters expressed concern that 
changes proposed to streamline the enrollment process would permit 
ineligible individuals to enroll in Medicaid and CHIP, and they 
recommended tighter controls to protect the integrity of these 
programs. The commenters stated that loopholes in existing eligibility 
and enrollment processes, particularly with respect to the verification 
of eligibility, would be expanded by this rule, making it difficult for 
States to effectively verify Medicaid and CHIP eligibility.
    Commenters opposing the proposals noted the increase in State costs 
described in the regulatory impact analysis and expressed concern that 
Medicaid and CHIP costs would increase. One commenter expressed concern 
that these changes were coming at the expense of State flexibility, 
taxpayers, and the truly needy who rely on the sustainability of 
Medicaid.
    A few commenters stated that the proposed rule gives more control 
to the Federal Government at the expense of States. They believe the 
proposed rule weakens State flexibility to administer enrollment 
determinations. One commenter stated that they opposed the proposed 
changes noting that States are best positioned to set eligibility, 
renewal, and retention requirements for Medicaid and CHIP. Another 
commenter explained that because issues of health care vary from State 
to State, they believe it is wrong for CMS to establish a ``one size 
fits all'' approach.
    Response: We appreciate commenters' concerns about protecting the 
integrity of the Medicaid and CHIP programs. As stewards of Federal 
funding for Medicaid and CHIP, we take program integrity very 
seriously. We maintained a focus on reducing the rate of improper 
payments as we developed the proposals finalized in this rule. For 
example, we expect the new requirements finalized in this rule for 
electronic recordkeeping will help ensure that State and Federal 
auditors can more easily verify the accuracy of eligibility 
determinations and payments made to providers. We also expect that 
establishing clear timeliness standards for acting on changes in 
circumstances and completing renewals will ensure that States do not 
continue to provide coverage to ineligible individuals for an extended 
period. These provisions will also ensure that States do not improperly 
deny coverage for a beneficiary who is eligible for Medicaid or CHIP. 
Accurate eligibility determinations in both situations are an important 
part of program integrity.
    We disagree with comments suggesting that streamlining eligibility 
and enrollment processes and eliminating unnecessary administrative 
requirements will increase the enrollment of ineligible individuals. To 
the contrary, the focus of many of the proposed provisions is to reduce 
enrollment errors caused when eligible individuals are unable to 
overcome administrative barriers to enrollment. For example, by 
removing the requirement to apply for other benefits that do not impact 
an individual's eligibility for Medicaid or CHIP, this rule eliminates 
a burdensome step in the eligibility process that increases potential 
for caseworker- or system error. Additionally, this final rule 
increases State reliance on electronic data sources, such as States' 
asset verification programs, to verify eligibility, thereby reducing 
the burden for States, as well as applicants and beneficiaries, of 
submitting copies of paper documents that must be reviewed by a 
caseworker.
    Regarding commenters' concerns about the increased costs associated 
with this rule, this final rule does not expand Medicaid or CHIP 
eligibility criteria to include new populations (for example, 
individuals with higher incomes or in categories not currently eligible 
for coverage under these programs). It simply removes barriers that 
prevent individuals who satisfy existing financial and other 
eligibility criteria from enrolling and remaining enrolled in these 
programs. We recognize that many of the provisions will require States 
to change their eligibility systems and their enrollment processes, and 
that these changes will generate upfront costs. However, as discussed 
in the regulatory impact analysis and collection of information 
sections, we believe these changes will create administrative savings 
that will continue to accrue in the future, and

[[Page 22784]]

that these savings will far outweigh the initial administrative costs. 
In addition, we note that enhanced Federal funding for design, 
implementation, and operation of State eligibility and enrollment 
systems is available in accordance with Sec.  433.112(b)(14) for 
changes to support accurate and timely processing of eligibility 
determinations.
    Finally, we understand commenters' concerns that some of the 
changes finalized in this rule will reduce the flexibility currently 
available to States. As we considered the comments submitted regarding 
each specific provision in this final rule, we looked for opportunities 
to provide States with more flexibility in achieving the policy goals 
of the September 2022 proposed rule. Revisions finalized in this 
rulemaking, which improve State flexibility, are discussed in detail in 
the responses to comments that follow.

A. Facilitating Medicaid Enrollment

1. Facilitate Enrollment by Allowing Medically Needy Individuals To 
Deduct Prospective Medical Expenses (42 CFR 435.831 and 436.831)
    We proposed to amend Sec.  435.831(g)(2) to permit States 
additional flexibility to project the incurred medical expenses of 
noninstitutionalized individuals who seek to establish eligibility for 
Medicaid as medically needy. Generally, the medically needy are 
individuals who have incomes too high to qualify in a categorically 
needy group described in section 1902(a)(10)(A) of the Act and who 
attain income eligibility by reducing their countable income to their 
State's medically needy income level (MNIL) by deducting the uncovered 
medical and remedial care expenses they, their family members, and 
financially responsible relatives have incurred (a process referred to 
as a ``spenddown''). When an individual qualifies as medically needy, 
the individual's eligibility lasts only as long as the State's 
medically needy budget period, which, under Sec.  435.831(a), can be no 
longer than 6 months (and can be as short as 1 month), at which point 
the individual will need to meet their spenddown amount again with 
different incurred medical or remedial expenses to reestablish 
eligibility. This process causes frequent disruptions in medically 
needy-based Medicaid coverage and can pose administrative challenges to 
States.
    In 1994, we amended Sec.  435.831 to add a new paragraph (g)(1), 
under which we permitted States to project the costs of medical 
institutional expenses, at the Medicaid reimbursement rate, that 
individuals seeking eligibility as medically needy will incur in a 
budget period (59 FR 1659, 1673 (January 12, 1994)). As we explained in 
section II.A.5. of the preamble of the September 2022 proposed rule, 
``projecting'' expenses means that a State deducts from the 
individual's countable income the medical expenses that it anticipates 
an individual will incur during a budget period. This can expedite 
eligibility because the individual does not have to first incur the 
anticipated expenses. As we explained, our rationale for permitting the 
projection of institutional expenses has been that such expenses are by 
their nature constant and predictable, and allowing their projection at 
the Medicaid rate offers States a simplified approach to determining 
the eligibility of institutionalized individuals as medically needy 
with a high degree of certainty of the accuracy of the determinations.
    We believe that allowing projection of only institutional expenses, 
while not also allowing projection of predictable and constant services 
incurred by community-based individuals, fosters an institutional bias, 
and we therefore proposed to amend Sec.  435.831(g)(2) to allow States 
to project the expenses of other services that are also reasonably 
constant and predictable. Our proposed regulation identified examples 
of services that we believe meet this criterion, including home and 
community-based services (HCBS) reflected in a person-centered service 
plan in accordance with Sec.  441.301(b)(1)(i), Sec.  441.468(a)(1), 
Sec.  441.540(b)(5), or Sec.  441.725 (relating to the HCBS authorized 
under section 1915(c), (i), (j) and (k) of the Act), and prescription 
drugs. We explained that features of these services create a high 
degree of likelihood of their continued receipt from month to month. We 
also proposed that States use the Medicaid reimbursement rate for the 
costs of the services they would project under proposed Sec.  
435.831(g)(2). We invited comment on other types of services that may 
meet the reasonably constant-and-predictable criteria, which we would 
consider including in the regulatory text.
    In drafting the September 2022 proposed rule, we inadvertently 
failed to include a revision to Sec.  436.831(g)(2) that mirrors the 
change proposed at Sec.  435.831(g)(2) to permit Guam, Puerto Rico, and 
the Virgin Islands (collectively, the ``436 territories'') to make the 
same elections with respect to medically needy eligibility. This 
omission was unintentional, as most of the provisions of the proposed 
rule that are adopted in this final rule are applicable to the 436 
territories as a result of incorporation by reference in existing 
regulations (as noted elsewhere throughout this final rule). The same 
reasons for adopting this option in Sec.  435.831 also apply in the 436 
territories, and we note that reference to the effects of such changes 
on all five U.S. territories was included in the discussion of 
information collection requirements in the proposed rule (87 FR 54820). 
We are including Sec.  436.831(g)(2) in this final rule and note that 
all references to Sec.  435.831(g) also apply to Sec.  436.831(g).
    We received the following comments on this provision in the 
proposed rule, and below are our responses.
    Comment: Most commenters strongly supported the proposed 
regulation, with nearly all such commenters stating that the proposal 
would do one or more of the following: help reduce Medicaid's 
institutional bias; further the integration mandates of the Americans 
with Disabilities Act (ADA) and section 504 of the Rehabilitation Act; 
reduce eligibility churn and ensure greater continuity of coverage; and 
reduce administrative burden and complexity. A couple of commenters 
specifically noted that the proposed regulation will improve health 
equity.
    Response: We appreciate the commenters' support. As explained in 
the following comment and response, we are finalizing the regulation as 
proposed.
    Comment: We received many comments in response to our invitation 
for the identification of other types of services that are reasonably 
constant and predictable, and which could be considered for inclusion 
in the regulatory text. Commenters suggested a very broad variety of 
services, and many commenters recommended that we include the services 
they identified in the regulation text. Examples of the additional 
expenses which were suggested to us by commenters include personal care 
services, Program of All-Inclusive Care for the Elderly (PACE) 
services, additional drug-related costs, behavioral health services, 
durable medical equipment (DME), health insurance premiums, and 
laboratory tests.
    Response: We appreciate the very thorough and thoughtful responses 
to our request. We agree that many of the expenses suggested by 
commenters, including health insurance premiums (such as, but not 
limited to, Medicare or PACE premiums paid by the individual), could 
meet the reasonably constant-and-predictable standard. However, we have 
decided to finalize the rule as proposed, in which the

[[Page 22785]]

examples of projectable services that will appear in the final 
regulation text will be those that were included in the proposed rule--
that is, the services in plans of care for the section 1915-related 
HCBS benefits and prescription drugs. We note that the list of specific 
services included in the regulation text is illustrative, not 
exhaustive, and have concluded that, given the variety and volume of 
expenses which could meet the reasonably constant-and-predictable 
standard, the addition of all or most of such services to the 
regulation text would be too cumbersome. Additionally, we are concerned 
that a longer list may actually heighten the potential that someone 
would incorrectly conclude that the specifically identified services 
are the only permissible ones that States may project as reasonably 
constant and predicable.
    Although we are not including additional examples in the final 
regulation, we confirm that the services in the regulation text are not 
exclusive, and that States are authorized to project services not 
specifically identified in the regulation which they determine to be 
reasonably constant and predicable. The language in the final rule (as 
in the proposed rule) provides that States may project expenses that 
they have determined to be reasonably constant and predictable 
``including, but not limited to,'' the services in a person-centered 
service plan for section 1915-related HCBS and prescription drugs. 
(Emphasis added.)
    We agree that many of the services identified by commenters could 
be reasonably constant and predictable. However, we decline to 
individually evaluate each service identified against that standard 
here. Under the final rule, discretion is left to each State to 
evaluate whether, and under what circumstances, a given service is 
considered reasonably constant and predictable. We believe that the 
services we have included in the regulation reflect practical examples 
of the reasonably-constant-and-predictable principle that will guide 
the type of services States may choose to project.
    Comment: One commenter suggested removing all examples from the 
regulation text, expressing concern that the inclusion of examples may 
be inadvertently interpreted to limit the projection of expenses to 
those contained within a Medicaid-approved plan of care, which would 
make the option available only to individuals who have already 
established Medicaid eligibility and have an approved plan of care. The 
commenter suggested that CMS explicitly provide States with the option 
to expand prospective HCBS-related deductions to individuals with 
private-pay receipts or who have received support from a qualified 
entity (such as an Aging and Disability Resource Center) to develop a 
service plan.
    Response: As explained previously in this final rule, we believe 
that adding other services to the regulation could increase the 
possibility that the list may be read as an exclusive one, in contrast 
to our intent. We disagree, however, that it is necessary to omit all 
examples from the regulatory text, because we believe, as also noted 
previously in this final rule, that the examples we include offer a 
useful gauge of our expectation on what may be considered reasonably 
constant and predictable. We also believe it is clear that the list of 
examples is illustrative but not exhaustive.
    Comment: A commenter suggested that we replace specific HCBS 
references with a blanket reference to HCBS authorized under all 
authorities.
    Response: As noted previously in this final rule, we believe that 
the specific services identified in the regulation offer a useful gauge 
of our expectations of what may be considered reasonably constant and 
predictable. The proposed regulation identified examples of services 
that we believe meet these criteria, including HCBS reflected in a 
person-centered service plan pursuant to Sec.  441.301(b)(1)(i), Sec.  
441.468(a)(1), Sec.  441.540(b)(5), or Sec.  441.725 (relating to the 
HCBS authorized under section 1915(c), (i), (j) and (k) of the Act). 
While we agree that HCBS that are not reflected in a person-centered 
service plan pursuant to one of the authorities listed in proposed 
Sec.  435.831(g)(2) could potentially include services that help an 
individual remain in the community (such as transportation), our goal 
is to provide clear examples of reasonably constant and predictable 
expenses in the regulation text. We believe that the proposed 
regulation text accomplishes that goal, since HCBS provided pursuant to 
a person-centered service plan necessarily meet that standard, whereas 
HCBS not reflected in such a plan may not, depending on the service and 
circumstances. We reiterate, however, that States are authorized to 
project services not specifically identified in the regulation which 
they determine to be reasonably constant and predictable, including 
HCBS that are not included in a person-centered service plan.
    Comment: We received several comments that either requested 
clarification on whether this proposal would be optional for States or 
that implied the commenters believed it not to be optional. One 
commenter stated that the subsection heading for this proposal in the 
preamble is presented as an individual option instead of a State 
option, and the commenter recommended that we confirm that States do 
not have to elect this option. Another commenter indicated that this 
proposal would reduce State discretion. A few other commenters shared 
that the proposal would impose a burden on States (that is, additional 
staff training and system changes), and that, given the complexity of 
the proposal, the timeline for State implementation should be relaxed. 
One commenter stated that the proposal might possibly increase 
medically needy caseloads.
    Response: We confirm that the authority to project noninstitutional 
expenses that we proposed and are finalizing at Sec.  435.831(g)(2) in 
this final rule is a State option, not a mandate. We agree that the 
language of the heading in the preamble to the September 2022 proposed 
rule suggests an individual option instead of a State option, and we 
have revised it in this final rule preamble. We note, however, that we 
did not propose, nor did we make, a change to the paragraph heading of 
Sec.  435.831(g) in which this new State authority is inserted 
(``Determination of deductible incurred medical expenses: Optional 
deductions.'') (Emphasis added). Given the optional nature of this 
provision, we disagree that it will impose a burden on States or that 
the timeline for State implementation should be longer (as there is not 
an implementation timeline for the election of this option). Although 
we believe that adopting the option will ease administrative burden, a 
State that believes negative outcomes that may possibly stem from 
permitting the projection of noninstitutional expenses would outweigh 
the benefits would not have to elect this option.
    Comment: Many commenters took the position that, for HCBS 
participants, CMS should require States to project noninstitutional 
medical and remedial expenses, rather than making it optional. The 
commenters indicated that making it mandatory would streamline the 
process and reduce unnecessary burden on how people with extensive 
health care needs receiving HCBS must demonstrate their eligibility.
    Response: As we explained in section II.A.5. of the preamble of the 
September 2022 proposed rule, our proposal to allow States to project 
noninstitutional expenses builds on the preexisting State regulatory 
option to project institutional expenses, a primary rationale of which

[[Page 22786]]

was to increase State flexibility. While we agree that expanding 
States' authority to project additional types of expenses will help 
streamline eligibility processes and offer important advantages to 
applicants and beneficiaries, we did not propose to eliminate State 
discretion in applying this policy. Doing so would be a substantial 
departure from the flexibility principles on which the proposed rule 
was based. Therefore, we are finalizing Sec.  435.831(g)(2) as 
proposed. The projection of reasonably constant and predictable medical 
expenses in determining whether a medically needy individual has met 
their spenddown will be a State option under this final rule.
    Comment: Several commenters requested that the regulation be 
extended to a broader range of people beyond those receiving services 
under the specific HCBS authorities included in the regulation text. 
One commenter noted that because use of services in an HCBS plan of 
care may vary greatly over the course of multiple budget periods, 
States may not be able to reasonably predict the individual's services 
costs in a forthcoming budget period.
    Response: States are permitted under this regulation to project the 
cost of noninstitutional services for all medically needy individuals, 
regardless of whether such individuals are eligible for HCBS authorized 
under section 1915 of the Act, so long as the projected services are 
reasonably constant and predictable. States are also not limited to 
projecting the specific services identified in the regulation.
    Comment: One commenter stated that proposed Sec.  435.831(g)(2) 
would not eliminate Medicaid's institutional bias. The commenter 
indicated that individuals who become hospitalized and then apply for 
Medicaid are typically discharged by hospitals to nursing facilities 
instead of the community due to the higher degree of likelihood that 
they will establish Medicaid eligibility in the former. The commenter 
further stated that individuals who are thus discharged to a nursing 
facility and become Medicaid-eligible will likely choose to remain 
there, as a return to the community, with different financial 
eligibility rules, may pose a threat to their retaining Medicaid.
    Response: We appreciate the concerns raised by the commenter. We 
have acknowledged in the past the challenges faced by Medicaid-eligible 
institutionalized individuals seeking to return to the community, and 
the proposed rule did not purport to eliminate all barriers individuals 
receiving institutional care may face in returning to the community. We 
previously issued a State Medicaid Director Letter on strategies that 
States may utilize to facilitate transitions from institutions to the 
community and connecting such individuals to HCBS. (Olmstead Update No. 
3, July 25, 2000). We believe that the option provided under Sec.  
435.831(g)(2) of this final rule complements these strategies to 
further assist States in their rebalancing \9\ efforts.
---------------------------------------------------------------------------

    \9\ ``Rebalancing'' is defined in this context as achieving a 
more equitable balance between the share of spending and use of 
services and supports delivered in home and community-based settings 
relative to institutional care.
---------------------------------------------------------------------------

    Comment: Two commenters stated that a plan of care may only be 
developed for an individual who has established Medicaid eligibility, 
with one of the commenters indicating that, as a result, projection of 
the plan-of-care costs would not assist a prospective medically needy 
individual in need of the HCBS.
    Response: We disagree with the commenters. The eligibility group 
described in Sec.  435.217, which covers individuals who are eligible 
for and will receive section 1915(c) services and who would be eligible 
if institutionalized, requires that section 1915(c) services be 
authorized before the individual may be enrolled in the group. This 
requires the completion of the plan of care as a condition precedent; 
for example, for individuals seeking coverage under this group, a State 
must complete a plan of care for section 1915(c) services prior to 
determining them eligible for Medicaid. Similarly, States are 
specifically authorized under sections 1915(c)(3) and 1915(i)(3) of the 
Act to apply special financial eligibility deeming rules for medically 
needy individuals seeking coverage for section 1915(c) or (i) services. 
This means that States electing to cover section 1915(c) or (i) 
services must confirm the need for such services as part of the 
underlying Medicaid eligibility determination. A State could develop a 
plan of care for the individual as part of this process; indeed, it 
often will make sense for the State to do so.
    Comment: We received many comments relating to retroactive coverage 
for HCBS, with nearly all such commenters suggesting that retroactive 
HCBS coverage should be available to the same extent it is for 
institutional services. Some of the commenters claimed that the 
misalignment is biased toward institutional services or discriminatory.
    Response: While not specifically stated by the commenters, we 
assume the comments on this point refer to the ``medical assistance'' 
definition in section 1915(c)(1) of the Act, which defines HCBS 
services as services that are provided ``pursuant to a written plan of 
care to individuals with respect to whom there has been a determination 
that but for the provision of such [HCBS waiver] services, the 
individuals would require the level of care provided in a hospital or a 
nursing facility or intermediate care facility for the mentally 
retarded the cost of which could be reimbursed under the State plan.'' 
We further believe that the commenters are proposing that if an 
individual is otherwise eligible for Medicaid coverage of other 
services, that the services that are in a section 1915(c) waiver 
participant's plan of care, but which are received by the individual 
before the plan of care is actually developed and the level-of-care 
determination has been made, also be eligible for Medicaid coverage. We 
appreciate the commenters' interest in this issue; however, it is 
beyond the scope of this rule. We note, however, that individuals who 
are eligible for HCBS are not categorically excepted from retroactive 
medical assistance coverage authorized under section 1902(a)(34) of the 
Act, and Medicaid beneficiaries may receive retroactive coverage for 
HCBS-related State plan services such as personal care services and 
home health care services.
    Comment: A couple of commenters stated that requiring use of the 
Medicaid rate for noninstitutional expense projection is too 
prescriptive and requested that CMS provide flexibility for States to 
determine the appropriate rate.
    Response: We do not agree that the requirement to use the Medicaid 
rate is overly prescriptive. Use of the Medicaid rate is appropriate to 
achieve the highest level of certainty that an individual will incur 
the liability that the regulation permits States to anticipate prior to 
the actual receipt of services. Use of a different rate increases the 
possibility that, upon reconciliation at the end of the budget period, 
an individual will be found not to have met their spenddown obligation 
(and thus to have been erroneously granted eligibility). Limiting the 
expenses projected to the Medicaid rate strikes an appropriate balance 
between preventing medically needy individuals from having to establish 
or reestablish eligibility based on a spenddown prior to receiving 
services and ensuring that individuals who are not reasonably certain 
to meet

[[Page 22787]]

their spenddown obligation are not erroneously granted eligibility.
    Comment: Some commenters recommended including community expenses 
that are not currently available to meet a spenddown, such as housing 
expenses (that is: rent, mortgage, and property taxes), utilities, and 
food.
    Response: Expenses that are used to meet an individual's spenddown, 
whether they are projected or not, must meet the requirements of Sec.  
435.831(e) (``Determination of deductible incurred expenses: Required 
deductions based on kinds of services''). Changes to Sec.  435.831(e) 
are beyond the scope of this regulation.
    Comment: One commenter urged CMS to include in the regulation as 
projectable expenses those that are significant in cost but not 
necessarily predictable month-to-month.
    Response: We are not permitting in the regulation the projection of 
expenses that are not reasonably constant and predicable. As explained 
in the preamble, the rationale for the projection of expenses is that 
the individual has expenses that the State can be reasonably certain 
the individual will actually incur the cost of during a budget period. 
We do not believe that intermittent or sporadic expenses, regardless of 
whether their cost is expected to be high, meet the standard needed to 
predict with reasonable certainty that the individual will incur them 
within a budget period. While we are not authorizing the projection of 
expenses that do not meet a reasonably-constant-and-predictable 
standard, we note that an individual's actually incurred medical and 
remedial expenses that meet the requirements of Sec.  435.831(e) must 
be deducted during a budget period.
    Comment: A couple of commenters requested that CMS specifically 
include section 1115 waivers in the HCBS authorities that are included 
in the regulation.
    Response: As noted previously in this final rule, we are not adding 
additional services to the regulation beyond those that we originally 
proposed, and we reiterate that the services listed in the regulation 
text are not exhaustive. We confirm that a State that has received 
authority under section 1115(a)(2) of the Act to provide to State-plan 
eligible individuals coverage for services for which the State is not 
otherwise eligible for Federal Financial Participation (FFP) could 
project the cost of such services for individuals seeking to qualify as 
medically needy, provided that such services are reasonably constant 
and predictable.
    Comment: One commenter inquired about whether a State would be 
required to define which non-institutional expenses it has determined 
meet the criteria and will be projected.
    Response: States that elect to project institutional expenses are 
currently required to confirm their election in their Medicaid State 
plan. States that elect to project non-institutional expenses in 
accordance with Sec.  435.831(g) of this final rule similarly will be 
required to confirm this election in their Medicaid State plan. States 
also should document each of the non-institutional expenses the State 
has determined will be projected in accordance with the State's 
election under Sec.  435.831(g)(2) of this final rule, and the 
circumstances in which such expenses will be projected, in their 
policies and procedures.
    Comment: Several commenters requested that CMS require States to 
revisit and modernize their MNILs to ensure that individuals have 
enough income available to meet their needs in the community.
    Response: Changes to State MNILs are beyond the scope of this rule.
    Comment: One commenter requested that the regulation include a 
requirement that if a determination is made that an individual no 
longer has reasonably constant and predictable medical expenses that 
meet his or her spenddown obligations, the individual should receive 
timely and advance notice after the renewal, with appeal and aid-paid-
pending rights.
    Response: The circumstances in which Medicaid's notice and fair 
hearing rights apply are set forth in 42 CFR part 431, subpart E. If a 
State's determination that an individual's medical or remedial care 
expenses are no longer constant and predictable implicates one of the 
circumstances described in part 431, subpart E (that is, as a result 
the individual is no longer eligible for the medically needy group), 
the individual will be entitled to advance notice and an opportunity 
for a fair hearing. The requirement for States to provide advance 
notice and fair hearing rights for individuals losing medically needy 
eligibility is not impacted by this final rule.
    Comment: A couple of commenters urged CMS to include a longer 
period for projection of noninstitutional medical expenses, up to 12 
months.
    Response: The projection of expenses is made for the duration of 
the medically needy budget period elected by the State, which, under 
Sec.  435.831(a)(1), cannot be longer than 6 months.
    Comment: A few commenters objected to the expectation described in 
the preamble that States conduct reconciliations at the end of each 
budget period; for example, that they confirm that medically needy 
individuals actually incurred the amounts projected at the beginning of 
the budget periods. One commenter indicated that reconciliation is 
burdensome and could pose a barrier to enrollment. Another commenter 
stated that the reconciliations should occur at renewal instead of the 
end of budget periods.
    Response: We believe reconciliation is necessary to ensure the 
projection process does not result in erroneous grants of eligibility. 
Reconciliation is also required for States that project institutional 
services. We disagree that conducting reconciliation at the point of an 
eligibility renewal is appropriate. It will be important for States to 
identify as quickly as possible medically needy beneficiaries whose 
projected expenses are not actually being incurred to (1) minimize the 
financial burden on the individual at the point of reconciliation, and 
(2) prevent further payment of medical assistance exceeding the amount 
for which the individual is eligible.
    Comment: One commenter requested that CMS include language in the 
regulatory text that prohibits the termination of coverage 
retroactively when individuals are found not to have met spenddown 
obligations after reconciliation.
    Response: Under Sec.  431.211, States generally are not permitted 
to terminate an individual's Medicaid eligibility sooner than 10 days 
after providing notice that the individual is no longer eligible for 
Medicaid. While there are exceptions to this limitation, described in 
Sec.  431.213, none of those exceptions relate to a circumstance in 
which an individual may have received an erroneous grant of Medicaid 
eligibility based on the projection of their medical or remedial care 
expenses. Section 431.211 applies equally to individuals eligible for 
medically needy coverage, and we do not consider it necessary or 
appropriate to repeat this requirement in Sec.  431.831.
    Comment: One commenter recommended that the regulation require only 
documentation of the predictability of prospective bills without 
requiring proof of payment during the budget period in which expenses 
are projected, as there is often a lag in billing times.
    Response: Such an addition to the regulation would not be 
consistent with Federal policy. Expenses for incurred medical or 
remedial care services are

[[Page 22788]]

counted in meeting an individual's spend down amount under Sec.  
435.831, regardless of whether or not the individual actually pays the 
provider for the services. The regulation at Sec.  435.831(f)(5) 
identifies the particular circumstance in which an actual payment must 
also be deducted (specifically, payments made during a current budget 
period for services incurred previous to the budget period and which 
were not deducted as expenses in a previous budget period). In these 
circumstances, States may verify that the payment was made. However, we 
note that the past consistency of payments made by an individual 
seeking to qualify as medically needy by projecting the cost of an 
expense that is reasonably constant and predictable may not be a factor 
in determining the amount to be projected.
    Comment: One commenter inquired about how the new authority to 
project noninstitutional expenses will work in conjunction with the 
``hypothetical spenddown'' process used by States that determine 
eligibility for HCBS through the medically needy eligibility pathway.
    Response: As mentioned previously in this final rule, the 
eligibility group described in Sec.  435.217 (generally referred to as 
``217 group'' beneficiaries) serves individuals who are eligible for 
and will receive section 1915(c) services and who would be eligible if 
institutionalized. While individuals in this group are, as required 
under Sec. Sec.  435.726 and 435.735, subject to post-eligibility 
treatment-of-income (PETI) rules, many States allow 217 group 
beneficiaries to keep all of their income to meet their community 
needs. This is effectuated by a State setting the maintenance allowance 
used in the PETI calculation for 217 group beneficiaries at the income 
eligibility standard for the State's 217 group. For example, if 300 
percent of the supplemental security income (SSI) benefit rate is the 
income eligibility standard for the State's 217 group, the State would 
elect 300 percent of the SSI benefit rate as the maintenance allowance. 
However, individuals who need section 1915(c) services but who have 
incomes in excess of the 217 group income standard commonly must 
qualify as medically needy to access such services, which requires them 
to reduce their income to the State's MNIL, which is typically an 
amount well below the State's maintenance allowance for the 217 group.
    The hypothetical spenddown policy enables States, at their option, 
to project the costs of institutional expenses that would be incurred 
by an otherwise medically needy individual if that individual were 
institutionalized. If the individual would meet their spenddown if they 
were actually in an institution, a State electing this policy could 
deem the individual to be one who would be eligible if 
institutionalized, thereby enabling the individual to be eligible under 
the 217 group. This allows the individual to keep the amount of their 
income equal to the State's section 1915(c) maintenance allowance for 
the 217 group, instead of having to spend down all of their income in 
order to establish eligibility while remaining in the community.
    This option is not impacted by the policy finalized in this 
rulemaking at Sec.  435.831(g), which enables States to project 
reasonably predictable and constant non-institutional medical expenses 
an individual expects to incur. However, we note that there is now a 
more versatile option available to States. As described in ``State 
Flexibilities to Determine Financial Eligibility for Individuals in 
Need of Home and Community-Based Services'' (SMD #21-004, December 7, 
2021), States can adopt income and resource disregards targeted at 
individuals who need HCBS, which includes the authority to target 
disregards at the 217 group, which also enables States to provide HCBS 
through the 217 group to individuals at higher income levels. We are 
available to provide technical assistance to any State interested in 
either of these options.
    After considering the comments received, we are finalizing the 
regulation text at Sec.  435.831(g)(2) as proposed without 
modification. We note that because the effect of this change is 
specific to the computation of medical expenses of noninstitutionalized 
individuals who seek to establish eligibility for Medicaid as medically 
needy, it operates independently from the other provisions of this 
final rule.
2. Application of Primacy of Electronic Verification and Reasonable 
Compatibility Standard for Resource Information (Sec. Sec.  435.952 and 
435.940)
    We proposed revisions to clarify that the regulations at Sec.  
435.952, regarding the use of information to verify an individual's 
eligibility, apply not only to verification of income and non-financial 
information, but also to the verification of resources. The language of 
Sec.  435.952 is written broadly to encompass all factors of 
eligibility, including income and resource criteria, when applicable. 
However, because Sec.  435.952(b) applies specifically to information 
needed by the State to verify an individual's eligibility in accordance 
with Sec.  435.948 (relating to income), Sec.  435.949 (relating to 
information received through the Federal Data Services Hub), or Sec.  
435.956 (relating to non-financial eligibility requirements), some have 
interpreted this requirement not to apply to verification of resources. 
Therefore, we proposed revisions to paragraphs (b) and (c) of Sec.  
435.952 to clarify that this provision applies to any information 
obtained by the State, including resource information. Since Sec.  
435.952 applies to resource information obtained from electronic data 
sources, such as an asset verification system (AVS) described under 
section 1940 of the Act, we also proposed a corresponding technical 
change to add section 1940 of the Act to Sec.  435.940 (regarding the 
basis and scope of the verification regulations). As a reminder, when 
implementing a reasonable compatibility standard for resources, States 
should continue to evaluate resources on an individual basis (subject 
to existing regulations under Sec.  435.602) and not on a household 
basis.
    We received the following comments on these proposed provisions:
    Comment: Commenters overwhelmingly supported the proposed changes 
clarifying that States should, to the extent possible and when 
reasonably compatible, rely on electronic data for verifying resources 
to streamline eligibility processes and alleviate the administrative 
burden for States and individuals. Further, commenters expressed that 
clarifying that the reasonable compatibility standards also apply to 
the verification of resources would increase the efficiency of the 
eligibility determination process for individuals who are age 65 or 
over, are blind, or have a disability (referred to herein as ABD 
individuals), as these individuals generally are required to have 
resources under a certain threshold in order to be eligible for 
Medicaid. Multiple commenters also supported the proposed changes 
because they would reduce churn, where eligible individuals lose 
eligibility (generally for a procedural reason such as not returning 
requested documentation) and then reapply and are determined eligible 
again.
    Response: We appreciate the overwhelming support for the proposed 
revisions at Sec.  435.952. We agree with commenters that applying a 
reasonable compatibility standard will increase the efficiency and 
reduce administrative burden for States when determining eligibility 
for individuals for whom a resource standard is required. States are 
already required to apply a reasonable compatibility standard for 
income for all

[[Page 22789]]

populations under existing regulations at Sec.  435.952. As commenters 
noted and we agree, our proposed policy will also streamline the 
eligibility process for consumers, because individuals will not be 
required to provide additional paper documentation of resources when 
electronic data sources provide information that is reasonably 
compatible with the individual's attestation. This streamlining will 
facilitate enrollment of eligible individuals. For example, if the 
resource threshold for non-MAGI eligibility is $2,000, the individual 
attests to $1,700 in financial assets from two sources and the AVS 
returns a resource amount of $1,850, the attested resource information 
and the resource information returned from the AVS both would be below 
the relevant threshold of $2,000, and therefore considered reasonably 
compatible, and no additional information from the individual would be 
needed. This is true regardless of the other data elements returned by 
the AVS such as the type or name of an asset which differs from the two 
sources listed in the attestation, or if the $1,850 includes a third 
source that was not included in the attestation.
    Comment: A few commenters raised concerns that the proposal would 
increase fraud in the Medicaid program and divert health care dollars 
and services from the neediest Americans. One commenter suggested that 
the rule should require individuals to provide verification of their 
resources rather than comparing self-attested information to data from 
electronic sources. The commenter stated that the proposed changes 
would increase Medicaid enrollment of ineligible individuals. This 
commenter suggested that the rule require individuals to verify their 
financial information, because such a policy would combat intentional 
fraud and remove middle and upper-income individuals from the Medicaid 
program.
    Response: We disagree that the proposed changes will increase fraud 
in the Medicaid program. The proposal would not limit States' statutory 
obligation to verify factors of an individual's eligibility. States 
currently must verify resources using an AVS described in section 1940 
of the Act for individuals whose eligibility is subject to a resource 
test, and nothing in this rulemaking changes that requirement. As 
clarified in this final rule, Sec.  435.952(c)(2) requires States to 
seek additional information, which may include documentation, if 
attested information is not reasonably compatible with information 
obtained through the AVS or other electronic data match. This means 
that if the resource information to which the individual attests is not 
reasonably compatible with information obtained through an electronic 
data match, and thus could affect whether the individual would be 
eligible for Medicaid, the State must seek additional information from 
the individual. If electronic data verifies an individual's 
attestation, there is no need for a State to require additional proof. 
Doing so would only add burden for both the State and the individual 
and diminish program integrity by potentially preventing the enrollment 
of an individual who is eligible for the program. In the final rule, we 
have made minor modifications to Sec.  435.952(c)(1) to make sure it is 
clear that the policy described above is the same for income and 
resources (meaning that resource information must be considered 
reasonably compatible if the resource information obtained 
electronically and the information provided by or on behalf of the 
individual is either at or below the applicable standard or other 
relevant threshold). Thus, we are finalizing the revisions at Sec.  
435.952(b) and (c)(1) as proposed with minor clarifying modifications 
to paragraph (c)(1).
    Comment: One commenter suggested that CMS make our proposed 
modifications to Sec.  435.952(b) and (c)(1) optional for States until 
more extensive work has been done to ensure that electronic data 
sources have sufficient information to verify resources. The commenter 
noted that verification of many types of resources may not be available 
through electronic data sources such as an AVS, for example, non-
homestead real property, automobiles and other vehicles, equipment, 
investments, annuities, and retirement assets.
    Response: We disagree that application of the regulations at Sec.  
435.952 to verification of resources should be at State option. The 
State must attempt to verify and determine eligibility in accordance 
with its verification plan, which may include requesting additional 
information and documentation from the individual in appropriate 
circumstances. Documentation from the individual may be sought to 
verify an individual's assets when electronic data is inconsistent with 
attested asset information as well as when electronic data are not 
available (that is for non-financial assets) and establishing a data 
match would not be effective in accordance with Sec.  435.952(c). The 
verification rules at Sec.  435.952, including the reasonable 
compatibility requirements, reduce burden on both individuals and 
States and thus further the effective and efficient administration of 
the State plan and best interests of beneficiaries. Further, the 
current regulation at Sec.  435.952 is written broadly to encompass all 
factors of eligibility, including resource criteria when applicable. 
The current regulations apply to verification of resources; this final 
rule clarifies the regulations to explicitly reflect as much. Finally, 
all 50 States, the District of Columbia, and Puerto Rico are required 
to implement an AVS to verify financial assets under section 1940 of 
the Act. States would be required to access other electronic data 
sources for asset verification only to the extent that such sources are 
available and would be effective in accordance with Sec.  
435.952(c)(2)(ii).
    Comment: A few commenters expressed concerns about operational and 
technological challenges in implementing this provision within the 
timeframe described in the September 2022 proposed rule, including some 
States that operate an AVS as a separate portal that is not integrated 
into the State's Medicaid eligibility system. Some commenters shared 
that applying a reasonable compatibility standard to resources would 
require a manual process until the State is able to make systems 
changes. Some commenters stated that system enhancements to make a 
reasonable compatibility determination for evaluation of resources 
would require the development of a new interface and new system rules, 
which would be difficult to complete within the 12-month implementation 
timeframe proposed.
    Response: We appreciate the operational concerns expressed by 
commenters and understand that this provision may lead States to 
implement operational changes and system enhancements. It is our 
understanding that if a State is using an AVS through a separate 
portal, there is already a manual process in place. Modification of the 
manual process requires re-training, but not a new interface. If a 
State is using an AVS through an automated interface, it may undertake 
modification of comparison logic and rules, but no new interface and/or 
rules need to be implemented. Because this is an existing requirement, 
and because this final rule does not add any new or additional burden, 
we are not providing additional time for State compliance with this 
provision. We recognize that some States are in the midst of other 
significant system changes and we will continue to work with them to 
ensure compliance with this requirement as soon as possible.

[[Page 22790]]

    Comment: A few commenters expressed concerns about the data quality 
and timeliness of responses from an AVS, which can delay eligibility 
determinations and prevent States from meeting application and renewal 
processing deadlines. Some of these commenters also raised concerns 
that not all financial institutions participate in AVS. A number of 
commenters requested additional technical assistance from CMS on 
details about how AVS programs should be operationalized. For example, 
due to the frequency of the AVS returning missing information or 
delayed information from smaller banks, one commenter requested 
clarification on the timeframe in which the AVS verification is 
considered complete and when to apply the reasonable compatibility 
standard.
    Response: We appreciate the comments regarding data quality and the 
timeliness of the information returned from the AVS. We understand that 
not all asset information available from financial institutions 
participating in the AVS is returned in real time. States may establish 
a reasonable timeframe to review information that is returned from an 
AVS. We understand that most financial institutions respond to AVS 
requests within 5 days, which a State could consider a reasonable 
amount of time to wait for information to be returned before the State 
applies the reasonable compatibility standard. If the State determines 
that the information returned from the AVS is incomplete, or if the AVS 
does not return information within the reasonable timeframe established 
by the State, the State must attempt to determine eligibility in 
accordance with its verification plan, which may include requesting 
additional information and documentation from the individual. We 
continue to be available to provide additional technical assistance to 
States regarding operationalizing of AVS and the application of 
verification rules at Sec.  435.952 to electronic information obtained 
from an AVS.
    Comment: One commenter requested clarification on how reasonable 
compatibility would interact with resource assessments and 90-day asset 
transfers to community spouses.
    Response: We interpret this comment as requesting feedback on how 
resource-related reasonable compatibility would operate in the context 
of the spousal impoverishment rules described in section 1924 of the 
Act (``Treatment of Income and Resources for Certain Institutionalized 
Spouses''), both at the underlying eligibility and redetermination 
phases. Reasonable compatibility, as explained immediately below, is 
sometimes, but not always, relevant under the spousal impoverishment 
rules.
    Section 1924(c)(2) of the Act requires that a State determine the 
amount of countable resources an institutionalized spouse and community 
spouse own, jointly or separately, at the time of the institutionalized 
spouse's Medicaid application. This amount, minus the community spouse 
resource allowance (CSRA) determined under section 1924(f)(2) of the 
Act, is the amount deemed available to the institutionalized spouse and 
compared to the resource standard of the eligibility group for which 
the institutionalized spouse is being evaluated. Effectively, the 
resource standard for the institutionalized spouse is the CSRA plus the 
resource standard for the relevant eligibility group.
    Consider, for example, an institutionalized spouse who is being 
evaluated for the eligibility group described in section 
1902(a)(10)(A)(ii)(V) of the Act (relating to individuals who have been 
in medical institutions for at least 30 consecutive days) in a State in 
which the CSRA is $70,000. The resource standard for the eligibility 
group is $2,000, which effectively means the institutionalized spouse 
will be resource-eligible if the resources owned by the couple are 
equal to or less than $72,000. Reasonable compatibility could be 
applied in making this determination. If the institutionalized spouse 
self-attests that the spouses have $60,000 in a savings account and no 
other countable resources, and the data returned on the couple's 
resources by the State's AVS is $65,000, the State would consider the 
amounts reasonably compatible and determine the institutionalized 
spouse resource-eligible without requiring additional documentation.
    Section 1924(f)(1) of the Act permits the institutionalized spouse 
to transfer their interest in any resources to the community spouse as 
soon as practicable after being determined eligible, as any resources 
still in the institutionalized spouse's name at their first renewal 
will be deemed available to the institutionalized spouse, including 
resources that were considered to be part of the CSRA at application. 
In other words, while each spouse's ownership of resources is not 
relevant at the determination of the institutionalized spouse's 
eligibility, it is relevant at the institutionalized spouse's 
redetermination. Reasonable compatibility would not serve a role in the 
verification of whether the institutionalized spouse maintains 
ownership of resources that were included in the initial calculation of 
resource eligibility.
    We note that section 1924(c)(1) of the Act also requires that a 
State determine the resources owned by the institutionalized spouse and 
community spouse at the former's first continuous period of 
institutionalization. However, while this amount may be relevant in 
determining the CSRA under section 1924(f)(2) of the Act, it is not 
compared to a resource-eligibility standard, which means that 
reasonable compatibility would not apply to a State's verification of 
this figure.
    Comment: One commenter suggested this September 2022 proposed rule 
may be a good opportunity to modernize the MAGI and non-MAGI 
verification plan submission and review process and move towards a web-
based submission process instead of submitting verification plans via 
email.
    Response: We appreciate the comment to improve the verification 
plan submission and review process. The comment is outside the scope of 
this rule. However, we will consider the comments for future 
enhancements of the verification plan review process.
    After considering the comments, we are finalizing the revisions at 
Sec. Sec.  435.940 and 435.952(b) and (c)(1) as proposed. We note that 
because the effect of this change is specific to clarifying current 
regulations regarding States' use of electronic data for verification 
of assets, it operates independently from the other provisions of this 
final rule.
3. Verification of Citizenship and Identity (42 CFR 435.407 and 
457.380)
    A State must verify an applicant's U.S. Citizenship under section 
1902(a)(46)(B) of the Act, implemented at Sec. Sec.  435.406 and 
435.956(a). When a State has not been able to verify an applicant's 
U.S. citizenship through an electronic data match with the Social 
Security Administration (SSA), it must verify the applicant's U.S. 
citizenship using alternative methods described under Sec. Sec.  
435.407 and 435.956(a)(1). Under current regulations, individuals whose 
citizenship is verified based on any of the sources identified in Sec.  
435.407(b)--which include a match with a State's vital statistics 
records or with the U.S. Department of Homeland Security (DHS) 
Systematic Alien Verification for Entitlements (SAVE) program--must 
also provide proof of identity. Verification with a State's vital 
statistics records or DHS SAVE system, like the data match with SSA, 
provides both proof of U.S. citizenship or nationality and reliable 
documentation of personal identity. Once U.S.

[[Page 22791]]

citizenship is verified via a State's vital statistic records or DHS 
SAVE, a State may not require an individual to provide additional proof 
of identity as a condition of eligibility. As such, in the September 
2022 proposed rule, we proposed to move verification of birth with a 
State's vital statistics records and U.S. citizenship with DHS SAVE 
system to the list of primary verifications of U.S. citizenship that do 
not require additional proof of identity, at Sec.  435.407(a)(7) and 
(8) respectively. These changes are incorporated into CHIP through an 
existing cross-reference at Sec.  457.380(b)(1)(i). We also proposed to 
remove the phrase ``at State option'' from Sec.  435.407(b)(2), as use 
of such data match with a vital statistics agency is not voluntary if 
it is available and effective in accordance with Sec.  
435.952(c)(2)(ii).
    We received the following comments on these proposed provisions:
    Comment: The majority of commenters were in support of the proposed 
changes to allow verification of birth with a State vital statistics 
agency and verification of citizenship with DHS SAVE system, or any 
other process established by DHS, as stand-alone evidence of 
citizenship. Commenters agreed the changes would provide additional 
efficiencies in the eligibility determination process and limit the 
burden on applicants to provide documentation of citizenship without 
increasing the risk of erroneous eligibility determinations.
    Response: We appreciate the support for the proposed changes at 
Sec.  435.407(a)(7) and (8). We agree that allowing States to 
electronically verify birth with a State vital statistics agency or to 
verify citizenship with DHS SAVE system will create administrative 
efficiencies for States and eliminate the need for applicants to 
provide unnecessary additional information without an increased risk of 
erroneous eligibility determinations. In section II.A.7. of the 
September 2022 proposed rule, we provided details on the efficacy of 
these data sources, both of which serve as primary information sources, 
one for evidence of U.S. birth (State vital statistics) and the other 
for naturalized U.S. citizenship (DHS SAVE system).
    Comment: A few commenters noted that some States do not have 
systems alignment with vital statistics, so these system changes could 
be costly and time consuming for States to implement.
    Response: We considered these comments and acknowledge that not 
every State may have an existing electronic system that matches an 
applicant's or beneficiary's data with the State vital statistics 
agency. It is optional for Medicaid and CHIP agencies to have a data 
match established with their State vital statistics agency. We note 
that the proposed changes to allow birth verification through an 
electronic match to a State's vital statistics agency, if use of such 
match is available and effective (considering such factors as 
associated costs to the data match, cost of reliance on paper 
documentation, and impact on program integrity) in accordance with 
Sec.  435.952(c)(2)(ii), is not a new requirement for States in this 
final rule. Establishing such a data match with State vital statistics 
agencies also promotes data integrity in the Medicaid and CHIP 
programs. Once such a data match is established, the State must utilize 
it to verify U.S. citizenship when the information from the applicant 
is not able to be verified with SSA or DHS, rather than requesting 
paper documentation from the individual.
    If a State does need to make changes to its eligibility system, FFP 
is available at the 90 percent rate (enhanced FFP or enhanced match), 
in accordance with Sec.  433.112(b)(14), for changes to support 
accurate and timely processing of eligibility determinations, like data 
matching with a State's vital statistics agency, other States' vital 
statistics agencies, or DHS SAVE system. Approval for enhanced FFP or 
enhanced match requires the submission of an Advanced Planning Document 
(APD). A State may submit an APD requesting approval for a 90/10 
enhanced match for the design, development, and implementation of their 
Medicaid Enterprise Systems (MES) initiatives that contribute to the 
economic and efficient operation of the program, including the 
electronic data exchanges discussed here. Interested States should 
refer to 45 CFR part 95, subpart F (Automatic Data Processing Equipment 
and Services--Conditions for Federal Financial Participation (FFP)), 
for the specifics related to APD submission. States may also request a 
75/25 enhanced match for ongoing operations of CMS approved systems. 
Interested States should refer to 42 CFR part 433, subpart C 
(Mechanized Claims Processing and Information Retrieval Systems), for 
the specifics related to systems approval.
    For some States, this rulemaking may require some eligibility and 
enrollment systems changes, changes to operational eligibility 
processes, and/or potential verification plan revisions, at the same 
time when States are facing a significant workload following the 
unwinding of the continuous enrollment condition. Therefore, we are 
providing States with 24 months following the effective date of this 
final rule to demonstrate compliance with the changes. We urge all 
States to comply as soon as possible.
    Comment: One commenter recommended CMS require States to accept 
birth certificates (paper or electronic) issued by the State's vital 
statistics agency as stand-alone evidence of U.S citizenship.
    Response: We thank the commenter for this comment to consider 
allowing a paper copy or electronic version (that is, a PDF obtained 
via email) of a birth certificate from a State's vital statistics 
agency as stand-alone evidence of U.S. citizenship. However, with such 
documentation, it may be difficult for the State to know what, if any, 
set of identifiable information was used to obtain such birth 
certificate or if a data match of such information was required to 
obtain the paper or electronic version of the birth certificate. A 
paper or electronic copy of a birth certificate could be altered, 
causing potential concern for program integrity. By contrast, data 
matching for identity occurs when the State agency uses a set of 
personally identifiable information from the applicant to check against 
the State vital statistics agency for a match, enabling electronic 
verification of birth or U.S. citizenship. As such, we believe this 
provision will enhance program integrity. Evidence of identity as 
specified in Sec.  435.407 would still need to be verified if a paper 
copy or electronic version of a U.S. birth certificate is provided, 
without evidence that verification with a State vital statistics agency 
was completed.
    Comment: One commenter requested that REAL IDs be included in the 
list of documents providing stand-alone evidence of citizenship, since 
they are verified with the State's vital statistics agency.
    Response: This comment is outside the scope of the proposed rule. 
However, it should be noted that if a State requires proof of U.S. 
citizenship for issuing a valid State-issued driver's license, this 
document can serve as stand-alone evidence of citizenship under 
existing regulations at Sec.  435.407(a)(4).
    Comment: Some commenters were concerned that the proposed 
regulation would prohibit States from verifying eligibility, could lead 
to increased fraud and waste in Medicaid and CHIP, and could result in 
ineligible individuals being enrolled in coverage.
    Response: We do not believe this proposal would cause ineligible 
individuals to be enrolled in coverage. In fact, we believe it may 
reduce potential fraud and waste in the

[[Page 22792]]

Medicaid and CHIP programs, thereby improving program integrity. First, 
verifying U.S. citizenship directly through an electronic interface 
with a State vital statistics agency or through DHS SAVE system 
decreases reliance on paper documentation which may be more difficult 
for the individual to obtain, take longer to verify, or have a higher 
chance of being altered. Second, verification of U.S. citizenship with 
a State vital statistics agency or DHS SAVE system requires a robust 
data matching process. The Medicaid or CHIP agency must provide the 
State vital statistics agency with a minimum set of identifiable 
information, including the name, date of birth, and Social Security 
number (SSN) before a response is provided. Similarly, DHS SAVE system 
reviews a set of identifiable information to verify identity before 
providing a response that verifies U.S. citizenship, and in some cases, 
the DHS SAVE system requires additional information or paper 
documentation from the individual to complete the verification. Third, 
State vital statistics agencies record and maintain evidence of birth 
in the State, making them the primary source of evidence of U.S. 
citizenship for many individuals. Likewise, DHS is the agency that 
makes decisions to grant U.S. citizenship for individuals who are 
naturalized U.S. citizens. Thus, the DHS SAVE system is the primary 
Federal data source that is able to verify an individual's attestation 
that they are a naturalized U.S. citizen.
    Comment: A few commenters indicated that only U.S. citizens, not 
noncitizens, should receive government benefits.
    Response: This comment is outside the scope of this proposed rule. 
Changes proposed at Sec.  435.407 apply only to individuals who have 
declared to be U.S. citizens; they do not apply to noncitizens. We note 
that Federal law, such as the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996 (PRWORA), governs eligibility of 
noncitizens for Federal means-tested public benefits, including 
Medicaid and CHIP.
    After consideration of the public comments we received, we are 
finalizing without modification our proposal to move verification 
through a match with a State's vital statistics records or with the DHS 
SAVE program from paragraph (b) to paragraph (a) of Sec.  435.407 as 
proposed. We are also finalizing without modification our proposal to 
remove the phrase ``at State option'' from Sec.  435.407(b)(2), as use 
of such data match with a vital statistics agency is not voluntary if 
it is available and effective in accordance with Sec.  
435.952(c)(2)(ii). We note that because the effect of this change is 
specific to simplifying verification procedures to allow verification 
of citizenship with a state vital statistics agency or SAVE without 
separate identity verification, it operates independently from the 
other provisions of this final rule.

B. Promoting Enrollment and Retention of Eligible Individuals

1. Aligning Non-MAGI Enrollment and Renewal Requirements With MAGI 
Policies (Sec. Sec.  435.907(c)(4) and (d) and 435.916)
    Since the passage of the ACA, States have been required to apply 
streamlined application and renewal processes to applicants and 
beneficiaries whose financial eligibility is based on MAGI. Despite 
their potential benefit, these procedures have been optional for 
individuals excepted from use of the MAGI-based methodologies at Sec.  
435.603(j) (``non-MAGI'' individuals). As discussed in section II.B.1. 
of the September 2022 proposed rule, we proposed to revise requirements 
at Sec. Sec.  435.907 and 435.916 to require that States adopt many of 
the streamlined application and renewal procedures currently required 
for MAGI applicants and beneficiaries for non-MAGI individuals as well. 
We believe these changes promote equity across all populations served 
by Medicaid.
    As noted in the proposed rule, States are currently expected to 
accept applications and supplemental forms needed for individuals to 
apply for coverage on a non-MAGI basis via all modalities identified in 
Sec.  435.907(a), although this is not expressly stated in the 
regulations. Therefore, we proposed to codify in regulation at new 
Sec.  435.907(c)(4) the requirement that any MAGI-exempt applications 
and supplemental forms must be accepted through all modalities 
currently allowed for MAGI beneficiaries. We also proposed at Sec.  
435.916(a)(1) to require that States conduct regularly-scheduled 
eligibility renewals once, and only once, every 12 months for all non-
MAGI Medicaid beneficiaries with one narrow exception (discussed 
below). Next, we proposed to require that States provide MAGI-excepted 
beneficiaries whose eligibility cannot be renewed based on information 
available to the State with: Sec.  435.916(b)(2)(i), (1) a pre-
populated renewal form that contains information available to the 
agency; and (2) a minimum of 30 calendar days from the date the agency 
sends the renewal form to return the signed renewal form along with any 
required information; and at Sec.  435.916(b)(2)(iii), (3) a 90-day 
reconsideration period for individuals who return their renewal form 
after the end of their eligibility period and following termination for 
failure to return the form. We also proposed at Sec.  435.916(b)(2)(iv) 
to eliminate the State option to require an in-person interview as part 
of the application and renewal processes for non-MAGI beneficiaries. 
States currently are required to comply with each of these policies for 
MAGI-based individuals.
    Lastly, in the September 2022 proposed rule, we proposed several 
technical changes, on which we did not receive any comments, including: 
(1) at proposed Sec.  435.916(b)(2)(i)(B) to clarify that the 30 
calendar days that States must provide beneficiaries to return their 
pre-populated renewal form begins on the date the State sends the form; 
(2) at proposed Sec.  435.916(b)(2)(iii) to specify explicitly our 
current policy that the returned renewal form and information received 
during the reconsideration period serve as an application and require, 
via cross reference to Sec.  435.912(c)(3) of the current regulation, 
that States determine eligibility within the same timeliness standards 
applicable to processing applications, that is, 90 calendar days for 
renewals based on disability status and 45 calendar days for all other 
renewals; (3) at proposed Sec.  435.916(d)(2) to ensure that, prior to 
terminating coverage for an individual determined ineligible for 
Medicaid, States determine eligibility for CHIP and potential 
eligibility for other insurance affordability programs (that is, BHP 
and insurance affordability programs available through the Exchanges) 
and transfer the individual's account in compliance with the procedures 
set forth in Sec.  435.1200(e); and (4) at proposed Sec.  
435.912(c)(4), with a cross reference in proposed Sec.  435.916(c), to 
establish time standards for States to complete renewals of 
eligibility.
    This final rule redesignates several provisions from Sec.  435.916 
to the new Sec.  435.919 rule, as discussed in section II.B.2. of this 
preamble. As a result, several paragraphs of Sec.  435.916 are 
renumbered in this final rule. For example, Sec.  435.916(g) (relating 
to accessibility of renewal forms and notices) is redesignated to Sec.  
435.916(e) of this final rule. We did not receive any comments on this 
change. However, as a reminder, this provision requires State Medicaid 
programs to ensure that any renewal form or notice be accessible to 
persons who have limited English proficiency and persons with 
disabilities, consistent with Sec.  435.905(b). Further, State Medicaid

[[Page 22793]]

programs are separately required under Federal civil rights laws to 
conduct their programs and activities in an accessible manner. State 
agencies that receive Federal financial assistance must take reasonable 
steps to ensure meaningful access to individuals with limited English 
proficiency, which may include provision of language assistance 
services (section 1557 of the ACA, 42 U.S.C. 18116; Title VI of the 
Civil Rights Act of 1964, 42 U.S.C. 2000d et seq.). States are also 
required to take appropriate steps to ensure effective communication 
with individuals with disabilities, including provision of appropriate 
auxiliary aids and services (section 1557; section 504 of the 
Rehabilitation Act of 1973, 29 U.S.C. 794; and Title II of the 
Americans with Disabilities Act, 42 U.S.C. 12131 et seq.).\10\ Nothing 
in this final rule changes these requirements.
---------------------------------------------------------------------------

    \10\ For more information, see U.S. Dept of Health & Human 
Servs., Re: Ensuring Language Access for Limited English Proficient 
(LEP) Individuals and Effective Communication for Individuals with 
Disabilities During the States' Unwinding of the Medicaid Continuous 
Enrollment Condition (Apr. 4, 2023), https://www.hhs.gov/sites/default/files/medicaid-unwinding-letter.pdf.
---------------------------------------------------------------------------

    We note that the requirements in part 435, subpart J, apply 
specifically to the 50 States, the District of Columbia, the Northern 
Mariana Islands, and American Samoa and through a cross reference at 
Sec.  436.901 they also apply to Guam, Puerto Rico, and the Virgin 
Islands (with the exception of Sec.  435.909). The revisions to 
Sec. Sec.  435.907 and 435.916, and all other revisions to part 435, 
subpart J, included in this rule, apply equally to the 50 States, the 
District of Columbia, and all territories.
    We received the following comments on these proposed provisions:
    Comment: Commenters generally supported the alignment of the non-
MAGI with MAGI processes proposed under Sec. Sec.  435.907 and 435.916, 
including allowing non-MAGI individuals to apply and renew through all 
modalities, renewing eligibility no more frequently than every 12 
months, providing a pre-populated renewal form, giving enrollees 30 
days to respond, and allowing a 90-day reconsideration period. 
Commenters noted that these proposed requirements, which originated in 
the ACA for the MAGI-based populations, have all proven possible to 
implement and effective at reducing churn of beneficiaries on and off 
Medicaid. Furthermore, non-MAGI populations tend to have fixed, routine 
sources of income, and so tend to stay consistently eligible, and yet, 
commenters asserted, States have not been allowed to extend to them the 
simplified enrollment and renewal processes available to MAGI 
populations that would help prevent churn. Therefore, commenters 
support now extending these policies to the non-MAGI groups as proposed 
in the September 2022 proposed rule.
    Other commenters pointed out that the proposed changes to align 
renewal requirements for MAGI and non-MAGI individuals would reduce 
administrative burdens on State Medicaid agencies, by creating one 
simplified set of renewal rules for State eligibility and enrollment 
call center workers, enrollees, assisters, and other interested parties 
to understand and implement. One commenter also highlighted that the 
September 2022 proposed rule would extend some of the requirements for 
applications to renewals, such as at proposed Sec.  435.916(b)(2)(iii), 
which, via cross reference to Sec.  435.912(c)(3) of the current 
regulation, would require that States determine eligibility at renewal 
within the same timeliness standards applicable to processing 
applications; this would allow States to consolidate eligibility and 
enrollment information for each applicant or beneficiary in one case 
record.
    Response: We agree with these commenters that aligning these 
application and renewal procedures will promote continuity of coverage, 
decrease churn, and simplify the renewal process for non-MAGI 
beneficiaries in a manner that is in the best interest of 
beneficiaries, consistent with section 1902(a)(19) of the Act. We note 
that this alignment will be particularly beneficial to individuals in 
households in which some individuals are eligible based on MAGI and 
others are eligible on a non-MAGI basis, as non-MAGI household members 
may otherwise be subject to more burdensome administrative 
requirements. We also believe alignment will reduce administrative 
burden for States. We want to clarify that, under the current 
regulations, States are permitted, at their option, to apply to their 
non-MAGI populations the application and renewal procedures we proposed 
to require in this rulemaking. The proposed revisions at Sec. Sec.  
435.907(c)(4) and 435.916(a)(1) and (b)(2)(i), (iii), and (iv), which 
we are finalizing as proposed in this final rule, will make it 
mandatory for States to do so.
    Comment: One commenter noted that the proposal at Sec.  
435.907(c)(4), requiring that States accept all MAGI-exempt 
applications and supplemental forms provided by applicants seeking 
coverage on a non-MAGI basis through all the modalities allowed for 
MAGI individuals, would require substantial systems changes to 
implement, as currently non-MAGI renewals are processed in a separate 
system from MAGI renewals, and such updates would take longer than 12-
18 months given States' unwinding priorities.
    Response: We understand that State system updates needed to accept 
applications and supplemental as well as renewal forms via additional 
modalities will take time and resources. However, as this is a 
longstanding policy being codified through rulemaking, we find this to 
be a reasonable investment given the reduction in beneficiary burden 
that will result from being able to submit required information in 
whatever modality best fits the needs of the applicant or beneficiary. 
CMS has been working with States to enforce this requirement, and those 
not already in compliance now have a mitigation plan approved by CMS to 
come into compliance.
    Additionally, while encouraged, there is no requirement for States 
to integrate non-MAGI with MAGI systems but rather to make non-MAGI 
applications and renewals possible through the same modalities--for 
example, paper, phone, web-based--as MAGI applications and renewals. We 
do recognize the operational challenges States face and are finalizing 
these requirements so that they are effective upon the effective date 
of this rule, except as otherwise required (such as by the CAA, 2023). 
However, States will have 36 months after the effective date of this 
rule to complete all system and operational changes necessary for 
compliance. This implementation timeframe will permit States to 
complete most unwinding and mitigation-related activities and then have 
adequate time to complete any additional system changes needed for full 
compliance with the requirements to align non-MAGI application and 
renewal requirements with those applicable to MAGI beneficiaries.
    We remind States that enhanced FFP is available, in accordance with 
Sec.  433.112(b)(14), at a 90 percent matching rate for the design, 
development, or installation of improvements to Medicaid eligibility 
determination systems, in accordance with applicable Federal 
requirements. Enhanced 75 percent FFP is also available for operations 
of such systems, in accordance with applicable Federal requirements.
    Comment: Some commenters specifically supported the proposed 
limitation on renewals to no more than once every 12 months at Sec.  
435.916(a)(1),

[[Page 22794]]

stating this would help improve health equity by ensuring that 
vulnerable populations maintain their Medicaid coverage. Commenters 
stated that more frequent renewals increase the number of eligible 
individuals who lose coverage, while conducting eligibility 
determinations only once every 12 months will reduce churn and provide 
non-MAGI beneficiaries with greater stability of coverage. While 
generally supporting the proposal requiring States to conduct regularly 
scheduled renewals once, and only once, every 12 months, some 
commenters requested that the Medically Needy population be excluded 
from this requirement, because the determination of medical expenses 
that individuals must incur to establish eligibility must be completed 
more frequently than once every 12 months.
    Response: We appreciate the support for this proposed provision. 
With respect to the request to exempt medically needy beneficiaries 
from the limitation on renewals to once every 12 months, we note that a 
State's medically needy budget period and its renewal schedule do not 
need to be identical. Under Sec.  435.831(a)(1) of the current 
regulations, States can adopt a budget period between 1 and 6 months. 
While States need to verify that individuals have met their spenddown 
every budget period, they do not need to recalculate their spenddown 
amount every budget period. The spenddown amount will remain constant 
until the next renewal unless the individual experiences a change in 
circumstances that might impact their eligibility. For example, a 
number of States currently limit renewals for their medically needy 
populations to once every 12 months, regardless of the length of their 
budget periods. Likewise, we do not know of any States with a 1-month 
budget period that conduct a full renewal of eligibility for medically 
needy beneficiaries every month on the same timeline. Therefore, we do 
not agree that alignment of regular renewals with the budget period is 
needed, and we are finalizing the requirement at Sec.  435.916(a)(1) as 
proposed to permit renewals no more frequently than once every 12 
months, with the limited exception discussed later in this final rule.
    Comment: A number of commenters supported our proposal at 
Sec. Sec.  435.907(d)(2) and 435.916(b)(2)(iv) to eliminate in-person 
interviews for non-MAGI eligible enrollees. They noted that the 
proposed change would reduce burden on enrollees, especially those with 
difficulties with activities of daily living, disabilities, behavioral 
health issues, and any individuals who are hampered by work schedules, 
inability to obtain childcare, or lack of transportation.
    Response: We agree and appreciate the support for this proposed 
provision. We believe in-person interview requirements create a barrier 
for eligible individuals to obtain and maintain coverage without 
yielding any additional information that cannot be obtained through 
other modalities, particularly for individuals without access to 
reliable transportation or a consistent schedule.
    Comment: A few commenters requested that CMS extend the proposed 
prohibition on mandatory in-person interviews at Sec. Sec.  435.907(d) 
and 435.916(b) to include all interviews, including phone and video 
interviews, for both non-MAGI and MAGI beneficiaries, because they 
create significant barriers. These commenters explain that a phone or 
video interview is no more necessary than an in-person interview. One 
commenter explained that, in States that currently require interviews 
as a condition of eligibility, individuals are allowed to complete the 
interview by phone, so unless the interview requirement is eliminated 
completely, this proposed change is unlikely to reduce procedural 
denials based on failure to complete the interview.
    Response: We appreciate and share the commenters' desire to remove 
unnecessary barriers to retaining enrollment for non-MAGI 
beneficiaries. We are finalizing our proposal to prohibit in-person 
interviews for non-MAGI beneficiaries as proposed. If any States use 
phone or video interviews to fulfill the requirement of an in-person 
interview, these interview types are also prohibited.
    Comment: One commenter stated their support for requiring that 
States provide non-MAGI beneficiaries with prepopulated renewal forms 
at Sec.  435.916(b)(2)(i)(A), which should assist many individuals who 
have difficulties with eyesight, cognition, and language barriers that 
interfere with understanding complex instructions. One commenter 
supported CMS requiring a prepopulated form because it will reduce the 
burden on people with disabilities, their families, and service 
providers and will also reduce burden on legal services and other 
assisters who assist individuals seeking coverage across the different 
Medicaid eligibility pathways. Another commenter supported CMS 
requiring States to give beneficiaries a prepopulated renewal form, 
which would make it much easier for beneficiaries to complete the forms 
and reduce risk of errors. Another commenter proposed that CMS should 
make the proposal to require a prepopulated renewal form for non-MAGI 
beneficiaries a State option. This commenter stated that if CMS were to 
finalize the requirement as proposed, States would need funding to 
support system changes as well as significant technical assistance with 
implementation.
    Response: We appreciate the support and agree that using a 
prepopulated form will reduce burden and the risk of errors both when a 
beneficiary completes the form and when the State enters information 
into its system. We understand that system updates needed to implement 
the form will take time and resources. However, we find this to be a 
reasonable investment given the reduction in both beneficiary and State 
burden that will result, as beneficiaries will no longer be required to 
gather and resubmit, and State workers will not need to re-enter, 
information already available to the State or already in the system. 
Again, we remind States that enhanced FFP is available, in accordance 
with Sec.  433.112(b)(14), at a 90 percent matching rate for the 
design, development, or installation of improvements to Medicaid 
eligibility determination systems, in accordance with applicable 
Federal requirements. Enhanced FFP is also available at a 75 percent 
matching rate, in accordance with Sec.  433.116, for operations of such 
systems, in accordance with applicable Federal requirements. Receipt of 
these enhanced funds is conditioned upon States meeting a series of 
standards and conditions to ensure investments are efficient and 
effective.
    For the reasons noted, we are finalizing Sec.  435.916(b)(2)(i)(A), 
which requires States to send a prepopulated renewal form when the 
State needs additional information to renew a beneficiary's 
eligibility, as proposed.
    Comment: One commenter indicated their support for the 
determination of Medicaid eligibility to be done through various State 
applications, including the use of the Supplemental Nutrition 
Assistance Program (SNAP) benefits assessment, to automatically 
supplant the renewal process and use that data to determine eligibility 
renewals.
    Response: Although we support the development of integrated 
applications that enable individuals to apply for multiple programs 
using a single application, we did not propose to permit States to use 
the applications used by SNAP or any other program in lieu of a 
Medicaid application or renewal form. Accordingly, this comment is 
outside the scope of this rulemaking. For more information about

[[Page 22795]]

States' ability to integrate SNAP and Medicaid applications, see the 
August 31, 2015, SHO letter (SHO #15-001) ``RE: Policy Options for 
Using SNAP to Determine Medicaid Eligibility and an Update on Targeted 
Enrollment Strategies.'' \11\
---------------------------------------------------------------------------

    \11\ https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SHO-15-001.pdf.
---------------------------------------------------------------------------

    Comment: Some commenters expressed concern that States with 
integrated eligibility systems would be challenged to implement the 
policies proposed at Sec.  435.916(b)(2)(i)(B) and (C), to require that 
States provide non-MAGI beneficiaries with at least 30 calendar days to 
return the prepopulated renewal form and other requested information, 
as well as a 90 calendar day reconsideration period following 
termination due to failure to return the renewal form or requested 
information, because these timelines do not align with the time frames 
for SNAP and Temporary Assistance for Needy Families (TANF). Commenters 
believe that lack of alignment with these programs could lead to 
beneficiary confusion and increase the risk of a higher rate of 
procedural denials. Other commenters encouraged CMS to find a solution 
to the different timeframes between Medicaid and SNAP for beneficiaries 
to return required additional information and offer a waiver or other 
option to States that jointly administer their Medicaid and SNAP 
programs to adjust this requirement. Lastly, some commenters opposed 
the proposal to apply the renewal processes at current Sec.  
435.916(a)(3) to non-MAGI beneficiaries due to concerns that States 
with integrated eligibility systems would have trouble implementing a 
prepopulated renewal form for Medicaid when the same form is used for 
other programs like SNAP and TANF that use different income counting 
methodologies.
    Response: We acknowledge the important work that many States have 
undertaken to establish integrated eligibility systems and simplified 
notices across their health and human service programs, like Medicaid, 
CHIP, SNAP, and TANF. However, we believe it is equally important to 
provide the same streamlined renewal processes for all Medicaid 
beneficiaries, regardless of the financial methodologies used to 
determine their eligibility. This is particularly important for 
households with both MAGI and non-MAGI Medicaid beneficiaries, for whom 
unaligned processes could increase confusion and result in increased 
procedural terminations.
    Further, we have worked with other human service programs, 
including SNAP, to better understand their requirements and to identify 
areas for potential alignment. While we recognize the challenges that 
States face in developing integrated eligibility and enrollment systems 
serving multiple programs, we do not believe that the processes 
proposed in Sec.  435.907(c)(4) or Sec.  435.916 of the September 2022 
proposed rule increase the challenges States face in aligning their 
Medicaid and CHIP renewal processes with other human service programs 
like SNAP. CMS is available to provide technical assistance to States 
attempting to develop such an integrated system.
    Comment: A few commenters urged CMS to consider extending the time 
period for all beneficiaries to provide requested information at 
renewal from a minimum of 30 calendar days to 45 or 60 calendar days. 
Others also supported potentially increasing the timeframe available to 
non-MAGI beneficiaries to 75 calendar days. These commenters were 
concerned that 30 calendar days may not be enough time for current 
beneficiaries to gather requested information. Commenters were 
concerned that while individuals who may not respond within the 30 days 
will have a reconsideration period after termination, they may still 
experience gaps in coverage that could potentially be avoided if they 
had more time initially to provide requested information.
    Response: We appreciate commenters' concerns to ensure that current 
beneficiaries have sufficient time to respond and prevent interruptions 
to coverage. We note that States continue to retain the ability to 
allow additional time beyond the required minimum of 30 calendar days 
for both MAGI and non-MAGI beneficiaries. However, our goal is to align 
requirements for non-MAGI beneficiaries with those currently applicable 
for MAGI beneficiaries. We believe the benefits of aligning the renewal 
requirements for all beneficiaries will operationally simplify the 
process for States and reduce confusion for beneficiaries. We did not 
propose any changes to the amount of time required for MAGI 
beneficiaries to return requested information at renewal at Sec.  
435.916(a)(3)(i)(B) but may consider extending the minimum timeframe 
beyond 30 calendar days for both MAGI and non-MAGI beneficiaries in 
future rulemaking. We are finalizing 30 calendar days for non-MAGI 
beneficiaries as proposed.
    Comment: While most commenters supported requiring a 
reconsideration period after the date of termination, a few believed 
that 90 calendar days for the reconsideration period proposed at Sec.  
435.916(b)(2)(i)(C) is too long and could lead to increased recoupments 
from providers. Instead, they suggested 60 calendar days to ensure 
beneficiaries have adequate time to receive notices and reply as well 
as to align with the Marketplaces' special enrollment period (SEP) 
timeframes.
    Response: In proposing 90 calendar days for the reconsideration 
period, our goal was to provide an equitable experience for all 
Medicaid beneficiaries, regardless of the financial methodologies used 
to determine their eligibility, and to eliminate the confusion that may 
result from different renewal timeframes for different household 
members who are subject to different methodologies. The 90 calendar 
days for the reconsideration period proposed for non-MAGI beneficiaries 
would achieve alignment with the current requirement that provides a 
90-day reconsideration period for MAGI beneficiaries.
    We do not believe that requiring States to provide non-MAGI 
beneficiaries who have been terminated for procedural reasons with 90 
calendar days for the reconsideration period to return their renewal 
form and any additional documentation needed will have any impact on 
recoupment from providers. Indeed, because a reconsideration period 
increases the number of terminated individuals who successfully 
reenroll in the program relatively quickly, provider reimbursement is 
likely to benefit.
    The reconsideration period after termination should not be confused 
with the amount of time individuals have to return a renewal form and 
other needed documentation before their eligibility period expires, 
which we proposed to be 30 days at Sec.  435.916(b)(2)(i)(B). We 
appreciate the suggestion to align with the Marketplace, but in this 
case, we believe the Medicaid standard is preferable. We do not believe 
that lack of alignment between Medicaid's reconsideration period and 
the 60-day Special Enrollment Period (SEP) poses a significant problem 
for coordination between these programs and are not aware of any 
challenges that the current 90 calendar days for the reconsideration 
period for MAGI beneficiaries poses for coordination between the 
Marketplace and Medicaid.
    After considering these comments, we are finalizing Sec. Sec.  
435.907(c)(4) and (d) and 435.916 as proposed. We note that

[[Page 22796]]

these changes to eligibility determination processes for non-MAGI 
populations require States to: conduct renewals no more than once every 
12 months; use prepopulated renewal forms; provide a minimum 90-day 
reconsideration period after termination for failure to return 
information needed to redetermine eligibility; eliminate mandatory in-
person interviews at application and renewal; and limit requests for 
information on a change in circumstances to information on the change, 
operate independently from the other provisions of this final rule. 
Because each of these changes individually serves to reduce the burden 
on applicants and beneficiaries associated with eligibility 
determinations, we believe they also operate independently from one 
another.
2. Acting on Changes in Circumstances Timeframes and Protections 
(Sec. Sec.  435.916, 435.919, and 457.344)
    In the September 2022 proposed rule, we proposed to add a new Sec.  
435.919 to clearly define States' responsibility to act on changes in 
circumstances. We proposed to revise and redesignate Sec.  435.916(c) 
(related to procedures for reporting changes) and (d) (related to 
promptly acting on changes in circumstances and scope of 
redeterminations based on changes in circumstances) of the current 
regulations to new Sec.  435.919. In addition to modifying these 
existing requirements, we proposed to describe the steps that States 
must take when reevaluating eligibility based on changes in 
circumstances reported by beneficiaries and when reevaluating 
eligibility based on changes in circumstances received from a third-
party data source. We also proposed that States must provide 
beneficiaries with at least 30 calendar days to respond to requests for 
additional information and 90 calendar days for the reconsideration 
period during which beneficiaries who failed to provide requested 
information related to a change in circumstances can still do so and 
have their eligibility reinstated if eligible. Finally, we modified 
existing language at Sec.  435.916(d)(2), redesignated to proposed 
Sec.  435.919(b)(3), to clarify that States must act on anticipated 
changes at an appropriate time (instead of the appropriate time). 
Generally, these proposed provisions were incorporated into the CHIP 
regulations at new Sec.  457.344.
    We received the following comments on these proposals:
    Comment: One commenter requested clarification regarding proposed 
Sec.  435.919(a) for States ``to ensure that beneficiaries understand 
the importance of making timely and accurate reports of changes in 
circumstances that may affect their eligibility'' and CMS' expectations 
for States to meet these requirements. The commenter expressed concern 
that States that currently provide information regarding reporting 
requirements via the rights and responsibilities to which individuals 
agree when submitting their initial application, and which are repeated 
in the notice informing individuals of their eligibility, may not 
provide sufficient notice.
    Response: As discussed in section II.B.2. of the September 2022 
proposed rule, we proposed redesignating current requirements at Sec.  
435.916(c) related to procedures for reporting changes to proposed 
Sec. Sec.  435.919(a) and 457.344(a). It was not our intent to apply 
new requirements about the procedures States must have in place to 
communicate with Medicaid and CHIP beneficiaries on accurate and timely 
reporting for changes in circumstances that may affect their 
eligibility. Providing clear information about this responsibility in 
the description of the rights and responsibilities provided to 
applicants and individuals determined eligible for coverage can satisfy 
this requirement. States continue to have flexibility to communicate 
this information through other avenues as well.
    Comment: We received many comments regarding the proposed processes 
for acting on changes in circumstances at Sec. Sec.  435.919(b) and 
457.344(b). Although commenters supported the alignment between 
Medicaid and CHIP when States act on changes in circumstances, 
commenters generally opposed the proposed approach as being overly 
prescriptive and complex for State eligibility workers to implement. 
Some commenters raised concerns that the number of decision points, 
such as when a request for additional information may be needed and 
what actions States must take in the different scenarios, would 
increase the likelihood of errors. Others expressed concerns that the 
proposed process would increase administrative burden by requiring 
States to evaluate each reported change to determine whether it might 
impact eligibility prior to processing the information. Commenters 
recommended applying a single process to all changes in circumstances 
rather than differentiating based on the source that reports the 
change.
    Response: We appreciate the feedback from commenters about the 
potential administrative challenges of implementing Sec. Sec.  
435.919(b) and 457.344(b) as proposed. As discussed in section II.B.2. 
of the September 2022 proposed rule, our intent in establishing a new 
section in part 435 (Sec.  435.919) (and a corresponding new section in 
part 457 (Sec.  457.344)) was not to create a set of new requirements 
that States must follow when they receive information about a change in 
circumstances. Our intent was to clarify existing requirements to 
ensure that States act on changes timely and in a manner that protects 
the coverage of beneficiaries who remain eligible (thereby, reducing 
unnecessary procedural terminations). Rather than increasing 
administrative burden by requiring States to establish a host of new 
actions and decision points within their process for redetermining 
eligibility based on changes in circumstances, the clear set of 
required actions described in this final rule is intended to help 
States to streamline their processes and reduce errors.
    We agree with commenters that the structure of proposed Sec.  
435.919(b), differentiating between changes reported by a beneficiary 
and changes reported by a third-party data source, with additional 
requirements for anticipated changes known to the agency, appears to 
create varied and potentially conflicting requirements for different 
types of changes and may cause confusion. Therefore, in this final 
rule, we revise Sec.  435.919(b) to streamline these requirements and 
establish a single set of actions that are required when a State 
receives reliable information about a change in circumstances that may 
impact a beneficiary's eligibility.
    In this final rule, we combined proposed Sec.  435.919(b)(1)(i), 
requiring the State to evaluate whether a beneficiary-reported change 
may impact that beneficiary's eligibility, with the requirement 
proposed at Sec.  435.919(b)(2)(i) that the State evaluate whether the 
information received from a third-party data source was accurate and if 
accurate, whether it may impact a beneficiary's eligibility. As such, 
we are finalizing Sec.  435.919(b) to require States to promptly 
redetermine eligibility between regularly scheduled renewals, whenever 
they have obtained or received reliable information about a change in a 
beneficiary's circumstances that may impact the beneficiary's 
eligibility for Medicaid, the amount of medical assistance for which 
the beneficiary is eligible, or the beneficiary's premiums or cost 
sharing charges. Reliable information includes changes reported by 
beneficiaries or

[[Page 22797]]

their authorized representatives, as well as information obtained from 
third-party data sources identified in States' verification plans that 
the State has determined to be accurate.
    At Sec.  435.919(b)(1) we are finalizing the requirement (proposed 
in the same paragraph) that in redetermining eligibility based on a 
change in circumstances, the agency must complete the redetermination 
based on available information, whenever possible. If the State does 
not have all information needed to complete a redetermination, it must 
request needed information from the beneficiary in accordance with 
Sec.  435.952(b) and (c).
    At Sec.  435.919(b)(2) and (3) of this final rule, we combine the 
requirements proposed at Sec.  435.919(b)(1)(iii) and (b)(2)(iii), to 
describe the requirements when a reported change may result in 
additional medical assistance (including lower premiums and/or cost 
sharing charges). If the change was reported by the beneficiary, as 
described at Sec.  435.919(b)(2)(i) of this final rule, prior to 
furnishing additional medical assistance, the State must verify the 
change in accordance with its verification plan. However, if the change 
was obtained from a third-party data source, as described at Sec.  
435.919(b)(2)(ii) of this final rule, the State may verify the 
information with the beneficiary prior to completing the determination. 
States are not required to verify such changes with the beneficiary. 
Proposed Sec.  435.919(b)(1)(iii) and (b)(2)(iii) also included a 
prohibition against terminating the coverage of a beneficiary who fails 
to respond to a request for information to verify their eligibility for 
increased medical assistance. This requirement is finalized at Sec.  
435.919(b)(3).
    We are finalizing, at Sec.  435.919(b)(4), the requirement proposed 
at Sec.  435.919(b)(2)(ii) when third-party data indicates a change 
that would adversely impact a beneficiary's eligibility. Prior to 
taking adverse action based on information from a third-party data 
source, the State must provide the beneficiary with an opportunity to 
furnish additional information to verify or dispute the information 
received. An adverse action, as defined at Sec.  431.201, includes a 
termination, suspension, or reduction in covered benefits, services, or 
eligibility, or an increase in premiums or cost sharing charges. At 
Sec.  435.919(b)(5), we are finalizing the required actions proposed at 
Sec.  435.919(b)(4), when a State determines that a reported change in 
circumstances results in an adverse action. These include compliance 
with the requirements to consider eligibility on other bases, determine 
potential eligibility for other insurance affordability programs, and 
provide advance notice and fair hearing rights.
    We complete the revisions to Sec.  435.919(b) with a requirement at 
paragraph (b)(6) regarding anticipated changes. This requirement is 
finalized as proposed at Sec.  435.919(b)(3), except we added a cross-
reference to paragraphs (b)(1) through (5) to clarify that the same 
steps apply when States are reevaluating a beneficiary's eligibility 
based on an anticipated changes in circumstances. Lastly, in this final 
rule, we revise the CHIP regulations at Sec.  457.344 to correspond 
with the modifications at Sec.  435.919, as discussed previously in 
this final rule, and ensure continued alignment between Medicaid and 
CHIP. However, we note that there are some minor differences at Sec.  
457.344 to account for Medicaid requirements that do not apply to CHIP, 
such as considering eligibility on all other bases.
    Comment: One commenter sought clarification on what would be 
considered ``additional medical assistance'' for purposes of acting on 
changes in circumstances under proposed Sec.  435.919(b). Some 
commenters also had questions about whether moving individuals between 
eligibility groups, when the move results in no change to the benefits 
to which the individual is entitled, should be considered ``additional 
medical assistance'' when acting on changes in circumstances.
    Response: The term ``additional medical assistance'' at Sec.  
435.919(b)(2), as well as the term ``additional child or pregnancy-
related assistance'' at Sec.  457.344(b)(2), mean any practical change 
to an individual's coverage that is beneficial to the individual. For 
example, an individual moving from an eligibility group provided with 
limited benefits (for example, the eligibility group limited to family 
planning and related services at Sec.  435.214) to another eligibility 
group that receives a comprehensive benefit package (for example, the 
eligibility group for parents and other caretaker relatives at Sec.  
435.110) would be considered to be receiving ``additional medical 
assistance'' because the individual is now entitled to more benefits. 
Another example would be a reduction or elimination of cost sharing or 
premiums, applied to a beneficiary who experienced a reduction in 
income. We also consider movement between eligibility groups that does 
not result in a practical change in benefits to be included within the 
term ``additional medical assistance'' for the purposes of meeting the 
requirements under proposed Sec. Sec.  435.919(b)(2) and 457.344(b)(2).
    Comment: Some commenters had questions about what States should do 
under proposed Sec.  435.919 when a reported change could result in an 
individual moving to a different eligibility group, particularly when 
the movement between eligibility groups may not impact benefits. 
Commenters sought clarification on whether States should reach out to 
beneficiaries regarding changes in circumstances that would result in a 
beneficiary changing eligibility groups and what to do if the 
beneficiary fails to respond to requests for additional information. 
One commenter recommended that States be allowed to move the individual 
between eligibility groups even if the individual does not respond to 
requests for information.
    Response: States are required, as described at Sec. Sec.  
435.919(b) and 457.344(b) of this final rule, to redetermine 
eligibility whenever they receive information about a change in 
circumstances that may impact a beneficiary's eligibility. We recognize 
that some changes in circumstances result in an adverse action, making 
the beneficiary ineligible or eligible for less medical assistance 
(that is, fewer benefits or higher cost sharing), some changes in 
circumstances result in eligibility for additional medical assistance, 
and other changes in circumstances necessitate a change from one 
eligibility group to another without impacting the medical assistance 
available to the beneficiary. In cases where a change in circumstances 
has no practical impact on a beneficiary's coverage, for example, 
eligibility for a different group with no change in coverage, the 
requirements described at Sec. Sec.  435.919(b)(2) and 457.344(b)(2) of 
this final rule apply. The State must attempt to act on the change, if 
reported by the beneficiary, consistent with applicable verification 
requirements (Sec. Sec.  435.940 through 435.960 for Medicaid and Sec.  
457.380 for CHIP) and the State's verification plan. If the State is 
able to verify the information, then the beneficiary would be moved to 
the new group. If the change was provided by a third-party data source, 
the State may verify the change with the beneficiary. If the State 
elects to verify information with the beneficiary and the beneficiary 
confirms that the change is correct, then the beneficiary would also be 
moved to the new group. However, if the State is unable to verify the 
information with the beneficiary, the individual must remain in their 
current eligibility group; consistent with

[[Page 22798]]

Sec. Sec.  435.919(b)(3) and 457.344(b)(3), the individual's 
eligibility may not be terminated for failure to respond to a request 
for additional information.
    Comment: Some commenters noted a lack of clarity in the proposed 
rule about when information from a third-party data source would be 
considered ``reliable'' consistent with proposed Sec.  435.919(b)(2)(i) 
and encouraged CMS to provide additional guidance on the data sources 
or types of information that could be considered reliable.
    Response: We expect States to make eligibility determinations for 
Medicaid and CHIP based on the most current and reliable information 
available to them. Information available in a beneficiary's case record 
or other more recent information available to the State, including 
information from electronic data sources or other agencies such as 
SNAP, would be considered reliable for this purpose. For example, if a 
State receives information from a third-party data source, such as 
Equifax, indicating a change in a beneficiary's income, but that 
information is older than other income information the State received 
from another agency, such as TANF, the State should not act on the 
older information from the third-party data source. See the December 
2020 Center for Medicaid and CHIP Services (CMCS) Informational 
Bulletin ``Medicaid and CHIP Renewal Requirements'' for additional 
information.\12\
---------------------------------------------------------------------------

    \12\ See December 2020 CMCS Informational Bulletin ``Medicaid 
and Children's Health Insurance Program (CHIP) Renewal 
Requirements.'' Available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib120420.pdf.
---------------------------------------------------------------------------

    Comment: One commenter expressed concern about how the proposed 
changes in circumstances requirements would interact with the 
reasonable opportunity period for individuals otherwise eligible for 
full Medicaid or CHIP benefits who do not respond to requests for 
additional information to resolve discrepancies about their declared 
satisfactory U.S. citizenship or satisfactory immigration status. The 
commenter provided an example when an individual is receiving limited 
Medicaid benefits for the treatment of an emergency medical condition 
who later declares to have a change in immigration status which makes 
them eligible for full Medicaid benefits.
    Response: Sections 1137(d)(3), 1902(a)(46)(B), 1902(ee) and 
2105(c)(9) of the Act require that States verify that an individual is 
a U.S. citizen or has a satisfactory immigration status when 
determining eligibility for Medicaid and CHIP. If States are unable to 
verify a beneficiary's U.S citizenship or satisfactory immigration 
status or a reported change in such status, existing regulations at 
Sec. Sec.  435.956(b) and 457.380(b)(1) require States to provide 
individuals with a reasonable opportunity period to verify such 
information. During this reasonable opportunity period, States must 
provide the individual with benefits that they would otherwise be 
eligible for consistent with Sec. Sec.  435.956(a)(5)(ii) and 
457.380(b)(1)(ii).
    In this scenario, in which an individual is eligible only for the 
treatment of an emergency medical condition in Medicaid due to not 
having U.S. citizenship or satisfactory immigration status, but the 
individual reports a change by declaring to be a U.S. citizen, U.S. 
national, or having satisfactory immigration status, we would expect 
the State to attempt to verify the information consistent with Sec.  
435.919(b)(1), which cites to existing citizenship/immigration 
verification requirements at Sec.  435.956. If the State is unable to 
verify the declared U.S. citizenship or satisfactory immigration status 
promptly, the State must provide the individual with a reasonable 
opportunity period and must continue efforts to complete the 
verification of the individual's citizenship or satisfactory 
immigration status, or request documentation if necessary. Once the 
reasonable opportunity period is provided, the State may begin to 
furnish full Medicaid benefits provided the individual is otherwise 
eligible (that is, the individual satisfies all other eligibility 
criteria). At that time, such State would be expected to follow the 
reasonable opportunity requirements at Sec.  435.956(b), including 
providing proper notice to the individual about when the reasonable 
opportunity period begins and ends. If, by the end of the reasonable 
opportunity period, the individual's U.S. citizenship or satisfactory 
immigration status has not been verified, States would be expected to 
terminate the individual's full Medicaid benefits within 30 days. At 
that point coverage would revert back to limited coverage for the 
treatment of an emergency medical condition as described in section 
1903(v)(2)(A) of the Act.
    Comment: Many commenters did not support proposed Sec.  
435.919(b)(2)(iii), which would allow States to verify information 
received from a third-party data source with the beneficiary before 
providing additional medical assistance or lowering cost sharing. 
Commenters indicated that currently at renewal States are required to 
act on reliable information from a third-party data source that results 
in eligibility for additional medical assistance or lower cost sharing 
without verifying the information with the individual. The commenters 
believe that States similarly should be required to act on reliable 
information received from a third-party data source that indicates a 
change in circumstances resulting in eligibility for additional medical 
assistance or lower cost sharing without verifying the change with the 
beneficiary.
    Response: We appreciate commenters' concerns. The intent of our 
proposal was to codify existing policy. States currently have the 
option to act on information obtained from a third-party data source 
without verifying the information with the individual prior to 
providing the additional benefits. Because we did not propose to change 
this policy, we are finalizing this policy as proposed but will take 
the comments into consideration in the future. At Sec. Sec.  
435.919(b)(2)(ii) and 457.344(b)(2)(ii), we are finalizing the option 
for States to confirm third-party information with a beneficiary, prior 
to providing additional medical assistance or reducing premiums and/or 
cost sharing. However, we retain the requirement at Sec. Sec.  
435.919(b)(3) and 457.344(b)(3) that States may not terminate a 
beneficiary's eligibility if they do not respond to a request for 
additional information to verify such third-party information.
    Comment: Some commenters supported the requirement at Sec.  
435.919(b)(1)(iv) to require States to send a notice to a beneficiary 
who reports a change that does not ultimately impact their eligibility. 
However, many other commenters believe that requiring a notice in this 
situation would be administratively burdensome for States and could 
create confusion for beneficiaries. Commenters were particularly 
concerned about the potential for confusion following the end of the 
continuous enrollment condition.
    Response: While we believe that communication with beneficiaries is 
critical, we appreciate commenters' concerns that this requirement both 
imposes additional burden on States and could cause unnecessary 
confusion for beneficiaries. Therefore, we are not finalizing the 
requirement at proposed Sec. Sec.  435.919(b)(1)(iv) and 
457.344(b)(1)(iv) that States must send a notice to beneficiaries that 
the information they reported was received but did not impact their 
eligibility. However, we encourage States to develop clear notices, at 
their option, to acknowledge such reported changes and assure 
beneficiaries that there is no impact on their eligibility or coverage.
    Comment: Many commenters supported the proposed requirement at

[[Page 22799]]

Sec. Sec.  435.919(b)(1)(iii) and (b)(2)(iii) that would prohibit a 
State from disenrolling a beneficiary who does not respond to requests 
for additional information to verify a change in circumstance that 
would result in a beneficial change, such as more medical assistance or 
lower cost sharing.
    Response: We appreciate commenters' support of our proposal to keep 
individuals enrolled in Medicaid and CHIP when they do not respond to 
requests that would potentially result in more beneficial coverage, 
such as additional benefits or lower cost sharing. We are finalizing 
Sec.  435.919(b)(1)(iii) and (b)(2)(iii), redesignated at Sec.  
435.919(b)(3) for Medicaid, as proposed. In addition, we are finalizing 
the corresponding CHIP provisions, proposed at Sec. Sec.  
457.344(b)(1)(iii) and (b)(2)(iii), and redesignated here as Sec.  
457.344(b)(3) of this final rule, as proposed.
    Comment: Many commenters were supportive of proposed Sec.  
435.919(c)(1) to require that States provide beneficiaries with at 
least 30 calendar days to respond to requests for additional 
information related to a change in circumstances, which would align 
with the current policy to provide MAGI-based beneficiaries with at 
least 30 days to return a renewal form. Commenters noted that 
beneficiaries often have significant difficulty in responding to 
requests for additional information, particularly when documentation is 
needed. However, some commenters expressed concern that this 
requirement would have a significant fiscal impact on States. These 
commenters noted that the policy would require States to maintain 
coverage for at least two additional months for individuals who may 
ultimately be determined ineligible for Medicaid. They stated that this 
additional time could have a considerable fiscal impact on States, 
especially in the case of beneficiaries enrolled in a managed care 
delivery system. Commenters also sought clarification from CMS on how 
proposed Sec.  435.919(c)(1) interacts with the minimum 10-day advance 
notice currently required prior to taking an adverse action (Sec.  
431.211).
    Response: We appreciate commenters' support for alignment of 
beneficiary response timeframes at renewal and following a change in 
circumstances for Medicaid and CHIP. We also appreciate commenters' 
concerns about maintaining coverage for individuals who may be 
determined ineligible, and we recognize the fiscal constraints that may 
incentivize speedy disenrollment of potentially ineligible 
beneficiaries. However, the benefits of providing individuals with 
adequate time to collect needed information and respond to a request 
from their State Medicaid or CHIP agency are clear. As discussed 
earlier, maintaining enrollment and reducing enrollment churn has the 
potential to improve beneficiary health; reduce the need for high-cost 
interventions that can result from delayed care; reduce administrative 
burdens for individuals, health care providers, and State agencies; 
improve the ability of beneficiaries and their providers to form 
lasting relationships; and protect beneficiaries from medical debt and 
providers from non-payment.
    Current Sec.  435.930(b) requires States to continue to furnish 
Medicaid to beneficiaries until they are found to be ineligible, and 
States cannot complete a finding of ineligibility without giving the 
beneficiary an adequate opportunity to explain, disprove, or verify 
information received from a third party. We believe a minimum 30-day 
response period provides adequate time for beneficiaries to respond and 
does not create undue burden on States. In addition, we agree with 
comments that support aligning policies between renewals and changes in 
circumstances to make administration simpler for States and reduce 
beneficiary confusion in terms of the expectations regarding their 
response to requests for additional information. As such, we are 
finalizing the 30-day response period at Sec.  435.919(c)(1) for 
Medicaid and Sec.  457.344(c)(1) for CHIP as proposed.
    We appreciate the question about how the requirement at Sec.  
431.211, to provide a minimum of 10 days advance notice prior to taking 
an adverse action, fits together with the 30-day response period 
finalized in this rule, when a beneficiary's eligibility must be 
terminated for failure to provide the requested information and will 
provide additional guidance on this question in the future.
    Comment: While many commenters viewed requiring a minimum timeframe 
for beneficiaries to respond to requests for additional information as 
a helpful way to combat churn, one commenter suggested that approach 
was not effective. Instead, this commenter highlighted the importance 
of providing States with additional flexibility to be able to gradually 
end Medicaid benefits for individuals who may appear to be no longer 
eligible rather than applying additional rules to States.
    Response: This comment is beyond the scope of this rulemaking. We 
note that medical assistance can only be provided to individuals who 
meet all eligibility requirements under a State plan or demonstration 
project authorized under section 1115 of the Act. While States are 
required to continue to furnish benefits until an individual has been 
found ineligible, consistent with Sec.  435.930 of the current 
regulations, Federal financial participation is not available for 
individuals determined to no longer meet eligibility criteria.
    Comment: Commenters were also generally supportive of the 
requirement at proposed Sec.  435.919(c)(1)(ii) that would require 
States to allow beneficiaries to respond to requests for information 
through any modality specified in Sec.  435.907(a), but a few 
commenters expressed concerns at being able to ensure that all methods 
were available given that changes in circumstances happen frequently 
and that it would be challenging for States to track all modalities of 
submission.
    Response: We appreciate commenters' raising their concerns about 
challenges States may face when developing procedures for beneficiaries 
to report changes or provide additional information regarding changes 
in circumstances consistent with Sec. Sec.  435.919 and 457.344. 
However, we note that these are not policy changes. They simply codify 
existing policies. States are currently required to allow beneficiaries 
to report information about changes through all modalities that are 
also available to individuals submitting a new application under 
existing Sec.  435.916(c), which is redesignated at Sec.  435.919(a) 
for Medicaid and Sec.  457.344(a) for CHIP in this final rule. 
Therefore, we are finalizing Sec. Sec.  435.919(c)(1)(ii) and 
457.344(c)(1)(ii) as proposed.
    Comment: The majority of commenters supported the redesignation of 
existing requirements at Sec.  435.916(d), which limit the scope of 
requests for additional information to only those related to the 
reported change in circumstance, to new Sec.  435.919(e).
    Response: We appreciate commenters' support of our proposal. We are 
finalizing Sec.  435.919(e) and the corresponding CHIP regulation at 
Sec.  457.344(e) as proposed.
    Comment: Similar to the existing 90-day reconsideration period at 
application, many commenters expressed support for providing a 
reconsideration period for individuals who return requested information 
relating to a change in circumstances after their coverage has been 
terminated. Many commenters noted that this policy would reduce the 
burden of processing new applications and simplify implementation by 
applying a

[[Page 22800]]

consistent policy for renewals and changes in circumstances. However, 
some commenters urged CMS to consider removing the language in proposed 
Sec.  435.919(d) that limited the requirement to provide a 90-day 
reconsideration period to only individuals who are terminated for 
procedural reasons (that is, because they did not respond to the 
State's request for additional information). Commenters stated that 
providing a reconsideration period for individuals whose coverage is 
terminated for cause, such as individuals with fluctuating income whose 
coverage is terminated when their income increases only to become 
eligible again shortly thereafter, could be very beneficial and prevent 
unnecessary churn.
    Response: We appreciate commenters' general support of our 
proposal. We agree that aligning policies between renewals and changes 
in circumstances simplifies requirements for States. We appreciate 
commenters' suggestions to remove the language in proposed Sec.  
435.919(d) that limits the proposed 90-day reconsideration period to 
only terminations as a result of not providing requested information. 
Since we did not propose expanding the scope of the reconsideration 
period in this way, we are not including this as a requirement in this 
final rule. We may consider the suggestion in future rulemaking and 
encourage States to consider existing flexibilities available to 
protect individuals whose coverage may be terminated as they experience 
frequent changes in circumstances. In the specific scenario raised by 
the commenter, we note that States have the flexibility under 
Sec. Sec.  435.603(h)(3) and 457.315(a) to take into account reasonably 
predictable changes in income when determining current monthly income, 
and that this can help reduce churn for individuals whose income 
fluctuates over the course of the year.
    Comment: One commenter appeared to raise concerns about the current 
requirement that States must obtain a signature for any additional 
information received at renewal. The commenter noted that it may not 
always be possible to obtain a signature depending on how information 
is submitted and that it is very common for beneficiaries to forget to 
sign when they return additional information at renewal. Second, the 
commenter stated that if a similar policy is applied to reconsideration 
periods as a result of a change in circumstance, States will likely 
face the same challenges as they currently do in obtaining signatures 
at renewal. Because of those challenges, they recommended removing the 
requirement at Sec.  435.919(d)(2) that States be required to obtain a 
signature from the beneficiary to confirm the accuracy of any 
information provided to redetermine eligibility during a 
reconsideration period following a change in circumstances. They 
believe allowing this flexibility will reduce administrative burden.
    Response: We appreciate the commenter's concerns about some of the 
challenges States may face when attempting to obtain the necessary 
signatures during renewal. As a best practice, we encourage States to 
continue to reach out to beneficiaries that are missing information on 
a returned renewal form. We believe this additional outreach is 
particularly important when individuals have provided all of the 
information necessary to complete an eligibility determination but have 
forgotten to include their signature.
    The intent of proposed Sec. Sec.  435.919(d)(2) and 457.344(d)(2) 
was to align the policies for the reconsideration period specific to a 
change in circumstance with the existing policies for a reconsideration 
period provided at renewal. Currently, if a beneficiary provides 
additional information during the 90-day reconsideration period at 
renewal, States must treat the information as a new application as 
described at Sec. Sec.  435.916(b)(2)(iii) and 457.343. As such under 
Sec.  435.907(f), the individual must provide a signature to be able to 
consent to enrollment (or reenrollment) in Medicaid and CHIP and verify 
the accuracy of the additional information or provide correct 
information, consistent with section 1137(d)(1)(A) of the Act. In order 
to continue to meet these requirements, we are finalizing Sec. Sec.  
435.916(d)(2) and 457.344(d)(2) with references to Sec.  435.907(f) as 
proposed. Additionally, we note that treating additional information 
received during the 90-day reconsideration period as a new application 
entitles eligible individuals to up to 3 months of retroactive coverage 
under Medicaid consistent with Sec.  435.915.
    Comment: Some commenters expressed concern that it would not be 
possible for States with an integrated eligibility system that also 
determines eligibility for other programs, such as SNAP and TANF, to 
comply with protections for Medicaid beneficiaries proposed at Sec.  
435.919(c)(1), requiring at least 30 calendar days for beneficiaries to 
respond to requests for information related to a change in 
circumstances, because these protections are not required under the 
other programs.
    Response: We acknowledge the important work that many States have 
undertaken to establish integrated eligibility systems and simplified 
notices across their health and human service programs, like Medicaid, 
CHIP, SNAP, and TANF. However, the eligibility requirements and 
processes between those programs continue to differ, so we believe that 
providing a minimum beneficiary response period to Medicaid and CHIP 
beneficiaries is appropriate to ensure that individuals who are 
actually eligible have time to provide the necessary information and 
reduce the likelihood of churn within Medicaid and CHIP.
    We have worked with other human service programs, including SNAP, 
to identify areas for potential alignment. While we recognize the 
challenges that States face in developing integrated eligibility and 
enrollment systems serving multiple programs, we do not believe that 
the processes proposed in Sec. Sec.  435.919(c)(1) and 457.344(c)(1) of 
the September 2022 proposed rule increase the challenge States face in 
aligning their Medicaid and CHIP beneficiary response timeframes with 
other human service programs like SNAP. We are available to provide 
technical assistance to States attempting to develop such an integrated 
system.
    Comment: Some commenters sought clarification on when States could 
or could not act on information if individuals did not respond to 
requests for additional information.
    Response: Generally, the intent of proposed Sec. Sec.  435.919 and 
457.344 was to outline in more detail the existing requirements States 
must follow under Sec.  435.952 when considering information received 
by the State and when additional information may be requested from the 
beneficiary. For example, proposed Sec. Sec.  435.919(b)(2)(ii) and 
457.344(b)(2)(ii), redesignated at Sec. Sec.  435.919(b)(4) and 
457.344(b)(4) of this final rule respectively, require States to 
provide individuals with the opportunity to dispute third-party 
information prior to taking an adverse action, such as terminating a 
beneficiary's coverage or their benefits; this is a current requirement 
at Sec.  435.952(d) for Medicaid and also applies to CHIP as referenced 
at Sec.  457.380.
    However, in addition to the existing requirements under Sec. Sec.  
435.952 and 457.380, we proposed to clarify at Sec.  435.919(b)(1)(iii) 
and (b)(2)(iii), redesignated at Sec.  435.919(b)(3) of this final 
rule, that States would not be permitted to terminate a beneficiary's 
existing coverage if they do not respond to the State's request for 
additional

[[Page 22801]]

information about a change in circumstances (either from the 
beneficiary or a third party data source) that may make the individual 
eligible for additional medical assistance or lower premiums or cost 
sharing charges. We proposed the same requirement for CHIP at Sec.  
457.344(b)(1)(iii) and (b)(2)(iii), which we redesignate at Sec.  
457.344(b)(3) in this final rule. We believe it is important to affirm 
this protection in the regulations to ensure that individuals who 
otherwise remain eligible for Medicaid or CHIP retain their current 
level of benefits, even if they may have been eligible for additional 
coverage if they had responded to the State's request.
    After considering the comments regarding requirements for acting on 
changes in circumstances, we are finalizing Sec. Sec.  435.919 and 
457.344, as well as the changes proposed to Sec.  435.916 with the 
modifications discussed. We note that because the effect of these 
changes is specific to the steps States are required to take to process 
changes in circumstances, including processing timeframes, the a 
minimum number of days States must provide for beneficiaries to return 
information to verify eligibility, and the reconsideration period 
(without requiring a new application) for beneficiaries who return 
needed information after being terminated for failure to respond, they 
operate independently from the other provisions of this final rule. 
Because each of these changes individually serves to protect 
beneficiaries during eligibility determinations based on changes in 
circumstances, we believe they also operate independently from one 
another.
3. Timely Determination and Redetermination of Eligibility (Sec. Sec.  
435.907, 435.912, 457.340(d), and 457.1170)
    Current requirements at Sec.  435.912 related to the timely 
determination of eligibility, including the maximum time period in 
which individuals are entitled to a determination of eligibility, 
exceptions to timeliness requirements, and considerations for States in 
establishing performance standards, only reference applications, 
although certain provisions also apply at renewal and when a 
beneficiary experiences a change in circumstances. We proposed changes 
to Sec.  435.912 to ensure that States complete initial determinations 
and redeterminations of eligibility within a reasonable timeframe at 
application, at regular renewals, and following changes in 
circumstances. We also proposed to add a new paragraph at Sec.  
435.907(d)(1), requiring that if a State is unable to determine an 
applicant's eligibility based on information provided on the 
application and verified through electronic data sources and it must 
obtain additional information from the applicant, the State must 
provide the applicant with a reasonable period of time to furnish the 
information.
    At Sec.  435.912(b), we proposed to require that States include 
renewals and changes in circumstances within the performance and 
timeliness standards described in their State plans. Additionally, we 
proposed at Sec.  435.912(c)(1) to clarify the actions that begin and 
end the period of time that is considered under a State's timeliness 
standards at application, and to specify the actions that begin and end 
the period of time that is considered under a State's timeliness 
standards at renewal and changes in circumstances. Proposed Sec.  
435.912(c)(2) expands the criteria that States need to consider when 
developing their performance and timeliness standards. We also proposed 
a new requirement at Sec.  435.912(g)(3) that prohibits States from 
using the timeliness standards to delay terminating a beneficiary's 
coverage or taking other adverse actions. Finally, we proposed 
standards to specify the maximum amount of time States may take to 
complete renewals and redeterminations based on changes in 
circumstances (proposed Sec.  435.912(c)(4) through (6)).
    The changes to Sec. Sec.  435.907(d) and 435.912 apply equally to 
CHIP through existing cross-references at Sec. Sec.  457.330 and 
457.340(d)(1), respectively. We proposed minor changes to Sec.  
457.340(d) to clarify when certain Medicaid requirements were not 
applicable to CHIP when States consider eligibility on other bases. We 
also modified the title of Sec.  457.340(d) to include a reference to 
timely redeterminations of CHIP eligibility. We are finalizing all 
changes proposed at Sec. Sec.  435.907(d), 435.912, and 457.340(d), 
except as described in the following discussions. Additionally, we note 
that we revised the references to Medicaid requirements at Sec.  
457.340(d)(1)(i), which were redesignated as Sec.  435.912(c)(4)(ii), 
(c)(5)(iii), and (c)(6)(ii) in this final rule.
    For reference, Table 1 provides an overview of the timeframes for 
(1) applicants or beneficiaries to provide additional information, (2) 
States to complete a timely determination, and (3) individuals to 
submit information for reconsideration at application, when a change in 
circumstances occurs, and at renewal. The information provided in Table 
1 is offered for ease of reference but does not contain in full detail 
the information needed to understand the application of the regulations 
summarized within. Additional information on the specific changes 
illustrated in Table 1 can either be found in the discussion that 
follows or in sections II.B.1. and II.B.2. of this final rule. Readers 
should refer to the regulation text and to the text discussion in this 
preamble to understand the requirements summarized in Table 1.
BILLING CODE 4120-01-P

[[Page 22802]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.000

BILLING CODE 4120-01-C
a. At Application
    Current Sec.  435.912(c)(3) requires States to determine 
eligibility within 90 calendar days for new applicants whose 
eligibility is being determined on the basis of disability and within 
45 calendar days for all other applicants. We did not propose any 
changes to this requirement. However, we did propose to establish a 
minimum timeframe for applicants to provide additional information when 
needed to determine eligibility. Specifically, we proposed new language 
at Sec.  435.907(d)(1)(i) that would require the State to provide the 
applicant with no less than 30 calendar days to respond to a request 
for additional information when eligibility is being considered on the 
basis of a disability, and no less than 15 calendar days to respond 
when eligibility is being considered on all other bases. We proposed at 
Sec.  435.907(d)(1)(ii) to require that States accept additional 
information through any of the modes by which an application may be 
submitted. We also proposed that when a notice of ineligibility is sent 
for failure to respond, States must provide a reconsideration period of 
at least 30 calendar days, during which the State

[[Page 22803]]

would be required to accept requested information and reconsider the 
individual's eligibility without requiring a new application (proposed 
Sec.  435.907(d)(1)(iii)(A)), similar to the minimum 90-day 
reconsideration currently required at Sec.  435.916(a)(3) for 
individuals terminated at a periodic renewal for failure to return a 
renewal form or other information needed to renew their eligibility. 
When a reconsideration period is applied, we proposed at Sec.  
435.907(d)(1)(iii)(B) that the 45 calendar-day clock for completing an 
eligibility determination timely as described at Sec.  435.912(c)(3) 
(or 90 calendar days for a determination based on disability) would 
restart on the date the requested information is submitted. In 
addition, at proposed Sec.  435.907(d)(1)(iii)(C), the effective date 
of coverage for individuals determined eligible would be based upon the 
original application date (that is, the date the application was 
submitted or the first day of the month of submission, in accordance 
with the State's election).
    We received the following comments related to timely determinations 
at application:
    Comment: While many commenters agreed that it was important to 
provide additional time to individuals who may need to provide 
documentation for their disability, they were concerned that applying 
different timeframes--30 calendar days for those whose eligibility is 
being determined on the basis of disability (proposed Sec.  
435.912(d)(1)(i)(A)) and 15 calendar days for those being determined 
eligible on all other bases (proposed Sec.  435.912(d)(1)(i)(B))--would 
create confusion about what response deadline was applicable to a 
specific applicant. Commenters sought clarification about whether the 
additional time under proposed Sec.  435.912(d)(1)(i)(B) was available 
only to individuals being considered for categorical eligibility based 
on disability or available to any applicant with a disability.
    Commenters also raised concerns regarding the operational and 
administrative burden of applying two separate timeframes for 
applicants. They explained that different timeframes may be 
particularly challenging when multiple household members are included 
on a single application and only one is applying on the basis of 
disability, or when an individual applicant is being considered for 
eligibility in both a disability-related and non-disability-related 
eligibility group. In addition, several commenters expressed concerns 
that States with integrated eligibility systems, which may include 
SNAP, TANF, and other State-specific programs, would not be able to 
provide the same timeframes for applicants to provide additional 
information needed across programs. For example, if additional income 
information was needed to verify financial eligibility for both 
Medicaid and SNAP, SNAP requires States to give households at least 10 
days for the individual to return the information, while the Medicaid 
agency would be required to provide more time. Commenters expressed 
concern that different deadlines would add complexity and confuse 
applicants who may be receiving requests for the same information from 
each program with different timeframes to respond, and both requests 
may be included within the same notice or separate notices sent from 
each program.
    Some commenters recommended providing additional response time to 
other groups of applicants, such as individuals who are subject to an 
asset test or who are required to provide a level of care 
determination. Other commenters also suggested that for individuals who 
need language assistance or are experiencing homelessness, 15 calendar 
days was not sufficient.
    Many commenters agreed that 15 calendar days would be sufficient 
for the majority of applicants, with some commenters citing CMS' 
September 2022 Application Processing Time Snapshot report that 
indicates the vast majority of MAGI applications are completed within 
either the first 24 hours or within days of receipt. However, other 
commenters did not agree with that timeframe and provided a range of 
suggestions for minimum response times between 15 to 60 calendar days.
    Some commenters did not support the establishment of specific 
timeframes for any applicants and instead recommended that we continue 
to provide flexibility for States to set their own timeframes that best 
meet the needs of specific types of applicants and/or are appropriate 
for the type of information being requested. Other commenters opposed a 
30-calendar day minimum timeframe for applicants to respond to requests 
for additional information because it would be challenging for States 
to determine eligibility timely for non-disability applications (within 
45 calendar days) while others asked for clarity regarding the 
interaction between the minimum beneficiary response period and the 
maximum timeframe for a timely eligibility determination.
    In section II.B.3. of the preamble to the September 2022 proposed 
rule, we requested comment on an alternative option providing a 30-
calendar day response period with a new exception to the timeliness 
standard. The exception would provide States with up to 15 additional 
calendar days if needed to process information provided by an applicant 
at or near the end of the applicant's 30-day response period. Some 
commenters supported a new exception to the timeliness standard to 
ensure that both applicants and States had sufficient time in the 
application process; other commenters were concerned that adding a new 
exception provided States with too much time that would result in 
additional delays for otherwise eligible applicants to be determined 
eligible for coverage and obtain access to needed care, because many 
States already struggle to meet the current timeliness standards. Some 
commenters also were concerned that restarting the clock for completing 
a timely determination of eligibility during the reconsideration 
period, as proposed at Sec.  435.907(d)(1)(iii)(B), provided too much 
time for States.
    Response: We appreciate commenters' support for maximizing response 
timeframes to ensure that applicants have sufficient time to respond to 
requests for additional information, especially when information about 
disability, assets, or level of care may be needed. However, we also 
understand commenters' concerns about States' ability to meet 
application timeliness standards and the need for continued flexibility 
to address different types of situations. We agree with commenters that 
requiring two separate timeframes for disability-related and non-
disability-related application types may be administratively burdensome 
and could create confusion for both applicants and eligibility workers, 
depending on how they are implemented. In States with integrated 
eligibility systems, a third timeframe could also be needed if the 
Medicaid timeframes cannot align with other programs like SNAP. At the 
same time, we remain concerned that requiring a single, minimum of 30 
calendar days for all applicants would make it challenging for States 
to process non-disability-related applications timely (within 45 days). 
In order to balance these opposing concerns, we are eliminating the 
different standards at proposed Sec.  435.907(d)(1)(i)(A) and (B) and 
finalizing a single minimum standard for all applicants. As described 
at Sec.  435.907(d)(1)(i) of this final rule, States will be required 
to provide all applicants with a reasonable amount of time that is no 
less than 15 calendar days to respond to any request for

[[Page 22804]]

additional information needed to determine their eligibility at 
application. This flexibility will permit States to elect to create a 
single minimum timeframe for all requests for information at 
application, including a 15 or 30 calendar day timeframe, that provides 
the best balance for a State's specific circumstances. Alternatively, a 
State may tailor the timeframes at application to reasonable periods 
(no less than 15 calendar days) depending on the circumstances and may 
vary the timeframes depending on the circumstances of the request.
    Further, to support applicants in States with integrated 
operations, we consulted with the U.S. Department of Agriculture (USDA) 
to explore options for aligning response periods across Medicaid and 
SNAP. As a result of this consultation, USDA anticipates releasing 
guidance outlining available flexibilities for States to align their 
SNAP processes with Medicaid. Through these flexibilities, a minimum 15 
calendar day response period will permit States with integrated 
eligibility systems to establish a single response period for SNAP and 
Medicaid. This will also support individuals applying for both programs 
simultaneously and help to minimize confusion when information is 
requested to determine eligibility. CMS and USDA's Food and Nutritional 
Service (FNS) are working in close collaboration to permit alignment of 
these allied programs wherever possible and will develop coordinated 
technical assistance to support state implementation.
    We believe modifying Sec.  435.907(d)(1)(i) to require a reasonable 
period of time (at least 15 calendar days) strikes an appropriate 
balance between applicants' need for sufficient time to gather 
necessary information and States' need for sufficient time to complete 
the determination, while also considering administrative burden. We 
believe that the reasonable response period (minimum of 15 calendar 
days) coupled with the reconsideration period proposed and finalized at 
Sec.  435.907(d)(1)(iii) for applicants who are denied eligibility for 
failure to provide requested information timely alleviates any adverse 
impact on individuals who may need more time.
    The minimum amount of time that a State may consider reasonable for 
an applicant to respond with additional information is 15 calendar 
days. Consistent with the revisions at 435.907(d)(1)(i) of this final 
rule, a State could consider that it is reasonable to provide only 15 
calendar days for an applicant to obtain and submit a recent pay stub 
demonstrating income eligibility. However, for an applicant acquiring 
documentation of certain assets in order to verify resource eligibility 
for a non-MAGI group, the same State may also determine that more time 
may be reasonable. There is a limited exception to the 15-day minimum 
for certain MSP determinations based on Low Income Subsidy (LIS) 
application data (LIS leads data). If the LIS leads data does not 
support a determination of Medicare Savings Program (MSP) eligibility 
and the State requires additional information for the MSP 
determination, Sec.  435.911(e)(8) requires States to provide 
individuals with a minimum of 30 days to furnish such information.
    Finally, although we are not making changes to the existing 45 and 
90 calendar day application timeliness standards at Sec.  
435.912(c)(3), we clarify that these standards represent the maximum 
amount of time a State may take to complete an eligibility 
determination. Recognizing that operational flexibilities and 
limitations differ in each State, we believe States are in the best 
position to establish reasonable timeframes for beneficiary responses 
that will permit the State to complete application processing timely, 
subject to the timeframes required under this final rule. Consistent 
with existing requirements at Sec.  435.912(g)(1), we expect States to 
complete their initial eligibility determinations as quickly as 
possible and not use the timeliness standards to delay coverage for 
individuals who would otherwise be eligible.
    Comment: Almost all commenters were supportive of the 
reconsideration period proposed at Sec.  435.907(d)(1)(iii) for 
applicants who are denied eligibility for failure to provide requested 
information and who subsequently submit the information within the 
period allowed by the State.
    Some of these commenters supported a 30-day reconsideration period, 
while others recommended providing a 90-day period at application to be 
consistent with the reconsideration periods at renewal and when an 
individual experiences a change in circumstances.
    Many commenters did not support our proposal at Sec.  
435.907(d)(1)(iii)(B) and (C) to require States to provide a 
retroactive effective date of coverage back to the original date of 
application if an individual provided information during their 
reconsideration period. Some expressed concern that this policy would 
incentivize applicants to not respond timely and would be unfair to 
individuals who do provide the necessary information by the requested 
deadline. Other commenters noted that providing the retroactive 
effective date for coverage was an important beneficiary protection 
from harmful outcomes, like debt from unpaid medical bills. Some 
commenters suggested applying the same effective date rules for 
reconsideration periods at application, renewal, and changes in 
circumstances, such that the provision of additional information would 
be treated like a new application and the effective date of eligibility 
would be based on the new application date.
    We received only one comment expressing concern about the burden of 
implementing a new reconsideration period for applicants. The commenter 
explained that they did not believe this would create any improvement 
since most application errors are resolved during the application 
review process.
    Response: We agree with commenters that applying the same policies 
across all reconsideration periods, whether at application, renewal, or 
changes in circumstances, would promote consistency and reduce 
complexity for States and individuals who need to provide additional 
information at application, at renewal, or following a change in 
circumstances. Therefore, we are modifying proposed Sec.  
435.907(d)(1)(iii) in this final rule to increase the reconsideration 
period at application from 30 to a minimum of 90 calendar days, and 
requiring the effective date of coverage to be based on the date the 
requested information is received to align with the policies for 
reconsideration periods at renewal and following a change in 
circumstances. We do not believe it is reasonable to require States to 
provide retroactive coverage based on the original application date 
because applicants now have a longer period of time to respond without 
having to provide a new application. Additionally, States are required 
to provide eligible Medicaid applicants with retroactive coverage 
consistent with Sec.  435.915(a).\13\ We believe that this retroactive 
coverage will help address the impact of potential gaps in coverage for 
applicants who provide requested information during the reconsideration 
period. We note that States also have the option to provide retroactive 
coverage to individuals applying for CHIP under Sec.  457.340(g).
---------------------------------------------------------------------------

    \13\ Unlike other Medicaid eligibility groups, qualified 
Medicare beneficiary (QMB) benefits are not retroactive. Coverage 
begins the first day of the month following the month in which the 
individual is determined to qualify for this eligibility group.
---------------------------------------------------------------------------

    Therefore, we are removing the provisions proposed at Sec.  
435.907(d)(1)(iii)(B) and (C) regarding the timeliness standard and 
effective date of eligibility. We are finalizing a

[[Page 22805]]

single paragraph at Sec.  435.907(d)(1)(iii) that (1) requires States 
to accept information submitted by an applicant within 90 calendar days 
of the date of denial and (2) specifies that States must treat the 
additional information like a new application and reconsider 
eligibility consistent with the current timeliness standards at Sec.  
435.912(c)(3). Because this information will be treated like a new 
application, the effective date of eligibility will be based on the 
date the information is returned consistent with current Sec.  435.915.
    Comment: A few commenters urged CMS to revise Sec.  435.912(e) to 
limit the scope of the exceptions to the timeliness standards in Sec.  
435.912. Current Sec.  435.912(e) provides that States must determine 
or redetermine eligibility within established timeliness standards 
except in unusual circumstances. One commenter was concerned that the 
example described at Sec.  435.912(e)(2) for an administrative or other 
emergency beyond the agency's control is too broad and recommended 
removing the reference to ``administrative.'' Another commenter 
recommended that States be required to notify applicants and 
beneficiaries when they are taking advantage of the exceptions provided 
at Sec.  435.912(e).
    Response: We appreciate the commenters' concerns about protecting 
access to timely eligibility determinations. We believe the timeliness 
standards are critically important for ensuring that applicants and 
beneficiaries have timely access to the coverage and services to which 
they are entitled. At the same time, we believe it is important that 
the language in the example described at Sec.  435.912(e)(2) remain 
sufficiently broad to account for a variety of unusual circumstances. 
As the introductory language at Sec.  435.912(e) states, the situations 
described in paragraphs (e)(1) and (2) are simply examples of the types 
of circumstances that may require an exception to the timely 
determination of eligibility. We have, and will continue to, work with 
States when they experience unusual circumstances like natural 
disasters and other emergencies to determine whether a timeliness 
exception is warranted and to implement workarounds to ensure that 
individuals continue to have access to the benefits they need during 
this time. We also note that States are required to document the reason 
for the delay in the individual's case record in accordance with Sec.  
435.912(f).
    Comment: We sought comment about whether States should be afforded 
additional time to determine CHIP eligibility for applicants seeking 
coverage under a separate CHIP for children with special health care 
needs (CSHCN), similar to the additional time provided at Sec.  
435.912(c)(3)(i) for States to make a final determination of 
eligibility for Medicaid coverage based on disability. Commenters 
indicated that it was not appropriate to provide States with extra time 
to make an eligibility determination for the separate CHIP for CSHCN 
because these children still have to meet the financial eligibility 
criteria for CHIP. Also, commenters were concerned that delaying a 
child's enrollment into CHIP for the sake of enrolling the child into 
CHIP for CSHCN, which offers an enhanced benefit package, could 
potentially be harmful. Instead, commenters believed it would be 
reasonable for States to continue to work with these children post-
enrollment into CHIP if additional information is necessary to 
determine their eligibility for the State's CSHCN program, and to 
transition them to such program at a later time if appropriate.
    Response: We agree with commenters that providing additional time 
for a determination of eligibility for a CSHCN program within CHIP is 
not necessary and could potentially delay the receipt of necessary 
care. Therefore, we are finalizing Sec.  457.340(d)(1) as proposed.
b. At Renewal
    At Sec.  435.912(c)(4) of the proposed rule, we proposed 
requirements for timeliness standards for States to complete renewals 
conducted under Sec.  435.916. We proposed three timeframes for 
completing timely renewals depending on the circumstances of the case. 
First, if a beneficiary's eligibility can be renewed based on available 
information or the beneficiary returns a renewal form with at least 25 
days remaining in the eligibility period, we proposed that a State 
would be required to complete the renewal prior to the end of the 
individual's eligibility period. Second, if the State is redetermining 
eligibility on the basis for which a beneficiary has been enrolled and 
the beneficiary returns a renewal form less than 25 calendar days 
before the end of the eligibility period, we proposed that the State 
must complete the renewal by the end of the following month. Finally, 
if the State must redetermine eligibility on another basis other than 
disability, we proposed that the State would have an additional 25 
calendar days to complete the eligibility determination. However, if 
the State is redetermining eligibility on the basis of disability, the 
State would have up to 90 additional calendar days from the date the 
individual is determined ineligible on their current basis.
    Comment: Many commenters supported the clarity of the timeliness 
standards for renewals proposed at Sec.  435.912(c)(4), including our 
proposal to provide States with additional time to complete a renewal 
when renewal forms are received near the end of a beneficiary's 
eligibility period. However, other commenters stated that the proposed 
timeliness standards were too prescriptive, and that additional 
flexibility is necessary for States to be able to effectively manage 
their processes.
    Response: We appreciate commenter support for our proposal to 
ensure that States have sufficient time to complete a timely 
eligibility determination, particularly when beneficiaries provide all 
necessary information close to the end of their eligibility period. We 
also agree with commenters that flexibility is important for States to 
effectively administer their Medicaid and CHIP programs, although we 
believe our proposal at Sec.  435.912(c)(4) provides more flexibility 
than currently is available to States. As discussed in section II.B.3. 
of the September 2022 proposed rule, Sec.  435.930(b) currently 
requires States to continue furnishing Medicaid benefits to eligible 
individuals until they are found to be ineligible. This means a State 
must maintain the eligibility of a beneficiary who submits all needed 
information at the end of their eligibility period, until the State can 
complete a redetermination, and if the beneficiary is no longer 
eligible, provide advance notice and fair hearing rights. However, 
current regulations do not provide for an extension of the renewal 
process beyond the end of a beneficiary's eligibility period, even if 
additional information is not provided to the State in a timely manner 
and even when the State is required to evaluate eligibility on other 
bases. Proposed paragraphs (c)(4)(ii) and (iii) of Sec.  435.912 
address this tension in the current regulations, by accounting for 
those situations in which States will need additional time to complete 
an eligibility determination in order to comply with Sec.  435.930(b) 
without running afoul of the requirement in Sec.  435.916 to renew 
eligibility once every 12 months. Therefore, we are finalizing the 
proposed policy to permit States to extend the redetermination process 
beyond the end of a beneficiary's eligibility period when information 
is received late in the process or eligibility needs to be determined 
on another basis, but we are making some modifications to the standards

[[Page 22806]]

themselves as described in the comment responses that follow.
    We note that the timeliness standards described at Sec.  
435.912(c)(4) represent the maximum amount of time that States may take 
to complete renewals. States maintain significant flexibility when 
establishing their timelines to process renewals and are not required 
to take the maximum amount of time described in the regulation to 
complete a renewal. In establishing standards for timely renewals, 
Sec.  435.912(c)(2) which we are finalizing as proposed, requires 
States to demonstrate that their timeliness standards address certain 
criteria, including prior State experience, availability of 
information, the needs of beneficiaries, and advance notice 
requirements.
    Comment: Many commenters expressed concern about the variety of 
timeliness standards proposed for different circumstances at renewal, 
which could require completion of the renewal at the end of the 
beneficiary's eligibility period (Sec.  435.912(c)(4)(i)), the end of 
the month following the end of the beneficiary's eligibility period 
(proposed Sec.  435.912(c)(4)(ii)), and 90 or 25 calendar days 
following a determination of ineligibility on the current basis when 
eligibility on another basis must be determined (proposed Sec.  
435.912(c)(4)(iii)). Some commenters also expressed confusion about the 
maximum timeliness standard applicable under proposed Sec.  
435.912(c)(4)(iii) when eligibility is being determined on a different 
basis. There also was concern that requiring several different 
timeframes for completion of renewals depending on when information is 
returned to the agency would be challenging to implement. Several 
commenters indicated that these changes, and the variety of timeframes 
associated with them, would require complex systems changes and 
extensive training for eligibility workers.
    Response: We appreciate commenters' concern that the variety of 
different timeframes proposed for timely renewals, which differ from 
the current timeframes for application and the proposed timeframes for 
changes in circumstances, would add unnecessary complexity and 
confusion and would require complex systems changes and significant 
training for eligibility workers. In this final rule, we simplify the 
maximum timeframes for timely renewals at Sec.  435.912(c)(4) to align 
more closely with the existing timeframes for timely eligibility 
determinations at application and the timeframes for processing changes 
in circumstances.
    The September 2022 proposed rule included three maximum timeliness 
standards for renewals: (1) the end of the eligibility period for 
renewals that can be completed using available information and those 
for which all necessary information is returned to the State at least 
25 or more calendar days prior to the end of the eligibility period 
(proposed Sec.  435.912(c)(4)(i)); (2) the end of the month following 
the end of the eligibility period for renewals for which needed 
information is returned with no less than 25 calendar days prior to the 
end of the eligibility period (proposed Sec.  435.912(c)(4)(ii)); and 
(3) following a determination of ineligibility, 90 calendar days for 
eligibility determined based on disability or 25 calendar days when 
eligibility must be determined on a different basis (proposed Sec.  
435.912(c)(4)(iii)). At Sec.  435.912(c)(4) of this final rule, we are 
finalizing the requirement to complete all renewals by the end of the 
eligibility period with two exceptions.
    The first exception, at Sec.  435.912(c)(4)(i), occurs when 
additional information needed to determine eligibility is not returned 
timely. We proposed a threshold of 25 calendar days, meaning if the 
beneficiary returned the renewal form at least 25 calendar days before 
the end of the eligibility period, the State must process the renewal 
before the end of the eligibility period. If the beneficiary returns 
the renewal form with less than 25 calendar days before the end of the 
eligibility period, the proposed rule would have required that the 
State process the renewal by the end of the month following the end of 
the eligibility period. In this final rule, we are increasing this 
threshold to 30 calendar days before the end of the eligibility period, 
such that if a beneficiary returns their renewal form at least 30 
calendar days before the end of their eligibility period, the State 
must process the renewal before the end of the eligibility period. If 
less than 30 calendar days remain before the end of the eligibility 
period, the State must process the renewal by no later than the end of 
the following month.
    The second exception, finalized at Sec.  435.912(c)(4)(ii), permits 
States to establish a separate timeliness standard when eligibility 
must be determined on another basis. We proposed at Sec.  
435.912(c)(4)(iii) to provide States with an additional 90 calendar 
days to complete a renewal when the other basis requires a disability 
determination and 25 calendar days when the other basis does not 
require a disability determination. In this final rule, we are 
maintaining the 90 calendar day threshold for disability-related 
determinations and increasing the timeframe for all other 
determinations to 45 calendar days to be consistent with the existing 
timeliness standards at application.
    Again, we clarify that the standards described at Sec.  
435.912(c)(4) are the maximum standards that a State may establish for 
timely eligibility renewals. States retain flexibility to complete 
renewals requiring a determination on other bases more quickly, 
provided that the State provides beneficiaries with at least 30 
calendar days consistent with Sec.  435.916(b)(2)(i)(B) as well as the 
minimum 10 days advance notice and fair hearing rights required under 
42 CFR part 431, subpart E.
    Comment: Many commenters raised concerns that the proposed 
thresholds for renewals, as well as changes in circumstances, would 
need to be tracked and reported to CMS, which would require extensive 
modifications to their systems.
    Response: We are not establishing new reporting requirements for 
States to report on the timeliness thresholds established in this final 
rule. Section 435.912(b) requires States to establish timeliness and 
performance standards in their State plan. However, we recognize that 
States may find tracking this information important for purposes of 
their own internal audits or external reviews, such as PERM and MEQC 
reviews and other CMS eligibility audits.
    Comment: Many commenters were concerned that the changes proposed 
at Sec.  435.912(c)(4)(ii) and (iii), which permit States to establish 
renewal timeliness standards that extend beyond the end of an 
individual's eligibility period, would result in many renewals being 
completed after a beneficiary's eligibility period ends. Commenters 
were concerned about the fiscal impact of that policy if States are 
required to keep beneficiaries enrolled in coverage while they complete 
their renewal and then the beneficiary is ultimately found to be 
ineligible. Some commenters also sought clarification on whether States 
could continue to receive enhanced funding based on a beneficiary's 
current eligibility group during the additional time available to 
States to redetermine eligibility based on information provided less 
than 25 calendar days prior to the end of the beneficiary's eligibility 
period consistent with proposed Sec.  435.912(c)(4)(ii).
    Response: Current regulations at Sec.  435.930(b) require States to 
continue furnishing Medicaid benefits to all eligible individuals until 
the State completes a redetermination and finds

[[Page 22807]]

an individual to be ineligible. The timeliness standards proposed at 
Sec.  435.912(c)(4) do not modify those requirements. States are still 
expected to complete redeterminations prior to the end of a 
beneficiary's eligibility period whenever possible. What the renewal 
timeliness standards finalized at Sec.  435.912(c)(4) recognize is that 
sometimes it is not possible for a State to complete a renewal by the 
end of a beneficiary's eligibility period because the State received 
requested information from that beneficiary too close to the end their 
eligibility period or the State needs to evaluate eligibility on other 
bases. If a State concludes that an individual is ineligible with less 
than 10 days remaining in the eligibility period, the State will be 
unable to provide the required advance notice and terminate eligibility 
before the eligibility period ends. In such cases, the State must 
continue eligibility beyond the end of the eligibility period, and if 
the State has elected to extend coverage through the end of the month, 
that beneficiary would remain enrolled until the end of the month 
following the month in which the eligibility period ends. Under Sec.  
435.912(c)(4)(i) of this final rule, this would be considered a timely 
renewal.
    Section 435.912(c)(4) of this final rule recognizes that a 
beneficiary remains eligible until determined ineligible, and States 
must continue providing benefits until the determination is complete. 
As such, as long as the eligibility determination is conducted in 
accordance with the timeliness standards for renewals outlined in Sec.  
435.912(c)(4), States may continue to claim the same match rate for 
such beneficiaries, until they are determined ineligible, without the 
potential risk of eligibility-related improper payments or other 
negative audit findings due to this requirement. For increased clarity 
of existing policy, we modify Sec.  435.912(g)(2) in this final rule by 
adding a cross-reference to Sec.  435.930(b) to ensure that States may 
not use the timeliness standards as a reason to stop furnishing 
benefits if they are unable to complete eligibility determinations in a 
timely manner.
c. At Changes in Circumstances
    We proposed two different timeliness standards at Sec.  
435.912(c)(5) and (6) for redeterminations based on changes in 
circumstances that may impact eligibility. First, we proposed at Sec.  
435.912(c)(5)(i) that States must complete redeterminations based on a 
reported change by the end of the month in which 30 calendar days from 
the date the agency becomes aware of the change falls, unless the State 
needs to request additional information from the beneficiary. In that 
case, we proposed that the State must complete the redetermination by 
the end of the month in which 60 calendar days from the date that the 
agency received the reported change in circumstances falls, as 
described at proposed Sec.  435.912(c)(5)(ii).
    Second, for anticipated changes of circumstances, we proposed at 
Sec.  435.912(c)(6) to use the same general standard proposed for 
renewals based on whether all necessary information is available at 
least 25 calendar days before the change occurs. Anticipated changes 
are those that the State knows will occur in the future, like a 
beneficiary turning 65 and becoming eligible for Medicare or aging out 
of the eligibility group for children under age 19. As described at 
proposed Sec.  435.912(c)(6)(i), if all information needed to 
redetermine eligibility is available with 25 or more calendar days 
before the date of the change, a State would be required to redetermine 
eligibility by the date (or at State option, the end of the month) the 
anticipated change will occur. Per proposed Sec.  435.912(c)(6)(ii), if 
the State receives needed information with less than 25 calendar days 
remaining before the anticipated change occurs, the State must complete 
the redetermination by the end of the month following the anticipated 
change. Finally, we proposed at Sec.  435.912(c)(6)(iii) that if a 
State must redetermine eligibility on another basis following an 
anticipated change in circumstances, they must complete the 
redetermination within either 25 calendar days (or, if on the basis of 
disability, 90 calendar days) from the date it determines the 
individual is ineligible based on their current basis.
    Comment: While some commenters were supportive of the proposed 
timeliness standards for reported changes in circumstances at Sec.  
435.912(c)(5), others suggested that CMS adopt a simplified approach. 
One commenter recommended including language to specify that the 
timeliness standard begins once all necessary information is received.
    Response: We appreciate commenters' support of proposed Sec.  
435.912(c)(5). We believe the proposal clearly outlines the applicable 
standards based on whether States seek additional information or not, 
so we will not modify those requirements in this final rule. However, 
in order to provide alignment across all changes in circumstance 
timeliness standards, we have added a new Sec.  435.912(c)(5)(iii) in 
this final rule to clarify that as a result of a change in 
circumstances, States must redetermine eligibility on another basis 
within 90 calendar days for determinations based on disability or 45 
calendar days for all other determinations. The additional 90 or 45 
calendar days begins on the day the State determines the individual is 
no longer eligible on their current basis of eligibility.
    Comment: Many commenters did not support the proposed timeliness 
standards for anticipated changes at Sec.  435.912(c)(6). Similar to 
renewals, commenters raised concerns regarding the complexity of 
implementing and tracking a 25-calendar day cutoff to know when 
additional time would be available to complete a redetermination due to 
an anticipated change in circumstances. Another commenter did not agree 
with proposed Sec.  435.912(c)(6)(iii)(B), stating that 25 calendar 
days was not enough time to redetermine eligibility on other bases for 
an individual who was found ineligible on their current basis due to 
the anticipated change in circumstances and instead recommended 
applying the same timeliness standard proposed for reported changes in 
Sec.  435.912(c)(5).
    Response: We understand the commenters' concerns about the 
complexity of the maximum timeliness standards proposed for anticipated 
changes in circumstances. Similar to the changes made to streamline the 
maximum timeliness standards at renewal at Sec.  435.912(c)(4), we are 
streamlining the requirements for the timeliness of redeterminations 
related to anticipated changes in eligibility. Specifically, we are 
establishing a single standard for timely redeterminations regarding 
anticipated changes in circumstances and creating two exceptions. As 
described at Sec.  435.912(c)(6) of this final rule, a redetermination 
of eligibility based on an anticipated change may not exceed the end of 
the month in which the change occurs, except in cases where the 
beneficiary returns needed information late in the process or the State 
needs to complete a determination of eligibility on another basis. In 
section Sec.  435.912(c)(6)(i) of this final rule, we increase the 25-
calendar day threshold to 30 calendar days, such that if a beneficiary 
returns requested information less than 30 days prior to the end of the 
month in which the anticipated change occurs, the State must complete 
the redetermination by the end of the following month. At Sec.  
435.912(c)(6)(ii) of this final rule, we apply the existing timeliness 
standards for new applications when a State must consider eligibility 
for a beneficiary on another basis following a change in

[[Page 22808]]

circumstances. This provides States with a maximum of 45 additional 
calendar days that begins when States make the determination of 
ineligibility on the original basis, to complete an eligibility 
determination on a new basis for beneficiaries whose eligibility is not 
being redetermined based on a disability. If a disability determination 
is required, the State may take up to an additional 90 calendar days to 
complete the eligibility determination.
d. Overarching Comments and CHIP-Specific Considerations
    In addition to the comments discussed previously in this final 
rule, we received several general comments that relate to the proposed 
beneficiary response requirements or timeliness standards, including 
CHIP-specific changes, as follows.
    Comment: In the September 2022 proposed rule, we sought comment on 
whether the 30-day beneficiary response timeframes proposed at 
Sec. Sec.  435.907(d)(1)(i), 435.916(b)(2)(i)(B), and 435.919(c)(1)(i) 
should be calculated using calendar days or business days. 
Additionally, we sought comment on whether the timeliness standards for 
States to complete a redetermination of eligibility at a regularly-
scheduled renewal or based on a change in circumstances at proposed 
Sec.  435.912(c)(4) through (6) should be based on calendar or business 
days. The majority of commenters supported a timeframe based on 
calendar days to maintain consistency with existing standards and 
minimize differences across States based on recognizing different 
holidays. However, a few commenters supported using business days or 
giving States flexibility to use the most appropriate approach, because 
in some cases using business days would provide applicants with more 
time in which to submit requested information.
    Response: We appreciate commenters' feedback in this area and agree 
that continuing to adhere to current practices, which define the 
response period based on calendar days, would maintain consistency and 
minimize confusion among both eligibility workers and beneficiaries. 
Therefore, we are finalizing Sec. Sec.  435.907(d)(1)(i) and 
435.916(b)(2)(i)(B) as proposed and modifying Sec. Sec.  
435.919(c)(1)(i) and 457.344(c)(1)(i) to specify ``calendar days'' to 
describe applicant and beneficiary response periods consistently 
throughout this final rule. Finally for increased clarity of current 
policy at application, we are making a technical change to specify 
``calendar days'' at Sec.  435.912(c)(3) and modifying proposed Sec.  
435.912(c)(4) through (6) to also specify that States must redetermine 
an individual's Medicaid eligibility on another basis using timeliness 
standards based on ``calendar days.''
    Comment: Many commenters supported CMS clarifying in this final 
rule that the 30-day response period begins on the date a request for 
additional information is sent, which we defined in the September 2022 
proposed rule as the date the request was postmarked. Commenters 
believed that this would help to reduce the impact of delays on the 
amount of time available to an applicant or beneficiary if the State or 
the mail system is delayed in sending requests for additional 
information in a timely manner. However, commenters were concerned that 
it would not be practical to base the response period on the day the 
request was postmarked due to operational challenges. For example, one 
commenter explained that in many cases it would not be possible for 
States to know the exact date the request was postmarked, and they 
would have to rely on beneficiaries keeping the original envelopes to 
determine the 30-calendar day response timeframe at renewal. Commenters 
were concerned that this approach would also not allow States to 
include a specific deadline for response within the request for 
additional information, and that they would have to rely on 
beneficiaries to determine their own deadline based on the postmarked 
date. Another commenter indicated that requiring States to postmark all 
requests could increase mailing costs if their current process does not 
include postmarked envelopes.
    Response: At Sec. Sec.  435.916(b)(2)(i)(B), and 435.919(c)(i), we 
proposed to require States to begin an applicant or beneficiary's 30-
day response timeframe on the date the agency sends the notice or form. 
As discussed in the September 2022 proposed rule, our expectation is 
that States will base the beginning of the beneficiary response window 
on the date the request is postmarked, when applicable. If the required 
notice or form is not sent through U.S. mail with a postmark, then the 
30 calendar days would be calculated based on the date the required 
notice or form is sent electronically or submitted to the post office 
for mailing.
    While we appreciate commenters' concerns that it may be difficult 
to always know the specific date that a notice is postmarked or sent, 
we believe the benefit of a consistent policy across States outweighs 
the challenges. In a State that uses a contractor for mailing, we would 
expect the agreement between the State and the contractor to include 
details about the timeliness of mailings, and the 30-calendar day 
response period would be based on that agreement. For example, if the 
contract specifies that all mailings are completed within 2 days of 
receipt from the State, the return date specified in the notice would 
be 32 days after the notice is sent out for mailing. We agree that it 
would be inappropriate to notify a beneficiary that they must return 
needed information within 30 days of the postmark date and then expect 
the beneficiary to calculate the due date. This would also make it 
difficult for the State to include a deadline in the eligibility system 
for receipt of the needed information. We believe that proposed 
Sec. Sec.  435.907(d)(1)(i), 435.916(b)(2)(i)(B), and 435.919(c)(i) 
will ensure that all Medicaid beneficiaries are provided with 
sufficient time to respond to requests for additional information at 
application, renewal, or a change in circumstances. Therefore, we are 
finalizing these provisions as proposed.
    Comment: Many commenters supported the technical changes throughout 
Sec.  435.912 to clarify that timeliness standards are applicable at 
application, renewal, and changes in circumstances, including the 
proposed changes at Sec.  435.912(c)(1) to further clarify the period 
covered when calculating a State's timeliness standards. Commenters 
also supported expanding the criteria at Sec.  435.912(c)(2), that 
States need to consider when developing their performance and 
timeliness standards, such as accounting for time needed to evaluate 
information obtained from electronic data sources and to provide 
required advance notice when the agency makes a determination that 
results in an adverse action. Finally, commenters supported the 
requirement at proposed Sec.  435.912(g)(3), which specifies that 
States may not use the timeliness standard to delay an adverse action, 
including termination of an individual's coverage.
    Response: We appreciate commenters' support of these specific 
changes as well as the technical changes throughout Sec.  435.912 to 
clarify that timeliness standards are now applicable at application, 
renewal, and changes in circumstances. We are finalizing as proposed 
Sec.  435.912(c)(1) (period covered by the timeliness and performance 
standards), (c)(2) (criteria for establishing timeliness and 
performance standards), and (g)(3) (prohibition on using the timeliness 
standards to delay adverse action), as well as the technical changes 
extending

[[Page 22809]]

existing requirements at Sec.  435.912 to renewals and redeterminations 
based on changes in circumstances. We note that references to 
requirements for changes in circumstances within Sec.  435.912(b)(4) 
and (c)(1)(iii) and (iv) were revised consistent with the redesignation 
of those requirements in this final rule as discussed in section 
II.B.2. of this final rule.
    Comment: Some commenters recommended that CMS engage in stronger 
oversight and enforcement of timeliness requirements. While commenters 
agreed that new timeliness standards at renewal and changes in 
circumstances were important, they remained concerned that States will 
struggle to meet these new timeliness standards, because they continue 
to struggle to meet the existing timeliness standards at application. 
For example, one comment suggested including State reporting 
requirements at Sec.  435.912 for the timeliness standards as a 
condition to receive FFP, because it would not be difficult to expand 
the current Performance Indicator data set, where States currently 
report application timeliness data, to incorporate reporting elements 
specific to timeliness for renewals and changes in circumstances. 
Others urged CMS to consider imposing sanctions on States that have a 
high percentage of determinations that are not completed within the 
required timeliness standards.
    Response: We appreciate commenters' concerns regarding State 
compliance with timeliness standards, and we agree that it is critical 
for States to complete all eligibility determinations as quickly as 
possible. We believe oversight and enforcement are important components 
of our role with respect to Medicaid, CHIP, and the BHP. As such, this 
final rule includes important regulatory requirements for States and 
protections to ensure that eligible applicants and beneficiaries can 
enroll and stay enrolled as long as they continue to meet the 
requirements of their program. In this final rule, we are not including 
reporting requirements for the timeliness standards at Sec.  435.912. 
Processes are already in place at both the State and Federal levels to 
ensure that applications, renewals, and redeterminations are processed 
timely. We note that States that do not comply with these requirements 
may be cited for improper payments identified during PERM reviews, MEQC 
reviews, other CMS eligibility audits, or State-level audits. 
Consistent with existing program requirements, improper payments 
identified by PERM and MEQC may be subject to recoveries.
    Comment: The comments we received with respect to modifying 
Sec. Sec.  457.1140, 457.1170(a), and 457.1180 supported these changes, 
which (1) require States to provide an opportunity for review if States 
fail to make a timely CHIP eligibility determination at application or 
renewal and (2) emphasize that continuation of enrollment under Sec.  
457.1170 includes continued provision of benefits pending a review.
    Response: We are finalizing Sec. Sec.  457.1140, 457.1170, and 
457.1180 as proposed.
    After considering all comments received, we are finalizing the 
proposals described above in this section with the modifications 
discussed. We note that these changes revising timeliness standards to 
expressly apply at application, renewal, and when a change in 
circumstance occurs, requiring States to provide a minimum number of 
days for individuals to return information needed to verify 
eligibility, providing specific timeframes for conducting Medicaid and 
CHIP renewals, including when beneficiaries return information late and 
when the State needs to consider eligibility on other bases, and 
establishing a 30-day reconsideration period for applicants who return 
needed information after being determined ineligible for failure to 
respond, operate independently from the other provisions of this final 
rule.
4. Agency Action on Updated Address Information (Sec. Sec.  435.919 and 
457.344)
    As we discussed in section II.B.2. of this final rule, in order to 
ensure that Medicaid and CHIP beneficiaries continue to meet applicable 
eligibility requirements, States must have a process to obtain 
information about changes in circumstances that may impact eligibility 
and to redetermine eligibility when appropriate. A change in address 
represents such a change. Beneficiaries who have moved out of State 
will no longer meet eligibility requirements for coverage in the 
original State (unless the State has suspended its State-residency 
requirement or has extended Medicaid and/or CHIP eligibility to 
individuals who are not residents of the State). Beneficiaries who have 
moved to a new in-State address are at risk of procedural termination 
at a regularly-scheduled renewal, if they rely on mailed paper notices 
and the State does not have their updated address. Indeed, our 
experience in working with States and beneficiary advocacy 
organizations indicates that returned mail historically has resulted in 
a significant number of beneficiaries losing their coverage, because 
their continued eligibility cannot be confirmed by the State. As such, 
it is critical for States to take reasonable steps to locate and update 
the contact information of beneficiaries who may have moved, prior to 
terminating their coverage or taking any other adverse action.
    In the September 2022 proposed rule, we included new paragraphs (f) 
and (g) at proposed Sec.  435.919 for Medicaid and Sec.  457.344 for 
CHIP to specify the steps States must take when beneficiary mail is 
returned to the agency by the United States Postal Service (USPS) 
(paragraph (f)) or when the agency obtains updated mailing information 
from third-party data sources (paragraph (g)). For brevity, in the 
following discussion we provide only the Medicaid references at Sec.  
435.919(f) and (g). When reading these references please note that the 
policy includes both the Medicaid requirements at Sec.  435.919(f) and 
(g) and the CHIP requirements at Sec.  457.344(f) and (g) unless 
otherwise stated.
    We proposed the following three-step process when the State 
receives returned beneficiary mail:
     Step 1 would require the State to check available data 
sources for updated beneficiary contact information (proposed Sec.  
435.919(f)(1));
     Step 2 would require the State to (1) conduct outreach via 
mail to the original address on file, the forwarding address (if 
provided on the returned mail), and all addresses obtained in Step 1; 
and (2) make at least two additional attempts through one or more 
modalities other than mail, such as phone, text or email, to locate the 
beneficiary and verify their address (proposed Sec.  435.919(f)(2) and 
(3));
     Step 3 describes the actions a State would be required to 
or would have the option to take when a beneficiary's new address could 
not be verified, and mail was returned with an in-State forwarding 
address (proposed Sec.  435.919(f)(4)), an out-of-State forwarding 
address (proposed Sec.  435.919(f)(5)), or no forwarding address at all 
(proposed Sec.  435.919(f)(6)). We also proposed conforming changes to 
Sec. Sec.  431.213(d) and 431.231(d) regarding returned mail with no 
forwarding address.
    At proposed Sec.  435.919(g), we described the steps a State would 
have to take to verify the accuracy of information obtained from a 
third-party data source other than the USPS. Specifically, at Sec.  
435.919(g)(1), we proposed that States that obtain updated in-State 
mailing information from USPS National Change of Address (NCOA)

[[Page 22810]]

database or managed care plans \14\ may treat such information as 
reliable, provided that the State completes the same basic actions 
described in Step 2 for returned mail (for example, attempt to contact 
the beneficiary at the original address on file and the new address 
provided by the third-party data source, and complete at least 2 
additional attempts to contact the individual to verify their new 
address through one or more modalities other than mail). At Sec.  
435.919(g)(2), we proposed that, with Secretary approval, States may 
treat updated in-State information from other trusted data sources in 
accordance with proposed paragraph (g)(1), and at Sec.  435.919(g)(3), 
we proposed that for all other third-party updates, the State must 
follow the actions described in steps 2 and 3 for returned mail. For 
additional information on the requirements and State options in 
proposed Sec.  435.919(f) and (g), see section II.B.4. of the September 
2022 proposed rule.
---------------------------------------------------------------------------

    \14\ Throughout this document, the use of the term ``managed 
care plan'' includes managed care organizations (MCOs), prepaid 
inpatient health plans (PIHPs), prepaid ambulatory health plans 
(PAHPs), primary care case managers (PCCMs) and primary care case 
management entities (PCCM entities).
---------------------------------------------------------------------------

    We received the following comments on these provisions:
    Comment: Many commenters supported the three-step process proposed 
for responding to returned mail. They noted that Medicaid beneficiaries 
may move frequently; parents and other caregivers, especially those 
experiencing housing instability, are often under extreme amounts of 
stress, and updating their address may not be a high-enough priority to 
take care of immediately; and some beneficiaries maintain non-
traditional residences that cannot receive mail. These commenters noted 
that returned mail can be a particular problem for people who are 
housing insecure.
    Many commenters stated that the proposed processes represent a 
reasonable approach that would promote retention of eligible 
individuals, reduce procedural disenrollments, avoid churn, and 
accelerate the pace at which States adopt non-traditional modes of 
beneficiary communication, which can be more efficient, cost-effective, 
and timely. The commenters asserted that clear guidance and commonsense 
tactics to better locate beneficiaries in the event of returned mail 
would help to mitigate unnecessary coverage losses and will be 
particularly important as millions of notices requiring a response are 
physically mailed to program enrollees during the unwinding period.
    While most commenters supported increasing requirements for States 
to confirm the accuracy of beneficiary contact information and obtain 
updated address information when mail is returned, some of these same 
commenters also opposed the specific requirements included in the 
September 2022 proposed rule. These commenters described the proposed 
requirements for returned mail and other address updates as overly 
complicated and burdensome, particularly for States that already 
exercise reasonable diligence in handling returned mail and attempting 
to locate enrollees who have moved. They raised concerns about 
potential negative, unintended consequences for beneficiaries; 
requirements not reflecting on-the-ground realities; and increased risk 
of negative audit findings.
    A number of commenters expressed concern that the proposed returned 
mail requirements are unduly prescriptive, weaken or remove State 
flexibility, include an unprecedented level of detail that is likely to 
become outdated over time, and lack the flexibility for simple 
solutions, like calling a beneficiary to get an updated address. 
Specific operational challenges raised by commenters include: the need 
to implement significant system updates across multiple enrollment 
systems; challenges in reconfiguring timeframes for timed processes; 
increased workload for outreach and imaging staff; increased mailing 
costs, including the cost of paper, postage, and mail vendors; and the 
need for new legislative and budget authority. Some of these commenters 
urged CMS not to finalize the proposed changes, but instead to work 
directly with States to better understand the operational realities, 
and to support the development of State-specific strategies that meet 
local needs.
    Response: We appreciate the support for requirements that protect 
coverage for eligible individuals, particularly those who may be 
housing insecure, by establishing reasonable solutions to the problems 
posed by returned mail. At the same time, we also appreciate the 
concerns and challenges raised by commenters about States' ability to 
implement the specific steps set forth in the September 2022 proposed 
rule, and we recognize that the same approach may not be best for all 
States. As such, we are finalizing a simplified set of requirements for 
returned mail and address updates.
    The September 2022 proposed rule included separate requirements for 
agency action when mail is returned by the USPS (paragraph (f)) and 
when updated address information is obtained from sources other than 
returned mail (paragraph (g)). We are combining paragraphs (f) and (g) 
of proposed Sec.  435.919 into one paragraph at Sec.  435.919(f) 
(Agency action on updated address information) in this final rule that 
establishes a single set of requirements for all types of address 
changes. Then we are streamlining the requirements at Sec.  435.919(f), 
such that paragraph (f)(1) describes the requirements for obtaining 
updated address information from third-party data sources, paragraphs 
(f)(2) through (4) describe the actions required by the State depending 
on the type of address information received, and paragraph (f)(5) 
describes the good-faith effort requirements for contacting 
beneficiaries as needed to confirm updated information.
    Within Sec.  435.919(f), we are also making changes to provide 
greater State flexibility, such as by removing some of the details for 
operationalizing the regulatory requirements. This will permit 
continued use of existing strategies for addressing returned mail, such 
as those established during the COVID-19 PHE under the waiver authority 
of section 1902(e)(14)(A) of the Act, which have proven very effective 
with updating beneficiary contact information without any notable 
adverse impact on beneficiaries. These changes are detailed in the 
succeeding discussion.
    Comment: We received many comments about the use of third-party 
data sources for updating beneficiaries' mailing addresses. Many 
commenters supported the requirement proposed at Sec.  435.919(f)(1) 
that States check data sources, including the agency's Medicaid 
Enterprise System and the agency's contracted managed care plans, if 
applicable, when mail is returned to the State. They noted that 
obtaining updated, accurate information from reliable outside sources 
will help to reduce disenrollment of otherwise eligible beneficiaries 
and ensure that they continue to receive important information about 
their coverage. Other commenters supported the use of electronic data 
sources but were opposed to the specific requirements proposed. A few 
commenters noted the cost implications for building new interfaces and 
establishing data sharing agreements with multiple managed care plans, 
and with other entities like SNAP, TANF, or the State's department of 
motor vehicles (DMV).
    Many commenters specifically supported the proposed requirement at 
Sec.  435.919(f)(1)(ii) and option at Sec.  435.919(g)(1) for States to 
obtain updated beneficiary contact information from their contracted 
managed care

[[Page 22811]]

plans. A number of commenters flagged managed care plans as one of the 
best sources for updated address information. The commenters stated 
that plans are more likely than States to have recently updated contact 
information, since beneficiaries typically engage with their managed 
care plans more frequently than they engage with the State Medicaid 
agency. Managed care plans often have multiple points of contact with 
their members, including hospital admissions, provider relationships, 
care management programs, disease management programs, and other health 
plan activities.
    A number of commenters also highlighted the nationwide reliability 
of the NCOA database and recommended that all States be required to use 
it. Commenters stated that forwarding addresses and updated contact 
information from the NCOA database are almost always accurate. One 
State reported that it had never received a member report of an 
incorrect address update based on the NCOA database. Another commenter 
explained that the NCOA database includes safeguards to ensure accuracy 
of change requests, making it a readily accessible and reliable source 
of information.
    Several commenters stated that CMS should give States the option to 
accept updated addresses from managed care plans and the NCOA database 
without first having to contact beneficiaries to reverify the 
information. The commenters recognized that this strategy is proving 
effective under waiver authority granted under section 1902(e)(14)(A) 
of the Act to assist States in returning to normal operations during 
the unwinding period. As such, they indicated that the strategy should 
be made permanent.
    Some commenters recommended going beyond a State option and 
requiring States to obtain updated contact information from their 
contracted managed care plans and the NCOA database. They noted that 
despite the availability of waiver authority under section 
1902(e)(14)(A) of the Act and CMS' guidance highlighting its use as a 
best practice, some States have not established the necessary data 
exchange protocols to obtain updated contact information from their 
contracted managed care plans. Many commenters supported a requirement 
that States use both the NCOA database and information obtained from 
contracted managed care plans. One commenter suggested that without a 
requirement across all States, CMS would effectively be authorizing 
States to reject reliable sources of information and to increase 
procedural terminations; and such policies would disproportionately 
affect eligible people of color.
    Many commenters supported the use of automatic, electronic data 
matches to the greatest extent possible because they not only mitigate 
churn, but also reduce administrative burden on beneficiaries and 
States. Other commenters recommended caution when using updated contact 
information and addresses obtained from sources other than the 
beneficiary, when they have not been directly confirmed by the State 
agency with the beneficiary. Finally, one commenter recommended that 
States be required to give notice to beneficiaries and provide them 
with an opportunity to verify the information obtained from these data 
sources.
    Response: We appreciate commenters' support for State use of 
available, reliable data sources to identify updated beneficiary 
addresses and other contact information. We agree that the use of 
outside data sources will improve States' ability to maintain contact 
with beneficiaries and will reduce unnecessary procedural terminations. 
We also appreciate the feedback regarding the cost and burden required 
to establish new connections with outside data sources.
    As described in section II.B.4. of the September 2022 proposed 
rule, we proposed to require, at Sec.  435.919(f)(1), that States check 
their Medicaid Enterprise System, their contracted managed care plans 
(if applicable), and at least one other data source such as the NCOA 
database, for updated mailing address information whenever beneficiary 
mail is returned by the USPS. At Sec.  435.919(g)(1), we proposed that 
independent of the returned mail processes, States that obtain updated 
in-State mailing information from the NCOA database or contracted 
managed care plans may, at their option, treat that information as 
reliable, provided they contact beneficiaries and provide them with an 
opportunity to review the information as specified at proposed Sec.  
435.919(g)(1)(i). We also requested comment on whether States should be 
required, or permitted, to update beneficiary contact information based 
on information obtained from a managed care plan, the NCOA database, or 
other reliable sources, without first attempting to contact the 
beneficiary to verify the information.
    We received significant support from commenters for a requirement 
that States obtain and act on updated address information provided by 
contracted managed care plans (when such information has been verified 
by the beneficiary) and the NCOA database, without requiring the State 
Medicaid or CHIP agency to complete additional verification. Commenters 
also supported the use of forwarding information provided by USPS 
without additional beneficiary verification. Based on this feedback, at 
Sec.  435.919(f)(1)(i), we are revising and redesignating proposed 
Sec.  435.919(f)(1) and (g)(1) to require that States establish a 
process to regularly obtain updated address information from reliable 
third-party data sources for use in updating beneficiaries' addresses 
in their case records. At Sec.  435.919(f)(1)(iii), we define four 
types of data sources as always reliable for this purpose: (1) mail 
that is returned to the State agency by USPS with a forwarding address: 
(2) the NCOA database; (3) managed care plans under contract with the 
State, provided that the managed care plan received the information 
directly from the beneficiary or verified it with the beneficiary; and 
(4) other data sources identified by the State agency and approved by 
the Secretary. Hereafter in this preamble, we will refer to the sources 
described in Sec.  435.919(f)(1)(iii) as ``reliable data sources.'' We 
also clarify at Sec.  435.919(f)(1)(iii)(C) that for the purpose of 
this rule, managed care plans include MCOs, PIHPs, PAHPs, PCCMs, and 
PCCM entities as defined in Sec.  438.2 of the subchapter.
    In returning to normal operations during the unwinding period, the 
vast majority of States requested (and were granted) waiver authority 
under section 1902(e)(14)(A) of the Act to accept updated contact 
information from contracted managed care plans and/or the NCOA 
database, without separately verifying the information with 
beneficiaries. We did not receive any feedback from commenters 
suggesting that this practice was, or would, harm beneficiaries or 
their access to coverage. We agree with commenters that implementing 
this process nationwide would result in more equitable treatment of 
beneficiaries across States and improved access for all Medicaid and 
CHIP beneficiaries nationwide. Therefore, we are finalizing a 
requirement at Sec.  435.919(f)(2)(i) that when a State receives 
information regarding an in-State change of address from a reliable 
data source, the State must accept the information as reliable, update 
the beneficiary's case record with the new information, and notify the 
beneficiary of the update.
    We recognize that some States will incur new costs as they 
establish data sharing agreements, create new electronic exchanges with 
the NCOA database and/or contracted managed care plans, and train staff 
in the use of

[[Page 22812]]

reliable, third-party information. However, we believe States will also 
see a reduction in the volume of returned mail as a result of this new 
policy. The benefits of maintaining up-to-date contact information for 
all beneficiaries should outweigh these upfront costs.
    Comment: We received many comments supporting the use of data 
sources other than the NCOA database and contracted managed care plans, 
such as the examples described in proposed Sec.  435.919(f)(1)(iii): 
SNAP, TANF, DMV, and other sources identified in the State's 
verification plan. Many commenters supported allowing States to accept 
updated address and contact information from a more expansive list of 
third-party sources. Suggested data sources include: medical providers 
and health clinics; Indian health care providers; essential community 
providers such as Federally Qualified Health Centers (FQHCs); community 
service providers such as a homeless shelters, homeless services 
providers or reentry programs; organizations that support managed care 
delivery systems, such as enrollment brokers; pharmacies and 
prescription drug plans; commercial third-party data providers; State 
and health plan contractors such as non-emergency medical 
transportation providers; schools; legally authorized representatives 
and/or emergency contacts; and other partners. One commenter supported 
crosschecking beneficiaries' addresses across State programs. Another 
commenter recommended that CMS more flexibly define reliable data 
sources and allow States to utilize additional sources that have proven 
to be credible (such as credit reporting agencies and utility 
companies).
    Many commenters recommended State flexibility with respect to the 
data sources to be used, and two commenters specifically opposed 
requirements to create new electronic data exchanges with sources a 
State has determined not to be helpful. One commenter stated that 
requiring States to check data sources with which they do not already 
have electronic connections will require eligibility workers to 
manually review a long list of data sources before acting on 
information, even when third-party information may not be reliable. 
Another commenter expressed support for an explicit requirement that 
the State Medicaid Agency select the third-party source that is 
believed to be the most comprehensive.
    Finally, many commenters expressed support for the provision at 
proposed Sec.  435.919(g)(2) authorizing States to use updated in-State 
address information from other trusted data sources with approval from 
the Secretary and further supported permitting such sources to be 
deemed ``reliable'' such that the information does not need to be 
reverified by the State. Some recommended permitting other reliable 
data sources, at State option, since the quality of data and the 
feasibility of accepting updated addresses varies between States and 
data sources.
    Response: We believe updated address information available from the 
NCOA database and updated address information verified by contracted 
managed care plans should always be considered reliable. As discussed, 
we are requiring at Sec.  435.919(f)(1)(i) of this final rule that 
States must establish processes to regularly obtain and act on 
information from these reliable data sources. We appreciate that other 
outside sources of information may also be efficient and effective for 
this purpose; however, we do not have enough information to conclude 
that any other such sources are sufficiently reliable to permit States 
to accept updated beneficiary contact information from them without 
separately verifying the information with the beneficiary or to require 
their use by all States.
    In this final rule, proposed Sec.  435.919(g)(2) is redesignated at 
Sec.  435.919(f)(1)(iii)(D), permitting States to request authority to 
utilize other data sources as reliable data sources, provided they can 
demonstrate that the data source provides reliable, up-to-date address 
information that has been verified with the beneficiary or an 
individual described at Sec.  435.907(a) who is permitted to submit 
information on behalf of the beneficiary. At Sec.  435.919(f)(1)(ii) of 
this final rule, we also revise and redesignate proposed Sec.  
435.919(g)(3), permitting States to establish a process to obtain 
information from other third-party data sources as well and to act on 
such information following additional verification by either a reliable 
data source or the beneficiary.
    Additional verification is required for two types of address 
changes: in-State address changes obtained from a third-party data 
source other than those considered reliable for this purpose and out-
of-State address changes received from any source. Section 
435.919(f)(2)(ii) of this final rule provides that when an in-State 
address change is provided by a data source not described in Sec.  
435.919(f)(1)(iii), the State must check their Medicaid Enterprise 
System, along with the most recent information obtained from reliable 
data sources, before taking any further action. In the September 2022 
proposed rule, we did not include a check of other data sources at 
proposed Sec.  435.919(g)(3) for verification of these types of address 
updates, but we sought comment on whether we should require States to 
check available data sources. We did not receive any comments opposing 
this action, and we are including this requirement in this final rule 
because we believe it is in the best interests of beneficiaries for all 
States to check reliable data sources that would permit the immediate 
update of beneficiary contact information. Section Sec.  
435.919(f)(2)(ii)(A) of this final rule requires that if the in-State 
change of address is consistent with information from the State's 
Medicaid Enterprise System or a reliable data source, the State must 
update the beneficiary's case record and notify the beneficiary of the 
change. In such cases no further action is required. However, if the 
State is unable to confirm the new address information through the 
State's Medicaid Enterprise System or other reliable data source, under 
Sec.  435.919(f)(2)(ii)(B) of this final rule, the State must make a 
good-faith effort to contact the beneficiary to verify the new address 
information. The requirements for making a good-faith effort are 
discussed later in this section.
    In the September 2022 proposed rule, we proposed that when a State 
is unable to confirm an in-State change of address with a beneficiary, 
the State may not terminate the beneficiary's eligibility for failure 
to respond to a request to confirm the change (proposed Sec.  
435.919(f)(4)(i)); additionally, if the in-State change of address was 
provided by a reliable data source, the State must accept it and update 
the beneficiary's case record (proposed Sec.  435.919(f)(4)(ii)). In 
this final rule, we revise and redesignate proposed Sec.  
435.919(f)(4)(i) and (ii) at Sec.  435.919(f)(2)(ii)(C), which 
prohibits a State from terminating the coverage of an individual for 
failure to respond to a request from the State to confirm the 
information. Section 435.919(f)(2)(ii)(C) of this final rule also 
prohibits the State from using the information to update the 
beneficiary's case record, because the information subject to this 
provision was not obtained from a reliable data source, and it was not 
verified by the beneficiary.
    The other type of address change requiring additional verification 
is an out-of-State address change. In the September 2022 proposed rule, 
at Sec.  435.919(f)(2) and (3), we proposed to require States to 
contact a beneficiary by mail and using at least one alternative 
modality to verify an out-of-State forwarding address provided by USPS

[[Page 22813]]

when mail is returned to the State. Then at Sec.  435.919(g)(3), we 
proposed to apply these same beneficiary contact requirements (proposed 
Sec.  435.919(f)(2) and (3)) to out-of-State address changes provided 
by third-party data sources other than the NCOA database and contracted 
managed care plans. We did not receive any comments specific to 
beneficiary contacts required to confirm out-of-State address changes. 
In this final rule, at Sec.  435.919(f)(3)(i) we revise and redesignate 
the requirements proposed at Sec.  435.919(f)(2) and (3) and (g)(3) 
that States contact a beneficiary by mail and through at least one 
alternative modality to verify an out-of-State address update. As 
finalized, Sec.  435.919(f)(3)(i) requires the State to make a good-
faith effort to contact the beneficiary to confirm an out-of-State 
address change received from any third-party data source. The good-
faith effort requirement is discussed in detail later in this section.
    When a State is unable to reach a beneficiary to confirm the 
accuracy of updated out-of-State address information or to obtain 
additional information demonstrating that the beneficiary continues to 
meet State residency requirements, we proposed at Sec.  435.919(f)(5) 
that the State must provide advance notice of termination and fair 
hearing rights consistent with 42 CFR part 431, subpart E. We are 
finalizing this policy as proposed; to do so, we revise and redesignate 
the language proposed at Sec.  435.919(f)(5) at Sec.  435.919(f)(3)(ii) 
of this final rule.
    While the use of data sources other than USPS and contracted 
managed care plans does require a State to complete additional 
verification, we encourage States to continue existing data exchanges 
to obtain updated beneficiary address information and to test the 
reliability of existing data sources and other data sources identified 
by commenters. As CMS and States' experience with other sources of 
beneficiary contact information increases, we may learn of other 
sources that are also extremely reliable. If a State demonstrates that 
another such source of updated beneficiary contact information is 
reliable, Sec.  435.919(f)(1)(iii)(D) of this final rule provides 
flexibility for the State, subject to approval by the Secretary, to 
treat updated contact information from such source in the same manner 
as other reliable data sources (Sec.  435.919(f)(1)(iii)(A) through 
(C)) are treated.
    Comment: Several commenters encouraged CMS to either require or to 
encourage States to use all available data sources to verify addresses 
and contact information prior to terminating eligibility when a 
beneficiary's whereabouts cannot be confirmed. These commenters 
explained that requesting States to select only one data source, as 
proposed at Sec.  435.919(f)(1)(iii), may be insufficient, as not all 
beneficiaries will, for example, receive benefits from a specified 
State agency or have a driver's license. Utilizing all available data 
sources would minimize unnecessary Medicaid coverage loss.
    Response: We understand commenters' concerns about ensuring that 
States take sufficient action to attempt to locate a beneficiary whose 
whereabouts are unknown. In the September 2022 proposed rule at Sec.  
435.919(f)(1), we proposed to require that when a State receives 
returned mail with no forwarding address, the State must check its 
Medicaid Enterprise System, contracted managed care plans (if 
applicable), and at least one third-party data source for an updated 
address. We recognize that a single data source may not be sufficient, 
depending on the source, to locate a beneficiary whose whereabouts are 
unknown. However, as discussed previously, in this final rule we are 
requiring all States to utilize the reliable data sources described in 
Sec.  435.919(f)(1)(iii). We believe these data sources will provide 
not only the greatest reliability but also include information on the 
largest number of Medicaid and CHIP beneficiaries of any available 
third-party data sources. While we are not requiring the use of 
additional data sources, we encourage States to use all available 
resources to locate a beneficiary whose whereabouts are unknown.
    At Sec.  435.919(f)(4)(i) and (ii) of this final rule, we are 
revising and redesignating the requirements proposed at Sec.  
435.919(f)(1), along with the requirements proposed at Sec.  
435.919(f)(2) and (3), for mail that is returned without a forwarding 
address. We require at Sec.  435.919(f)(4)(i) of the final rule that 
when a State receives returned mail with no forwarding address, the 
State must check its Medicaid Enterprise System and the most recently 
available information from reliable data sources for additional contact 
information. If updated address information cannot be obtained and 
confirmed as reliable, then Sec.  435.919(f)(4)(ii) requires the State 
to make a good-faith effort (as discussed later) to contact the 
beneficiary to obtain updated information. If a State is unable to 
identify and confirm a beneficiary's current address, the State must 
either move the beneficiary to a fee-for-service delivery system or 
take the necessary steps to terminate or suspend the beneficiary's 
coverage. At Sec.  435.919(f)(4)(iii) of this final rule, we 
redesignate and finalize the requirements proposed at Sec.  
435.919(f)(6).
    Comment: One commenter requested clarity on what would constitute a 
check of a third-party data source such as a contracted managed care 
plan. The commenter questioned whether a process, for example, in which 
the State obtains updated beneficiary contact information from its 
managed care plans on a recurring basis, would satisfy the requirement 
at proposed Sec.  435.919(f)(1)(ii) to check managed care plans for 
updated address information whenever beneficiary mail is returned. 
Similarly, commenters recommended that requests for beneficiary contact 
information be sent to managed care plans in batch files, rather than 
individually, since responding to individual requests would require a 
significant amount of time and resources from the plans. One commenter 
recommended that States establish new processes to ensure that they do 
not accidentally override updated enrollee information received from 
managed care plans.
    Response: We recognize that submitting an individual request to a 
managed care plan each time the State receives updated beneficiary 
address information may be unnecessarily burdensome, particularly if 
the process is not automated. We also understand that many States have 
established processes with contracted managed care plans to obtain 
updated beneficiary contact information on a regular basis, such as a 
daily, weekly, or monthly data exchange. We believe any of these 
options satisfies the requirement to check data sources for updated 
address information, which was proposed at Sec.  435.919(f)(1) and is 
finalized at Sec.  435.919(f)(1)(i) (establishing a process to obtain 
updated address information from reliable sources) and at Sec.  
435.919(f)(2)(ii) (checking reliable data sources to verify in-State 
address updates) and (f)(4)(i) (checking reliable data sources to 
obtain updated address information when whereabouts are unknown). A 
State may satisfy the requirement to verify in-State address updates 
(Sec.  435.919(f)(2)(ii)) and the requirement to obtain new address 
information when whereabouts are unknown (Sec.  435.919(f)(4)(i)), by 
making individual data requests to reliable data sources or by sending 
a batch of individual requests to a reliable data source on a regular 
basis, such as at the end of each day or week. Alternatively, States 
may satisfy this requirement by

[[Page 22814]]

establishing a process to receive regular updates (that is, daily, 
weekly, or monthly) from reliable data sources. We believe that 
establishing a process to receive regular updates strikes the best 
balance between minimizing the burden on States (as well as their 
contracted managed care plans) and ensuring that States have up-to-date 
beneficiary contact information when needed to contact a beneficiary, 
such as the beneficiary's next renewal or redetermination of 
eligibility following a change in circumstances.
    Comment: We received many comments on the requirements proposed for 
contacting beneficiaries to confirm a change of address. At Sec.  
435.919(f)(2) and (g)(1)(ii), we proposed to require States to send the 
beneficiary a notice by mail at: the current address in the 
beneficiary's case record; the forwarding address, if provided for 
returned mail, or the new address obtained from a third-party data 
source; and any address identified by checking other data sources 
(required for returned mail only). Some commenters supported these 
proposed requirements, describing the requirement to send notices to 
both (or multiple) addresses as a critical step to protect the 
beneficiary's right to ensure that the information is correct before it 
becomes permanent.
    While some commenters were supportive, many other commenters 
expressed concerns about the requirements for mailing notices to 
beneficiaries. Commenters were particularly concerned about the 
proposed requirement to send a notice to the address on file after mail 
sent to that address has been returned. They stated that such an 
approach would not be effective or efficient, and that it would add 
unnecessary time, and administrative and financial burden. A couple of 
commenters were concerned that the proposed approach would do the 
opposite of streamlining eligibility and enrollment, and one suggested 
that it contradicts the intent of the Paperwork Reduction Act of 1995, 
because it will generate twice as much mail to be processed when it is 
returned again to the agency undelivered.
    Commenters reported concerns that ongoing paper and envelope 
shortages would be exacerbated by a requirement to send multiple paper 
notices, that it would increase the backlog of returned mail 
processing, that it would have a negative environmental impact, and 
that it would compound confusion and burden on beneficiaries who 
already receive a large volume of notices. In addition, several States 
reported that their systems do not have the functionality to hold (or 
send mail to) more than one beneficiary address; that manual 
intervention by workers would be necessary to add a second address; and 
that this process would significantly increase the risk of data input 
errors and lead to more misdirected notices. One State commenter 
explained that due to system limitations, they have developed a 
different process that is not consistent with CMS' proposed change, but 
they believe to be comparably effective.
    At Sec.  435.919(f)(3) and (g)(1)(iii), we proposed to require 
States to send at least two additional notices using one or more 
modalities besides mail, such as text message or email. Many commenters 
supported the proposed requirement for States to contact beneficiaries 
through other modalities, such as phone, email, or text message, when 
mail is returned, since this may increase their ability to reach 
eligible individuals. Several commenters noted that use of additional 
modalities puts greater protections in place to ensure that States are 
doing their due diligence to follow up when mail is returned. One 
commenter noted that traditional mail has proven to be vastly 
ineffective due to changes in address and delays in mail delivery, and 
one State commenter stated that they already attempt outreach to 
beneficiaries by telephone, in addition to sending a notice by mail, 
when mail is returned.
    Other commenters expressed concerns about the financial, 
administrative, and time burden of contacting beneficiaries through 
multiple modalities. Several commenters stated that their States would 
require significant personnel resources for compliance, since possible 
automation of notices provided through other modalities would be 
limited and would likely require complex modifications to multiple 
systems. Some States reported that they would need to procure a 
Customer Relationship Management system, which would require years and 
significant State funds to implement. Other commenters were concerned 
that it may be impossible to send a beneficiary at least two additional 
notices by one or more modalities other than mail. The commenters 
stated that States may not have enough available contact information 
for a phone call, electronic notice, email, and/or text message, 
particularly if they only maintain email addresses for individuals who 
have elected to receive their notices electronically, which may result 
in a low contact success rate with a high cost.
    A number of commenters recommended more State flexibility for 
contacting beneficiaries about returned mail and updated mailing 
addresses. Others suggested specific alternative approaches. Some 
supported a requirement for States to investigate other available 
addresses and send notice to those addresses. Others recommended 
limiting the total number of required attempts to two, for example, by 
sending one notice to the updated address and another notice through an 
additional modality other than mail. We also received comments 
recommending that the second notice be a State option or best practice, 
particularly in light of the reliability of forwarding addresses. 
Finally, some commenters recommended that CMS not mandate any specific 
outreach, but instead encourage States to make additional attempts to 
contact beneficiaries through additional modalities.
    Response: We agree that when new address information is obtained 
from outside sources, which may not have verified the information in 
advance, it is important for States to take adequate steps to contact 
the beneficiary and ensure that the information is correct. We also 
understand the barriers and challenges raised by commenters regarding 
the proposed approaches for contacting beneficiaries by mail and 
through other modalities, and we recognize that some approaches will be 
easier to implement in some States than others. In this final rule, we 
seek to balance the likelihood of reaching a beneficiary with the 
significant increase in burden that multiple mailings and the use of 
multiple modalities would place on State Medicaid and CHIP agencies.
    As discussed previously in this final rule, we believe updated 
addresses provided by the NCOA database and States' contracted managed 
care plans (when verified by the beneficiary) are extremely reliable. 
Therefore, we are finalizing a requirement at Sec.  435.919(f)(2)(i) 
that States must accept in-State address updates from these sources as 
reliable, use the information to update the contact information in a 
beneficiary's case record without attempting to contact the beneficiary 
for additional verification, and notify the beneficiary of the update. 
We believe this change will reduce the number of additional beneficiary 
communications that are needed. However, we believe there are still a 
number of situations in which it is important for States to attempt to 
contact a beneficiary to confirm a change of address before updating 
the beneficiary's case record.

[[Page 22815]]

This includes situations in which the reliable third-party data 
indicates a potential change of State residency (that is, an out-of-
State forwarding address), the change of address was provided by a 
third-party data source other than those considered reliable under 
Sec.  435.919(f)(1)(iii) of this final rule, or mail is returned to the 
State without a forwarding address. Therefore at Sec.  
435.919(f)(2)(ii)(B), (f)(3)(i), (f)(4)(ii), and (f)(5) of this final 
rule, we revise and redesignate the beneficiary contact requirements 
proposed at Sec.  435.919(f)(2) and (3) and (g)(1)(ii) and (iii). For 
the purpose of this final rule, we refer to these beneficiary contact 
requirements as a good-faith effort to contact beneficiaries to confirm 
address changes, and we define a good-faith effort at Sec.  
435.919(f)(5). The discussion that follows describes Sec.  
435.919(f)(5) in detail, including the redesignation and revisions to 
proposed Sec.  435.919(f)(2) and (3) and (g)(1)(ii) and (iii).
    In the September 2022 proposed rule, at Sec.  435.919(f)(2), we 
proposed to require that whenever beneficiary mail is returned to the 
State by USPS, the State must attempt to contact the beneficiary by 
mail to either confirm the forwarding address or to obtain a new 
address. This included requirements to send a notice to the address 
currently on file in the beneficiary's case record, the forwarding 
address (if provided) and any other addresses identified by the agency. 
We proposed the same requirement at Sec.  435.919(g)(1)(ii) for updated 
in-State address information obtained from the NCOA database or from a 
contracted managed care plan (provided the information was verified by 
the beneficiary), except the requirement to send a notice to other 
addresses identified by the agency. Finally, we proposed to apply the 
requirements at Sec.  435.919(f)(2) to in-State address changes 
received from data sources other than USPS and contracted managed care 
plans and to out-of-State address changes received from any outside 
data source through a cross reference at proposed Sec.  435.919(g)(3).
    At Sec.  435.919(f)(3) and (g)(1)(iii) we proposed to require that 
States send the beneficiary at least two notices, by one or more 
modalities other than mail, such as phone, electronic notice, email, or 
text message, to either confirm the forwarding address or to obtain a 
new address. Consistent with the requirements for mailing notices, we 
proposed to apply these requirements when beneficiary mail is returned, 
when the State obtains an updated in-State address from the NCOA 
database, and to other address updates through a cross-reference at 
Sec.  435.919(g)(3).
    In this final rule, we combine these requirements into a good-faith 
effort requirement to contact the beneficiary, which must include, at a 
minimum, at least two attempts to contact the beneficiary, using at 
least two different modalities, with a reasonable period of time 
between contact attempts. To permit a swift and seamless transition, we 
modelled the good-faith effort required by this final rule on the 
requirements established under section 6008(f)(2)(C) of the FFCRA, as 
amended by the CAA, 2023. As a condition for receiving the FFCRA's 
temporary FMAP increase, States were required to undertake a good-faith 
effort to contact beneficiaries using more than one modality before 
terminating eligibility on the basis of returned mail. In a State 
Health Official letter issued on January 27, 2023 (SHO# 23-002), we 
defined a good-faith effort to mean that the State (1) has a process in 
place to obtain up-to-date mailing addresses and additional contact 
information for all beneficiaries, and (2) attempts to reach a 
beneficiary whose mail is returned through at least two modalities 
using the most up-to-date contact information the State has for the 
individual.\15\
---------------------------------------------------------------------------

    \15\ https://www.medicaid.gov/federal-policy-guidance/downloads/sho23002.pdf.
---------------------------------------------------------------------------

    The September 2022 proposed rule would have required States to mail 
notices to all available beneficiary addresses, including the address 
currently on file, the forwarding address, and any other addresses 
obtained from other data sources. We agree with commenters that this 
proposed requirement was unnecessarily burdensome. In this final rule, 
we have eliminated the specific requirements for mailing notices to the 
old address, new address, and any other available to the agency. 
Instead, Sec.  435.919(f)(5)(i)(A) requires the State to make at least 
two attempts to contact the beneficiary, and Sec.  435.919(f)(5)(i)(B) 
requires the State to use at least two different modalities (such as 
mail, phone, email). For many beneficiaries, a mailed paper notice 
continues to be the best method of communication, and when the State 
receives an out-of-State forwarding address or obtains an updated in-
State address, we would generally expect the State to mail a notice to 
that address as part of their good-faith effort, in accordance with 
this final rule. This approach provides States with flexibility, for 
example, to tailor their approach to specific types of beneficiaries 
and to utilize modalities that have proven most effective in reaching 
their beneficiaries.
    We recognize that every individual's situation is different, and 
some beneficiaries may respond best to text messaging, internet-based 
messaging, or other electronic communication, while others may be more 
likely to respond to a phone call or a letter. We proposed to require, 
at Sec.  435.919(f)(3)(i) that for a beneficiary who elected to receive 
electronic notices and communications in accordance with Sec.  435.918, 
at least one communication attempt must be electronic, and any 
additional attempts must occur through a different modality. We are not 
finalizing this requirement; removing this proposed requirement from 
the final rule increases State flexibility, and current Sec.  
435.918(b) already requires States to communicate electronically, by 
posting notices to an individual's electronic account, when an 
individual elects to receive their notices electronically. We expect 
States to utilize the modalities that match individual beneficiary 
preferences as much as possible. For those beneficiaries who have 
requested electronic communications, we would generally expect at least 
one of the attempts to contact the beneficiary, as required at Sec.  
435.919(f)(5)(i), to be made using this modality unless the electronic 
communication is undeliverable. If the electronic communication is 
undeliverable, the State must utilize other modalities, if available, 
to fulfill this requirement.
    Further, we proposed at Sec.  435.919(f)(3)(ii) and (iii) that 
notices must be sent first to contact information in the beneficiary's 
case record, if available, and then using other contact information, 
but that the State may utilize any combination or order of modalities. 
To increase flexibility and permit States to establish the most 
effective processes given their unique circumstances, we are not 
finalizing these requirements. However, in making a good-faith effort 
to contact a beneficiary, we expect States to utilize the most up-to-
date information available. For example, if a State receives a piece of 
returned mail with no forwarding address, and the contact information 
in the beneficiary's case record includes a mailing address and cell 
phone number provided 10 months ago, plus an email address that was 
updated one month ago, the State would be expected to attempt to 
contact the beneficiary by email and by phone or text.
    We believe this requirement to make a good-faith effort to contact 
the beneficiary, with at least two attempts through two or more 
modalities, strikes

[[Page 22816]]

the best balance of protecting coverage for eligible individuals 
without overburdening State agencies. We also recognize that States 
will not always have sufficient information to make two or more 
attempts through different modalities. At Sec.  435.919(f)(5)(ii), we 
revised and redesignated the requirement proposed at Sec.  
435.919(f)(3)(v) that if the State does not have the necessary contact 
information to full the requirements of Sec.  435.919(f)(5)(i) for a 
good-faith effort, the State must make a note of that fact in the 
beneficiary's case record.
    Comment: One commenter supported the proposed requirement that when 
a State sends notice to a beneficiary to update their address, or 
confirm an updated address, the individual be provided with a 
reasonable period of time of 30 calendar days from the date the notice 
is sent to the beneficiary to verify the accuracy of the new contact 
information. Another commenter disagreed with the requirement to wait 
30 calendar days to hear back from a beneficiary before acting on a 
change. One commenter reported that States often receive address 
changes that at are least six months old, creating very little risk 
that the individual incorrectly updated their address and did not 
realize the error in the intervening six months; in these cases, giving 
the beneficiary 30 days to respond would significantly delay the 
State's ability to update the address and not meaningfully increase the 
accuracy of the agency's contact information.
    Response: We believe it is important to provide beneficiaries with 
adequate time to receive and respond to a request from the State. In 
this final rule, we revise and redesignate the requirement to provide 
beneficiaries with at least 30 days to verify the accuracy of new 
contact information, proposed at Sec.  435.919(f)(3)(i) and (g)(1)(v), 
at Sec.  435.919(f)(5)(i)(D) of this final rule. Section 
435.919(f)(5)(i)(D) provides that when a State makes a good-faith 
effort to contact a beneficiary to confirm their updated address, the 
State must provide the beneficiary with at least 30 calendar days to 
respond to the request and either provide updated contact information 
or confirm the updated contact information obtained by the State. We 
note that when beneficiaries themselves provide updated contact 
information to the State, or when the State receives updated, in-State 
contact information from a reliable data source described in Sec.  
435.919(f)(1)(iii), the State is not required to separately verify the 
change with the beneficiary.
    Comment: We received several comments regarding the use of data in 
States with combined eligibility systems, which may include Medicaid, 
SNAP, TANF, and other public benefit programs. One commenter questioned 
whether use of a combined eligibility system would automatically 
satisfy the requirement at proposed Sec.  435.919(f)(1)(iii) to check 
at least one outside data source. Two commenters expressed concern 
about the use of other data sources in States with combined eligibility 
systems. One commenter noted that while the NCOA database, for example, 
may be an acceptable source for address verification for Medicaid, it 
may conflict with other programs' requirements and could have a 
significant impact on eligibility for other benefit programs.
    Response: We recognize that utilizing a combined eligibility system 
requires navigating among different programs' eligibility requirements. 
Prior to this final rule, policy differences already existed between 
CMS programs and other State-administered health and human services 
programs, and States have reconciled differences over time to 
administer multiple programs together through a single system. States 
have a number of options for reconciling different program requirements 
for this purpose. They may, for example, adopt options or flexibilities 
that permit alignment of program rules, establish separate processes to 
allow separate rules to be applied to each program, or determine that 
information collected, or decisions made, by one program can be applied 
to the other program. The options available will differ by program, by 
State and Federal requirements, and by the specific nature and design 
of State processes.
    In this rule, we are finalizing a requirement that States must 
obtain data from sources defined as reliable for updating beneficiary 
contact information. At Sec.  435.919(f)(1)(iii), we define the 
following four data sources as reliable: mail returned to the State 
agency by the USPS, the NCOA database, managed care plans, and other 
entities under contract with the State, and other data sources 
identified by the State and approved by the Secretary. States may seek 
approval from the Secretary to deem data provided by SNAP, TANF, or 
another public benefit program or agency as reliable for updating 
beneficiary contact information. In such cases, the State must 
demonstrate that the information was received directly from, or 
verified by, the beneficiary whose contact information will be updated 
or by an individual with authority to provide information to the State 
on the beneficiary's behalf. Such individuals would include an adult 
who is in the applicant's household, as defined in Sec.  435.603(f), 
family, as defined at 26 U.S.C. 36B(d)(1), or an authorized 
representative. Additional information on obtaining Secretarial 
approval for this purpose will be made available through subregulatory 
guidance.
    We are not finalizing the requirement at proposed Sec.  
435.919(f)(1)(iii) to check at least one outside data source, so the 
commenter's question about whether use of a combined eligibility system 
would automatically satisfy the requirement to check an outside data 
source is no longer relevant for this rule. However, States are 
permitted, as described at Sec.  435.919(f)(1)(ii) to establish 
processes to obtain updated address information from data sources other 
than those identified as reliable and described in Sec.  
435.919(f)(1)(iii), including data provided by SNAP, TANF, or other 
public benefit programs. States must act on information obtained from 
these data sources in accordance with Sec.  435.919(f)(2) and (3).
    Comment: Several commenters opposed the proposed requirement that 
when sending notices through one or more modalities, the notices be 
issued a minimum of 3 days apart. The commenters stated that this would 
be operationally difficult for States to monitor and track and would 
create significant additional work without a clear added benefit. The 
commenters recommended State flexibility with respect to the timing of 
the communications. Other commenters supported the requirement to 
schedule at least 3 business days between the first and the last 
attempt to contact a beneficiary, explaining that such additional time 
may permit some beneficiaries to overcome challenges they experienced 
in responding to the first attempt.
    Response: We appreciate the input. We agree that it is important to 
provide a reasonable period of time for a beneficiary to respond 
between the first and the last contact attempts. However, we also 
understand commenters' concerns that 3 days may not be the best 
timeframe for all situations and that such a specific timeframe may be 
difficult to implement. While we believe 3 days is a reasonable period 
of time, we believe other timeframes may also be considered reasonable. 
As such, we are revising and redesignating proposed Sec.  
435.919(f)(3)(iv) at Sec.  435.919(f)(5)(i)(C), which requires that a 
good-faith effort to contact a beneficiary includes a reasonable period 
of time between contact attempts.
    Comment: One commenter recommended that before updating a

[[Page 22817]]

mailing address based on secondary information, States use the new 
address as an alternative address or consider communicating only non-
sensitive information at the new address until the beneficiary has been 
successfully contacted and has confirmed the update. The commenter 
explained that such an approach would mitigate privacy concerns if 
personal health information was inadvertently sent to the individual at 
an incorrect address.
    Response: We agree that protecting the privacy of Medicaid and CHIP 
beneficiaries is critical. That is why we proposed at Sec.  
435.919(f)(2) and (3) and (g)(1) to require that States contact 
beneficiaries prior to making updates to their contact information 
based on information provided by an outside data source that has not 
been determined to be extremely reliable. We note that the reliable 
data sources identified in Sec.  435.919(f)(1)(iii) of this final rule 
all provide information that was either obtained from or confirmed by 
the beneficiary. Except in the case of updated in-State address 
information received from a reliable data source, we are finalizing the 
requirement that the State attempt to contact a beneficiary to confirm 
an in-State change of address (Sec.  435.919(f)(2)(ii)(B)) and an out-
of-State change of address (Sec.  435.919(f)(3)(i)) provided by a 
third-party data source.
    Comment: One commenter expressed concern that States would not be 
permitted to send electronic notices to individuals who do not 
expressly consent to receive their notices electronically.
    Response: States are required to provide timely and adequate 
written notice to beneficiaries of any decisions affecting their 
eligibility, as described at current Sec.  435.917. If an individual 
elects to receive such notices electronically, the use of electronic 
notices must comply with Sec.  435.918(b). This regulatory requirement 
does not prohibit a State from attempting to reach a beneficiary 
through a secure electronic communication when the State is unable to 
deliver the notice by mail because a beneficiary's mailing address is 
no longer correct.
    Comment: One commenter expressed concerns surrounding managed care 
plans' ability to utilize two different effective contact modalities 
given current restrictions under the Telephone Consumer Protection Act 
(TCPA). The commenter requested clear guidance on the role of managed 
care plans in these outreach efforts.
    Response: We believe managed care plans are a particularly 
effective source of reliable contact information for beneficiaries. 
That is why we are finalizing the requirement proposed at Sec.  
435.919(f)(1)(ii), revised and redesignated at Sec.  435.919(f)(1)(i) 
that States establish a process to obtain and act on updated 
information available through contracted managed care plans. While 
managed care plans are important partners to State Medicaid and CHIP 
agencies, the regulatory requirement finalized at Sec.  435.919(f) does 
not require action by contracted managed care plans. State agencies 
must make a good-faith effort to contact their beneficiaries to verify 
a change of address. While Sec.  435.919(f)(1)(i) requires States to 
work with contracted managed care plans to obtain updated beneficiary 
contact information, the managed care plans themselves are not 
obligated to conduct any outreach under these requirements. Because the 
requirements established by the TCPA fall outside our purview, we are 
not able to provide guidance on this statute or compliance with its 
terms. For additional information on the TCPA and its implications for 
Medicaid and CHIP agencies, we refer readers to guidance issued by the 
Federal Communications Commission at https://www.fcc.gov/document/fcc-provides-guidance-enable-critical-health-care-coverage-calls.
    Comment: Many commenters noted the importance of using multiple 
modalities to reach beneficiaries in different types of situations. 
Several commenters expressed concerns about States' ability to contact 
beneficiaries who may be housing insecure and do not maintain a 
consistent address, because reliance on mailed notices will have a 
disproportionately negative impact on such individuals, particularly 
individuals experiencing homelessness. One commenter explained that 
text messages and email are likely preferred methods of contact for 
Medicaid beneficiaries due to the high prevalence of smartphone use 
among this population. Other commenters noted that beneficiaries have 
varied access to different modes of communication, and they are likely 
to have different levels of ability and levels of comfort utilizing 
various communication modalities. Examples provided by commenters 
include beneficiaries in rural areas who may have limited broadband 
access and cellphone coverage, older adults and people with 
disabilities who may temporarily lose access to mail while they are 
hospitalized or receiving skilled nursing care in a facility, and 
individuals with disabilities who may have unique accessibility issues 
across different modes of communication.
    One commenter recommended that beneficiary preferences be 
considered when determining the best contact method for a given 
beneficiary, as some may prefer electronic notices, some may opt for 
paper, and others may prefer to speak to a caseworker, especially if 
they have questions. Another commenter recommended that applications 
and renewal forms include options to indicate when an individual is 
experiencing unstable housing and must be contacted through methods 
other than mail. A third commenter suggested that we provide States 
with resources and technical assistance to ensure they are equipped to 
communicate with beneficiaries experiencing homelessness, including via 
text messaging.
    Response: We agree that different modes of communication are likely 
to be more effective for some beneficiaries than others and that access 
to alternative forms of communication is particularly important for 
individuals who may not receive mail regularly, such as those who are 
housing insecure. The model, single streamlined application described 
at Sec.  435.907(b)(1) permits applicants to leave the home address 
field blank if they are experiencing unstable housing, and applicants 
and beneficiaries are always permitted to provide an alternative 
mailing address, such as the address of a relative, friend, community-
based organization, or post office, among others. In addition, every 
applicant and beneficiary currently have the right under existing 
regulations (see Sec.  435.918) to elect to receive communications 
electronically. We will continue to consider additional opportunities, 
including potential changes to the single, streamlined application, to 
assist States in communicating with different types of individuals who 
may have different communication needs. We remind States that 
communications with individuals with limited English proficiency and 
individuals with disabilities must be accessible, as discussed 
previously.
    Comment: One commenter requested clarification about whether States 
are required to act on address changes reported by third-party entities 
that are not considered by the State to be reliable.
    Response: Other than the data sources identified as reliable in 
Sec.  435.919(f)(1)(iii) of this final rule--the agency's contracted 
managed care plans, the NCOA database, USPS returned mail, and any 
other source identified by the State and approved by the Secretary--
States are not required to establish processes for obtaining updated 
address information from any

[[Page 22818]]

other specific data sources. Each State agency has flexibility to 
determine which data sources will be most effective for use in their 
own State. Address information obtained from any data source other than 
those identified as reliable in Sec.  435.919(f)(1)(iii) must be 
verified by the beneficiary.
    Comment: Most commenters supported the proposed requirement at 
Sec.  435.919(f)(4)(i) that when beneficiary mail is returned to the 
State and the State is unable to confirm a beneficiary's in-State 
forwarding address, the State may not terminate the beneficiary's 
eligibility for failure to respond.
    Response: We agree that failure to respond to a request to confirm 
a change of address is not a valid reason for terminating a 
beneficiary's eligibility. We are finalizing this requirement as 
proposed, except that we have moved the proposed provision to Sec.  
435.919(f)(2)(ii)(C) of this final rule and applied it only to in-State 
address updates from third-party sources other than those defined as 
reliable at Sec.  435.919(f)(1)(iii). When the State receives an in-
State address change from the USPS, either via returned mail or from 
the NCOA database, or from a contracted managed care plan that obtained 
the information directly from the beneficiary or verified it with the 
beneficiary, Sec.  435.919(f)(2)(i) requires the State to accept the 
change, update the beneficiary's case record with the information and 
then notify the beneficiary of the change. A beneficiary does not need 
to respond to reconfirm the information provided by a reliable data 
source.
    Comment: One commenter requested clarification about the 
prohibition on terminating Medicaid eligibility when a beneficiary 
fails to respond to a request to confirm an in-State forwarding 
address. The commenter was unclear about whether this requirement was 
limited to only circumstances in which the change of address is the 
only change or whether it also applies when a State attempts to contact 
a beneficiary to request information about a change that does impact 
the individual's eligibility, such as income.
    Response: Section Sec.  435.919(f)(2)(ii)(C) of this final rule, 
prohibits a State from terminating an individual's coverage for failure 
to respond to a request from the State to confirm their address or 
State residency. This requirement applies only to the request to 
confirm the change of address. For example, a State receives 
notification through a monthly data exchange with SNAP that a 
beneficiary's address has changed to a new in-State address. In 
accordance with Sec.  435.919(f)(2)(ii)(A) of this final rule, the 
State checks reliable data sources but is unable to confirm the 
beneficiary's updated address. The State therefore mails a notice to 
the beneficiary and calls the beneficiary at the phone number in the 
beneficiary's case record to request confirmation of the change of 
address. If the beneficiary does not respond to either request, the 
State may not terminate the beneficiary's eligibility in accordance 
with Sec.  435.919(f)(2)(ii)(C) of this final rule. However, if the 
State receives information from the SNAP agency both that the 
beneficiary has moved and that their income has increased beyond the 
income standard for Medicaid, the outcome may be different. In this 
case, the State would need to contact the beneficiary in accordance 
with Sec.  435.919(f)(2)(ii) to confirm the change of address, and in 
accordance with Sec.  435.919(b)(4) to verify or dispute the income 
information. After following these steps, if the beneficiary does not 
respond the State's outreach, then the State may send advance notice of 
termination and fair hearing rights, in accordance with Sec.  435.917 
and 42 CFR part 431, subpart E, because it cannot confirm that the 
beneficiary remains income eligible.
    Comment: We received one comment urging CMS to require States to 
provide advance notice, at a beneficiary's last known address or 
through electronic means, before suspending or terminating eligibility 
because a beneficiary's whereabouts are unknown.
    Response: The circumstances in which Medicaid's notice and fair 
hearing rights apply are set forth in 42 CFR part 431, subpart E. 
Section 431.213 provides for a series of exceptions to the requirement 
to provide advance notice; current Sec.  431.213(d) permits a State to 
send notice of an adverse action not later than the date of the action 
when a beneficiary's whereabouts are unknown and the post office 
returns mail with no forwarding address. It also refers to current 
Sec.  431.231(d) for the procedure for when beneficiaries whereabouts 
become unknown. In the preamble to the September 2022 proposed rule, we 
proposed to revise and redesignate Sec.  431.231(d) at proposed Sec.  
435.919(f)(6) and to update the reference to Sec.  431.231(d) in 
current Sec.  431.213(d). However, we did not carry these changes over 
to the proposed regulatory text correctly, and the references to 
Sec. Sec.  431.213(d) and 431.231(d) were switched. The requirement for 
States to provide advance notice and fair hearing rights, and the 
existing exception at Sec.  431.213(d) permitting the State to send 
notice no later than the date of termination or suspension when a 
beneficiary's whereabouts are unknown, are not impacted by this final 
rule. However, we are finalizing the proposed change to revise and 
redesignate Sec.  431.231(d). In this final rule, we remove and reserve 
paragraph (d) of Sec.  431.231, which requires that any discontinued 
services be reinstated if a beneficiary's whereabouts become known 
during the time that beneficiary would have remained eligible for 
services. Paragraph (f)(4)(iii) of this final rule describes the 
procedures a State must follow when a beneficiary's whereabouts are 
unknown, including the requirement to reinstate coverage if the 
beneficiary's whereabouts become known.
    We understand the commenter's concerns about ensuring that 
beneficiaries receive advance notice of any adverse actions. We believe 
the changes finalized in this rule will reduce the number of 
beneficiaries whose whereabouts remain unknown and who cannot be 
reached for notification. While we are not making any policy changes to 
the exception at Sec.  431.213(d), we will continue to seek new 
alternatives and will consider making a change in future rulemaking.
    Comment: We received several comments on proposed Sec.  
435.919(f)(5), which would require States to terminate the eligibility 
of a beneficiary if they are unable to contact the beneficiary 
following the return of mail with an out-of-State forwarding address. 
Several commenters specifically supported this proposed requirement. 
They noted that beneficiaries must first be given proper notice and the 
opportunity to verify or dispute the out-of-State address, and the 
State must provide advance notice of termination and fair hearing 
rights. Two commenters recommended that no disenrollment action be 
taken due to returned mail, since it does not necessarily indicate that 
a beneficiary has moved. Another commenter recommended that in lieu of 
disenrollment, States be given the option to retain eligibility for 
such beneficiaries and transition them to fee-for-service care as 
opposed to keeping them enrolled in a managed care plan and continuing 
to make capitation payments.
    Response: We believe it is appropriate for States to terminate the 
eligibility of beneficiaries when the State has information indicating 
that the beneficiary no longer meets all eligibility requirements, in 
this case State residency, and the beneficiary does not respond to 
requests from the State to verify continued eligibility. At

[[Page 22819]]

Sec.  435.919(f)(3)(ii) of this final rule, we are finalizing the 
requirement proposed at Sec.  435.919(f)(5) to terminate eligibility in 
such cases; States must provide advance notice and fair hearing rights 
in accordance with Sec.  435.917 and 42 CFR part 431, subpart E.
    We appreciate commenters' interest in keeping beneficiaries 
enrolled. However, we do not believe it is appropriate to maintain the 
eligibility of a beneficiary when the State has information indicating 
that the individual no longer meets the State's residency requirement, 
regardless of the delivery system in which the individual is enrolled. 
An individual cannot have a different eligibility determination in a 
managed care versus a fee-for-service delivery system. We believe the 
commenter's recommendation to transition beneficiaries from managed 
care to fee-for-service was intended to permit States to keep 
beneficiaries enrolled, in case they respond later to confirm continued 
State residency, while at the same time protecting the State from 
paying for medical assistance while their eligibility status is 
unclear. Changing the delivery system through which a beneficiary 
receives medical assistance is not an appropriate way to resolve an 
eligibility issue. However, we note that States may achieve a similar 
result through use of a reconsideration period. As described at Sec.  
435.919(d) of this final rule, when the State receives information 
indicating that a beneficiary experienced a change in circumstances 
that impacts eligibility, and the beneficiary fails to respond to the 
State with information indicating continued eligibility, the State must 
move forward to terminate eligibility and provide the individual with a 
reconsideration period of at least 90 days. If the individual 
subsequently submits information indicating continued eligibility 
within 90 days after the date of termination, or a longer period 
elected by the State, the State must reconsider the individual's 
eligibility without requiring a new application.
    Comment: We received a number of comments opposing proposed Sec.  
457.344(f)(5). In States in which CHIP coverage is not provided 
statewide, we proposed to apply the requirements for out-of-State 
returned mail when mail is returned with an out-of-county forwarding 
address and CHIP coverage is not available in the county to which the 
enrollee's mail is being forwarded. Commenters were concerned that such 
individuals' eligibility would be terminated without considering 
whether the individual may be eligible for other Medicaid or CHIP 
coverage or for assistance purchasing a qualified health plan through 
the State's Marketplace. They recommended that the State proceed with 
determining eligibility for other insurance affordability programs, 
sending a combined notice, and transferring the individual's account in 
accordance with Sec. Sec.  435.1200 and 457.350.
    Response: We appreciate the points raised by commenters about 
protecting access to coverage for CHIP enrollees who move but continue 
to reside within the same State. We also recognize that while States 
are permitted to limit their CHIP coverage to specific geographic areas 
within the State, only a very small number of States have chosen to 
limit the program's Statewide availability. As such, we do not believe 
it is necessary to establish a special requirement for handling mail 
returned with an in-State address in the limited cases in which CHIP is 
not available Statewide. The requirement finalized at Sec.  
457.344(f)(2) for handling an in-State change of address will apply to 
all CHIPs. When a change of address is provided by a reliable data 
source, Sec.  457.344(f)(2) of this final rule requires the State to 
accept and update the address in the enrollee's case record. When 
applying this requirement in a State that does not provide Statewide 
coverage, if the change would impact an individual's CHIP eligibility, 
we would expect the State to first attempt to contact the beneficiary 
to confirm the change of address as they would with any other reported 
change impacting eligibility. If the State is unable to reach the 
enrollee to confirm the change, the State must act on the change. In 
cases where a change of address would result in ineligibility for CHIP, 
before terminating enrollment, the State must screen the individual for 
eligibility for other Medicaid or CHIP coverage, and if the individual 
is no longer eligible for CHIP and is not eligible for Medicaid, the 
State must consider the individual's potential eligibility for 
assistance through the State's Marketplace in accordance with Sec.  
457.350. If the individual is potentially eligible for coverage through 
the Marketplace, their account must be transferred to the Marketplace 
in accordance with Sec.  457.350.
    Comment: One commenter expressed concern that the changes proposed 
with respect to returned mail will likely lead to prolonged delays in 
assessing enrollees' eligibility. Another commenter stated that from a 
member perspective, the increased outreach requirements that must be 
performed by the agency, such as the requirement to perform outreach 
using at least two modalities, may impact timely receipt of 
notifications, increasing unnecessary churn.
    Response: We do not agree that the proposed returned mail changes 
will lead to delays in assessing enrollees' eligibility. In fact, we 
believe these requirements will facilitate better communication with 
beneficiaries and reduce delays in redetermining their eligibility at 
regular renewals or when the State receives information regarding a 
change in circumstances that may impact a beneficiary's eligibility. We 
believe that returned mail results in a significant number of 
beneficiaries being terminated from coverage, even though they continue 
to meet all eligibility requirements, because many States historically 
have not taken reasonable steps to locate them. Returned mail with an 
in-State forwarding address does not indicate a potential change that 
may result in ineligibility. While an out-of-State or no forwarding 
address does indicate a potential change in circumstances with respect 
to State residency, it is critical to maintaining continuity of 
coverage for eligible individuals that States attempt to confirm the 
accuracy of the information before acting on it, including efforts to 
locate the individual to obtain or confirm their new address.
    After considering the comments, we are finalizing the returned mail 
requirements with modification as discussed. Because the effect of this 
change is specific to updating beneficiaries' case files with updated 
address information, primarily for the purpose of contacting 
beneficiaries with information about their case, we note that this 
provision operates independently from the other provisions of this 
final rule.
5. Transitions Between Medicaid, CHIP and BHP Agencies (42 CFR 431.10, 
435.1200, 457.340, 457.348, 457.350, and 600.330)
    We proposed to revise Medicaid regulations at Sec. Sec.  431.10 and 
435.1200 and CHIP regulations at Sec. Sec.  457.340, 457.348, and 
457.350 to improve coverage transitions between Medicaid and separate 
CHIPs. The proposed changes seek to reduce and prevent unnecessary gaps 
in coverage for individuals transitioning between these programs, and 
to make the transitions process more seamless for families. The 
proposed changes would require Medicaid and separate CHIPs to make 
determinations of eligibility on behalf of the other program; to accept 
determinations of eligibility made by these programs; to transition 
individuals to the insurance affordability program for which they are 
determined eligible

[[Page 22820]]

or potentially eligible based on available data; and for Medicaid and 
separate CHIP agencies to provide a single, combined notice to all 
members of a household with information about each individual's 
eligibility status for each applicable insurance affordability program. 
We proposed technical changes to BHP regulations at Sec.  600.330, to 
maintain the current policy for that program. We sought comment on 
whether it is appropriate and feasible to apply the proposed changes 
for seamless transitions between Medicaid and separate CHIPs to 
coverage transitions between Medicaid, separate CHIPs, and BHPs, but we 
did not receive any specific comments on the appropriateness or 
feasibility of applying the specific transitions requirements to BHPs. 
Therefore, we are not making changes to Sec.  600.330, and are 
finalizing this section as proposed. BHPs must continue to fulfill the 
requirements of Sec.  435.1200(d), (e)(1)(ii), and (e)(3) and, if 
applicable, Sec.  600.330(c).
    Comment: Many commenters provided overall support for the 
provisions in the September 2022 proposed rule to improve transitions 
in coverage between Medicaid and separate CHIPs. Commenters indicated 
that the proposed changes would help to prevent unnecessary churn 
between insurance affordability programs; reduce gaps in coverage as 
beneficiaries move between programs; improve timeliness for State 
agencies to transition beneficiaries' coverage; and reduce burden for 
families throughout the renewal and transition processes.
    Response: As noted by commenters, we believe these changes will 
help to ensure a more streamlined process for transitioning 
beneficiaries between insurance affordability programs, reduce gaps in 
coverage during these transitions, and improve the renewal and 
transitions experience for beneficiaries. As such, we are finalizing as 
proposed the changes as set forth in proposed Sec. Sec.  435.1200, 
457.340, 457.348, and 600.330 without revision. We are making one 
change to proposed Sec.  457.350, in paragraph (b)(1)(ii) of that 
section, to include new language that clarifies that information 
provided on the application or renewal form by or on behalf of the 
beneficiary includes information obtained through trusted electronic 
data sources. Aside from this change to paragraph (b)(1)(ii) of the 
section, we are finalizing Sec.  457.350 as proposed.
    Comment: Numerous commenters expressed support for provisions in 
Sec.  435.1200(e) of the September 2022 proposed rule to require 
Medicaid agencies to make determinations of eligibility for their 
State's separate CHIP and proposed Sec.  457.348 to require separate 
CHIPs to accept determinations of eligibility made by their State's 
Medicaid agency. Commenters noted that these changes will ensure 
continuity of coverage for individuals transitioning from Medicaid to a 
separate CHIP. Some commenters provided suggestions for CMS on how to 
implement these changes in order to minimize barriers to accessing care 
when individuals are transitioned from Medicaid to a separate CHIP. 
Several commenters encouraged CMS to require States to effectuate 
separate CHIP coverage immediately after an eligibility determination 
is made by Medicaid, and permit plan-selection and collection of 
premiums and enrollment fees (if imposed) for the separate CHIP post-
enrollment. Similarly, other commenters suggested that CMS require 
States to apply a 30-day premium grace period for the first month of 
enrollment after a transition in coverage from Medicaid to a separate 
CHIP. Another commenter requested that CMS encourage States to develop 
a gradual phase-out of benefits from Medicaid and graduated co-payments 
in separate CHIPs when individuals are transitioned from Medicaid to a 
separate CHIP.
    Response: We appreciate commenters' support of our proposal to 
require Medicaid agencies to make eligibility determinations on behalf 
of separate CHIPs and agree that this change will help to ensure 
beneficiaries retain coverage and access to care through transitions 
from Medicaid to a separate CHIP. We are finalizing Sec. Sec.  
435.1200(e) and 457.348 as proposed to effectuate this requirement. We 
thank commenters for offering suggestions for implementation of this 
requirement. We acknowledge that adopting the recommendations to 
require a 30-day premium grace period; collect initial premiums and 
enrollment fees post-enrollment; and initiate graduated copayments in 
separate CHIPs would reduce barriers for individuals to access care as 
they transition to a separate CHIP from Medicaid. We note that the 
current regulation at Sec.  457.340(g), which is not revised in this 
final rule, requires States to develop a method for determining the 
effective date of separate CHIP eligibility. This provision provides 
States with the flexibility to select any reasonable method that 
supports coordinated transitions of children between a State's separate 
CHIP and other insurance affordability programs without creating gaps 
or overlaps in coverage. We believe States with premiums and enrollment 
fees in their separate CHIPs could prevent potential gaps in coverage 
and delays in effectuating separate CHIP coverage for individuals 
transitioning from Medicaid by leveraging the flexibility afforded 
under existing authority at Sec.  457.340(g). For example, to address 
commenters' concerns about enrollment fees and premiums creating 
potential gaps in coverage as individuals transition from Medicaid to a 
separate CHIP, we encourage States to waive premiums for the first 
month of separate CHIP coverage. We also acknowledge that post-
enrollment plan-selection for separate CHIPs would help to reduce 
delays for individuals to access care as they are transitioned to a 
separate CHIP from Medicaid. Several States with managed care delivery 
systems in their separate CHIP provide services to newly enrolled 
individuals through fee-for-service arrangements temporarily before 
their managed care plan selection/assignment is finalized. This 
strategy helps to ensure that newly enrolled individuals can receive 
needed care before they have been assigned to a specific managed care 
plan. We encourage States with managed care delivery systems in their 
separate CHIP to consider this or a similar approach to ensure newly 
enrolled beneficiaries are able to access needed separate CHIP services 
prior to plan-assignment.
    Comment: Numerous commenters expressed support for the requirements 
for separate CHIP agencies to make eligibility determinations on behalf 
of Medicaid as outlined in Sec.  457.350(b) of the September 2022 
proposed rule, and for Medicaid to accept determinations of eligibility 
made by the separate CHIP agency as proposed at Sec.  435.1200. 
Commenters noted that these changes would improve coordination between 
Medicaid and separate CHIPs in conducting eligibility determinations 
and transitioning individuals between programs. A few commenters 
expressed concern that inaccurate or incomplete eligibility 
determinations could be made by separate CHIPs that use different 
methodologies to assess eligibility than Medicaid. A commenter also 
recommended that CMS require Medicaid programs to supervise separate 
CHIPs and other insurance affordability programs in determining 
Medicaid eligibility in States that do not use a shared eligibility 
service for Medicaid, their separate CHIP, and other insurance 
affordability programs.
    Response: We thank commenters for their support of the proposed 
requirements to permit separate CHIPs to make determinations of 
eligibility on

[[Page 22821]]

behalf of Medicaid and agree that these changes will support alignment 
in separate CHIPs and Medicaid to conduct eligibility determinations 
and transitions between insurance affordability programs as seamlessly 
as possible. We appreciate commenters' recommendations to ensure that 
accurate Medicaid eligibility determinations are made by separate 
CHIPs. We note that State Medicaid agencies are not required to accept 
eligibility determinations that are not made on the basis of MAGI and 
that proposed Sec.  435.1200(b)(4) provides Medicaid agencies with 
several options for accepting determinations of eligibility based on 
MAGI that are made by separate CHIPs, which we are finalizing without 
revision. We believe this approach provides the State Medicaid agency 
with the ability to exercise appropriate oversight over MAGI-based 
eligibility determinations for Medicaid. For instances when separate 
CHIPs do not have sufficient information to make determinations of 
eligibility for Medicaid, such as Medicaid eligibility on a non-MAGI 
basis, proposed Sec.  457.350(e) directs separate CHIPs to make a 
determination of potential Medicaid eligibility and transfer the 
account to the State Medicaid agency to make a final determination.
    Comment: Another commenter indicated that potential increases in 
Medicaid enrollment as a result of permitting separate CHIPs to 
determine eligibility on behalf of Medicaid could strain dental 
provider capacity to care for additional children in Medicaid and urged 
CMS to expand dental provider participation in Medicaid to meet the 
oral health care needs of a larger eligible Medicaid population.
    Response: We acknowledge commenters' request for us to expand 
dental provider participation in Medicaid to ensure adequate provider 
capacity to administer oral health care services to a potentially 
larger Medicaid population as a result of these changes. However, 
changes related to Medicaid provider participation requirements are 
outside the scope of this final rule. Therefore, we are finalizing 
requirements at Sec.  435.1200 for Medicaid and Sec.  457.350(b) for 
separate CHIPs as proposed.
    Comment: Many commenters offered support for the proposed 
requirements in Sec. Sec.  435.1200(h)(1) and 457.340(f) that State 
Medicaid and separate CHIP agencies provide households with a single 
combined notice to indicate changes in beneficiaries' eligibility and 
coverage under Medicaid, separate CHIPs, BHPs, and an Exchange. 
Commenters noted that the use of a combined notice for all insurance 
affordability programs will ensure a more seamless and less burdensome 
process for renewals and transitions between programs for States and 
beneficiaries.
    Response: We thank the commenters for their support to require 
Medicaid and separate CHIP agencies to provide a single combined notice 
with information about Medicaid, separate CHIP, BHP, and Exchange 
coverage. We agree that issuing one notice to families about 
eligibility and ineligibility information for all insurance 
affordability programs would simplify the process to inform families 
about changes in coverage.
    Comment: A few commenters recommended that CMS explicitly require 
the content of combined notices to include information about additional 
steps for individuals to effectuate coverage, such as plan selection 
and premium requirements.
    Response: We appreciate commenters' concerns about combined notices 
including detailed information for families about what they need to do 
to effectuate their Medicaid or separate CHIP coverage. We are 
maintaining current requirements for content of eligibility notices to 
applicants and beneficiaries outlined in existing Sec.  435.917(b) for 
Medicaid and Sec.  457.340(e) for separate CHIP, which include 
information about obtaining benefits and cost sharing requirements.
    Comment: One commenter encouraged CMS to make conforming changes to 
the definition of combined notices for Medicaid in Sec.  435.4, and to 
Sec.  457.340(f) for separate CHIPs to align these sections with the 
changes for combined notices included in proposed Sec.  435.1200(h)(1).
    Response: We agree with commenters' recommendation that the 
definition of combined notices in Sec.  435.4 be consistent with 
proposed changes for combined notices in Sec.  435.1200(h)(1). We note 
that the proposed Sec.  435.1200(h)(1) cross-references the definition 
of combined eligibility notices in Sec.  435.4 for Medicaid. 
Additionally, corresponding changes for separate CHIPs in Sec.  
457.340(f) cross-reference the definition of combined eligibility 
notices in Sec.  457.10. We believe the existing definitions of 
combined eligibility notices in current Sec. Sec.  435.4 and 457.10 
adequately account for changes in proposed Sec. Sec.  435.1200(h)(1) 
and 457.340(f), and these current definitions will be maintained 
without revision. In response to comments about making conforming 
changes to Sec.  457.340(f) to align with proposed changes for combined 
notices in Sec.  435.1200(h)(1), we note that conforming changes were 
proposed in Sec.  457.340(f) for separate CHIPs to align with changes 
proposed in Sec.  435.1200(h)(1) for Medicaid. As such, we are 
finalizing Sec. Sec.  435.1200(h)(1) and 457.340(f) as proposed to 
require State Medicaid and separate CHIP agencies to use a single, 
combined notice to provide information about Medicaid, separate CHIP, 
BHP, and Exchange eligibility and ineligibility determinations.
    Comment: Some commenters requested that CMS specify scenarios when 
a combined notice for a full family would not be required.
    Response: In response to commenter questions about situations when 
a single combined notice for a full family will not be required, we 
clarify that current Sec.  435.1200(h)(1), redesignated as Sec.  
435.1200(h)(1)(ii) in this final rule, requires States to issue a 
single combined notice to the maximum extent feasible for all members 
of a household that are included on the same application or renewal 
form, regardless of individual member differences in program 
eligibility. A situation that could result in multiple notices for a 
single household is when multiple members of a household are included 
on an application for coverage, and one or more individuals are 
determined to be potentially eligible for different programs for which 
a final eligibility determination is needed. In this scenario, 
individuals that are assessed as potentially eligible may receive an 
additional, separate notice once the program they are potentially 
eligible for makes a final eligibility determination. For example, a 
parent and their child who are members of the same household submit one 
application for health coverage. A notice is provided to the household, 
indicating that the child is eligible for Medicaid, while the parent is 
potentially eligible for Exchange coverage. The parent's information is 
sent to the Exchange to make a final eligibility determination. The 
household would then receive a second, separate notice with information 
about the parent's final eligibility determination made by the 
Exchange.
    Comment: Several commenters responded to CMS' request for comment 
in section II.B.5. of the September 2022 proposed rule about the 
appropriateness of requiring BHP agencies and Exchanges to issue single 
combined notices. These commenters encouraged CMS to require that 
combined notices be provided by all insurance affordability programs 
and that the combined notices include information

[[Page 22822]]

pertaining to eligibility and ineligibility for Medicaid, separate 
CHIP, BHP, and Exchange coverage. CMS also sought comment about the 
feasibility for BHP agencies and Exchanges to implement the combined 
notice requirements proposed for Medicaid and separate CHIPs. However, 
comments did not address CMS' question about the feasibility for BHPs 
and Exchanges to implement the combined notice requirements.
    Response: While we acknowledge the recommendation of some 
commenters to require BHP agencies and the Exchanges to issue combined 
eligibility notices, we are concerned about the feasibility of State 
implementation, a point on which we did not receive any comments. 
Additionally, requirements for Exchange notices are outside of the 
scope of this rulemaking. Therefore, while we encourage State BHP 
agencies with the capability to issue combined notices to do so, we 
decline commenters' suggestion to require this of BHPs and Exchanges in 
the final rule.
    Comment: Another commenter requested that CMS permit individuals 
transitioning from Medicaid to an Exchange to seamlessly transition to 
an Exchange plan that is affiliated with the individual's existing 
Medicaid plan, to promote continuity of care.
    Response: We agree with commenters that maintaining continuity of 
care is an important element to ensure seamless transitions between 
insurance affordability programs. However, this rule does not address 
plan selection through the Exchanges. We understand that some States 
may have agreements with the same health plans across all insurance 
affordability programs. However, this is not always the case. To the 
extent that health plans do align across insurance affordability 
programs in a State, we encourage States to assign individuals to 
health plans in Medicaid or a separate CHIP that are affiliated with 
the individual's existing health plan to ensure continuity of care, as 
long as they follow the rules for plan enrollment in Sec. Sec.  438.54 
and 457.1210(a).
    After considering all comments, we are finalizing the proposed 
changes to Medicaid regulations at Sec. Sec.  431.10 and 435.1200 and 
CHIP regulations at Sec. Sec.  457.340, 457.348, and 457.350 with 
modifications as discussed previously in this final rule. Because the 
effect of this change is specific to the process to prevent termination 
of eligible beneficiaries who should be transitioned between Medicaid 
and CHIP, we note that this provision operates independently from the 
other provisions of this final rule.
6. Optional Group for Reasonable Classification of Individuals Under 21 
Who Meet Criteria for Another Optional Group (Sec. Sec.  435.223 and 
435.601)
    We proposed to add a new regulation at Sec.  435.223, ``Other 
optional eligibility for reasonable classifications of children under 
21,'' to codify in the regulations the option for States to provide 
coverage to individuals under age 21, 20, 19, or 18, or to reasonable 
classifications of such individuals, who meet the requirements of any 
clause of section 1902(a)(10)(A)(ii) of the Act. We further confirmed 
in the proposed rule (87 FR 54800) that States, in determining 
eligibility under the proposed Sec.  435.223, could except from MAGI 
financial eligibility methodologies those individuals who are described 
in Sec.  435.603(j). We explained that the current section of our 
regulations for optional categorically needy coverage of reasonable 
classifications of children at Sec.  435.222 does not reflect the full 
scope of authority States have under section 1902(a)(10)(A)(ii) of the 
Act to cover different groups of individuals under age 21 or reasonable 
classifications of such individuals, as the terms of Sec.  435.222 
apply only to individuals who are eligible under section 
1902(a)(10)(A)(ii)(I) (relating to individuals who meet the eligibility 
requirements for, but are not receiving, cash assistance) or (IV) of 
the Act (relating to individuals who meet the eligibility requirements 
for cash assistance or would but for their institutionalization) and 
whose financial eligibility is determined using MAGI-based 
methodologies.
    We also proposed changes to Sec.  435.601(f)(1) to provide that, in 
the case of individuals for whom the cash assistance program most 
closely categorically-related to the individual's status is Aid to 
Families and Dependent Children (AFDC) (that is, individuals under age 
21, pregnant individuals and parents and other caretaker relatives who 
are exempt from MAGI-based methodologies and to whom, as we explained 
in the proposed rule, AFDC methodologies generally still apply), the 
agency may apply either (1) the financial methodologies of the AFDC 
program, or (2) the MAGI-based methodologies defined in Sec.  435.603, 
except to the extent that MAGI-based methods conflict with the terms of 
Sec.  435.602 (relating to financial responsibility of relatives and 
other individuals).
    We also proposed to change the heading of Sec.  435.222, to reflect 
that it would no longer be the exclusive regulation relating to 
reasonable classifications of children and proposed certain additional 
technical changes to Sec.  435.601(b)(2) and (d)(1) in accordance with 
our proposed amendment to Sec.  435.601(f).
    Comment: We received several comments on these proposals, all of 
which expressed support. Commenters noted that the proposals would 
increase State flexibility and add an eligibility pathway for non-MAGI 
individuals under age 21.
    Response: We appreciate the commenters' support, and we are 
finalizing Sec. Sec.  435.223 and 435.601(b)(2), (d), and (f)(1)(i) and 
(ii) as proposed.
    We are making an additional change to the heading of Sec.  435.222. 
We proposed to change the existing heading of Sec.  435.222 from 
``Optional eligibility for reasonable classifications of individuals 
under age 21'' to ``Optional eligibility for reasonable classifications 
of individuals under age 21 with incomes below a MAGI-equivalent 
standard.'' As we explained in section II.B.6 of the preamble of the 
September 2022 proposed rule, part of the rationale for proposing a new 
Sec.  435.223 was to confirm the authority of States to extend 
eligibility to reasonable classifications of individuals under age 21 
who are excepted from the mandatory use of MAGI-based methodologies. We 
further explained that, while the proposed Sec.  435.223 would not be 
exclusive to non-MAGI reasonable classifications of individuals under 
age 21, we believed, as a practical matter, States would utilize the 
proposed Sec.  435.223 only for non-MAGI reasonable classifications, 
because Sec.  435.222 already permitted MAGI-based reasonable 
classifications of individuals under age 21.
    Upon further review, however, we recognize that the current terms 
of Sec.  435.222 only permit the creation of MAGI-based reasonable 
classifications of individuals under age 21 within two particular 
eligibility categories: section 1902(a)(10)(A)(ii)(I) (relating to 
individuals who are eligible for, but are not receiving, cash 
assistance); and section 1902(a)(10)(A)(ii)(IV) (relating to 
individuals who would be eligible for cash assistance but for their 
institutionalization). Because Sec.  435.222 limits States' ability to 
create MAGI-based reasonable classifications of individuals under age 
21, we are further modifying our proposed heading of Sec.  435.222 to 
read ``Optional eligibility for reasonable classifications of 
individuals under age 21 with income below a MAGI-equivalent standard 
in specified eligibility categories,'' to better reflect the limited 
reach of Sec.  435.222.
    Neither the heading to the proposed Sec.  435.223, nor the terms of 
the

[[Page 22823]]

September 2022 proposed rule, limited eligibility to individuals 
eligible on a non-MAGI basis. Therefore, our change to the heading to 
Sec.  435.222 does not require a corresponding change to Sec.  435.223 
(which, as noted above, we are finalizing as proposed). We also confirm 
that States may offer eligibility under Sec.  435.223 to MAGI-based 
reasonable classifications of individuals under age 21 who are eligible 
under categories separate from section 1902(a)(10)(A)(ii)(I) and (IV).
    We also note that the proposed regulation text to Sec.  435.601 
noted paragraph (f)(2) as ``[Reserved.]'' This was inadvertent. Current 
Sec.  435.601(f)(2) contains certain rules relating to a State's 
election of less restrictive financial methodologies. No change was 
intended to be proposed or is being made to this provision.
    Comment: One commenter specifically encouraged CMS to evaluate any 
cost-sharing requirements that a State might apply to this new pathway 
which could in turn create a barrier to coverage.
    Response: We thank the commenter for raising this concern about 
cost-sharing requirements. We have considered possible financial 
barriers to coverage under Sec.  435.223 in the context of cost-sharing 
requirements. Specifically, we reviewed our premiums and cost-sharing 
rules under 42 CFR 447.50 through 447.90, to identify any standard 
limitations that apply to individuals under 21 or reasonable 
classifications of such individuals. Currently, under Sec.  
447.56(a)(1)(v), States may exempt from premiums and cost-sharing 
``individuals under age 19, 20, or age 21, eligible under Sec.  
435.222.''
    As we explained in the September 2022 proposed rule, proposed Sec.  
435.223 is derived from the same statutory provisions that supports 
Sec.  435.222. With the addition of a new Sec.  435.223, there would be 
no statutory directive or logical reason to limit the discretion in 
Sec.  447.56(a)(1)(v) to individuals eligible under Sec.  435.222 and 
not include those eligible under Sec.  435.223. In this final rule, 
therefore, we are making a technical amendment to Sec.  447.56(a)(1)(v) 
to add ``and Sec.  435.223'' after ``42 CFR 435.222.''
    After consideration of the public comments we received, we are 
finalizing Sec. Sec.  435.223 and 435.601(b)(2), (d), and (f)(1)(i) and 
(ii) as proposed (with certain minor stylistic changes to cross-
references therein that do not affect the substance), and are making 
modifications, as described previously in this final rule, to 
Sec. Sec.  435.222 (the heading) and 447.56(a)(1)(v). Because the 
effect of this change is specific to allowing states to establish an 
optional eligibility group for all or a reasonable classification of 
individuals under age 21 whose eligibility is excepted from use of the 
MAGI-based methodology (that is, those living with a disability), or 
whose MAGI-based eligibility is not otherwise described, and for which 
such coverage is not already permitted in regulation, we note that this 
provision operates independently from the other provisions of this 
final rule.

C. Eliminating Barriers to Access in Medicaid

1. Remove Optional Limitation on the Number of Reasonable Opportunity 
Periods (Sec. Sec.  435.956 and 457.380)
    Sections 1902(a)(46)(B), 1902(ee)(1)(B), 1903(x)(4), and 
1137(d)(4)(A) of the Act, set forth the requirement for States to 
provide a reasonable opportunity period (ROP) for individuals who have 
declared U.S. citizenship or satisfactory immigration status, for whom 
the State is unable to promptly verify citizenship or satisfactory 
immigration status, and who meet all other eligibility requirements. 
During the ROP, the State furnishes benefits to the individual while 
continuing efforts to complete verification. Current Sec.  
435.956(b)(4) provides an option for States to limit the number of ROPs 
that a given individual may receive, if the State demonstrates that the 
lack of limits jeopardizes program integrity. As we have no information 
indicating the availability of multiple ROPs poses significant risks to 
program integrity, in the September 2022 proposed rule, we proposed to 
revise Sec.  435.956(b)(4) to remove the option for States to impose 
limits on the number of ROPs that an individual may receive. This 
Medicaid requirement is applicable to CHIP through an existing cross-
reference at Sec.  457.380(b)(1)(ii).
    We received the following comments on this proposed change:
    Comment: The overwhelming majority of commenters supported the 
proposed change to remove the State option to place a limitation on the 
number of reasonable opportunity periods an individual may receive. 
Supportive comments included statements that allowing States to limit 
the number of ROPs would make it harder for eligible individuals to 
enroll, which could disproportionately impact certain vulnerable 
groups, that there is no indication that the availability of multiple 
ROPs poses significant risks to program integrity, and that limitations 
on the number of ROPs are unnecessary and act as barriers to eligible 
immigrants' enrollment. One commenter shared that removing the option 
to limit ROPs is consistent with sections 1902(a)(46)(B), 
1902(ee)(1)(B)(ii), 1903(x)(4), and 1137(d)(4)(A) of the Act, which do 
not include any limitation on the number of ROPs.
    Response: We agree with these comments. Under section 1902(a)(8) of 
the Act and Sec.  435.906, State agencies must afford individuals the 
opportunity to apply for Medicaid without delay. The ROP is an integral 
piece of the Medicaid application and enrollment process when the State 
is not able to promptly verify an individual's citizenship or 
satisfactory immigration status. By removing the option for States to 
limit the number of ROPs, we aim to reduce barriers to enrollment and 
to ensure that U.S. citizens and immigrants and their families applying 
for or renewing their coverage have prompt access to the benefits to 
which they are entitled while they complete the process of verifying 
their citizenship or satisfactory immigration status. We agree that the 
statute does not expressly limit the number of ROPs an individual may 
receive, nor does it expressly provide discretion for States to 
establish such a limit. We note that only one State has elected the 
option to limit the number of ROPs, as a pilot program, and that State 
removed the requirement from its State Plan as data revealed there were 
no program integrity issues.
    Comment: One commenter shared that an applicant's immigration 
status can change over time and that the removal of the ROP limitations 
better accommodates circumstances in which such a change may occur.
    Response: We understand that an individual's immigration status may 
change as their life circumstances change, including when an individual 
has applied for an adjustment of status to Lawful Permanent Resident 
(LPR, or ``green card'' holder). By removing the State option to limit 
the number of ROPs, we intend to allow for the possibility that an 
individual's immigration status may have changed since the individual 
was last determined eligible for Medicaid or CHIP, or that new 
information or evidence regarding their satisfactory immigration status 
may be available. We agree that individuals who submit a new 
application after they are procedurally terminated or terminated for 
another reason should be afforded another ROP if their citizenship or 
immigration status cannot be promptly verified, including when their 
citizenship or immigration status changed from the status on their 
previous application.

[[Page 22824]]

    Comment: Many commenters shared that some applicants such as 
survivors of domestic abuse and individuals experiencing homelessness 
are more likely to have difficulty with electronic data matches to 
verify their U.S. citizenship or satisfactory immigration status. The 
challenging circumstances some vulnerable individuals face can make it 
harder for them to be determined eligible for Medicaid. These 
commenters noted that noncitizens, such as Compact of Free Association 
(COFA) migrants or those with visas under the Violence Against Women 
Act (VAWA) or trafficking victims (T visa holders), may have particular 
difficulty having their immigration status verified timely or providing 
paper documentation. The commenters shared that allowing States to 
limit the number of ROPs could disproportionately impact these 
communities, widening health disparities. These individuals are more 
likely to need an ROP to ensure the individual can immediately enroll 
in Medicaid if they have attested to U.S. citizenship or satisfactory 
immigration status and meet all other eligibility requirements, so that 
they can receive benefits during delays in the verification process.
    Response: We agree that individuals experiencing domestic abuse and 
homelessness, or survivors of trafficking, may have greater difficulty 
with verification of citizenship or immigration status, because without 
stable and permanent housing, individuals often do not have access to 
the documentation that includes the information needed by States to 
begin verification of satisfactory immigration status with DHS SAVE 
system. For example, an individual who is a Victim of Trafficking may 
need to provide paper documentation, specifically a letter issued by 
the HHS' Office of Refugee Resettlement, demonstrating evidence of 
satisfactory immigration status, when such status is not verifiable 
through the Federal Data Services Hub or DHS SAVE system. For many 
other noncitizens, to initiate DHS SAVE system verification, an 
individual must provide an ``Alien number'' or I-94 number. We note 
that while most COFA migrants' immigration status can be verified 
electronically through the Hub or DHS SAVE system, there are some COFA 
migrants who may have to provide additional paper documentation to 
verify COFA status. The ROP is intended to account for delays in the 
verification process, such that individuals can receive coverage while 
waiting for verification of their citizenship or satisfactory 
immigration status. There may be operational challenges or delays with 
the verification process, including for noncitizens with the DHS SAVE 
system or if an individual's citizenship is not verified with the SSA. 
We believe that ROPs should not be limited, given the possibility of 
individuals, especially vulnerable individuals, needing additional time 
for their citizenship or satisfactory immigration status to be 
verified.
    Comment: A few commenters encouraged CMS to engage in oversight of 
States' implementation of this provision to ensure that individuals are 
afforded a ROP and receive benefits during that time.
    Response: We provide oversight of States' Medicaid and CHIP 
eligibility determination and enrollment processes through multiple 
avenues. We offer technical assistance to States on various eligibility 
issues, including citizen and noncitizen eligibility requirements and 
verification processes, through monthly Eligibility Technical 
Assistance Group (E-TAG) meetings, Center for Medicaid and CHIP 
Services (CMCS) all-State calls, and one-on-one calls with State agency 
staff. We also conduct oversight of State's eligibility policies and 
processes through the PERM and MEQC programs and other CMS eligibility 
audits, through which eligibility cases are sampled and reviewed for 
compliance with all eligibility criteria and enrollment processes, 
including those related to citizenship and satisfactory immigration 
status. Finally, we make extensive eligibility policy resources 
available on Medicaid.gov to assist States in making accurate 
eligibility determinations. When we learn that a State is out of 
compliance with Federal statutes that CMS has been charged with 
implementing or CMS regulations, we immediately begin working with the 
State to address the issue--providing technical assistance, requesting 
corrective action when needed, and then withholding Federal funding 
when noncompliance cannot otherwise be resolved.
    Comment: One commenter suggested clarification that in prohibiting 
a limitation on ROPs, CMS is not requiring States to accept self-
attestation and thereby approve an application that has not been 
electronically verified for citizenship status. Another commenter 
expressed concern that without a limitation on ROPs, the State may be 
forced to accept other information on the application that is no longer 
accurate.
    Response: A State must comply with the statutory requirements for 
verification of U.S. citizenship and satisfactory immigration status 
prior to completing an applicant's eligibility determination. Section 
1902(a)(46)(B) of the Act requires Medicaid agencies to verify the U.S. 
citizenship of applicants who have attested to being U.S. citizens; 
verification may occur through a data match with the SSA under section 
1902(ee) of the Act, or an alternative method of verification under 
section 1903(x) of the Act. States must verify an applicant's 
declaration of satisfactory immigration status through an electronic 
system set up by DHS under section 1137(d) of the Act. If an individual 
has declared to be a U.S. citizen or to have satisfactory immigration 
status but the State has been unable to complete verification of such 
status, and the individual meets all other Medicaid and CHIP 
eligibility requirements, the agency must provide an ROP and make 
benefits available during the ROP. Federal statute and regulations 
specify that if verification of citizenship or satisfactory immigration 
status is not completed by the end of the ROP, except in specific 
cases, benefits must be terminated within 30 days.
    We do not agree that, by removing the limit on the number of ROPs, 
State Medicaid and CHIP agencies will have to accept application 
information that is no longer accurate. For each application that is 
submitted, the individual would be required to provide a declaration of 
satisfactory citizenship or immigration status and updated information 
regarding U.S. citizenship or satisfactory immigration status. Such 
information would be verified by the State Medicaid or CHIP agency in 
accordance with sections 1902(a)(46), 1902(ee)(2)(B), 1903(x) and 
1137(d)(3) of the Act, Sec. Sec.  435.407, 435.945, and 435.956, and 
the State's approved verification plan. Finally, under 42 CFR 
435.907(f), all applications must be signed under penalty of perjury.
    Comment: One commenter recommended that CMS amend the proposed rule 
to require States to close a case, for which citizenship or immigration 
status has not been electronically verified, that is more than 90 days 
old. The commenter further noted that this would not prohibit an 
individual from submitting a new application.
    Response: This comment is outside the scope of this regulation. 
However, we note that Sec.  435.956(b)(3), implementing sections 
1902(ee)(1)(B)(ii)(III) and 1137(d)(5) of the Act, requires State 
Medicaid and CHIP agencies to terminate benefits within 30 days of the 
end of the 90-day ROP, while providing notice and fair hearing rights 
under 42 CFR 431,

[[Page 22825]]

subpart E, if the individual's U.S. citizenship or satisfactory 
immigration status has not been verified. States have an option 
(described at Sec.  435.956(b)(2)(ii)(B)) to extend the ROP 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 their status. This option, which must be 
elected through a State plan amendment, is not impacted by this final 
rule. Some States have also provided for a similar extension for 
individuals who have declared to be U.S. citizens under section 1115 
demonstration authority during the unwinding period.
    After consideration of the public comments we received, we are 
finalizing without modification our proposal at Sec.  435.956(b)(4) to 
remove the optional limitation on the number of reasonable opportunity 
periods. Because the effect of this change is specific to removing the 
option to limit the number of ROPs during which otherwise eligible 
applicants receive Medicaid while they complete verification of their 
U.S. citizenship or satisfactory immigration status, we note that this 
provision operates independently from the other provisions of this 
final rule.
2. Remove Requirement To Apply for Other Benefits (Sec. Sec.  435.608 
and 436.608)
    In the September 2022 proposed rule, we proposed to remove the 
requirement at Sec.  435.608 that State Medicaid agencies require 
Medicaid applicants and beneficiaries, as a condition of their 
eligibility, to take all necessary steps to obtain other benefits to 
which they are entitled, such as annuities, pensions, retirement and 
disability benefits, unless they can show good cause for not doing so. 
This requirement presently applies to all Medicaid applicants and 
beneficiaries, without regard to the basis of their eligibility or the 
financial methodology used to determine their eligibility.
    In section II.B.2. of the September 2022 proposed rule, we 
explained that current Sec.  435.608 was established in 1978, under the 
authority of section 1902(a)(17)(B) of the Act, which authorizes the 
Secretary to prescribe the standards for evaluating which income and 
resources are available to Medicaid applicants or beneficiaries. 
Through this proposed change, we would redefine ``available'' in 
section 1902(a)(17)(B) of the Act to mean only such income and 
resources as are actually within a Medicaid applicant's or 
beneficiary's immediate control. We indicated in the proposed rule, 
however, that we were also considering maintaining the requirement with 
modifications.
    In drafting the September 2022 proposed rule, we inadvertently 
failed to include the removal of Sec.  436.608 consistent with the 
change proposed to remove Sec.  435.608. Similar to the proposed 
revisions to Sec.  435.831(g), this omission was unintentional, as most 
of the provisions of the proposed rule that are adopted in this final 
rule are applicable to the 436 territories as a result of incorporation 
by reference in existing regulations (as noted elsewhere throughout 
this final rule). The same reasons for rescinding Sec.  435.608 also 
apply in the 436 territories. We are including the recission of Sec.  
436.608 in this final rule to make the same simplification available to 
applicants in Guam, Puerto Rico, and the Virgin Islands and the 
Medicaid agencies in these territories. All references to Sec.  435.608 
in the September 2022 proposed rule and this final rule also apply to 
Sec.  436.608.
    We received the following comments on this proposal:
    Comment: Most commenters supported the proposal to eliminate Sec.  
435.608 in its entirety. Numerous commenters, including beneficiary 
advocacy organizations and State Medicaid agencies, stated that the 
current rule is outdated, burdensome, and impedes access to medical 
care. Several commenters identified the administrative challenges posed 
by the current rule and welcomed eliminating the work involved in 
applying the rule in their eligibility determinations. Two commenters 
specifically mentioned the communications with applicants and 
beneficiaries made necessary by Sec.  435.608, with one reporting that 
multiple contacts are commonly required and the other reporting that 
they are time consuming. Multiple commenters stated that compliance 
with Sec.  435.608 does not commonly result in applicants or 
beneficiaries receiving income that affects eligibility, and several 
commenters noted challenges related to specific benefits. One commenter 
stated that this change would help veterans by eliminating the burden 
of applying for veterans' benefits to which they may not be entitled. 
Other commenters noted that this requirement can frequently result in 
individuals being forced to elect early retirement benefits from Social 
Security, which provides a lower monthly benefit. One commenter stated 
this choice is particularly harmful for women because, the commenter 
wrote, women are more likely than men to rely on Social Security but 
receive lower average benefits than men, and, as women and particularly 
women of color, as further shared by the commenter, are at greater risk 
of poverty as they age, a reduction in their Social Security benefit 
could represent a serious loss at a financially precarious time. 
Additionally, one commenter stated that, as CHIP, BHP, and the 
Marketplace do not impose a requirement to apply for other benefits, 
the Medicaid requirement creates misalignment across programs, which is 
a counter-objective of the September 2022 proposed rule itself.
    Many commenters expressly opposed the alternatives we presented, 
under which CMS would maintain the rule but with modifications. These 
comments noted that only reducing the scope of the rule would have 
little practical value, because a modified requirement to apply for 
other benefits would still leave many individuals subject to the rule, 
and a modified form of the rule would possibly be more complex for 
States to administer.
    Response: We appreciate this support and commenters' explanations 
about specific impacts of our proposal. We are finalizing our proposal 
to remove and reserve Sec.  435.608.
    Comment: Some commenters suggested that CMS consider ways to 
encourage States to educate beneficiaries about the other benefits to 
which they may be entitled, including public benefit programs, by 
engaging in partnerships with other entities, and that CMS should 
consider using its resources to help facilitate the timely enrollment 
of Medicaid beneficiaries in such programs. The commenters mentioned 
the SNAP as an example of a program that could help meet the needs of 
Medicaid beneficiaries. Another commenter stated that individuals 
should pursue income and benefits for which they are potentially 
eligible, as it is in their best interest to do so, even if receipt of 
such benefits would not be counted for Medicaid eligibility.
    Response: We agree generally that the receipt of other benefits to 
which Medicaid applicants and beneficiaries are entitled could help 
such individuals meet their needs. The purpose of this rulemaking to 
eliminate Sec.  435.608 is focused on our role in establishing the 
parameters for Medicaid eligibility rather than assessing whether 
applying for other benefits serves the best interests of Medicaid 
applicants and beneficiaries. We did not originally

[[Page 22826]]

promulgate Sec.  435.608 based on our judgment of what actions taken by 
Medicaid applicants and beneficiaries, even if unrelated to their 
Medicaid eligibility, might produce the best outcomes for them. 
Instead, as noted above, we promulgated Sec.  435.608 in order to align 
a procedural requirement of the AFDC and SSI programs with Medicaid, at 
a time when eligibility for Medicaid was predominantly based on 
eligibility for these cash assistance programs.
    Removing the Medicaid requirement that applicants and beneficiaries 
apply for other benefits does not prohibit, and is not intended to 
discourage, States from educating Medicaid applicants and beneficiaries 
about their potential eligibility for other such benefits or 
facilitating their application for them. While we do not intend to 
directly inform Medicaid applicants and beneficiaries of other benefits 
for which they may be eligible, we have engaged in efforts to 
facilitate their eligibility for other programs, such as working with 
States to establish multi-benefit applications (that is, Medicaid, 
SNAP, and TANF) and partnering with the Food and Nutrition Service 
(FNS) to promote and expand demonstration projects aimed at qualifying 
children for free and reduced-price school meals. We expect to continue 
working on initiatives such as these and encourage States to continue 
educating beneficiaries about other benefits for which they may be 
eligible.
    Comment: One commenter supported maintaining Sec.  435.608 and 
applying the rule in circumstances in which applicants and 
beneficiaries will receive income countable in their Medicaid 
eligibility determinations. Another commenter indicated that States 
should maintain the discretion to apply the rule for individuals who 
apply for Medicaid on the basis of being 65 years old or older, or 
having blindness or a disability.
    Response: We decline to maintain the rule in circumstances 
involving countable income or for discrete populations. As noted above, 
most commenters supported the removal of the provision in its entirety, 
and numerous commenters noted that only reducing the scope of the rule 
would have little practical value, because a modified requirement to 
apply for other benefits would still leave many individuals subject to 
the rule, and a modified form of the rule would possibly be more 
complex for States to administer. We did not receive comments 
suggesting that certain categories of beneficiaries are not as acutely 
affected by the rule as others, which means that maintaining the rule 
in limited form will perpetuate the challenges to beneficiaries and 
States that commenters noted in their input. We are persuaded that 
maintaining the rule even in limited circumstances would not reduce the 
delays in access to coverage experienced by applicants or the 
administrative burden States experience in enforcing it.
    Comment: We received several comments relating to the potential 
costs of eliminating the requirement to apply for other benefits. One 
commenter expressed concern that an increase in State costs could be an 
unintended consequence of the elimination of the requirement, which, 
the commenter indicated, States commonly address by reducing 
eligibility, benefits, and employing other mechanisms that create 
barriers to timely access to health care. The commenter suggested that 
CMS take steps to minimize possible negative ramifications of the 
proposal. Other commenters stated that removing Sec.  435.608 could 
increase Long-Term Services and Supports (LTSS) costs, with one 
commenter specifically noting that, if veterans do not pursue Veteran 
Aid and Attendance benefits, which are includable in the PETI 
calculation, State and Federal liability would be affected. The 
commenter questioned if this had been taken into consideration.
    Response: We appreciate the commenters' concern about unintended 
consequences, in the form of possible increased State costs that might 
stem from the elimination of the requirement. However, based on the 
comments we received, we do not share the concern. States commented 
that imposing the requirement does not commonly produce countable 
income for Medicaid applicants and beneficiaries. Therefore, we do not 
expect this change to result in increased State costs. Additionally, as 
noted above, numerous States, in commenting in support of eliminating 
Sec.  435.608, reported that the staff time necessary to contact 
applicants and beneficiaries to confirm compliance with the existing 
regulation has imposed an administrative burden on them, and that the 
operational complexity of implementing the requirement outweighs any 
benefit to them in terms of saved payments for medical assistance. 
Accordingly, it is possible that this change will result in fewer costs 
for States by making eligibility determinations more efficient without 
an offsetting increase in benefit costs.
    We interpret the generalized comment about the increase in LTSS 
costs that might result from the removal of Sec.  435.608 as being 
related to PETI, which is the subject of the specific comment relating 
to Veteran Aid and Attendance benefits.
    The PETI calculation described in Sec. Sec.  435.700 through 
435.735 (relating to the categorically needy) and 435.832 (relating to 
the medically needy) generally requires the inclusion of all income, 
including income that is disregarded or excluded in the underlying 
income eligibility determination. However, nearly all of the examples 
of benefits specifically identified in Sec.  435.608 for which Medicaid 
applicants and beneficiaries have historically been required to apply--
annuities, pensions, retirement and disability benefits, Old-Age, 
Survivors, and Disability Insurance (OASDI) and railroad retirement 
benefits, unemployment compensation--are generally sources of countable 
income for individuals whose eligibility is determined using non-MAGI 
income eligibility methodologies and who therefore could be subject to 
PETI. While there may be some benefits within the scope of Sec.  
435.608 that might produce income not countable in a non-MAGI income 
eligibility determination, but which could be countable in a PETI 
calculation (that is, a certain portion of Veterans Affairs 
Administration (VA) Aid and Attendance benefits), the instances are 
few. Therefore, we do not anticipate that the elimination of Sec.  
435.608 would have a disproportionate impact on State LTSS costs 
compared to non-LTSS expenditures, nor an impact that would persuade us 
to make Sec.  435.608 a post-enrollment activity.
    Comment: One commenter requested clarification about whether 
removal of Sec.  435.608 means that Medicaid applicants and 
beneficiaries will not be required to apply for Social Security 
benefits or for retirement distributions, but that they may still be 
required to apply for Medicare as a condition of Medicaid eligibility.
    Response: We confirm that the removal of Sec.  435.608 means that 
Medicaid applicants and beneficiaries will no longer be required, as a 
condition of their Medicaid eligibility, to apply for Social Security 
benefits or retirement distributions. However, States may still require 
applicants and beneficiaries to apply for Medicare as a condition of 
Medicaid eligibility.
    We have historically permitted, as a State plan option, the 
requirement that applicants and beneficiaries apply for Medicare as a 
condition of Medicaid eligibility, subject to certain limitations 
(described below). This authority is not derived from Sec.  435.608, 
but instead from New York State Department of Social

[[Page 22827]]

Services v. Dublino, 413 U.S. 405 (1973), the holding of which 
generally provides support for States to impose collateral conditions 
of eligibility in Federal programs which further the objectives of the 
particular program and are not otherwise prohibited by the authorizing 
statute.
    As we have historically noted, Medicaid is the payor of last resort 
(see section 3900.1 of the State Medicaid Manual), and Medicaid 
regulations prohibit FFP for coverage of any services that would have 
been covered by Part B of the Medicare program had the individual been 
enrolled in Part B (section 1903(b)(1) of the Act; Sec.  
431.625(c)(3)). Given these precepts and in the absence of any 
statutory prohibition, consistent with the Dublino holding, we have 
permitted States to require Medicaid applicants and beneficiaries who 
may be eligible for Medicare to apply for Medicare Parts A, B, and/or D 
as a condition of Medicaid eligibility. When electing this authority, a 
State must agree to pay any premiums and cost-sharing (except those 
applicable under Part D) that such individuals would otherwise incur 
based on their Medicare enrollment. States continue to have this 
authority notwithstanding the removal of Sec.  435.608.
    Comment: A few commenters noted that States rely on disability 
determinations made by the SSA for Social Security Disability Insurance 
(SSDI) benefits and expressed concern that eliminating applications for 
SSDI as a Medicaid eligibility requirement could increase the workloads 
of State disability units. The commenters further expressed concern 
that those who forego applying for SSDI may ultimately forego their 
Medicare entitlement, which SSDI beneficiaries attain after receiving 
benefits for 24 months; this would result in Medicaid providing 
coverage for services such individuals would otherwise receive from 
Medicare.
    Response: It is not clear to us how the removal of the requirement 
in Sec.  435.608 would increase the workload of State disability units 
or create circumstances in which they will become newly responsible for 
making disability determinations. Section Sec.  435.541(c) requires 
States to conduct a disability determination for individuals who apply 
for Medicaid on the basis of disability in several different 
circumstances. These include, but are not limited to, the circumstances 
in which such a Medicaid applicant has not yet filed an application for 
disability benefits with SSA, or has filed an application for 
disability benefits with SSA but is not expected to receive a 
determination from SSA within sufficient time for the State to comply 
with the time limit in Sec.  435.912(c)(3)(i) for disability-based 
Medicaid applications (that is, within 90 days of the filing of the 
Medicaid application).
    An individual who applies for Medicaid on the basis of disability 
and has not filed a disability claim with SSA, but then does so 
pursuant to the historical requirement in Sec.  435.608 to apply for 
other benefits, would most typically still be an individual for whom a 
State, per Sec.  435.541(c), would conduct a disability determination. 
This is because the State, in order to comply with Sec.  
435.912(c)(3)(i) to determine disability-related eligibility within 90 
days of the date of Medicaid application, would most practically 
proceed with its own determination, instead of first waiting during 
this period for the outcome of the SSA's determination, as the latter 
course would present a risk to the State of having insufficient time to 
make its own determination consistent with Sec.  435.912(c)(3)(i) if it 
were to become clear that SSA's determination would not be completed 
before the 90th day of the Medicaid application. In most other 
situations in which a State is required under Sec.  435.541(c) to 
determine disability, the relevant individual has already applied for 
disability-related benefits with SSA.
    We appreciate the commenters' additional concern about the 
possibility of individuals who forego SSDI applications not eventually 
attaining entitlement to Medicare as a result. However, we generally 
did not receive comments suggesting that individuals are likely to 
forego applying for other benefits for which they may be eligible as a 
result of the removal of Sec.  435.608. As such, it is not clear to us 
that eliminating Sec.  435.608 will correlate into Medicaid applicants 
and beneficiaries choosing not to apply for SSDI and, possibly as a 
result, not attaining entitlement to Medicare. Further, as we explained 
earlier, States may still advise individuals of their possible 
eligibility for other benefits.
    In addition, as discussed previously, we did receive a comment 
noting that requiring individuals to apply for Social Security 
retirement benefits before their full retirement age forces them to 
accept a lower benefit. However, individuals who might now delay filing 
for Social Security retirement benefits as a result of the removal of 
Sec.  435.608 would not be Medicare-eligible if they applied for their 
retirement benefits before the age of 65. At the age of 65, whether 
they have applied for Social Security retirement benefits or not, they 
will be Medicare-eligible. As we explained previously, States may still 
require such individuals, independent of Sec.  435.608, to file an 
application for Medicare as a condition of Medicaid eligibility. We are 
therefore not persuaded that eliminating Sec.  435.608 will translate 
into Medicaid applicants and beneficiaries choosing to forego applying 
for SSDI or applying for retirement benefits and ultimately requiring 
States to provide Medicaid coverage for services that could have been 
covered by Medicare.
    Comment: One commenter who supported removal of Sec.  435.608 also 
recommended that CMS consider eliminating the requirement in Sec. Sec.  
433.145(a)(2) and 435.610(a)(2)(i) that Medicaid applicants and 
beneficiaries (subject to the ``good cause'' exception) cooperate in 
establishing the identity of a child's parents and obtaining medical 
support payments. The commenter believes the requirement is a barrier 
to coverage.
    Response: We appreciate the comment; however, the suggestion is 
beyond the scope of this regulation.
    Comment: One commenter supported the elimination of Sec.  435.608 
and suggested that income and resource standards can have the effect of 
discouraging Medicaid-eligible individuals who have disabilities from 
working. The commenter noted that Medicaid's working disability 
eligibility groups allow such individuals to work and maintain their 
Medicaid coverage, given the higher income and resource standards that 
generally apply to these groups. The commenter encouraged CMS to issue 
Federal guidance supporting State adoption of the working disability 
groups, and allowing States to smoothly transition individuals to other 
eligibility groups when they experience a change in their health or 
work status.
    Response: We agree on the importance of Medicaid's working 
disability eligibility groups. While the commenter's suggestions are 
outside the scope of this regulation, we appreciate this feedback.
    Comment: One State indicated that it requires individuals to pursue 
assets as a condition of receiving certain State-funded cash payments 
and questioned whether the elimination of Sec.  435.608 would affect 
this requirement.
    Response: Eliminating Sec.  435.608 will only prohibit States from 
requiring that Medicaid applicants and beneficiaries, as a condition of 
their Medicaid eligibility, apply for other benefits for which they may 
be entitled. A similar requirement imposed by a State in the context of 
its State-funded programs would not be affected.

[[Page 22828]]

    After consideration of the public comments we received, we are 
finalizing our proposal to eliminate Sec.  435.608 in its entirety. 
Because the effect of this change is specific to eliminating the 
requirement to apply for other benefits as a condition of Medicaid 
eligibility, we note that this provision operates independently from 
the other provisions of this final rule.

D. Recordkeeping (Sec. Sec.  431.17, 435.914, and 457.965)

    As we explained in section II.D. of the September 2022 proposed 
rule, State Medicaid agencies must maintain records needed to justify 
and support all decisions made regarding applicants and beneficiaries. 
These records must include sufficient information to substantiate an 
eligibility determination made by the State. They must also be made 
available for review purposes, such as review by applicants and 
beneficiaries prior to a fair hearing and review by State and Federal 
auditors conducting oversight. Because current recordkeeping 
regulations are both outdated and lacking in needed specificity, we 
proposed revisions at Sec. Sec.  431.17 and 435.914 for Medicaid and at 
Sec.  457.965 for CHIP to require that State agencies maintain their 
records in an electronic format and to clarify the specific information 
to be retained, the minimum retention periods, and the requirements for 
making records available outside the agency.
    We note that Sec.  431.17 applies to States, the District of 
Columbia, and all Territories, as does Sec.  435.914 through a cross-
reference at Sec.  436.901.
    We received the following comments on these proposed provisions:
    Comment: Many commenters noted their support for the proposed 
changes, including standardized timeframes for record retention and 
clarification of the specific records and documentary evidence that 
must be maintained by States to support eligibility determinations. 
They supported the alignment of requirements between Medicaid and CHIP 
and agreed that proposed changes would advance the integrity of these 
programs. Commenters explained that proper documentation would not only 
reduce improper payments identified by PERM due to insufficient 
documentation, but more importantly, actual eligibility and coverage 
errors that could negatively impact Medicaid and CHIP beneficiaries. 
Additionally, commenters reported that some States' systems and 
processes are already in alignment with these proposals.
    Response: We thank the commenters for their support. We are 
finalizing proposed changes to Sec.  431.17 (regarding the format, 
content, and availability of records, as well as the minimum retention 
period in Medicaid), changes to Sec.  435.914 (regarding documentation 
of agency decisions at application, redetermination, and renewal in 
Medicaid), and corresponding changes at Sec.  457.965 for CHIP with 
some modifications, which are explained in the following discussion.
    Comment: Most commenters supported the proposal at Sec. Sec.  
431.17(d)(1) and 457.965(d)(1) to require States to maintain records in 
an electronic format. They noted both long-term operational 
efficiencies and ease of sharing documents. Several commenters raised 
concerns about the significant technology, time, and resource 
investment that would be required to transition from paper to 
electronic records, including the eligibility system interfaces, 
scanning technology, and staff training that will be required. Some 
States reported that they have already transitioned completely to 
electronic records, while others reported that they are in the process 
of moving to an electronic format. Commenters also noted that 
implementation may be especially challenging for States with non-MAGI 
legacy systems, integrated eligibility systems, eligibility offices in 
smaller, more rural areas, and county-based eligibility systems.
    Response: We appreciate these concerns and recognize that States 
are currently facing competing demands on their time, resources, and 
eligibility systems. At the same time, we believe it is critically 
important for States to modernize their recordkeeping processes and 
implement comprehensive electronic records to address HHS Office of 
Inspector General (OIG) audits and PERM, MEQC, and other CMS 
eligibility reviews that have historically identified documentation 
inadequacies. Accordingly, we are finalizing as proposed the 
requirements at Sec. Sec.  431.17(d)(1) and 457.965(d)(1) that Medicaid 
and CHIP agencies must maintain all required records in an electronic 
format.
    Comment: We received a number of comments regarding 
standardization. A couple of commenters recommended that CMS work with 
States to adopt a standardized format across all Medicaid and CHIP 
agencies. Another commenter expressed concern that implementation of 
the proposed requirements would necessitate universal definitions for 
all records both within States and across States. Several commenters 
recommended that CMS partner with State agencies to ensure that any 
system changes made to support electronic recordkeeping are completed 
in a standardized and secure way, including proper testing and training 
for agency staff. One commenter urged CMS to clarify that States must 
retain sensitive claims information separately from eligibility and 
enrollment information. Finally, one commenter requested clarification 
on the funding available to support the changes needed to comply with 
these new electronic recordkeeping requirements.
    Response: While we recognize the benefits of standardization across 
States, in this final rule, we do not require States to adopt a single 
standardized format. We do, however, encourage States to implement a 
standardized format for records across their systems as much as 
possible. While each of the records and documentary evidence described 
in Sec. Sec.  431.17(b)(1) and 457.965(b)(1) for Medicaid and CHIP 
respectively are considered part of the case record, we did not propose 
that these records must be stored in a single system, and this final 
rule does not require that States maintain all required case records in 
a single system.
    Federal funding may be available for systems development, subject 
to conditions for enhanced funding (CEF) outlined at Sec.  433.112 and 
Medicaid program standards, laws, regulations, and industry best 
practices, including certification under the Streamlined Modular 
Certification process. As described at Sec.  95.621, State agencies are 
responsible for the security of all automated data processing systems 
involved in the administration of Department of Health and Human 
Services' programs and must establish a security plan that outlines how 
software and data security will be maintained. This section further 
requires that State agencies conduct a review and evaluation of 
physical and data security operating procedures and personnel practices 
on a biennial basis. Additionally, as specified in part 11 of the State 
Medicaid Manual, State agencies are required to be in compliance with 
the security and privacy standards contained in Public Law 104-191, the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA), 
and adopted in 45 CFR 164, subparts C and E, as follows: The security 
standards require that measures be taken to secure protected heath 
information that is transmitted or stored in electronic format. The 
privacy standards apply to protected health information that may be in 
electronic, oral, and paper form. Furthermore, State agencies are bound 
by the requirements in section 1902(a)(7) of the Act, as further 
implemented in our regulations

[[Page 22829]]

at Sec. Sec.  431.300 through 431.307. These provisions require that 
use or disclosure of information concerning applicants and recipients 
is permitted only when directly connected to administration of the 
State plan and provide additional safeguards to protect applicant and 
beneficiary data. Conducting a risk analysis, pursuant to HIPAA and 
implementing regulations at 45 CFR 164.308(a)(1)(ii)(A), should be the 
first step in identifying and implementing safeguards that comply with 
and carry out the standards and implementation specifications of HIPAA. 
Therefore, a risk analysis can be foundational and must be completed to 
assist organizations in identifying and implementing the most effective 
and appropriate administrative, physical, and technical safeguards of 
PII/PHI.
    Comment: One commenter suggested that we provide an option for 
States to store records in non-electronic format in special 
circumstances, such as when a beneficiary expresses safety concerns 
that an individual may have unauthorized access to State systems.
    Response: We appreciate this comment and agree that maintaining the 
safety and privacy of Medicaid beneficiaries is of critical importance. 
We acknowledge that storing records electronically may pose new 
challenges to ensuring beneficiary records are secure from unauthorized 
access. However, we note that any recordkeeping system will have 
security vulnerabilities and that there are safeguards that States can 
implement to minimize this risk. We believe that electronic storage of 
records is necessary to align with industry standards and that the 
advantages of modernizing Medicaid recordkeeping standards outweigh the 
risks inherent with electronic systems. We are finalizing the 
electronic format requirements at Sec. Sec.  431.17(d)(1) and 
457.965(d)(1) as proposed. We expect States to implement privacy and 
security measures in accordance with all Federal and State laws 
regarding privacy, security, and confidentiality. Compliance with these 
laws will help to ensure that records are not improperly accessed. To 
comply with the privacy protections under section 1902(a)(7) of the Act 
and 42 CFR part 431, subpart F, States must have policies in place that 
specify for what purposes data will be used within the organization and 
to whom and for what purposes the agency will disclose data. While 
States are required to establish electronic recordkeeping as finalized 
in this rule, States also have flexibility to develop additional 
protection processes for applicants and beneficiaries who need or 
request them. For example, a State could place a security freeze on the 
beneficiary's records at the request of the beneficiary, which would 
prevent the records from being accessed on the user-end, such as 
through an applicant or beneficiary user portal, while still allowing 
the State Medicaid agency to utilize the data as appropriate. Such a 
process could also include restricting access to records to a limited 
number of State employees. Additionally, States could implement a 
policy of requiring identity proofing to validate that an individual 
attempting to access records on the user-end is the applicant or 
beneficiary.
    Comment: Several commenters supported the specific types of 
information and documentation that we proposed must be included in 
beneficiary case records, as described at proposed Sec. Sec.  
431.17(b)(1) and 457.965(b)(1). Another commenter expressed concern 
about the specific content requirements included in the proposed rule, 
describing them as rigid and administratively taxing. The commenter 
expressed appreciation for the historic flexibility in this area and 
concern that the specificity of the new requirements will lead to 
increased audit citations.
    Response: We appreciate commenters' support of the content 
requirements proposed at Sec. Sec.  431.17(b)(1) and 457.965(b)(1) for 
individual applicant and beneficiary records. We proposed to require 
such records to include applications, renewal forms, and changes 
submitted by the individual or household; information transferred from 
another insurance affordability program; evidence returned regarding 
the disposition of income and eligibility verification; documentation 
supporting any decisions made regarding the individual's eligibility; 
all notices provided to the individual; records pertaining to any 
appeals or fair hearings; and information on all medical assistance 
provided. We developed these requirements to assist State Medicaid and 
CHIP agencies in maintaining records that can be used to justify and 
support decisions made regarding the eligibility of applicants and 
beneficiaries and the coverage available to them, defend these 
decisions when challenged by an applicant or beneficiary, and enable 
State and Federal auditors and reviewers to conduct appropriate 
oversight. As discussed in section II.D. of the proposed rule, 
insufficient documentation was the leading cause of eligibility-related 
improper payments in the most recent cycles of review in the PERM 
program, MEQC program, and other CMS eligibility audits. As such, we do 
not agree with the comment that flexibility in this area has benefited 
State agencies or that increased specificity related to recordkeeping 
will increase audit citations. Based on the PERM, MEQC, and other CMS 
eligibility audit findings and recent OIG findings citing insufficient 
documentation to evaluate the accuracy of States' eligibility 
determinations, we anticipate a reduction in audit citations once 
States fully implement these requirements. We are finalizing the 
content requirements at Sec. Sec.  431.17(b)(1) and 457.965(b)(1) as 
proposed.
    Comment: One commenter expressed support for our proposal to expand 
the Medicaid case documentation requirements at Sec.  435.914 to 
include agency decisions at renewal, in addition to agency decisions at 
application. One commenter suggested further amendment to add 
redeterminations in addition to renewals.
    Response: We appreciate the support for the changes proposed at 
Sec.  435.914, which would require State Medicaid agencies to include 
in each applicant's case record, the facts and documentation necessary 
to support a decision of eligibility or ineligibility at application 
and at renewal. We did not intend to exclude redeterminations based on 
changes in circumstance from these recordkeeping requirements. 
Accordingly, we are adding ``redetermination'' to Sec.  435.914(b) in 
this final rule to ensure that records related to redeterminations made 
in response to changes in circumstances are maintained in the same way 
and to the same extent as records related to applications and annual 
renewals.
    Comment: Commenters requested clarification of the level of detail 
required to be maintained in each individual's case record, 
particularly with respect to data received through electronic data 
sources, when to document data that is not useful to the eligibility 
determination, and whether to document a lack of data received through 
data sources.
    Response: State Medicaid and CHIP agencies are expected to maintain 
an appropriate level of detail to permit the individual or other 
authorized reviewer to understand how and why the agency made a 
determination of eligibility or a coverage decision. Data received by 
the State Medicaid or CHIP agency that is related to a condition of 
eligibility and therefore relevant to the determination made by the 
State must be maintained. For example, if a State pings an electronic 
data source to verify income when income is relevant to the eligibility 
determination, the State must

[[Page 22830]]

maintain the income data received, even if the agency subsequently 
determines that the income data was not useful in making the 
eligibility determination. In this case, the State Medicaid agency 
should document that the State found the income information to not be 
useful to determining or verifying eligibility. This income data as 
well as documentation that the State reviewed it and determined it to 
be irrelevant to their determination is necessary context to justify 
and support the decisions made regarding all applicants and 
beneficiaries, defend decisions challenged by an applicant or 
beneficiary who requests a fair hearing, enable State and Federal 
auditors and reviewers to conduct appropriate oversight, and support 
the State's own quality control processes.
    Comment: One commenter recommended that we require collection of 
demographic information on all program applicants. They explained that 
collection of demographic information at application facilitates 
interactions with individuals who may need language access services or 
other communication services to enroll in coverage, and it removes the 
need for entities further down the line to request duplicative 
information. It also allows programs to track disparities not just in 
access to services, but in the eligibility and redetermination 
processes, in retention of eligible individuals and families, and in 
utilization of services.
    Response: We support efforts to collect demographic information for 
purposes of States providing language access, streamlining 
communications with applicants and beneficiaries, and supporting 
retention efforts. However, we believe that requiring provision of 
certain demographic information on the application would increase 
applicant burden and act as a barrier to enrollment. The requirements 
regarding certain demographic information collected on the application 
are outside the scope of this rulemaking, and we decline to require 
collection of specific demographic information from all program 
applicants through the requirements for the content of records at Sec.  
431.17(b). However, we urge States to continue to explore methods of 
encouraging applicants to provide demographic information, which can be 
used to improve access and retention, such as providing help text on 
the application explaining how demographic information will be used or 
requesting the information after the person has been enrolled.
    Comment: Most commenters supported the proposed requirement at 
Sec. Sec.  431.17(d)(2) and 457.965(d)(2) that States must make records 
available to the Secretary and to Federal and State auditors within 30 
days of the request. One commenter specifically supported beneficiary 
access to case records within 30 calendar days. However, many 
commenters were concerned by the inclusion of ``other parties, who 
request, and are authorized to review, such records'' within the 
requirement. Commenters expressed concerns about applicant and 
beneficiary privacy, specifically regarding access to sensitive 
information such as diagnoses and services used, as well as immigration 
status, that may be used for purposes outside the provision of health 
care through Medicaid and CHIP. Commenters recommended that we 
strengthen this requirement by more narrowly defining the specific 
parties that have a legitimate program integrity purpose or research 
purpose for accessing beneficiary records. Others recommended that 
records only be made available to parties authorized under Federal law 
so that Federal privacy protections clearly apply. One commenter stated 
that it is important to reassure immigrants that it is safe to apply 
for health coverage because their information will only be used for 
purposes of administering the program and not for immigration 
enforcement purposes. Some commenters suggested that we use this 
opportunity to clarify CMS policy on information sharing with the DHS 
or other similar authorities.
    Response: We appreciate this comment and agree that safeguarding 
confidential information concerning Medicaid applicants and 
beneficiaries is of critical importance. Section 1902(a)(7) of the Act 
and implementing regulations at 42 CFR part 431, subpart F, require 
State Medicaid agencies to provide safeguards that restrict the use or 
disclosure of information concerning Medicaid applicants and 
beneficiaries to uses or disclosures that are directly connected with 
the administration of the Medicaid State plan. The same requirements 
also apply to separate CHIPs under Sec.  457.1110(b), which provides 
that separate CHIPs must comply with part 431, subpart F. Accordingly, 
we are clarifying this existing requirement by adding a new paragraph 
(e) to Sec.  431.17 of this final rule, which specifies that records 
maintained pursuant to Sec.  431.17 must be safeguarded in accordance 
with the requirements of part 431, subpart F.
    Section 431.302 sets forth the ``purposes directly related to State 
plan administration,'' which include: Establishing eligibility; 
determining the amount of medical assistance; providing services for 
beneficiaries; and conducting or assisting an investigation, 
prosecution, or civil or criminal proceeding related to the 
administration of the plan. Under longstanding policy, sharing 
information with DHS about an applicant or beneficiary's Medicaid or 
CHIP coverage for purposes of a public charge determination is 
generally not directly related to administration of the State plan,\16\ 
and therefore the circumstances in which such information can be shared 
with DHS are quite limited. Some examples of permissible disclosure of 
applicant and beneficiary information include: providing the 
information needed to verify eligibility under section 1137 of the Act 
and Sec. Sec.  435.940 through 435.965, such as verifying immigration 
status through the DHS SAVE Program; sharing information with a 
beneficiary's enrolled Medicaid or CHIP providers as needed to provide 
services; and sharing information with a beneficiary's Medicaid or CHIP 
managed care plan as needed to provide services.
---------------------------------------------------------------------------

    \16\ CMCS Informational Bulletin, ``Public Charge and 
Safeguarding Beneficiary Information'' (issued July 22, 2021), 
available at: https://www.medicaid.gov/federal-policy-guidance/downloads/cib072221.pdf.
---------------------------------------------------------------------------

    Comment: Several commenters raised concerns about States' ability 
to meet the 30-day timeframe for making records available upon request. 
They noted challenges that may be outside the agency's control, such as 
a high volume of requests during a specific timeframe or competing 
demands from other programs in States with integrated or county-based 
eligibility systems, which may make it difficult to provide all records 
within the requirement timeframe. Commenters suggested we provide a 
process for States to request an extension to this timeframe.
    Response: At Sec. Sec.  431.17(d)(2) and 457.965(d)(2) we proposed 
to require that States make records available within 30 calendar days 
of the receipt of a request. We thank commenters for the suggestion to 
permit a process through which States could request an extension of the 
timeframe for making records available. We understand that there may be 
limited circumstances in which a State is unable to make records 
available within 30 days following a request, such as in the case of 
natural disasters. However, we believe that a process for States to 
request an extension in such cases is impractical, as States in such 
circumstances may be unable to take necessary steps to request an 
extension. In lieu of an extension process, we have revised Sec. Sec.  
431.17(d)(2) and 457.965(d)(2) in this final rule to permit an 
exception to the 30-day timeframe when there is an

[[Page 22831]]

administrative or other emergency beyond the agency's control. This 
exception is modeled on the eligibility determination timeliness 
exception found at Sec.  435.912(e)(2). States will not be required to 
seek our approval that use of the exception is appropriate but may want 
to seek our concurrence for audit or other oversight purposes. 
Additionally, we are making a technical revision to Sec. Sec.  
431.17(d)(2) and 457.965(d)(2) to clarify that parties may specify in 
their request a longer period of time for States to provide the 
requested records.
    Comment: We received a number of comments in support of our 
proposal that the Medicaid and CHIP State plans provide for retention 
of records for the period during which an applicant or beneficiary's 
case is active and a minimum of 3 additional years thereafter. One 
commenter stated that this proposal strikes a good balance between the 
preservation of necessary information and administrative efficiency. We 
also received many comments recommending that States be required to 
maintain applicant and beneficiary records for longer than 3 years. The 
majority of these comments recommended retention of records during the 
period in which a case is active and 10 years thereafter. They 
explained that it is not unusual for an individual to reapply after a 
break in coverage for 3 or more years, and a longer retention policy 
would make it possible for the State to utilize verification of 
citizenship or immigration status and other eligibility factors that do 
not change when such an individual reapplies for coverage. Commenters 
also noted that a 10-year retention period would align with the policy 
for Medicaid MCOs under Sec.  438.3(u) and for drug manufacturers 
participating in the Medicaid Drug Rebate Program under Sec.  
447.510(f).
    Response: We appreciate commenters' support for the proposed 
policy, at Sec. Sec.  431.17(c) and 457.965(c), which would require 
State Medicaid and CHIP agencies to retain records while an 
individual's case is active plus a minimum 3 years thereafter. We also 
understand commenters' concerns that 3 years will not be sufficient in 
all cases. A longer retention period may be particularly beneficial for 
certain citizens and certain qualified non-citizens whose eligible 
immigration status is unlikely to change and cannot be verified 
electronically. If such an individual disenrolls and then reapplies, we 
agree that the enrollment process would be streamlined significantly if 
the State still had the individual's case record with documentation of 
their citizenship or satisfactory immigration status.
    In proposing a 3-year retention timeframe, we considered the 
administrative burden of maintaining documentation with a large file 
size, like a recording of a telephonic signature, along with the 
different actions for which beneficiary case records may be needed. 
While we appreciate that retention for just 3 years will not be long 
enough to help every applicant who reapplies for coverage after a 
period of disenrollment, we also recognize that no standard will 
protect everyone. We are also concerned that the burden of maintaining 
all required documentation for all beneficiaries for at least 10 years 
may cause some States to take actions to reduce case record size, which 
could negatively impact applicants' and beneficiaries' user experiences 
if data is lost or rendered unreadable.
    While we appreciate the drawbacks to a 3-year retention period 
raised by commenters, we still believe that requiring State Medicaid 
and CHIP agencies to retain records for 3 years after an individual's 
case is no longer active strikes the best balance between the 
advantages of a longer retention period and administrative burden on 
States. Therefore, we are finalizing a 3-year retention requirement at 
Sec. Sec.  431.17(c)(1) and 457.965(c), as proposed, with one exception 
at Sec.  431.17(c)(2) specific to Medicaid, which is described in a 
subsequent comment response. We note that the requirement to retain 
records during the period that an individual case is active, plus 3 
years thereafter, is the minimum requirement for State retention of 
records. Recognizing the benefits of retaining records for a longer 
period of time, particularly records related to factors of eligibility 
that will not change, we encourage all States to consider instituting a 
longer record retention period. We also note that, as discussed in 
section II.D. of the September 2022 proposed rule, a case remains 
active for any applicant or beneficiary who has a fair hearing appeal 
pending. In addition, in the event that an individual submits a new 
application prior to expiration of the 3-year period, the records 
retention clock would restart, and the State would need to retain the 
case record until 3 years after eligibility is terminated or the 
individual otherwise disenrolls from coverage.
    Comment: One commenter pointed out that State and Federal statute 
does not allow estate recovery until after a Medicaid recipient dies, 
or if they are survived by a spouse, after their spouse dies. 
Therefore, in cases when estate recovery is required, the commenter 
noted that records may need to be maintained for longer than the 
proposed 3-year period. This commenter suggested that we amend the 
minimum record retention period to require records to be maintained for 
at least 15 years.
    Response: We thank the commenter for raising this issue and agree 
that the proposed minimum retention period may be insufficient in cases 
where estate recovery is required after the death of a surviving 
spouse. We also note that in some situations, States may need to delay 
estate recovery if the deceased beneficiary is survived by someone 
other than their spouse, such as a minor or child with a disability. We 
recognize States need to maintain records for use in the estate 
recovery process, when such a process is required under section 1917(b) 
of the Act. However, requiring a minimum record retention period of 15 
years, even if narrowly tailored to cases where estate recovery is 
required, may be longer than necessary in some cases and not long 
enough in other cases. Therefore, we are including an exception to our 
proposed language at Sec.  431.17(c) when estate recovery is required. 
As described at Sec.  431.17(c)(2) of this final rule, States must 
maintain records for individuals whose estates are subject to recovery 
until they have satisfied their statutory obligations under section 
1917(b) of the Act for the estate at issue (that is, the State 
completed recovery from the estate through a legal proceeding or other 
means, waived recovery against the estate on the basis of undue 
hardship, or determined that the estate has insufficient property from 
which to recover).
    Comment: Several commenters requested that CMS amend the proposed 
record retention period to align with other programs such as SNAP and 
TANF.
    Response: While we acknowledge there may be benefits to aligning 
the record retention period with other programs, particularly in States 
with an integrated eligibility system that includes other programs like 
SNAP and TANF, we decline to make this a requirement. We do not believe 
that all other programs have the same record retention requirements, 
and our rule does not preclude a State from maintaining records for a 
longer period of time if, for example, the State determines it would be 
administratively convenient to align the period with longer periods 
used by other programs. Similarly, we do not believe that States are 
precluded from retaining records

[[Page 22832]]

from other programs for a longer period if needed to align with 
Medicaid's retention period. We believe that our proposed retention 
period of the time that the case is active plus an additional 3 years 
for most records, as described at Sec. Sec.  431.17(c)(1) and 
457.965(c), will ensure that applicant and beneficiary records will be 
available for the majority of circumstances in which such records may 
be needed. Some programs calculate the retention period only from the 
date of initial determination, without taking into account the time 
period a case is active. If we were to impose a minimum retention 
period that did not take into account the length of time that a case is 
active, States would not be required to maintain evergreen verification 
data, for example, which continues to demonstrate a beneficiary's 
current eligibility even if received more than 3 years prior. 
Additionally, beneficiaries who enrolled more than 3 years prior may be 
unable to access all of their records. Therefore, we are finalizing the 
length of the retention period for most records at Sec. Sec.  
431.917(c)(1) and 457.965(c) as the period when the applicant or 
beneficiary's case is active, plus a minimum of 3 years thereafter.
    Comment: One commenter recommended that the proposed retention 
policy apply not only to an individual's record while that individual's 
case is active plus 3 years thereafter, but also while that individual 
is part of another case that is active, plus 3 years thereafter. 
Another commenter recommended that the retention period relate to the 
individual, rather than the active case. One commenter further 
recommended clarification that States must maintain separate case 
records for parents and their dependent children.
    Response: We appreciate the comments flagging differences in how 
States maintain applicant and beneficiary records. The regulatory 
provisions related to recordkeeping in this final rule, at Sec. Sec.  
431.17, 435.914, and 457.965 are specific to individual applicants and 
beneficiaries. We recognize that applications often include multiple 
household members, and these household members may remain together in a 
State's beneficiary case records. However, applicants and beneficiaries 
receive their own individual determination of eligibility at 
application, at renewal and when they experience a change in 
circumstances. Most services are provided at the individual beneficiary 
level as well. As such, the Medicaid and CHIP regulations regarding 
maintenance of records are applied at the individual applicant and 
beneficiary level. This does not preclude a State from maintaining the 
records of individual household members together for recordkeeping 
purposes, but in such cases, the household record must be retained 
while every individual member's case is active and for at least 3 years 
after the last household member has disenrolled.
    Comment: One commenter requested that CMS clarify its expectations 
for disposition of records after the mandatory retention period ends. 
Another commenter suggested adding a provision to hold States harmless 
during audits for documentation omissions that would not have made a 
difference in determining eligibility for an applicant or beneficiary 
or in authorizing coverage of a specific service. And one commenter 
recommended that CMS provide guidance on how States can help applicants 
and beneficiaries understand how to gain access to their case records.
    Response: We decline to prescribe specific regulatory standards in 
these areas. State Medicaid and CHIP agencies have flexibility to adopt 
record disposition procedures consistent with their State law, rules, 
and policies. After the mandatory retention period under this final 
rule ends, States may choose to maintain records for a longer period of 
time, archive, or destroy records. With respect to the information that 
must be made available to auditors, we agree that applicant and 
beneficiary case records must include the information needed to support 
the decisions made regarding eligibility and benefits, but the specific 
details about what types of information may, or may not, be considered 
in an audit are outside the scope of this rule. Finally, we agree that 
every State must establish a clear process, that is not burdensome, for 
individuals to request and access copies of their case records. We will 
consider including more information on these topics in future 
subregulatory guidance.
    After considering all comments, we are finalizing the recordkeeping 
requirements proposed at Sec. Sec.  431.17, 435.914, and 457.965 with 
some modifications as discussed. Because the effect of this change is 
specific to clearly defining the types of eligibility determination 
documentation to be maintained, defining the time required to retain 
Medicaid and CHIP records and case documentation, removing references 
to outdated technology, and defining when records must be made 
available upon request, we note that this provision operates 
independently from the other provisions of this final rule.

E. Eliminating Access Barriers in CHIP and BHP

1. Prohibition on Premium Lock-Out Periods (Sec. Sec.  457.570 and 
600.525(b)(2))
    We proposed to revise CHIP regulations at Sec.  457.570 and BHP 
regulations at Sec.  600.525(b)(2) to prohibit premium lock-out periods 
in CHIP and BHP. Premium lock-out periods have permitted States to 
specify a period of time that an individual must wait after non-payment 
of premiums until being allowed to reenroll in the CHIP or BHP.
    In order to improve continuity of care and align with Medicaid 
rules in this area, we proposed that States with a separate CHIP or BHP 
that terminate enrollees for non-payment of premiums or enrollment fees 
may not condition re-enrollment in CHIP or BHP on the payment of past-
due premiums or enrollment fees. This is in accordance with our CHIP 
statutory authority at section 2101(a) of the Act to ``expand the 
provision of child health assistance to uninsured, low-income children 
in an effective and efficient manner'' and BHP authority at section 
1331(c)(4) of the Act to ``coordinate the administration of, and 
provision of benefits with the State Medicaid program under title XIX 
of the SSA, the State child health plan under title XXI of such Act, 
and other State-administered health programs to maximize the efficiency 
of such programs and to improve the continuity of care.'' We also 
sought comment on an alternative proposal to provide States with an 
option to implement a 30-day premium lock-out period.
    Comment: We received numerous comments in support of our proposal 
to prohibit premium lock-out periods in CHIP. Several commenters 
indicated that eliminating premium lock-outs would improve access and 
continuity of care for children and reduce barriers to care. One 
commenter noted their support for this change in BHP, citing it will 
simplify BHP premium rules. In addition, a few commenters indicated 
that even short gaps in coverage can create a barrier to care and 
stated that CMS should not permit a premium lock-out period of 30 days.
    Response: We thank the commenters for supporting our proposal to 
eliminate premium lock-out periods. We are finalizing this provision as 
proposed at Sec.  457.570 for CHIP and Sec.  600.525(b)(2) for BHP. As 
discussed in section II.F.1. of the September 2022 proposed rule, we 
agree that removing lock-out periods will increase access to care, 
reduce gaps in coverage, and limit financial barriers to care for low-
income families. This final rule will support continuity of care

[[Page 22833]]

to ensure enrollees in CHIP and BHP receive and maintain coverage.
    Comment: A few commenters requested technical clarifications 
related to eliminating premium lock-out periods. One commenter 
requested clarification on whether the enrollee's services will be 
expected to be covered in the month of termination. Another commenter 
requested clarification on whether a State can require payment of past-
due premiums as a condition of re-enrollment. Another commenter 
questioned whether States will be able to terminate for non-payment of 
premiums.
    Response: We appreciate the commenters request for clarity on these 
issues. Under the final rule, once an individual's coverage is 
terminated, States will not be required to cover services (unless the 
individual re-enrolls in coverage). Further, as discussed in the 
September 2022 proposed rule, under the final rule, States cannot 
require families who were disenrolled to repay past-due premiums as a 
condition of reenrollment. Because States will no longer be able to 
require collection of past due premiums or enrollment fees as a 
condition of eligibility, a family could re-apply for coverage 
immediately following disenrollment, and could re-enroll without paying 
any past due premiums. However, the family could be required to pay a 
new premium or enrollment fee associated with new enrollment prior to 
re-enrollment. Finally, while the final rule prohibits lock-out periods 
for individuals with unpaid premiums or enrollment fees, it does not 
address whether States may still terminate coverage for nonpayment of 
premiums, an issue that is beyond the scope of the final rule.
    Comment: Two commenters opposed prohibiting premium lock-out 
periods. One commenter expressed concerns that States could experience 
administrative and budgetary challenges with removing the premium lock-
out period.
    Response: We acknowledge the commenters' concerns related to 
potential administrative and budgetary challenges associated with 
States eliminating premium lock-out periods. To improve administrative 
simplicity, we encourage States to consider other options for 
facilitating timely premium payments, such as charging a single, but 
affordable, annual enrollment fee. As discussed in the September 2022 
proposed rule, requiring an affordable enrollment fee may improve 
retention, reduce disenrollment rates, and simplify program 
administration by reducing the cost of monthly bill collection. As with 
premiums, States could consider varying enrollment fees based on family 
income level to ensure that they are affordable. Some States have 
reported that the costs associated with managing premium lock-out 
periods and frequent churn have resulted in greater administrative 
burden and higher costs compared to premium payment offsets.
    Comment: A few commenters requested that CMS delay the effective 
date of this provision to ensure States have adequate time to make 
necessary changes in State laws or updates to information technology 
systems.
    Response: We recognize that certain changes proposed in this rule, 
including the elimination of premium lock-out periods, may require 
States to make changes to their statutes and/or regulations, as well as 
systems changes prior to implementation, and that this process can take 
time. States will no longer be permitted to adopt a new premium lock-
out period when this provision becomes effective. However, we are 
providing States with existing premium lock-out periods with 12 months 
from the effective date of this final rule to implement the necessary 
changes to discontinue this policy. States with biennial legislatures 
that require legislative action to implement these requirements can 
request an extension of up to 24 months following the effective date of 
this final rule.
    After considering the comments, we are finalizing as proposed. 
Because the effect of this change is specific to preventing States from 
disenrolling or locking-out CHIP beneficiaries for failure to pay 
premiums, we note that this provision operates independently from the 
other provisions of this final rule.
2. Prohibition on Waiting Periods in CHIP (Sec. Sec.  457.65, 457.340, 
457.350, 457.805, and 457.810)
    CHIP regulations at Sec.  457.805(b) have permitted States to 
institute a 90-day ``period of uninsurance,'' or ``waiting period,'' 
for individuals who have disenrolled from a group health plan, prior to 
allowing them to enroll in a separate CHIP. We proposed to revise 
Sec. Sec.  457.805(b) and 457.810(a) to eliminate the use of a waiting 
period for any length of time as a substitution procedure under either 
CHIP direct state plan coverage or premium assistance. We also proposed 
conforming amendments to remove references to waiting periods by 
revising Sec.  457.65(d), removing Sec.  457.340(d)(3), and revising 
Sec.  457.350(i) (which is redesignated as Sec.  457.350(g) in this 
final rule). Then we proposed to remove specified limitations in Sec.  
457.805(b)(2) and (3) that are no longer relevant without waiting 
periods.
    We sought comment on an alternative proposal to provide States with 
an option to implement a 30-day waiting period if a high rate of 
substitution of group coverage could be demonstrated. We are finalizing 
the change we proposed, to prohibit the use of waiting periods 
altogether.
    Comment: The majority of commenters supported the proposal to 
prohibit waiting periods in separate CHIPs. Commenters expressed the 
view that elimination of waiting periods would help reduce potential 
gaps in children's coverage and simplify the enrollment process for 
families. In addition, several commenters explicitly opposed permitting 
a waiting period of any length, including a 30-day waiting period, in 
favor of eliminating waiting periods altogether.
    Response: We thank commenters for their support of the proposal to 
eliminate CHIP waiting periods. We agree with commenters that 
permitting a waiting period for any length of time would not 
sufficiently address the access barriers that waiting periods pose for 
children and families. In addition, a 30-day waiting period would 
provide less time for children to obtain coverage in another insurance 
affordability program during the waiting period. The purpose of these 
changes is to mitigate gaps in coverage for children that may occur 
during a waiting period and to align with other insurance coverage such 
as Medicaid and private insurance plans that do not permit waiting 
periods prior to individuals being enrolled. The proposal to eliminate 
separate CHIP waiting periods is also consistent with Executive Order 
14070 of April 5, 2022, titled ``Continuing to Strengthen Americans' 
Access to Affordable, Quality Health Coverage,'' which instructs 
agencies to identify policy changes to ensure that enrollment and 
retention in coverage can be more easily navigated by consumers.
    Comment: A commenter expressed concern that prohibiting States' use 
of waiting periods in our regulations would be more restrictive on 
State plans than the existing title XXI statutory requirements. A few 
commenters expressed concern that the proposed changes removed some of 
the State flexibility needed to design their separate CHIPs.
    Response: We appreciate the commenters' request for further 
clarification on these issues. No provision of the Act expressly 
authorizes waiting periods. As we explained in the preamble to our 
original CHIP final regulations (66 FR

[[Page 22834]]

2490), CMS had previously interpreted section 2102(b)(3)(C) of the Act, 
which requires the State child health plan to ``include a description 
of procedures to be used to ensure that the insurance provided under 
the State child health plan does not substitute for coverage under 
group health plans,'' to permit States to adopt a waiting period as one 
possible method to prevent substitution.\17\ When CHIP began in 1997, 
group health plans were the main alternative sources of coverage for 
children who would otherwise have been eligible for CHIP. Because 
waiting periods historically involved a period of uninsurance, 
requiring a waiting period before a child could enroll in CHIP was 
considered a possible deterrent to families who wanted to change 
coverage from group health plans to CHIP. CMS therefore permitted 
waiting periods as one potential route to ensure that CHIP ``does not 
substitute for coverage under group health plans.''
---------------------------------------------------------------------------

    \17\ See section II.G.2 of (66 FR 2490), State Child Health; 
Implementing Regulations for the State Children's Health Insurance 
Program.
---------------------------------------------------------------------------

    Since 1997, circumstances have changed significantly. As explained 
in section II.F.2. of the September 2022 proposed rule preamble, after 
the passage of the Affordable Care Act, families waiting to enroll in 
CHIP can receive health coverage through an Exchange, greatly 
diminishing any deterrent effect that may have resulted from a waiting 
period. There is little to no evidence that waiting periods effectively 
reduce substitution of coverage.\18\ By contrast, the evidence has 
shown that waiting periods can impose significant costs on children. 
There is an abundance of evidence showing that waiting periods reduce 
program enrollment and utilization of health care services and increase 
the number of children without insurance.2 19 20 Children 
are particularly vulnerable to waiting periods because a period of 
uninsurance can compromise child health and development and access to 
preventive and primary health care during childhood and 
adolescence.21 22 23
---------------------------------------------------------------------------

    \18\ Gruber, J. and Simon, K. (2008) Crowd-out 10 years later: 
Have recent public insurance expansions crowded out private health 
insurance? Journal of Health Economics, 27(2):201-217. https://doi.org/10.1016/j.jhealeco.2007.11.004.
    \19\ Reinbold, G.W. (2021). State Medicaid and CHIP options and 
child insurance outcomes: An investigation of 83 state options with 
state-level panel data. World Medical & Health Policy, 1-15. https://doi-org.ezproxyhhs.nihlibrary.nih.gov/10.1002/wmh3.465.
    \20\ Medicaid and CHIP Payment and Access Commission, 
Transitions Between Medicaid, CHIP, and Exchange Coverage, July 
2022. Accessed at: https://www.macpac.gov/wp-content/uploads/2022/07/Coverage-transitions-issue-brief.pdf.
    \21\ DeVoe, J.E., Graham, A., Krois, L., Smith, J., & 
Fairbrother, G.L. (2008). ``Mind The Gap'' in Children's Health 
Insurance Coverage: Does the Length of a Child's Coverage Gap 
Matter?. Ambulatory Pediatrics, 8(2), 129-134. https://doi.org/10.1016/j.ambp.2007.10.003.
    \22\ Leininger, L.J. Partial-Year Insurance Coverage and the 
Health Care Utilization of Children. Medical Care Research and 
Review. 2009;66:49-67. https://doi.org/10.1177/1077558708324341.
    \23\ Buchmueller, T., Orzol, S.M., & Shore-Sheppard, L. (2014). 
Stability of children's insurance coverage and implications for 
access to care: evidence from the Survey of Income and Program 
Participation. International journal of Health Care Finance and 
Economics, 14(2), 109-126. https://doi.org/10.1007/s10754-014-9141-1.
---------------------------------------------------------------------------

    Even though sections 2102(b)(1)(B)(iii), 2102(b)(1)(B)(iv), and 
2112(b)(5) of the Act prescribe limitations on the use of waiting 
periods, these restrictions on their usage do not automatically 
authorize waiting periods. Rather, these provisions--which were 
included in the statue when it was first enacted in 1997--reflect the 
fact that waiting periods were, at the time, contemplated as one 
potential strategy States could use to prevent substitution of 
coverage, consistent with section 2102(b)(3)(C) of the Act. As 
explained, because the health coverage landscape has changed since 
1997, waiting periods are no longer a viable method to ensure that CHIP 
does not substitute for coverage under group health plans.
    Further, CMS regulations at Sec.  457.805(a) require that States 
employ ``reasonable procedures'' to ensure that CHIP does not 
substitute for coverage. For the reasons stated above, as well as those 
reasons discussed in section II.F.2. of the preamble to the September 
2022 proposed rule, waiting periods no longer constitute a ``reasonable 
procedure'' for preventing or addressing substitution of coverage. 
States will continue to be required to monitor for substitution of 
coverage. In addition, States will also have the flexibility to propose 
a procedure other than a waiting period to reduce substitution of 
coverage if monitoring shows that substitution of coverage exceeds the 
acceptable threshold determined by the State in its CHIP state plan. 
For example, States may implement a CHIP premium assistance program for 
children enrolled in group health plan coverage, and/or improve public 
outreach about the range of health coverage options that are available 
in that State.
    We believe this approach appropriately meets the requirements 
outlined in relevant statute and regulations, while minimizing adverse 
impacts for children and families that are often a result of 
implementing waiting periods.
    After considering the comments, we are finalizing as proposed. 
Because the effect of this change is specific to ensuring that CHIP 
coverage does not substitute for coverage under group health plans, we 
note that this provision operates independently from the other 
provisions of this final rule.
3. Prohibit Annual and Lifetime Limits on Benefits (Sec.  457.480)
    Annual and lifetime limits are not permitted on Essential Health 
Benefits in any individual, group, or employer health plans, or on any 
benefits in Medicaid. However, CHIP regulations have been silent on the 
use of annual and lifetime limits except for banning annual and 
aggregate dollar limits on mental health and substance use disorder 
benefits. Recognizing that these limits may present barriers to CHIP 
enrollees receiving necessary health care services and exacerbate unmet 
treatment needs, we proposed to prohibit any annual, lifetime or other 
aggregate dollar limitations on any medical or dental services that are 
covered under the CHIP State plan. This prohibition was included in the 
September 2022 proposed rule at Sec.  457.480.
    We received the following comments on this provision:
    Comment: The majority of commenters supported the proposal to 
prohibit annual and lifetime limits on all covered CHIP benefits. In 
particular, commenters expressed support for the provision as important 
to eliminating barriers to care, preventing discrimination against 
children with higher medical needs, and providing CHIP children 
improved access to dental and orthodontia care. A few commenters 
highlighted the positive benefit of aligning State Medicaid programs 
and CHIP that this provision would achieve. One commenter also noted 
that States still have the flexibility to design their benefit package, 
which creates an appropriate balance between utilization management and 
assuring access to critical services.
    Response: We appreciate the support from commenters for our 
proposal to remove annual and lifetime limits. We are finalizing 
changes as proposed at Sec.  457.480. As discussed in section II.F.3. 
of the September 2022 proposed rule, we agree that such limits create 
barriers for families to access health coverage, particularly for 
children with the greatest medical needs. States have frequently 
reported that alignment across Medicaid and CHIP creates administrative 
simplification, and we

[[Page 22835]]

agree that this is an important area for alignment. We also recognize, 
as noted by commenters, that States continue to have flexibility in 
designing their benefit package, as long as they adhere to the relevant 
requirements in part 457, subpart D.
    Comment: One commenter expressed support for the September 2022 
proposed rule and recommended that removing limits should be factored 
into rate setting to ensure actuarial soundness in States with managed 
care plans.
    Response: We agree with the point raised by the commenter. States 
that remove lifetime and annual limits in a CHIP managed care delivery 
system should ensure that such changes are accounted for in rate 
development. States must adhere to the Federal standards for rate 
development in CHIP managed care at Sec.  457.1203, including using 
payment rates in CHIP managed care that are consistent with actuarially 
sound principles. We recommend that States coordinate closely with 
their actuaries to ensure the application of generally accepted 
actuarial principles and practices in CHIP managed care rate setting.
    Comment: Two commenters opposed removing annual and lifetime 
limits. Specifically, one commenter expressed concern related to 
prohibiting annual and lifetime limits due to the potential cost impact 
to State CHIPs.
    Response: We recognize that the potential cost associated with 
eliminating annual and lifetime limitations in CHIP is an important 
consideration for States and health plans. We note that one study found 
that the cost of eliminating lifetime limits is minimal because only a 
small number of people exceed them.\24\ In addition, improving overall 
access to dental care services, for example, helps families avoid 
emergency room visits that may increase financial burden for both 
States and families. We also note that CHIP has been an outlier in 
terms of permitting these types of limitations. Following 
implementation of the ACA, neither Medicaid, Exchange, nor private 
group health plans allow annual, lifetime or other aggregate dollar 
limitations. Thus, higher income children in the Exchange have been 
protected from these types of limitations whereas lower income children 
in CHIP continued to be subject to dollar limitations. We also note 
that States and health plans have extensive experience in using other 
types of cost containment mechanisms.
---------------------------------------------------------------------------

    \24\ PricewaterhouseCoopers. ``The Impact of Lifetime Limits.'' 
March 2009. Prepared for the National Hemophilia Foundation on 
behalf of the Raise the Caps Coalition.
---------------------------------------------------------------------------

    For the above reasons, we are finalizing these changes to Sec.  
457.480 as proposed. Because the effect of this change is specific to 
prohibiting annual and/or lifetime limits on benefits in CHIP, we note 
that this provision operates independently from the other provisions of 
this final rule.

F. Compliance Timelines

    In the September 2022 proposed rule, we did not specify the date(s) 
by which States would be required to demonstrate compliance with the 
proposed requirements, but we requested comment on appropriate 
compliance timeframes. We received the following comments on the amount 
of time States will need to implement each provision as proposed:
    Comment: Many comments regarding the timeline for implementing this 
rule focused on the benefits of the streamlined eligibility and 
enrollment processes included in the September 2022 proposed rule and 
the likelihood that these changes would reduce erroneous disenrollments 
when States begin to terminate the coverage of ineligible individuals 
at the end of the continuous enrollment condition. Timeframes 
recommended by these commenters ranged from promptly or as soon as 
practicable to specific timeframes of 30 to 60 days, 90 days, and no 
more than 6 or 12 months following publication of this final rule. Some 
commenters supported our proposed approach to make all changes 
effective 30-days after publication, with compliance required within 12 
months. Others recommended prioritizing some provisions for earlier 
implementation, or phasing them in, based on different factors, 
including whether the provisions (1) would help to mitigate coverage 
losses; (2) required fewer resources; (3) posed a smaller technological 
burden or required fewer system changes; or (4) simply clarified 
existing requirements. Many commenters recognized the need to balance 
State resources and the amount of work required to implement a change 
with the needs of beneficiaries and the potential positive impact on 
coverage. They urged CMS to afford States sufficient time to implement, 
but not more time than would be necessary.
    At the other end of the spectrum, many commenters focused on the 
vast resources States were currently directing toward unwinding from 
the PHE and returning to regular operations at the end of the 
continuous enrollment condition. They described how that work was 
already stretching States' limited resources, and that States could not 
simultaneously manage that work and implement this rule within the 
proposed timeframe. Many commenters expressed concern that the 
significant time and resources needed to implement this rule would take 
time and funding away from unwinding work and that instead of 
mitigating coverage losses, speedy implementation would put States at 
risk for implementation errors. Commenters described many changes that 
States will need to make as they implement this rule, including: 
developing new State legislative and regulatory constructs; revising 
budget requests to obtain needed funding; implementing system updates, 
which will be much greater in States that still utilize legacy systems 
for eligibility and enrollment that is not based on MAGI; designing new 
procedures and implementing workflow changes; hiring and training staff 
to implement the new processes and requirements; and obtaining CMS 
approval of changes to their State plans. None of these commenters 
believed our proposed timeframe for compliance was adequate. They 
recommended timeframes for compliance ranging from at least 6 to 12 
months following the end of unwinding to 2, 3, or 5 years following 
publication of this final rule. One commenter suggested that CMS pause 
this rulemaking and refile it after States have returned to regular 
operations following the continuous enrollment condition. Several 
commenters also recommended that we provide States with an option to 
request an extension when specific barriers could not be overcome 
during a required compliance timeframe.
    Response: We agree that the provisions in the September 2022 
proposed rule will help eligible individuals to enroll in Medicaid and 
CHIP and to stay enrolled as long as they remain eligible. At the same 
time, implementing many of the provisions in this final rule will 
require complex systems changes that will take time for States to make. 
We are sympathetic to States' assertions that they are currently 
devoting all available resources toward protecting the enrollment of 
eligible individuals as they unwind from the continuous enrollment 
condition, and we believe that requiring States to divert resources 
away from this work will likely do more harm than good. We also agree 
that an early effective date, combined with phased-in compliance, 
strikes the best balance between making the streamlined processes in 
this final rule available as soon as possible and giving States the 
time needed to implement these changes correctly. We

[[Page 22836]]

appreciated the many suggestions for criteria to assist us in 
developing a phase-in plan for compliance.
    After considering all of the factors suggested for phase-in and all 
of the challenges that States may need to overcome as they implement 
these changes, we are finalizing this rule with an effective date 60 
days after publication and will phase-in compliance with each provision 
as described in Table 2, with full compliance required no more than 36 
months after this final rule becomes effective.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR02AP24.001

BILLING CODE 4120-01-C
    In establishing a compliance date for each provision in this final 
rule, we first considered whether the provision established a new State 
option or a requirement, and whether the provision clarified the policy 
for existing processes or would require new processes. For those 
provisions that create new options, are expected to require little to 
no change in State processes, or clarify existing requirements, 
compliance is required

[[Page 22837]]

when the rule becomes effective. Next, we considered those provisions 
that were expected to reduce State administrative burden and have the 
least extensive statutory or system implications. Recognizing that some 
of these provisions may require State legislative action or have budget 
implications, States will have 12-18 months following the effective 
date of this final rule to implement these provisions and demonstrate 
compliance with the new requirements. States with biennial legislatures 
that require legislative action to implement these requirements can 
request an extension of up to 24 months following the effective date of 
this final rule. The last set of provisions are expected to require the 
greatest change to State systems and workflow processes. To ensure that 
States have adequate time to adopt the system and policy changes needed 
to implement these requirements, to ensure that eligibility workers are 
properly trained in the new policies and procedures, and to ensure that 
implementation does not interfere with the completion of State 
unwinding work and mitigations, we are providing States with 24 to 36 
months following the effective date of this final rule to demonstrate 
compliance with these requirements. We encourage all States to work 
within these timeframes to prioritize completion of these changes as 
quickly as possible.
    Comment: We received a number of comments recommending specific 
implementation timeframes for specific provisions. Recommended 
timeframes included:
     Agency action on returned mail as soon as possible, 30 
days, and 90 days after the effective date;
     Align non-MAGI enrollment and renewal requirements with 
MAGI policies 60 days, 90 days, and at least 3 years after the 
effective date;
     Apply primacy of electronic verification and reasonable 
compatibility standard for resource information 60 days after effective 
date;
     Establish specific requirements for acting on changes in 
circumstances--18-24 months and 3 years after the effective date;
     Prohibiting access barriers in CHIP--as soon as possible;
     Remove requirement to apply for other benefits 90 days 
after effective date; and
     Transitions between Medicaid and CHIP 90 days after the 
effective date.
    Response: We took each of these recommendations into account when 
developing the compliance timeframes described in Table 2. In some 
cases, the specific recommendation was consistent with our final 
compliance timeframe. For example, commenters recommended between 18 
and 36 months to implement the requirements for acting on changes in 
circumstances. We believe this provision will require significant 
system changes, particularly in States that are still using legacy 
eligibility systems, and we are requiring compliance with the 
requirements at Sec. Sec.  435.919, 457.344, and 457.960 no later than 
36 months after this final rule becomes effective. In other cases, the 
specific recommendation informed our compliance timeframe even though 
it is not the same. For example, one commenter recommended making 
removal of the requirement to apply for other benefits effective 90 
days after the effective date. We agree that this is a low-complexity 
system change that is likely to improve beneficiary access and reduce 
State administrative burden, and as such, it should happen quickly. 
However, we are providing States with up to 12 months following the 
effective date of this final rule to comply with this requirement as we 
believe some States may require additional time to get the necessary 
system changes in the queue and to effectuate them.

III. Collection of Information Requirements

    In the September 2022 proposed rule, we projected both new burden 
and savings based on how the rule would change respondents' efforts 
relative to the status quo. However, the proposed rule referenced 
Office of Management and Budget (OMB) control numbers that we now 
believe do not cover certain longstanding provisions of the Medicaid 
and CHIP programs related to eligibility and enrollment. Specifically, 
because the Medicaid program predates the enactment of the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.), and because we 
viewed many longstanding basic Medicaid requirements as exempt from the 
PRA, burden for the following requirements were not historically 
subjected to the requirements of the PRA and therefore are not covered 
by the OMB control numbers referenced in the September 2022 proposed 
rule: application (burden on State in processing the application and 
burden on individual in filling out application); requests for 
additional information (burden on State in assessing application and 
burden on individual in responding to State); making eligibility 
determinations and providing appeal rights (burden on State in making 
determinations and burden on individual if filing appeal); verifying 
information in the application (burden on State in conducting 
verifications and burden on individual in supplying supporting 
documentation); and renewal process (burden on State in conducting 
renewals and burden on individual in responding to State). We are 
addressing that oversight by moving our burden and savings estimates to 
the Regulatory Impact Analysis (RIA) section of this final rule. We 
will be bringing the longstanding Medicaid requirements and what was 
thought to be exempt into compliance with the PRA outside of this 
rulemaking. That effort will include the publication of Federal 
Register notices with 60- and 30-day comment periods to allow for 
public comment on the estimates of this final rule's impact.
    In addition to the above-mentioned restructuring of the burden 
estimates from the proposed rule to final rule, the finalization of 
certain proposed collection of information requirements were separately 
addressed in the 2023 Streamlining MSP Enrollment final rule. The 
provisions were specific to individuals dually eligible for both 
Medicaid and Medicare and include: Information Collection Requests 
(ICRs) Regarding Facilitating Enrollment Through Medicare Part D Low-
Income Subsidy ``Leads'' (Sec. Sec.  435.601, 435.911, and 435.952), 
ICRs Regarding Defining ``Family of the Size Involved'' for the 
Medicare Savings Program Groups using the Definition of ``Family Size'' 
in the Medicare Part D Low-Income Subsidy Program (Sec.  435.601), and 
ICRs Regarding Automatically Enrolling Certain SSI Recipients Into the 
Qualified Medicare Beneficiaries Group (Sec.  435.909).

IV. Regulatory Impact Analysis

    We received one public comment on the RIA section of the September 
2022 proposed rule, which we summarize and respond to here.
    Comment: One commenter recommended that CMS include in its RIA more 
qualitative estimates of the positive impacts of this final rule, in 
addition to quantitative estimates of administrative spending and 
spending due to increased enrollment as well as savings to States and 
beneficiaries. Specifically, the commenter suggested that we highlight 
the improved health and economic outcomes for beneficiaries of 
increased enrollment and decreased churn. Likewise, the commenter urged 
CMS to describe the distributive impacts of the rule as well as the 
positive effects on health equity.
    Response: We agree that we anticipate unquantified positive impacts 
on beneficiaries as a result of States implementing the policies in 
this final rule. As discussed in the background section of this final 
rule and in response

[[Page 22838]]

to similar comments in section II. of this preamble, Medicaid and CHIP 
play a key role in the United States health care system. These programs 
make it possible for tens of millions of Americans to access the health 
care services they need. While Medicaid and CHIP coverage can have a 
huge impact on the individuals served by these programs, we agree that 
the full value of the programs goes well beyond the individual 
beneficiaries.
    Again, we agree with commenters that the streamlined eligibility 
and enrollment processes established by this rule will reduce the 
enrollment churn of eligible individuals on and off Medicaid and CHIP. 
Commenters noted that a reduction in enrollment churn will not only 
improve the health of beneficiaries, but it will also protect 
individual beneficiaries, and their families, from medical debt and 
associated stressors. We agree with commenters that reduced enrollment 
churn has the potential to reduce administrative burdens for 
beneficiaries and their health care providers, improve the ability of 
beneficiaries and their providers to form lasting relationships, and 
reduce the need for high-cost interventions that can result from 
delayed care. We also agree with comments on the broader community 
impact of this rule. We believe that healthier beneficiaries can be 
more productive in their homes, their work, and their communities.
    We also received one comment specifically related to the rule's 
collection of information requirements. The comment and our response 
can be found below.
    Comment: One commenter questioned whether the cost savings that CMS 
claimed that States should achieve once automation is in place are 
meaningful, since, in many States, most of the Medicaid operations are 
automated other than the non-MAGI caseloads. According to the 
commenter, the system, policy, and procedural updates required to 
implement this rule will need to be prioritized and developed over 
several years. For example, a small to medium build can take up to 12 
months, while a significant build can take 24-36 months, depending on 
the complexity of the systems and the number of competing priorities. 
States' challenges include staff turnover and competing priorities, and 
any administrative savings from this rule would take additional years 
to realize.
    Response: We understand that State system updates, such as those 
needed to accept applications and supplemental forms via additional 
modalities, will take time and resources. However, we find this to be a 
reasonable investment given the reduction in beneficiary burden that 
will result from being able to submit required information in whatever 
modality best fits the needs of the applicant or beneficiary. 
Additionally, while encouraged, there is no requirement for States to 
integrate non-MAGI with MAGI systems but rather to make non-MAGI 
renewals possible through the same modalities--for example, paper, 
phone, web-based--as MAGI renewals. We do recognize the operational 
challenges States face and are finalizing these requirements so that 
they are effective using a phased approach (see section II.F for a list 
of compliance dates for each provision in this final rule).
    We remind States that enhanced FFP is available, in accordance with 
Sec.  433.112(b)(14), at a 90 percent matching rate for the design, 
development, or installation of improvements to Medicaid eligibility 
determination systems, in accordance with applicable Federal 
requirements. Enhanced FFP is also available at a 75 percent matching 
rate for operations of such systems, in accordance with applicable 
Federal requirements.

A. Statement of Need

    We have learned through our experiences in working with States and 
other interested parties that there are gaps in our regulatory 
framework related to Medicaid, CHIP, and BHP eligibility and 
enrollment. While we have made great strides in expanding access to 
coverage over the past decade, certain policies continue to result in 
unnecessary burdens and create barriers to enrollment and retention of 
coverage. In response to the President's Executive Order on Continuing 
to Strengthen Americans' Access to Affordable, Quality Health Coverage, 
we reviewed existing regulations to look for areas where access could 
be improved.
    In this rulemaking, we seek to eliminate obstacles that make it 
harder for eligible people to remain enrolled, particularly those 
individuals who are exempted from MAGI and did not benefit from many of 
the enrollment simplifications in our 2012 and 2013 eligibility final 
rules. We seek to remove coverage barriers, like premium lock-out 
periods and waiting periods that are not permitted under other 
insurance affordability programs, and to reduce coverage gaps as 
individuals transition from one insurance affordability program to 
another. Together, the changes in this final rule will streamline 
Medicaid, CHIP and BHP eligibility and enrollment processes, reduce 
administrative burden on States and enrollees, expand coverage of 
eligible applicants, increase retention of eligible enrollees, and 
improve health equity.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), Executive Order 14094 on Modernizing Regulatory 
Review (hereinafter, the Modernizing E.O.) (April 6, 2023), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, section 202 of the Unfunded 
Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive 
Order 13132 on Federalism (August 4, 1999), and the Congressional 
Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 on Regulatory Planning and Review and 13563 
on Improving Regulation and Regulatory Review 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). The 
Modernizing E.O. amends section 3(f)(1) of Executive Order 12866. The 
amended section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) having an annual effect on the economy of $200 million or more in 
any 1 year (adjusted every 3 years by the Administrator of the Office 
of Information and Regulatory Affairs (OIRA) for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
tribal governments or communities; (2) creating a serious inconsistency 
or otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order, as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    OIRA must be prepared for major rules with significant regulatory 
action(s) or with economically significant effects ($200 million or 
more in any 1 year). Based on our estimates,

[[Page 22839]]

the OIRA has determined this rulemaking is significant per section 
3(f)(1) as measured by the $200 million or more in any 1-year 
threshold, and hence is also a major rule under Subtitle E of the Small 
Business Regulatory Enforcement Fairness Act of 1996 (also known as the 
Congressional Review Act). Accordingly, we have prepared a Regulatory 
Impact Analysis that to the best of our ability presents the costs and 
benefits of the rulemaking.
    The aggregate economic impact of this final rule is estimated to be 
$45.15 billion (in real FY 2024 dollars) over 5 years. This represents 
additional health care spending made by the Medicaid and CHIP programs 
on behalf of Medicaid and CHIP beneficiaries, with $37.39 billion paid 
by the Federal Government and $23.20 billion paid by the States, and a 
reduction of $15.44 billion in Federal Marketplace subsidies.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $9.0 million to $47.0 million in any one year. Individuals 
and States are not included in the definition of a small entity. Since 
this final rule would only impact States and individuals, we do not 
believe that this final rule will have a significant economic impact on 
a substantial number of small businesses.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside a Metropolitan Statistical Area and has fewer than 
100 beds. This final rule applies to State Medicaid and CHIP agencies 
and would not add requirements to rural hospitals or other small 
providers. Therefore, we are not preparing an analysis for section 
1102(b) of the Act because we have determined, and the Secretary 
certifies, that this final rule would not have a significant impact on 
the operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any one year of 
$100 million in 1995 dollars, updated annually for inflation. In 2024, 
that is approximately $183 million. We believe that this final rule 
would have such an effect on spending by State, local, or tribal 
governments but not by private sector entities.

C. Overall Assumptions

    In developing these estimates, we have relied on several global 
assumptions. All estimates are based on the projections from the 
President's FY 2024 Budget. We have assumed that new enrollees would 
have the same average costs as current enrollees by eligibility group, 
unless specified in the description of the estimates. We have assumed 
that the effective date of the rule would be October 1, 2024, with 
provisions being effective on the schedule described in this rule. In 
addition, we have relied on the data sources and assumptions described 
in the next section to develop estimates for specific provisions of 
this final rule.

D. Anticipated Effects

    To derive average administrative burdens for each provision in this 
rule, we used data from the U.S. Bureau of Labor Statistics' (BLS) May 
2022 National Occupational Employment and Wage Estimates (https://www.bls.gov/oes/2022/may/oes_nat.htm). Table 3 presents BLS' mean 
hourly wage along with our estimated cost of fringe benefits and other 
indirect costs (calculated at 100 percent of salary) and our adjusted 
hourly wage.
[GRAPHIC] [TIFF OMITTED] TR02AP24.002

    States: To estimate State costs, it was important to take into 
account the Federal Government's contribution to the cost of 
administering the Medicaid and CHIP programs. The Federal Government 
provides funding based on a FMAP that is established for each State, 
based on the per capita income in the State as compared to the national 
average. FMAPs range from a minimum of 50 percent in States with higher 
per capita incomes to a maximum of 76.25 percent in States with lower 
per capita incomes. States receive an ``enhanced'' FMAP for 
administering their CHIP programs, ranging from 65 to 83 percent. For 
Medicaid, all States receive a 50 percent FMAP for administration. As 
noted previously in this final rule, States also receive higher Federal 
matching rates for certain services and now for systems improvements or 
redesign, so the level of Federal funding provided to a State can be 
significantly

[[Page 22840]]

higher. As such, in taking into account the Federal contribution to the 
costs of administering the Medicaid and CHIP programs for purposes of 
estimating State burden with respect to collection of information, we 
elected to use the higher end estimate that the States would contribute 
50 percent of the costs, even though the burden will likely be much 
smaller.
    Beneficiaries: We believe that the cost for beneficiaries 
undertaking administrative and other tasks on their own time is a post-
tax wage of $21.98/hr. While we used BLS wage data to estimate the cost 
of our proposed provisions, this final rule uses the Valuing Time in 
U.S. Department of Health and Human Services Regulatory Impact 
Analyses: Conceptual Framework and Best Practices,\25\ which identifies 
the approach for valuing time when individuals undertake activities on 
their own time. To derive the costs for beneficiaries, we used a 
measurement of the usual weekly earnings of wage and salary workers of 
$1,059 \26\ for 2022, divided by 40 hours to calculate an hourly pre-
tax wage rate of $26.48/hr. This rate is adjusted downwards by an 
estimate of the effective tax rate for median income households of 
about 17 percent or $4.50/hr ($26.48/hr x 0.17), resulting in the post-
tax hourly wage rate of $21.98/hr ($26.48/hr-$4.50/hr). Unlike our 
State and private sector wage adjustments, we are not adjusting 
beneficiary wages for fringe benefits and other indirect costs, since 
the individuals' activities, if any, would occur outside the scope of 
their employment.
---------------------------------------------------------------------------

    \25\ https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//176806/VOT.pdf.
    \26\ https://fred.stlouisfed.org/series/LEU0252881500A.
---------------------------------------------------------------------------

    Total Administrative Burden and Savings: As outlined in Table 4, in 
total, we expect this rule will result in a one-time administrative 
burden of 53,409 labor hours for States and savings of minus 7,207,971 
labor hours for beneficiaries, as well as $2,589,410 in one-time 
spending for States and one-time savings of minus $158,431,203 for 
beneficiaries. However, we also expect the rule to result in annual 
reductions in administrative burden of minus 3,048,036 labor hours for 
States and minus 21,859,547 labor hours for beneficiaries, as well as 
an annual reduction of minus $66,014,177 in spending by States and 
minus $480,472,849 by beneficiaries.
BILLING CODE 4120-01-P

[[Page 22841]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.003


[[Page 22842]]


BILLING CODE 4120-01-C
1. Facilitating Enrollment by Allowing Medically Needy Individuals To 
Deduct Prospective Medical Expenses (Sec.  435.831(g))
    The amendments under Sec.  435.831(g) will permit States to project 
medical expenses of noninstitutionalized individuals that the State can 
determine with reasonable certainty will be constant and predictable to 
prevent those in the medically needy group from cycling on and off 
Medicaid, and preventing the occurrence of an eligibility start date 
each budget period that is not predictable to either the individual or 
State agency. Over time, this will reduce the burden on the State by 
making the spenddown process much more predictable for many 
noninstitutionalized individuals in the medically needy group. This 
will also reduce the burden on the individual who will not need to wait 
for coverage until they've reached their spenddown each budget period 
but instead will remain continuously enrolled while their medical 
expenses remain predictable. However, there will be an up-front cost to 
the States to program their eligibility systems to project the cost of 
care for the medically needy group and to remove the triggers to 
reconsider financial eligibility each budget period once the spenddown 
amount is reached.
    This provision is only relevant to the 36 States that have opted to 
cover the medically needy or are 209(b) States, and it is optional for 
those States. Assuming all 36 States take up the option, we estimate 
that 36 States will need to make system changes to program their 
eligibility systems to project the cost of care for the medically needy 
group and to remove the triggers to reconsider financial eligibility 
each month once the spenddown amount is reached. We estimate it will 
take an average of 200 hours per State to develop and code the changes 
to utilize projected noninstitutional expenses when determining 
financial eligibility for medically needy individuals. Of those 200 
hours, we estimate it will take a Database and Network Administrator 
and Architect 50 hours at $106.16/hr and a Computer Programmer 150 
hours at $98.84/hr. Therefore, we estimate a one-time burden of 7,200 
hours (36 States x 200 hr) at a cost of $724,824 (36 States x [(50 hr x 
$106.16/hr) + (150 hr x $98.84/hr)]) for completing the necessary 
system changes. Taking into account the 50 percent Federal contribution 
to Medicaid and CHIP program administration, the estimated State share 
will be $362,412 ($724,824 x 0.5).
    We estimate that under new Sec.  435.831(g), each of all 36 States 
will no longer need to collect information each budget period on the 
incurred medical expenses for 25 beneficiaries in the medically needy 
or mandatory 209(b) groups annually. We estimate it currently takes an 
Eligibility Interviewer, Government Programs, 2 hours at $48.10/hr and 
an Interpreter and Translator 1 hour at $59.36/hr to review the 
incurred medical expenses submitted for 6 months per year per 
beneficiary. Therefore, each State will save minus 450 hours (-3 hr x 6 
months/year x 25 beneficiaries) and minus $23,334 (6 months/year x -25 
beneficiaries x [(2 hr x $48.10/hr) + (1 hr x $59.36/hr)]) annually by 
not processing such incurred expenses each budget period for each 
individual in the medically needy or mandatory 209(b) groups. In 
aggregate, we estimate this provision will save all 36 States minus 
16,200 hours (-450 hr x 36 States) and minus $840,024 (-$23,334 x 36 
States). When taking into account the 50 percent Federal contribution 
to Medicaid and CHIP program administration, the estimated State 
savings will be minus $420,012 (-$840,024 x 0.5).
    Likewise, we estimate that under new Sec.  435.831(g), those same 
25 beneficiaries will no longer need to submit evidence of the incurred 
medical expenses that their States have designated as being reasonably 
constant and predictable but instead will remain continuously enrolled 
and reconcile actual expenses with projected expenses periodically, 
thus reducing the burden on the individuals. We estimate that it 
currently takes a beneficiary 2 hours at $21.98/hr to submit 
information each budget period in an average of 6 months per year. 
Therefore, beneficiaries in each State will save a total of minus 300 
hours (-2 hr x 6 months/year x 25 beneficiaries/State) and minus $6,594 
(-300 hr x $21.98/hr) annually. In aggregate, under this provision, 
beneficiaries across all 36 States will save minus 10,800 hours (-300 
hr x 36 States) and minus $237,384 (-$6,594 x 36 States) annually.
    When taking into account the Federal contribution, we estimate a 
one-time State savings of minus $57,600 ($362,412-$420,012).

[[Page 22843]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.004

2. Application of Primacy of Electronic Verification and Reasonable 
Compatibility Standard for Resource Information (Sec. Sec.  435.952 and 
435.940)
    States have inquired about whether they are permitted to request 
additional documentation from applicants and beneficiaries related to 
resources that can be verified through the State's asset verification 
system (AVS), or if they can apply a reasonable compatibility standard 
for resources when resource information returned from an electronic 
data source is compared to the information provided by the applicant or 
beneficiary. We believe the requirements at Sec.  435.952(b) and (c), 
which require States to apply a reasonable compatibility test to income 
determinations, apply to resource determinations as well. We believe 
that clearly applying the requirements at Sec.  435.952(b) and (c) to 
resources will help streamline enrollment for individuals applying for 
Medicaid on a non-MAGI basis, such as on the basis of age, blindness, 
or disability, and decrease burden for both States and beneficiaries.
    The amendments under Sec. Sec.  435.952 and 435.940 clarify that, 
if information provided by an individual is reasonably compatible with 
information returned through an AVS, the State must determine or renew 
eligibility based on that information. They also clarify that States 
must consider asset information obtained through an AVS to be 
reasonably compatible with attested information if either both are 
above or both are at or below the applicable resource standard or other 
relevant resource threshold.
    Under the changes to Sec. Sec.  435.952 and 435.940, we estimate 
that the States will save an Eligibility Interviewer 1 hour per 
beneficiary at $48.10/hr to no longer reach out to 10,000 individuals 
per State for additional information to verify their resources. In 
aggregate, we estimate a savings for all States of minus 510,000 hours 
(51 States x 10,000 individuals/State x -1 hr) and minus $24,531,000 (-
510,000 hr x $48.10/hr). When taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State savings will be minus $12,265,500 (-$24,531,000 x 0.5).
    Under the changes to Sec. Sec.  435.952 and 435.940, we estimate 
that 10,000 individuals per State will save on average 1 hour each at 
$21.98/hr to no longer need to submit additional information to verify 
their resources. In aggregate for individuals in all States, we 
estimate a savings of minus 510,000 hours (-1 hr x 10,000 individuals/
State x 51 States) and minus $11,209,800 (-510,000 hr x $21.98/hr).

[[Page 22844]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.005

3. Verification of Citizenship and Identity (Sec.  435.407)
    The amendments under Sec.  435.407 will simplify eligibility 
verification procedures by considering verification of birth with a 
State vital statistics agency or verification of citizenship with DHS 
SAVE as stand-alone evidence of citizenship. Likewise, under this 
provision, separate verification of identity will not be required. This 
revision is not intended to require a State to develop a match with its 
vital statistics agency if it does not already have one in place. 
However, if a State already has established a match with a State vital 
statistics agency or it would be effective to establish such capability 
in accordance with the standard set forth in Sec.  435.952(c)(2)(ii), 
the State must utilize such match before requesting paper documentation 
from the applicant. We estimate this provision will apply to the 
roughly 100,000 applicants per year for whom States cannot verify U.S. 
citizenship with SSA.
    We estimate that the amendments under Sec.  435.407 will take a 
Management Analyst 15 minutes (0.25 hr) per applicant at $100.64/hr to 
check with the State's vital statistics agency for verification of U.S. 
citizenship of an applicant. In aggregate for all 56 States, this 
provision will add a burden of 25,000 hours (0.25 hr x 100,000 
applicants) at a cost of $2,516,000 (25,000 hr x $100.64/hr). Taking 
into account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share will be $1,258,000 
($2,516,000 x 0.5).
    In contrast, we estimate that the amendments under Sec.  435.407 
will save an Eligibility Interviewer 45 minutes (0.75 hr) at $48.10/hr 
by no longer needing to request and process paper documentation to 
verify identity. In aggregate, all 56 States will save minus 75,000 
hours (0.75 hr x -100,000 applicants) and minus $3,607,500 (-75,000 hr 
x $48.10/hr). Taking into account the 50 percent Federal contribution 
to Medicaid and CHIP program administration, the estimated State 
savings will be minus $1,803,750 (-$3,607,500 x 0.5).
    When taking into account the Federal contribution, we estimate a 
total annual State savings of minus $545,750 ($1,258,000 - $1,803,750).
    For individuals, we estimate that the amendments under Sec.  
435.407 would save each applicant 1 hour at $21.98/hr plus an average 
of approximately $10 in miscellaneous costs [($4.50 postage for small 
package or $1.75/page for faxing) + $4 roundtrip bus ride (from home to 
printing/copying place to post office and back home) + $0.13/page for 
printing/copying], to no longer need to gather and submit paper 
documentation to verify identity. In aggregate, all 100,000 applicants 
would save 100,000 hours (1 hr x -100,000 applicants) and minus 
$2,198,000 (-100,000 hr x $21.98/hr) in labor and minus $1,000,000 
($10.00 x -100,000 applicants) in non-labor related costs.

[[Page 22845]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.006

4. Aligning Non-MAGI Enrollment and Renewal Requirements With MAGI 
Policies (Sec.  435.916)
    The amendments under Sec.  435.916(a) will align the frequency of 
renewals for non-MAGI beneficiaries with the current requirement for 
MAGI beneficiaries, which allows for renewals no more frequently than 
every 12 months. Section 435.916(b) also requires States to adopt the 
existing renewal processes required for MAGI beneficiaries for non-MAGI 
beneficiaries when a State is unable to renew eligibility for an 
individual based on information available to the agency. Section 
435.916(b)(2) will require States to provide all beneficiaries, 
including non-MAGI beneficiaries, whose eligibility cannot be renewed 
without contacting the individual in accordance with Sec.  
435.916(b)(1), a renewal form that is pre-populated with information 
available to the agency, a minimum of 30 calendar days to return the 
signed renewal form along with any required information, and a 90-day 
reconsideration period for individuals terminated for failure to return 
their renewal form but who subsequently return their form within the 
reconsideration period. Section 435.916(b)(2) no longer permits States 
to require an in-person interview for non-MAGI beneficiaries as part of 
the renewal process.
    We estimate that in 2021, six States (Minnesota, New Hampshire, 
Texas, Utah, Washington, and West Virginia) had policies in place to 
conduct regularly-scheduled renewals for at least some non-MAGI 
beneficiaries more frequently than once every 12 months. One other 
State conducted more frequent renewals for non-MAGI populations during 
normal operations but elected to conduct renewals only once every 12 
months for all beneficiaries during the COVID-19 PHE. We excluded the 
State from these estimates, as it would have needed to make changes for 
the temporary authority in effect as of 2021 during the PHE.
    Under Sec.  435.916(a), we estimate it will take an average of 200 
hours per State to develop and code the changes to each State's system 
to reschedule renewals for non-MAGI beneficiaries no more frequently 
than once every 12 months. Of those 200 hours, we estimate it will take 
a Database and Network Administrator and Architect 50 hours at $106.16/
hr and a Computer Programmer 150 hours at $98.84/hr. In aggregate, we 
estimate a one-time burden of 1,200 hours (6 States x 200 hr) at a cost 
of $120,804 (6 States x [(50 hr x $106.16/hr) + (150 hr x $98.84/hr)]) 
for completing the necessary system changes. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $60,402 ($120,804 x 
0.5).
    We also estimate that 21 States do not pull available non-MAGI 
beneficiary information to prepopulate a renewal form.\27\ Under Sec.  
435.916(b)(2), we estimate it will take an average of 200 hours per 
State to develop and code the changes to each State's system to pull 
the existing non-MAGI beneficiary information to prepopulate a renewal 
form. Of those 200 hours, we estimate it will take a Business 
Operations Specialist 50 hours at $80.08/hr and a Management Analyst 
150 hours at $100.64/hr. In aggregate, we estimate a one-time burden of 
4,200 hours (21 States x 200 hr) at a cost of $401,100 (21 States x 
[(50 hr x $80.08/hr) + (150 hr x $100.64/hr)]) for completing the 
necessary system changes and designing the form. Taking into account 
the 50 percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $200,550 ($401,100 x 
0.5).
---------------------------------------------------------------------------

    \27\ Kaiser Family Foundation. ``Medicaid Financial Eligibility 
for Seniors and People with Disabilities: Findings from a 50-State 
Survey.'' Available at: https://files.kff.org/attachment/Issue-Brief-Medicaid-Financial-Eligibility-for-Seniors-and-People-with-Disabilities-Findings-from-a-50-State-Survey.
---------------------------------------------------------------------------

    While we do not have evidence of how many States currently require 
an in-person or telephone interview, to calculate this burden, we will 
assume all 56 States do so, with the understanding that the actual 
State savings will be much less. In 2020, there were about 2,688,386 
non-MAGI beneficiaries \28\ for whom States will no

[[Page 22846]]

longer need to conduct an in-person interview as part of the renewal 
process. Under Sec.  435.916(b)(2), we estimate that an Eligibility 
Interviewer will save on average 0.5 hours per beneficiary at $48.10/
hr. In aggregate, we estimate this will save States minus 1,344,193 
hours (0.5 hr x -2,688,386 beneficiaries) and minus $64,655,683 (-
1,344,193 hr x $48.10/hr). Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State savings will be minus $32,327,842 (-$64,655,683 x 0.5).
---------------------------------------------------------------------------

    \28\ Major Eligibility Group Information for Medicaid and CHIP 
Beneficiaries by Year, accessed from: https://data.medicaid.gov/dataset/267831f3-56d3-4949-8457-f6888d8babdd.
---------------------------------------------------------------------------

    In total for the burdens related to Sec.  435.916, taking into 
account the Federal contribution, we estimate an annual State savings 
of minus $32,327,842 with a one-time cost of $260,952 ($200,550 + 
$60,402).
    We estimate that in the aforementioned six States that currently 
have policies to conduct regularly scheduled renewals for non-MAGI 
beneficiaries more frequently than once every 12 months, during normal 
operations in 2020, there were about 2,688,386 non-MAGI beneficiaries 
\29\ who would no longer need to submit a renewal under Sec.  
435.916(a). Assuming impacted beneficiaries are evenly distributed 
across these six States, and assuming it currently takes each 
beneficiary 1 hour at $21.98/hr to submit a renewal form, in aggregate, 
beneficiaries across these six States will save minus 2,688,386 hours 
(-2,688,386 non-MAGI beneficiaries x 1 hr) and minus $59,090,724 (-
2,688,386 hr x $21.98/hr).
---------------------------------------------------------------------------

    \29\ Ibid.
---------------------------------------------------------------------------

    While we do not have evidence of how many States currently require 
an in-person interview, to calculate this burden, we will assume all 56 
States do so, with the understanding that the actual individual burden 
will be much less. In 2020, there were about 2,688,386 non-MAGI 
beneficiaries \30\ who will no longer need to travel to a Medicaid 
office to complete an in-person interview in order to maintain coverage 
under Sec.  435.916(b)(2). Assuming impacted beneficiaries are evenly 
distributed across these 56 States and assuming it currently takes each 
beneficiary 1 hour to travel to and participate in an in-person 
interview, plus on average $10/person in travel expenses, in aggregate, 
beneficiaries across these 56 States will save minus 2,688,386 hours (-
2,688,386 beneficiaries x 1 hr) and minus $59,090,724 (-2,688,386 hr x 
$21.98/hr) in labor and minus $26,883,860 (-2,688,386 non-MAGI 
beneficiaries x $10.00) in non-labor related costs for a total savings 
of minus $85,974,584 (-$59,090,724-$26,883,860).
---------------------------------------------------------------------------

    \30\ Ibid.
---------------------------------------------------------------------------

    Under Sec.  435.916(b)(2), we estimate 37 States will need to 
establish a reconsideration period for non-MAGI beneficiaries or extend 
the timeframe of their existing reconsideration period for non-MAGI 
beneficiaries to 90 calendar days. In 2020, there were up to 2,688,386 
non-MAGI beneficiaries in 56 States \31\ who would newly not need to 
complete a new application to regain coverage after being terminated 
for coverage for failure to return their renewal form under this 
provision. Approximately 4.2 percent of beneficiaries are disenrolled 
from coverage and reenroll within 90 days.\32\ Therefore, we estimate 
74,603 beneficiaries (2,688,386 beneficiaries/56 States x 0.042 x 37 
States) will newly not need to complete a full application to reenroll 
in coverage because they will be in a 90-day reconsideration period 
under Sec.  435.916(b)(2). Assuming impacted beneficiaries are evenly 
distributed across the 37 States and assuming it currently takes each 
beneficiary 1 hour at $21.98/hr to submit a new full application, this 
provision will save, in aggregate, beneficiaries across these 37 States 
a total of minus 74,603 hours (-74,603 beneficiaries x 1 hr) and minus 
$1,639,774 (-74,603 hr x $21.98/hr).
---------------------------------------------------------------------------

    \31\ Ibid.
    \32\ Kaiser Family Foundation (2021). Medicaid Enrollment Churn 
and Implications for Continuous Coverage Policies. https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-churn-and-implications-for-continuous-coverage-policies/.
---------------------------------------------------------------------------

    For beneficiaries, we estimate a total burden reduction of minus 
5,451,375 hours (-2,688,386 hr -2,688,386 hr -74,603 hr) and minus 
$146,705,082 (-$59,090,724-$85,974,584-$1,639,774).
BILLING CODE 4120-01-P

[[Page 22847]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.007

BILLING CODE 4120-01-C
5. Acting on Changes in Circumstances (Sec. Sec.  435.916, 435.919, and 
457.344)
    The amendments under Sec.  435.919 will, if the State cannot 
redetermine the individual's eligibility after a change in circumstance 
using third party data and information available to the agency, allow 
beneficiaries at least 30 calendar days from the date the State sends a 
request for additional information to provide such information. In 
addition, the amendments will require States to provide beneficiaries 
terminated due to failure to provide information requested after a 
change in circumstance with a 90-day reconsideration period.
    Because the requirements under Sec. Sec.  435.912, 435.919, and 
457.344 will result in more time for beneficiaries to respond to the 
State's request for additional information, it is likely that fewer 
beneficiaries will lose eligibility as a result of this provision. As 
well, because the amendments will, for the first time, provide a 90-day 
reconsideration period after a change in circumstance for all 
approximately 85,809,179 Medicaid and CHIP beneficiaries (in the 51 
States that reported enrollment data for November 2021) \33\ to submit 
additional information to maintain their eligibility, it is likely that 
beneficiaries will not need to complete and States will not need to 
process full applications for 4.2 percent of those individuals or 
3,603,986 beneficiaries (85,809,179 beneficiaries x 0.042) who lose 
coverage and later reenroll.\34\
---------------------------------------------------------------------------

    \33\ CMS, November 2021 Medicaid & CHIP Enrollment. Available at 
https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html.
    \34\ Kaiser Family Foundation. (2021). Medicaid Enrollment Churn 
and Implications for Continuous Coverage Policies. https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-churn-and-implications-for-continuous-coverage-policies/.
---------------------------------------------------------------------------

    Assuming the 40 States with a separate CHIP agency can adapt 
language from the Medicaid notice for their purposes, we estimate it 
will not take as long for those 40 States to revise the notice 
requesting additional information from beneficiaries regarding their 
eligibility after a change in circumstance to include language allowing 
the beneficiary at least 30 calendar days to respond. Therefore, we 
estimate it will take an average of 6 hours per State Medicaid agency 
and 3 hours per separate CHIP agency to complete this task. Of the 6 
Medicaid hours, we estimate it will take a Business Operations 
Specialist 4 hours (and 2 hr for CHIP) at $80.08/hr and a Management 
Analyst 2 hours (and 1 hr for CHIP) at $100.64/hr. We estimate one-time 
burden of 306 hours for Medicaid (51 Medicaid States \35\ x 6 hr) and 
120 hours for CHIP (40 CHIP States x 3 hr) at a cost of $26,602 for 
Medicaid (51 States x [(4 hr x $80.08/hr) + (2 hr x $100.64/hr)]) and 
$10,432 for CHIP (40 States x [(2 hr x $80.08/hr) + (1 hr x $100.64/
hr)]) for revising the notice requesting additional information. Taking 
into account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State shares will be $13,301 for 
Medicaid ($26,602 x 0.5) and $5,216 for CHIP ($10,432 x 0.5).
---------------------------------------------------------------------------

    \35\ While this provision applies to all States, Washington, DC, 
and the 5 territories, we are only estimating the burden for the 51 
States for which we have current enrollment data, per the November 
2021 CMS enrollment snapshot, available at https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/october-november-2021-medicaid-chip-enrollment-trend-snapshot.pdf.
---------------------------------------------------------------------------

    We also estimate it will take each State 6 hours to revise the 
termination notice to beneficiaries who did not respond to the State's 
request for additional information regarding their eligibility after a 
change in circumstance

[[Page 22848]]

to include language allowing the beneficiary a 90-day reconsideration 
period. Of those 6 hours, we estimate it will take a Business 
Operations Specialist an average of 4 hours at $80.08/hr and a 
Management Analyst 2 hours at $100.64/hr. In aggregate, we estimate a 
one-time burden of 336 hours (56 States x 6 hr) at a cost of $29,210 
(56 States x [(4 hr x $80.08/hr) + (2 hr x $100.64/hr)]) for revising 
the termination notice. Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share will be $14,605 ($29,210 x 0.5).
    We also estimate that it will save each State 50 hours to process 
full applications annually for beneficiaries who will no longer lose 
coverage and later reenroll. Specifically, we estimate it will save an 
Eligibility Interviewer 40 hours at $48.10/hr and an Interpreter and 
Translator 10 hours at $59.36/hr. In aggregate, we estimate an annual 
savings of minus 2,800 hours (56 States x -50 hr) and minus $140,986 
([(40 hr x $48.10/hr) + (10 hr x $59.36/hr)] x 56 States) for 
processing fewer full applications. Taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State savings will be minus $70,493 (-$140,986 x 0.5).
    When taking into account the Federal contribution, we estimate a 
total State savings of minus $37,371 ($13,301 + $5,216 + $14,605-
$70,493).
    We estimate that it will save each beneficiary who is disenrolled 
after a change in circumstance 2 hours at $21.98/hr to no longer submit 
a full application. As stated above under burden #4, approximately 4.2 
percent of beneficiaries are disenrolled from coverage and reenroll 
within 90 days.\36\ Because this provision applies to all 
beneficiaries, which numbered approximately 85,809,179 individuals for 
Medicaid and CHIP (in the 51 States that reported enrollment data for 
November 2021),\37\ we estimate approximately 3,603,986 beneficiaries 
(85,809,179 beneficiaries x 0.042) will save this time not reapplying 
after a change in circumstance. In aggregate, we estimate that this 
provision will save beneficiaries minus 7,207,972 hours (-3,603,986 
beneficiaries x 2 hr) and minus $158,431,225 (-7,207,972 hr x $21.98/
hr).
---------------------------------------------------------------------------

    \36\ Kaiser Family Foundation (2021). ``Medicaid Enrollment 
Churn and Implications for Continuous Coverage Policies.'' Available 
at: https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-churn-and-implications-for-continuous-coverage-policies/.
    \37\ CMS, ``November 2021 Medicaid & CHIP Enrollment.'' 
Available at https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html.
---------------------------------------------------------------------------

BILLING CODE 4120-01-P

[[Page 22849]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.008

6. Timely Determination and Redetermination of Eligibility in Medicaid 
(Sec.  435.912) and CHIP (Sec.  457.340)
a. State Plan Changes
    The amendments in this section will establish standards to ensure 
that applicants have enough time to gather and provide additional 
information and documentation requested by a State in adjudicating 
eligibility. In addition, the amendments will apply the current 
requirements that apply at application to redeterminations either at 
renewal or based on changes in circumstances. To address the current 
situation where redeterminations remain unprocessed for several months 
following the end of a beneficiary's eligibility period due to the 
beneficiary failing to return needed information to the State, these 
amendments will require States to establish timeliness standards for 
both beneficiaries to return requested information to the State, as 
well as for the State to complete a redetermination of eligibility when 
the beneficiary returns information too late to process before the end 
of the eligibility period. In addition, these amendments will require 
States to establish performance and timeliness standards for

[[Page 22850]]

determining Medicaid eligibility, as well as determining eligibility 
for CHIP and BHP when an individual is determined ineligible for 
Medicaid.
    Lastly, the amendments under Sec.  435.912 will for the first time 
establish set timeframes for when States must complete existing 
requirements related to acting on change in circumstances. The 
amendments will require States to process a redetermination by the end 
of month that occurs 30 calendar days from the date the State receives 
information indicating a potential change in a beneficiary's 
circumstance if no information is needed from the individual to 
redetermine eligibility and by the end of month that occurs 60 calendar 
days if the State needs to request additional information from the 
individual.
    We estimate that it will take each State 3 hours to update their 
Medicaid State plans via a State plan amendment (SPA) to establish 
timeliness standards for the State to process redeterminations. Of 
those 3 hours per SPA, we estimate it will take a Business Operations 
Specialist 2 hours at $80.08/hr and a General Operations Manager 1 hour 
at $118.14/hr to update and submit each SPA to us for review. In 
aggregate, we estimate a one-time burden of 168 hours (56 States x 3 
hr) at a cost of $15,585 (56 responses x ([2 hr x $80.08/hr] + [1 hr x 
$118.14/hr])) for completing the necessary SPA updates. Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share will be $7,792 
($15,585 x 0.5).
b. Updating Notices and Systems
    We estimate that it will take each State 6 hours to update their 
notices to inform beneficiaries of the newly established timeframes 
within which they must return requested additional information for the 
State to process their redeterminations. Of those 6 hours, we estimate 
it will take a Business Operations Specialist 4 hours at $80.08/hr and 
a Computer Programmer 2 hours at $98.84/hr. In aggregate, we estimate a 
one-time burden of 336 hours (56 States x 6 hr) at a cost of $29,008 
(56 States x ([4 hr x $98.84/hr] + [2 hr x $80.08/hr])) for all States 
to update the notices. Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share will be $14,504 ($29,008 x 0.5).
    We also estimate it will take an average of 200 hours per State to 
develop and code the changes to each State's system to update the 
timeframes for beneficiaries to return additional information and to 
implement a reconsideration process for beneficiaries who are 
disenrolled for failure to return information within the newly 
established timeframes but who return the information within the 
reconsideration period. Of those 200 hours, we estimate it will take a 
Business Operations Specialist 50 hours at $80.08/hr and a Management 
Analyst 150 hours at $100.64/hr. In aggregate, we estimate a one-time 
State burden of 11,200 hours (56 States x 200 hr) at a cost of 
$1,069,600 ([(50 hr x $80.08/hr) + (150 hr x $100.64/hr)] x 56 States) 
for completing the necessary system changes. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $534,800 ($1,069,600 
x 0.5).
c. Total State Cost
    When taking into account the Federal contribution, we estimate a 
total one-time State cost of $557,096 ($7,792 + $14,504 + $534,800).
[GRAPHIC] [TIFF OMITTED] TR02AP24.009

7. Agency Action on Updated Address Information (Sec. Sec.  435.919 and 
457.344)
    This rule establishes the steps States must take when beneficiary 
mail is returned to the agency. All States must establish a data 
exchange to obtain updated beneficiary contact information from the 
USPS and contracted managed care plans. When updated in-State contact 
information is found, States must accept that information as reliable, 
update the beneficiary's case record, and notify the beneficiary of the 
change. If an in-State change of address is obtained from other data 
sources and

[[Page 22851]]

cannot be confirmed as reliable by information available from USPS or 
contracted managed care plans, then the State must make a good-faith 
effort (at least two attempts to contact the beneficiary through at 
least two different modalities) to confirm the change. When updated 
out-of-State contact information is obtained from any source, the State 
must always make a good-faith effort to contact the beneficiary. If the 
State is unable to confirm that the beneficiary continues to meet State 
residency requirements, the State must terminate the beneficiary's 
eligibility, subject to notice and fair hearing rights. When mail is 
returned with no forwarding address, and the State is unable to obtain 
a new address (after making a good-faith effort), the State must 
suspend or terminate the beneficiary's enrollment, or move the 
beneficiary from a managed care program to fee-for-service Medicaid.
    In the September 2022 proposed rule, we estimated that, to 
implement this provision, States with managed care delivery systems in 
their Medicaid and CHIP programs would need to update their contracts 
to enter into regular data sharing arrangements with their managed care 
plans to obtain up-to-date beneficiary contact information. However, we 
know now that all States with managed care delivery systems have 
already done this as a part of their activities to unwind from the 
COVID-19 PHE, and so we are omitting this burden estimate from this 
final rule.
    In the same September 2022 proposed rule, we estimated, using our 
own analysis, that about half of all States (56 States/2 = 28 States) 
currently check DMV data for updated beneficiary information, such as 
contact information, as a part of their routine verification plans. 
Using this as a proxy for whether the State has an agreement with 
third-party sources, for example, the NCOA database, etc., we estimated 
that it would take 28 States each 40 hours to establish these data-
sharing agreements. Through ongoing monitoring of States' activities to 
unwind from the COVID-19 PHE, we now know that 37 States have waiver 
authority under section 1902(e)(14)(A) of the Act to check the NCOA 
database and update beneficiary contact information based on that 
information without checking with the beneficiary first, and so we no 
longer need to use a proxy here. We are updating our estimate that the 
additional burden of implementing this provision will apply to only 19 
States (56 States - 37 States with waiver authority) instead of 28, 
thus reducing the burden. Of those 40 hours, we estimate it will take a 
Procurement Clerk 10 hours at $44.76/hr and a Management Analyst 30 
hours at $100.64/hr. In aggregate, we estimate a one-time burden of 760 
hours (40 hr x 19 States) at a cost of $65,869 ([(10 hr x $44.76/hr) + 
(30 hr x $100.64/hr)] x 19 States). Taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State share will be $32,935 ($65,869 x 0.5).
    In the September 2022 proposed rule, we also assumed that 15 
percent \38\ of all Medicaid beneficiaries (12,871,377 beneficiaries = 
85,809,179 beneficiaries x 0.15) \39\ generate returned mail each year, 
and so we estimated that it will take 51 States each 30 seconds 
(approximately 0.0083 hr) per notice to send one additional notice by 
mail not only to the current address on file, but also to the 
forwarding address, if one is provided. However, in this final rule we 
are amending our proposal, as described in detail in section II.B.4. of 
this preamble, to only require that States send a single notice by mail 
to the forwarding address. Therefore, we revise our estimate here to 
omit the burden for mailing an additional notice to the original 
address on file. We estimate that it will take a Management Analyst in 
each State 0.0083 hr/notice at $100.64/hr to program the sending of one 
extra notice for a total of 106,832 hours (0.0083 hr x 12,871,377 
beneficiaries) at a cost of $10,751,616 (106,832 hr x $100.64/hr). 
Taking into account the 50 percent Federal contribution to Medicaid and 
CHIP program administration, the estimated State share will be 
$5,375,808 ($10,751,616 x 0.5). We also estimate this amendment will 
create additional burden in postage costs for all States totaling 
$7,722,826 ($0.60/notice \40\ x 12,871,377 \41\). When taking into 
account the 50 percent Federal contribution, the estimated State share 
will be $3,861,413 ($7,722,826 x 0.5). In aggregate for the above 
burdens, taking into account the 50 percent Federal contribution to 
Medicaid and CHIP program administration, the estimated State share 
will be $9,237,221 ($5,375,808 + $3,861,413).
---------------------------------------------------------------------------

    \38\ KHN, November 9, 2019, ``Return to Sender: A Single 
Undeliverable Letter Can Mean Losing Medicaid.'' Available at 
https://khn.org/news/tougher-returned-mail-policies-add-to-medicaid-enrollment-drop/.
    \39\ Centers for Medicare & Medicaid Services, ``October and 
November 2021 Medicaid and CHIP Enrollment Trends Snapshot,'' March 
28, 2022. Available at https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/october-november-2021-medicaid-chip-enrollment-trend-snapshot.pdf.
    \40\ This amount is based on the current USPS postage rate for 
standard letters.
    \41\ While this provision applies to all States, Washington, DC, 
and the 5 territories, we are only estimating the burden for the 51 
States for which we have current enrollment data, per the November 
2021 CMS enrollment snapshot available at https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/october-november-2021-medicaid-chip-enrollment-trend-snapshot.pdf.
---------------------------------------------------------------------------

    We estimate that it will take an Eligibility Interviewer an average 
of 5 minutes (0.083 hr) per beneficiary at $48.10/hr to make one 
additional outreach attempt using a modality other than mail to the 
estimated 12,871,377 beneficiaries per year for whom the State receives 
returned mail. Because this final rule permits States to automatically 
update in-State changes of address when they can be verified by USPS or 
a contracted managed care plan, we do not believe States will need to 
conduct additional outreach to all 12.9 million beneficiaries. However, 
until we have a better understanding of the volume of returned mail 
that will require such follow-up outreach, we are maintaining our 
proposed estimate here. In aggregate, we estimate this will add 
1,068,324 hours (0.083 hr x 12,871,377 beneficiaries) at a cost of 
$51,386,398 (1,068,324 hr x $48.10/hr). Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $25,693,199 
($51,386,398 x 0.5).
    In total, for the burden related to Sec. Sec.  435.919 and 457.344, 
when taking into account the 50 percent Federal contribution, we 
estimate a total State cost of $34,963,355 ($32,935 + $9,237,221 + 
$25,693,199).
    We estimate that current State policies on returned mail may have 
contributed to a drop of approximately 2.125 percent in enrollment.\42\ 
Applying that change, we estimate that 273,517 beneficiaries in total 
(12,871,377 beneficiaries x 0.02125), or 5,363 beneficiaries in each of 
51 States, will no longer be disenrolled after non-response to a State 
notice generated by returned mail and will no longer need to reapply to 
Medicaid. Therefore, we estimate that these amendments will lead to a 
reduction in burden for 273,517 beneficiaries who will otherwise be 
disenrolled after generating returned mail. We estimate that these 
beneficiaries will each save 2 hours of time not needed to reapply for 
Medicaid at $21.98/hr. In aggregate, we estimate this amendment will 
save beneficiaries in all States minus 547,034

[[Page 22852]]

hours (-273,517 beneficiaries x 2 hr) and minus $12,023,807 (-547,034 
hr x $21.98/hr).
---------------------------------------------------------------------------

    \42\ KHN, November 9, 2019, ``Return to Sender: A Single 
Undeliverable Letter Can Mean Losing Medicaid.'' Available at 
https://khn.org/news/tougher-returned-mail-policies-add-to-medicaid-enrollment-drop/.
[GRAPHIC] [TIFF OMITTED] TR02AP24.010

8. Improving Transitions Between Medicaid and CHIP (Sec. Sec.  
435.1200, 457.340, 457.348, 457.350, and 600.330)
    In States with separate Medicaid and CHIP programs, Sec.  435.1200 
will require both the Medicaid and CHIP agencies to make system changes 
to transition the eligibility of individuals more seamlessly from one 
program to the other. We have not included a burden estimate for 
changes to the BHP regulations, since revisions to the Medicaid cross-
references are intended to maintain current BHP policies.
    We estimate that Sec.  435.1200 will take each of the 40 States 
with a separate CHIP 40 hours to execute a delegation agreement between 
the Medicaid and CHIP agencies to implement more seamless coverage 
transitions. Of those 40 hours, we estimate it will take a Procurement 
Clerk 10 hours at $44.76/hr and a Management Analyst 30 hours at 
$100.64/hr. In aggregate, we estimate a one-time burden of 1,600 hours 
(40 hr x 40 States) at a cost of $138,672 [(10 hr x $44.76/hr) + (30 hr 
x $100.64/hr) x 40 States]. Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share will be $69,336 ($138,672 x 0.5).
    We estimate that it will take all 40 States with a separate CHIP an 
average of 42 hours each to review any policy differences between their 
Medicaid and CHIP programs and make any necessary administrative 
actions to permit coordination of enrollment, such as a delegation of 
eligibility determinations or alignment of financial eligibility 
requirements between the two programs. Of those 42 hours, we estimate 
it will take a Business Operations Specialist 22 hours at $80.08/hr and 
a Management Analyst 20 hours at $100.64/hr. In aggregate, we estimate 
a one-time burden of 1,680 hours (40 States x 42 hr) at a cost of 
$150,982 ([(22 hr x $80.08/hr) + (20 hr x $100.64/hr)] x 40 States) to 
review and make necessary policy changes. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $75,491 ($150,982 x 
0.5).
    We estimate that it will take all 40 States with a separate CHIP 
200 hours to make changes to their shared eligibility system or service 
to determine, based on available information, whether an individual is 
eligible for Medicaid or CHIP when determined ineligible for the other 
program and before a notice of ineligibility is sent. Of those 200 
hours, we estimate it will take a Business

[[Page 22853]]

Operations Specialist 50 hours at $80.08/hr and a Management Analyst 
150 hours at $100.64/hr. In aggregate, we estimate a one-time burden 
for all 40 States of 8,000 hours (40 States x 200 hr) at a cost of 
$764,000 ([(50 hr x $80.08/hr) + (150 hr x $100.64/hr)] x 40 States) 
for completing the necessary system changes. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $382,000 ($764,000 x 
0.5).
    We estimate that 25 percent of States with a separate CHIP (40 
States x 0.25 = 10) are already using combined notices and will see no 
additional burden from this provision. For the 30 of the 40 States with 
separate CHIPs who do not currently use a combined notice, we estimate 
that it will take 6 hours to develop or update a combined eligibility 
notice for individuals determined ineligible for Medicaid and eligible 
for CHIP or vice versa and 40 hours to make the system changes 
necessary to implement it. Of those 46 hours, we estimate that it will 
take a Business Operations Specialist 14 hours at $80.08/hr and a 
Management Analyst 32 hours at $100.64/hr. In aggregate, we estimate a 
one-time burden of 1,380 hours (30 States x 46 hr) at a cost of 
$130,248 ([(14 hr x $80.08/hr) + (32 hr x $100.64/hr)] x 30 States) to 
develop the notice. Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share will be $65,124 ($130,248 x 0.5).
    For the burden related to Sec. Sec.  435.1200, 457.340, 457.348, 
457.350, and 600.330, when taking into account the Federal 
contribution, we estimate a total cost of $591,951 ($69,336 + $75,491 + 
$382,000 + $65,124).
    We also estimate that this provision will save each beneficiary on 
average 3 hours to no longer submit a renewal form once they have been 
determined ineligible for one program and determined potentially 
eligible for another insurance affordability program based on available 
information. Assuming 1 percent of beneficiaries (85,809,179 
beneficiaries x 0.01 = 858,092 beneficiaries) currently submit a 
Medicaid renewal for this reason, in aggregate, we estimate an annual 
saving for beneficiaries in all States of minus 2,574,276 hours (-3 hr 
x 858,092 individuals) and minus $56,582,586 (-2,574,276 hr x $21.98/
hr).
    We estimate that it will save each beneficiary 4 hours previously 
spent reapplying for coverage. Assuming 0.25 percent of beneficiaries 
(214,523 beneficiaries = 85,809,179 beneficiaries x 0.0025) currently 
lose coverage for failure to return a renewal form when no longer 
eligible, instead of being transitioned to the program for which they 
are eligible, we estimate an annual saving for beneficiaries in all 
States of minus 858,092 hours (-4 hr x 214,523 individuals) and minus 
$18,860,862 (-858,092 hr x $21.98/hr).
    For beneficiaries, we estimate a total savings of minus $75,443,448 
(-$56,582,586-$18,860,862).
BILLING CODE 4120-01-P

[[Page 22854]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.011


[[Page 22855]]


[GRAPHIC] [TIFF OMITTED] TR02AP24.012

BILLING CODE 4120-01-C
9. Eliminating Requirement To Apply for Other Benefits (Sec.  435.608)
    This rule removes the requirement at Sec.  435.608 that State 
Medicaid agencies must require all Medicaid applicants and 
beneficiaries, as a condition of their eligibility, to take all 
necessary steps to obtain any benefits to which they are entitled. The 
requirement applies to adults only, which equates to approximately 
46,000,000 Medicaid applicants.\43\ Most individuals already apply for 
other benefits such as Veterans' compensation and pensions, Social 
Security disability insurance and retirement benefits, and unemployment 
compensation, because they want to receive them. As such, the 
requirement only impacts those individuals who applied for a benefit 
solely to obtain or keep Medicaid coverage.
---------------------------------------------------------------------------

    \43\ CMS, November 2021 Medicaid & CHIP Enrollment. Available at 
https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html.
---------------------------------------------------------------------------

    If we estimate that, in a year, 5 percent of beneficiaries need to 
apply for another benefit, that will be 2,300,000 people who are no 
longer required to apply due to the removal of this provision. However, 
the burden of this requirement on beneficiaries with respect to the 
collection of information relates to the application requirements of 
other agencies, and therefore we did not estimate the burden reduction 
for Medicaid and CHIP.
    We estimate it will take an average of 200 hours per State to 
develop and code the changes to each State's application system to 
eliminate the trigger for the Medicaid applicant to apply for other 
benefit programs. Of those 200 hours, we estimate it will take a 
Database and Network Administrator and Architect 50 hours at $106.16/hr 
and a Computer Programmer 150 hours at $98.84/hr. For States, we 
estimate a total one-time burden of 11,200 hours (56 States x 200 hr) 
at a cost of $1,127,504 ([(50 hr x $106.16/hr) + (150 hr x $98.84/hr)] 
x 56 States) to complete the necessary system changes. Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share will be $563,752 
($1,127,504 x 0.5).

[[Page 22856]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.013

10. Removing Optional Limitation on the Number of Reasonable 
Opportunity Periods (Sec.  435.956)
    This provision does not create any new or revised reporting, 
recordkeeping, or third-party disclosure requirements or burden. We are 
finalizing the proposal to revise Sec.  435.956(b)(4) to remove the 
option for States to establish limits on the number of ROPs. Under 
revised Sec.  435.956(b)(4), all 56 States will be prohibited from 
imposing limitations on the number of ROPs that an individual may 
receive.
    Since the option was established, only one State submitted a SPA 
requesting to implement this option and implemented via a 12-month 
pilot. Following the pilot, the State suspended the policy of limiting 
the ROP period and removed the option from its State Plan. Other than 
the one State, we have not received any inquiries about establishing 
such a limitation. Therefore, we estimate that the amendments to Sec.  
435.956(b)(4) will not lead to any change in burden on States.
11. Eliminating Requirement To Apply for Other Benefits (Sec. Sec.  
435.608 and 436.608)
    We anticipate a reduction in administrative burden for States 
resulting from the elimination of the requirement to apply for other 
benefits outlined in the preamble of this final rule. Specifically, we 
estimate that this provision would save State Eligibility Interviewers 
on average 1 hour per enrollee at $48.10/hr from no longer needing to 
prepare and send notices and requests for additional information about 
applying for other benefits, or to process requests for good cause 
exemptions. In aggregate for all States, we estimate an annual savings 
of minus 2,300,000 hours (1 hr x 2.3M enrollees) and minus $110,630,000 
(2,300,000 hrs x $48.10/hr). Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share will be $55,315,000.
    We also estimate that this provision would save each enrollee who 
otherwise meets all requirements to be enrolled or remain enrolled in 
Medicaid but who, absent this provision, would lose Medicaid coverage 
due to failure to provide information on application for other benefits 
on average 2 hours at $21.98/hr. In aggregate, we estimate that 
enrollees in all States would save minus 4,600,000 hours (2 hrs x 
2,300,000 enrollees) and minus $101,108,000 (4,600,000 hrs x $21.98/hr) 
annually.
BILLING CODE 4120-01-P

[[Page 22857]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.014

BILLING CODE 4120-01-C
12. Recordkeeping (Sec. Sec.  431.17 and 457.965)
    The amendments under Sec. Sec.  431.17 (Medicaid) and 457.965 
(CHIP) clearly delineate the types of information that States must 
maintain in Medicaid and CHIP case records while the case is active in 
addition to the minimum retention period of 3 years. This final rule 
clearly defines the records, such as the date and basis of any 
determination and the notices provided to the applicant/beneficiary. 
Sections 431.17(c) and 457.965(c) establish a minimum records retention 
period of 3 years, and Sec. Sec.  431.17(d) and 457.965(d) require that 
records be stored in an electronic format and that such records be made 
available to appropriate parties within 30 days of a request if not 
otherwise specified.
    We recognize that States are in various stages of electronic 
recordkeeping today and that a portion of non-MAGI beneficiary case 
records are currently stored in a paper-based format, along with a 
small portion of MAGI-based beneficiary case records. Therefore, under 
Sec. Sec.  431.17(c) and 457.965(c), we estimate it will take an 
average of 20 hours per State for a Management Analyst at $100.64/hr to 
update each State's policies and procedures to retain records 
electronically for 3 years minimum as well as the other changes 
finalized in this rule. In aggregate, we estimate a one-time burden of 
1,120 hours (56 States x 20 hr) at a cost of $112,717 (1,120 hr x 
$100.64/hr) for completing the necessary updates. Taking into account 
the 50 percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $56,358 ($112,717 x 
0.5).

[[Page 22858]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.015

13. Prohibiting Premium Lock-Out Periods and Disenrollment for Failure 
To Pay Premiums (Sec. Sec.  457.570 and 600.525(b)(2))
a. CHIP State Plan Changes
    The amendments to Sec. Sec.  457.570 and 600.525(b)(2) will 
eliminate the option for States to impose premium lock-out periods in 
CHIP and in States with a BHP that allows continuous open enrollment 
throughout the year.
    Under Sec.  457.570, we estimate it will take a Management Analyst 
2 hours at $100.64/hr and a General and Operations Manager 1 hour at 
$118.14/hr in all 14 States that currently impose lock-out periods to 
amend their CHIP State plans to remove the lock-out period and submit 
in the Medicaid Model Data Lab (MMDL) portal for review. We estimate an 
aggregate one-time burden of 42 hours (14 States x 3 hr) at a cost of 
$4,472 (([2 hr x $100.64/hr] + [1 hr x $118.14/hr]) x 14 States). 
Taking into account the 50 percent Federal contribution to Medicaid and 
CHIP program administration, the estimated State share will be $2,236 
($4,472 x 0.5).
b. BHP Blueprint Changes
    Our amendments will require BHP States to revise their BHP 
Blueprints to remove the premium lock-out period. Under Sec.  
600.525(b)(2), in the one BHP State that imposes a lock-out period, we 
estimate it will take a Management Analyst 2 hours at $100.64/hr and a 
General and Operations Manager 1 hour at $118.14/hr to revise their BHP 
Blueprints to remove the premium lock-out period. We estimate an 
aggregate one-time burden of 3 hours (1 State x 3 hr) at a cost of $319 
(([2 hr x $100.64/hr] + [1 hr x $118.14/hr]) x 1 State).
c. Total State Cost
    In total for the burden related to Sec. Sec.  457.570 and 
600.525(b)(2), taking into account the Federal contribution for the 
CHIP-related changes, we estimate a total one-time cost for the State 
of $2,555 ($2,236 + $319).
[GRAPHIC] [TIFF OMITTED] TR02AP24.016


[[Page 22859]]


14. Prohibition on Waiting Periods in CHIP (Sec. Sec.  457.65, 457.340, 
457.350, 457.805, and 457.810)
    The amendments to Sec. Sec.  457.65, 457.340, 457.350, 457.805, and 
457.810 in the September 2022 proposed rule will eliminate the State 
option to impose a waiting period for families with children eligible 
for CHIP who were recently enrolled in a group health plan.
    Currently, 11 States with a separate CHIP program impose waiting 
periods between 1 month and 90 days. We estimate that the amendments 
will require these 11 States to process CHIP applications earlier than 
under current rules and without evaluating whether the applicant just 
lost coverage through a group health plan. Therefore, these States will 
need to update their applications to eliminate the question requesting 
attestation of recently lost coverage and all related follow-up 
questions evaluating whether the person falls into an exception for a 
waiting period. If the State uses a data source to check for other 
coverage, the State will need to update the application to remove the 
trigger to query the data source.
    We estimate it will take an average of 200 hours in each of these 
11 States to develop and code the changes to each State's application 
to remove all questions and queries related to recently lost coverage. 
Of those 200 hours, we estimate it will take a Database and Network 
Administrator and Architect 50 hours at $106.16/hr and a Computer 
Programmer 150 hours at $98.84/hr. In aggregate, we estimate a one-time 
burden of 2,200 hours (11 States x 200 hr) at a cost of $221,474 ([(50 
hr x $106.16/hr) + (150 hr x $98.84/hr)] x 11 States) for completing 
the necessary system changes. Taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State share will be $110,737 ($221,474 x 0.5).
    We estimate it will take an average of 3 hours in each of 11 unique 
States to update each State's CHIP SPAs in MMDL to eliminate the 
waiting period and to document the other strategies the States will use 
to monitor substitution of coverage. We estimate it will take a General 
and Operations Manager 1 hour at $118.14/hr and a Business Operations 
Specialist 2 hours at $80.08/hr. In aggregate, we estimate a one-time 
burden for all States of 33 hours (11 States x 3 hr) and $3,061 ([(1 hr 
x $118.14/hr) + (2 hr x $80.08/hr)] x 11 States) for completing the 
necessary SPA updates. Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share will be $1,531 ($3,061 x 0.5).
    In total for the burden related to Sec. Sec.  457.65, 457.340, 
457.350, 457.805, and 457.810, and taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State share will be $112,268 ($110,737 + $1,531).
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR02AP24.017


[[Page 22860]]


BILLING CODE 4120-01-C
15. Prohibiting Annual and Lifetime Limits on Benefits (Sec.  457.480)
a. Programming Changes to Annual and Lifetime Limits
    The amendments to Sec.  457.480 will prohibit annual and lifetime 
dollar limits in the provision of all CHIP medical and dental benefits. 
Currently, 13 unique States place either an annual or lifetime dollar 
limit on at least 1 CHIP benefit. Twelve of the 13 States place an 
annual dollar limit on at least one CHIP benefit (AL, AR, CO, IA, MI, 
MS, MT, OK, PA, TN, TX, and UT), and six of the 13 States place a 
lifetime dollar limit on at least one benefit (CO, CT, MS, PA, TN, and 
TX). We estimate that the amendments will require 13 States to update 
their systems and their CHIP SPAs to eliminate annual or lifetime 
benefit limits.
    We estimate it will take an average of 20 hours to develop and code 
the changes to remove just 1 limit on either an annual or lifetime 
benefit. Of those 20 hours, we estimate it will take a Database and 
Network Administrator and Architect 5 hours at $106.16/hr and a 
Computer Programmer 15 hours at $98.84/hr. In aggregate, we estimate a 
one-time burden across all 13 States of 260 hours (20 hr x 13 States) 
and $26,174 ([(5 hr x $106.16/hr) + (15 hr x $98.84/hr)] x 13 States) 
for completing the necessary system changes. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $13,087 ($26,174 x 
0.5).
b. Updating CHIP SPAs
    The amendments to Sec.  457.480 will require States to submit 
updated CHIP SPAs. We estimate it will take an average of 3 hours in 
each of 13 unique States to update each State's CHIP SPAs in MMDL to 
remove each of 21 different limits on annual and/or lifetime benefits 
(calculated as 21/13, or approximately 1.62, limits per State if 
distributed evenly). Of those 3 hours, we estimate it will take a 
General and Operations Manager 1 hour at $118.14/hr and a Business 
Operations Specialist 2 hours at $80.08/hr for a per State total of 5 
hours (3 hr/limit x 1.62 limits). In aggregate, we estimate a one-time 
burden for all States of 65 hours (13 States x 3 hr x 1.62 limits/
State) and $5,844 ([(1 hr x $118.14/hr) + (2 hr x $80.08/hr)] x 21 
limits) for completing the necessary SPA updates. Taking into account 
the 50 percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share will be $2,922 ($5,844 x 
0.5).
c. Total State Cost
    In total for the burden related to Sec.  457.480, taking into 
account the 50 percent Federal contribution, we estimate a total one-
time State cost of $16,009 ($13,087 + $2,922).
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR02AP24.018

BILLING CODE 4120-01-C

[[Page 22861]]

16. Provisions To Facilitate Medicaid Enrollment
    For provisions that would facilitate Medicaid enrollment (including 
the electronic verification and reasonable compatibility standard; 
facilitating enrollment by allowing medically needy individuals to 
deduct prospective medical expenses; and the verification of 
citizenship and identity), we assumed that these provisions would 
increase enrollment by about 0.1 percent among aged enrollees and 
enrollees with disabilities and would have a negligible impact on other 
categories of enrollees. We estimated that this would increase 
enrollment by about 20,000 person-year equivalents by 2028.
[GRAPHIC] [TIFF OMITTED] TR02AP24.019

17. Promoting Enrollment and Retention of Eligible Individuals
    These provisions are expected to increase coverage by assisting 
persons with gaining and maintaining Medicaid coverage. We have 
considered several effects of the provisions in this final rule.
    First, we estimated the impacts of aligning non-MAGI enrollment and 
renewal requirements with MAGI policy. We anticipate that this 
provision would increase the number of member months of coverage among 
enrollees eligible based on non-MAGI criteria (older adults and persons 
with disabilities). In an analysis of dually eligible enrollees from 
2015 to 2018, we found that about 29 percent of new dually eligible 
enrollees lost coverage for at least 1 month in the first year of 
coverage, and about 24 percent lost coverage for at least 3 months. 
While some of this loss of coverage is likely due to enrollees no 
longer being eligible, we expect that many enrollees may still be 
eligible despite losing coverage, and that this provision would assist 
enrollees in continuing coverage. We assumed that this provision would 
increase enrollment among aged enrollees and enrollees with 
disabilities by about 1 percent.
    For all other provisions under this section, we assumed that they 
would increase coverage for children by about 1 percent and for all 
other enrollees by about 0.75 percent. In particular, we assumed that 
provisions for acting on changes in circumstances, timely eligibility 
determinations and redeterminations, and action on returned mail would 
all contribute to modest increases in enrollment (mostly through 
continuing coverage for persons already enrolled) and that the 
provision to improve transitions between Medicaid and CHIP would 
further increase Medicaid enrollment.
    In total, we estimated these provisions would increase enrollment 
by about 890,000 person-year equivalents by 2028.
[GRAPHIC] [TIFF OMITTED] TR02AP24.020

18. Eliminating Barriers to Access in Medicaid
    We assumed that removing or limiting requirements to apply for 
other benefits as a condition of Medicaid enrollment would lead to an 
increase in Medicaid coverage. We have not assessed the impacts across 
different benefits (that is, SSI, TANF, etc.). We assumed that this 
would increase overall enrollment by about 0.5 percent, or about 
420,000 person-year equivalents by 2028.
    We have assumed that removing optional limitations on the number of 
reasonable opportunity periods would have a negligible impact on 
Medicaid enrollment and expenditures.

[[Page 22862]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.021

19. CHIP Changes and Eliminating Access Barriers in CHIP
    We estimated that changes to CHIP enrollment (including timely 
determinations and redeterminations, acting on changes in 
circumstances, acting on returned mail, and improving transitions 
between CHIP and Medicaid) would increase CHIP enrollment by about 1 
percent. These are comparable to the impacts on Medicaid children of 
the comparable Medicaid provisions.
    For prohibitions on premium lockout periods and waiting periods, 
there are currently 14 States that have such lockout periods and 11 
States that have waiting periods for CHIP enrollment. We assumed that 
in those States, removing these barriers to coverage would increase 
enrollment by about 1 percent. We assumed that prohibiting annual and 
lifetime limits on benefits in CHIP would have a negligible impact.
    In total, we estimate these provisions would increase enrollment by 
about 130,000 person-year equivalents by 2028.
[GRAPHIC] [TIFF OMITTED] TR02AP24.022

20. Impacts on the Marketplaces
    We anticipate that many of the enrollees that would either be 
gaining Medicaid or CHIP coverage or retaining Medicaid or CHIP 
coverage as a result of this final rule would have had other coverage 
under current policies. In particular, we expect that many of the 
children and adults would have enrolled in the Marketplace and been 
eligible for subsidized care.
    To estimate the impacts this final rule would have on Marketplace 
expenditures, we started by calculating the cost of care and Federal 
subsidy payments for different households shifting from Medicaid and 
CHIP to Marketplace coverage. We made the following assumptions. We 
estimated that health care prices are 30 percent higher in Marketplace 
plans than in Medicaid and CHIP, and that the average percentage of 
costs for non-benefit costs in managed care programs was 10 percent--
this also considers that some beneficiaries receive all or part of 
their care outside of managed care delivery systems. Next, we assumed 
that individuals would reduce health spending by 10 percent in the 
Marketplace due to increased cost sharing requirements. We used an 
actuarial value of 70 percent, consistent with silver level plans on 
the Marketplace, and assumed that the average percentage of non-benefit 
costs in Marketplace plans was 20 percent. Finally, we assumed that the 
average income of persons shifting from Medicaid and CHIP to 
Marketplace coverage would be 125 percent of the Federal poverty level 
(FPL) and that the premium tax credits would be calculated assuming 
that they would not have to pay any contribution in 2024 and 2025 under 
the Inflation Reduction Act of 2022, and that they would have to pay 2 
percent of income for coverage for 2026 and beyond.
    We calculated the amount of Federal subsidies (measured by premium 
tax credits) for households of one adult, two adults, one adult and one 
child, one adult and two children, and two adults and two children, and 
then calculated the total Federal cost of Marketplace coverage to be 
consistent with the distribution of projected enrollment change in 
Medicaid and CHIP under this final rule. We made a final assumption 
that 60 percent of individuals would have enrolled in Marketplace 
coverage, and the remaining 40 percent would have either received other 
coverage or become uninsured.
    We estimated that Marketplace costs would have decreased by $3.8 
billion in 2022 under the policies in this final rule. To project costs 
for future years that would be affected by this final rule,

[[Page 22863]]

we assumed that per capita costs, premiums, and Federal subsidies would 
increase consistent with the projected growth rates in the President's 
Budget with adjustments to account for the impacts of the Inflation 
Reduction Act of 2022, and that enrollment would increase consistent 
with the projections made for the Medicaid and CHIP provisions of this 
final rule.
[GRAPHIC] [TIFF OMITTED] TR02AP24.023

    There is a wide range of possible savings due to this effect of 
this final rule. For these estimates, participation in the Marketplace 
and health care costs and prices may vary from what we assumed here. 
Thus, actual savings could be greater or less than estimated here. This 
uncertainty is addressed in the high and low range estimates provided 
in the accounting statement (see section IV.F. of this final rule).
21. Total
    In total, we project that these provisions would increase Medicaid 
enrollment by 1.33 million by 2028 and would increase total Medicaid 
spending by $58,950 million from 2024 through 2028. Of that amount, we 
estimate that $36,240 million would be paid by the Federal Government 
and $22,710 million would be paid by the States. We also estimate that 
CHIP enrollment would increase by 0.13 million by 2028, and that total 
CHIP expenditures would increase by $1,640 million from 2024 to 2028 
($1,150 Federal and $490 million State costs). Table 24 shows the net 
impacts for Medicaid and for CHIP.
[GRAPHIC] [TIFF OMITTED] TR02AP24.024

    In addition to the effects on Medicaid and CHIP, we have also 
estimated impacts on the Federal subsidies for Marketplace coverage. 
Table 25 shows the net impact on Federal spending for Medicaid, CHIP, 
and Federal Marketplace subsidies.

[[Page 22864]]

[GRAPHIC] [TIFF OMITTED] TR02AP24.025

E. Alternatives Considered

    In developing this final rule, the following alternatives were 
considered:
1. Not Proposing the Rule
    We considered not finalizing this rule and maintaining the status 
quo. However, we believe this final rule will lead to more eligible 
individuals gaining access to coverage and maintaining their coverage 
across all States. In addition, we believe that provisions in this 
final rule, such as updates to the recordkeeping requirements, will 
reduce the incidence of improper payments and improve the integrity of 
the Medicaid program and CHIP.
2. Maintaining Records in Paper Format
    We considered allowing States, which have not yet transitioned 
their enrollee records into an electronic format, to continue to 
maintain a paper-based record keeping system. As documented by the OIG 
and PERM eligibility reviews, many existing enrollee case records lack 
adequate information to verify decisions of Medicaid eligibility. A 
move to electronic recordkeeping will not only help States to ensure 
adequate documentation of their eligibility decisions but will also 
make it easier to report such information to State auditors and other 
relevant parties. Therefore, we proposed to require State Medicaid 
agencies to store records in electronic format (estimated in section 
IV.D. of this final rule, as a one-time cost of $56,358) and sought 
comment on whether States should retain flexibility to maintain records 
in paper or other formats that reflect evolving technology.

F. Limitations of the Analysis

    There are several caveats to these estimates. Foremost, there is 
significant uncertainty about the actual effects of these provisions. 
Each of these provisions could be more or less effective than we have 
assumed in developing these estimates, and for many of these provisions 
we have made assumptions about the impacts they would have. In many 
cases, determining the reasons why a person may not be enrolled despite 
being eligible for Medicaid or CHIP is difficult to do in an analysis 
such as this. Therefore, these assumptions rely heavily on our judgment 
about the impacts of these provisions. While we believe these are 
reasonable estimates, we note that this could have a substantially 
greater or lesser impact than we have projected.
    Second, there is uncertainty even under current policy in Medicaid 
and CHIP. Due to the COVID-19 pandemic and legislation to address the 
pandemic, Medicaid (and to a lesser extent, CHIP) has experienced 
significant increases in enrollment since the beginning of 2020. Actual 
underlying economic and public health conditions may differ than what 
we assume here.
    In addition to the sources of uncertainty described previously, 
there are other reasons the actual impacts of these provisions may 
differ from the estimates. There may be differences in the impacts of 
these provisions across eligibility groups or States that are not 
reflected in these estimates. There may also be different costs per 
enrollee than we have assumed here--those gaining coverage altogether 
or keeping coverage for longer durations of time may have different 
costs than those who were already assumed to be enrolled in the 
program. Lastly, to the extent that States have discretion in 
provisions that are optional in this final rule or in the 
administration of their programs more broadly, States' efforts to 
implement these provisions may lead to larger or smaller impacts than 
estimated here.
    To address these limitations, we have developed a range of impacts. 
We believe that the actual impacts would likely fall within a range 50 
percent higher or lower than the estimates we have developed. While 
this is a significant range, we would note that in the context of 
spending in the entire Medicaid program ($839 billion in FY 2022), this 
is still a relatively narrow range.

G. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in 
Table 10 showing the classification of the transfer payments with the 
provisions of this final rule. These impacts are classified as 
transfers, with the Federal Government and States incurring additional 
costs and beneficiaries receiving medical benefits and reductions in 
out-of-pocket health care costs.
    This provides our best estimates of the transfer payments outlined 
in the section IV.D. of this final rule. To address the significant 
uncertainty related to these estimates, we have assumed that the costs 
could be 50 percent greater than or less than we have estimated here. 
We recognize that this is a relatively wide range, but we note several 
reasons for uncertainty regarding these estimates. First, there are 
numerous provisions that affect Medicaid and CHIP in this rule. For 
several provisions, we have limited information, analysis, or 
comparisons to prior experience to use in developing our estimates. 
Thus, the range reflects that impacts of these provisions could be 
greater or less than we assume. In addition, given the number of 
provisions, there may be cases where multiple provisions would help an 
individual maintain coverage. This could lead to these estimates 
``double counting'' some effects. We also note that there are expected 
impacts on the Marketplace subsidies; we believe this range adequately 
accounts for the potential variation in costs or savings to those 
programs as well. Finally, given

[[Page 22865]]

the significant effects of the COVID-19 pandemic and legislation 
intended to address this, the current outlooks for Medicaid and CHIP 
are less certain than typically. We provide this wider range to account 
for this uncertainty as well. This range provides the high-cost and 
low-cost ranges shown in Table 26.
[GRAPHIC] [TIFF OMITTED] TR02AP24.026

H. Waiver Fiscal Responsibility Act Requirements

    The Director of OMB has waived the requirements of section 263 of 
the Fiscal Responsibility Act of 2023 (Pub. L. 118- 5) pursuant to 
section 265(a)(2) of that Act.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on February 27, 2024.

List of Subjects

42 CFR Part 431

    Grant programs-health, Health facilities, Medicaid, Privacy, 
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 436

    Aid to families with dependent children, Grant programs-health, 
Guam, Medicaid, Puerto Rico, Supplemental Security Income (SSI), Virgin 
Islands.

42 CFR Part 447

    Accounting, Administrative practice and procedure, Drugs, Grant 
programs--health, Health facilities, Health professions, Medicaid, 
Reporting and recordkeeping requirements, Rural areas.

42 CFR Part 457

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

42 CFR Part 600

    Administrative practice and procedure, Health care, Health 
Insurance, Intergovernmental relations, Penalties, 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 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION

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

    Authority: 42 U.S.C. 1302.


0
2. Section 431.10 is amended by--
0
a. Redesignating paragraphs (c)(1)(i)(A)(2) and (3) as paragraphs 
(c)(1)(i)(A)(4) and (5), respectively; and
0
b. Adding new paragraphs (c)(1)(i)(A)(2) and (3).
    The additions read as follows:


Sec.  431.10  Single State agency.

* * * * *
    (c) * * *
    (1) * * *
    (i) * * *
    (A) * * *
    (2) The separate Children's Health Insurance Program agency;
    (3) The Basic Health Program agency;
* * * * *

0
3. Section 431.17 is revised to read as follows:


Sec.  431.17  Maintenance of records.

    (a) Basis and purpose. This section, based on section 1902(a)(4) of 
the Act, prescribes the kinds of records a Medicaid agency must 
maintain, the minimum retention period for such records, and the 
conditions under which those records must be provided or made 
available.
    (b) Content of records. A State plan must provide that the Medicaid 
agency will maintain or supervise the maintenance of the records 
necessary for the proper and efficient operation of the plan. The 
records must include all of the following:
    (1) Individual records on each applicant and beneficiary that 
contain all of the following:
    (i) All information provided on the initial application submitted 
through any modality described in Sec.  435.907 of this chapter by, or 
on behalf of, the applicant or beneficiary, including the signature on 
and date of application.
    (ii) The electronic account and any information or other 
documentation received from another insurance affordability program in 
accordance with Sec.  435.1200(c) and (d) of this chapter.
    (iii) The date of, basis for, and all documents or other evidence 
to support any determination, denial, or other adverse action, 
including decisions made at application, renewal, and as a result of a 
change in circumstance, taken with respect to the applicant or 
beneficiary, including all information provided by, or on behalf of, 
the applicant or beneficiary, and all information obtained 
electronically or otherwise by the agency from third-party sources.
    (iv) The provision of, and payment for, services, items and other 
medical assistance, including the service or item provided, relevant 
diagnoses, the date that the service or item was provided, the 
practitioner or provider rendering, providing or prescribing the 
service or item, including their National Provider Identifier, and the 
full amount paid or reimbursed for the service or item, and any third-
party liabilities.

[[Page 22866]]

    (v) Any changes in circumstances reported by the individual and any 
actions taken by the agency in response to such reports.
    (vi) All renewal forms and documentation returned by, or on behalf 
of, a beneficiary, to the Medicaid agency in accordance with Sec.  
435.916 of this chapter, regardless of the modality through which such 
forms are submitted, including the signature on the form and date 
received.
    (vii) All notices provided to the applicant or beneficiary in 
accordance with Sec.  431.206 and Sec. Sec.  435.917 and 435.918 of 
this chapter.
    (viii) All records pertaining to any fair hearings requested by, or 
on behalf of, the applicant or beneficiary, including each request 
submitted and the date of such request, the complete record of the 
hearing decision, as described in Sec.  431.244(b), and the final 
administrative action taken by the agency following the hearing 
decision and date of such action.
    (ix) The disposition of income and eligibility verification 
information received under Sec. Sec.  435.940 through 435.960 of this 
chapter, including evidence that no information was returned from an 
electronic data source.
    (2) Statistical, fiscal, and other records necessary for reporting 
and accountability as required by the Secretary.
    (c) Retention of records. The State plan must--
    (1) Except as provided in paragraph (c)(2) of this section, provide 
that the records required under paragraph (b) of this section will be 
retained for the period when the applicant or beneficiary's case is 
active, plus a minimum of 3 years thereafter.
    (2) For beneficiaries described in section 1917(a)(1)(B), (b)(1)(B) 
and (b)(1)(C) of the Act, provide that the records required under 
paragraph (b) of this section will be retained until the State has 
satisfied the requirements of section 1917(b) of the Act (relating to 
estate recovery).
    (d) Accessibility and availability of records. The agency must--
    (1) Maintain the records described in paragraph (b) of this section 
in an electronic format; and
    (2) Consistent with paragraph (e) of this section, and to the 
extent permitted under Federal law, make the records available to the 
Secretary, Federal and State auditors and other parties who request and 
are authorized to review such records within 30 calendar days of the 
request (or longer period specified in the request), except when there 
is an administrative or other emergency beyond the agency's control.
    (e) Release and safeguarding information. The agency must provide 
safeguards that restrict the use or disclosure of information contained 
in the records described in paragraph (b) of this section in accordance 
with the requirements set forth in subpart F of this part.

0
4. Section 431.213 is amended by revising paragraph (d) to read as 
follows:


Sec.  431.213  Exceptions from advance notice.

* * * * *
    (d) The beneficiary's whereabouts are unknown, and the post office 
returns mail directed to him indicating no forwarding address (see 
Sec.  435.919(f)(4) of this chapter for procedures if the beneficiary's 
whereabouts become known);
* * * * *


Sec.  431.231  [Amended]

0
5. Section 431.231 is amended by removing and reserving paragraph (d).

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

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

    Authority:  42 U.S.C. 1302.


0
7. Section 435.222 is amended by revising the section heading to read 
as follows:


Sec.  435.222  Optional eligibility for reasonable classifications of 
individuals under age 21 with income below a MAGI-equivalent standard 
in specified eligibility categories.

* * * * *

0
8. Section 435.223 is added to read as follows:


Sec.  435.223  Other optional eligibility for reasonable 
classifications of individuals under age 21.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii) 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) or to one 
or more reasonable classifications of individuals under age 21 who meet 
the requirements described in any clause of section 1902(a)(10)(A)(ii) 
of the Act and implementing regulations in this subpart.

0
9. Section 435.407 is amended by--
0
a. Adding paragraphs (a)(7) and (8);
0
b. Removing paragraphs (b)(2) and (11);
0
c. Redesignating paragraphs (b)(3) through (10) and (12) through (18) 
as paragraphs (b)(2) through (16), respectively; and
0
d. In newly redesignated paragraph (b)(16), removing the reference 
``(17)'' and adding in its place the reference ``(15)''.
    The additions read as follows:


Sec.  435.407  Types of acceptable documentary evidence of citizenship.

    (a) * * *
    (7) Verification with a State vital statistics agency documenting a 
record of birth.
    (8) A data match with the Department of Homeland Security (DHS) 
Systematic Alien Verification for Entitlements (SAVE) Program or any 
other process established by DHS to verify that an individual is a 
citizen.
* * * * *

0
10. Section 435.601 is amended by--
0
a. In paragraph (b)(2), removing the phrase ``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'' and adding in its place the 
phrase ``specified in paragraphs (c) through (e) of this section or in 
Sec.  435.121 or as permitted under paragraph (f)(1)(ii)(B) of this 
section, in determining'';
0
b. In paragraph (d)(1) introductory text, removing the phrase 
``permitted under Sec.  435.831(b)(1) in determining eligibility'' and 
adding in its place the phrase ``permitted under paragraph (e) or 
(f)(1)(ii)(B) of this section in determining eligibility''; and
0
c. Revising paragraph (f)(1).
    The revision reads as follows:


Sec.  435.601  Application of financial eligibility methodologies.

* * * * *
    (f) * * *
    (1)(i) The State plan must specify that, except to the extent 
precluded in Sec.  435.602, in determining financial eligibility of 
individuals, the agency will apply the cash assistance financial 
methodologies and requirements, unless the agency chooses the option 
described in paragraph (f)(1)(ii)(B) of this section, or chooses to 
apply less restrictive income and resource methodologies in accordance 
with paragraph (d) of this section, or both.
    (ii) In the case of individuals for whom the program most closely 
categorically-related to the individual's status is AFDC (individuals 
under age 21, pregnant individuals and parents and other caretaker 
relatives who are not disabled, blind or age 65 or older), the agency 
may apply--
    (A) The financial methodologies and requirements of the AFDC 
program; or
    (B) The MAGI-based methodologies defined in Sec.  435.603, except 
that, the

[[Page 22867]]

agency must comply with the terms of Sec.  435.602.
* * * * *


Sec.  435.608  [Removed and Reserved]

0
11. Section 435.608 is removed and reserved.

0
12. Section 435.831 is amended by--
0
a. Redesignating paragraphs (g)(2) and (3) as paragraphs (g)(3) and 
(4), respectively; and
0
b. Adding new paragraph (g)(2).
    The addition reads as follows:


Sec.  435.831  Income eligibility.

* * * * *
    (g) * * *
    (2) May include expenses for services that the agency has 
determined are reasonably constant and predictable, including but not 
limited to, services identified in a person-centered service plan 
developed pursuant to Sec.  441.301(b)(1)(i), Sec.  441.468(a)(1), 
Sec.  441.540(b)(5), or Sec.  441.725 of this chapter and expenses for 
prescription drugs, projected to the end of the budget period at the 
Medicaid reimbursement rate;
* * * * *

0
13. Section 435.907 is amended by adding paragraph (c)(4) and revising 
paragraph (d) to read as follows:


Sec.  435.907  Application.

* * * * *
    (c) * * *
    (4) Any MAGI-exempt applications and supplemental forms must be 
accepted through all modalities described at paragraph (a) of this 
section.
    (d) Requesting information from applicants. (1) If the agency needs 
to request additional information from the applicant to determine and 
verify eligibility in accordance with Sec.  435.911, the agency must--
    (i) Provide applicants with a reasonable period of time of no less 
than 15 calendar days, measured from the date the agency sends the 
request, to respond and provide any necessary information;
    (ii) Allow applicants to provide requested information through any 
of the modes of submission specified in paragraph (a) of this section; 
and
    (iii) If the applicant subsequently submits the additional 
information within 90 calendar days after the date of denial, or a 
longer period elected by the agency, treat the additional information 
as a new application and reconsider eligibility in accordance with the 
application time standards at Sec.  435.912(c)(3) without requiring a 
new application; and
    (2) The agency may not require an in-person interview as part of 
the application process.
* * * * *

0
14. Section 435.911 is amended by removing the heading from paragraph 
(a) and revising paragraph (c) introductory text to read as follows:


Sec.  435.911  Determination of eligibility.

* * * * *
    (c) For each individual who has submitted an application described 
in Sec.  435.907, whose eligibility is being renewed in accordance with 
Sec.  435.916, or whose eligibility is being redetermined in accordance 
with Sec.  435.919 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)), the State Medicaid agency must comply with the 
following--
* * * * *

0
15. Section 435.912 is revised to read as follows:


Sec.  435.912  Timely determination and redetermination of eligibility.

    (a) Definitions. For purposes of this section--
    Performance standards are overall standards for determining, 
renewing and redetermining eligibility in an efficient and timely 
manner across a pool of applicants or beneficiaries, and include 
standards for accuracy and consumer satisfaction, but do not include 
standards for an individual applicant's determination, renewal, or 
redetermination of eligibility.
    Timeliness standards refer to the maximum periods of time, subject 
to the exceptions in paragraph (e) of this section and in accordance 
with Sec.  435.911(c), in which every applicant is entitled to a 
determination of eligibility, a redetermination of eligibility at 
renewal, and a redetermination of eligibility based on a change in 
circumstances.
    (b) State plan requirements. Consistent with guidance issued by the 
Secretary, the agency must establish in its State plan timeliness and 
performance standards, promptly and without undue delay, for:
    (1) Determining eligibility for Medicaid for individuals who submit 
applications to the single State agency or its designee in accordance 
with Sec.  435.907, including determining eligibility or potential 
eligibility for, and transferring individuals' electronic accounts to, 
other insurance affordability programs pursuant to Sec.  435.1200(e);
    (2) Determining eligibility for Medicaid for individuals whose 
accounts are transferred from other insurance affordability programs, 
including at initial application, as well as at a regularly scheduled 
renewal or due to a change in circumstances;
    (3) Redetermining eligibility for current beneficiaries at 
regularly scheduled renewals in accordance with Sec.  435.916, 
including determining eligibility or potential eligibility for, and 
transferring individuals' electronic accounts to, other insurance 
affordability programs pursuant to Sec.  435.1200(e);
    (4) Redetermining eligibility for current beneficiaries based on a 
change in circumstances in accordance with Sec.  435.919(b)(1) through 
(5), including determining eligibility or potential eligibility for, 
and transferring individuals' electronic accounts to, other insurance 
affordability programs pursuant to Sec.  435.1200(e); and
    (5) Redetermining eligibility for current beneficiaries based on 
anticipated changes in circumstances in accordance with Sec.  
435.919(b)(6), including determining eligibility or potential 
eligibility for, and transferring individuals' electronic accounts to, 
other insurance affordability programs pursuant to Sec.  435.1200(e).
    (c) Timeliness and performance standard requirements--(1) Period 
covered. The timeliness and performance standards adopted by the agency 
under paragraph (b) of this section must--
    (i) For determinations of eligibility at initial application or 
upon receipt of an account transfer from another insurance 
affordability program, as described in paragraphs (b)(1) and (2) of 
this section, cover the period from the date of application or transfer 
from another insurance affordability program to the date the agency 
notifies the applicant of its decision or the date the agency transfers 
the individual's electronic account to another insurance affordability 
program in accordance with Sec.  435.1200(e);
    (ii) For regularly-scheduled renewals of eligibility under Sec.  
435.916, cover the period from the date that the agency initiates the 
steps required to renew eligibility on the basis of information 
available to the agency, as required under Sec.  435.916(b)(1), to the 
date the agency sends the individual notice required under Sec.  
435.916(b)(1)(i) or (b)(2)(i)(C) of its decision to approve their 
renewal of eligibility or, as applicable, to the date the agency 
terminates eligibility and transfers the individual's electronic 
account to

[[Page 22868]]

another insurance affordability program in accordance with Sec.  
435.1200(e);
    (iii) For redeterminations of eligibility due to changes in 
circumstances under Sec.  435.919(b)(1) through (5), cover the period 
from the date the agency receives information about the reported 
change, to the date the agency notifies the individual of its decision 
or, as applicable, to the date the agency terminates eligibility and 
transfers the individual's electronic account to another insurance 
affordability program in accordance with Sec.  435.1200(e); and
    (iv) For redeterminations of eligibility based on anticipated 
changes in circumstances under Sec.  435.919(b)(6), cover the period 
from the date the agency begins the redetermination of eligibility, to 
the date the agency notifies the individual of its decision or, as 
applicable, to the date the agency terminates eligibility and transfers 
the individual's electronic account to another insurance affordability 
program in accordance with Sec.  435.1200(e).
    (2) Criteria for establishing standards. To promote accountability 
and a consistent, high quality consumer experience among States and 
between insurance affordability programs, the timeliness and 
performance standards included in the State plan must address--
    (i) The capabilities and cost of generally available systems and 
technologies;
    (ii) The general availability of electronic data matching, ease of 
connections to electronic sources of authoritative information to 
determine and verify eligibility, and the time needed by the agency to 
evaluate information obtained from electronic data sources;
    (iii) The demonstrated performance and timeliness experience of 
State Medicaid, CHIP, and other insurance affordability programs, as 
reflected in data reported to the Secretary or otherwise available;
    (iv) The needs of applicants and beneficiaries, including 
preferences for mode of application and submission of information at 
renewal or redetermination (such as through an internet website, 
telephone, mail, in-person, or other commonly available electronic 
means), the time needed to return a renewal form or any additional 
information needed to complete a determination of eligibility at 
application or renewal, as well as the relative complexity of 
adjudicating the eligibility determination based on household, income 
or other relevant information; and
    (v) The advance notice that must be provided to beneficiaries in 
accordance with Sec. Sec.  431.211, 431.213, and 431.214 of this 
chapter when the agency makes a determination resulting in termination 
or other action as defined in Sec.  431.201 of this chapter.
    (3) Standard for new applications and transferred accounts. Except 
as provided in paragraph (e) of this section, the determination of 
eligibility for any applicant or individual whose account was 
transferred from another insurance affordability program may not 
exceed--
    (i) 90 calendar days for applicants who apply for Medicaid on the 
basis of disability; and
    (ii) 45 calendar days for all other applicants.
    (4) Standard for renewals. The redetermination of eligibility at a 
beneficiary's regularly scheduled renewal may not exceed the end of the 
beneficiary's eligibility period, except as provided in paragraphs (e) 
and (c)(4)(i) and (ii) of this section.
    (i) In the case of a beneficiary who returns a renewal form less 
than 30 calendar days prior to the end of the beneficiary's eligibility 
period, the redetermination of eligibility may not exceed the end of 
the month following the end of the beneficiary's eligibility period.
    (ii) In the case of a beneficiary who is determined ineligible on 
the basis for which they are currently receiving Medicaid (the 
applicable modified adjusted gross income standard described in Sec.  
435.911(b)(1) and (2) or another basis) and for whom the agency is 
considering eligibility on another basis, the eligibility determination 
on the new basis may not exceed--
    (A) 90 calendar days for beneficiaries whose eligibility is being 
determined on the basis of disability; and
    (B) 45 calendar days for all other beneficiaries.
    (5) Standard for redeterminations based on changes in 
circumstances. Except as provided in paragraph (e) of this section, the 
redetermination of eligibility for a beneficiary based on a change in 
circumstances reported by the beneficiary or received from a third 
party may not exceed the end of the month that occurs--
    (i) 30 calendar days following the agency's receipt of information 
related to the change in circumstances, unless the agency needs to 
request additional information from the beneficiary;
    (ii) 60 calendar days following the agency's receipt of information 
related to the change in circumstances if the agency must request 
additional information from the beneficiary; or
    (iii) In the case of a beneficiary who is determined ineligible on 
the basis for which they are currently receiving Medicaid (the 
applicable modified adjusted gross income standard described in Sec.  
435.911(b)(1) and (2) or another basis) and for whom the agency is 
considering eligibility on another basis--
    (A) 90 calendar days following the determination of ineligibility 
on the current basis, for beneficiaries whose eligibility is being 
determined on the basis of disability; and
    (B) 45 calendar days following the determination of ineligibility 
on the current basis for all other beneficiaries.
    (6) Standard for redeterminations based on anticipated changes. The 
redetermination of eligibility for a beneficiary based on an 
anticipated change in circumstances may not exceed the end of the month 
in which the anticipated change occurs, except as provided in 
paragraphs (e) and (c)(6)(i) and (ii) of this section.
    (i) In the case of a beneficiary who returns information or 
documentation requested pursuant to Sec.  435.919(b)(6) less than 30 
calendar days prior to the end of the month in which the anticipated 
change occurs, the redetermination of eligibility may not exceed the 
end of the month following the month in which the anticipated change 
occurs.
    (ii) In the case of a beneficiary who is determined ineligible on 
the basis for which they are currently receiving Medicaid (the 
applicable modified adjusted gross income standard described in Sec.  
435.911(b)(1) and (2) or another basis) and for whom the agency is 
considering eligibility on another basis, the eligibility determination 
on the new basis may not exceed--
    (A) 90 calendar days for beneficiaries whose eligibility is being 
determined on the basis of disability; and
    (B) 45 calendar days for all other beneficiaries.
    (d) Availability of information. The agency must inform individuals 
of the timeliness standards adopted in accordance with this section.
    (e) Exceptions. The agency must determine or redetermine 
eligibility within the standards except in unusual circumstances, for 
example--
    (1) When the agency cannot reach a decision because the applicant 
or beneficiary, or an examining physician, delays or fails to take a 
required action; or
    (2) When there is an administrative or other emergency beyond the 
agency's control.
    (f) Case documentation. The agency must document the reason(s) for 
delay in the applicant's or beneficiary's case record.

[[Page 22869]]

    (g) Prohibitions. The agency must not use the timeliness 
standards--
    (1) As a waiting period before determining eligibility;
    (2) As a reason for denying or terminating eligibility or benefits 
as required under Sec.  435.930(b) (because it has not determined or 
redetermined eligibility within the timeliness standards); or
    (3) As a reason for delaying termination of a beneficiary's 
coverage or taking other adverse action.


Sec.  435.914  [Amended]

0
16. Section 435.914 is amended by-
0
a. In paragraph (a), removing the phrase ``case record facts to support 
the agency's decision on his application'' and adding in its place the 
phrase ``and beneficiary's case record the information and 
documentation described in Sec.  431.17(b)(1) of this chapter''; and
0
b. In paragraph (b) introductory text, removing the phrase ``by a 
finding of eligibility or ineligibility'' and adding in its place the 
phrase ``and renewal or redetermination by a finding of eligibility or 
ineligibility''.

0
17. Section 435.916 is revised to read as follows:


Sec.  435.916  Regularly scheduled renewals of Medicaid eligibility.

    (a) Frequency of renewals. Except as provided in Sec.  435.919:
    (1) The eligibility of all Medicaid beneficiaries not described in 
paragraph (a)(2) of this section must be renewed once every 12 months, 
and no more frequently than once every 12 months.
    (2) The eligibility of qualified Medicare beneficiaries described 
in section 1905(p)(1) of the Act must be renewed at least once every 12 
months, and no more frequently than once every 6 months.
    (b) Renewals of eligibility--(1) Renewal on basis of information 
available to agency. The agency must make a redetermination of 
eligibility for all Medicaid beneficiaries without requiring 
information from the individual if able to do so based on reliable 
information contained in the individual's account or other more current 
information available to the agency, including but not limited to 
information through any data bases accessed by the agency under 
Sec. Sec.  435.948, 435.949, and 435.956. If the agency is able to 
renew eligibility based on such information, the agency must, 
consistent with the requirements of this subpart and subpart E of part 
431 of this chapter, notify the individual--
    (i) Of the eligibility determination, and basis; and
    (ii) That the individual must inform the agency, through any of the 
modes permitted for submission of applications under Sec.  435.907(a), 
if any of the information contained in such notice is inaccurate, but 
that the individual is not required to sign and return such notice if 
all information provided on such notice is accurate.
    (2) Renewals requiring information from the individual. If the 
agency cannot renew eligibility for beneficiaries in accordance with 
paragraph (b)(1) of this section, the agency--
    (i) Must provide the individual with--
    (A) A pre-populated renewal form containing information, as 
specified by the Secretary, available to the agency that is needed to 
renew eligibility.
    (B) At least 30 calendar days from the date the agency sends the 
renewal form to respond and provide any necessary information through 
any of the modes of submission specified in Sec.  435.907(a), and to 
sign the renewal form under penalty of perjury in a manner consistent 
with Sec.  435.907(f).
    (C) Notice of the agency's decision concerning the renewal of 
eligibility in accordance with this subpart and subpart E of part 431 
of this chapter.
    (ii) Must verify any information provided by the beneficiary in 
accordance with Sec. Sec.  435.945 through 435.956.
    (iii) If the individual subsequently submits the renewal form or 
other needed information within 90 calendar days after the date of 
termination, or a longer period elected by the State, must treat the 
renewal form as an application and reconsider the eligibility of an 
individual whose coverage is terminated for failure to submit the 
renewal form or necessary information in accordance with the 
application time standards at Sec.  435.912(c)(3) without requiring a 
new application.
    (iv) Not require an individual to complete an in-person interview 
as part of the renewal process.
    (v) May request from beneficiaries only the information needed to 
renew eligibility. Requests for non-applicant information must be 
conducted in accordance with Sec.  435.907(e).
    (3) Special rules related to beneficiaries whose Medicaid 
eligibility is determined on a basis other than modified adjusted gross 
income. (i) The agency may consider blindness as continuing until the 
reviewing physician under Sec.  435.531 determines that a beneficiary's 
vision has improved beyond the definition of blindness contained in the 
plan; and
    (ii) The agency may consider disability as continuing until the 
review team, under Sec.  435.541, determines that a beneficiary's 
disability no longer meets the definition of disability contained in 
the plan.
    (c) Timeliness of renewals. The agency must complete the renewal of 
eligibility in accordance with this section by the end of the 
beneficiary's eligibility period described in paragraph (a) of this 
section and in accordance with the time standards in Sec.  
435.912(c)(4).
    (d) Determination of ineligibility and transmission of data 
pertaining to individuals no longer eligible for Medicaid. (1) Prior to 
making a determination of ineligibility, the agency must consider all 
bases of eligibility, consistent with Sec.  435.911.
    (2) Prior to terminating coverage for individuals determined 
ineligible for Medicaid, the agency must determine eligibility or 
potential eligibility for other insurance affordability programs and 
comply with the procedures set forth in Sec.  435.1200(e).
    (e) Accessibility of renewal forms and notices. Any renewal form or 
notice must be accessible to persons who are limited English proficient 
and persons with disabilities, consistent with Sec.  435.905(b).

0
18. Section 435.919 is added to read as follows:


Sec.  435.919  Changes in circumstances.

    (a) Procedures for reporting changes. The agency must:
    (1) Have procedures designed to ensure that beneficiaries 
understand the importance of making timely and accurate reports of 
changes in circumstances that may affect their eligibility; and
    (2) Accept reports made under paragraph (a)(1) of this section and 
any other beneficiary reported information through any of the modes 
permitted for submission of applications under Sec.  435.907(a).
    (b) Agency action on information about changes. Consistent with the 
requirements of Sec.  435.952, the agency must promptly redetermine 
eligibility between regularly scheduled renewals of eligibility 
required under Sec.  435.916(a) whenever it has reliable information 
about a change in a beneficiary's circumstances that may impact the 
beneficiary's eligibility for Medicaid, the amount of medical 
assistance for which the beneficiary is eligible, or the beneficiary's 
premiums or cost sharing charges. Such redetermination must be 
completed in accordance with this paragraph (b) and paragraph (e) of 
this section.
    (1) The agency must redetermine eligibility based on available 
information, if possible. When needed

[[Page 22870]]

information is not available, the agency must request such information 
from the beneficiary in accordance with Sec.  435.952(b) and (c).
    (2) Prior to furnishing additional medical assistance or lowering 
applicable premiums or cost sharing charges based on a reported change:
    (i) If the change was reported by the beneficiary, the agency must 
verify the information in accordance with Sec. Sec.  435.940 through 
435.960 and the agency's verification plan developed under Sec.  
435.945(j).
    (ii) If the change was provided by a third-party data source, the 
agency may verify the information with the beneficiary.
    (3) If the agency is unable to verify a reported change that would 
result in additional medical assistance or lower premiums or cost 
sharing, the agency may not terminate the beneficiary's coverage for 
failure to respond to the request to verify such change.
    (4) Prior to taking an adverse action, as defined in Sec.  431.201 
of this chapter, based on information received from a third-party, the 
agency must request information from the beneficiary to verify or 
dispute the information received, consistent with Sec.  435.952(d).
    (5) If the agency determines that a reported change results in an 
adverse action, the agency must--
    (i) Comply with the requirements at Sec.  435.916(d)(1) (relating 
to consideration of eligibility on other bases) and (2) (relating to 
determining potential eligibility for other insurance affordability 
programs) prior to terminating a beneficiary's eligibility in 
accordance with this section.
    (ii) Provide advance notice of adverse action and fair hearing 
rights, in accordance with the requirements of part 431, subpart E, of 
this chapter, prior to taking any adverse action resulting from a 
change in a beneficiary's circumstances.
    (6) If the agency has information about anticipated changes in a 
beneficiary's circumstances that may affect his or her eligibility, the 
redetermination of eligibility must be initiated at an appropriate time 
based on such changes consistent with paragraphs (b)(1) through (5) of 
this section and the timeliness standards at Sec.  435.912(c)(6).
    (c) Beneficiary response times--(1) In general. The agency must--
    (i) Provide beneficiaries with at least 30 calendar days from the 
date the agency sends the notice requesting the beneficiary to provide 
the agency with any additional information needed for the agency to 
redetermine eligibility.
    (ii) Allow beneficiaries to provide any requested information 
through any of the modes of submission specified in Sec.  435.907(a).
    (2) Time standards for redetermining eligibility. The agency must 
redetermine eligibility within the time standards described in Sec.  
435.912(c)(5) and (6), except in unusual circumstances, such as those 
described in Sec.  435.912(e); States must document the reason for 
delay in the individual's case record.
    (d) 90-day reconsideration period. If an individual terminated for 
not returning requested information in accordance with this section 
subsequently submits the information within 90 calendar days after the 
date of termination, or a longer period elected by the State, the 
agency must--
    (1) Reconsider the individual's eligibility without requiring a new 
application in accordance with the application timeliness standards 
established under Sec.  435.912(c)(3).
    (2) Request additional information needed to determine eligibility 
consistent with Sec.  435.907(e) and obtain a signature under penalty 
of perjury consistent with Sec.  435.907(f) if such information or 
signature is not available to the agency or included in the information 
described in this paragraph (d).
    (e) Scope of redeterminations following a change in circumstance. 
For redeterminations of eligibility for Medicaid beneficiaries 
completed in accordance with this section--
    (1) The agency must limit any requests for additional information 
under this section to information relating to a change in circumstance 
that may impact the beneficiary's eligibility.
    (2) If the agency has enough information available to it to renew 
eligibility with respect to all eligibility criteria, the agency may 
begin a new eligibility period, as defined in Sec.  435.916(a).
    (f) Agency action on updated address information--(1) Updated 
address information received from a third party. (i) The agency must 
have a process in place to regularly obtain updated address information 
from reliable data sources and to act on such updated address 
information in accordance with paragraphs (f)(2) and (3) of this 
section.
    (ii) The agency may establish a process to obtain updated address 
information from other third-party data sources and to act on such 
updated address information in accordance with paragraphs (f)(2) and 
(3) of this section.
    (iii) For purposes of paragraph (f)(1)(i) of this section, reliable 
data sources include:
    (A) Mail returned to the agency by the United States Postal Service 
(USPS) with a forwarding address;
    (B) The USPS National Change of Address (NCOA) database;
    (C) The agency's contracted managed care organizations (MCOs), 
prepaid inpatient health plans (PIHPs), prepaid ambulatory health plans 
(PAHPs), primary care case managers (PCCMs), and PCCM entities as 
defined in Sec.  438.2 of this chapter, provided the MCO, PIHP, PAHP, 
PCCM, or PCCM entity received the information directly from or verified 
it with the beneficiary; and
    (D) Other data sources identified by the agency and approved by the 
Secretary.
    (2) In-State address changes. The following actions are required 
when the agency receives updated in-State address information for a 
beneficiary.
    (i) If the information is provided by a reliable data source 
described in paragraph (f)(1)(iii) of this section, the agency must--
    (A) Accept the information as reliable;
    (B) Update the beneficiary's case record; and
    (C) Notify the beneficiary of the update.
    (ii) If the information is provided by a data source not described 
in paragraph (f)(1)(iii) of this section, the agency must check the 
agency's Medicaid Enterprise System (MES) and the most recent address 
information received from reliable data sources described in paragraph 
(f)(1)(iii) of this section to confirm the accuracy of the information.
    (A) If the updated address information is confirmed, the agency 
must accept the information as reliable in accordance with paragraph 
(f)(2)(i) of this section.
    (B) If the updated address information is not confirmed by the MES 
or a reliable data source, the agency must make a good-faith effort, as 
described in paragraph (f)(5) of this section, to contact the 
beneficiary to confirm the information.
    (C) If the agency is unable to confirm the updated address 
information, the agency may not update the beneficiary's address in the 
case record or terminate the beneficiary's coverage for failure to 
respond to a request to confirm their address or State residency.
    (3) Out-of-State address changes. The following actions are 
required when the agency receives updated out-of-State address 
information for a beneficiary through the processes described in 
paragraph (f)(1) of this section.
    (i) The agency must make a good-faith effort, as described in 
paragraph (f)(5) of this section, to contact the beneficiary to confirm 
the information or obtain

[[Page 22871]]

information on whether the beneficiary continues to meet the agency's 
State residency requirement.
    (ii) If the agency is unable to confirm that the beneficiary 
continues to meet State residency requirements, the agency must provide 
advance notice of termination and fair hearing rights consistent with 
part 431, subpart E, of this chapter.
    (4) Whereabouts unknown. The following actions are required when 
beneficiary mail is returned to the agency with no forwarding address.
    (i) The agency must check the agency's MES and the most recently 
available information from reliable data sources described in paragraph 
(f)(1)(iii) of this section for additional contact information. If 
updated in-State address information is available from such a reliable 
data source, then accept the information as reliable in accordance with 
paragraph (f)(2)(i) of this section.
    (ii) If updated address information cannot be obtained and 
confirmed as reliable in accordance with paragraph (f)(4)(i) of this 
section, the agency must make a good-faith effort, as described in 
paragraph (f)(5) of this section, to contact the beneficiary to obtain 
updated address information.
    (iii) If the agency is unable to identify and confirm the 
beneficiary's address pursuant to paragraph (f)(4)(i) or (ii) of this 
section and the beneficiary's whereabouts remain unknown, the agency 
must take appropriate steps to move the beneficiary to a fee-for-
service delivery system, or to terminate or suspend the beneficiary's 
coverage.
    (A) If the agency elects to terminate or suspend coverage in 
accordance with this paragraph (f)(4)(iii), the agency must send notice 
to the beneficiary's last known address or via electronic notification, 
in accordance with the beneficiary's election under Sec.  435.918, no 
later than the date of termination or suspension and provide notice of 
fair hearing rights in accordance with part 431, subpart E, of this 
chapter.
    (B) If whereabouts of a beneficiary whose coverage was terminated 
or suspended in accordance with this paragraph (f)(4)(iii) become known 
within the beneficiary's eligibility period, as defined in Sec.  
435.916(b), the agency--
    (1) Must reinstate coverage back to the date of termination without 
requiring the individual to provide additional information to verify 
their eligibility, unless the agency has other information available to 
it that indicates the beneficiary may not meet all eligibility 
requirements.
    (2) May begin a new eligibility period consistent paragraph (e)(2) 
of this section, if the agency has sufficient information available to 
it to renew eligibility with respect to all eligibility criteria 
without requiring additional information from the beneficiary.
    (5) A good-faith effort to contact a beneficiary. (i) For purposes 
of this paragraph (f), a good-faith effort includes:
    (A) At least two attempts to contact the beneficiary;
    (B) Use of two or more modalities (such as, mail, phone, email);
    (C) A reasonable period of time between contact attempts; and
    (D) At least 30 calendar days for the beneficiary to respond to 
confirm updated address information, consistent with paragraph (c)(1) 
of this section.
    (ii) If the agency does not have the information necessary to make 
at least two attempts to contact a beneficiary through two or more 
modalities in accordance with paragraph (f)(5)(i) of this section, the 
agency must make a note of that fact in the beneficiary's case record.

0
19. Section 435.940 is revised to read as follows:


Sec.  435.940  Basis and scope.

    The income and eligibility verification requirements set forth in 
this section and Sec. Sec.  435.945 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), 1940, and 1943(b)(3) of the Act, and section 1413 
of the Affordable Care Act. Nothing in the regulations in this subpart 
should be construed as limiting the State's program integrity measures 
or affecting the State's obligation to ensure that only eligible 
individuals receive benefits, consistent with parts 431 and 455 of this 
chapter, or its obligation to provide for methods of administration 
that are in the best interest of applicants and beneficiaries and are 
necessary for the proper and efficient operation of the plan, 
consistent with Sec.  431.15 of this chapter and section 1902(a)(19) of 
the Act.

0
20. Section 435.952 is amended by revising paragraphs (b), (c) 
introductory text, and (c)(1) to read as follows:


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

* * * * *
    (b) If information provided by or on behalf of an individual (on 
the application or renewal form or otherwise) is reasonably compatible 
with information obtained by the agency, including information obtained 
in accordance with Sec.  435.948, Sec.  435.949, Sec.  or 435.956, the 
agency must determine or renew eligibility based on such information.
    (c) An individual must not be required to provide additional 
information or documentation unless information needed by the agency in 
accordance with Sec.  435.948, Sec.  435.949, Sec.  or 435.956 cannot 
be obtained electronically or information obtained electronically is 
not reasonably compatible, as provided in the verification plan 
described in Sec.  435.945(j) with information provided by or on behalf 
of the individual.
    (1) Income information obtained through an electronic data match 
shall be considered reasonably compatible with income information 
provided by or on behalf of an individual, and resource information 
obtained through an electronic data match shall be considered 
reasonably compatible with resource information provided by or on 
behalf of an individual, if both the information obtained 
electronically and the information provided by or on behalf of the 
individual are either above or at or below the applicable standard or 
other relevant threshold.
* * * * *

0
21. Section 435.956 is amended by revising paragraph (b)(4) to read as 
follows:


Sec.  435.956  Verification of other non-financial information.

* * * * *
    (b) * * *
    (4) The agency may not limit the number of reasonable opportunity 
periods an individual may receive.
* * * * *

0
22. Section 435.1200 is amended by--
0
a. Revising the heading for paragraph (b) and paragraph (b)(1);
0
b. Revising and republishing paragraph (b)(3);
0
c. Adding paragraph (b)(4);
0
d. Revising paragraphs (c) and (e)(1);
0
e. Adding paragraph (e)(4);
0
f. Revising paragraph (h)(1) and the introductory text of the first 
paragraph (h)(3)(i); and
0
g. Redesignating the second paragraph (h)(3)(i) as paragraph 
(h)(3)(ii).
    The revisions and additions read as follows:


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

* * * * *
    (b) General requirements. * * *
    (1) Fulfill the responsibilities set forth in paragraphs (c) 
through (h) of this section.
* * * * *

[[Page 22872]]

    (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 programs;
    (ii) Ensure compliance with paragraphs (c) through (h) 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;
    (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 
part 155, subpart F, and a fair hearing of a denial of Medicaid 
eligibility which is conducted by the Exchange or Exchange appeals 
entity; and
    (vi) Seamlessly transition the eligibility of beneficiaries between 
Medicaid and the Children's Health Insurance Program (CHIP) when an 
agency administering one of these programs determines that a 
beneficiary is eligible for the other program.
    (4) Accept a determination of eligibility for Medicaid made using 
MAGI-based methodologies by the State agency administering a separate 
CHIP in the State. In order to comply with the requirement of this 
paragraph (b)(4), the agency may:
    (i) Apply the same MAGI-based methodologies in accordance withSec.  
435.603, and verification policies and procedures in accordance with 
Sec. Sec.  435.940 through 435.956 as those used by the separate CHIP 
in accordance with Sec. Sec.  457.315 and 457.380 of this chapter, such 
that the agency will accept any finding relating to a criterion of 
eligibility made by a separate CHIP without further verification, in 
accordance with this paragraph (d)(4);
    (ii) Utilize a shared eligibility service through which 
determinations of Medicaid eligibility are governed exclusively by the 
Medicaid agency and any functions performed by the separate CHIP are 
solely administrative in nature;
    (iii) Enter into an agreement in accordance with Sec.  431.10(d) of 
this chapter under which the Medicaid agency delegates authority to the 
separate CHIP in accordance with Sec.  431.10(c) of this chapter to 
make final determinations of Medicaid eligibility; or
    (iv) Adopt other procedures approved by the Secretary.
    (c) Provision of Medicaid for individuals found eligible for 
Medicaid by another insurance affordability program. (1) For each 
individual determined Medicaid eligible in accordance with paragraph 
(c)(2) of this section, the agency must--
    (i) Establish procedures to receive, via secure electronic 
interface, the electronic account containing the determination of 
Medicaid eligibility;
    (ii) Comply with the provisions of Sec.  435.911 to the same extent 
as if an application had been submitted to the Medicaid agency; and
    (iii) Comply with the provisions of Sec.  431.10 of this chapter to 
ensure it maintains oversight for the Medicaid program.
    (2) For purposes of paragraph (c)(1) of this section, individuals 
determined eligible for Medicaid in this paragraph (c) include:
    (i) Individuals determined eligible for Medicaid by another 
insurance affordability program, including the Exchange, pursuant to an 
agreement between the agency and the other insurance affordability 
program in accordance with Sec.  431.10(d) of this chapter (including 
as a result of a decision made by the program or the program's appeals 
entity in accordance with paragraph (g)(6) or (g)(7)(i)(A) of this 
section); and
    (ii) Individuals determined eligible for Medicaid by a separate 
CHIP (including as the result of a decision made by a CHIP review 
entity) in accordance with paragraph (b)(4) of this section.
* * * * *
    (e) * * *
    (1) Individuals determined not eligible for Medicaid. For each 
individual who submits an application to the agency which includes 
sufficient information to determine Medicaid eligibility or whose 
eligibility is being renewed in accordance with Sec.  435.916 
(regarding regularly-scheduled renewals of eligibility) or Sec.  
435.919 (regarding changes in circumstances) and whom the agency 
determines is ineligible 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:
    (i) Determine eligibility for a separate CHIP if operated in the 
State, and if eligible, transfer the individual's electronic account, 
via secure electronic interface, to the separate CHIP agency and ensure 
that the individual receives a combined eligibility notice as defined 
at Sec.  435.4; and
    (ii) If not eligible for CHIP, determine potential eligibility for 
BHP (if offered by the State) and coverage available through the 
Exchange, and if potentially eligible, transfer the individual's 
electronic account, via secure electronic interface, to the program for 
which the individual is potentially eligible.
* * * * *
    (4) Ineligible individuals. For purposes of paragraph (e)(1) of 
this section, an individual is considered ineligible for Medicaid if 
they are not eligible for any eligibility group covered by the agency 
that provides minimum essential coverage as defined at Sec.  435.4. An 
individual who is eligible only for a limited benefit group, such as 
the eligibility group for individuals with tuberculosis described at 
Sec.  435.215, would be considered ineligible for Medicaid for purposes 
of paragraph (e)(1) of this section.
* * * * *
    (h) * * *
    (1) Include in the agreement into which the agency has entered 
under paragraph (b)(3) of this section that a combined eligibility 
notice, as defined in Sec.  435.4, will be provided:
    (i) To an individual, by either the agency or a separate CHIP, when 
a determination of Medicaid eligibility is completed for such 
individual by the State agency administering a separate CHIP in 
accordance with paragraph (b)(4) of this section, or a determination of 
CHIP eligibility is completed by the Medicaid agency in accordance with 
paragraph (e)(1)(i) of this section; and
    (ii) To the maximum extent feasible to an individual who is not 
described in paragraph (h)(1)(i) of this section but who is transferred 
between the agency and another insurance affordability program by the 
agency, Exchange, or other insurance affordability program, as well as 
to multiple members of the same household included on the same 
application or renewal form.
* * * * *

[[Page 22873]]

    (3) * * *
    (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--
* * * * *

PART 436--ELIGIBILITY IN GUAM, PUERTO RICO, AND THE VIRGIN ISLANDS

0
23. The authority citation for part 436 continues to read as follows:

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


Sec.  436.608  [Removed and Reserved]

0
24. Section 436.608 is removed and reserved.

0
25. Section 436.831 is amended by--
0
a. Redesignating paragraphs (g)(2) and (3) as paragraphs (g)(3) and 
(4), respectively; and
0
b. Adding new paragraph (g)(2).
    The addition reads as follows:


Sec.  436.831  Income eligibility.

* * * * *
    (g) * * *
    (2) May include expenses for services that the agency has 
determined are reasonably constant and predictable, including but not 
limited to, services identified in a person-centered service plan 
developed pursuant to Sec.  441.301(b)(1)(i), Sec.  441.468(a)(1), 
Sec.  441.540(b)(5), or Sec.  441.725 of this chapter and expenses for 
prescription drugs, projected to the end of the budget period at the 
Medicaid reimbursement rate;
* * * * *

PART 447--PAYMENTS FOR SERVICES

0
26.The authority citation for part 447 continues to read as follows:

    Authority:  42 U.S.C. 1302 and 1396r-8.


0
27. Section 447.56 is amended by revising paragraph (a)(1)(v) to read 
as follows:


Sec.  447.56  Limitations on premiums and cost sharing.

    (a) * * *
    (1) * * *
    (v) At State option, individuals under age 19, 20 or age 21, 
eligible under Sec.  435.222 or Sec.  435.223 of this chapter.
* * * * *

PART 457--ALLOTMENTS AND GRANTS TO STATES

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

    Authority: 42 U.S.C. 1302.


0
29. Section 457.65 is amended by revising paragraph (d) to read as 
follows:


Sec.  457.65  Effective date and duration of State plans and plan 
amendments.

* * * * *
    (d) Amendments relating to enrollment procedures. A State plan 
amendment that institutes or extends the use of waiting lists, 
enrollment caps or closed enrollment periods is considered an amendment 
that restricts eligibility and must meet the requirements in paragraph 
(b) of this section.
* * * * *

0
30. Section 457.340 is amended by--
0
a. Revising the heading for paragraph (d) and paragraph (d)(1);
0
b. Removing paragraph (d)(3); and
0
d. Revising paragraph (f)(1).
    The revisions read as follows:


Sec.  457.340  Application for and enrollment in CHIP.

* * * * *
    (d) Timely determination and redetermination of eligibility. (1) 
The terms in Sec.  435.912 of this chapter apply equally to CHIP, 
except that--
    (i) The terms of Sec.  435.912(c)(4)(ii), (c)(5)(iii), and 
(c)(6)(ii) of this chapter (relating to timelines for completing 
renewals and redeterminations when States must consider other bases of 
eligibility) do not apply; and
    (ii) The standards for transferring electronic accounts to other 
insurance affordability programs are pursuant to Sec.  457.350 and the 
standards for receiving applications from other insurance affordability 
programs are pursuant to Sec.  457.348.
* * * * *
    (f) * * *
    (1) Include in the agreement into which the State has entered under 
Sec.  457.348(a) that, a combined eligibility notice, as defined in 
Sec.  457.10, will be provided:
    (i) To an individual, by the State agency administering a separate 
CHIP or the Medicaid agency, when a determination of CHIP eligibility 
is completed for such individual by the State agency administering 
Medicaid in accordance with Sec.  457.348(e), or a determination of 
Medicaid eligibility is completed by the State in accordance with Sec.  
457.350(b)(1);
    (ii) To the maximum extent feasible, to an individual who is not 
described in paragraph (f)(1)(i) of this section but who is transferred 
between the State and another insurance affordability program in 
accordance with Sec.  457.348 or Sec.  457.350; and
    (iii) To the maximum extent feasible, to multiple members of the 
same household included on the same application or renewal form.
* * * * *

0
31. Section 457.344 is added to read as follows:


Sec.  457.344  Changes in circumstances.

    (a) Procedures for reporting changes. The State must:
    (1) Have procedures designed to ensure that enrollees understand 
the importance of making timely and accurate reports of changes in 
circumstances that may affect their eligibility; and
    (2) Accept reports made under paragraph (a)(1) of this section and 
any other enrollee reported information through any of the modes 
permitted for submission of applications under Sec.  435.907(a) of this 
chapter, as cross-referenced at Sec.  457.330.
    (b) State action on information about changes. Consistent with the 
requirements of Sec.  457.380(f), the State must promptly redetermine 
eligibility between regularly scheduled renewals of eligibility 
required under Sec.  457.343, whenever it has reliable information 
about a change in an enrollee's circumstances that may impact the 
enrollee's eligibility for CHIP, the amount of child or pregnancy-
related health assistance for which the enrollee is eligible, or the 
enrollee's premiums or cost sharing charges. Such redetermination must 
be completed in accordance with paragraph (e) of this section.
    (1) The State must redetermine eligibility based on available 
information, if possible. When needed information is not available, the 
State must request such information from the enrollee in accordance 
with Sec.  435.952(b) and (c) of this chapter as referenced in Sec.  
457.380(f).
    (2) Prior to furnishing additional child or pregnancy-related 
assistance or lowering applicable premiums or cost sharing charges 
based on a reported change:
    (i) If the change was reported by the enrollee, the State must 
verify the information in accordance with Sec. Sec.  435.940 through 
435.960 of this chapter and the State's verification plan as referenced 
in Sec.  457.380.
    (ii) If the change was provided by a third-party data source, the 
State may verify the information with the enrollee.
    (3) If the State is unable to verify a reported change that would 
result in additional child or pregnancy-related health assistance or 
lower premiums or cost sharing, the State may not

[[Page 22874]]

terminate the enrollee's coverage for failure to respond to the request 
to verify such change.
    (4) Prior to taking an action subject to review, as defined in 
Sec.  457.1130, based on information received from a third-party data 
source, the State must request information from the enrollee to verify 
or dispute the information received consistent with Sec.  435.952(d) of 
this chapter as referenced in Sec.  457.380(f).
    (5) If the State determines that a reported change results in an 
action subject to review, the State must:
    (i) Comply with the requirements at Sec.  435.916(d)(2) of this 
chapter as referenced in Sec.  457.343 (relating to determining 
potential eligibility for other insurance affordability programs), 
prior to terminating an enrollee's eligibility in accordance with this 
section.
    (ii) Provide notice and State review rights, in accordance with the 
requirements of Sec.  457.340(e), and subpart K of this part, prior to 
taking any action subject to review resulting from a change in an 
enrollee's circumstances.
    (6) If the State has information about anticipated changes in an 
enrollee's circumstances that may affect his or her eligibility, it 
must initiate a determination of eligibility at the appropriate time 
based on such changes consistent with paragraphs (b)(1) through (5) of 
this section and the requirements at Sec.  435.912(c)(6) of this 
chapter as referenced in Sec.  457.340(d)(1).
    (c) Enrollee response times--(1) State requirements. The State 
must--
    (i) Provide enrollees with at least 30 calendar days from the date 
the State sends the notice requesting the enrollee to provide the State 
with any additional information needed for the State to redetermine 
eligibility.
    (ii) Allow enrollees to provide any requested information through 
any of the modes of submission specified in Sec.  435.907(a) of this 
chapter, as referenced in Sec.  457.330.
    (2) Time standards for redetermining eligibility. The State must 
redetermine eligibility within the time standards described in Sec.  
435.912(c)(5) and (6) of this chapter, except in unusual circumstances, 
such as those as described in Sec.  435.912(e) of this chapter, as 
referenced in Sec.  457.340(d)(1); States must document the reason for 
delay in the individual's case record.
    (d) Ninety-day reconsideration period. If an individual terminated 
for not returning requested information in accordance with this section 
subsequently submits the information within 90 calendar days after the 
date of termination, or a longer period elected by the State, the State 
must--
    (1) Reconsider the individual's eligibility without requiring a new 
application in accordance with the timeliness standards described at 
Sec.  435.912(c)(3) of this chapter as referenced in Sec.  
457.340(d)(1).
    (2) Request additional information needed to determine eligibility 
and obtain a signature under penalty of perjury consistent with Sec.  
435.907(e) and (f) of this chapter respectively as referenced in Sec.  
457.330 if such information or signature is not available to the State 
or included in the information described in this paragraph (d).
    (e) Scope of redeterminations following a change in circumstances. 
For redeterminations of eligibility for CHIP enrollees completed in 
accordance with this section--
    (1) The State must limit any requests for additional information 
under this section to information relating to change in circumstances 
which may impact the enrollee's eligibility.
    (2) If the State has enough information available to it to renew 
eligibility with respect to all eligibility criteria, the State may 
begin a new eligibility period under Sec.  457.343.
    (f) State action on updated address information--(1) Updated 
address information received from a third party. (i) The State must 
have a process in place to regularly obtain updated address information 
from reliable data sources and to act on such updated address 
information in accordance with paragraphs (f)(2) and (3) of this 
section.
    (ii) The State may establish a process to obtain updated address 
information from other third-party data sources and to act on such 
updated address information in accordance with paragraphs (f)(2) and 
(3) of this section.
    (iii) For purposes of paragraph (f)(1)(i) of this section, reliable 
data sources include:
    (A) Mail returned to the State by the United States Postal Service 
(USPS) with a forwarding address;
    (B) The USPS National Change of Address (NCOA) database;
    (C) The State's contracted MCOs, PIHPs, PAHPs, PCCMs, and PCCM 
entities as defined in Sec.  457.10, provided the MCO, PIHP, PAHP, 
PCCM, or PCCM entity received the information directly from or verified 
it with the enrollee; and
    (D) Other data sources identified by the State and approved by the 
Secretary.
    (2) In-State address changes. The following actions are required 
when the State receives updated in-State address information for an 
enrollee.
    (i) If the information is provided by a reliable data source 
described in paragraph (f)(1)(iii) of this section, the State must--
    (A) Accept the information as reliable;
    (B) Update the enrollee's case record; and
    (C) Notify the enrollee of the update.
    (ii) If the information is provided by a data source not described 
in paragraph (f)(1)(iii) of this section, the State must check the 
State's Medicaid Enterprise System (MES) and the most recent address 
information received from reliable data sources described in paragraph 
(f)(1)(iii) of this section to confirm the accuracy of the information.
    (A) If the updated address information is confirmed, the State must 
accept the information as reliable in accordance with paragraph 
(f)(2)(i) of this section.
    (B) If the updated address information is not confirmed by the MES 
or a reliable data source, the State must make a good-faith effort, as 
described in paragraph (f)(5) of this section, to contact the enrollee 
to confirm the information.
    (C) If the State is unable to confirm the updated address 
information, the State may not update the enrollee's address in the 
case record or terminate the enrollee's coverage for failure to respond 
to a request to confirm their address or State residency.
    (3) Out-of-State address changes. The following actions are 
required when the State receives updated out-of-State address 
information for an enrollee through the processes described in 
paragraph (f)(1) of this section.
    (i) The State must make a good-faith effort, as described in 
paragraph (f)(5) of this section, to contact the enrollee to confirm 
the information or obtain information on whether the enrollee continues 
to meet the State's residency requirement.
    (ii) If the State is unable to confirm that the enrollee continues 
to meet State residency requirements, the State must provide advance 
notice of termination and individual's rights to a CHIP review 
consistent with Sec.  457.340(e)(1).
    (4) Whereabouts unknown. The following actions are required when 
enrollee mail is returned to the State with no forwarding address.
    (i) The State must check the State's MES and the most recently 
available information from reliable data sources described in paragraph 
(f)(1)(iii) of this section for additional contact information. If 
updated in-State address information is available from such a reliable 
data source, then accept the information as reliable in accordance with 
paragraph (f)(2)(i) of this section.

[[Page 22875]]

    (ii) If updated address information cannot be obtained and 
confirmed as reliable in accordance with paragraph (f)(4)(i) of this 
section, the State must make a good-faith effort, as described in 
paragraph (f)(5) of this section, to contact the enrollee to obtain 
updated address information.
    (iii) If the State is unable to identify and confirm the enrollee's 
address pursuant to paragraph (f)(4)(i) or (ii) of this section and the 
enrollee's whereabouts remain unknown, the State must take appropriate 
steps to move the enrollee to a fee-for-service delivery system, or to 
terminate or suspend the enrollee's coverage.
    (A) If the State elects to terminate or suspend coverage in 
accordance with this paragraph (f)(4)(iii), the State must send notice 
to the enrollee's last known address or via electronic notification, in 
accordance with the enrollee's election under Sec.  457.110, no later 
than the date of termination or suspension and provide notice of an 
individual's rights to a CHIP review in accordance with Sec.  
457.340(e).
    (B) If whereabouts of an enrollee whose coverage was terminated or 
suspended in accordance with this paragraph (f)(4)(iii) become known 
within the enrollee's eligibility period, as defined in Sec.  
435.916(b) of this chapter as referenced in Sec.  457.343, the State--
    (1) Must reinstate coverage back to the date of termination without 
requiring the individual to provide additional information to verify 
their eligibility, unless the State has other information available to 
it that indicates the enrollee may not meet all eligibility 
requirements.
    (2) May begin a new eligibility period consistent paragraph (e)(2) 
of this section, if the State has sufficient information available to 
it to renew eligibility with respect to all eligibility criteria 
without requiring additional information from the enrollee.
    (5) A good-faith effort to contact an enrollee. (i) For purposes of 
this paragraph (f), a good-faith effort includes:
    (A) At least two attempts to contact the enrollee;
    (B) Use of two or more modalities (such as, mail, phone, email);
    (C) A reasonable period of time between contact attempts; and
    (D) At least 30 calendar days for the enrollee to respond to 
confirm updated address information, consistent with paragraph (c)(1) 
of this section.
    (ii) If the State does not have the information necessary to make 
at least two attempts to contact an enrollee through two or more 
modalities in accordance with paragraph (f)(5)(i) of this section, the 
State must make a note of that fact in the enrollee's case record.

0
32. Section 457.348 is amended by--
0
a. In paragraph (a)(4), removing the phrase ``Provide for coordination 
of notices with other insurance'' and adding in its place the phrase 
``Provide for a combined eligibility notice and coordination of notices 
with other insurance'';
0
b. Adding paragraph (a)(6);
0
c. Revising paragraph (b);
0
d. In paragraph (c)(3), removing the reference to ``Sec.  457.350(i)'' 
and adding in its place the reference ``Sec.  457.350(g)''; and
0
e. Adding paragraph (e).
    The additions and revision read as follows:


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

    (a) * * *
    (6) Seamlessly transition the enrollment of beneficiaries between 
CHIP and Medicaid when a beneficiary is determined eligible for one 
program by the agency administering the other.
    (b) Provision of CHIP for individuals found eligible for CHIP by 
another insurance affordability program. (1) For each individual 
determined CHIP eligible in accordance with paragraph (b)(2) of this 
section, the State must--
    (i) 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;
    (ii) Comply with the provisions of Sec.  457.340 to the same extent 
as if the application had been submitted to the State; and
    (iii) Maintain proper oversight of the eligibility determinations 
made by the other program.
    (2) For purposes of paragraph (b)(1) of this section, individuals 
determined eligible for CHIP in this paragraph (b) include:
    (i) Individuals determined eligible for CHIP by another insurance 
affordability program, including the Exchange, pursuant to an agreement 
between the State and the other insurance affordability program 
(including as a result of a decision made by the program or the 
program's appeal entity in accordance with paragraph (a) of this 
section); and
    (ii) Individuals determined eligible for CHIP by the State Medicaid 
agency (including as the result of a decision made by the Medicaid 
appeals entity) in accordance with paragraph (e) of this section.
* * * * *
    (e) CHIP determinations made by other insurance affordability 
programs. The State must accept a determination of eligibility for CHIP 
from the Medicaid agency in the State. In order to comply with the 
requirement in this paragraph (e), the agency may:
    (1) Apply the same modified adjusted gross income (MAGI)-based 
methodologies in accordance with Sec.  457.315, and verification 
policies and procedures in accordance with Sec.  457.380 as those used 
by the Medicaid agency in accordance with Sec. Sec.  435.940 through 
435.956 of this chapter, such that the agency will accept any finding 
relating to a criterion of eligibility made by a Medicaid agency 
without further verification;
    (2) Enter into an agreement under which the State delegates 
authority to the Medicaid agency to make final determinations of CHIP 
eligibility; or
    (3) Adopt other procedures approved by the Secretary.

0
33. Section 457.350 is revised to read as follows:


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

    (a) State plan requirement. The State plan shall include a 
description of the coordinated eligibility and enrollment procedures 
used, at an initial and any follow-up eligibility determination, 
including any periodic redetermination, to ensure that:
    (1) Only targeted low-income children are furnished CHIP coverage 
under the plan; and
    (2) Enrollment is facilitated for applicants and enrollees found to 
be eligible or potentially eligible for other insurance affordability 
programs in accordance with this section.
    (b) Evaluation of eligibility for other insurance affordability 
programs. (1) For individuals described in paragraph (b)(2) of this 
section, promptly and without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), the State 
must:
    (i) Determine eligibility for Medicaid on the basis of having 
household income at or below the applicable modified adjusted gross 
income standard, as defined in Sec.  435.911(b) of this chapter 
(``MAGI-based Medicaid''); and
    (ii) If unable to make a determination of eligibility for MAGI-
based Medicaid, identify potential eligibility for other insurance 
affordability programs, including Medicaid on a basis other than MAGI, 
the Basic Health Program (BHP) in accordance with Sec.  600.305(a) of 
this chapter, or insurance affordability programs available through

[[Page 22876]]

the Exchange, as indicated by information provided on the application 
or renewal form provided by or on behalf of the beneficiary, including 
information obtained by the agency from other trusted electronic data 
sources.
    (2) Individuals to whom paragraph (b)(1) of this section applies 
include:
    (i) Any applicant who submits an application to the State which 
includes sufficient information to determine CHIP eligibility;
    (ii) Any enrollee whose eligibility is being redetermined at 
renewal or due to a change in circumstance per Sec.  457.343; and
    (iii) Any enrollee whom the State determines is not eligible for 
CHIP, or who is determined not eligible for CHIP as a result of a 
review conducted in accordance with subpart K of this part.
    (3) In determining eligibility for Medicaid as described in 
paragraph (b)(1) of this section, the State must utilize the option the 
Medicaid agency has elected at Sec.  435.1200(b)(4) of this chapter to 
accept determinations of MAGI-based Medicaid eligibility made by a 
separate CHIP, and which must be detailed in the agreement described at 
Sec.  457.348(a).
    (c) Income eligibility test. To determine eligibility as described 
in paragraph (b)(1)(i) of this section and to identify the individuals 
described in paragraph (b)(1)(ii) of this section who are potentially 
eligible for BHP or insurance affordability programs available through 
an Exchange, a State must apply the MAGI-based methodologies used to 
determine household income described in Sec.  457.315 or such 
methodologies as are applied by such other programs.
    (d) Individuals found eligible for Medicaid based on MAGI. For 
individuals identified in paragraph (b)(1) of this section, the State 
must--
    (1) Promptly and without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), transfer the 
individual's electronic account to the Medicaid agency via a secure 
electronic interface; and
    (2) Except as provided in Sec.  457.355, find the applicant 
ineligible for CHIP.
    (e) Individuals potentially eligible for Medicaid on a basis other 
than MAGI. For individuals identified as potentially eligible for 
Medicaid on a non-MAGI basis, as described in paragraph (b)(1)(ii) of 
this section, the State must--
    (1) Promptly and without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), transfer the 
electronic account to the Medicaid agency via a secure electronic 
interface.
    (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 (e)(1) of this section;
    (ii) The transfer of the individual's account to another insurance 
affordability program in accordance with paragraph (g) of this section, 
if applicable; and
    (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) Disenroll 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.
    (f) Children found ineligible for Medicaid based on MAGI, and 
potentially ineligible for Medicaid on a basis other than MAGI. If a 
State uses a screening procedure other than a full determination of 
Medicaid eligibility under all possible eligibility groups, and the 
screening process reveals that the child does not appear to be eligible 
for Medicaid, the State must provide the child's family with the 
following in writing:
    (1) A statement that based on a limited review, the child does not 
appear eligible for Medicaid, but Medicaid eligibility can only be 
determined based on a full review of a Medicaid application under all 
Medicaid eligibility groups;
    (2) Information about Medicaid eligibility rules, covered benefits, 
and restrictions on cost sharing; and
    (3) Information about how and where to apply for Medicaid under all 
eligibility groups.
    (4) The State will determine the written format and timing of the 
information regarding Medicaid eligibility, benefits, and the 
application process required under this paragraph (f).
    (g) Individuals found potentially eligible for other insurance 
affordability programs. For individuals identified in paragraph 
(b)(1)(ii) of this section who have been identified as potentially 
eligible for BHP or insurance affordability programs available through 
the Exchange, the State must promptly and without undue delay, 
consistent with the timeliness standards established under Sec.  
457.340(d), transfer the electronic account to the other insurance 
affordability program via a secure electronic interface.
    (h) Evaluation of eligibility for Exchange coverage. A State may 
enter into an arrangement with the Exchange for the entity that 
determines eligibility for CHIP to make determinations of eligibility 
for advance payments of the premium tax credit and cost sharing 
reductions, consistent with 45 CFR 155.110(a)(2).
    (i) Waiting lists, enrollment caps and closed enrollment. The State 
must establish procedures to ensure that--
    (1) The procedures developed in accordance with this section have 
been followed for each child applying for a separate child health 
program before placing the child on a waiting list or otherwise 
deferring action on the child's application for the separate child 
health program;
    (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 (h) 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.

0
34. Section 457.480 is amended by--
0
a. Revising the section heading;
0
b. Redesignating paragraphs (a) and (b) as paragraphs (b) and (c), 
respectively; and
0
c. Adding a new paragraph (a).
    The revision and addition read as follows:


Sec.  457.480  Prohibited coverage limitations, preexisting condition 
exclusions, and relation to other laws.

    (a) Prohibited coverage limitations. The State may not impose any 
annual, lifetime or other aggregate dollar limitations on any medical 
or dental services which are covered under the State plan.
* * * * *

0
35. Section 457.570 is amended by revising and republishing paragraph 
(c) to read as follows:


Sec.  457.570  Disenrollment protections.

* * * * *
    (c) The State must ensure that disenrollment policies, such as 
policies related to non-payment of premiums, do not present barriers to 
the timely determination of eligibility and

[[Page 22877]]

enrollment in coverage of an eligible child in the appropriate 
insurance affordability program. A State may not--
    (1) Impose a specified period of time that a CHIP eligible targeted 
low-income child or targeted low-income pregnant woman who has an 
unpaid premium or enrollment fee will not be permitted to reenroll for 
coverage in CHIP.
    (2) Require the collection of past due premiums or enrollment fees 
as a condition of eligibility for reenrollment if an individual was 
terminated for failure to pay premiums.
* * * * *

0
36. Section 457.805 is amended by revising paragraph (b) to read as 
follows:


Sec.  457.805  State plan requirement: Procedures to address 
substitution under group health plans.

* * * * *
    (b) Limitations. A State may not, under this section, impose a 
waiting period before enrolling into CHIP an eligible individual who 
has been disenrolled from group health plan coverage, Medicaid, or 
another insurance affordability program. States must conduct monitoring 
activities to prevent substitution of coverage.

0
37. Section 457.810 is amended by revising paragraph (a) to read as 
follows:


Sec.  457.810  Premium assistance programs: Required protections 
against substitution.

* * * * *
    (a) Prohibition of waiting periods. A State may not, under this 
section, impose a waiting period before enrolling into CHIP premium 
assistance coverage an eligible individual who has access to, but is 
not enrolled in, group health plan coverage.
* * * * *


Sec.  457.960  [Removed]

0
38. Section 457.960 is removed.

0
39. Section 457.965 is revised to read as follows:


Sec.  457.965  Documentation.

    (a) Basis and purpose. This section, based on section 2101 of the 
Act, prescribes the kinds of records a State must maintain, the minimum 
retention period for such records, and the conditions under which those 
records must be provided or made available.
    (b) Content of records. A State plan must provide that the State 
will maintain or supervise the maintenance of the records necessary for 
the proper and efficient operation of the plan. The records must 
include all of the following:
    (1) Individual records on each applicant and enrollee that contain 
all of the following:
    (i) All information provided on the initial application submitted 
through any modality described in Sec.  435.907(a) of this chapter as 
referenced in Sec.  457.330, by, or on behalf of, the applicant or 
enrollee, including the signature on and date of application.
    (ii) The electronic account and any information or other 
documentation received from another insurance affordability program in 
accordance with Sec.  457.348(b) and (c).
    (iii) The date of, basis for, and all documents or other evidence 
to support any determination, denial, or other adverse action, 
including decisions made at application, renewal, and a result of a 
change in circumstance, taken with respect to the applicant or 
enrollee, including all information provided by the applicant or 
enrollee, and all information obtained electronically or otherwise by 
the State from third-party sources.
    (iv) The provision of, and payment for, services, items and other 
child health assistance or pregnancy-related assistance, including the 
service or item provided, relevant diagnoses, the date that the item or 
service was provided, the practitioner or provider rendering, providing 
or prescribing the service or item, including their National Provider 
Identifier, and the full amount paid or reimbursed for the service or 
item, and any third-party liabilities.
    (v) Any changes in circumstances reported by the individual and any 
actions taken by the State in response to such reports.
    (vi) All renewal forms returned by, or on behalf of, a beneficiary, 
to the State in accordance with Sec.  457.343, regardless of the 
modality through which such forms are submitted, including the 
signature on the form and date received.
    (vii) All notices provided to the applicant or enrollee in 
accordance with Sec.  457.340(e) and Sec.  457.1180.
    (viii) All records pertaining to any State reviews requested by, or 
on behalf of, the applicant or enrollee, including each request 
submitted and the date of such request, the complete record of the 
review decision, as described in subpart K of this part, and the final 
administrative action taken by the agency following the review decision 
and date of such action.
    (ix) The disposition of income and eligibility verification 
information received under Sec.  457.380, including evidence that no 
information was returned from an electronic data source.
    (2) Statistical, fiscal, and other records necessary for reporting 
and accountability as required by the Secretary.
    (c) Retention of records. The State plan must provide that the 
records required under paragraph (b) of this section will be retained 
for the period when the applicant or enrollee's case is active, plus a 
minimum of 3 years thereafter.
    (d) Accessibility and availability of records. The agency must--
    (1) Maintain the records described in paragraph (b) of this section 
in an electronic format; and
    (2) To the extent permitted under Federal law, make the records 
available to the Secretary, Federal and State auditors and other 
parties who request, and are authorized to review, such records within 
30 calendar days of the request (or longer period specified in the 
request), except when there is an administrative or other emergency 
beyond the agency's control.
    (e) Release and safeguarding information. The State must provide 
safeguards that restrict the use or disclosure of information contained 
in the records described in paragraph (b) of this section in accordance 
with the requirements set forth in Sec.  457.1110.

0
40. Section 457.1140 is amended by revising paragraph (d)(4) to read as 
follows:


Sec.  457.1140  Program specific review process: Core elements of 
review.

* * * * *
    (d) * * *
    (4) Receive continued enrollment and benefits in accordance with 
Sec.  457.1170.

0
41. Section 457.1170 is revised to read as follows:


Sec.  457.1170  Program specific review process: Continuation of 
enrollment.

    A State must ensure the opportunity for continuation of enrollment 
and benefits pending the completion of review of the following:
    (a) A suspension or termination of enrollment, including a decision 
to disenroll for failure to pay cost sharing; and
    (b) A failure to make a timely determination of eligibility at 
application and renewal.

0
42. Section 457.1180 is revised to read as follows:


Sec.  457.1180  Program specific review process: Notice.

    A State must provide enrollees and applicants timely written notice 
of any determinations required to be subject to review under Sec.  
457.1130 that includes the reasons for the determination, an 
explanation of applicable rights to review of that determination, the 
standard and expedited time frames for review, the manner in which a 
review

[[Page 22878]]

can be requested, and the circumstances under which enrollment and 
benefits may continue pending review.

PART 600--ADMINISTRATION, ELIGIBILITY, ESSENTIAL HEALTH BENEFITS, 
PERFORMANCE STANDARDS, SERVICE DELIVERY REQUIREMENTS, PREMIUM AND 
COST SHARING, ALLOTMENTS, AND RECONCILIATION

0
43. The authority citation for part 600 continues to read as follows:

    Authority:  Section 1331 of the Patient Protection and 
Affordable Care Act of 2010 (Pub. L. 111-148, 124 Stat. 119), as 
amended by the Health Care and Education Reconciliation Act of 2010 
(Pub. L. 111-152, 124 Stat 1029).


0
44. Section 600.330 is amended by revising paragraph (a) to read as 
follows:


Sec.  600.330  Coordination with other insurance affordability 
programs.

    (a) Coordination. The State must establish eligibility and 
enrollment mechanisms and procedures to maximize coordination with the 
Exchange, Medicaid, and Children's Health Insurance Program (CHIP). The 
terms of 45 CFR 155.345(a) regarding the agreements between insurance 
affordability programs apply to a BHP. The State BHP agency must 
fulfill the requirements of Sec.  435.1200(d), (e)(1)(ii), and (e)(3) 
of this chapter and, if applicable, paragraph (c) of this section for 
BHP eligible individuals.
* * * * *

0
45. Section 600.525 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  600.525  Disenrollment procedures and consequences for nonpayment 
of premiums.

* * * * *
    (b) * * *
    (2) A State electing to enroll eligible individuals throughout the 
year must comply with the reenrollment standards set forth in Sec.  
457.570(c) of this chapter.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-06566 Filed 3-27-24; 8:45 am]
BILLING CODE 4120-01-P